ConnectOne Bancorp's Net Income Soars 139% on Strong Interest Income

TL;DR

**ConnectOne Bancorp's FLIC acquisition fueled massive asset growth and quarterly profit surge, but watch out for rising credit loss provisions and merger costs that are eating into year-to-date earnings.**

AI Summary

ConnectOne Bancorp, Inc. (CNOBP) reported a significant increase in net income for the three months ended September 30, 2025, reaching $40.976 million, a substantial rise from $17.161 million in the same period of 2024. This 138.7% increase was driven by a robust 44.1% growth in total interest income, which hit $187.709 million, up from $130.242 million. Net interest income also surged by 67.5% to $102.017 million from $60.887 million. The company's total assets expanded dramatically to $14.023 billion as of September 30, 2025, from $9.879 billion at December 31, 2024, largely due to the acquisition of The First of Long Island Corporation (FLIC) on June 1, 2025, which added $3.905 billion in assets. Loans receivable increased to $11.303 billion from $8.274 billion, while total deposits grew to $11.369 billion from $7.820 billion. However, the provision for credit losses also increased significantly to $44.700 million for the nine months ended September 30, 2025, compared to $10.300 million in the prior year, reflecting potential credit quality concerns or growth in the loan portfolio. Diluted earnings per common share for the quarter rose to $0.78 from $0.41, but for the nine-month period, diluted EPS decreased to $0.83 from $1.27, impacted by higher merger expenses of $33.963 million and increased provision for credit losses.

Why It Matters

This filing reveals ConnectOne Bancorp's aggressive growth strategy through the acquisition of FLIC, significantly expanding its asset base and market presence, particularly in the Long Island region. For investors, the substantial increase in net interest income and quarterly net income is positive, but the sharp rise in the provision for credit losses and merger expenses warrants close attention, as it could impact future profitability and asset quality. Employees of both ConnectOne and the acquired FLIC will experience integration challenges and opportunities. Customers may see expanded services and branch networks. Competitively, this acquisition positions ConnectOne as a larger regional player, intensifying competition in the New Jersey and New York banking markets.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in the provision for credit losses, which jumped from $10.300 million for the nine months ended September 30, 2024, to $44.700 million for the same period in 2025. This 334% increase suggests potential deterioration in loan quality or a more conservative lending outlook. Additionally, merger expenses of $33.963 million for the nine months ended September 30, 2025, compared to $742 thousand in 2024, indicate substantial integration costs that could strain profitability in the short term.

Analyst Insight

Investors should closely monitor ConnectOne Bancorp's asset quality metrics and the trajectory of its provision for credit losses in upcoming quarters. While the FLIC acquisition has significantly boosted scale and interest income, the associated integration costs and increased credit loss provisions are key factors to evaluate. Consider holding CNOBP if you believe the integration will be successful and credit quality will stabilize, but be prepared for potential volatility.

Financial Highlights

debt To Equity

N/A

revenue

$187.709M

operating Margin

N/A

total Assets

$14.023B

total Debt

N/A

net Income

$40.976M

eps

$0.78

gross Margin

N/A

cash Position

$542.734M

revenue Growth

44.1%

Revenue Breakdown

Key Numbers

• $40.976M — Net Income (Q3 2025) (Increased 138.7% from $17.161M in Q3 2024)
• $187.709M — Total Interest Income (Q3 2025) (Increased 44.1% from $130.242M in Q3 2024)
• $102.017M — Net Interest Income (Q3 2025) (Increased 67.5% from $60.887M in Q3 2024)
• $14.023B — Total Assets (Sept 30, 2025) (Increased 41.9% from $9.879B at Dec 31, 2024, largely due to FLIC acquisition)
• $11.303B — Loans Receivable (Sept 30, 2025) (Increased 36.6% from $8.274B at Dec 31, 2024)
• $11.369B — Total Deposits (Sept 30, 2025) (Increased 45.4% from $7.820B at Dec 31, 2024)
• $44.700M — Provision for Credit Losses (YTD Sept 30, 2025) (Increased 334% from $10.300M in YTD Sept 30, 2024)
• $33.963M — Merger Expenses (YTD Sept 30, 2025) (Significantly higher than $742K in YTD Sept 30, 2024)
• $0.78 — Diluted EPS (Q3 2025) (Increased from $0.41 in Q3 2024)
• $0.83 — Diluted EPS (YTD Sept 30, 2025) (Decreased from $1.27 in YTD Sept 30, 2024)

