ConnectOne Bancorp, Inc.

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 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.

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 affected 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.s…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

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 wording

Net income available to common stockholders for the nine months ended September 30, 2026 was $106.4 million, compared to $36.4 million for the prior-year period. The Company’s diluted earnings per share were $2.10 for the nine months ended September 30, 2026 compared with $0.83 for the prior-year period. Results for the nine months ended September 30, 2026 include the $23.0 million pretax loss on the transfer of loans held-for-sale recognized in the third quarter of 2026. The $70.0 million increase in net income available to common stockholders and the $1.27 increase in diluted earnings per share resulted mainly from a $93.1 million increase in net interest income, a $26.2 million decrease in provision for credit losses and a $3.0 million decrease in noninterest expenses. This was partially offset by a $28.8 million decrease in noninterest income and a $23.5 million increase in income tax expense. The decrease in noninterest income was mainly attributable to the $23.0 million pretax loss described above. It also reflected $10.1 million of non-recurring income recognized in the third quarter of 2025, consisting of $6.6 million in employee retention tax credit ("ERTC") and a $3.5 million defined benefit pension plan curtailment gain.

Previous 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.

Current wording

Fully taxable equivalent net interest income for the three months ended September 30, 2026 was $118.5 million, an increase of $15.4 million, or 14.9%, from the prior-year period. The increase was due to a 33 basis-point widening of the net interest margin to 3.44% from 3.11%, and a 3.9% increase in average interest earning assets. The wider margin reflected a 15 basis-point increase in the yield on interest-earning assets and a 17 basis-point decrease in the average cost of deposits, including noninterest-bearing deposits.

Previous wording

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 wording

Fully taxable equivalent net interest income for the nine months ended September 30, 2026 was $343.4 million, an increase of $93.8 million, or 37.6%, from prior-year period. The increase was due to a 38 basis-point widening of the net interest margin to 3.42% from 3.04%, and a 22.5% 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 31 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits. The increase in average interest-earning assets mainly reflects the inclusion of FLIC’s results for the full nine months ended September 30, 2026, compared with approximately four months in the prior-year period following the completion of the merger on June 1, 2025.

Previous 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.

Current wording

The following tables present for the three and nine months ended September 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 $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 wording

Noninterest income totaled $0.2 million for the nine months ended September 30, 2026, compared with $29.0 million for prior-year-period. Noninterest income for the nine months ended 2026 included the aforementioned $23.0 million pretax restructuring charge and in 2025 the $10.1 million in non-recurring gains discussed above. Excluding these items noninterest income increased by $4.3 million compared to the prior-year period. The increase was primarily due to a $3.5 million increase in BOLI income, a $1.9 million increase in net gains on sale of loans held-for-sale, and a $1.5 million increase in deposit, loan and other income, partially offset by a decrease of $2.6 million in net gains on equity securities. Similarly, growth across these noninterest income categories was primarily attributable to operating the expanded franchise for the full nine-month period in 2026 compared to just four months of FLIC activity in the prior-year period.

Previous 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.

Current wording

Noninterest expenses totaled $55.4 million for the three months ended September 30, 2026, compared with $58.7 million for the prior-year period. Noninterest expenses for the third quarter of 2025 included $2.9 million in merger, restructuring and exit charges. Excluding these charges, noninterest expenses were $55.4 million for the third quarter of 2026, down $0.4 million from $55.8 million in the prior-year period. Key drivers of the decrease included a $0.9 million decrease in FDIC insurance expense, a $0.4 million decrease in amortization of core deposit intangibles, a $0.2 million decrease in occupancy and equipment expenses and a $0.1 million decrease in other expenses, partially offset by a $0.5 million increase in salaries and employee benefits, a $0.3 million increase in professional and consulting expenses and a $0.2 million increase in marketing and advertising expenses.

