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What changed in ConnectOne Bancorp, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ConnectOne Bancorp, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+268 added−293 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-21)

Top changes in ConnectOne Bancorp, Inc.'s 2025 10-K

268 paragraphs added · 293 removed · 195 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

52 edited+11 added−13 removed107 unchanged
Biggest changeBecause the estimated loss pursuant to the systemic risk determination will be periodically adjusted, the FDIC could: ● Cease collection early, if it has collected enough to recover actual or estimated losses; ● Extend the special assessment collection period one or more quarters beyond the initial eight-quarter collection period, if actual or estimated losses exceed the amounts collected; and ● Impose a final shortfall special assessment on a one-time basis after the receiverships for Silicon Valley Bank and Signature Bank terminate, if actual losses exceed the amounts collected. -18- Table of Contents The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (the “Modernization Act”): ● allows bank holding companies meeting management, capital, and Community Reinvestment Act standards to engage in a substantially broader range of non-banking activities than previously was permissible, including insurance underwriting and making merchant banking investments in commercial and financial companies, if the bank holding company elects to become a financial holding company.
Biggest changeIn December of 2025, due to its current assessment of the loss incurred due to the systemic risk determination, the FDIC adopted an interim final rule to reduce the assessment rate for the eighth quarterly assessment, due March 30, 2026, from 3.36 basis points per quarter to 2.97 basis points per quarter. -19- Table of Contents The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (the “Modernization Act”): ● allows bank holding companies meeting management, capital, and Community Reinvestment Act standards to engage in a substantially broader range of non-banking activities than previously was permissible, including insurance underwriting and making merchant banking investments in commercial and financial companies, if the bank holding company elects to become a financial holding company.
The Holding Company Act prohibits the Company, with certain exceptions, from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company which is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to subsidiary banks, except that it may, upon application, engage in, and may own shares of companies engaged in, certain businesses found by the FRB to be so closely related to banking “as to be a proper incident thereto.” The Holding Company Act requires prior approval by the FRB of the acquisition by the Company of more than 5% of the voting stock of any other bank.
The Holding Company Act prohibits the Company, with certain exceptions, from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company which is not a bank or bank holding company and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to subsidiary banks, except that it may, upon application, engage in, and may own shares of companies engaged in, certain businesses found by the FRB to be so closely related to banking “as to be a proper incident thereto.” The Holding Company Act requires prior approval by the FRB of the acquisition by the Company of more than 5% of the voting stock of any other bank.
Under federal law, a bank subsidiary may only make loans or extensions of credit to, or invest in the securities of, its parent or the non-bank subsidiaries of its parent (other than direct subsidiaries of such bank which are not financial subsidiaries) or to any affiliate, or take their securities as collateral for loans to any borrower, upon satisfaction of various regulatory criteria, including specific collateral loan to value requirements. -12- Table of Contents The Dodd-Frank Act The Dodd-Frank Act, adopted in 2010, will continue to have a broad impact on the financial services industry as a result of the significant regulatory and compliance changes made by the Dodd-Frank Act, including, among other things, (i) enhanced resolution authority over troubled and failing banks and their holding companies; (ii) increased capital and liquidity requirements; (iii) increased regulatory examination fees; (iv) changes to assessments to be paid to the FDIC for federal deposit insurance; and (v) numerous other provisions designed to improve supervision and oversight of, and strengthening safety and soundness for, the financial services sector.
Under federal law, a bank subsidiary may only make loans or extensions of credit to, or invest in the securities of, its parent or the non-bank subsidiaries of its parent (other than direct subsidiaries of such bank which are not financial subsidiaries) or to any affiliate, or take their securities as collateral for loans to any borrower, upon satisfaction of various regulatory criteria, including specific collateral loan to value requirements. -13- Table of Contents The Dodd-Frank Act The Dodd-Frank Act, adopted in 2010, will continue to have a broad impact on the financial services industry as a result of the significant regulatory and compliance changes made by the Dodd-Frank Act, including, among other things, (i) enhanced resolution authority over troubled and failing banks and their holding companies; (ii) increased capital and liquidity requirements; (iii) increased regulatory examination fees; (iv) changes to assessments to be paid to the FDIC for federal deposit insurance; and (v) numerous other provisions designed to improve supervision and oversight of, and strengthening safety and soundness for, the financial services sector.
We strive to challenge our employees to be the best they can be and to provide them with the tools and training they need to help fulfill their critical service mandate. We endeavor to build a diverse team of financial experts and relationship specialists who understand the demands of a successful business and are prepared to meet them.
We strive to challenge our employees to be the best they can be and to provide them with the tools and training they need to help fulfill their critical service mandate. We endeavor to build a team of financial experts and relationship specialists with diverse experience who understand the demands of a successful business and are prepared to meet them.
In addition, significant provisions of FDICIA required federal banking regulators to impose standards in a number of other important areas to assure bank safety and soundness, including internal controls, information systems and internal audit systems, credit underwriting, asset growth, compensation, loan documentation and interest rate exposure. -15- Table of Contents Capital Adequacy Guidelines In December 2010 and January 2011, the Basel Committee on Banking Supervision (the “Basel Committee”) published the final texts of reforms on capital and liquidity generally referred to as “Basel III.” In July 2013, the FRB, the FDIC and the Comptroller of the Currency adopted final rules (the “New Rules”), which implement certain provisions of Basel III and the Dodd-Frank Act.
In addition, significant provisions of FDICIA required federal banking regulators to impose standards in a number of other important areas to assure bank safety and soundness, including internal controls, information systems and internal audit systems, credit underwriting, asset growth, compensation, loan documentation and interest rate exposure. -16- Table of Contents Capital Adequacy Guidelines In December 2010 and January 2011, the Basel Committee on Banking Supervision (the “Basel Committee”) published the final texts of reforms on capital and liquidity generally referred to as “Basel III.” In July 2013, the FRB, the FDIC and the Comptroller of the Currency adopted final rules (the “New Rules”), which implement certain provisions of Basel III and the Dodd-Frank Act.
A “covered transaction” includes: • a loan or extension of credit to an affiliate; • a purchase of, or an investment in, securities issued by an affiliate; • a purchase of assets from an affiliate, with some exceptions; • the acceptance of securities issued by an affiliate as collateral for a loan or extension of credit to any party; and • the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate. -14- Table of Contents Further, under Regulation W: • a bank and its subsidiaries may not purchase a low-quality asset from an affiliate; • covered transactions and other specified transactions between a bank or its subsidiaries and an affiliate must be on terms and conditions that are consistent with safe and sound banking practices; and • with some exceptions, each loan or extension of credit by a bank to an affiliate must be secured by certain types of collateral with a market value ranging from 100% to 130% of the loan value, depending on the type of collateral.
A “covered transaction” includes: • a loan or extension of credit to an affiliate; • a purchase of, or an investment in, securities issued by an affiliate; • a purchase of assets from an affiliate, with some exceptions; • the acceptance of securities issued by an affiliate as collateral for a loan or extension of credit to any party; and • the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate. -15- Table of Contents Further, under Regulation W: • a bank and its subsidiaries may not purchase a low-quality asset from an affiliate; • covered transactions and other specified transactions between a bank or its subsidiaries and an affiliate must be on terms and conditions that are consistent with safe and sound banking practices; and • with some exceptions, each loan or extension of credit by a bank to an affiliate must be secured by certain types of collateral with a market value ranging from 100% to 130% of the loan value, depending on the type of collateral.
The Consumer Financial Protection Bureau has examination and enforcement authority over all banks and savings institutions with more than $10 billion in assets. Institutions with $10 billion or less in assets will continue to be examined for compliance with the consumer laws by their primary bank regulators.
The Consumer Financial Protection Bureau has examination and enforcement authority over all banks and savings institutions with more than $10 billion in assets. Institutions with $10 billion or less in assets continue to be examined for compliance with the consumer laws by their primary bank regulators.
While the New Rules generally require the phase-out of non-qualifying capital instruments such as trust preferred securities and cumulative perpetual preferred stock, holding companies with less than $15 billion in total consolidated assets as of December 31, 2009, such as the Company, may permanently include non-qualifying instruments that were issued and included in Tier 1 or Tier 2 capital prior to May 19, 2010 in Additional Tier 1 or Tier 2 capital until they redeem such instruments or until the instruments mature. -16- Table of Contents The New Rules prescribe a standardized approach for calculating risk-weighted assets.
While the New Rules generally require the phase-out of non-qualifying capital instruments such as trust preferred securities and cumulative perpetual preferred stock, holding companies with less than $15 billion in total consolidated assets as of December 31, 2009, such as the Company, may permanently include non-qualifying instruments that were issued and included in Tier 1 or Tier 2 capital prior to May 19, 2010 in Additional Tier 1 or Tier 2 capital until they redeem such instruments or until the instruments mature. -17- Table of Contents The New Rules prescribe a standardized approach for calculating risk-weighted assets.
These regulations impose obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their clients. -20- Table of Contents Loans to Related Parties The Company’s authority to extend credit to its directors and executive officers, as well as to entities controlled by such persons, is currently governed by the requirements of the Sarbanes-Oxley Act of 2002 and Regulation O promulgated by the FRB.
These regulations impose obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their clients. -21- Table of Contents Loans to Related Parties The Company’s authority to extend credit to its directors and executive officers, as well as to entities controlled by such persons, is currently governed by the requirements of the Sarbanes-Oxley Act of 2002 and Regulation O promulgated by the FRB.
The Company is studying the revisions to determine the impact on its operations, which is uncertain at this time. -19- Table of Contents USA PATRIOT Act The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) gives the federal government powers to address terrorist threats through domestic security measures, surveillance powers, information sharing, and anti-money laundering requirements.
The Company is studying the revisions to determine the impact on its operations, which is uncertain at this time. -20- Table of Contents USA PATRIOT Act The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) gives the federal government powers to address terrorist threats through domestic security measures, surveillance powers, information sharing, and anti-money laundering requirements.
We continuously assess any skill gaps and are gearing learning for the banking positions of the future. -11- Table of Contents SUPERVISION AND REGULATION The banking industry is highly regulated. Statutory and regulatory controls increase a bank holding company’s cost of doing business and limit the options of its management to deploy assets and maximize income.
We continuously assess any skill gaps and are gearing learning for the banking positions of the future. -12- Table of Contents SUPERVISION AND REGULATION The banking industry is highly regulated. Statutory and regulatory controls increase a bank holding company’s cost of doing business and limit the options of its management to deploy assets and maximize income.
We seek to hire and retain quality employees who desire greater responsibility than may be available working for a larger employer. -9- Table of Contents Human Capital The Company strives to be an employer of choice by creating a working environment that fosters excellence, creativity and professional growth.
We seek to hire and retain quality employees who desire greater responsibility than may be available working for a larger employer. -10- Table of Contents Human Capital The Company strives to be an employer of choice by creating a working environment that fosters excellence, creativity and professional growth.
The Company’s subsidiaries also include a Real Estate Investment Trust (the “REIT”) which holds a portion of the Company’s real estate loan portfolio. All subsidiaries mentioned above are directly or indirectly wholly owned by the Company, except that the Company indirectly owns less than 100% of the preferred stock of the REIT.
The Company’s subsidiaries also include two Real Estate Investment Trust (each, a “REIT”) each of which holds a portion of the Company’s real estate loan portfolio. All subsidiaries mentioned above are directly or indirectly wholly owned by the Company, except that the Company indirectly owns less than 100% of the preferred stock of each REIT.
All loan approvals require the signatures of a minimum of two officers. The Management Credit Committee (Bank President, Chief Credit Officer, Chief Lending Officer, two Senior Credit Officers and one Managing Director) can approve loans up to $80 million in aggregate loan exposure with no policy exceptions.
All loan approvals require the signatures of a minimum of two officers. The Management Credit Committee (Bank President, Chief Credit Officer, Chief Lending Officer, two Senior Credit Officers and one Managing Director) can approve loans up to $100 million in aggregate loan exposure with no policy exceptions.
Federal Deposit Insurance and Premiums The deposits of the Bank are insured up to applicable limits by the Deposit Insurance Fund (“DIF”) of the FDIC and are subject to deposit insurance assessments to maintain the DIF. The assessment base for deposit insurance premiums is an institution’s average consolidated total assets minus average tangible equity.
Federal Deposit Insurance and Premiums The deposits of the Bank are insured up to applicable limits by the DIF of the FDIC and are subject to deposit insurance assessments to maintain the DIF. The assessment base for deposit insurance premiums is an institution’s average consolidated total assets minus average tangible equity.
Furthermore, the Management Credit Committee has authority to approve unsecured loan amounts without policy exceptions up to $40 million. The Senior Lending Group (Chief Executive Officer, President, Chief Credit Officer and Chief Lending Officer) can approve loans up to $35 million in aggregate loan exposure with no policy exceptions and up to $30 million with policy exceptions.
Furthermore, the Management Credit Committee has authority to approve unsecured loan amounts without policy exceptions up to $40 million. The Senior Lending Group (Chief Executive Officer, President, Chief Credit Officer and Chief Lending Officer) can approve loans up to $40 million in aggregate loan exposure with no policy exceptions.
Additionally, the Dodd-Frank Act establishes a new framework for systemic risk oversight within the financial system to be distributed among new and existing federal regulatory agencies, including the Financial Stability Oversight Council, the FRB, the Office of the Comptroller of the Currency and the FDIC.
Additionally, the Dodd-Frank Act established a new framework for systemic risk oversight within the financial system to be distributed among new and existing federal regulatory agencies, including the Financial Stability Oversight Council, the FRB, the Office of the Comptroller of the Currency and the FDIC.
ConnectOne Bank is a high-performing commercial bank offering a full suite of deposit and loan products and services to the general public, primarily to small and mid-sized businesses, local professionals and individuals residing, working and conducting business in the New York Metropolitan area and the South Florida market served by our West Palm Beach office.
ConnectOne Bank is a high-performing commercial bank offering a full suite of deposit and loan products and services to the general public, primarily to small and mid-sized businesses, local professionals and individuals residing, working and conducting business in the New York Metropolitan area and the Florida market served by our West Palm Beach office and Orlando loan production office.
Classes include an ABA approved curriculum as well as other third party and Company proprietary courses; ● May take classes to attain job specific certifications to help with career development; ● May take continuing education classes related to other positions and operations at the Company; ● May take business related continuing education classes at partner community colleges and other institutions through a New Jersey State grant program; ● May participate in career mentoring programs in which employees meet with senior officers of the Company to discuss career development; and ● May participate in a tuition reimbursement program under which the Company will reimburse employees for up to $5,250 in tuition expenses related to approved business-related course work at any school.
Classes include an ABA approved curriculum as well as other third party and Company proprietary courses; ● May take classes to attain job specific certifications to help with career development; ● May take continuing education classes related to other positions and operations at the Company; ● May take business related continuing education classes at partner community colleges and other institutions; ● May participate in career mentoring programs in which employees meet with senior officers of the Company to discuss career development; and ● May participate in a tuition reimbursement program under which the Company will reimburse employees for up to $5,250 in tuition expenses related to approved business-related course work at any school.
Consumer loans are made to individuals who qualify for auto loans, cash reserve, credit cards and installment loans. -8- Table of Contents The Board of Directors has approved a credit policy granting designated lending authorities to the Management Credit Committee and specific officers of the Bank.
Consumer loans are made to individuals who qualify for auto loans, cash reserve, credit cards and installment loans. The Board of Directors has approved a credit policy granting designated lending authorities to the Management Credit Committee and specific officers of the Bank.
These regulatory policies could affect the ability of the Company to pay dividends or otherwise engage in capital distributions. -21- Table of Contents
These regulatory policies could affect the ability of the Company to pay dividends or otherwise engage in capital distributions. -22- Table of Contents
Through high tech tools and services, the Bank is able to extend its reach by supporting clients as they move into new markets, such as South Florida where we opened an office in West Palm Beach in August 2022. Our market area includes some of the most robust markets in the United States.
Through high tech tools and services, the Bank is able to extend its reach by supporting clients as they move into new markets, such as Florida where we opened an office in West Palm Beach in August 2022 and a loan production office in 2025. Our market area includes some of the most robust markets in the United States.
The REIT has issued less than 20% of its outstanding non-voting preferred stock to individuals, primarily Bank personnel and directors. -6- Table of Contents SEC Reports and Corporate Governance The Company makes its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments thereto available on its website at https://www.connectonebank.com without charge as soon as reasonably practicable after filing or furnishing them to the SEC.
