ConnectOne Bancorp, Inc.
For the period ended Jun 30, 2026. Filed Aug 4, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 4, 2026
CNOB$32.42-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-05.
0001437749-26-014866
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0001437749-26-025623
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 97 previous paragraphs and 103 current paragraphs.
56 unchanged; 32 reworded; 12 added; 9 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 25 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Net income (loss) available to common stockholders for the three months ended June 30, 2026 was $40.2 million, as compared to ($21.8) million for the prior-year period. The Company’s diluted earnings (loss) per share was $0.80 for the three months ended June 30, 2026 compared with ($0.52) for the prior-year period. The $62.0 million increase in net income available to common stockholders and the $1.32 increase in diluted earnings per share were due to a $34.8 million increase in net interest income, a $27.4 million decrease in provision for credit losses, a $2.7 million increase in noninterest income and a $18.2 million decrease in noninterest expenses, which was partially offset by a $21.2 million increase in income tax expense. The reduction in provision for credit losses primarily reflects the initial $27.4 million provision recognized in the prior-year period upon closing the acquisition of The First of Long Island Corporation ("FLIC"). Similarly, the $18.2 million decrease in noninterest expenses was driven by $30.7 million in merger and restructuring charges recognized in the prior-year period, partially offset by the inclusion of ongoing FLIC operating expenses in the current period. Overall, year-over-year variances across all income statement line items were heavily impacted by the merger with FLIC.
Current report
Fully taxable equivalent net interest income for the second quarter of 2026 increased $35.0 million, or 43.9%, from the prior-year period, due to a 36 basis-point widening of the net interest margin to 3.42% from 3.06%, and a 28.5% increase in average interest earning assets. The margin also benefited from a 16 basis-point increase in the yield on interest-earning assets and a 32 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits. The year-over-year expansion in both net interest margin and average earning assets was primarily driven by the inclusion of a full quarter of FLIC's operating results in the second quarter of 2026, compared to only one month of activity in the prior-year period following the mid-quarter closing of the merger.
Current report
Noninterest income totaled $14.7 million for the six months ended June 30, 2026, compared with $9.6 million for prior-year-period. The increase was primarily due to a $2.3 million increase in BOLI income, a $2.0 million increase in deposit, loan and other income and a $1.5 million increase in net gains on sale of loans held-for-sale, primarily SBA loans, which was partially offset by a $0.7 million decrease in net gains on equity securities. Similarly, growth across these noninterest income categories was primarily attributable to operating the expanded franchise for the full six-month period in 2026 compared to just one month of FLIC activity in the prior-year period.
Current report
Noninterest expenses totaled $113.3 million for the six months ended June 30, 2026, compared with $113.0 million for the prior-year period. Noninterest expenses for the six months ended June 30, 2026 included $2.2 million in merger and restructuring charges, compared to $32.4 million in merger and restructuring charges in the prior-year period. Excluding merger-related charges, adjusted noninterest expenses were $111.1 million for the first six months of 2026, up $30.5 million from $80.6 million in the prior-year period. This increase was primarily driven by six full months of combined FLIC operations in 2026, compared to just one month in the 2025 period. Key drivers of the increase included a $16.5 million increase in salaries and employee benefits, a $4.7 million increase in occupancy and equipment expenses, a $4.2 million increase in amortization of core deposit intangibles, a $2.1 million increase in other expenses, a $1.3 million increase in professional and consulting fees, a $1.2 million increase in information technology and communication expenses, and a $0.7 million increase in marketing and advertising expenses, partially offset by a $0.1 million decrease in FDIC insurance expense.
Current report
Income tax expense was $30.9 million for the six months ended June 30, 2026, resulting in an effective tax rate of 28.0%, compared to income tax expense of $2.2 million for the prior-year period. Income tax expense increased primarily due to a return to pre-tax profitability in 2026. By comparison, the prior-year period reflected a pre-tax loss driven by initial credit loss provisions and FLIC merger-related charges. The effective tax rate also reflects higher state and local tax apportionment factors resulting from our expanded presence in New York following the FLIC merger.
Current report
On June 30, 2026, the Company executed an agreement committing up to $50.0 million to a renewable energy tax equity fund. The investment was structured to generate economic returns as well as Federal Investment Tax Credits ("ITCs") and other favorable tax attributes, which are accounted for under the Proportional Amortization Method ("PAM") pursuant to ASC 323-740. While no capital calls were funded and no direct tax credits or proportional amortization expenses were recognized in the consolidated income statement during the second quarter of 2026, the anticipated full-year tax benefits of the transaction were incorporated into our estimated annual effective tax rate calculation for fiscal 2026. This expectation supports maintaining our estimated full-year effective tax rate at approximately 28%. We expect the underlying renewable energy projects to achieve placed-in-service status in tranches during the second half of 2026, at which point the corresponding capital calls, direct tax credits, and proportional asset amortization will be recognized in our consolidated financial statements.
Current report
For the three and six months ended June 30, 2026, the provision for credit losses (including unfunded commitments) was $8.3 million and $13.5 million, respectively, down from $35.7 million and $39.2 million in the comparable 2025 periods. The provision in the prior-year periods was significantly elevated due to an initial $27.4 million provision recognized upon closing the FLIC merger in June 2025. Excluding the initial merger provision from the prior-year base, the provision for credit losses in both 2026 periods reflected net loan portfolio growth, charge-offs and specific reserves on individually evaluated loans, and updates to macroeconomic forecasts and qualitative factors.
