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Business Combinations | 6 Months Ended
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Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
Business Combinations | Business Combination Flushing Acquisition On June 1, 2026, the Company completed its acquisition of Flushing, pursuant to which Apollo Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), merged with and into Flushing (the “First-Step Merger”), with Flushing continuing as the surviving entity. Immediately following the First-Step Merger, Flushing merged with and into the Company, with the Company continuing as the surviving corporation (the “Second-Step Merger” and together with the First-Step Merger, the “Merger”). On the day immediately following the closing date of June 1, 2026, Flushing Bank, a New York-chartered non-member bank and, prior to the Second-Step Merger, a wholly-owned subsidiary of Flushing merged with and into the Bank, with the Bank continuing as the surviving bank. Each share of common stock, par value $0.01 per share, of Flushing issued and outstanding immediately prior to the completion of the Merger, was converted into the right to receive 0.85 of a share of common stock, par value $0.01 per share, of the Company. Holders of Flushing common stock also became entitled to receive cash in lieu of fractional shares of the Company’s common stock. Concurrent with the completion of the Merger, the Company raised $225 million of equity from affiliates of funds managed by Warburg Pincus, in which the Company issued and sold to Warburg Pincus 9.6 million shares of Company’s common stock, at $19.76 per share, 1,812 shares of a new class of NVCE Stock representing the economic equivalent of approximately 1.8 million shares of Company’s common stock, at $19,760 per share of NVCE Stock, and issued to Warburg Pincus a warrant to purchase approximately 11.4 million shares of NVCE Stock with an exercise price of $19,760 per share of NVCE Stock. The NVCE Stock was issued as a series of preferred stock, in accordance with the Investment Agreement dated December 29, 2025. The NVCE Stock is not listed or traded on any national securities exchange or automated quotation system, and there currently is no established trading market for such stock. The NVCE Stock does not have voting rights and ranks equally with, and has identical rights, preferences and privileges as the voting common stock with respect to dividends or distributions (including regular quarterly dividends) declared by the Board and rights upon any liquidation, dissolution, winding up or similar proceeding of the Company. The warrant carries a term of seven years and can be exercised voluntarily following the third anniversary of the investment. The warrant can also be voluntarily exercised prior to the third anniversary of the investment, in the event the market price of the Company’s common stock reaches or exceeds $30 per share at the closing of any trading day or in connection with certain change of control transactions involving the Company. The warrant is subject to mandatory exercise, at any time, in the event the market price of Company’s common stock reaches or exceeds $30 per share for a certain number of trading days over a specified period. In the event of a change of control transaction where less than 90% of the consideration in such transaction is comprised of equity securities traded on the NASDAQ or NYSE, Warburg Pincus will be entitled to receive additional shares if it exercises the warrant in connection with such transaction. The warrants are accounted as equity-classified instruments. The acquisition was accounted for under the acquisition method of accounting, with the Company as the accounting acquirer. Under this method of accounting, the purchase price has been allocated to the respective assets acquired and liabilities assumed based upon their estimated fair values, net of tax. The excess of consideration paid over the estimated fair value of the net assets acquired has been recorded as goodwill. After purchase accounting adjustments, the merger added $8.69 billion to total assets, including $6.19 billion to loans and loans held for sale, and $7.44 billion to deposits. Total consideration paid for Flushing was $538.4 million, including cash consideration of $2.8 million. The application of the acquisition method of accounting resulted in goodwill of $12.4 million. The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of the acquisition for Flushing, net of total consideration paid (in thousands):
| At June 1, 2026
| Flushing Book Value |  | Purchase Accounting Adjustments |  | Estimated Fair Value
Total Purchase Price: |  |  |  |  | $ | 538,351 |
Assets acquired: |  |  |  |  |
Cash and cash equivalents | $ | 308,470 |  |  | $ | — |  |  | $ | 308,470 |