Each REIT has issued non-voting preferred stock to individuals, primarily Bank personnel and directors and former personnel of FLIC. -6- Table of Contents SEC Reports and Corporate Governance The Company makes its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments thereto available on its website at https://www.connectonebank.com without charge as soon as reasonably practicable after filing or furnishing them to the SEC.
All such dividends are subject to the laws of the State of New Jersey, the Banking Act, the Federal Deposit Insurance Act (“FDIA”) and the regulations of the Banking Department and of the FDIC. Under the New Jersey Corporation Act, the Parent Corporation is permitted to pay cash dividends provided that the payment does not leave us insolvent.
All such dividends are subject to the laws of the State of New Jersey, the Banking Act, the FDIA and the regulations of the Banking Department and of the FDIC. Under the New Jersey Corporation Act, the Parent Corporation is permitted to pay cash dividends provided that the payment does not leave us insolvent.
Demographics : As of December 31, 2024, we had 489 full-time employees and 4 part-time and temporary employees. The employees are not represented by a collective bargaining unit. Education : We encourage and support the growth and development of our employees and, wherever possible, seek to fill positions by promotion and transfer from within the organization.
Demographics : As of December 31, 2025, we had 750 full-time employees and 6 part-time and temporary employees. The employees are not represented by a collective bargaining unit. Education : We encourage and support the growth and development of our employees and, wherever possible, seek to fill positions by promotion and transfer from within the organization.
The Bank has established wellness programs that include a Preventative Care Incentive Program, flu shot vaccination time-off, as well as health programs & service discounts. -10- Table of Contents Benefits & Employee Retention : We offer a wide variety of benefits and incentive rewards to attract, engage, retain and motivate talent.
The Bank has established wellness programs that include a Preventative Care Incentive Program, vaccination time-off, as well as health programs & service discounts. Benefits & Employee Retention; Employee Integration : We offer a wide variety of benefits and incentive rewards to attract, engage, retain and motivate talent.
As of December 31, 2024, the Bank’s largest committed relationship (to several affiliated borrowers) was $212.7 million, and the single largest loan outstanding was $64.0 million. Competition The banking business is highly competitive. We face substantial immediate competition and potential future competition both in attracting deposits and in originating loans.
As of December 31, 2025, the Bank’s largest committed relationship (to several affiliated borrowers) was $223.0 million, and the single largest loan outstanding was $88.0 million. Competition The banking business is highly competitive. We face substantial immediate competition and potential future competition both in attracting deposits and in originating loans.
As a bank holding company under the BHCA, we would be prohibited from paying cash dividends if we are not in compliance with any capital requirements applicable to us, including our required capital conservation buffer.
As a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHCA”), we would be prohibited from paying cash dividends if we are not in compliance with any capital requirements applicable to us, including our required capital conservation buffer.
The Company adopted the CECL standard effective January 1, 2021. On September 17, 2019, the federal banking agencies issued a final rule providing simplified capital requirements for certain community banking organizations (banks and holding companies) with less than $10 billion in total consolidated assets, implementing provisions of EGRRCPA discussed above.
On September 17, 2019, the federal banking agencies issued a final rule providing simplified capital requirements for certain community banking organizations (banks and holding companies) with less than $10 billion in total consolidated assets, implementing provisions of EGRRCPA discussed above.
Furthermore, the Senior Lending Group has authority to approve unsecured loan amounts without policy exceptions up to $10 million and up to $5 million with an exception. Loans to insiders must be approved by the entire Board of Directors. The Bank’s lending policies generally provide for lending within our primary trade area.
Furthermore, the Senior Lending Group has authority to approve unsecured loan amounts without policy exceptions up to $10 million. Loans to insiders must be approved by the entire Board of Directors. -9- Table of Contents The Bank’s lending policies generally provide for lending within our primary trade area.
The Dodd-Frank Act also authorizes the SEC to promulgate rules that would allow shareholders to nominate their own candidates using a company’s proxy materials, which the SEC has adopted. -13- Table of Contents Although a significant number of the rules and regulations mandated by the Dodd-Frank Act have been finalized, many of the requirements called for have yet to be fully implemented and will likely be subject to implementing regulations over the course of several years.
The Dodd-Frank Act also authorizes the SEC to promulgate rules that would allow shareholders to nominate their own candidates using a company’s proxy materials, which the SEC has adopted. -14- Table of Contents Although a significant number of the rules and regulations mandated by the Dodd-Frank Act have been finalized, many of the requirements called for have yet to be fully implemented and a number of the rules and regulations initially adopted have been revised.
The Bank’s legal lending limit to any one borrower is 15% of the Bank’s capital base (defined as tangible equity plus the allowance for credit losses) for most loans ($172.0 million) and 25% of the capital base for loans secured by readily marketable collateral ($286.7 million).
The Bank’s legal lending limit to any one borrower is 15% of the Bank’s capital base (defined as tangible equity plus the allowance for credit losses) for most loans totaling $237.9 million) and 25% of the capital base for loans secured by readily marketable collateral totaling $396.5 million).
In connection with adopting this assessment base calculation, the FDIC lowered total base assessment rates to between 2.5 and 9 basis points for banks in the lowest risk category, and 30 to 45 basis points for banks in the highest risk category. The Company paid $7.2 million and $5.7 million in total FDIC assessments in 2024 and 2023, respectively.
In connection with adopting this assessment base calculation, the FDIC lowered total base assessment rates to between 2.5 and 9 basis points for banks in the lowest risk category, and 30 to 45 basis points for banks in the highest risk category.
Historical Development of Business ConnectOne Bancorp, Inc., (the “Company” and with ConnectOne Bank, “we” or “us”) a one-bank holding company, was incorporated in the State of New Jersey on November 12, 1982 as Center Bancorp, Inc. and commenced operations on May 1, 1983 upon the acquisition of all outstanding shares of capital stock of Union Center National Bank, its then principal subsidiary.
ConnectOne Bancorp, Inc. assumes no obligation to update forward-looking statements at any time. -4- Table of Contents Historical Development of Business ConnectOne Bancorp, Inc., (the “Company” and with ConnectOne Bank, “we” or “us”) a one-bank holding company, was incorporated in the State of New Jersey on November 12, 1982 as Center Bancorp, Inc. and commenced operations on May 1, 1983 upon the acquisition of all outstanding shares of capital stock of Union Center National Bank, its then principal subsidiary.
The numerator of the CBLR is Tier 1 capital, as calculated under present rules. The denominator of the CBLR is the QCBO’s average assets, calculated in accordance with the QCBO’s Call Report instructions and less assets deducted from Tier 1 capital. The Company and the Bank have elected not to opt into the CBLR.
The numerator of the CBLR is Tier 1 capital, as calculated under present rules. The denominator of the CBLR is the QCBO’s average assets, calculated in accordance with the QCBO’s Call Report instructions and less assets deducted from Tier 1 capital.
Deposits serve as the primary source of funding for our interest-earning assets, but also generate noninterest revenue through insufficient funds fees, stop payment fees, wire transfer fees, safe deposit rental fees, debit card income, including foreign ATM fees and credit and debit card interchange, and other miscellaneous fees.
Unless certain conditions are satisfied, the FDIC considers these funds as brokered deposits. -8- Table of Contents Deposits serve as the primary source of funding for our interest-earning assets, but also generate noninterest revenue through insufficient funds fees, stop payment fees, wire transfer fees, safe deposit rental fees, debit card income, including foreign ATM fees and credit and debit card interchange, and other miscellaneous fees.
Given the uncertainty associated with the way the provisions of the Dodd-Frank Act will be implemented by the various regulatory agencies, the full extent of the impact such requirements will have on financial institutions’ operations is unclear.
See “Economic Growth, Regulatory Relief and Consumer Protection Act” below. Given the uncertainty associated with the way the provisions of the Dodd-Frank Act will be implemented by the various regulatory agencies in the future, the full extent of the impact such requirements will have on financial institutions’ operations is unclear.
The Dodd-Frank Act made permanent the $250,000 deposit insurance limit for insured deposits. Amendments to the Federal Deposit Insurance Act also revised the assessment base against which an insured depository institution’s deposit insurance premium paid to the Deposit Insurance Fund (“DIF”) will be calculated.
Amendments to the Federal Deposit Insurance Act ("FDIA") also revised the assessment base against which an insured depository institution’s deposit insurance premium paid to the Deposit Insurance Fund (“DIF”) will be calculated.
This occurs in increments of less than the FDIC insurance limits so that both the principal and interest are eligible for FDIC insurance coverage in amounts larger than the insured dollar amount. Unless certain conditions are satisfied, the FDIC considers these funds as brokered deposits.
This occurs in increments of less than the FDIC insurance limits so that both the principal and interest are eligible for FDIC insurance coverage in amounts larger than the standard insured dollar amount.
We offer consumer and commercial business loans on a secured and unsecured basis, revolving lines of credit, commercial mortgage loans, and residential mortgages on both primary and secondary residences, home equity loans, bridge loans and other personal purpose loans. However, we are not and have not historically been a participant in the sub-prime lending market.
We offer consumer and commercial business loans on a secured and unsecured basis, revolving lines of credit, commercial mortgage loans, and residential mortgages on both primary and secondary residences, home equity loans, bridge loans and other personal purpose loans.
Residential mortgages include loans secured by first liens on 1-4 family, 1-4 family investment properties, condominium and cooperative residential real estate and are generally made to existing clients of the Bank to purchase or refinance primary and secondary residences.
Residential mortgages include loans secured by first liens on 1-4 family, 1-4 family investment properties, condominium and cooperative residential real estate to purchase or refinance primary and secondary residences. Home equity loans and lines of credit include loans secured by first or second liens on residential real estate for primary or secondary residences.
Clients, who are Federal Deposit Insurance Corporation (“FDIC”) insurance sensitive, are able to place large dollar deposits with the Company and the Company utilizes CDARS to place those funds into certificates of deposit issued by other banks in the Network.
Through these networks, Clients are able to place large dollar deposits with the Company and the Company utilizes or will utilize CDARS and/or NBID to place those funds into certificates of deposit issued by other banks in the respective networks.
The FDIC Board of Directors approved a final rule to implement a special assessment to recover the loss to the Deposit Insurance Fund (DIF) associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.
The FDIC Board of Directors approved a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. The FDIA requires the FDIC to take this action in connection with the systemic risk determination announced on March 12, 2023.
On May 31, 2019, the Company, through the Bank, completed its purchase of all of the assets of New York/Boston-based BoeFly, LLC and contributed them to its newly formed subsidiary, BoeFly, Inc (“BoeFly”). BoeFly’s online business lending marketplace helps connect small- to medium-size businesses, primarily franchisors and franchisees, with professional loan brokers and lenders across the United States.
On May 31, 2019, the Company, through the Bank, completed its purchase of all of the assets of New York/Boston-based BoeFly, LLC and contributed them to its newly formed subsidiary, BoeFly, Inc (“BoeFly”). BoeFly is the Bank’s business-to-business fintech subsidiary, providing a marketplace that connects franchisors, franchisees, and lenders.
Also available on the website is the Company’s corporate Code of Conduct that applies to all of the Company’s employees, including principal officers and directors.
Also available on the website is the Company’s corporate Code of Conduct that applies to all of the Company’s employees, including principal officers and directors. In addition, the Investor Relations section of the Company’s website provides access to our primary governance documents, including charters for the Audit, Risk, Nominating and Corporate Governance, and Compensation Committees.
The increase in 2024 was attributable to additional premiums paid in 2024 related to the FDIC special assessment. -17- Table of Contents The FDIC has a designated reserve ratio (DRR), that is, the ratio of the DIF to insured deposits, of 1.35%.
The Company paid $8.6 million and $7.2 million in total FDIC assessments in 2025 and 2024, respectively. -18- Table of Contents The FDIC has a designated reserve ratio (DRR), that is, the ratio of the DIF to insured deposits, of 1.35%.
The Company will provide, without charge, a copy of its Annual Report on Form 10-K to any shareholder by mail. Requests should be sent to: ConnectOne Bancorp, Inc. Attention: Investor Relations 301 Sylvan Avenue Englewood Cliffs, New Jersey 07632 Narrative Description of the Business ConnectOne Bancorp, Inc. is a modern financial services company with $9.880 billion in assets.
Attention: Investor Relations 301 Sylvan Avenue Englewood Cliffs, New Jersey 07632 Narrative Description of the Business ConnectOne Bancorp, Inc. is a modern financial services company with $14.0 billion in assets. It operates primarily through its bank subsidiary, ConnectOne Bank.
The Bank encourages a work/life balance by offering hybrid scheduling that combines working remotely, as well as the ability to work out of our offices. Promotions: We focus on promoting employees from within and leveraging their knowledge of the organization as we continue to grow our Bank. In 2024, 71 employees were promoted into new roles.
We were successful in integrating these new employees, which increased our employee base by approximately 28%. Promotions: We focus on promoting employees from within and leveraging their knowledge of the organization as we continue to grow our Bank. In 2025, 96 employees were promoted into new roles.
On September 4, 2024, the Company entered into an Agreement and Plan of Merger with The First of Long Island Corporation (“FLIC"), the holding company for the First National Bank of Long Island (“FNBLI”).
On June 1, 2025 (the “Acquisition Date”), the Company completed the acquisition of The First of Long Island Corporation (“FLIC”), the parent company for The First National Bank of Long Island (“FNBLI”), in accordance with the definitive Agreement and Plan of Merger dated as of September 4, 2024 (the “Merger Agreement”).
Many of our deposit products can be accessed through both our branches and online to provide ease of access to our clients and communities. CDARS/ICS reciprocal deposits are offered based on the Bank’s participation in the IntraFi Network LLC ("the network"), formerly known as Promontory Interfinancial Network.
Many of our deposit products can be accessed through both our branches and online to provide ease of access to our clients and communities.
BoeFly operates as an independent brand and subsidiary of the Bank. -5- Table of Contents On January 2, 2020, the Company completed its in-market merger with Bergen County, New Jersey based Bancorp of New Jersey, Inc.
The platform utilizes proprietary technology for franchisee applicant vetting and facilitates efficient access to capital by referring qualified loan opportunities to both the Bank and an expanded network of external referral partners. -5- Table of Contents On January 2, 2020, the Company completed its in-market merger with Bergen County, New Jersey based Bancorp of New Jersey, Inc.
The merger, which is subject to receipt of all required regulatory approvals, is expected to close during the first or second calendar quarter of 2025. The Company’s primary activity, at this time, is to act as a holding company for the Bank and its other subsidiaries.
As part of this merger, the Company acquired 36 branch offices located in Nassau and Suffolk Counties of Long Island, and the boroughs of New York City. The Company’s primary activity, at this time, is to act as a holding company for the Bank and its other subsidiaries.
Removed
ConnectOne Bancorp, Inc. assumes no obligation to update forward-looking statements at any time.
Added
Pursuant to the Merger Agreement, on the Acquisition Date, FLIC merged with and into the Company, with the Company continuing as the surviving corporation, and FNBLI merged with and into the Bank, with the Bank as the surviving bank (collectively, the “merger”).
Removed
Under the agreement, FLIC will merge with and into the Company, with the Company as the surviving entity, and FNBLI will merge with and into ConnectOne Bank, with ConnectOne Bank as the surviving bank. FNBLI is a Melville, New York headquartered national bank serving Nassau and Suffolk Counties on Long Island and New York City through 37 branches.
Added
Also available are the Company’s Corporate Governance Guidelines, Code of Ethics, and key policies regarding Compensation Recoupment, Anti-Harassment & Discrimination, and Equal Employment Opportunity. The Company will provide, without charge, a copy of its Annual Report on Form 10-K to any shareholder by mail. Requests should be sent to: ConnectOne Bancorp, Inc.
Removed
On February 14, 2025, at separate special meetings, the shareholders of both companies approved proposals relating to the pending merger of the Company and FLIC. As of December 31, 2024, FLIC had total assets of $4.1 billion and total deposits of $3.3 billion.
Added
For clients that are Federal Deposit Insurance Corporation (“FDIC”) insurance sensitive, we participate in the IntraFi Network LLC, formerly known as the Promontory Interfinancial Network, and, to a lesser extent the National Bank InterDeposit Company (“NBID”) network, which is operated by ModernFi .
Removed
Additionally, within the Investor Relations section of the Company’s web site, charters for the Audit and Risk Committee, Nominating and Corporate Governance Committee and Compensation Committee can be found, along with the Company’s Corporate Governance Guidelines, Equal Employment Opportunity and Right to be Free of Gender Inequity 2022, Anti-Harassment & Discrimination Policy, Compensation Recoupment Policy and Code of Ethics.