Current report
Net charge-offs were $21.0 million and $27.7 million for the three and six months ended June 30, 2026, respectively, compared with $4.9 million and $8.3 million for the prior-year periods. The elevated net charge-off activity during the three and six months ended June 30, 2026 was primarily driven by a $13.8 million charge-off associated with a group of New York City multi-family loans secured by rent-stabilized properties.
Current report
The Company actively manages credit risk and portfolio quality through stringent underwriting standards, routine credit reviews, and ongoing monitoring of delinquencies, risk ratings, and portfolio dynamics. Management prioritizes early identification of deteriorating credits, ensuring timely charge-offs based on realistic appraisals of cash flows and underlying collateral, while maintaining an adequate ACL.
Current report
As a matter of policy, loans are placed on nonaccrual status when principal or interest payments become 90 days past due, or earlier if full collection is deemed doubtful. Upon transfer to nonaccrual status, interest recognition ceases, and all previously accrued but uncollected interest is reversed against current-period interest income. Cash payments received on nonaccrual loans are generally applied to reduce principal. Loans may be restored to accrual status only when all delinquent amounts are brought current and future payments are reasonably assured. Well-secured loans in the process of collection may continue to accrue interest beyond 90 days past due, subject to management review.
Current report
The increase in nonaccrual loans was primarily driven by a group of New York City multi-family loans secured by rent-stabilized properties, which added $29.9 million (net of charge-offs) to nonaccruals during the three months ended June 30, 2026.
Current report
Average total deposits increased by $3.2 billion, or 38.4%, during the six months ended June 30, 2026 when compared to the prior-year period. The increase in total average deposits was due to a $1.6 billion increase in demand, interest-bearing and NOW deposits, a $0.9 billion increase in noninterest-bearing deposits, a $0.4 billion increase in time deposits, and a $0.3 billion increase in savings deposits. Growth across all deposit categories was primarily attributable to operating the expanded branch network resulting from the FLIC merger for six full months in 2026 compared to only one month of FLIC activity in the prior-year period.
Removed paragraphs (9)
Previous report
The provision for credit losses, which includes a provision for unfunded commitments, for the three months ended March 31, 2026 and March 31, 2025 was $5.2 million and $3.5 million, respectively. In each of the quarters presented, the provision for credit losses reflected net portfolio growth, charges related to individually evaluated loans, and changing macroeconomic forecasts and conditions.
Previous report
Net charge-offs for the first quarter of 2026 totaled $6.7 million, or 0.23% of average loans on an annualized basis, compared to $3.4 million, or 0.17% of average loans, for the prior-year period. The current period activity was primarily driven by the resolution of PCD loans acquired in the FLIC merger, which represented 0.15% of the total annualized net charge-off ratio.
Previous report
These PCD loans were successfully resolved against previously established nonaccretable credit marks and resulted in a $0.2 million release of provision for credit losses upon settlement. Excluding these acquisition-related resolutions, the annualized net charge-off ratio for the originating portfolio was 0.08% for the three months ended March 31, 2026, a decrease from the 0.17% reported in the prior-year period.
Previous report
The Company manages asset quality and credit risk by maintaining diversification in its loan portfolio and through its review processes that includes analysis of credit requests and ongoing examination of outstanding loans, delinquencies, and potential problem loans, with particular attention to portfolio dynamics and mix. The Company strives to identify loans experiencing difficulty early on, to record charge-offs promptly based on realistic assessments of current collateral values and cash flows, and to maintain an adequate ACL at all times.
Previous report
It is generally the Company’s policy to discontinue interest accruals once a loan is past due as to interest or principal payments for a period of ninety days. When a loan is placed on nonaccrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current income. Payments received on nonaccrual loans are generally applied against principal. A loan may be restored to an accruing basis when all past due amounts have been collected. Loans past due 90 days or more, which are both well-secured and in the process of collection, may remain on an accrual basis.
Previous report
As of March 31, 2026, loans 30-59 days past due were 0.81% of loans receivable, compared to 0.19% as of December 31, 2025. This rise is predominantly due to an interrelated series of credits totaling $63.8 million secured by 19 multifamily NYC rent-regulated properties. We are working with our client to resolve these credits; however, the resulting financial impact cannot be determined at this time.
Previous report
Rent-regulated Portfolio
Previous report
The Bank maintains a solid reserve position, particularly within its rent-regulated multifamily portfolio which includes significant credit and fair value marks applicable to the portfolio acquired from FLIC, in addition to qualitative ACL allocations applicable to its legacy portfolio. The following table provides additional information on the Bank's New York City ("NYC") rent-regulated portfolio as of March 31, 2026:
Previous report
During the first quarter of 2026, the Company expanded these capabilities by launching a partnership with the National Bank InterDeposit Company (“NBID”) network, operated by ModernFi. We are currently in the initial stages of transitioning select client funds to this network to further diversify our reciprocal deposit options. While the financial impact of this transition was not material to our results of operations or liquidity position for the three months ended March 31, 2026, we anticipate utilizing this platform to complement our existing reciprocal programs in future periods.