Previous wording

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 wording

Noninterest expenses totaled $168.7 million for the nine months ended September 30, 2026, compared with $171.6 million for the prior-year period. Noninterest expenses for the nine months ended September 30, 2026 included $2.2 million in merger, restructuring and exit charges, compared with $35.3 million in merger, restructuring and exit charges, including a $0.3 million BOLI restructuring charge, in the prior-year period. Excluding these charges, noninterest expenses were $166.4 million for the nine months ended September 30, 2026, up $30.1 million from $136.3 million in the prior-year period. The increase was primarily driven by the inclusion of FLIC’s operations for the full nine months of 2026, compared with approximately four months in the prior-year period. Key drivers of the increase included a $17.0 million increase in salaries and employee benefits, a $4.6 million increase in occupancy and equipment expenses, a $3.8 million increase in amortization of core deposit intangibles, a $2.0 million increase in other expenses, a $1.6 million increase in professional and consulting expenses, a $1.3 million increase in information technology and communications expenses and a $0.8 million increase in marketing and advertising expenses, partially offset by a $1.0 million decrease in FDIC insurance expense.

Previous wording

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 wording

On June 30, 2026, the Company entered into an agreement committing up to $50.0 million to a renewable energy tax equity fund. The investment is expected to generate economic returns as well as federal investment tax credits (“ITCs”) and other tax benefits, and is accounted for under the proportional amortization method (see Note 5). During the three months ended September 30, 2026, the Company funded a $6.0 million capital call, reducing its unfunded commitment to $44.0 million. As of September 30, 2026, none of the underlying renewable energy projects had been placed in service. As a result, no tax credits, tax benefits or proportional amortization were recognized in the Consolidated Statements of Income for the three or nine months ended September 30, 2026. The Company has incorporated the anticipated 2026 tax credits and net benefits from this investment into its estimated annual effective tax rate for 2026. The Company expects the underlying projects to be placed in service in tranches during the fourth quarter of 2026. Remaining capital contributions, tax credits and proportional amortization will be recognized as each tranche is placed in service.

Previous wording

The ACL is an estimate of current expected credit losses considering available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date. The methodology for determining the ACL is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded ACL. The loan portfolio also represents the largest asset type on the Company’s Consolidated Statement of Financial Condition.

Current wording

The ACL is an estimate of current expected credit losses considering available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date. The methodology for determining the ACL is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded ACL. The loan portfolio also represents the largest asset type on the Company’s Consolidated Statements of Financial Condition.

Previous wording

The level of the allowance for the respective periods of 2026 and 2025 reflects the credit quality within the loan portfolio, expected loan maturity dates, the changing composition of the commercial and residential real estate loan portfolios and other related factors. In management’s view, the level of the ACL as of June 30, 2026 is adequate to cover credit losses inherent in the loan portfolio. Management’s judgment regarding the adequacy of the allowance constitutes a “Forward-Looking Statement” under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from management’s analysis, based principally upon the factors considered by management in establishing the allowance.

Current wording

The level of the allowance for the respective periods of 2026 and 2025 reflects the credit quality within the loan portfolio, expected loan maturity dates, the changing composition of the commercial and residential real estate loan portfolios, including the transfer of multifamily loans to loans held-for-sale in the third quarter of 2026, and other related factors. In management’s view, the level of the ACL as of September 30, 2026 is adequate to cover expected credit losses over the contractual term of the loan portfolio. Management’s judgment regarding the adequacy of the allowance constitutes a “Forward-Looking Statement” under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from management’s analysis, based principally upon the factors considered by management in establishing the allowance.

Previous wording

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 wording

The Company manages credit risk and portfolio quality through its underwriting standards, periodic credit reviews and ongoing monitoring of delinquencies, risk ratings and portfolio trends. Management seeks to identify deteriorating credits early and to recognize charge-offs on a timely basis, based on assessments of expected cash flows and the value of underlying collateral, while maintaining an adequate ACL.

Previous wording

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 wording

As a matter of policy, loans are generally placed on nonaccrual status when principal or interest payments become 90 days past due, unless the loan is both well-secured and in the process of collection. Loans may be placed on nonaccrual status earlier when management determines that collection of all principal and interest is not expected. When a loan is placed on nonaccrual status, interest recognition ceases and previously accrued but uncollected interest is reversed against interest income. Payments received on nonaccrual loans are generally applied to reduce principal. Loans are returned to accrual status when all delinquent amounts are brought current and the borrower has demonstrated sustained repayment performance, generally for a period of at least six months.

Previous wording

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 wording

Nonaccrual loans increased $18.4 million to $64.3 million as of September 30, 2026, from $45.9 million as of December 31, 2025. The increase was primarily driven by a group of New York City multifamily loans secured by rent-stabilized properties, which added $29.9 million (net of charge-offs) to nonaccrual loans during the second quarter of 2026 and remained on nonaccrual as of September 30, 2026. This increase was partially offset by work-out loan sales, charge-offs, payoffs and paydowns, net of other additions to nonaccrual loans. None of the loans transferred to loans held-for-sale were on nonaccrual status, and nonperforming assets exclude loans held-for-sale.