Securities | 1,560,808 |  |  | (332) |  |  | 1,560,476 |
Loans receivable, net of allowance for loans credit losses | 5,221,067 |  |  | (229,810) |  |  | 4,991,257 |
Loans held-for-sale | 1,309,849 |  |  | (108,063) |  |  | 1,201,786 |
Core deposit intangible | 647 |  |  | 84,353 |  |  | 85,000 |
Other assets | 457,057 |  |  | 82,513 |  |  | 539,570 |
Total assets acquired | 8,857,898 |  |  | (171,339) |  |  | 8,686,559 |
Liabilities assumed: |  |  |  |  |
Deposits | 7,436,454 |  |  | 7,497 |  |  | 7,443,951 |
FHLB advances and other borrowings | 406,241 |  |  | (6,106) |  |  | 400,135 |
Other liabilities | 316,879 |  |  | (401) |  |  | 316,478 |
Total liabilities assumed | 8,159,574 |  |  | 990 |  |  | 8,160,564 |
Net assets acquired | $ | 698,324 |  |  | $ | (172,329) |  |  | $ | 525,995 |
Goodwill recorded in the merger |  |  |  |  | $ | 12,356 |
The calculation of goodwill is subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available. As the Company finalizes its review of the acquired assets and liabilities, certain adjustments to the recorded carrying values may be required. Fair Value Measurement of Assets Assumed and Liabilities Assumed The methods used to determine the fair value of the assets acquired and liabilities assumed in the Flushing acquisition were as follows. Refer to Note 8, Fair Value Measurements, for a discussion of the fair value hierarchy. Securities The estimated fair values of the securities were generally calculated utilizing Level 1 and Level 2 inputs using quoted market prices, observable market data or subsequent sale prices as this was determined to be the best indicator of fair value. The securities acquired are generally traded in active markets. Prices for these instruments were obtained through security industry sources actively participating in these markets or using other observable inputs. Certain municipal securities are fair valued using a discounted cash flow methodology and therefore, classified as Level 3. Loans and loans held-for-sale The Company evaluated whether acquired loans have experienced more-than-insignificant deteriorations in credit quality since origination, using a combination of qualitative and quantitative factors. Loans meeting this criteria were classified as purchased credit deteriorated (“PCD”) loans. In accordance with the adoption of ASU 2025-08, all loans acquired that are not identified as PCD loans are classified as purchased seasoned loans (“PSL”), with the exception of credit cards. For both PSL and PCD loans, the Company recorded an initial allowance through an adjustment to acquired loan balances and a related purchase accounting mark under the gross up approach. The acquired loan portfolio held for investment was valued utilizing Level 3 inputs and included the use of present value techniques employing cash flow estimates and incorporated assumptions that marketplace participants would use in estimating fair values. The acquired loans were grouped into pools based on similar characteristics such as loan type, interest rate type, payment type, risk rating and performance status. Specifically, the Company utilized two separate fair value analyses which a market participant would employ in estimating the total fair value adjustment: 1) interest rate loan fair value analysis and 2) credit fair value adjustment. The credit fair value adjustment was calculated using expected credit losses derived from probability of default and loss given default assumptions over the estimated life of the loans. The analysis also incorporated market participant assumptions regarding economic conditions and other qualitative factors. These inputs were obtained from various external data sources and reviewed by management for reasonableness. A discounted cash flow approach was utilized to calculate the credit fair value adjustment. For the interest rate fair value analysis, market rate spreads and prepayment assumptions were developed for each loan pool using data obtained from various external sources and were reviewed by management for reasonableness. A discounted cash flow approach was utilized to calculate the interest rate fair value adjustment. The non-credit discount on the acquired loans will be recognized over the life of the loans on a level yield basis as an adjustment to yield. The following table presents the PCD and PSL activity on loans held for investment (in thousands):
| June 1, 2026
| PSL |  | PCD
Par value of loans at acquisition | $ | 4,416,746 |  |  | $ | 812,205 |
Initial allowance for credit losses on acquired loans | (60,881) |  |  | (60,450) |
Non-credit discount on acquired loans | (60,897) |  |  | (55,466) |
Fair value of acquired loans | $ | 4,294,968 |  |  | $ | 696,289 |