Reworded paragraphs (32)
Previous wording
This report includes forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that involve inherent risks and uncertainties. This report contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of ConnectOne Bancorp Inc. and its subsidiaries, including statements preceded by, followed by, or that include words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue,” “remain,” “pattern” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) competitive pressures among depository institutions may increase significantly; (2) changes in the interest rate environment may reduce interest margins; (3) prepayment speeds, loan origination and sale volumes, charge-offs and credit loss provisions may vary substantially from period to period; (4) general economic conditions may be less favorable than expected or may be adversely effected by policy uncertainties, including regarding the impact of tariffs; (5) political developments, sovereign debt problems, wars or other hostilities such as the ongoing conflict between Ukraine and Russia and the United States and Iran, and instability in the Middle East, may disrupt or increase volatility in securities markets or other economic conditions; (6) legislative or regulatory changes or actions may adversely affect the businesses in which ConnectOne Bancorp is engaged or the business of our clients, such as changes affecting the owners of rest stabilized multi-family buildings in New York City; (7) changes and trends in the securities markets may adversely impact ConnectOne Bancorp; (8) a delayed or incomplete resolution of regulatory issues could adversely impact planning by ConnectOne Bancorp; (9) the impact on reputation risk created by the developments discussed above on such matters as business generation and retention, funding and liquidity could be significant; (10) the outcome of regulatory and legal investigations and proceedings may not be anticipated, and (11) the impact of health emergencies or natural disasters on our employees and operations, and those of our customers. Further information on other factors that could affect the financial results of ConnectOne Bancorp is included in Item 1a. of ConnectOne Bancorp’s Annual Report on Form 10-K as amended and updated in ConnectOne Bancorp’s other filings with the Securities and Exchange Commission. These documents are available free of charge at the Commission’s website at http://www.se…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This report includes forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that involve inherent risks and uncertainties. This report contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of ConnectOne Bancorp Inc. and its subsidiaries, including statements preceded by, followed by, or that include words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue,” “remain,” “pattern” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) competitive pressures among depository institutions may increase significantly; (2) changes in the interest rate environment may reduce interest margins; (3) prepayment speeds, loan origination and sale volumes, charge-offs and credit loss provisions may vary substantially from period to period; (4) general economic conditions may be less favorable than expected or may be adversely effected by policy uncertainties, including regarding the impact of tariffs; (5) political developments, sovereign debt problems, wars or other hostilities such as the ongoing conflict between Ukraine and Russia and the United States and Iran, and instability in the Middle East, may disrupt or increase volatility in securities markets or other economic conditions; (6) legislative or regulatory changes or actions may adversely affect the businesses in which ConnectOne Bancorp is engaged or the business of our clients, such as changes affecting the owners of rent stabilized multi-family buildings in New York City; (7) changes and trends in the securities markets may adversely impact ConnectOne Bancorp; (8) a delayed or incomplete resolution of regulatory issues could adversely impact planning by ConnectOne Bancorp; (9) the impact on reputation risk created by the developments discussed above on such matters as business generation and retention, funding and liquidity could be significant; (10) the outcome of regulatory and legal investigations and proceedings may not be anticipated, and (11) the impact of health emergencies or natural disasters on our employees and operations, and those of our customers. Further information on other factors that could affect the financial results of ConnectOne Bancorp is included in Item 1a. of ConnectOne Bancorp’s Annual Report on Form 10-K as amended and updated in ConnectOne Bancorp’s other filings with the Securities and Exchange Commission. These documents are available free of charge at the Commission’s website at http://www.se…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Net income available to common stockholders for the three months ended March 31, 2026 was $36.3 million, as compared to $18.7 million for the prior-year period. The Company’s diluted earnings per share were $0.72 for the three months ended March 31, 2026, as compared with diluted earnings per share of $0.49 for the prior-year period. The $17.6 million increase in net income available to common stockholders and the $0.23 increase in diluted earnings per share were due to a $43.0 million increase in net interest income and a $2.3 million increase in noninterest income, which was partially offset by an $18.6 million increase in noninterest expenses, a $7.5 million increase in income tax expense and a $1.7 million increase in provision for credit losses. The increases in net interest income and noninterest expenses were primarily driven by a full three-month impact of the FLIC acquisition in 2026, compared to the pre-merger period in 2025.
Current wording
Net income (loss) available to common stockholders for the six months ended June 30, 2026 was $76.5 million, as compared to ($3.1) million for the prior-year period. The Company’s diluted earnings (loss) per share were $1.51 for the six months ended June 30, 2026 compared with ($0.08) for the prior-year period. The $79.5 million increase in net income available to common stockholders and the $1.59 increase in diluted earnings per share were due to a $77.8 million increase in net interest income, a $25.7 million decrease in provision for credit losses and a $5.1 million increase in noninterest income, which was partially offset by a $28.7 million increase in income tax expense and a $0.3 million increase in noninterest expenses. The reduction in provision for credit losses primarily reflects the initial $27.4 million provision recognized in the prior-year period upon closing the acquisition of FLIC. Noninterest expenses were essentially flat year-over-year, as the prior-year period included $32.1 million in merger and restructuring charges associated with the transaction; excluding these prior-year charges, core noninterest expenses increased due to operating the larger combined franchise for the full six-month period in 2026. Overall, performance variances across both periods reflect the significant expansion of the franchise following the FLIC merger.