Added
As part of a strategic initiative to grow our residential portfolio and increase our volume of loan sales, the Company is building an enhanced lending team focused on originating loans secured by 1-4 family properties and investing in technology to support those efforts. However, we are not and have not historically been a participant in the sub-prime lending market.
Removed
It operates primarily through its bank subsidiary, ConnectOne Bank.
Added
During 2025, 210 employees participated in our leadership and mentoring programs within ConnectOne University. Through ConnectOne University, we also sponsor two employees each year to attend the Stonier Graduate School of Banking.
Removed
Home equity loans and lines of credit include loans secured by first or second liens on residential real estate for primary or secondary residences.
Added
This is a competitive process requiring an employee to be nominated by the employee’s manager and then participate in a panel interview. ● We offer our employees a full benefits program, including health insurance, flexible spending accounts, a 401(k) plan with the Company matching employee contributions up to 5.0% of the employee’s compensation or $17,250, whichever is lower, and an employee discount program under which our employees get discounts at various retailers and service providers. ● We request employee feedback and concerns through our annual Employment Engagement Survey.
Removed
During 2024, ConnectOne University continued to drive professional development and growth across the organization. Key achievements included delivering comprehensive job skills and cybersecurity training, advancing leadership skills for 125 managers, and sponsoring professional certifications and graduate-level education for employees through programs like the ABA Stonier Graduate School of Banking and the ABA Commercial Lending School.
Added
The results of this survey are presented to our senior management group for the identification of action items to be implemented. During 2025, approximately 94% of our employees participated in the Engagement Survey. -11- Table of Contents Health and Safety : The safety, health and well-being of our employees is a top priority.
Removed
Additionally, approximately 300 employees participated in culture programs, reinforcing our shared values, while the Company supported advanced education through tuition reimbursement for eligible coursework. These efforts reflect our commitment to fostering a culture of continuous learning and development. Health and Safety : The safety, health and well-being of our employees is a top priority.
Added
The Bank encourages a work/life balance by offering hybrid scheduling that combines working remotely, as well as the ability to work out of our offices. In connection with our merger with FLIC, 206 FLIC employees, the overwhelming majority of FLIC employees, joined us effective June 1, 2025.
Removed
Although the Bank currently has less than $10 billion in assets and so is not subject to examination by the Bureau, the Bank will exceed $10 billion in assets upon consummation of its merger with The First National Bank of Long Island, and even without the merger it is likely that the Bank will exceed $10 billion in total assets in the foreseeable future, and so will become subject to examination by the Bureau. • Deposit Insurance.
Added
Both prior to the closing of the transaction and immediately after the closing of the transaction, we undertook extensive efforts to integrate the former FLIC employees, including extensive education and training programs, mentorship programs and pairing former FLIC employees with CNOB navigators to assist with their transition to employment with CNOB.
Removed
In addition, some of the requirements of the Dodd-Frank Act that were implemented have already been revised. See “Economic Growth, Regulatory Relief and Consumer Protection Act” below.
Added
During 2025, the Trump Administration declined to request funding for the Bureau from the FRB and has significantly scaled back its operations. These actions have been subject to litigation, which is ongoing. In light of this, the future role of the Bureau is uncertain. • Deposit Insurance. The Dodd-Frank Act made permanent the $250,000 deposit insurance limit for insured deposits.
Removed
In December 2018, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ implementation of ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”).
Added
The Company and the Bank did not elect to opt into the CBLR, and as a result of the FLIC merger are no longer eligible to utilize the CBLR.
Removed
The Federal Deposit Insurance Act (FDI Act) requires the FDIC to take this action in connection with the systemic risk determination announced on March 12, 2023.
Removed
The Company accrued $2.1 million as of December 31, 2023 related to this special assessment.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

32 edited+13 added−50 removed83 unchanged
Biggest changeIn order to continue our growth, we will be required to maintain our regulatory capital ratios at levels higher than the minimum ratios set by our regulators. We can offer you no assurances that we will be able to raise capital in the future, or that the terms of any such capital will be beneficial to our existing security holders.
Biggest changeWe can offer you no assurances that we will be able to raise capital in the future, or that the terms of any such capital will be beneficial to our existing security holders. In the event we are unable to raise capital in the future, we may not be able to continue our growth strategy.
Any increase in late payments or defaults by our borrowers due to increases in the interest rates applicable to their loans could adversely affect our asset quality and results of operations. -24- Table of Contents The small-to medium-sized businesses that the Bank lends to may have fewer resources to weather a downturn in the economy, which may impair a borrower ’ s ability to repay a loan to the Bank that could materially harm our operating results.
Any increase in late payments or defaults by our borrowers due to increases in the interest rates applicable to their loans could adversely affect our asset quality and results of operations. -25- Table of Contents The small to medium-sized businesses that the Bank lends to may have fewer resources to weather a downturn in the economy, which may impair a borrower ’ s ability to repay a loan to the Bank that could materially harm our operating results.
To be successful as a larger institution, we must successfully integrate the operations and retain the clients of acquired institutions, attract and retain the management required to successfully manage larger operations, and control costs.
To be successful as a larger institution, we must effectively integrate the operations and retain the clients of acquired institutions, attract and retain the management required to successfully manage larger operations, and control costs.
In addition, in recent periods we have substantially increased our use of alternative deposit origination channels, such as brokered deposits, including reciprocal deposit services, and internet listing services. -26- Table of Contents Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the financial services industry in general.
In addition, in recent periods we have substantially increased our use of alternative deposit origination channels, such as brokered deposits, including reciprocal deposit services, and internet listing services. -28- Table of Contents Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the financial services industry in general.
In that case, the trading price of our securities may decline, and stockholders may lose part or all of their investment in our securities. -22- Table of Contents Risks Applicable to Our Business: Our growth-oriented business strategy could be adversely affected if we are not able to attract and retain skilled employees or if we lose the services of our senior management team.
In that case, the trading price of our securities may decline, and stockholders may lose part or all of their investment in our securities. -23- Table of Contents Risks Applicable to Our Business: Our growth-oriented business strategy could be adversely affected if we are not able to attract and retain skilled employees or if we lose the services of our senior management team.
Therefore, unless all dividends due on our outstanding preferred stock have been declared and paid for the most recent dividend period provided for under the terms of the preferred stock, we may not pay a dividend on our common stock or repurchase shares of our common stock during that period. -27- Table of Contents We may incur impairment to goodwill.
Therefore, unless all dividends due on our outstanding preferred stock have been declared and paid for the most recent dividend period provided for under the terms of the preferred stock, we may not pay a dividend on our common stock or repurchase shares of our common stock during that period. -29- Table of Contents We may incur impairment to goodwill.
Our New York State multifamily loan portfolio could be adversely impacted by changes in legislation or regulation which, in turn, could have a material adverse effect on our financial condition and results of operations. We have a significant portfolio of loans secured by multi family properties located in New York.
Our New York State multifamily loan portfolio could be adversely impacted by changes in legislation or regulation which, in turn, could have a material adverse effect on our financial condition and results of operations. We have a significant portfolio of loans secured by multifamily properties located in New York.
Any of these events could increase our costs, require management time and attention, and materially and adversely affect us. -23- Table of Contents Federal banking agencies have issued guidance regarding high concentrations of commercial real estate loans within bank loan portfolios.
Any of these events could increase our costs, require management time and attention, and materially and adversely affect us. -24- Table of Contents Federal banking agencies have issued guidance regarding high concentrations of commercial real estate loans within bank loan portfolios.
No assurance can be given that we will be able to raise any required capital, or that we will be able to raise capital on terms that are beneficial to stockholders. -28- Table of Contents Attractive acquisition opportunities may not be available to us in the future.
No assurance can be given that we will be able to raise any required capital, or that we will be able to raise capital on terms that are beneficial to stockholders. -30- Table of Contents Attractive acquisition opportunities may not be available to us in the future.
A significant portion of our loan portfolio has interest rates that will reset over the next 24 months. In addition, a significant portion of our portfolio will mature over the next 24 months. Applicable increases in interest rates could harm our borrowers ’ abilities to repay their loans.
A significant portion of our loan portfolio has interest rates that will reset over the next 24 months. Applicable increases in interest rates could harm our borrowers ’ abilities to repay their loans.
The financial services market, including banking services, is increasingly affected by advances in technology, including developments in: ● Telecommunications; ● Data processing; ● Automation; ● Internet-based banking, including personal computers, mobile phones and tablets; ● Debit cards and so-called “smart cards”; ● Remote deposit capture; ● Artificial Intelligence; ● Cryptocurrency; and ● Use of Blockchain.
The financial services market, including banking services, is increasingly affected by advances in technology, including developments in: ● Telecommunications; ● Data processing; ● Automation; ● Internet-based banking, including personal computers, mobile phones and tablets; ● Debit cards and so-called “smart cards”; ● Remote deposit capture; ● Artificial Intelligence; ● Cryptocurrency; ● Blockchain; and ● Stablecoins.
The federal and state laws and regulations applicable to our operations give regulatory authorities extensive discretion in connection with their supervisory and enforcement responsibilities, and generally have been promulgated to protect depositors and the Deposit Insurance Fund and not for the purpose of protecting shareholders. These laws and regulations can materially affect our future business.
The federal and state laws and regulations applicable to our operations give regulatory authorities extensive discretion in connection with their supervisory and enforcement responsibilities and generally have been promulgated to protect depositors and the DIF and not for the purpose of protecting shareholders. These laws and regulations can materially affect our future business.
As a result, the value of the collateral located in New York State securing the Company’s multi family loans or the future net operating income of such properties could potentially become impaired which, in turn, could have a material adverse effect on our financial condition and results of operations.
As a result, the value of the collateral located in New York State and New York City securing the Company’s multifamily loans or the future net operating income of such properties could potentially become impaired which, in turn, could have a material adverse effect on our financial condition and results of operations.
These provisions, as well as any other aspects of current or proposed regulatory or legislative changes to laws applicable to the financial industry, may impact the profitability of our business activities and may change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans, and achieve satisfactory interest spreads, and could expose us to additional costs, including increased compliance costs.
Current or proposed regulatory or legislative changes to laws applicable to the financial industry, as well as future legal and regulatory changes, may impact the profitability of our business activities and may change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans, and achieve satisfactory interest spreads, and could expose us to additional costs, including increased compliance costs.
The ultimate effect of certain of these changes on the financial services industry in general, and us in particular, is uncertain at this time. -34- Table of Contents The laws that regulate our operations are designed for the protection of depositors and the public, not our shareholders.
The ultimate effect of certain of these changes on the financial services industry in general, and us in particular, is uncertain. -33- Table of Contents The laws that regulate our operations are designed for the protection of depositors and the public, not our shareholders.
Generally, these loans currently bear interest at rates that are lower than current market rates, as these loans were predominately originated in 2020 and 2021, and so these borrowers will experience an increase in the interest rates applicable to their loans, which in some cases will be significant.
Generally, these loans currently bear interest at rates that are lower than current market rates, and so these borrowers will experience an increase in the interest rates applicable to their loans, which in some cases will be significant.
Any significant failure to pay on time by our clients or a significant default by our clients would materially and adversely affect us. As of December 31, 2024, we had $6.3 billion of commercial real estate loans (nonowner-occupied, owner-occupied, multifamily and land), including construction loans, which represented 76.2% of loans receivable.
Any significant failure to pay on time by our clients or a significant default by our clients would materially and adversely affect us. As of December 31, 2025, we had $8.1 billion of commercial real estate loans (nonowner-occupied, owner-occupied, multifamily and land), including construction loans, which represented 70.3% of loans receivable.
Based on this regulatory definition, our commercial real estate loans represented 435% of the Bank’s Tier 1 capital plus the allowance for credit losses on loans.
Based on this regulatory definition, our commercial real estate loans represented 434% of the Bank’s Tier 1 capital plus the allowance for credit losses on loans at December 31, 2025.
Declines in the value of our investment securities portfolio may adversely impact our results. As of December 31, 2024, we had approximately $612.8 million in fair value of investment securities, all of which are classified as available-for-sale.
Declines in the value of our investment securities portfolio may adversely impact our results. As of December 31, 2025, we had approximately $1.3 billion in fair value of investment securities, all of which are classified as available-for-sale.
This competition currently comes principally from other banks, savings institutions, mortgage banking companies, credit unions and other lenders, including online “fintech” companies.
We face substantial competition in originating loans. This competition currently comes principally from other banks, savings institutions, mortgage banking companies, credit unions and other lenders, including online “fintech” companies.
Many other factors, including the exchange rate for the U.S. dollar, potential international trade tariffs, inflation and changes in federal tax laws affecting the deductibility of state and local taxes and mortgage interest could negatively impact our local economy and real estate market.
Many other factors, including the exchange rate for the U.S. dollar, potential international trade tariffs, inflation and changes in federal tax laws affecting the deductibility of state and local taxes and mortgage interest and new legal or regulatory requirements impacting New York City rent regulated multifamily properties could negatively impact our local economy and real estate market.
Any such charge could have a material adverse effect on our results of operations. We have grown and may continue to grow through acquisitions. Since January 1, 2019, we have acquired GHB, BoeFly and BNJ and entered into an agreement to acquire FLIC (First of Long Island Corp.), the consummation of which is pending regulatory approval.
Any such charge could have a material adverse effect on our results of operations. We have grown and may continue to grow through acquisitions. Since January 1, 2019, we have acquired GHB, BoeFly, BNJ and FLIC (First of Long Island Corp.).
As a result, such non-bank competitors may have advantages over us in providing certain products and services. This competition may reduce or limit our margins on banking services, reduce our market share and adversely affect our earnings and financial condition.
Some of our non-bank competitors are not subject to the same extensive regulations that govern our operations. As a result, such non-bank competitors may have advantages over us in providing certain products and services. This competition may reduce or limit our margins on banking services, reduce our market share and adversely affect our earnings and financial condition.
We also attempt to manage risk from changes in market interest rates, in part, by controlling the mix of interest rate sensitive assets and interest rate sensitive liabilities. However, interest rate risk management techniques are not exact. A rapid increase or decrease in interest rates could adversely affect our results of operations and financial performance.
We also attempt to manage risk from changes in market interest rates, in part, by controlling the mix of interest rate sensitive assets and interest rate sensitive liabilities. However, interest rate risk management techniques are not exact.
Our management cannot predict what effect any such future modifications will have on our operations. In addition, the primary focus of Federal and state banking regulation is the protection of depositors and not the shareholders of the regulated institutions. For example, implementation of all required regulations under the Dodd-Frank Act may result in substantial new compliance costs.
Our management cannot predict what effect any such future modifications will have on our operations. In addition, the primary focus of federal and state banking regulation is the protection of depositors and not the shareholders of the regulated institutions.
Economic downturns and other events that negatively impact our market areas could cause the Bank to incur substantial credit losses that could negatively affect our results of operations and financial condition. Our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance.
Economic downturns and other events that negatively impact our market areas could cause the Bank to incur substantial credit losses that could negatively affect our results of operations and financial condition. The development and use of artificial intelligence ( “ AI ” ) present risks and challenges that may adversely impact our business.
Consequently, it may be difficult and expensive for our stockholders to remove current management, even if current management is not performing adequately. -25- Table of Contents Competition in originating loans and attracting deposits may adversely affect our profitability. We face substantial competition in originating loans.
Anti-takeover provisions in our corporate documents and in New Jersey law may render the removal of our existing board of directors and management more difficult. Consequently, it may be difficult and expensive for our stockholders to remove current management, even if current management is not performing adequately. Competition in originating loans and attracting deposits may adversely affect our profitability.
As of December 31, 2024, a significant portion of our loan portfolio bears interest at rates that will reset during 2025 and 2026.
As of December 31, 2025, a significant portion of our loan portfolio, approximately $2.4 billion, primarily originated during the low-interest-rate environment of 2021 and 2022, bears interest at rate that will reset during 2026 and 2027.
However, if the program significantly tightens the nation’s money supply, it may adversely affect our results of operations and financial performance. -33- Table of Contents The banking business is subject to significant government regulations. We are subject to extensive governmental supervision, regulation and control.
A rapid increase or decrease in interest rates could adversely affect our results of operations and financial performance. -32- Table of Contents The banking business is subject to significant government regulations. We are subject to extensive governmental supervision, regulation and control.
In the event we are unable to raise capital in the future, we may not be able to continue our growth strategy. We have a significant concentration in commercial real estate loans. Our loan portfolio is made up largely of commercial real estate loans.
We have a significant concentration in commercial real estate loans. Our loan portfolio is made up largely of commercial real estate loans.