Key Players & Entities

• ConnectOne Bancorp, Inc. (company) — Parent Corporation and registrant
• ConnectOne Bank (company) — Wholly-owned subsidiary of ConnectOne Bancorp, Inc.
• The First of Long Island Corporation (company) — Company acquired by ConnectOne Bancorp, Inc. on June 1, 2025
• The First National Bank of Long Island (company) — Wholly-owned subsidiary of FLIC, merged into ConnectOne Bank
• $40,976 thousand (dollar_amount) — Net income for the three months ended September 30, 2025
• $17,161 thousand (dollar_amount) — Net income for the three months ended September 30, 2024
• $14,023,585 thousand (dollar_amount) — Total assets as of September 30, 2025
• $9,879,600 thousand (dollar_amount) — Total assets as of December 31, 2024
• $44,700 thousand (dollar_amount) — Provision for credit losses for the nine months ended September 30, 2025
• $33,963 thousand (dollar_amount) — Merger expenses for the nine months ended September 30, 2025

FAQ

Risk Factors

• Credit Risk and Loan Portfolio Quality [high — financial]: The provision for credit losses increased significantly to $44.700 million for the nine months ended September 30, 2025, from $10.300 million in the prior year. This substantial increase (334%) suggests potential deterioration in loan quality or a proactive response to growth in the loan portfolio, which expanded to $11.303 billion.
• Integration of Acquired Entities [medium — operational]: The acquisition of The First of Long Island Corporation (FLIC) on June 1, 2025, added $3.905 billion in assets and significantly expanded the company's balance sheet. Successful integration of FLIC's operations, systems, and culture is critical to realizing the expected synergies and avoiding operational disruptions.
• Interest Rate Sensitivity [medium — market]: As a financial institution, ConnectOne Bancorp is exposed to interest rate risk. Fluctuations in interest rates can impact net interest income and the valuation of investment securities. The significant increase in interest income suggests a favorable rate environment, but future rate changes could pose a risk.
• Increased Borrowings and Leverage [medium — financial]: Total borrowings increased to $833.443 million and subordinated debentures to $201.677 million as of September 30, 2025, compared to December 31, 2024. While necessary for growth, increased leverage can amplify financial risk.
• Regulatory Compliance [medium — regulatory]: As a bank holding company and a commercial bank, ConnectOne Bancorp is subject to extensive regulation by federal and state authorities. Changes in regulatory requirements or failure to comply can result in significant penalties and operational constraints.
• Merger and Acquisition Expenses [low — financial]: The company incurred substantial merger expenses of $33.963 million for the nine months ended September 30, 2025, compared to $742,000 in the prior year, primarily due to the FLIC acquisition. These expenses negatively impacted year-to-date diluted EPS.

Industry Context

ConnectOne Bancorp operates in the highly competitive regional banking sector, focusing on community banking services. The industry is characterized by consolidation, technological advancements, and evolving regulatory landscapes. Recent trends include a focus on digital transformation, customer experience, and managing interest rate sensitivity. The acquisition of FLIC demonstrates a strategy of inorganic growth to expand market share and capabilities.

Regulatory Implications

As a registered bank holding company and a commercial bank, ConnectOne Bancorp is subject to stringent oversight from federal and state regulators. Compliance with capital requirements, lending standards, and consumer protection laws is paramount. The significant increase in the provision for credit losses may attract regulatory scrutiny regarding loan portfolio management.

What Investors Should Do

1. Monitor loan portfolio quality and provision for credit losses.
2. Assess the success of FLIC integration.
3. Analyze net interest margin trends.
4. Evaluate the impact of merger expenses on profitability.

Key Dates

• 2025-06-01: Acquisition of The First of Long Island Corporation (FLIC) — Significantly expanded the company's asset base by $3.905 billion and integrated a new market presence.
• 2025-09-30: End of Q3 2025 — Reporting period for the strong net income growth and balance sheet expansion.
• 2025-09-30: FLIC Pension Plan Frozen — Marks the end of benefit accruals for former FLIC employees under the acquired defined benefit pension plan.

Glossary

Provision for credit losses

An expense set aside by a financial institution to cover potential loan defaults and uncollectible debts. (A significant increase in this provision indicates potential concerns about the quality of the loan portfolio or anticipated future losses.)

Net interest income

The difference between the interest income generated by a bank and the interest it pays out to depositors and lenders. (A key driver of profitability for banks; a substantial increase suggests improved lending margins or higher volumes.)

