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ConnectOne Bancorp, Inc. Reports Second Quarter 2025 Results; Declares Common and Preferred Dividends

1. CNOB reported a net loss of $(21.8) million in Q2 2025. 2. Merger with FLIC completed, positioning CNOB as a $14 billion entity. 3. Increased provision for credit losses to $35.7 million due to merger impacts. 4. Operating net income rose to $23.1 million, excluding merger expenses. 5. Dividend of $0.18 per share to be paid on September 2, 2025.

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FAQ

Why Bearish?

The reported net loss and significant provision for credit losses may concern investors, reminiscent of other banks' struggles post-mergers. Similar cases, like regional banks in 2015, saw stock declines after unfavorable results post-acquisition.

How important is it?

The substantial losses and merger-related expenses directly impact CNOB's financial health, influencing investor sentiment and markets immediately.

Why Short Term?

The immediate market reaction is likely to be negative due to the unexpected losses and high costs, suggesting a quick retracement to investor confidence is unlikely.

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FLICKEYSZION
ENGLEWOOD CLIFFS, N.J., July 29, 2025 (GLOBE NEWSWIRE) -- ConnectOne Bancorp, Inc. (Nasdaq: CNOB) (the “Company” or “ConnectOne”), parent company of ConnectOne Bank (the “Bank”), today reported a net loss available to common stockholders of $(21.8) million for the second quarter of 2025 compared with net income available to common stockholders of $18.7 million for the first quarter of 2025 and $17.5 million for the second quarter of 2024. Diluted earnings per share were $(0.52) for the second quarter of 2025 compared with $0.49 for the first quarter of 2025 and $0.46 for the second quarter of 2024. On June 1, 2025, the merger with The First of Long Island Corporation (“FLIC”) was completed. The full quarter results of the combined entity include one month of activity from FLIC. Historical financial information includes only the operations of ConnectOne, pre-merger. Return on average assets was (0.73)%, 0.84% and 0.79% for the three months ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively. Return on average tangible common equity was (8.42)%, 8.25% and 7.98% for the three months ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively. Operating net income available to common stockholders, which excludes non-operating items (primarily merger-related expenses and an initial provision for credit losses totaling $58.1 million, pre-tax, in the aggregate), was $23.1 million for the second quarter of 2025, $19.7 million for the first quarter of 2025 and $17.9 million for the second quarter of 2024. Operating diluted earnings per share were $0.55 for the second quarter of 2025, $0.51 for the first quarter of 2025 and $0.47 for the second quarter of 2024. Operating return on average assets was 0.89%, 0.88% and 0.80% for the three months ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively. Operating return on average tangible common equity was 9.29%, 8.59% and 8.05% for the three months ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively. See supplemental tables for a complete reconciliation of GAAP earnings to operating earnings, and other non-GAAP measures. The decrease in net income available to common stockholders and diluted earnings per share during the second quarter of 2025 when compared to the first quarter of 2025 was primarily due to a $34.3 million increase in noninterest expenses, which included $30.7 million in merger expenses and a $32.2 million increase in provision for credit losses. The provision for credit losses during the second quarter of 2025 included $27.4 million in an initial provision for credit losses related to the merger with FLIC. The increase in noninterest expenses and provision for credit losses was partially offset by a $13.1 million increase in net interest income, a $0.7 million increase in noninterest income and a $12.1 million decrease in income tax expenses. The decrease in net income available to common stockholders and diluted earnings per share during the second quarter of 2025 when compared to the second quarter of 2024 was primarily due to a $36.1 million increase in noninterest expenses, which included the aforementioned $30.7 million in merger expenses and a $33.2 million increase in provision for credit losses, which included the aforementioned $27.4 million initial provision for credit losses related to the merger with FLIC. These increases were partially offset by a $17.4 million increase in net interest income, a $0.8 million increase in noninterest income and a $11.7 decrease in income tax expenses. “ConnectOne’s solid second quarter reflects continued momentum in executing our strategy and the integration of the largest merger in