Previous wording
Fully taxable equivalent net interest income for the first quarter of 2026 increased $43.4 million, or 65.2%, from prior-year period, due to a 46 basis-point widening of the net interest margin to 3.39% from 2.93%, and a 42.7% increase in average interest earning assets. The increase in average interest-earning assets was primarily due to the full-period impact of assets acquired in the FLIC merger. The margin also benefited from a 20 basis-point increase in the yield on interest-earning assets and a 49 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits.
Current wording
Fully taxable equivalent net interest income for the six months ended June 30, 2026 increased $78.4 million, or 53.6%, from prior-year period, due to a 41 basis-point widening of the net interest margin to 3.41% from 3.00%, and a 35.1% increase in average interest-earning assets. The margin also benefited from a 17 basis-point increase in the yield on interest-earning assets and a 40 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits. Similarly, performance for the six-month period reflects six full months of the combined balance sheet in 2026 compared to just one month of FLIC activity in the prior-year period, significantly benefiting both average earning asset volumes and net interest margin.
Previous wording
The following table presents for the three months ended March 31, 2026 and 2025, the Company’s average assets, liabilities and stockholders’ equity. The Company’s net interest income, net interest spread and net interest margin are also reflected.
Current wording
The following tables present for the three and six months ended June 30, 2026 and 2025, the Company’s average assets, liabilities and stockholders’ equity. The Company’s net interest income, net interest spread and net interest margin are also reflected.
Previous wording
Noninterest income totaled $6.8 million for the three months ended March 31, 2026, compared with $4.5 million for prior-year-period. The increase was primarily due to a $1.4 million increase in BOLI income and a $1.3 million increase in deposit, loan and other income, which was partially offset by a $0.4 million decrease in net gains (losses) on equity securities. The growth in deposit, loan and other income was primarily attributable to the expanded scale of operations following the merger with FLIC.
Current wording
Noninterest income totaled $7.9 million for the three months ended June 30, 2026, compared with $5.2 million for the prior-year-period. The increase was primarily due to a $1.4 million increase in net gains on sale of loans held-for-sale, primarily SBA loans, a $0.9 million increase in BOLI income and a $0.8 million increase in deposit, loan and other income, which was partially offset by a $0.4 million decrease in net gains on equity securities. The increase across these fee-based lines and BOLI income was primarily driven by the inclusion of a full quarter of FLIC operations in 2026, compared to only one month of activity in the prior-year period.
Previous wording
Noninterest expenses totaled $57.9 million for the three months ended March 31, 2026, compared with $39.3 million for prior-year period. The increase was primarily due to a $10.2 million increase in salaries and employee benefits, a $2.7 million increase in occupancy and equipment expenses and a $2.6 million increase in amortization of core deposit intangibles. Other contributing factors included a $0.7 million increase in other expenses, a $0.7 million increase in professional and consulting expenses and a $0.6 million increase in information technology and communication expenses. Additionally, noninterest expenses for the first quarter of 2026 included $2.1 million in merger expenses and restructuring charges, compared to $1.3 million in the prior-year period. Excluding these merger-related items, noninterest expenses would have been $55.7 million and $38.0 million for the 2026 and 2025 periods, respectively. The variances in nearly all noninterest expense categories were primarily attributable to the expanded operations following the merger with FLIC.
Current wording
Noninterest expenses totaled $55.4 million for the three months ended June 30, 2026, compared with $73.6 million for the prior-year period. Noninterest expenses for the second quarter of 2026 included $0.1 million in merger and restructuring charges, compared to $30.7 million in the prior-year period. Excluding merger-related charges, adjusted noninterest expenses were $55.3 million for the second quarter of 2026, up $12.4 million from $42.9 million in the prior-year period. The increase was primarily driven by a full quarter of combined FLIC operations compared to just one month in the 2025 period. Key drivers of the increase included a $6.3 million increase in salaries and employee benefits, a $2.0 million increase in occupancy and equipment expenses, a $1.6 million increase in amortization of core deposit intangibles, a $1.3 million increase in other expenses, a $0.6 million increase in information technology and communication expenses, and a $0.5 million increase in professional and consulting fees.
Previous wording
Income tax expense was $14.7 million for the first quarter of 2026, resulting in an effective tax rate of 28.0%, compared to income tax expense of $7.2 million and an effective tax rate of 26.1% for the prior-year period. The increase in income tax expense and the effective tax rate was primarily due to higher pre-tax income and changes in state and local tax apportionment factors resulting from our expanded presence in New York following the FLIC merger.
Current wording
Income tax expense was $16.2 million for the second quarter of 2026, resulting in an effective tax rate of 28.0% compared to income tax benefit of ($5.0) million for the prior-year period. The increase in income tax expense was primarily driven by the return to pre-tax profitability in 2026, compared to a pre-tax loss in the prior-year period that was largely due to initial credit loss provisions and merger-related charges associated with the FLIC acquisition. Additionally, the effective tax rate was impacted by higher state and local tax apportionment factors resulting from our expanded presence in New York following the merger.