Diluted earnings per common share (EPS)

A measure of a company's profit allocated to each outstanding share of common stock, assuming all convertible securities and stock options were exercised. (Indicates profitability on a per-share basis; a decrease year-to-date despite strong quarterly net income highlights the impact of merger expenses and provisions.)

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair value of its identifiable net assets. (The increase in goodwill reflects the premium paid in the FLIC acquisition.)

Core deposit intangibles

An intangible asset representing the value of a bank's stable, low-cost deposit base acquired in a business combination. (The substantial increase indicates the value attributed to the deposit base of the acquired FLIC entity.)

Bank Holding Company Act (BHCA)

U.S. federal law that regulates bank holding companies, which are companies that own or control one or more banks. (Establishes the regulatory framework under which ConnectOne Bancorp operates.)

Year-Over-Year Comparison

Compared to the prior year, ConnectOne Bancorp has experienced a dramatic increase in total assets, growing by 41.9% to $14.023 billion, primarily driven by the acquisition of FLIC. This growth is reflected in higher loans receivable and total deposits. Net income for the quarter more than doubled, but year-to-date diluted EPS decreased due to substantial merger expenses and a significantly higher provision for credit losses, which rose by 334%.

Filing Documents

• cnob20250930_10q.htm (10-Q) — 4310KB
• ex_852716.htm (EX-31.1) — 8KB
• ex_852717.htm (EX-31.2) — 8KB
• ex_852718.htm (EX-32.1) — 4KB
• ex_852719.htm (EX-32.2) — 4KB
• image1banklogo.jpg (GRAPHIC) — 7KB
• 0001437749-25-032796.txt ( ) — 19255KB
• cnob-20250930.xsd (EX-101.SCH) — 96KB
• cnob-20250930_cal.xml (EX-101.CAL) — 98KB
• cnob-20250930_def.xml (EX-101.DEF) — 764KB
• cnob-20250930_lab.xml (EX-101.LAB) — 605KB
• cnob-20250930_pre.xml (EX-101.PRE) — 812KB
• cnob20250930_10q_htm.xml (XML) — 5003KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 3 Consolidated Statements of Condition as of September 30, 2025 (unaudited) and December 31, 2024 3 Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024 (unaudited) 4 Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2025 and 2024 (unaudited) 5 Consolidated Statements of Changes in Stockholders' Equity for the three and nine months ended September 30, 2025 and 2024 (unaudited) 6 Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (unaudited) 8

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 55 Item 3. Qualitative and Quantitative Disclosures about Market Risks 75 Item 4.

Controls and Procedures

Controls and Procedures 75

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 76 Item 1a.

Risk Factors

Risk Factors 76 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 76 Item 3. Defaults Upon Senior Securities 76 Item 4. Mine Safety Disclosures 76 Item 5. Other Information 76 Item 6. Exhibits 77