We also compete with non-bank providers of financial services, such as brokerage firms, consumer finance companies, insurance companies and governmental organizations, which may offer more favorable terms. Some of our non-bank competitors are not subject to the same extensive regulations that govern our operations.
Increased deposit competition could adversely affect our ability to generate the funds necessary for lending operations, which may increase our cost of funds. -27- Table of Contents We also compete with non-bank providers of financial services, such as brokerage firms, consumer finance companies, insurance companies and governmental organizations, which may offer more favorable terms.
Finally, health related events, such as a viral pandemic, could adversely affect the business of our clients and our local economies, thereby adversely affecting our results of operations. The Company will be subject to heightened regulatory requirements when total assets exceed $10 billion. The Company’s total assets were $9.880 billion as of December 31, 2024.
Finally, health related events, such as a viral pandemic, could adversely affect the business of our clients and our local economies, thereby adversely affecting our results of operations. -31- Table of Contents Risks Applicable to the Banking Industry Generally: Our allowance for credit losses may not be adequate to cover actual losses.
Removed
In addition, a significant portion of our loan portfolio matures in 2025 and 2026. For loans that are maturing, borrowers will either need to refinance these loans, with the Bank or with another financial institution, or pay these loans off using other sources of funds.
Added
In order to continue our growth, we will be required to maintain our regulatory capital ratios at levels higher than the minimum ratios set by our regulators. For example, in connection with our merger with FLIC, we raised $200 million of capital through the issuance of subordinated debt.
Removed
Any increase in late payments or defaults by our borrowers due to increases in the interest rates applicable to their loans could adversely affect our asset quality and results of operations.
Added
In addition, the new mayoral administration in New York City has discussed policies which would further limit or eliminate rent increases and make tenant evictions more difficult.
Removed
An increase in interest rates applicable to their loans may negatively impact our borrowers, increasing their costs and potentially making it more difficult for them to continue to perform under their loan agreements.
Added
We have begun and intend to continue to selectively incorporate AI technology in certain business processes, fraud detections, services or products, including technologies that process sensitive financial and/or personal data. We have also selectively employed AI technologies to assist in drafting standardized documents and communications, and to search information on the internet.
Removed
Anti-takeover provisions in our corporate documents and in New Jersey law may render the removal of our existing board of directors and management more difficult.
Added
Furthermore, our third-party vendors, clients or counterparties may develop or incorporate AI technology into their business processes, services or products. The development and use of AI present a number of risks and challenges to our business.
Removed
We have also been active in competing for New York and New Jersey governmental and municipal deposits. As of December 31, 2024, governmental and municipal deposits accounted for approximately $1.1 billion in deposits.
Added
The legal and regulatory environment relating to AI is uncertain and rapidly evolving at both the state and federal level, and includes regulation targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment and other laws applicable to the use of AI.
Removed
The governor of New Jersey has proposed that the state form and own a bank in which governmental and municipal entities would deposit their excess funds, with the state-owned bank then financing small businesses and municipal projects in New Jersey.
Added
These evolving laws and regulations could require changes in our implementation of AI technology and increase our compliance costs and the risk of non-compliance, including in relation to data privacy and security requirements under laws such as the Gramm-Leach-Bliley-Act (“GLBA”), which mandates the protection of consumer financial information.
Removed
Although this proposal has not advanced, should this proposal be adopted and a state-owned bank formed, it could impede our ability to attract and retain governmental and municipal deposits. Increased deposit competition could adversely affect our ability to generate the funds necessary for lending operations, which may increase our cost of funds.
Added
AI models, particularly generative AI models, may produce output or decisions or take action that is incorrect, that results in the release of private, confidential or proprietary information, that reflects biases included in the data on which they are trained or that are inherent in their algorithms, that produces output that is, or is perceived to be, discriminatory or unfair, that infringes on the intellectual property rights of others, or that is otherwise harmful.
Removed
Upon consummation of the FLIC merger, our assets will be substantially in excess of $10 billion.
Added
While we have policies and governance structures prohibiting our employees from using non-approved generative AI applications or websites on the Company or the Bank’s network or devices, there can be no assurances that our employees will adhere to these policies or that such policies and governance structures will be effective in mitigating the risks associated with using AI technology.
Removed
Banks with assets in excess of $10 billion are subject to requirements imposed by the Dodd-Frank Act and its implementing regulations, including: the examination authority of the Consumer Financial Protection Bureau to assess compliance with Federal consumer financial laws, imposition of higher FDIC premiums, and reduced debit card interchange fees, all of which increase operating costs and reduce earnings.
Added
Since personally identifiable or nonpublic information may be used with AI applications, there is a risk that these technologies generate output that improperly discloses such personally identifiable or nonpublic information.
Removed
As the Company has approached $10 billion in total consolidated assets, additional costs have been incurred to prepare for the implementation of these imposed requirements. The Company may be required to invest more significant management attention and resources to evaluate and continue to make any changes necessary to comply with the new statutory and regulatory requirements under the Dodd-Frank Act.
Added
The use of personally identifiable or nonpublic information could result in a violation of certain laws, including data privacy laws and the data privacy and security requirements of the GLBA, exposing us to legal liability or regulatory penalties. In addition, the complexity of many AI models makes it challenging to understand why they are generating particular outputs.
Removed
Any failure of the Company to meet these requirements may negatively impact results of operations and financial condition. Risks Applicable to our Proposed Merger with FLIC Shareholders of ConnectOne will have less influence as shareholders of the combined company than as a shareholder of ConnectOne prior to the completion of the merger.
Added
This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, ensuring adherence to our privacy policies, reducing erroneous output, eliminating bias and discrimination and complying with regulations that require documentation or explanation of the basis on which decisions are made.
Removed
The shareholders of ConnectOne will experience a decline in their influence over the resulting entity in the merger. Presently, ConnectOne shareholders have the right to control ConnectOne through their ability to elect the board of directors of ConnectOne and to vote on other matters affecting ConnectOne.
Added
Further, we may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models, and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which we may have limited visibility.
Removed
As a result of the merger, the existing shareholders of ConnectOne will own approximately 76% of the combined company’s outstanding common stock.
Added
Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures, which could have an adverse effect on our business, financial condition or results of operations. -26- Table of Contents Our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance.
Removed
Consequently, while the existing shareholders of ConnectOne will continue to own a majority of the outstanding shares of the combined company and thus will continue to have the ability to control the vote on most matters submitted to the shareholders of the combined company, the extent of the existing ConnectOne shareholders’ influence over the management and policies of the combined company will be less than their current influence over the management and policies of ConnectOne. -29- Table of Contents Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the Merger.
Removed
Before the merger and the bank merger may be completed, ConnectOne and FLIC must obtain approvals from, or provide notice to, the Federal Reserve Board, the FDIC and the New Jersey Department of Banking and Insurance. Other approvals, waivers or consents from regulators may also be required.
Removed
In determining whether to grant these approvals the regulators consider a variety of factors. An adverse development in either party’s regulatory standing or these factors could result in an inability to obtain approvals or delay their receipt.
Removed
These regulators may impose conditions on the completion of the holding company merger or the bank merger or require changes to the terms of the merger or the bank merger.
Removed
Such conditions or changes could have the effect of delaying or preventing completion of the merger or the bank merger or imposing additional costs on or limiting the revenues of the combined company following the merger and the bank merger, any of which might have an adverse effect on the combined company following the merger.
Removed
ConnectOne may need to raise additional capital in connection with the merger. In order to further support the capital ratios of the combined entity, ConnectOne expects that it will raise additional capital as part of the transaction.
Removed
Under the terms of the merger agreement, ConnectOne has agreed that it would raise up to $200 million in new capital if required to obtain any necessary regulatory approval. The actual amount of capital to be raised, the timing, and the type of securities to be issued by ConnectOne to raise such capital, have not yet been determined.
Removed
We can offer you no assurances that ConnectOne will be able to raise additional capital in connection with the merger. If ConnectOne is unable to raise additional capital, it may negatively impact ConnectOne’s ability to obtain necessary regulatory approvals for the merger. Failure to complete the merger could severely disadvantage ConnectOne.
Removed
Completion of the merger is subject to the satisfaction or waiver of a number of conditions. ConnectOne or FLIC cannot guarantee when or if these conditions will be satisfied or that the merger will be successfully completed.
Removed
The consummation of the merger may be delayed, the merger may be consummated on terms different than those contemplated by the merger agreement, or the merger may not be consummated at all.
Removed
If the merger is not completed, the ongoing business of ConnectOne may be adversely affected, and ConnectOne will be subject to several risks, including the following: ● ConnectOne could incur substantial costs relating to the proposed merger, such as legal, accounting, financial advisor, filing, printing and mailing fees; and ● ConnectOne’s management’s and employees’ attention may be diverted from their day-to-day business and operational matters as a result of efforts relating to the attempt to consummate the merger.
Removed
In addition, if the merger is not completed, ConnectOne may experience negative reactions from the financial markets and from its customers and employees. ConnectOne also could be subject to litigation related to any failure to complete the merger or to enforcement proceedings commenced against ConnectOne to perform its obligations under the merger agreement.
Removed
If the merger is not completed, ConnectOne cannot assure shareholders that the risks described above will not materialize and will not materially affect the stock price and business and financial results of ConnectOne. The expected benefits of the merger may not be realized if the combined company does not achieve cost savings and other benefits.
Removed
The expectation by the management teams of ConnectOne and FLIC that cost savings and revenue enhancements are achievable is a forward-looking statement that is inherently uncertain. The combined company’s actual cost savings and revenue enhancements, if any, cannot be quantified at this time.
Removed
Any actual cost savings or revenue enhancements will depend on future expense levels and operating results, the timing of certain events and general industry, regulatory and business conditions. Many of these events will be beyond the control of the combined company. -30- Table of Contents ConnectOne will be subject to business uncertainties and contractual restrictions, while the merger is pending.
Removed
Uncertainty about the effect of the merger on employees and customers may have an adverse effect on ConnectOne. These uncertainties may impair ConnectOne’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with ConnectOne to seek to change existing business relationships with ConnectOne.
Removed
Retention of certain employees by ConnectOne may be challenging while the merger is pending, as certain employees may experience uncertainty about their future roles with ConnectOne. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with ConnectOne, ConnectOne’s business could be harmed.
Removed
In addition, subject to certain exceptions, ConnectOne has agreed to operate its business in the ordinary course, consistent with past practices, prior to closing. This could prohibit ConnectOne from taking advantage of a new business opportunity prior to consummation of the merger.
Removed
Shareholder litigation could prevent or delay the completion of the merger or otherwise negatively impact the business and operations of ConnectOne. ConnectOne shareholders and/or FLIC shareholders may file lawsuits against ConnectOne, FLIC and/or the directors and officers of either company in connection with the merger.
Removed
If any plaintiff were successful in obtaining an injunction prohibiting ConnectOne or FLIC from completing the merger or any of the other transactions contemplated by the merger agreement, then such injunction may delay or prevent the effectiveness of the merger and could result in significant costs to ConnectOne, including any cost associated with the indemnification of directors and officers or the defense or settlement of any shareholder lawsuits filed in connection with the merger.
Removed
Such litigation could have an adverse effect on the consolidated financial condition and consolidated results of operations of ConnectOne and could prevent or delay the completion of the merger. The combined company may be unable to retain ConnectOne and/or FLIC personnel successfully after the merger is completed.
Removed
The success of the merger will depend in part on the combined company’s ability to retain the talents and dedication of key employees currently employed by ConnectOne and FLIC.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The Bank operates six banking offices in Bergen County, NJ, in Fort Lee, Englewood Cliffs, Hackensack, Cresskill, Ridgewood and Saddle River; four banking offices in Union County, NJ, consisting of two offices in Union Township, and one office each in Springfield Township, and Summit; one banking office in Morristown in Morris County, NJ; one office in Newark in Essex County, NJ; one office in West New York in Hudson County, NJ; one office in Holmdel in Monmouth County, NJ; one banking office in the borough of Manhattan in New York City, one office in Melville, Nassau County and one office in East Hampton, Suffolk County in Long Island, one in Astoria, Queens and five branches in the Hudson Valley, including in White Plains and Tarrytown, in Westchester County, NY, Bardonia and Blauvelt, in Rockland County, NY and in Middletown, in Orange County, NY, and one financial center in West Palm Beach in Palm Beach County, FL.
Biggest changeProperties The Bank operates a total of 59 banking offices in Bergen County, Essex County, Hudson County, Monmouth County, Morris County, and Union County, New Jersey; in the Boroughs of Manhattan and Queens, in New York City; in Nassau County, Orange County, Rockland County, Suffolk County and Westchester County in New York State; and in Palm Beach County, Florida.
The Bank’s principal office is located at 301 Sylvan Avenue, Englewood Cliffs, NJ. The principal office is a three-story leased building constructed in 2008. The following table sets forth certain information regarding the Bank’s leased operating locations.
The Bank also leases a loan production office in Orlando, Florida. The Bank’s principal office is located at 301 Sylvan Avenue, Englewood Cliffs, NJ. The principal office is a three-story leased building constructed in 2008. -37- Table of Contents
Removed
Banking Office Location Term 301 Sylvan Avenue, Englewood Cliffs, NJ Term expires November 2028 1 Union Ave, Cresskill, NJ Term expires January 2038 142 John Street, Hackensack, NJ Term expires December 2026 171 East Ridgewood Avenue, Ridgewood, NJ Term expires April 2029 71 East Allendale Road, Saddle River, NJ Term expires May 2032 356 Chestnut Street, Union, NJ Term expires May 2027 545 Morris Avenue, Summit, NJ Term expires January 2034 217 Chestnut Street, Newark, NJ Term expires December 2034 5914 Park Avenue, West New York, NJ Term expires September 2028 963 Holmdel Road, Holmdel, NJ Term expires September 2026 551 Madison Avenue, Suite 201, NY, NY Term expires May 2032 551 Madison Avenue, Suite 202, NY, NY Term expires October 2028 48 South Service Rd, 2nd Fl, Melville, NY Term expires June 2025 36-19 Broadway, Astoria, NY Term expires August 2028 485 Schutt Rd, Middletown, NY Term expires October 2025 715 Route 304, Bardonia NY Term expires August 2028 567 North Broadway, White Plains NY Term expires September 2028 155 White Plains Rd., Tarrytown NY Term expires December 2026 170 East Erie St, Blauvelt NY Term expires February 2028 625 N Flagler Dr Ste 1002, West Palm Beach, FL Term expires June 2027 78B Park Place, East Hampton, NY Term expires January 2029 4175 Veterans Memorial Highway, Ste 100, Ronkonkoma, NY Term expires August 2034

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
Item 3. Legal Proceedings There are no significant pending legal proceedings involving the Company other than those arising out of routine operations. None of these matters would have a material adverse effect on the Company or its results of operations if decided adversely to the Company.
Added
Item 3. Legal Proceedings On August 28, 2024, FLIC, a predecessor company to the Company by merger, filed an 8-K disclosing that its subsidiary, FNBLI was notified by a client of suspicious wire transfer activity in July 2024 involving the client's bank accounts.
Added
According to the 8-K, the wire transfer activity arose as the result of unauthorized access to banking information within the client's control. FLIC completed an investigation with the assistance of a digital forensic investigations firm, which did not yield evidence of unauthorized bank network activity.
Added
The net amount of funds at issue, after the initial return of recalled wires, involved in the suspicious wire transfer activity is approximately $11.1 million. On January 22, 2025, the client filed suit against FLIC and FNBLI claiming damages of approximately $11.1 million.
Added
The Company and the Bank, as the successors to FLIC and FNBLI, vehemently disagree with the client's allegations and intend to vigorously defend these claims. The case is still in the discovery stage.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeNASDAQ AND KBW BANK INDEX Assumes $100 Invested on December 31, 2019, with Dividends Reinvested Year Ended December 31, 2024 COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS Fiscal Year Ending Company/Index/Market 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 ConnectOne Bancorp, Inc. $ 100.00 $ 78.59 $ 131.92 $ 99.76 $ 97.86 $ 101.06 KBW Bank Index 100.00 91.32 124.79 116.15 115.69 130.96 Nasdaq 100.00 145.05 177.27 119.63 173.11 224.34 -40- Table of Contents
Biggest changeNASDAQ COMPOSITE AND KBW BANK INDEX Assumes $100 invested on January 1, 2021 Assumes dividends reinvested Year Ended December 31, 2025 COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS Fiscal Year Ending Company/Index/Market 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 ConnectOne Bancorp, Inc. $ 100.00 $ 167.85 $ 126.92 $ 124.52 $ 128.59 $ 151.49 KBW Bank Index 100.00 136.65 127.19 126.69 143.42 152.74 Nasdaq 100.00 122.22 82.48 119.35 154.67 187.42 -40- Table of Contents
As of December 31, 2024, the Company had 678 stockholders of record, excluding beneficial owners for whom Cede & Company or others act as nominees. Share Repurchase Program Historically, repurchases have been made from time to time as, in the opinion of management, market conditions warranted, in the open market or in privately negotiated transactions.