Previous wording
As of March 31, 2026, gross loans totaled $11.7 billion, an increase of $0.3 billion or 2.5% compared to December 31, 2025. The increase in gross loans as of March 31, 2026, compared to December 31, 2025, was primarily driven by organic growth in the commercial real estate portfolio, reflecting continued lending activity within our expanded market footprint.
Current wording
As of June 30, 2026, gross loans totaled $11.9 billion, an increase of $0.4 billion or 3.6% compared to December 31, 2025. The increase in gross loans as of June 30, 2026, compared to December 31, 2025, was primarily driven by organic growth in the commercial real estate portfolio, reflecting continued lending activity within our expanded market footprint.
Previous wording
As of March 31, 2026, the Company’s ACL was $153.1 million, a decrease of $1.2 million from $154.3 million as of December 31, 2025.
Current wording
As of June 30, 2026, the Company’s ACL was $140.1 million, a decrease of $14.2 million from $154.3 million as of December 31, 2025. The $14.2 million decrease was primarily driven by recent charge-off activity—which reduced specific reserves previously established—alongside improvements in macroeconomic forecasts and continued favorable asset quality metrics, including historically low levels of delinquencies and criticized loans.
Previous wording
Changes in the ACL on loans are presented in the following tables for the periods indicated (dollars in thousands).
Current wording
Changes in the ACL on loans are presented in the following tables for the periods indicated.
Previous wording
As of March 31, 2026, the Company's recorded investment in PCD loans totaled $207.6 million. PCD loans, or purchased credit deteriorated loans, are defined by the CECL standard as acquired financial loans that, at the time of acquisition, have experienced a more-than-insignificant deterioration in credit quality since their origination. The Company, with the assistance of independent third-party loan review experts, identified such deterioration by considering various factors. These factors included, but were not limited to, nonperforming status, payment history and delinquency, risk rating, debt service coverage ability, and rate repricing risk. The resulting PCD designated loans include multifamily loans, commercial real estate, commercial loans, and residential real estate.
Current wording
As of June 30, 2026, the Company's recorded investment in PCD loans totaled $193.4 million. PCD loans, or purchased credit deteriorated loans, are defined by the CECL standard as acquired financial loans that, at the time of acquisition, have experienced a more-than-insignificant deterioration in credit quality since their origination. The Company, with the assistance of independent third-party loan review experts, identified such deterioration by considering various factors. These factors included, but were not limited to, nonperforming status, payment history and delinquency, risk rating, debt service coverage ability, and rate repricing risk. The resulting PCD designated loans include multifamily loans, commercial real estate, commercial loans, and residential real estate.
Previous wording
Within the PCD loan portfolio as of March 31, 2026, there is a pool of rent-regulated loans amounting to $158.0 million. These loans are associated with multifamily properties located in the five boroughs of New York City, most of which are entirely or predominantly rent-regulated. This specific pool is subject to unique stressors, primarily due to the 2019 New York rent laws, which restricted rent increases while operating in an environment of escalating expenses, and certain proposed policies of the new mayoral administration of New York City, including a proposed rent freeze.
Current wording
Within the PCD loan portfolio as of June 30, 2026, there is a pool of rent-regulated loans amounting to $146.3 million. These loans are associated with multifamily properties located in the five boroughs of New York City, most of which are entirely or predominantly rent-regulated. This specific pool is subject to unique stressors, primarily due to the 2019 New York rent laws, which restricted rent increases while operating in an environment of escalating expenses, and certain proposed policies of the new mayoral administration of New York City, including a proposed rent freeze which has been adopted by the New York City Rent Guidelines Board.
Previous wording
As of March 31, 2026, the principal components of the securities portfolio were federal agency obligations, mortgage-backed securities, obligations of U.S. states and political subdivisions, corporate bonds and notes, asset-backed securities and equity securities. For the three months ended March 31, 2026, average securities, on an amortized cost basis, increased by $561.3 million to $1.3 billion, or 9.9% of average total interest-earning assets, from $745.9 billion, or 8.1% of average interest-earning assets, for the prior-year period.
Current wording
As of June 30, 2026, the principal components of the securities portfolio were federal agency obligations, mortgage-backed securities, obligations of U.S. states and political subdivisions, corporate bonds and notes, asset-backed securities and equity securities. For the three months ended June 30, 2026, average securities, on an amortized cost basis, increased by $339.1 million to $1.3 billion, or 9.5% of average total interest-earning assets, from $936.0 million, or 8.9% of average interest-earning assets, for the prior-year period. For the six months ended June 30, 2026, average securities, on an amortized cost basis increased by $449.6 million to approximately $1.3 billion, or 9.7% of average total interest-earning assets, from approximately $841.5 million, or 8.5% of average interest-earning assets, for the six months ended June 30, 2025.
Previous wording
As of March 31, 2026, net unrealized losses on available-for-sale securities, which are carried as a component of AOCI and included in stockholders’ equity, net of tax, amounted to $48.2 million as compared with net unrealized losses of $40.7 million as of December 31, 2025. The increase in unrealized losses is predominantly attributable to changes in market conditions and interest rates. Unrealized losses have not been recognized into income because the issuers are of high credit quality, we do not intend to sell, and it is likely that we will not be required to sell the securities prior to their anticipated recovery. The issuers continue to make timely principal and interest payments on the securities. Any impairment that has not been recorded through an ACL is recognized in OCI, net of applicable taxes. The Company did not record an ACL for available-for-sale securities as of March 31, 2026.