our Company's history,” commented Frank Sorrentino, Chairman and Chief Executive Officer of ConnectOne. “Following completion of the merger on June 1st, we immediately opened as a unified organization with one team, and fully deployed the ConnectOne brand across our new markets. This transformational merger establishes ConnectOne as a $14 billion regional financial institution with 61 locations and more than 700 banking professionals.” “The merger and the addition of our new team members continues to exceed expectations. Our core systems conversion was successfully completed, and our client-centric execution has resulted in strong client retention. We’ve also seen steady momentum in new client onboarding, reinforcing the complementary nature of both organizations.” Mr. Sorrentino added, “Operationally, the merger has significantly improved our loan and deposit mix, net interest margin, credit metrics, and profitability ratios. At June 30, 2025 total loans were $11.2 billion, deposits totaled $11.3 billion, and our market capitalization now exceeds $1.2 billion. The current loan-to-deposit ratio of 99% and noninterest-bearing demand composition exceeding 21% reflect both the merger and our relationship-based approach.” “I’m incredibly proud of how seamlessly our teams have come together as one organization, with a shared commitment to client success and operational excellence. We believe these early results reflect the compelling value of the transaction and reinforce our confidence in the long-term potential of the combined franchise,” Mr. Sorrentino concluded. Dividend Declarations The Company announced that its Board of Directors declared a cash dividend on both its common stock and its outstanding preferred stock. A cash dividend on common stock of $0.18 per share will be paid on September 2, 2025, to common stockholders of record on August 15, 2025. A dividend of $0.328125 per depositary share, representing a 1/40th interest in a share of the Company’s 5.25% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, will also be paid on September 2, 2025 to holders of record on August 15, 2025. Operating Results Fully taxable equivalent net interest income for the second quarter of 2025 was $79.8 million, an increase of $13.2 million, or 19.9%, from the first quarter of 2025, due to a 13 basis-point widening of the net interest margin to 3.06% from 2.93%, and a 13.5% increase in average interest earning assets. The increase in average interest-earning assets was primarily due to the merger with FLIC. Accretion of purchase accounting adjustments of $3.3 million contributed approximately 13 basis points to the net interest margin during the second quarter of 2025. The margin also benefited from an 11 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits, partially offset by higher average cash balances and the impact of a $200 million long-term subordinated debt issuance, with a rate of 8.125%, that was consummated on May 15, 2025. Fully taxable equivalent net interest income for the second quarter of 2025 increased $17.6 million, or 28.2%, from the second quarter of 2024, due to a 34 basis-point widening of the net interest margin to 3.06% from 2.72%, and a 13.7% increase in average interest earning assets. The increase in average interest-earning assets was primarily due to the merger with FLIC. The aforementioned accretion of purchase accounting adjustments contributed approximately 13 basis points to the net interest margin during the second quarter of 2025. The margin also benefited from a 56 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits, partially offset by higher average cash balances and the subordinated debt issuance discussed above. Noninterest income was $5.2 million in the second quarter of 2025, $4.5 million in the first quarter of 2025 and $4.4 million in the second quarter of 2024. The $0.7 million increase in noninterest income for the second quarter of 2025 when compared to the first quarter of 2025 was primarily due to a $0.6 million increase in deposit, loan and other income and a $0.5 million increase in BOLI income (partially resulting from 1035 exchanges), partially offset by a $0.2 million decrease in net gains on sale of loans held-for-sale and a $0.2 million decrease in net gains on equity securities. The merger with FLIC primarily contributed to all of the aforementioned increases. The $0.8 million increase in noninterest income for the second quarter of 2025 when compared to the second quarter of 2024 was primarily due to a $0.9 million increase in deposit, loan and other income, a $0.6 million increase in net gains on equity securities and a $0.4 million increase in BOLI income, partially offset by a $1.1 million decrease in net gains on sale of loans held-for-sale. Noninterest expenses were $73.6 million for the second quarter of 2025, $39.3 million for the first quarter of 2025 and $37.6 million for the second quarter of 2024. The increase of $34.3 million during the second quarter of 2025 when compared to the first quarter of 2025 was primarily due to a $29.4 million increase in merger expenses, a $2.7 million increase in salaries and employee benefits, a $1.0 million increase in amortization of core deposit intangibles and a $0.8 million increase in occupancy and equipment. The $36.1 million increase in noninterest expenses for the second quarter of 2025 when compared to the second quarter of 2024 was primarily due to a $30.7 million increase in merger expenses, a $2.5 million increase in salaries and employee benefits, a $0.9 million increase in amortization of core deposit intangibles, a $0.7 million increase in professional and consulting expenses, a $0.6 million increase in occupancy and equipment expenses and a $0.6 million increase in information technology and communications expenses, partially offset by a $0.4 decrease in other expenses. The increases from the first quarter of 2025 and the second quarter of 2024 were primarily due to the merger with FLIC. There was a net income tax benefit of $5.0 million during the second quarter of 2025 compared to income tax expense of $7.2 million during the first quarter of 2025 and $6.7 million during the second quarter of 2024. Included in the second quarter of 2025 was an estimated $3.0 million state tax liability resulting from intercompany dividends. The overall decrease in income tax expense when compared to the first quarter of 2025 and the second quarter of 2024 was primarily due to lower taxable income that resulted from the additional expenses due to the FLIC merger. Asset Quality The provision for credit losses was $35.7 million for the second quarter of 2025, $3.5 million for the first quarter of 2025 and $2.5 million for the second quarter of 2024. Included in the provision for the second quarter of 2025 was a $27.4 million initial provision for credit losses related to the FLIC merger. 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.   Nonperforming assets, which includes nonaccrual loans and other real estate owned (the Bank had no other real estate owned during the periods reported), were $39.2 million as of June 30, 2025, $57.3 million as of December 31, 2024 and $46.0 million as of June 30, 2024. The decrease in nonaccruals was primarily due to the work out of three CRE relationships totaling $22.0 million, partially offset by $4.3 million in loans placed into nonaccrual status.   Nonperforming assets as a percentage of total assets were 0.28% as of June 30, 2025, 0.58% as of December 31, 2024 and 0.47% as of June 30, 2024. The ratio of nonaccrual loans to loans receivable was 0.35%, 0.69% and 0.56%, as of June 30, 2025, December 31, 2024 and June 30, 2024, respectively. The annualized net loan charge-offs ratio was 0.22% for the second quarter of 2025, 0.17% for the first quarter of 2025 and 0.16% for the second quarter of 2024. The allowance for credit losses represented 1.40%, 1.00% and 1.01% of loans receivable as of June 30, 2025, December 31, 2024 and June 30, 2024, respectively. The allowance for credit losses related to the loan portfolio increased $73.5 million to $156.2 million, compared to $82.7 million as of December 31, 2024. The increase was primarily due to the FLIC merger: $43.3 million of allowance recorded through goodwill related to the purchased credit-deteriorated loans and $27.4 million reflecting the initial provision for credit losses. The allowance for credit losses as a percentage of nonaccrual loans was 398.2% as of June 30, 2025, 144.3% as of December 31, 2024 and 178.3% as of June 30, 2024. Criticized and classified loans as a percentage of loans receivable was 2.44% as of June 30, 2025, down from 2.68% as of December 31, 2024 and up from 1.50% as of June 30, 2024.   Loans delinquent 30 to 89 days were 0.13% of loans receivable as of June 30, 2025, up from 0.04% as of December 31, 2024 and up from 0.11% as of June 30, 2024.   Selected Balance Sheet Items As of June 30, 2025, the balance sheet reflected the merger with FLIC. The Company’s total assets were $13.9 billion as of June 30, 2025, compared to $9.9 billion as of December 31, 2024. Loans receivable were $11.2 billion as of June 30, 2025 and $8.3 billion as of December 31, 2024. Total deposits were $11.3 billion as of June 30, 2025 and $7.8 billion as of December 31, 2024. The increase in total assets, loans receivable and total deposits were primarily due to the merger with FLIC. The Company’s total stockholders’ equity was $1.5 billion as of June 30, 2025 and $1.2 billion as of December 31, 2024. The increase in total stockholders’ equity was primarily due to an increase in common stock of $270.8 million which represented the fair value stock consideration issued for the FLIC merger, partially offset by a $16.9 million decrease in retained