As of December 31, 2025, the Company had 678 stockholders of record, excluding beneficial owners for whom Cede & Company or others act as nominees. Share Repurchase Program Historically, repurchases have been made from time to time as, in the opinion of management, market conditions warranted, in the open market or in privately negotiated transactions.
For information regarding restrictions on dividends, see Part I, Item 1, “Business” and Part II, Item 8, “Financial Statements and Supplementary Data”, Note 19 and Note 22 of the Notes to Consolidated Financial Statements.” Stockholders Return Comparison Set forth on the following page is a line graph presentation comparing the cumulative stockholder return on the Parent Corporation’s common stock, on a dividend reinvested basis, against the cumulative total returns of the NASDAQ Composite and the KBW Bank Index for the period from December 31, 2019 through December 31, 2024. -39- Table of Contents COMPARATIVE SIX-YEAR CUMULATIVE TOTAL RETURN AMONG CONNECTONE BANCORP INC.
For information regarding restrictions on dividends, see Part I, Item 1, “Business” and Part II, Item 8, “Financial Statements and Supplementary Data”, Note 19 and Note 22 of the Notes to Consolidated Financial Statements.” Stockholders Return Comparison Set forth on the following page is a line graph presentation comparing the cumulative stockholder return on the Parent Corporation’s common stock, on a dividend reinvested basis, against the cumulative total returns of the NASDAQ Composite and the KBW Bank Index for the period from December 31, 2020 through December 31, 2025. -39- Table of Contents COMPARATIVE FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG CONNECTONE BANCORP INC.
The share repurchase plan does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company's discretion. During the year ended December 31, 2024, the Company repurchased a total of 282,370 shares. As of December 31, 2024, shares remaining for repurchase under the program were 641,118.
The share repurchase plan does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company's discretion. The Company did not repurchase any shares during 2025. As of December 31, 2025, shares remaining for repurchase under the program were 641,118.
Removed
The following table details share repurchases for the year 2024: Cumulative Total Number of Shares Maximum Number Purchased of Shares as Part of Publicly that May Yet Total Number Announced Be Purchased Shares of Shares Average Price Plans or Under the Plans Authorized Purchased Paid per Share Programs or Programs 923,488 First Quarter 2024 - 282,370 $ 20.27 282,370 641,118 Second Quarter 2024 - - - 282,370 641,118 Third Quarter 2024 - - - 282,370 641,118 Fourth Quarter 2024 - - - 282,370 641,118 Dividends Federal laws and regulations contain restrictions on the ability of the Parent Corporation and the Bank to pay dividends.
Added
Dividends Federal laws and regulations contain restrictions on the ability of the Parent Corporation and the Bank to pay dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDecember 31, 2024 December 31, 2023 Balance Loan-to-Value Balance Loan-to-Value (dollars in thousands) Commercial real estate loans Multifamily $ 2,496,508 61 % $ 2,553,401 61 % Nonowner-occupied 1,965,044 53 2,177,585 54 Owner-occupied 1,101,034 52 930,319 53 Land loans 317,524 45 234,563 45 Total commercial real estate loans (before fair value adjustment) 5,880,110 56 % 5,895,868 56 % Fair value premium (discount) 569 (323 ) Total commercial real estate loans $ 5,880,679 $ 5,895,545 The table above is further broken down in the following table by geography: December 31, 2024 December 31, 2023 Balance Percent of Total Balance Percent of Total (dollars in thousands) Multifamily loans New Jersey $ 1,588,891 63.6 % $ 1,623,666 63.6 % New York 713,651 28.6 789,065 30.9 Florida 7,732 0.3 7,828 0.3 Connecticut 36,486 1.5 36,761 1.4 All Other States 149,748 6.0 96,081 3.8 Total multifamily loans $ 2,496,508 100.0 % $ 2,553,401 100.0 % December 31, 2024 December 31, 2023 Balance Percent of Total Balance Percent of Total (dollars in thousands) Nonowner-occupied New Jersey $ 796,785 40.5 % $ 972,907 44.7 % New York 730,145 37.2 778,842 35.8 Florida 162,184 8.3 205,178 9.4 Connecticut 47,083 2.4 80,067 3.7 All Other States 228,847 11.6 140,592 6.4 Total nonowner occupied $ 1,965,044 100.0 % $ 2,177,585 100.0 % December 31, 2024 December 31, 2023 Balance Percent of Total Balance Percent of Total (dollars in thousands) Owner-occupied New Jersey $ 509,151 46.3 % $ 474,905 51.1 % New York 312,514 28.4 267,990 28.8 Florida 46,540 4.2 69,989 7.5 Connecticut 36,636 3.3 5,887 0.6 All Other States 196,193 17.8 111,548 12.0 Total owner-occupied $ 1,101,034 100.0 % $ 930,319 100.0 % -52- Table of Contents December 31, 2024 December 31, 2023 Balance Percent of Total Balance Percent of Total (dollars in thousands) Land loans New Jersey $ 78,429 24.7 % $ 106,884 45.6 % New York 110,967 35.0 77,767 33.1 Florida 125,523 39.5 48,807 20.8 Connecticut - - - - All Other States 2,605 0.8 1,105 0.5 Total land $ 317,524 100.0 % $ 234,563 100.0 % In addition, the following tables present further detail with respect to our owner-occupied and nonowner-occupied borrower concentrations included in the commercial real estate segment.
Biggest changeDecember 31, 2025 December 31, 2024 Balance Percent of Total Balance Percent of Total (dollars in thousands) Multifamily loans New Jersey $ 1,643,765 47.3 % $ 1,588,891 63.6 % New York 1,497,916 43.1 713,651 28.6 Florida 44,403 1.3 7,732 0.3 Connecticut 39,628 1.1 36,486 1.5 All Other States 251,590 7.2 149,748 6.0 Total multifamily loans $ 3,477,302 100.0 % $ 2,496,508 100.0 % December 31, 2025 December 31, 2024 Balance Percent of Total Balance Percent of Total (dollars in thousands) Owner-occupied New Jersey $ 559,404 35.6 % $ 509,151 46.3 % New York 607,679 38.6 312,514 28.4 Florida 94,682 6.0 46,540 4.2 Connecticut 59,008 3.8 36,636 3.3 All Other States 251,385 16.0 196,193 17.8 Total owner-occupied $ 1,572,158 100.0 % $ 1,101,034 100.0 % December 31, 2025 December 31, 2024 Balance Percent of Total Balance Percent of Total (dollars in thousands) Nonowner-occupied New Jersey $ 780,321 28.2 % $ 796,785 40.5 % New York 1,625,546 58.9 730,145 37.2 Florida 178,830 6.5 162,184 8.3 Connecticut 37,234 1.3 47,083 2.4 All Other States 139,989 5.1 228,847 11.6 Total nonowner-occupied $ 2,761,920 100.0 % $ 1,965,044 100.0 % -54- Table of Contents December 31, 2025 December 31, 2024 Balance Percent of Total Balance Percent of Total (dollars in thousands) Land loans New Jersey $ 123,541 35.4 % $ 78,429 24.7 % New York 43,263 12.4 110,967 35.0 Florida 128,547 36.8 125,523 39.5 Connecticut - - - - All Other States 53,774 15.4 2,605 0.8 Total land loans $ 349,125 100.0 % $ 317,524 100.0 % In addition, the following tables present further details with respect to our owner-occupied and nonowner-occupied borrower concentrations included in the commercial real estate segment.
The methodology for determining the allowance for credit losses is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded allowance for credit losses.
The methodology for determining the allowance for credit losses is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded allowance for credit losses.
Given the unique nature of the post-pandemic interest rate environment, and the speed with which interest rates have been changing, the projections noted above on the Company’s EVE and net interest income and can be expected to differ from actual results.
Given the unique nature of the post-pandemic interest rate environment, and the speed with which interest rates have been changing, the projections noted above on the Company’s EVE and net interest income can be expected to differ from actual results.
The decrease was primarily due to an 10 basis-point contraction in the net interest margin to 2.72% from 2.82%, partially offset by a $43.0 million, or 0.5%, increase in average interest-earning assets. ● Increase in noninterest expenses of $7.8 million.
The decrease was primarily due to a 10 basis-point contraction in the net interest margin to 2.72% from 2.82%, partially offset by a $43.0 million, or 0.5%, increase in average interest-earning assets. ● Increase in noninterest expenses of $7.8 million.
Capital amounts and classifications are also subject to qualitative judgments by the bank regulators regarding capital components, risk weightings, and other factors. -69- Table of Contents Subordinated Debentures During 2003, the Company formed a statutory business trust, which exists for the exclusive purpose of (i) issuing Trust Securities representing undivided beneficial interests in the assets of the Trust; (ii) investing the gross proceeds of the Trust securities in junior subordinated deferrable interest debentures (subordinated debentures) of the Company; and (iii) engaging in only those activities necessary or incidental thereto.
Capital amounts and classifications are also subject to qualitative judgments by the bank regulators regarding capital components, risk weightings, and other factors. -72- Table of Contents Subordinated Debentures During 2003, the Company formed a statutory business trust, which exists for the exclusive purpose of (i) issuing Trust Securities representing undivided beneficial interests in the assets of the Trust; (ii) investing the gross proceeds of the Trust securities in junior subordinated deferrable interest debentures (subordinated debentures) of the Company; and (iii) engaging in only those activities necessary or incidental thereto.
Diluted earnings per share were $1.76 for 2024, a 15.0% decrease from $2.07 for 2023. The change in net income from 2023 to 2024 was attributable to the following: ● Decrease in net interest income of $7.8 million.
Diluted earnings per share were $1.76 for 2024, a 15.0% decrease from $2.07 for 2023. The change in net income from 2023 to 2024 was primarily attributable to the following: ● Decrease in net interest income of $7.8 million.
The 2018 Notes were redeemed in full on February 1, 2023. -70- Table of Contents Preferred Stock On August 19, 2021, the Company completed an underwritten public offering of 115,000 shares, or $115 million in aggregate liquidation preference, of its depositary shares, each representing a 1/40th interest in a share of the Company’s 5.25% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series A, no par value, with a liquidation preference of $1,000 per share.
The 2018 Notes were redeemed in full on February 1, 2023. -73- Table of Contents Preferred Stock On August 19, 2021, the Company completed an underwritten public offering of 115,000 shares, or $115 million in aggregate liquidation preference, of its depositary shares, each representing a 1/40th interest in a share of the Company’s 5.25% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series A, no par value, with a liquidation preference of $1,000 per share.
Noninterest Expense Noninterest expenses for 2024 increased by $7.8 million, primarily due to increases in information technology and communications expenses of $3.2 million, attributable to additional investments in technology, equipment and software.
Noninterest expenses for 2024 increased by $7.8 million, primarily due to increases in information technology and communications expenses of $3.2 million, attributable to additional investments in technology, equipment and software.
Changes in assumptions could significantly affect the estimates. -63- Table of Contents Impact of Inflation and Changing Prices The financial statements and notes thereto presented elsewhere herein have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation.
Changes in assumptions could significantly affect the estimates. -65- Table of Contents Impact of Inflation and Changing Prices The financial statements and notes thereto presented elsewhere herein have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation.
If model results were to fall outside prescribed ranges, action, including additional monitoring and reporting to the Board, would be required by the ALCO and Bank’s management. -61- Table of Contents The net interest income simulation model attempts to measure the change in net interest income over the next one-year period, and over the next three-year period on a cumulative basis, assuming certain changes in the general level of interest rates.
If model results were to fall outside prescribed ranges, action, including additional monitoring and reporting to the Board, would be required by the ALCO and Bank’s management. -63- Table of Contents The net interest income simulation model attempts to measure the change in net interest income over the next one-year period, and over the next three-year period on a cumulative basis, assuming certain changes in the general level of interest rates.
The Bank believes that its strategy of high-quality client service, competitive rate structures and selective marketing have enabled it to gain market share. -50- Table of Contents Commercial loans are loans made for business purposes and are primarily secured by collateral such as business assets including accounts receivable, inventory and equipment.
The Bank believes that its strategy of high-quality client service, competitive rate structures and selective marketing have enabled it to gain market share. -52- Table of Contents Commercial loans are loans made for business purposes and are primarily secured by collateral such as business assets including accounts receivable, inventory and equipment.
The increase in unrealized losses is predominately attributable to changes in market conditions and interest rates. Unrealized losses have not been recognized into income because the issuers are of high credit quality, we do not intend to sell, and it is likely that we will not be required to sell the securities prior to their anticipated recovery.
The decrease in unrealized losses is predominately attributable to changes in market conditions and interest rates. Unrealized losses have not been recognized into income because the issuers are of high credit quality, we do not intend to sell, and it is likely that we will not be required to sell the securities prior to their anticipated recovery.
We currently utilize net interest income simulation and economic value of equity (“EVE”) models to measure the potential impact to the Bank of future changes in interest rates. As of December 31, 2024, and December 31, 2023, the results of the models are monitored by guidelines prescribed by our Board of Directors.
We currently utilize net interest income simulation and economic value of equity (“EVE”) models to measure the potential impact to the Bank of future changes in interest rates. As of December 31, 2025, and December 31, 2024, the results of the models are monitored by guidelines prescribed by our Board of Directors.
As of December 31, 2024, the amount of liquid assets remained at a level management deemed adequate to ensure that, on a short and long-term basis, contractual liabilities, depositors’ withdrawal requirements, and other operational and client credit needs could be satisfied.
As of December 31, 2025, the amount of liquid assets remained at a level management deemed adequate to ensure that, on a short and long-term basis, contractual liabilities, depositors’ withdrawal requirements, and other operational and client credit needs could be satisfied.
(6) Represents net interest income on a tax equivalent basis divided by average total interest-earning assets. -47- Table of Contents Rate/Volume Analysis The following table presents, by category, the major factors that contributed to the changes in net interest income.
(6) Represents net interest income on a tax equivalent basis divided by average total interest-earning assets. -49- Table of Contents Rate/Volume Analysis The following table presents, by category, the major factors that contributed to the changes in net interest income.
As of December 31, 2024, the principal components of the investment portfolio are U.S. Treasury and Government Agency Obligations, Federal Agency Obligations including mortgage-backed securities, Obligations of U.S. States and Political Subdivisions, Corporate Bonds and other debt and equity securities.
As of December 31, 2025, the principal components of the investment portfolio are U.S. Treasury and Government Agency Obligations, Federal Agency Obligations including mortgage-backed securities, Obligations of U.S. States and Political Subdivisions, Corporate Bonds and other debt and equity securities.
General The following discussion and analysis present the more significant factors affecting the Company’s financial condition as of December 31, 2024 and 2023 and results of operations for each of the years in the three-year period ended December 31, 2024.
General The following discussion and analysis present the more significant factors affecting the Company’s financial condition as of December 31, 2025 and 2024 and results of operations for each of the years in the three-year period ended December 31, 2025.
The increase is primarily due to increases in information technology and communications expenses of $3.2 million, attributable to additional investments in technology, equipment and software. Ad ditionally, there were increases in salaries and employee benefits of $1.8 million, attributable to an increase in incentive compensation accruals and an increase in expenses related to the Bank’s Supplemental Executive Retirement Plan.
The increase is primarily due to increases in information technology and communications expenses of $3.2 million, attributable to additional investments in technology, equipment and software. Additionally, there were increases in salaries and employee benefits of $1.8 million, attributable to an increase in incentive compensation accruals and an increase in expenses related to the Bank’s Supplemental Executive Retirement Plan.
Contractual Obligations and Other Commitments The following table summarizes contractual obligations as of December 31, 2024 and the effect such obligations are expected to have on liquidity and cash flows in future periods.
Contractual Obligations and Other Commitments The following table summarizes contractual obligations as of December 31, 2025 and the effect such obligations are expected to have on liquidity and cash flows in future periods.
Finally, there were increases in merger expenses of $1.6 million, due to the planned merger with The First of Long Island Corporation, professional and consulting expenses of $0.9 million, occupancy and equipment of $0.7 million, branch closing expenses of $0.5 million, and marketing and advertising of $0.5 million, partially offset by decreases in FDIC insurance of $1.2 million, due to an FDIC special assessment charge in 2023, and amortization of core deposit intangible of $0.2 million. ● Increase in provision for credit losses of $5.6 million.