Current wording
As of June 30, 2026, net unrealized losses on available-for-sale securities, which are carried as a component of accumulated other comprehensive loss and included in stockholders’ equity, net of tax, amounted to $46.1 million as compared with net unrealized losses of $40.7 million as of December 31, 2025. The increase in net unrealized losses is predominantly attributable to changes in market conditions and interest rates. Unrealized losses have not been recognized into income because the issuers are of high credit quality, we do not intend to sell, and it is likely that we will not be required to sell the securities prior to their anticipated recovery. The issuers continue to make timely principal and interest payments on the securities. Any impairment that has not been recorded through an ACL is recognized in OCI, net of applicable taxes. The Company did not record an ACL for available-for-sale securities as of June 30, 2026.
Previous wording
Based on our model, which was run as of March 31, 2026, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 4.71%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 2.73%. As of December 31, 2025, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 4.95% while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 3.06%.
Current wording
Based on our model, which was run as of June 30, 2026, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 5.63%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 3.27%. As of December 31, 2025, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 4.95% while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 3.06%.
Previous wording
Based on our model, which was run as of March 31, 2026, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would increase our net interest income by 0.10%, while a 100 basis-point instantaneous and parallel decrease in interest rates would decrease net interest income by 0.87%. As of December 31, 2025, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 0.32%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 1.04%.
Current wording
Based on our model, which was run as of June 30, 2026, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would increase our net interest income by 0.87%, while a 100 basis-point instantaneous and parallel decrease in interest rates would decrease net interest income by 0.46%. As of December 31, 2025, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 0.32%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 1.04%.
Previous wording
An EVE analysis is also used to dynamically model the present value of asset and liability cash flows with instantaneous and parallel rate shocks of up 200 basis points and down 100 basis points. The EVE is likely to be different as interest rates change. Our EVE as of March 31, 2026, would decrease by 7.41% with an instantaneous and parallel rate shock of up 200 basis points, and increase by 0.84% with an instantaneous and parallel rate shock of down 100 basis points. Our EVE as of December 31, 2025, would decrease by 7.12% with an instantaneous and parallel rate shock of up 200 basis points, and increase by 0.28% with an instantaneous and parallel rate shock of down 100 basis-points.
Current wording
An EVE analysis is also used to dynamically model the present value of asset and liability cash flows with instantaneous and parallel rate shocks of up 200 basis-points and down 100 basis-points. The EVE is likely to be different as interest rates change. Our EVE as of June 30, 2026, would decrease by 8.38% with an instantaneous and parallel rate shock of up 200 basis-points, and increase by 1.32% with an instantaneous and parallel rate shock of down 100 basis-points. Our EVE as of December 31, 2025, would decrease by 7.12% with an instantaneous and parallel rate shock of up 200 basis-points, and increase by 0.28% with an instantaneous and parallel rate shock of down 100 basis-points.
Previous wording
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.
Current wording
The change in interest rate sensitivity was impacted by changes in overall market interest rates, updates to certain model assumptions, changes in short and intermediate-term fixed rate funding and by the deposit mix shift into noninterest-bearing deposits from listing and brokered certificates of deposit.
Previous wording
As of March 31, 2026, the amount of liquid assets remained at a level management deemed adequate to ensure that, on a short and long-term basis, contractual liabilities, depositors’ withdrawal requirements, and other operational and client credit needs could be satisfied. As of March 31, 2026, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $772.0 million, which represented 5.4% of total assets and 6.3% of total deposits and borrowings, compared to $874.4 million as of December 31, 2025, which represented 6.2% of total assets and 7.2% of total deposits and borrowings. As of March 31, 2026, not included in the above liquid assets were securities with a market value of $95.0 million which were pledged to the FHLB and securities with a market value of $133.9 million which were pledged to the Federal Reserve Bank of New York, which supported aggregate unutilized borrowing capacity of $215.8 million and $223.3 million, respectively as of March 31, 2026 and December 31, 2025.
Current wording
As of June 30, 2026, the amount of liquid assets remained at a level management deemed adequate to ensure that, on a short and long-term basis, contractual liabilities, depositors’ withdrawal requirements, and other operational and client credit needs could be satisfied. As of June 30, 2026, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $870.9 million, which represented 6.0% of total assets and 7.0% of total deposits and borrowings, compared to $874.4 million as of December 31, 2025, which represented 6.2% of total assets and 7.2% of total deposits and borrowings. As of June 30, 2026, not included in the above liquid assets were securities with a market value of $92.3 million which were pledged to the FHLB and securities with a market value of $128.5 million which were pledged to the Federal Reserve Bank of New York, which supported aggregate unutilized borrowing capacity of $210.5 million and $223.3 million, respectively as of June 30, 2026 and December 31, 2025.