earnings. As of June 30, 2025, the Company’s tangible common equity ratio and tangible book value per share were 8.09% and $21.95, respectively, compared to 9.49% and $23.92, respectively, as of December 31, 2024. Total goodwill and other intangible assets were $281.9 million as of June 30, 2025, and $213.0 million as of December 31, 2024. Use of Non-GAAP Financial Measures In addition to the results presented in accordance with Generally Accepted Accounting Principles ("GAAP"), ConnectOne routinely supplements its evaluation with an analysis of certain non-GAAP measures. ConnectOne believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors in understanding our operating performance and trends. These non-GAAP measures have inherent limitations and are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for an analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of non-GAAP financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the accompanying tables. Second Quarter 2025 Results Conference Call Management will also host a conference call and audio webcast at 10:00 a.m. ET on July 29, 2025 to review the Company's financial performance and operating results. The conference call dial-in number is 1 (646) 307-1963, access code 7519286. Please dial in at least five minutes before the start of the call to register. An audio webcast of the conference call will be available to the public, on a listen-only basis, via the "Investor Relations" link on the Company's website https://www.ConnectOneBank.com or at http://ir.connectonebank.com. A replay of the conference call will be available beginning at approximately 1:00 p.m. ET on Tuesday, July 29, 2025 and ending on Tuesday, August 5, 2025 by dialing 1 (609) 800-9909, access code 7519286. An online archive of the webcast will be available following the completion of the conference call at https://www.ConnectOneBank.com or at http://ir.connectonebank.com. About ConnectOne Bancorp, Inc. ConnectOne Bancorp, Inc., is a modern financial services company that operates, through its subsidiary, ConnectOne Bank, and the Bank’s fintech subsidiary, BoeFly, Inc. ConnectOne Bank is a high-performing commercial bank offering a full suite of banking & lending products and services that focus on small to middle-market businesses. BoeFly, Inc. is a fintech marketplace that connects borrowers in the franchise space with funding solutions through a network of partner banks. ConnectOne Bancorp, Inc. is traded on the Nasdaq Global Market under the trading symbol "CNOB," and information about ConnectOne may be found at https://www.connectonebank.com. This news release contains certain forward-looking statements which are based on certain assumptions and describe future plans, strategies, and expectations of the Company. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, those factors set forth in Item 1A – Risk Factors of the Company’s Annual Report on Form 10-K, as filed with the U.S. Securities and Exchange Commission, as supplemented by the Company’s subsequent filings with the U.S. Securities and Exchange Commission, and changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company's market area, changes in accounting principles and guidelines and the impact of the health emergencies and natural disasters on the Company, its employees and operations, and its customers. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Investor Contact:William S. BurnsSenior Executive Vice President & CFO201.816.4474; bburns@cnob.com Media Contact:Shannan Weeks MikeWorldWide732.299.7890; sweeks@mww.com  CONNECTONE BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION(in thousands)       June 30 December 31, June 30 2025 2024 2024 (unaudited)   (unaudited)ASSETS     Cash and due from banks$97,792  $57,816  $47,105 Interest-bearing deposits with banks 498,741   298,672   246,408 Cash and cash equivalents 596,533   356,488   293,513       Investment securities 1,227,200   612,847   620,579 Equity securities 19,707   20,092   19,743       Loans held-for-sale 1,027   743   435       Loans receivable 11,164,477   8,274,810   8,157,903 Less: Allowance for credit losses - loans 156,190   82,685   82,077 Net loans receivable 11,008,287   8,192,125   8,075,826       Investment in restricted stock, at cost 49,248   40,449   43,403 Bank premises and equipment, net 54,297   28,447   28,881 Accrued interest receivable 60,950   45,498   48,262 Bank owned life insurance 364,836   243,672   240,985 Right of use operating lease assets 31,282   14,489   13,359 Goodwill 215,611   208,372   208,372 Core deposit intangibles 66,315   4,639   5,232 Other assets 220,445   111,739   125,141 Total assets$13,915,738  $9,879,600  $9,723,731       LIABILITIES     Deposits:     Noninterest-bearing$2,424,529  $1,422,044  $1,268,882 Interest-bearing 8,853,958   6,398,070   6,307,132 Total deposits 11,278,487   7,820,114   7,576,014 