Finally, there were increases in merger expenses of $1.6 million, due to the planned merger with FLIC, professional and consulting expenses of $0.9 million, occupancy and equipment of $0.7 million, branch closing expenses of $0.5 million, and marketing and advertising of $0.5 million, partially offset by decreases in FDIC insurance of $1.2 million, due to an FDIC special assessment charge in 2023, and amortization of core deposit intangible of $0.2 million. ● Increase in provision for credit losses of $5.6 million.
There were no municipal securities, or corporate securities, of any single issuer exceeding 10% of stockholders’ equity as of December 31, 2024.
There were no municipal securities, or corporate securities, of any single issuer exceeding 10% of stockholders’ equity as of December 31, 2025.
The increase was primarily due to increases in net gains on sale of loans held-for-sale of $1.0 million, bank owned life insurance of $0.8 million, deposit, loan and other income of $0.8 million and net gains on equity securities of $0.1 million. Noninterest income for 2023 increased by $0.7 million, or 5.7%, to $14.0 million from $13.2 million in 2022.
Noninterest income for 2024 increased by $2.7 million, or 19.5%, to $16.7 million from $14.0 million in 2023. The increase was primarily due to increases in net gains on sale of loans held-for-sale of $1.0 million, bank owned life insurance of $0.8 million, deposit, loan and other income of $0.8 million and net gains on equity securities of $0.1 million.
Based on our model, which was run as of December 31, 2024, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous increase in the general level of interest rates would decrease our net interest income by 2.08%, while a 100 basis-point instantaneous decrease in interest rates would increase net interest income by 0.37%.
As of December 31, 2024, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous increase in the general level of interest rates would decrease our net interest income by 2.08%, while a 100 basis-point instantaneous decrease in interest rates would increase net interest income by 0.37%.
Factors considered by the Company in determining individual analysis include payment status and the probability of collecting scheduled principal and interest payments when due. Nonaccrual loans that are $250,000 or higher and all purchased credit-deteriorated (PCD) loans are individually analyzed.
Factors considered by the Company in determining individual analysis include payment status and the probability of collecting scheduled principal and interest payments when due. Nonaccrual loans with balances of $250,000 or greater and all purchased credit-deteriorated ("PCD") loans are individually analyzed.
As of December 31, 2024, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $799.7 million, which represented 8.1% of total assets and 9.4% of total deposits and borrowings, compared to $516.3 million as of December 31, 2023, which represented 5.2% of total assets and 6.1% of total deposits and borrowings on such date.
As of December 31, 2025, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $874.4 million, which represented 6.2% of total assets and 7.2% of total deposits and borrowings, compared to $799.7 million as of December 31, 2024, which represented 8.1% of total assets and 9.4% of total deposits and borrowings on such date.
Based on our model, which was run as of December 31, 2024, we estimated that over the next one-year period a 200 basis-point instantaneous increase in the general level of interest rates would decrease our net interest income by 8.02%, while a 100 basis-point instantaneous decrease in interest rates would increase net interest income by 3.56%.
As of December 31, 2024, we estimated that over the next one-year period a 200 basis-point instantaneous increase in the general level of interest rates would decrease our net interest income by 8.02%, while a 100 basis-point instantaneous decrease in interest rates would increase net interest income by 3.56%.
Within the various economic scenarios considered for this hypothetical sensitivity analysis, as of December 31, 2024, the quantitative estimate of the allowance for credit loss for collectively evaluated loans would increase by approximately $47.2 million under sole consideration of an adverse Moody’s economic forecast.
Within the various economic scenarios considered for this hypothetical sensitivity analysis, as of December 31, 2025, the quantitative estimate of the allowance for credit loss for collectively evaluated loans would increase by approximately $54.9 million under sole consideration of an adverse Moody’s economic forecast.
As of December 31, 2024, net unrealized losses on securities available-for-sale, which are carried as a component of accumulated other comprehensive loss and included in stockholders’ equity, net of tax, amounted to $69.6 million as compared with net unrealized losses of $57.8 million as of December 31, 2023.
As of December 31, 2025, net unrealized losses on securities available-for-sale, which are carried as a component of accumulated other comprehensive loss and included in stockholders’ equity, net of tax, amounted to $40.7 million as compared with net unrealized losses of $69.6 million as of December 31, 2024.
Therefore, effective for quarterly interest rate resets after July 3, 2023 the subordinated debentures’ floating rate will be three-month CME Term SOFR plus 2.85% plus a tenor spread of 0.26161%. The rate as of December 31, 2024 was 7.70%.
Therefore, effective for quarterly interest rate resets after July 3, 2023 the subordinated debentures’ floating rate will be three-month CME Term SOFR plus 2.85% plus a tenor spread of 0.26161%. The rate as of December 31, 2025 was 6.95%.
The Bank also has a credit facility established with the Federal Reserve Bank of New York for direct discount window borrowings based on pledged collateral and had the ability to borrow $1.6 billion as of December 31, 2024.
The Bank also has a credit facility established with the Federal Reserve Bank of New York for direct discount window borrowings based on pledged collateral and had the ability to borrow $2.3 billion as of December 31, 2025.
As of December 31, 2024, the Bank had aggregate available and unused credit of approximately $3.0 billion, which represents the aforementioned facilities totaling $4.4 billion net of $1.4 billion in outstanding borrowings and letters of credit. As of December 31, 2024, outstanding commitments for the Bank to extend credit were approximately $1.1 billion.
As of December 31, 2025, the Bank had aggregate available and unused credit of approximately $4.6 billion, which represents the aforementioned facilities totaling $6.4 billion net of $1.9 billion in outstanding borrowings and letters of credit. As of December 31, 2025, outstanding commitments for the Bank to extend credit were approximately $2.0 billion.
For the year ended December 31, 2024, the provision for credit losses was $13.8 million, an increase of $5.6 million, compared to the provision for credit losses of $8.2 million for the year ended December 31, 2023.
The provision for credit losses was $13.8 million for the year ended December 31, 2024, an increase of $5.6 million from $8.2 million in 2023.
Notwithstanding the foregoing, if the benchmark rate is less than zero, then the benchmark rate shall be deemed to be zero. During January 2018, the Parent Corporation issued $75 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the “2018 Notes”).
Notwithstanding the foregoing, if the benchmark rate is less than zero, then the benchmark rate shall be deemed to be zero. During June 2020, the Parent Corporation issued $75 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the “2020 Notes”).
In addition, as of December 31, 2024, the Bank had in place borrowing capacity of $305 million through correspondent banks and other unsecured borrowing lines.
In addition, as of December 31, 2025, the Bank had in place borrowing capacity of $280 million through correspondent banks and other unsecured borrowing lines.
As of December 31, 2024, on a weighted average basis the most severe historical loss rate for our commercial and commercial real estate loans were 2.37% and 1.96%, respectively. -42- Table of Contents The Company’s quantitative component of allowance for credit losses for collectively evaluated loans is calculated with an economic forecast sourced from Moody’s.
As of December 31, 2025, on a weighted average basis the most severe historical loss rate for our commercial and commercial real estate loans were 2.38% and 1.94%, respectively. The Company’s quantitative component of allowance for credit losses for collectively evaluated loans is calculated with an economic forecast sourced from Moody’s.
OREO represents property acquired through foreclosure in partial or full satisfaction of loans. Loans 90 days or greater past due and still accruing represent loans that are both well-secured and in the process of collection, as well as any purchased credit-deteriorated loans, net of fair value marks, which accrete income per the valuation at the date of acquisition.
Loans 90 days or greater past due and still accruing represent loans that are both well-secured and in the process of collection, as well as any purchased credit-deteriorated loans, net of fair value marks, which accrete income per the valuation at the date of acquisition.
The increase reflected an increase in the individually evaluated allowance, partially offset by a decrease in the level of collectively evaluated allowance. ● Increase in noninterest income of $2.7 million, primarily due to increases in net gains on sale of loans held-for-sale of $1.0 million, income on bank owned life insurance of $0.8 million, deposit, loan and other income of $0.8 million, and net losses on equity securities of $0.1 million. ● Decrease in income tax expense of $5.3 million resulting primarily from lower taxable income.
The increase reflected an increase in the individually evaluated allowance, partially offset by a decrease in the level of collectively evaluated allowance. ● Increase in noninterest income of $2.7 million, primarily due to increases in net gains on sale of loans held-for-sale of $1.0 million, income on bank owned life insurance of $0.8 million, deposit, loan and other income of $0.8 million, and net losses on equity securities of $0.1 million. ● Decrease in income tax expense of $5.3 million resulting primarily from lower taxable income. -47- Table of Contents Net Interest Income Fully taxable equivalent net interest income for 2025 totaled $357.3 million, an increase of $106.6 million, or 42.5%, from 2024.
The expected credit loss for unfunded loan commitments is reported on the Consolidated Statement of Financial Condition in “Other Liabilities”. As of December 31, 2024, the allowance for credit losses for loans was $82.7 million, an increase of $0.7 million, or 0.9%, from $82.0 million as of December 31, 2023.
The expected credit loss for unfunded loan commitments is reported on the Consolidated Statement of Financial Condition in “Other Liabilities”. As of December 31, 2025, the allowance for credit losses for loans was $154.3 million, an increase of $71.6 million, or 86.6%, from $82.7 million as of December 31, 2024.
Financial Condition Overview As of December 31, 2024, the Company’s total assets were $9.9 billion, an increase of $24 million from December 31, 2023. Total loans (including loans held-for-sale) were $8.3 billion, a decrease of $70 million from December 31, 2023. Deposits were $7.8 billion, an increase of $284 million from December 31, 2023.
Deposits were $11.2 billion, an increase of $3.4 billion from December 31, 2024. As of December 31, 2024, the Company’s total assets were $9.9 billion, an increase of $24 million from December 31, 2023. Total loans (including loans held-for-sale) were $8.3 billion, a decrease of $70 million from December 31, 2023.
As of December 31, 2024, the Company’s CET 1, Tier 1 and total risk-based capital ratios were 10.97%, 12.29% and 14.11%, respectively. For information on risk-based capital and regulatory guidelines for the Parent Corporation and its bank subsidiary, see Note 15 to the Consolidated Financial Statements.
As of December 31, 2025, the Company’s CET 1, Tier 1 and total risk-based capital ratios were 10.24%, 11.22% and 13.88%, respectively. For information on risk-based capital and regulatory guidelines for the Parent Corporation and its bank subsidiary, see Note 15 to the Consolidated Financial Statements.
The table below sets forth information on our classified loans and loans designated as special mention (excluding loans held-for-sale) as of the dates presented: 2024 2023 (dollars in thousands) Classified Loans: Substandard $ 72,399 $ 58,509 Doubtful - - Loss - - Total classified loans 72,399 58,509 Special Mention Loans 149,375 54,168 Total classified and special mention loans $ 221,774 $ 112,677 During the year ended December 31, 2024, “substandard” loans and “doubtful” loans, which include lower credit quality loans which possess higher risk characteristics than “special mention” loans, increased to $72.4 million, or 0.9% of loans receivable, as of December 31, 2024 from $58.5 million, or 0.7% of loans receivable, as of December 31, 2023.
The table below sets forth information on our classified loans and loans designated as special mention (excluding loans held-for-sale) as of the dates presented: December 31, 2025 December 31, 2024 (dollars in thousands) Classified Loans: Substandard $ 156,249 $ 72,399 Doubtful - - Loss - - Total classified loans 156,249 72,399 Special Mention Loans 128,470 149,375 Total classified and special mention loans $ 284,719 $ 221,774 During the year ended December 31, 2025, “substandard” loans and “doubtful” loans, which include lower credit quality loans which possess higher risk characteristics than “special mention” loans, increased to $156.2 million, or 1.4% of loans receivable, as of December 31, 2025 from $72.4 million, or 0.9% of loans receivable, as of December 31, 2024.
From and including June 15, 2025 through maturity or earlier redemption, the interest rate shall reset quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be Three-Month Term SOFR (as defined in the Second Supplemental Indenture), plus 560.5 basis points, payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on June 15, 2025.
From and including June 1, 2030 through maturity or earlier redemption, the interest rate shall reset quarterly to an interest rate per annum equal to a benchmark rate, which is Three-Month Term SOFR: (as defined in the Prospectus Supplement), plus 441.5 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2030.
The following table sets forth, as of the dates indicated, the amount of the Company’s nonaccrual loans, other real estate owned (“OREO”), and loans past due 90 days or greater and still accruing: December 31, December 31, 2024 2023 Nonaccrual loans $ 57,310 $ 52,524 OREO - - Total nonperforming assets $ 57,310 $ 52,524 Loans 90 days or greater past due and still accruing $ - $ - Nonaccrual loans to loans receivable 0.69 % 0.63 % Nonperforming assets to total assets 0.58 0.53 Allowance for Credit Losses and Related Provision The allowance for credit losses is an estimate of current expected credit losses considering available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date.
The following table sets forth, as of the dates indicated, the amount of the Company’s nonaccrual loans, OREO, and loans past due 90 days or greater and still accruing: December 31, December 31, 2025 2024 (dollars in thousands) Nonaccrual loans $ 45,915 $ 57,310 OREO - - Total nonperforming assets $ 45,915 $ 57,310 Loans 90 days or greater past due and still accruing $ 17,472 $ - Nonaccrual loans to loans receivable 0.40 % 0.69 % Nonperforming assets to total assets 0.33 0.58 Allowance for Credit Losses and Related Provision The ACL is an estimate of current expected credit losses considering available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date.
The qualitative component of our ACL for loans, which is largely based on management’s judgment of qualitative loss factors, increased by $8.0 million on an absolute basis, over the same period-of-time, as qualitative factor trends increased over 2024.
The qualitative component of our ACL for loans, which is largely based on management’s judgment of qualitative loss factors, increased by $17.2 million on an absolute basis, over the same period-of-time.
Allowance for Credit Losses and Related Provision The allowance for credit losses is an estimate of current expected credit losses considering available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date.
For information on our significant accounting policies, see Note 1a in the Notes to Consolidated Financial Statements: Allowance for Credit Losses and Related Provision The allowance for credit losses is an estimate of current expected credit losses considering available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date.
The 2020 Notes bear interest at 5.75% annually from, and including, the date of initial issuance to, but excluding, June 15, 2025 or the date of earlier redemption, payable semi-annually in arrears on June 15 and December 15 of each year, commencing December 15, 2020.
The 2025 Notes bear interest at 8.125% annually from, and including, the date of initial issuance up to but excluding June 1, 2030 or the date of earlier redemption, payable semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2025.
Other securities do not have a contractual maturity and are included in the “Due in 1 year or less” maturity in the table above. -60- Table of Contents The following table sets forth the carrying value of the Company’s investment securities, as of December 31, for each of the last three years. 2024 2023 (dollars in thousands) Investment Securities Available-for-Sale: Federal agency obligations $ 84,670 $ 45,326 Residential mortgage pass-through securities 378,838 411,191 Commercial mortgage pass-through securities 20,892 21,564 Obligations of U.S.
Other securities do not have a contractual maturity and are included in the “Due in 1 year or less” maturity in the table above. -62- Table of Contents The following table sets forth the carrying value of the Company’s investment securities, as of December 31, for each of the last two years. 2025 2024 (dollars in thousands) Investment Securities Available-for-Sale: Federal agency obligations $ 391,190 $ 84,670 Residential mortgage pass-through securities 607,144 378,838 Commercial mortgage pass-through securities 26,969 20,892 Obligations of U.S.
Total Commercial Residential Real Estate Consumer Amount of % of Total Amount of % of Total Amount of % of Total Total Allowance Allowance Allowance Allowance Allowance Allowance Allowance (dollars in thousands) 2024 $ 78,119 94.5 % $ 4,561 5.5 % $ 5 0.0 % $ 82,685 2023 77,649 94.7 % 4,320 5.2 % 5 0.1 % 81,974 2022 86,363 95.4 % 4,143 4.6 % 7 0.1 % 90,513 -58- Table of Contents Investments For the year ended December 31, 2024, the average amortized cost of investment securities, including equity securities, increased by $6.8 million to approximately $733.3 million or 8.0% of average earning assets, from $726.5 million, or 7.9% of average earning assets, for the year ended December 31, 2023.