Upon completion of the acquisition, the Company sold $1.31 billion of multifamily loans that were classified as loans held-for-sale, with servicing released. The held-for-sale loans were valued based on the executed sales price, net of estimated costs to sell, from an observable transaction completed shortly after the acquisition date, as this was determined to be the best indicator of fair value. Management determined that no significant changes in market conditions or loan characteristics occurred between the acquisition date and the sale date. Leases Flushing operated 31 properties that were subject to separate lease agreements, in addition to owned properties. The fair value of acquired leases was determined using a discounted cash flow methodology based on the present value of the difference between contractual rents and estimated market rents for comparable properties over the remaining lease terms. Deposits and Core Deposit Premium Core deposit premium represents the value assigned to certain non-interest-bearing demand deposits, interest-bearing checking, money market and savings accounts acquired as part of the acquisition. The core deposit premium value represents the future economic benefit, including the present value of future tax benefits, of the potential cost saving from acquiring the core deposits as part of an acquisition compared to the cost of alternative funding sources and is valued utilizing Level 3 inputs. The core deposit premium totaled $85.0 million for the acquisition of Flushing, and is being amortized over its estimated useful life of approximately 7 years using a sum of the years’ digits method. Time deposits are not considered to be core deposits as they are assumed to have a low expected average life upon acquisition. The fair value of time deposits represents the present value of the expected contractual payments discounted by market rates for similar time deposits and is valued utilizing Level 2 inputs. Borrowings The fair value of the acquired subordinated debt is valued using observable market prices and trading data for this instrument. Accordingly, the valuation utilized Level 2 inputs. The fair value for the junior subordinated debt, or trust preferred securities, was determined using a discounted cash flow methodology. Contractual cash flows were discounted using market rates for similar debt instruments adjusted for differences in credit risk, liquidity, and time to maturity. Accordingly, the valuation utilized Level 3 inputs. Supplemental Pro Forma Financial Information The following table presents financial information regarding the former Flushing operations included in the Consolidated Statements of Income from the date of the acquisition (June 1, 2026) through June 30, 2026. In addition, the table provides unaudited condensed pro forma financial information assuming the Merger had been completed as of January 1, 2025 for the six months ended June 30, 2025. The table below has been prepared for comparative purposes only and is not necessarily indicative of the actual results that would have been attained had the acquisition occurred as of the beginning of the periods presented, nor is it indicative of future results. The unaudited pro forma information does not reflect management’s estimates of any revenue-enhancing opportunities or anticipated cost savings that may be realized as a result of the integration and consolidation of Flushing’s operations. The pro forma information presented gives effect to estimated purchase accounting fair value adjustments, merger-related expenses of $46.9 million (which had an estimated tax-adjusted earnings per share impact of $0.37) assumed to have been incurred in 2025 and therefore excluded from 2026 results, the removal of Flushing’s 2025 goodwill impairment charge, and related income tax effects, including the application of the combined entity’s effective tax rate. Average diluted shares outstanding include shares issued in connection with the Flushing acquisition, as well as common stock and NVCE Stock issued to Warburg Pincus.
(in thousands) | Flushing Actual from June 1, 2026 to June 30, 2026 |  | Pro Forma For the Six Months Ended June 30, 2026 |  | Pro Forma For the Six Months Ended June 30, 2025 |
Net interest income | $ | 19,068 |  |  | $ | 316,979 |  |  | $ | 287,326 |  |
Credit loss expense | (109) |  |  | 8,751 |  |  | 16,891 |  |
Non-interest income | 1,350 |  |  | 22,810 |  |  | 38,337 |  |
Non-interest expense | 14,813 |  |  | 257,942 |  |  | 275,657 |  |
Income before income taxes | 5,714 |  |  | 73,096 |  |  | 33,115 |  |
Provision for income taxes | 1,607 |  |  | 20,467 |  |  | 9,272 |  |
Net income | $ | 4,107 |  |  | $ | 52,629 |  |  | $ | 23,843 |  |
Net income available to common stockholders | $ | 4,107 |  |  | $ | 52,629 |  |  | $ | 20,000 |  |
Average diluted shares outstanding |  |  | 97,712 |  |  | 98,555 |  |
Fully diluted earnings per share |  |  | $ | 0.54 |  |  | $ | 0.20 |  |

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