Borrowings 783,859   688,064   756,144 Subordinated debentures, net 276,500   79,944   79,692 Operating lease liabilities 35,334   15,498   14,435 Other liabilities 45,127   34,276   73,219 Total liabilities 12,419,307   8,637,896   8,499,504       COMMITMENTS AND CONTINGENCIES           STOCKHOLDERS' EQUITY     Preferred stock 110,927   110,927   110,927 Common stock 857,765   586,946   586,946 Additional paid-in capital 36,728   36,347   33,955 Retained earnings 614,532   631,446   610,759 Treasury stock (76,116)  (76,116)  (76,116)Accumulated other comprehensive loss (47,405)  (47,846)  (42,244)Total stockholders' equity 1,496,431   1,241,704   1,224,227 Total liabilities and stockholders' equity$13,915,738  $9,879,600  $9,723,731         CONNECTONE BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(dollars in thousands, except for per share data)         Three Months EndedSix Months Ended 06/30/25 06/30/24 06/30/25 06/30/24Interest income       Interest and fees on loans$132,316  $120,145  $247,667  $240,233 Interest and dividends on investment securities:       Taxable 7,437   4,683   12,424   9,017 Tax-exempt 1,419   1,121   2,516   2,275 Dividends 788   1,217   1,677   2,342 Interest on federal funds sold and other short-term investments 4,070   2,841   6,535   5,747 Total interest income 146,030   130,007   270,819   259,614 Interest expense       Deposits 60,239   62,086   114,231   122,493 Borrowings 6,908   6,482   11,949   15,382 Total interest expense 67,147   68,568   126,180   137,875         Net interest income 78,883   61,439   144,639   121,739 Provision for credit losses 35,700   2,500   39,200   6,500 Net interest income after provision for credit losses 43,183   58,939   105,439   115,239         Noninterest income       Deposit, loan and other income 2,570   1,654   4,576   3,246 Income on bank owned life insurance 2,087   1,677   3,671   3,341 Net gains on sale of loans held-for-sale 181   1,277   513   1,783 Net gains (losses) on equity securities 347   (209)  876   (123)Total noninterest income 5,185   4,399   9,636   8,247         Noninterest expenses       Salaries and employee benefits 25,233   22,721   47,811   44,852 Occupancy and equipment 3,478   2,899   6,158   5,908 FDIC insurance 2,000   1,800   3,800   3,600 Professional and consulting 2,598   1,923   4,964   3,851 Marketing and advertising 840   613   1,435   1,290 Information technology and communications 4,792   4,198   9,396   8,587 Merger expenses 30,745   -   32,065   - Bank owned life insurance restructuring charge -   -   327   - Amortization of core deposit intangibles 1,251   321   1,530   642 Other expenses 2,712   3,119   5,468   5,929 Total noninterest expenses 73,649   37,594   112,954   74,659         (Loss) income before income tax expense (25,281)  25,744   2,121   48,827 Income tax (benefit) expense (4,988)  6,688   2,172   12,566 Net (loss) income (20,293)  19,056   (51)  36,261 Preferred dividends 1,509   1,509   3,018   3,018 Net (loss) income available to common stockholders$(21,802) $17,547  $(3,069) $33,243         Earnings per common share:       Basic$(0.52) $0.46  $(0.08) $0.87 Diluted (0.52)  0.46   (0.08)  0.86           ConnectOne's management believes that the supplemental financial information, including non-GAAP measures provided below, is useful to investors. The non-GAAP measures should not be viewed as a substitute for financial results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP financial measures presented by other companies.           CONNECTONE BANCORP, INC.SUPPLEMENTAL GAAP AND NON-GAAP FINANCIAL MEASURES            As of  Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30,  2025 2025 2024 2024 2024 Selected Financial Data(dollars in thousands) Total assets$13,915,738  $9,759,255  $9,879,600  $9,639,603  $9,723,731  Loans receivable:          Commercial 1,597,590  $1,483,392  $1,522,308  $1,505,743  $1,491,079  Commercial real estate 4,285,663   3,356,943   3,384,319   3,261,160   3,274,941  Multifamily 3,348,308   2,490,256   2,506,782   2,482,258   2,499,581  Commercial construction 681,222   617,593   616,246   616,087   639,168  Residential 1,254,646   256,555   249,691   250,249   256,786  Consumer 1,709   1,604   1,136   835   945  Gross loans 11,169,138   8,206,343   8,280,482   8,116,332   8,162,500  Net deferred loan fees (4,661)  (5,209)  (5,672)  (4,356)  (4,597) Loans receivable 11,164,477   8,201,134   8,274,810   8,111,976   8,157,903  Loans held-for-sale 1,027   202   743   -   435  Total loans$11,165,504  $8,201,336  $8,275,553  $8,111,976  $8,158,338             Investment and equity securities$1,246,907  $655,665  $632,939  $667,112  $640,322  Goodwill and other intangible assets 281,926   212,732   213,011   213,307   213,604  Deposits:          Noninterest-bearing demand$2,424,529  $1,319,196  $1,422,044  $1,262,568  $1,268,882  Time deposits 3,065,015   