Total Commercial Residential Real Estate Consumer Amount of % of Total Amount of % of Total Amount of % of Total Total Allowance Allowance Allowance Allowance Allowance Allowance Allowance (dollars in thousands) 2025 $ 142,088 92.1 % $ 12,199 7.9 % $ 18 0.0 % $ 154,305 2024 78,119 94.5 % 4,561 5.5 % 5 0.0 % 82,685 2023 77,649 94.7 % 4,320 5.2 % 5 0.1 % 81,974 -60- Table of Contents Investments For the year ended December 31, 2025, the average amortized cost of investment securities, including equity securities, increased by $360.8 million to approximately $1.1 billion, or 9.5% of average interest earning-assets, from $733.3 million, or 8.0% of average interest-earning assets, for the year ended December 31, 2024.
As of December 31, 2023, the Company had a gross carrying value of $933.6 million, excluding a net fair value discount of $58 thousand, in notes outstanding at a weighted average interest rate of 5.41%.
As of December 31, 2025, the Company had a gross carrying value of $903.5 million, excluding a net fair value discount of $14 thousand, in notes outstanding at a weighted average interest rate of 3.97%.
The decrease in net interest income was due to a 10 basis-point contraction in the net interest margin to 2.72% from 2.82%, partially offset by a $43.0 million, or 0.5%, increase in average interest-earning assets.
Fully taxable equivalent net interest income for 2024 totaled $250.7 million, a decrease of $7.6 million, or 2.9%, from 2023. The decrease in net interest income was due to a 10 basis-point contraction in the net interest margin to 2.72% from 2.82%, partially offset by a $43.0 million, or 0.5%, increase in average interest-earning assets.
During the year ended December 31, 2024, rate related factors increased investment revenue by $1.5 million and volume related factors increased investment revenue by $0.2 million. The tax-equivalent yield on investments increased by 21 basis points to 3.31% from a yield of 3.10% during the year ended December 31, 2023.
During the year ended December 31, 2025, rate related factors increased investment revenue by $5.5 million and volume related factors increased investment revenue by $14.6 million. The tax-equivalent yield on investments increased by 74 basis points to 4.05% from a yield of 3.31% during the year ended December 31, 2024.
As of December 31, 2024, not included in the above liquid assets were securities with a market value of $102.5 million which were pledged to the Federal Home Loan Bank, which support aggregate unutilized borrowing capacity of $95.2 million as of December 31, 2024. -64- Table of Contents The Bank is a member of the Federal Home Loan Bank of New York and, based on available qualified collateral as of December 31, 2024, had the ability to borrow $2.5 billion.
As of December 31, 2025, not included in the above liquid assets were securities with a market value of $97.7 million which were pledged to the Federal Home Loan Bank and securities with a market value of $137.6 million which were pledged to the Federal Reserve Bank of New York, which supported aggregate unutilized borrowing capacity of $223.3 million as of December 31, 2025. -66- Table of Contents The Bank is a member of the Federal Home Loan Bank of New York and, based on available qualified collateral as of December 31, 2025, had the ability to borrow $3.9 billion.
The MD&A should be read in conjunction with the consolidated financial statements, notes to consolidated financial statements and other information contained in this report. -43- Table of Contents Operating Results Overview 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 net income of $81.0 million for 2023.
The MD&A should be read in conjunction with the consolidated financial statements, notes to consolidated financial statements and other information contained in this report. -45- Table of Contents Operating Results Overview Net income available to common stockholders for the year ended December 31, 2025 was $74.4 million, an increase of $6.7 million, or 9.8%, compared to net income of $67.8 million for 2024.
The issuers continue to make timely principal and interest payments on the securities. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. For additional information regarding the Company’s investment portfolio, see Note 4, Note 16 and Note 21 of the Notes to the Consolidated Financial Statements.
The issuers continue to make timely principal and interest payments on the securities. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes.
The increase in substandard loans from the prior year was primarily due to a net increase in loans migrating to nonaccrual during the year ended December 31, 2024.
The increase in substandard loans from the prior year was primarily due to the addition of PCD loans associated with the FLIC merger, in addition to a net increase in loans migrating to nonaccrual during the year ended December 31, 2025.
As of December 31, 2023, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous increase in the general level of interest rates would decrease our net interest income by 5.68%, while a 100 basis-point instantaneous decrease in interest rates would increase net interest income by 4.29%.
Based on our model, which was run as of December 31, 2025, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous increase in the general level of interest rates would decrease our net interest income by 0.32%, while a 100 basis-point instantaneous decrease in interest rates would increase net interest income by 1.04%.
Our EVE as of December 31, 2023, would decrease by 15.09% with an instantaneous rate shock of up 200 basis points, and increase by 5.75% with an instantaneous rate shock of down 100 basis points.
Our EVE as of December 31, 2025, would decrease by 7.12% with an instantaneous rate shock of up 200 basis points, and increase by 0.28% with an instantaneous rate shock of down 100 basis points.
States and political subdivisions 122,404 132,705 Corporate bonds and notes 4,987 4,973 Asset-backed securities 885 1,238 Certificates of deposit - - Other securities 171 165 Total $ 612,847 $ 617,162 For other information regarding the Company’s investment securities portfolio, see Note 4, Note 16 and Note 21 of the Notes to the Consolidated Financial Statements.
States and political subdivisions 212,409 122,404 Corporate bonds and notes 12,519 4,987 Asset-backed securities 525 885 Other securities 182 171 Total $ 1,250,938 $ 612,847 For other information regarding the Company’s investment securities portfolio, see Note 4, Note 16 and Note 21 of the Notes to the Consolidated Financial Statements.
The following table provides information on the maturity distribution of the time deposits with balances greater than $250,000 as of December 31, 2024: December 31, 2024 (dollars in thousands) 3 months or less $ 223,840 Over 3 to 6 months 225,561 Over 6 to 12 months 221,962 Over 12 months 24,384 Total $ 695,747 -67- Table of Contents Federal Home Loan Bank Advances Federal Home Loan Bank advances are secured, under the terms of a blanket collateral agreement, primarily by commercial mortgage loans.
The following table provides information on the maturity distribution of the time deposits with balances greater than $250,000 as of December 31, 2025: December 31, 2025 (dollars in thousands) 3 months or less $ 242,095 Over 3 to 6 months 311,426 Over 6 to 12 months 320,729 Over 12 months 74,633 Total $ 948,883 -70- Table of Contents Federal Home Loan Bank Advances Federal Home Loan Bank advances are secured, under the terms of a blanket collateral agreement, primarily by commercial mortgage loans.
Finally, there were increases in merger expenses of $1.6 million, due to the planned merger with The First of Long Island Corporation, professional and consulting expenses of $0.9 million, occupancy and equipment of $0.7 million, branch closing expenses of $0.5 million, and marketing and advertising of $0.5 million, partially offset by decreases in FDIC insurance of $1.2 million, due to FDIC special assessment charge in 2023, and amortization of core deposit intangible of $0.2 million.
Finally, there were increases in merger expenses of $1.6 million, due to the planned merger with FLIC, professional and consulting expenses of $0.9 million, occupancy and equipment of $0.7 million, branch closing expenses of $0.5 million, and marketing and advertising of $0.5 million, partially offset by decreases in FDIC insurance of $1.2 million, due to FDIC special assessment charge in 2023, and amortization of core deposit intangible of $0.2 million. -51- Table of Contents Income Taxes Income tax expense was $32.3 million for 2025 compared to $24.7 million for 2024 and $30.0 million for 2023.
As of December 31, 2023, we estimated that over the next one-year period a 200 basis-point instantaneous increase in the general level of interest rates would decrease our net interest income by 9.25%, while a 100 basis-point instantaneous decrease in interest rates would increase net interest income by 5.34%.
Based on our model, which was run as of December 31, 2025, we estimated that over the next one-year period a 200 basis-point instantaneous increase in the general level of interest rates would decrease our net interest income by 4.95%, while a 100 basis-point instantaneous decrease in interest rates would increase net interest income by 3.06%.
The change in interest rate sensitivity was impacted by changes in overall market interest rates, updates to certain model assumptions, changes in short and intermediate-term fixed rate funding and by the deposit mix shift into certificates of deposit, from both noninterest-bearing and interest-bearing non-maturity deposits. -62- Table of Contents The following table illustrates the most recent results for EVE and NII as of December 31, 2024.
The change in interest rate sensitivity was impacted by changes in overall market interest rates, updates to certain model assumptions, changes in short and intermediate-term fixed rate funding and by the deposit mix shift into certificates of deposit, from both noninterest-bearing and interest-bearing non-maturity deposits. -64- Table of Contents The following table illustrates the estimates of net interest income for the year ending December 31, 2026 and the calculations of EVE at December 31, 2025 assuming rate changes of plus and minus 100, 200 and 300 bps.
The 2018 Notes bore interest at a rate that resets quarterly to an interest rate per annum equal to the then current three-month LIBOR rate plus 284 basis points (2.84%) payable quarterly in arrears.
During January 2018, the Parent Corporation issued $75 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the “2018 Notes”). The 2018 Notes bore interest at a rate that resets quarterly to an interest rate per annum equal to the then current three-month LIBOR rate plus 284 basis points (2.84%) payable quarterly in arrears.
Years Ended December 31, 2024 2023 2022 Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ (Tax-Equivalent Basis) Balance Expense Rate Balance Expense Rate Balance Expense Rate (dollars in thousands) ASSETS Interest-earning assets: Investment securities (1) (2) $ 733,261 $ 24,261 3.31 % $ 726,487 $ 22,541 3.10 % $ 660,760 $ 17,640 2.67 % Loans receivable and loans held-for-sale (2) (3) (4) 8,192,738 479,994 5.86 % 8,179,853 455,940 5.57 % 7,380,584 354,450 4.80 % Federal funds sold and interest-earning deposits with banks 243,650 12,617 5.18 % 220,143 11,104 5.04 % 186,205 2,493 1.34 % Restricted investment in bank stocks 44,209 4,349 9.84 % 44,389 3,662 8.25 % 36,744 1,655 4.50 % Total interest-earning assets 9,213,858 521,221 5.66 % 9,170,872 493,247 5.38 % 8,264,293 376,238 4.55 % Noninterest-earning assets: Allowance for credit losses (83,993 ) (89,119 ) (84,209 ) Noninterest-earning assets 620,574 613,642 602,657 Total assets $ 9,750,439 $ 9,695,395 $ 8,782,741 LIABILITIES & STOCKHOLDERS’ EQUITY Interest-bearing liabilities: Time deposits $ 2,564,670 $ 114,555 4.47 % $ 2,529,892 $ 92,969 3.67 % $ 1,449,826 $ 21,331 1.47 % Other interest-bearing deposits 3,751,117 130,291 3.47 % 3,667,096 113,207 3.09 % 3,702,773 29,230 0.79 % Total interest-bearing deposits 6,315,787 244,846 3.88 % 6,196,988 206,176 3.33 % 5,152,599 50,561 0.98 % Borrowings 774,533 20,386 2.63 % 792,239 22,453 2.83 % 661,729 12,188 1.84 % Subordinated debentures 79,673 5,239 6.58 % 85,249 6,234 7.31 % 153,092 8,759 5.72 % Finance lease 1,382 81 5.86 % 1,630 96 5.89 % 1,838 119 6.47 % Total interest-bearing liabilities 7,171,375 270,552 3.77 % 7,076,106 234,959 3.32 % 5,969,258 71,627 1.20 % Noninterest-bearing deposits 1,268,839 1,332,809 1,612,040 Other liabilities 80,702 89,122 51,048 Stockholders’ equity 1,229,523 1,197,358 1,150,395 Total liabilities and stockholders’ equity $ 9,750,439 $ 9,695,395 $ 8,782,741 Net interest income/interest rate spread (5) 250,669 1.88 % 258,288 2.06 % 304,611 3.35 % Tax-equivalent adjustment (3,332 ) (3,182 ) (2,492 ) Net interest income as reported $ 247,337 $ 255,106 $ 302,119 Net interest margin (6) 2.72 % 2.82 % 3.69 % (1) Average balances are based on amortized cost.
Years Ended December 31, 2025 2024 2023 Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ (Tax-Equivalent Basis) Balance Expense Rate Balance Expense Rate Balance Expense Rate (dollars in thousands) ASSETS Interest-earning assets: Investment securities (1) (2) $ 1,094,081 $ 44,345 4.05 % $ 733,261 $ 24,261 3.31 % $ 726,487 $ 22,541 3.10 % Loans receivable and loans held-for-sale (2) (3) (4) 9,957,149 583,461 5.86 % 8,192,738 479,994 5.86 % 8,179,853 455,940 5.57 % Federal funds sold and interest-earning deposits with banks 408,077 17,428 4.27 % 243,650 12,617 5.18 % 220,143 11,104 5.04 % Restricted investment in bank stocks 45,600 3,694 8.10 % 44,209 4,349 9.84 % 44,389 3,662 8.25 % Total interest-earning assets 11,504,907 648,928 5.64 % 9,213,858 521,221 5.66 % 9,170,872 493,247 5.38 % Noninterest-earning assets: Allowance for credit losses (125,245 ) (83,993 ) (89,119 ) Noninterest-earning assets 854,595 620,574 613,642 Total assets $ 12,234,257 $ 9,750,439 $ 9,695,395 LIABILITIES & STOCKHOLDERS’ EQUITY Interest-bearing liabilities: Time deposits $ 2,779,367 $ 110,381 3.97 % $ 2,564,670 $ 114,555 4.47 % $ 2,529,892 $ 92,969 3.67 % Other interest-bearing deposits 5,045,005 149,913 2.97 % 3,751,117 130,291 3.47 % 3,667,096 113,207 3.09 % Total interest-bearing deposits 7,824,372 260,294 3.33 % 6,315,787 244,846 3.88 % 6,196,988 206,176 3.33 % Borrowings 744,139 16,390 2.20 % 774,533 20,386 2.63 % 792,239 22,453 2.83 % Subordinated debentures 179,576 14,869 8.28 % 79,673 5,239 6.58 % 85,249 6,234 7.31 % Finance lease 1,102 64 5.81 % 1,382 81 5.86 % 1,630 96 5.89 % Total interest-bearing liabilities 8,749,189 291,617 3.33 % 7,171,375 270,552 3.77 % 7,076,106 234,959 3.32 % Noninterest-bearing deposits 1,991,311 1,268,839 1,332,809 Other liabilities 74,939 80,702 89,122 Stockholders’ equity 1,418,818 1,229,523 1,197,358 Total liabilities and stockholders’ equity $ 12,234,257 $ 9,750,439 $ 9,695,395 Net interest income/interest rate spread (5) 357,311 2.31 % 250,669 1.88 % 258,288 2.06 % Tax-equivalent adjustment (4,060 ) (3,332 ) (3,182 ) Net interest income as reported $ 353,251 $ 247,337 $ 255,106 Net interest margin (6) 3.11 % 2.72 % 2.82 % (1) Average balances are based on amortized cost.
The decrease in income tax expense in 2024 when compared to 2023 and 2022 was primarily the result of lower taxable income. The effective tax rates were 25.1% in 2024, 25.6% in 2023 and 26.9% for 2022.
The increase in income tax expense in 2025 when compared to 2024 and 2023 was primarily the result of higher taxable income and higher statutory tax rates due to the FLIC merger. The effective tax rates were 28.6% in 2025, 25.1% in 2024 and 25.6% for 2023.
December 31, December 31, December 31, 2024 2023 2022 Balance as of January 1, $ 81,974 $ 90,513 $ 78,773 Charge-offs: Commercial 3,286 14,888 2,612 Commercial real estate 10,416 2,142 2,819 Residential real estate - 18 9 Consumer - 1 3 Total charge-offs 13,702 17,049 5,443 Recoveries: Commercial 392 10 54 Commercial real estate 31 - - Residential real estate 6 68 63 Consumer - 8 - Total recoveries 429 86 117 Net charge-offs 13,273 16,963 5,326 Provision for credit losses for loans 13,984 8,424 17,066 Balance at end of year $ 82,685 $ 81,974 $ 90,513 Ratio of net charge-offs during the year to average loans receivable outstanding during the year 0.16 % 0.23 % 0.07 % Allowance for credit losses for loans as a percentage of loans receivable 1.00 0.98 1.12 For additional information regarding loans, see Note 5 of the Notes to the Consolidated Financial Statements.
December 31, December 31, December 31, 2025 2024 2023 (dollars in thousands) Balance as of January 1, $ 82,685 $ 81,974 $ 90,513 Charge-offs: Commercial 4,516 3,286 14,888 Commercial real estate 13,839 10,416 2,142 Residential real estate 1,000 - 18 Consumer 26 - 1 Total charge-offs 19,381 13,702 17,049 Recoveries: Commercial 366 392 10 Commercial real estate 746 31 - Residential real estate 35 6 68 Consumer - - 8 Total recoveries 1,147 429 86 Net charge-offs 18,234 13,273 16,963 Provision for credit losses for loans - 13,984 8,424 Initial provision related to acquisition – loans 27,307 - - Operating provision for credit losses 20,525 - - Nonaccretable credit marks on PCD loans 42,022 - - Balance at end of year $ 154,305 $ 82,685 $ 81,974 Ratio of net charge-offs during the year to average loans receivable outstanding during the year 0.17 % 0.16 % 0.23 % Allowance for credit losses for loans as a percentage of loans receivable 1.35 1.00 0.98 For additional information regarding loans, see Note 5 of the Notes to the Consolidated Financial Statements.