Previous 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.

Current wording

As of September 30, 2026, the Company’s recorded investment in PCD loans totaled $71.0 million, compared to $193.4 million as of June 30, 2026. The decrease was primarily due to the transfer of PCD loans with an amortized cost of $120.4 million to loans held-for-sale during the third quarter of 2026, in connection with the balance sheet restructuring and repositioning described above. PCD loans are acquired loans that, at the time of acquisition, had experienced a more-than-insignificant deterioration in credit quality since origination. In identifying PCD loans at the time of the FLIC merger, the Company, with the assistance of independent third-party loan review experts, considered factors including nonperforming status, payment history and delinquency, risk rating, debt service coverage and rate repricing risk. The Company’s remaining PCD loans consist of multifamily, commercial real estate, commercial and residential real estate loans.

Previous wording

Our determination of PCD classification and initial allowance involved significant judgment. Key assumptions included expected remaining life, default rates, recoveries, and economic scenarios. We continue to monitor roll‑off and performance of the PCD portfolio in our quarterly review process.

Current wording

The determination of PCD classification and the related allowance at acquisition involved significant judgment, including assumptions about expected remaining life, default rates, recoveries and economic scenarios. The Company continues to monitor the performance of the remaining PCD portfolio as part of its quarterly credit review process.

Previous 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.

Current wording

As of September 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 September 30, 2026, average securities, on an amortized cost basis, increased by $31.8 million to $1.4 billion, or 10.1% of average total interest-earning assets, compared to $1.4 billion, or 10.3% of average interest-earning assets, for the prior-year period. For the nine months ended September 30, 2026, average securities, on an amortized cost basis increased by$308.8 million to approximately$1.3 billion, or 9.9% of average total interest-earning assets, from approximately $1.0 billion, or 9.3% of average interest-earning assets, for the nine months ended September 30, 2025.

Previous 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.

Current wording

As of September 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 $95.8 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 September 30, 2026.

Previous 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%.

Current wording

Based on our model, which was run as of September 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 9.25%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 4.28%. 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 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%.

Current wording

Based on our model, which was run as of September 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 5.15%, while a 100 basis-point instantaneous and parallel decrease in interest rates would decrease net interest income by 1.36%. 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 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.

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 September 30, 2026, would decrease by 10.33% with an instantaneous and parallel rate shock of up 200 basis-points, and increase by 2.40% 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

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.

Current wording

As of September 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 September 30, 2026, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $1.0 billion, which represented 6.9% of total assets and 7.9% 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 September 30, 2026, not included in the above liquid assets were securities with a market value of $84.7 million which were pledged to the FHLB and securities with a market value of $117.0 million which were pledged to the Federal Reserve Bank of New York, which supported aggregate unutilized borrowing capacity of $191.4 million and $223.3 million, respectively as of September 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 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.

Current wording

The Bank is a member of the FHLB of New York and, based on available qualified collateral as of September 30, 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 $2.9 billion as of September 30, 2026. In addition, as of September 30, 2026, the Bank had in place borrowing capacity of $280.0 million through correspondent banks and other unsecured borrowing lines. As of September 30, 2026, the Bank had aggregate available and unused credit of approximately $5.2 billion, which represents the aforementioned facilities totaling $7.0 billion net of $1.8 billion in outstanding borrowings and letters of credit. As of September 30, 2026, outstanding commitments for the Bank to extend credit were approximately $1.7 billion.

Previous 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.

Current wording

Cash and cash equivalents totaled $313.3 million as of September 30, 2026, decreasing by $67.6 million from $380.9 million as of December 31, 2025. Operating activities provided $135.2 million in net cash. Investing activities used $869.9 million in net cash, a net increase in loans of $704.8 million and investment purchases of $376.5 million and were partially offset by investment maturities, calls and principal repayments of $226.3 million. Financing activities provided $667.2 million in net cash, primarily reflecting a net increase in deposits of $537.4 million and FHLB net borrowings of $168.9 million.

Previous 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.

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 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 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.