Previous wording
The Bank is a member of the FHLB of New York and, based on available qualified collateral as of March 31, 2026, had the ability to borrow $3.8 billion. 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 March 31, 2026. In addition, as of March 31, 2026, the Bank had in place borrowing capacity of $280.0 million through correspondent banks and other unsecured borrowing lines. As of March 31, 2026, the Bank had aggregate available and unused credit of approximately $4.4 billion, which represents the aforementioned facilities totaling $6.3 billion net of $1.9 billion in outstanding borrowings and letters of credit. As of March 31, 2026, outstanding commitments for the Bank to extend credit were approximately $1.4 billion.
Current wording
The Bank is a member of the FHLB of New York and, based on available qualified collateral as of June 30, 2026, had the ability to borrow $3.9 billion. The Bank also has a credit facility established with the Federal Reserve Bank of New York for direct discount window borrowings based on pledged collateral and had the ability to borrow $2.4 billion as of June 30, 2026. In addition, as of June 30, 2026, the Bank had in place borrowing capacity of $280.0 million through correspondent banks and other unsecured borrowing lines. As of June 30, 2026, the Bank had aggregate available and unused credit of approximately $4.7 billion, which represents the aforementioned facilities totaling $6.6 billion net of $1.9 billion in outstanding borrowings and letters of credit. As of June 30, 2026, outstanding commitments for the Bank to extend credit were approximately $1.6 billion.
Previous wording
Cash and cash equivalents totaled $344.5 million as of March 31, 2026, decreasing by $36.4 million from $380.9 million as of December 31, 2025. Operating activities provided $15.3 million in net cash. Investing activities used $233.1 million in net cash, a net increase in loans $273.3 million and investment purchases of $45.3 million and were partially offset by investment maturities, calls and principal repayments of $89.6 million .Financing activities provided $181.3 million in net cash, primarily reflecting a net increase in deposits of $272.3 million and were partially offset by net repayments of FHLB borrowings of $76.0 million.
Current wording
Cash and cash equivalents totaled $362.3 million as of June 30, 2026, decreasing by $18.6 million from $380.9 million as of December 31, 2025. Operating activities provided $49.8 million in net cash. Investing activities used $353.6 million in net cash, a net increase in loans of $423.9 million and investment purchases of $101.6 million and were partially offset by investment maturities, calls and principal repayments of $166.2 million. Financing activities provided $285.2 million in net cash, primarily reflecting a net increase in deposits of $499.5 million and which was partially offset by net repayments of FHLB borrowings of $188.1 million.
Previous wording
To support clients with balances exceeding standard FDIC insurance limits, we utilize reciprocal deposit networks. This primarily includes the IntraFi Network LLC for the placement of Certificate of Deposit Account Registry Service ("CDARS") and Insured Cash Sweep ("ICS") accounts. Through these networks, large-dollar deposits are placed into accounts at other participating banks in increments below the FDIC insurance limit to ensure full principal and interest coverage.
Current wording
To support clients with balances exceeding standard FDIC insurance limits, we utilize reciprocal deposit networks. This includes the IntraFi Network LLC for the placement of Certificate of Deposit Account Registry Service ("CDARS") and Insured Cash Sweep ("ICS") accounts, as well as the recently launched partnership with the National Bank InterDeposit Company (“NBID”) network, operated by ModernFi. Through these networks, large-dollar deposits are placed into accounts at other participating banks in increments below the FDIC insurance limit to ensure full principal and interest coverage.
Previous wording
Average total deposits increased by $3.6 billion, or 47.0%, during the three months ended March 31, 2026 when compared to the prior-year period. The increase in total average deposits was due to a $1.8 billion increase in demand, interest-bearing and NOW deposits, a $1.1 billion increase in noninterest-bearing deposits, a $0.4 billion increase in savings deposits and a $0.4 billion increase in time deposits. The increase in all quarter-to-date average deposit categories was primarily due to the merger with FLIC.
Current wording
Average total deposits increased by $2.7 billion, or 31.0%, during the three months ended June 30, 2026 when compared to the prior-year period. The increase in total average deposits was due to a $1.5 billion increase in demand, interest-bearing and NOW deposits, a $0.7 billion increase in noninterest-bearing deposits, a $0.3 billion increase in time deposits and a $0.2 billion increase in savings deposits. Growth across all deposit categories was primarily driven by the merger with FLIC, which reflected a full quarter of combined operations in 2026 compared to only one month of activity in the prior-year period.
Previous wording
The increase in average time deposits of $0.4 billion during the three months ended March 31, 2026 was primarily due to a $0.5 billion increase in retail time deposits, partially offset by a $0.1 billion dollar decrease in nonreciprocal brokered certificates of deposit. Average nonreciprocal brokered certificates of deposit included in total time deposits were $0.8 billion for the three months ended March 31, 2026, compared to $0.9 billion for the prior-year period.
Current wording
The increase in average time deposits of $0.3 billion during the three months ended June 30, 2026 was primarily due to a $0.4 billion increase in retail time deposits, partially offset by a $0.1 billion decrease in nonreciprocal brokered certificates of deposit. Average nonreciprocal brokered certificates of deposit included in total time deposits were $0.9 billion for both the three months ended June 30, 2026 and the prior-year period.
Previous wording
Average aggregate demand deposits included $1.2 billion and $1.1 billion in ICS reciprocal deposits during the three months ended March 31, 2026 and March 31, 2025, respectively.