2,550,223   2,557,200   2,614,187   2,593,165  Other interest-bearing deposits 5,788,943   3,897,811   3,840,870   3,647,350   3,713,967  Total deposits$11,278,487  $7,767,230  $7,820,114  $7,524,105  $7,576,014             Borrowings$783,859  $613,053  $688,064  $742,133  $756,144  Subordinated debentures (net of debt issuance costs) 276,500   80,071   79,944   79,818   79,692  Total stockholders' equity 1,496,431   1,252,939   1,241,704   1,239,496   1,224,227             Quarterly Average Balances          Total assets$11,108,430  $9,748,605  $9,563,446  $9,742,853  $9,745,853  Loans receivable:          Commercial$1,486,245  $1,488,962  $1,487,850  $1,485,777  $1,517,446  Commercial real estate (including multifamily) 6,404,302   5,852,342   5,733,188   5,752,467   5,789,498  Commercial construction 643,115   610,859   631,022   628,740   652,227  Residential 587,118   256,430   250,589   252,975   254,284  Consumer 5,759   5,687   5,204   7,887   5,155  Gross loans 9,126,539   8,214,280   8,107,853   8,127,846   8,218,610  Net deferred loan fees (5,097)  (5,525)  (4,727)  (4,513)  (5,954) Loans receivable 9,121,442   8,208,755   8,103,126   8,123,333   8,212,656  Loans held-for-sale 352   259   498   83   169  Total loans$9,121,794  $8,209,014  $8,103,624  $8,123,416  $8,212,825             Investment and equity securities$845,614  $655,191  $653,988  $650,897  $637,551  Goodwill and other intangible assets 235,848   212,915   213,205   213,502   213,813  Deposits:          Noninterest-bearing demand$1,680,653  $1,305,722  $1,304,699  $1,259,912  $1,256,251  Time deposits 2,662,411   2,480,990   2,478,163   2,625,329   2,587,706  Other interest-bearing deposits 4,463,648   3,888,131   3,838,575   3,747,427   3,721,167  Total deposits$8,806,712  $7,674,843  $7,621,437  $7,632,668  $7,565,124             Borrowings$723,303  $686,391  $648,300  $717,586  $787,256  Subordinated debentures (net of debt issuance costs) 170,802   79,988   79,862   79,735   79,609  Total stockholders' equity 1,344,254   1,254,373   1,241,738   1,234,724   1,220,621              Three Months Ended  Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30,  2025 2025 2024 2024 2024  (dollars in thousands, except for per share data) Net interest income$78,883  $65,756  $64,711  $60,887  $61,439  Provision for credit losses 35,700   3,500   3,500   3,800   2,500  Net interest income after provision for credit losses 43,183   62,256   61,211   57,087   58,939  Noninterest income          Deposit, loan and other income 2,570   2,006   1,798   1,817   1,654  Income on bank owned life insurance 2,087   1,584   1,656   2,145   1,677  Net gains on sale of loans held-for-sale 181   332   597   343   1,277  Net gains (losses) on equity securities 347   529   (307)  432   (209) Total noninterest income 5,185   4,451   3,744   4,737   4,399  Noninterest expenses          Salaries and employee benefits 25,233   22,578   22,244   22,957   22,721  Occupancy and equipment 3,478   2,680   2,818   2,889   2,899  FDIC insurance 2,000   1,800   1,800   1,800   1,800  Professional and consulting 2,598   2,366   2,449   2,147   1,923  Marketing and advertising 840   595   495   635   613  Information technology and communications 4,792   4,604   4,523   4,464   4,198  Merger expenses 30,745   1,320   863   742   -  Branch closing expenses -   -   477   -   -  Bank owned life insurance restructuring charge -   327   -   -   -  Amortization of core deposit intangible 1,251   279   296   297   321  Other expenses 2,712   2,756   2,533   2,710   3,119  Total noninterest expenses 73,649   39,305   38,498   38,641   37,594             (Loss) income before income tax expense (25,281)  27,402   26,457   23,183   25,744  Income tax (benefit) expense (4,988)  7,160   6,086   6,022   6,688  Net (loss) income (20,293)  20,242   20,371   17,161   19,056  Preferred dividends 1,509   1,509   1,509   1,509   1,509  Net (loss) income available to common stockholders$(21,802) $18,733  $18,862  $15,652  $17,547             Weighted average diluted common shares outstanding 42,173,758   38,511,237   38,519,581   38,525,484   38,448,594  Diluted EPS$(0.52) $0.49  $0.49  $0.41  $0.46             Reconciliation of GAAP Net Income to Operating Net Income:          Net (loss) income$(20,293) $20,242  $20,371  $17,161  $19,056  Merger expenses 30,745   1,320   863   742   -  Estimated state tax liability on intercompany dividends 3,000   -   -   -   -  Initial provision for credit losses related to merger 27,418   -   -   -   -  Branch closing expenses -   -   477   -   -  Bank owned life insurance restructuring charge -   327   -   -   -  Amortization of core deposit intangibles 1,251   279   296   297   321  Net (gains) losses on equity securities (347)  (529)  307   (432)  209  Tax impact of adjustments (17,168)  (420)  (585)  (171)  (149) Operating net income$24,606  $21,219  $21,729  $17,597  $19,437  Preferred dividends 1,509   1,509   1,509   1,509   1,509  Operating net income available to common stockholders$23,097  $19,710  $20,220  $16,088  $17,928             Operating diluted EPS (non-GAAP)(1)$0.55  $0.51  $0.52  $0.42  $0.47             Return on Assets Measures          Average assets$11,108,430  $9,748,605  $9,653,446  $9,742,853  $9,745,853  Return on avg. assets (0.73)% 0.84 % 0.84 % 0.70 % 0.79 %Operating return on avg. assets (non-GAAP)(2) 0.89   0.88   0.90   0.72   0.80  Pre provision net operating revenue ("PPNR") return on avg. assets (non-GAAP)(3) 1.47   1.33   1.28   1.11   1.17             (1)Operating net income available to common stockholders divided by weighted average diluted shares outstanding.(2)Operating net income divided by average assets.(3)Net income before income tax expense, provision for credit losses, merger charges, BOLI restructuring charges and net gains on equity securities divided by average assets.            Three Months Ended  Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30,  2025 2025 2024 2024 2024 Return on Equity Measures(dollars in thousands) Average stockholders' equity$1,344,254  $1,254,373  $1,241,738  $1,234,724  $1,220,621  Less: average preferred stock (110,927)  (110,927)  (110,927)  (110,927)  (110,927) Average common equity$1,233,327  $1,143,446  $1,130,811  $1,123,797  $1,109,694  Less: average intangible assets (235,848)  (212,915)  (213,205)  (213,502)  (213,813) Average tangible common equity$997,479  $930,531  $917,606  $910,295  $895,881  Return on avg. common equity (GAAP) (7.09)% 6.64 % 6.64 % 5.54 % 6.36 %Operating return on avg. common equity (non-GAAP)(4) 7.51   6.99   7.11   5.70   6.50  Return on avg. tangible common equity (non-GAAP)(5) (8.42)  8.25   8.27   6.93   7.98  Operating return on avg. tangible common equity (non-GAAP)(6) 9.29   8.59   8.77   7.03   8.05             Efficiency Measures          Total noninterest expenses$73,649  $39,305  $38,498  $38,641  $37,594  Merger expenses (30,745)  (1,320)  (863)  (742)  -  Branch closing expenses -   -   (477)  -   -  Bank owned life insurance restructuring charge -   (327)  -   -   -  Amortization of core deposit intangibles (1,251)  (279)  (296)  (297)  (321) Operating noninterest expense$41,653  $37,379  $36,862  $37,602  $37,273             Net interest income (tax equivalent basis)$79,810  $66,580  $65,593  $61,710  $62,255  Noninterest income 5,185   4,451   3,744   4,737   4,399  Net (gains) losses on equity securities (347)  (529)  307   (432)  209  Operating revenue$84,648  $70,502  $69,644  $66,015  $66,863             Operating efficiency ratio (non-GAAP)(7) 49.2 % 53.0 % 52.9 % 57.0 % 55.7 %           Net Interest Margin          Average interest-earning assets$10,468,589  $9,224,712  $9,117,201  $9,206,038  $9,210,050             Net interest income (tax equivalent basis)$79,810  $66,580  $65,593  $61,710  $62,255  Net interest margin (non-GAAP) 3.06 % 2.93 % 2.86 % 2.67 % 2.72 %           (4)Operating net income available to common stockholders divided by average common equity.(5)Net income available to common stockholders, excluding amortization of intangible assets, divided by average tangible common equity.(6)Operating net income available to common stockholders, divided by average tangible common equity.(7)Operating noninterest expense divided by operating revenue.            As of  Jun. 30, Mar. 31, Dec. 31, Sept. 30, Jun. 30,  2025 2025 2024 2024 2024 Capital Ratios and Book Value per Share(dollars in thousands, except for per share data) Stockholders equity$1,496,431  $1,252,939  $1,241,704  $1,239,496  $1,224,227  Less: preferred stock (110,927)  (110,927)  (110,927)  (110,927)  (110,927) Common equity$1,385,504  $1,142,012  $1,130,777  $1,128,569  $1,113,300  Less: intangible assets (281,926)  (212,732)  (213,011)  (213,307)  (213,604) Tangible common equity$1,103,578  $929,280  $917,766  $915,262  $899,696             Total assets$13,915,738  $9,759,255  $9,879,600  $9,639,603  $9,723,731  Less: intangible assets (281,926)  (212,732)  (213,011)  (213,307)  (213,604) Tangible assets$13,633,812  $9,546,523  $9,666,589  $9,426,296  $9,510,127             Common shares outstanding 50,270,162   38,469,975   38,370,317   38,368,217   38,365,069             Common equity ratio (GAAP) 9.96 % 11.70 % 11.45 % 11.71 % 11.45 %Tangible common equity ratio (non-GAAP)(8) 8.09   9.73   9.49   9.71   9.46             Regulatory capital ratios (Bancorp):          Leverage ratio 9.25 % 11.33 % 11.33 % 11.10 % 10.97 %Common equity Tier 1 risk-based ratio 10.04   11.14   10.97   11.07   10.90  Risk-based Tier 1 capital ratio 11.06   12.46   12.29   12.42   12.25  Risk-based total capital ratio 14.35   14.29   14.11   14.29   14.10             Regulatory capital ratios (Bank):          Leverage ratio 10.22 % 11.67 % 11.66 % 11.43 % 11.29 %Common equity Tier 1 risk-based ratio 