SIGNATURES

SIGNATURES 78 2 Table of Contents

Financial Statements

Item 1. Financial Statements CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (in thousands, except for share data) September 30, December 31, 2025 2024 (unaudited) ASSETS Cash and due from banks $ 96,990 $ 57,816 Interest-bearing deposits with banks 445,744 298,672 Cash and cash equivalents 542,734 356,488 Investment securities 1,252,202 612,847 Equity securities 20,133 20,092 Loans held-for-sale - 743 Loans receivable 11,303,636 8,274,810 Less: Allowance for credit losses - loans 156,499 82,685 Net loans receivable 11,147,137 8,192,125 Investment in restricted stock, at cost 51,516 40,449 Bank premises and equipment, net 55,888 28,447 Accrued interest receivable 60,630 45,498 Bank owned life insurance 367,767 243,672 Right of use operating lease assets 29,283 14,489 Goodwill 215,611 208,372 Core deposit intangibles 63,119 4,639 Other assets 217,565 111,739 Total assets $ 14,023,585 $ 9,879,600 LIABILITIES Deposits: Noninterest-bearing $ 2,513,102 $ 1,422,044 Interest-bearing 8,856,193 6,398,070 Total deposits 11,369,295 7,820,114 Borrowings 833,443 688,064 Subordinated debentures, net 201,677 79,944 Operating lease liabilities 33,185 15,498 Other liabilities 47,641 34,276 Total liabilities 12,485,241 8,637,896 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred Stock, no par value: 1,000 per share liquidation preference; Authorized 5,000,000 shares; issued 115,000 shares as of September 30, 2025 and as of December 31, 2024; outstanding 115,000 shares as of September 30, 2025 and as of December 31, 2024 110,927 110,927 Common stock, no par value: Authorized 100,000,000 shares; issued 54,158,637 shares as of September 30, 2025 and 42,255,865 shares as of December 31, 2024; outstanding 50,273,089 shares as of September 30, 2025 and 38,370,317 as of December 31, 2024 857,765 586,946 Additional paid-in capital 37,934 3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1a. Nature of Operations, Principles of Consolidation and Risk and Uncertainties Nature of Operations ConnectOne Bancorp, Inc. (the "Parent Corporation") is incorporated under the laws of the State of New Jersey and is a registered bank holding company under the Bank Holding Company Act of 1956, as amended (the "BHCA"). The Parent Corporation's business currently consists of the operation of its wholly-owned subsidiary, ConnectOne Bank (the "Bank" and, collectively with the Parent Corporation and the Parent Corporation's subsidiaries, the "Company") and making certain limited investments. The Bank's direct and indirect subsidiaries include Union Investment Co. (a New Jersey investment company), Twin Bridge Investment Co. (a Delaware investment company), ConnectOne Preferred Funding Corp. (a New Jersey real estate investment trust), Center Financial Group, LLC (a New Jersey financial services company), Center Advertising, Inc. (a New Jersey advertising company), Morris Property Company, LLC, (a New Jersey limited liability company), Volosin Holdings, LLC, (a New Jersey limited liability company), NJCB Spec- 1, LLC (a New Jersey limited liability company), Port Jervis Holdings, LLC (a New Jersey limited liability company), BONJ Special Properties, LLC (a New Jersey limited liability company), The First of Long Island REIT (a New York real estate investment trust), FNY Service Corp (a New York investment company) and BoeFly, Inc. (a New Jersey financial technology company). The Bank is a community-based, full-service New Jersey-chartered commercial bank that was founded in 2005. The Bank operates from its headquarters located at 301 Sylvan Avenue in the Borough of Englewood Cliffs, Bergen County, New Jersey and through its 59 other banking offices. On June 1, 2025, the Company completed its acquisition of The First of Long Island Corporation ("FLIC"), and The First National Bank of Long Island ("FNBLI

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1a. Nature of Operations, Principles of Consolidation and Risk and Uncertainties - (continued) Segment Reporting The Company's operations are solely in the financial services industry. The Company provides a range of regional community banking services to commercial and retail clients. The Company's reportable segment is determined by the Chief Executive Officer, who is designated the Chief Operating Decision Maker ("CODM"), based upon information about the Company's products and services offered, primarily its banking operations. The segment is also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business (such as branches and the subsidiary bank), which are then aggregated if operating performance, products/services, and customers are similar. The CODM will evaluate the financial performance of the Company's business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the Company's segment and in the determination of allocating resources. The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The CODM uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment of performance and in establishing compensation. Loans, investments, and deposits provide the revenues in the banking operation. Interest expense, provision for credit losses, and payroll provide the significant expenses in the banking operation. All operations are domestic. See Note 14 for disclosures related to the reportable segment. Employee Benefit Plans The Company has a noncontributory pension plan that covered all eligible employees up until September 30, 2007 , at which time the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1b. Authoritative Accounting Guidance Adoption of New Accounting Standards in 2025 In December 2023, the FASB issued Accounting Standard Update ("ASU") 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures. These amendments require that public business entities on an annual basis ( 1 ) disclose specific categories in the rate reconciliation and ( 2 ) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments require that all entities disclose on an annual basis the following information about income taxes paid: 1 ) The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes; and 2 ) The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes paid (net of refunds received). The amendments also require that all entities disclose the following information: 1 ) Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign; and 2 ) Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. The Company adopted ASU 2023 - 09 on January 1, 2025. Newly Issued, But Not Yet Effective Accounting Standards In November 2024, the FASB issued ASU 2024 - 03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 )" ("ASU 2024 - 03" ). ASU 2024 - 03 requires public entities to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are inc

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 2. Business Combination On June 1, 2025 ( the "Acquisition Date"), the Company completed the acquisition of FLIC, the parent company for the FNBLI, in accordance with the definitive Agreement and Plan of Merger dated as of September 4, 2024 ( the "Merger Agreement"). Pursuant to the Merger Agreement, on the Acquisition Date, FLIC merged with and into the Company, with the Company continuing as the surviving corporation, and FNBLI merged with and into the Bank, with the Bank as the surviving bank (collectively, the "merger"). As part of this merger, the Company acquired 36 branc

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