Current wording
Average aggregate demand deposits included $1.2 billion and $1.1 billion in ICS and ModernFi reciprocal deposits in the aggregate during the three months ended June 30, 2026 and June 30, 2025, respectively.
Previous wording
The deposit beta—the measurement of rate sensitivity in response to market changes—on nonreciprocal brokered certificates of deposit tends to be higher than that of ICS and CDARS reciprocal deposits. This is because nonreciprocal brokered funds are more directly correlated to prevailing market rates, whereas reciprocal deposits reflect deeper client relationships and a primary focus on FDIC insurance coverage rather than market-leading yields.
Current wording
The deposit beta, the measurement of rate sensitivity in response to market changes, on nonreciprocal brokered certificates of deposit tends to be higher than that of ICS, ModernFi and CDARS reciprocal deposits. This is because nonreciprocal brokered funds are more directly correlated to prevailing market rates, whereas reciprocal deposits reflect deeper client relationships and a primary focus on FDIC insurance coverage rather than market-leading yields.
Previous wording
Total deposits increased by $0.3 billion, or 2.4%, when compared to December 31, 2025. The increase in total deposits was primarily due to a $0.2 billion increase in time deposits and a $0.1 billion increase in demand, interest-bearing and NOW deposits.
Current wording
Total deposits increased by $0.5 billion, or 4.4%, when compared to December 31, 2025. The increase in total deposits was primarily due to a $0.4 billion increase in demand, interest-bearing and NOW deposits, a $0.1 billion increase in time deposits and a $0.1 billion increase in noninterest bearing deposits, partially offset by a $0.1 billion decrease in savings deposits.
Previous wording
Aggregate demand deposits included $1.2 billion in ICS reciprocal deposits as of both March 31, 2026 and December 31, 2025.
Current wording
Aggregate demand deposits included $1.3 billion in ICS and ModernFi reciprocal deposits as of June 30, 2026 and $1.2 billion as of December 31, 2025.
Previous wording
Included in time deposits were nonreciprocal brokered certificates of deposit of $0.9 billion as of March 31, 2026 and $0.7 billion as of December 31, 2025.
Current wording
Included in time deposits were nonreciprocal brokered certificates of deposit of $0.8 billion as of June 30, 2026 and $0.7 billion as of December 31, 2025.
Previous wording
As of March 31, 2026, we held $1.0 billion of time deposits with balances greater than $250,000. The following table provides information on the maturity distribution of the time deposits with balances greater than $250,000 as of March 31, 2026:
Current wording
As of June 30, 2026, we held $1.1 billion of time deposits with balances greater than $250,000. The following table provides information on the maturity distribution of the time deposits with balances greater than $250,000 as of June 30, 2026:
Previous wording
The Company’s stockholders’ equity increased by $18.2 million when compared to December 31, 2025. The increase in total stockholders’ equity was primarily due to an increase in retained earnings of $27.3 million, partially offset by an increase in the AOCI of $6.2 million. As of March 31, 2026, the Company’s tangible common equity ratio and tangible book value per share were 8.64% and $23.93, respectively, compared to 8.62% and $23.52, respectively, as of December 31, 2025. Total goodwill and other intangible assets were $277.3 million as of March 31, 2026, and $280.2 million as of December 31, 2025.
Current wording
The Company’s stockholders’ equity increased by $53.2 million when compared to December 31, 2025. The increase in total stockholders’ equity was primarily due to an increase in retained earnings of $57.6 million, partially offset by an increase in accumulated other comprehensive loss of $3.0 million. As of June 30, 2026, the Company’s tangible common equity ratio and tangible book value per share were 8.78% and $24.66, respectively, compared to 8.62% and $23.52, respectively, as of December 31, 2025. Total goodwill and other intangible assets were $274.5 million as of June 30, 2026, and $280.2 million as of December 31, 2025.
Previous wording
As of March 31, 2026, both the Company and Bank satisfy the capital conservation buffer requirements applicable to them. The lowest ratio at the Company is the Tier 1 Risk Based Capital Ratio which was 2.69 percentage points above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 2.84 percentage points above the minimum buffer ratio.
Current wording
As of June 30, 2026, both the Company and Bank satisfy the capital conservation buffer requirements applicable to them. The lowest ratio at the Company is the Tier 1 Risk Based Capital Ratio which was 2.72 percentage points above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 2.70 percentage points above the minimum buffer ratio.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The increase in average time deposits of $0.4 billion during the three months ended June 30, 2026 was primarily due to a $0.4 billion increase in retail time deposits. Average nonreciprocal brokered certificates of deposit included in total time deposits were $0.8 billion for the six months ended June 30, 2026, compared to $0.9 billion for the prior-year period.
Current report — wording carried from elsewhere
Average aggregate demand deposits included $1.2 billion and $1.0 billion in ICS and ModernFi reciprocal deposits during the six months ended June 30, 2026 and June 30, 2025, respectively.
Current report — wording carried from elsewhere
The deposit beta, the measurement of rate sensitivity in response to market changes, on nonreciprocal brokered certificates of deposit tends to be higher than that of ICS, ModernFi and CDARS reciprocal deposits. This is because nonreciprocal brokered funds are more directly correlated to prevailing market rates, whereas reciprocal deposits reflect deeper client relationships and a primary focus on FDIC insurance coverage rather than market-leading yields.