12.22   12.82   12.63   12.79   12.60  Risk-based Tier 1 capital ratio 12.22   12.82   12.63   12.79   12.60  Risk-based total capital ratio 13.24   13.79   13.60   13.77   13.58             Book value per share (GAAP)$27.56  $29.69  $29.47  $29.41  $29.02  Tangible book value per share (non-GAAP)(9) 21.95   24.16   23.92   23.85   23.45             Net Loan Charge-offs (Recoveries):          Net loan charge-offs (recoveries):          Charge-offs$5,039  $3,555  $3,363  $3,559  $3,595  Recoveries (118)  (155)  (29)  (53)  (324) Net loan charge-offs$4,921  $3,400  $3,334  $3,506  $3,271  Net loan charge-offs as a % of average loans receivable (annualized) 0.22 % 0.17 % 0.16 % 0.17 % 0.16 %           Asset Quality          Nonaccrual loans$39,228  $49,860  $57,310  $51,300  $46,026  Other real estate owned -   -   -   -   -  Nonperforming assets$39,228  $49,860  $57,310  $51,300  $46,026             Allowance for credit losses - loans ("ACL")$156,190  $82,403  $82,685  $82,494  $82,077  Less: nonaccretable credit marks 43,336   173   173   173   173  ACL excluding nonaccretable credit marks$112,854  $82,230  $82,512  $82,321  $81,904             Loans receivable 11,164,477   8,201,134   8,274,810   8,111,976   8,157,903             Nonaccrual loans as a % of loans receivable 0.35 % 0.61 % 0.69 % 0.63 % 0.56 %Nonperforming assets as a % of total assets 0.28   0.51   0.58   0.53   0.47  ACL as a % of loans receivable 1.40   1.00   1.00   1.02   1.01  ACL excluding nonaccretable credit marks as a % of loans receivable 1.01   1.00   1.00   1.01   1.00  ACL as a % of nonaccrual loans 398.2   165.3   144.3   160.8   178.3             (8)Tangible common equity divided by tangible assets(9)Tangible common equity divided by common shares outstanding at period-end   CONNECTONE BANCORP, INC.NET INTEREST MARGIN ANALYSIS(dollars in thousands)                For the Three Months Ended  June 30, 2025March 31, 2025June 30, 2024 Average    Average    Average   Interest-earning assets:BalanceInterestRate(7)  BalanceInterestRate(7)  BalanceInterestRate(7) Investment securities(1) (2)$935,996 $9,234 3.96% $745,873 $6,375 3.47% $739,591 $6,102 3.32%Loans receivable and loans held-for-sale(2) (3) (4) 9,121,794  132,865 5.84   8,209,014  115,883 5.73   8,212,825  120,663 5.91 Federal funds sold and interest-              bearing deposits with banks 367,309  4,070 4.44   229,491  2,466 4.36   212,811  2,841 5.37 Restricted investment in bank stock 43,490  788 7.27   40,334  889 8.94   44,823  1,217 10.92 Total interest-earning assets 10,468,589  146,957 5.63   9,224,712  125,613 5.52   9,210,050  130,823 5.71 Allowance for loan losses (98,030)     (82,027)     (84,681)   Noninterest-earning assets 737,871      607,920      620,484    Total assets$11,108,430     $9,750,605     $9,745,853                   Interest-bearing liabilities:              Money market deposits 2,016,336  15,467 3.08   1,572,287  11,287 2.91   1,554,210  13,099 3.39 Savings deposits 777,951  6,172 3.18   656,789  5,227 3.23   481,033  3,893 3.25 Time deposits 2,662,411  26,636 4.01   2,480,990  25,154 4.11   2,587,706  28,898 4.49 Other interest-bearing deposits 1,669,361  11,964 2.87   1,659,055  12,324 3.01   1,685,924  16,196 3.86 Total interest-bearing deposits 7,126,059  60,239 3.39   6,369,121  53,992 3.44   6,308,873  62,086 3.96                Borrowings 723,303  3,530 1.96   686,391  3,725 2.20   787,256  5,150 2.63 Subordinated debentures 170,802  3,361 7.89   79,988  1,298 6.58   79,609  1,311 6.62 Finance lease 1,139  17 5.99   1,210  18 6.03   1,416  21 5.96 Total interest-bearing liabilities 8,021,303  67,147 3.36   7,136,710  59,033 3.35   7,177,154  68,568 3.84                Noninterest-bearing demand deposits 1,680,653      1,305,722      1,256,251    Other liabilities 62,220      51,800      91,827    Total noninterest-bearing liabilities 1,742,873      1,357,522      1,348,078    Stockholders' equity 1,344,254      1,254,373      1,220,621    Total liabilities and stockholders' equity$11,108,430     $9,748,605     $9,745,853                   Net interest income (tax equivalent basis)  79,810      66,580      62,255   Net interest spread(5)  2.27%   2.17%   1.87%               Net interest margin(6)  3.06%   2.93%   2.72%               Tax equivalent adjustment  (927)     (824)     (816)  Net interest income $78,883     $65,756     $61,439                  (1)Average balances are calculated on amortized cost.(2)Interest income is presented on a tax equivalent basis using 21% federal tax rate.(3)Includes loan fee income.(4)Loans include nonaccrual loans.(5)Represents difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities and is presented on a tax equivalent basis.(6)Represents net interest income on a tax equivalent basis divided by average total interest-earning assets.(7)Rates are annualized. 

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