Changes due to both volume and rate have been allocated in proportion to the relationship of the dollar amount change in each. 2024/2023 2023/2022 Increase (Decrease) Increase (Decrease) Due to Change in: Due to Change in: Average Average Net Average Average Net Volume Rate Change Volume Rate Change (dollars in thousands) Interest income: Investment securities: $ 224 $ 1,496 $ 1,720 $ 2,039 $ 2,862 $ 4,901 Loans receivable and loans held-for-sale 755 23,299 24,054 44,551 56,939 101,490 Federal funds sold and interest-earnings deposits with banks 1,217 296 1,513 1,712 6,899 8,611 Restricted investment in bank stocks (18 ) 705 687 631 1,376 2,007 Total interest income: $ 2,178 $ 25,796 $ 27,974 $ 48,933 $ 68,076 $ 117,009 Interest expense: Savings, NOW, money market, interest checking $ 2,918 $ 14,166 $ 17,084 $ (1,101 ) $ 85,078 $ 83,977 Time deposits 1,553 20,033 21,586 39,690 31,949 71,639 Borrowings and subordinated debentures (833 ) (2,229 ) (3,062 ) (1,262 ) 9,001 7,739 Finance obligation (15 ) - (15 ) (12 ) (11 ) (23 ) Total interest expense: $ 3,623 $ 31,970 $ 35,593 $ 37,315 $ 126,017 $ 163,332 Net interest income: $ (1,445 ) $ (6,174 ) $ (7,619 ) $ 11,618 $ (57,941 ) $ (46,323 ) Provision for Credit Losses In determining the provision for credit losses, management considers national and local economic trends and conditions; trends in the portfolio including orientation to specific loan types or industries; experience, ability and depth of lending management in relation to the complexity of the portfolio; effects of changes in lending policies, trends in volume and terms of loans; levels and trends in delinquencies, individually analyzed loans and net charge-offs and the results of independent third party loan reviews.
Changes due to both volume and rate have been allocated in proportion to the relationship of the dollar amount change in each. 2025/2024 2024/2023 Increase (Decrease) Increase (Decrease) Due to Change in: Due to Change in: Average Average Net Average Average Net Volume Rate Change Volume Rate Change (dollars in thousands) Interest income Investment securities $ 14,624 $ 5,460 $ 20,084 $ 224 $ 1,496 $ 1,720 Loans receivable and loans held-for-sale 103,390 77 103,467 755 23,299 24,054 Federal funds sold and interest-earnings deposits with banks 7,022 (2,211 ) 4,811 1,217 296 1,513 Restricted investment in bank stocks 113 (768 ) (655 ) (18 ) 705 687 Total interest income $ 125,149 $ 2,558 $ 127,707 $ 2,178 $ 25,796 $ 27,974 Interest expense Savings, NOW, money market, interest checking $ 38,448 $ (18,826 ) $ 19,622 $ 2,918 $ 14,166 $ 17,084 Time deposits 8,527 (12,701 ) (4,174 ) 1,553 20,033 21,586 Borrowings and subordinated debentures 2,352 3,282 5,634 (833 ) (2,229 ) (3,062 ) Finance obligation (16 ) (1 ) (17 ) (15 ) - (15 ) Total interest expense $ 49,311 $ (28,246 ) $ 21,065 $ 3,623 $ 31,970 $ 35,593 Net interest income $ 75,838 $ 30,804 $ 106,642 $ (1,445 ) $ (6,174 ) $ (7,619 ) Provision for Credit Losses In determining the provision for credit losses, management considers national and local economic trends and conditions; trends in the portfolio including orientation to specific loan types or industries; experience, ability and depth of lending management in relation to the complexity of the portfolio; effects of changes in lending policies, trends in volume and terms of loans; levels and trends in delinquencies, individually analyzed loans and net charge-offs and the results of independent third party loan reviews.
Federal regulations and our policies require that we utilize an internal asset classification system as a means of reporting problem and potential problem assets. We have incorporated an internal asset classification system, substantially consistent with Federal banking regulations, as a part of our credit monitoring system.
We have incorporated an internal asset classification system, substantially consistent with Federal banking regulations, as a part of our credit monitoring system. Federal banking regulations set forth a classification scheme for problem and potential problem assets as “substandard,” “doubtful” or “loss” assets.
The increase in the allowance for credit losses was primarily driven by $14.0 million in provision for credit losses on loans, partially offset by net charge-offs of $13.3 million. -57- Table of Contents The allowance for credit losses for loans as a percentage of loans receivable was 1.00% as of December 31, 2024 and 0.98% as of December 31, 2023.
In addition, there was a $20.5 million provision in credit losses on loans, partially offset by net charge-offs of $18.2 million. -59- Table of Contents The allowance for credit losses for loans as a percentage of loans receivable was 1.35% as of December 31, 2025 and 1.00% as of December 31, 2024.
For loans designated as nonaccrual with balances of less than $250,000, these loans are collectively evaluated, and, accordingly, are not separately identified for analysis or disclosures. Instruments will not be included in either collective or individual analysis. Individual analysis will establish an individually evaluated allowance for instruments in scope. -55- Table of Contents Asset Classification.
For loans designated as nonaccrual with balances of less than $250,000, these loans are collectively evaluated, and, accordingly, are not separately identified for analysis or disclosures. Each financial asset is subject to either a collective or an individual loss analysis; no single instrument will be included in both calculations simultaneously.
During June 2020, the Parent Corporation issued $75 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the “2020 Notes”).
On May 15, 2025, the Parent Corporation issued $200 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the "2025 Notes").
December 31, 2024 December 31, 2023 Balance Percent of Total Balance Percent of Total (dollars in thousands) Owner-occupied Retail $ 203,119 18.4 % $ 208,685 22.4 % Office 94,821 8.6 102,886 11.1 Warehouse/Industrial 247,413 22.5 249,557 26.8 Mixed Use 126,783 11.5 116,046 12.5 Other 428,898 39.0 253,145 27.2 Total owner-occupied $ 1,101,034 100.0 % $ 930,319 100.0 % December 31, 2024 December 31, 2023 Balance Percent of Total Balance Percent of Total (dollars in thousands) Nonowner-occupied Retail $ 612,431 31.1 % $ 637,211 29.3 % Office 420,059 21.4 424,479 19.5 Warehouse/Industrial 213,842 10.9 233,518 10.7 Mixed Use 127,604 6.5 192,617 8.8 Other 591,108 30.1 689,760 31.7 Total nonowner-occupied $ 1,965,044 100.0 % $ 2,177,585 100.0 % -53- Table of Contents The following table sets forth the classification of our gross loans by loan portfolio segment and by fixed and adjustable-rate loans as of December 31, 2024 by remaining contractual maturity.
December 31, 2025 December 31, 2024 Balance Percent of Total Balance Percent of Total (dollars in thousands) Owner-occupied Retail $ 216,500 13.8 % $ 203,119 18.4 % Office 130,646 8.3 94,821 8.6 Warehouse/Industrial 395,830 25.2 247,413 22.5 Mixed Use 134,113 8.5 126,783 11.5 Other 695,069 44.2 428,898 39.0 Total owner-occupied $ 1,572,158 100.0 % $ 1,101,034 100.0 % December 31, 2025 December 31, 2024 Balance Percent of Total Balance Percent of Total (dollars in thousands) Nonowner-occupied Retail $ 848,400 30.7 % $ 612,431 31.1 % Office 672,744 24.4 420,059 21.4 Warehouse/Industrial 273,866 9.9 213,842 10.9 Mixed Use 250,588 9.1 127,604 6.5 Other 716,322 25.9 591,108 30.1 Total nonowner-occupied $ 2,761,920 100.0 % $ 1,965,044 100.0 % -55- Table of Contents The following table sets forth the classification of our gross loans by loan portfolio segment and by fixed and adjustable-rate loans as of December 31, 2025 by remaining contractual maturity.
December 31, December 31, 2024 2023 Commercial $ 1,532,730 $ 1,578,730 Commercial real estate 5,880,679 5,895,545 Commercial construction 616,246 620,496 Residential real estate 249,691 256,041 Consumer 1,136 1,029 Gross loans 8,280,482 8,351,841 Net deferred fees (5,672 ) (6,696 ) Loans receivable 8,274,810 8,345,145 Allowance for credit losses (82,685 ) (81,974 ) Net loans receivable $ 8,192,125 $ 8,263,171 -51- Table of Contents While the previous table reflects the classification of our loans by loan portfolio segment, the following tables present further disaggregation of our commercial real estate portfolio along with loan-to-value ("LTV") percentages.
December 31, December 31, 2025 2024 (dollars in thousands) Commercial $ 1,565,963 $ 1,532,730 Commercial real estate 8,054,696 5,880,679 Commercial construction 623,902 616,246 Residential real estate 1,210,980 249,691 Consumer 2,017 1,136 Gross loans 11,457,558 8,280,482 Net deferred fees (4,278 ) (5,672 ) Loans receivable 11,453,280 8,274,810 Allowance for credit losses (154,305 ) (82,685 ) Net loans receivable $ 11,298,975 $ 8,192,125 -53- Table of Contents While the previous table reflects the classification of our loans by loan portfolio segment, the following table presents further disaggregation of our commercial real estate portfolio along with loan-to-value ("LTV") percentages.
The increase was primarily due to decreases in net losses on equity securities of $1.4 million and increases in income on bank owned life insurance of $0.7 million, partially offset by decreases in deposit, loan and other income of $1.4 million.
Further contributing to the increase were a $4.8 million increase in deposit, loan and other income, a $2.4 million increase in income on bank owned life insurance and a $1.7 million increase in net gains on equity securities. These were partially offset by a $0.7 million decrease in net gains on sale of loans held-for-sale.
Year-to-Date Average December 31, 2024 Year-to-Date Average December 31, 2023 Year-to-Date Average December 31, 2022 Balance Rate Balance Rate Balance Rate (dollars in thousands) Demand, noninterest-bearing $ 1,268,839 - % $ 1,332,809 - % $ 1,612,040 - % Demand, interest-bearing & NOW 3,253,364 3.50 3,292,907 3.17 3,284,866 0.80 Savings 497,753 3.28 374,189 2.37 417,907 0.70 Time 2,564,670 4.47 2,529,892 3.67 1,449,826 1.47 Average Total Deposits $ 7,584,626 3.23 % $ 7,529,797 2.74 % $ 6,764,639 0.75 % Average total deposits increased by $54.8 million, or 0.7%, during the year ended December 31, 2024 when compared to the year ended December 31, 2023.
Year-to-Date Average December 31, 2025 Year-to-Date Average December 31, 2024 Year-to-Date Average December 31, 2023 Balance Rate Balance Rate Balance Rate (dollars in thousands) Demand, noninterest-bearing $ 1,991,311 - % $ 1,268,839 - % $ 1,332,809 - % Demand, interest-bearing & NOW 4,194,485 2.96 3,253,364 3.50 3,292,907 3.17 Savings 850,520 3.04 497,753 3.28 374,189 2.37 Time 2,779,367 3.97 2,564,670 4.47 2,529,892 3.67 Average Total Deposits $ 9,815,683 2.65 % $ 7,584,626 3.23 % $ 7,529,797 2.74 % -68- Table of Contents Average total deposits increased by $2.2 billion, or 29.4%, for the year ended December 31, 2025, compared to the prior year.
The Company considers the allowance for credit losses and related provision to be critical to our financial results. For information on our significant accounting policies, see Note 1a in the Notes to Consolidated Financial Statements.
The Company considers the allowance for credit losses and related provision to be critical to our financial results.
December 31, 2024 December 31, 2023 Amount % of total Amount % of total (dollars in thousands) Demand, noninterest-bearing $ 1,422,044 18.2 % $ 1,259,364 16.7 % Demand, interest-bearing & NOW 3,248,731 41.5 3,326,989 44.1 Savings 592,139 7.6 418,478 5.6 Time 2,557,200 32.7 2,531,371 33.6 Total Deposits $ 7,820,114 100.0 % $ 7,536,202 100.0 % Total deposits increased by $283.9 million, or 3.8%, to $7.8 billion as of December 31, 2024 from $7.5 billion as of December 31, 2023.
December 31, 2025 December 31, 2024 Amount % of total Amount % of total (dollars in thousands) Demand, noninterest-bearing $ 2,420,397 21.5 % $ 1,422,044 18.2 % Demand, interest-bearing & NOW 4,992,696 44.4 3,248,731 41.5 Savings 1,030,644 9.2 592,139 7.6 Time 2,796,877 24.9 2,557,200 32.7 Total Deposits $ 11,240,614 100.0 % $ 7,820,114 100.0 % Total deposits increased by $3.4 billion, or 43.7%, to $11.2 billion as of December 31, 2025, compared to $7.8 billion at year-end 2024.
As of December 31, 2024 As of December 31, 2023 Balance Balance (dollars in thousands) As stated in FFIEC 041-Consolidated Report of Condition, schedule RC-O: Total Bank unconsolidated deposits (including affiliate and subsidiary accounts) $ 11,196,115 $ 11,243,254 Estimated uninsured deposits 7,536,202 6,152,454 The Bank, on a consolidated basis: Total deposits $ 6,883,241 $ 7,536,202 Estimated uninsured deposits (excluding affiliate and subsidiary accounts) 2,712,798 2,388,545 The following table sets forth the distribution of total actual deposit accounts, by account types for the periods indicated.
December 31, 2025 December 31, 2024 Balance Balance (dollars in thousands) As stated in FFIEC 041-Consolidated Report of Condition, schedule RC-O: Total Bank unconsolidated deposits (including affiliate and subsidiary accounts) $ 11,423,825 $ 11,996,115 Estimated uninsured deposits 5,150,662 6,883,241 The Bank, on a consolidated basis: Total deposits $ 11,296,431 $ 7,820,114 Estimated uninsured deposits (excluding affiliate and subsidiary accounts) 4,860,186 2,713,019 The following table sets forth the mix of our deposit accounts and their respective percentages of total deposits for the periods presented.
Average demand deposits (including interest-bearing and noninterest-bearing) during the year ended December 31, 2024 included $1.1 billion in ICS reciprocal deposits, compared to $0.9 billion during the year ended December 31, 2023. Average time deposits during the year ended December 31, 2023 included $71.0 million in CDARS, compared to $110.9 million during the year ended December 31, 2023.
Average demand deposits (including interest-bearing and noninterest-bearing) for both 2025 and 2024 included $1.1 billion in ICS reciprocal deposits. Average CDARS within the time deposit portfolio were $47.9 million for the year ended December 31, 2025, a decrease from $71.0 million in 2024. This decline was primarily attributed to maturities that were not renewed.
The beta, which is the measurement of deposit rate sensitivity in response to market rate changes, on nonreciprocal brokered deposits tends to be higher than that of ICS and CDARS reciprocal deposits, as nonreciprocal brokered time deposits are more directly correlated to prevailing market rates of interest, while ICS and CDARs reciprocal deposits reflect the Bank’s relationship with reciprocal deposit clients and are more driven by a desire for FDIC insurance coverage than market leading rates. -66- Table of Contents The following table sets forth information related to the uninsured deposit balances of the Bank.
Conversely, ICS and CDARS reciprocal deposits typically reflect the Bank’s core relationship with clients; these balances are primarily driven by a desire for FDIC insurance coverage rather than market-leading rates, resulting in lower price sensitivity. -69- Table of Contents The following table sets forth information related to the uninsured deposit balances of the Bank for the periods presented.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Sensitivity Market Risk Interest rate risk management is our primary market risk. See “Item 7- Management’s Discussion and Analysis of Financial Condition and Results of Operation- Interest Rate Sensitivity Analysis” herein for a discussion of our management of our interest rate risk. -71- Table of Contents PART II
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Sensitivity Market Risk Interest rate risk management is our primary market risk. See “Item 7- Management’s Discussion and Analysis of Financial Condition and Results of Operation- Interest Rate Sensitivity Analysis” herein for a discussion of our management of our interest rate risk. -74- Table of Contents PART II

Other CNOBP 10-K year-over-year comparisons