Current wording

Average demand deposits included $1.2 billion and $1.1 billion in ICS and ModernFi reciprocal deposits in the aggregate during the three months ended September 30, 2026 and 2025, respectively.

Previous 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.

Current wording

The increase in average time deposits of $215.0 million during the nine months ended September 30, 2026 was primarily due to a $344.5 million increase in retail time deposits, partially offset by a $124.4 million decrease in nonreciprocal brokered certificates of deposit, a $4.7 million decrease in CDARS reciprocal deposits and a $0.4 million decrease in listing service deposits. Average nonreciprocal brokered certificates of deposit included in total time deposits were $793.4 million for the nine months ended September 30, 2026, compared to $917.8 million for the prior-year period.

Previous wording

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 wording

Average aggregate demand deposits included $1.2 billion and $1.1 billion in ICS and ModernFi reciprocal deposits in the aggregate during the nine months ended September 30, 2026 and September 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, 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.

Current wording

The deposit beta, a measure of the sensitivity of deposit rates to changes in market interest rates, is generally higher for nonreciprocal brokered certificates of deposit than for ICS, ModernFi and CDARS reciprocal deposits. Nonreciprocal brokered deposits are more directly tied to prevailing market rates, while reciprocal deposits generally reflect client relationships in which FDIC insurance coverage, rather than yield, is the primary consideration.

Previous 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.

Current wording

Demand deposits included $1.3 billion and $1.2 billion in ICS and ModernFi reciprocal deposits in the aggregate as of September 30, 2026 and December 31, 2025, respectively.

Previous 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:

Current wording

As of September 30, 2026, we held $1.2 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 September 30, 2026:

Previous wording

During December 2003, Center Bancorp Statutory Trust II, a statutory business trust and wholly owned subsidiary of the Parent Corporation issued $5.0 million of MMCapS capital securities to investors due on January 23, 2034. The trust loaned the proceeds of this offering to the Parent Corporation and received in exchange $5.2 million of the Parent Corporation’s subordinated debentures. The subordinated debentures are redeemable in whole or part prior to maturity. Upon the cessation of publication of LIBOR rates and pursuant to the Federal LIBOR Act and Federal Reserve regulations implementing the Act, the MMCapS capital securities converted as of June 30, 2023 to a new index based on CME Term SOFR, as defined in the LIBOR Act, plus a tenor spread adjustment, which is referred to as the Benchmark Replacement. Effective for quarterly interest rate resets after July 3, 2023 the subordinated debentures' floating rate will be three-month CME Term SOFR plus 2.85% plus a tenor spread adjustment of 0.26161%. The rate as of June 30, 2026 was 6.78%.

Current wording

During December 2003, Center Bancorp Statutory Trust II, a statutory business trust and wholly-owned subsidiary of the Parent Corporation issued $5.0 million of MMCapS capital securities to investors due on January 23, 2034. The trust loaned the proceeds of this offering to the Parent Corporation and received in exchange $5.2 million of the Parent Corporation’s subordinated debentures. The subordinated debentures are redeemable in whole or part prior to maturity. Upon the cessation of publication of LIBOR rates and pursuant to the Federal LIBOR Act and Federal Reserve regulations implementing the Act, the MMCapS capital securities converted as of June 30, 2023 to a new index based on CME Term SOFR, as defined in the LIBOR Act, plus a tenor spread adjustment, which is referred to as the Benchmark Replacement. Effective for quarterly interest rate resets after July 3, 2023 the subordinated debentures' floating rate will be three-month CME Term SOFR plus 2.85% plus a tenor spread adjustment of 0.26161%. The rate as of September 30, 2026 was 6.95%.

Previous 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.

Current wording

The Company’s stockholders’ equity increased by $25.3 million when compared to December 31, 2025. The increase in total stockholders’ equity was primarily due to an increase in retained earnings of $77.7 million, partially offset by an increase in accumulated other comprehensive loss of $51.0 million. As of September 30, 2026, the Company’s tangible common equity ratio and tangible book value per share were 8.38% and $24.19, respectively, compared to 8.62% and $23.52, respectively, as of December 31, 2025. Total goodwill and other intangible assets were $271.6 million as of September 30, 2026, and $280.2 million as of December 31, 2025.

Previous 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.

Current wording

As of September 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 2.51 percentage points above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 2.49 percentage points above the minimum buffer ratio.