• ConnectOne Bancorp, Inc. Reports Third Quarter 2024 Results; Declares Common and Preferred Dividends

    Source: Nasdaq GlobeNewswire / 24 Oct 2024 07:00:01   America/New_York

    ENGLEWOOD CLIFFS, N.J., Oct. 24, 2024 (GLOBE NEWSWIRE) -- ConnectOne Bancorp, Inc. (Nasdaq: CNOB) (the “Company” or “ConnectOne”), parent company of ConnectOne Bank (the “Bank”), today reported net income available to common stockholders of $15.7 million for the third quarter of 2024 compared with $17.5 million for the second quarter of 2024 and $19.9 million for the third quarter of 2023. Included in net income available to common stockholders’ was merger and restructuring pre-tax expenses of $0.7 million for the third quarter of 2024, while there were no such charges during the second quarter of 2024 and the third quarter of 2023. Diluted earnings per share were $0.41 for the third quarter of 2024 compared with $0.46 for the second quarter of 2024 and $0.51 for the third quarter of 2023. Return on average assets was 0.70%, 0.79% and 0.88% for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. Return on average tangible common equity was 6.93%, 7.98% and 9.11% for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively.

    Operating net income available to common stockholders, which excludes non-operating items, was $16.1 million for the third quarter of 2024, $17.9 million for the second quarter of 2024 and $20.4 million for the third quarter of 2023. Operating diluted earnings per share were $0.42 for the third quarter of 2024, $0.47 for the second quarter of 2024 and $0.52 for the third quarter of 2023. Operating return on average assets was 0.72%, 0.80% and 0.90% for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. Operating return on average tangible common equity was 7.03%, 8.05% and 9.21% for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, 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 from the second quarter of 2024 was primarily due to a $1.3 million increase in the provision for credit losses, a $1.0 million increase in noninterest expenses, and a $0.6 million decrease in net interest income, partially offset by a $0.7 million decrease in income tax expenses and a $0.3 million increase in noninterest income. The decrease in net income available to common stockholders from the third quarter of 2023 was primarily due to a $2.9 million increase in noninterest expenses, a $2.3 million increase in the provision for credit losses, and a $1.5 million decrease in net interest income, partially offset by a $1.2 million increase in noninterest income and a $1.2 million decrease in income tax expense. The increases in noninterest expenses when compared to the prior sequential quarter and the prior year quarter included the impact of the aforementioned $0.7 million of merger and restructuring expense that occurred during the third quarter of 2024.

    “In September, we announced a planned merger with The First of Long Island Corporation, a transaction that we believe will create a truly premier New York-metro community bank,” commented Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer. “Our integration planning is off to a good start, the initial regulatory process is underway, and we’re excited about creating a significantly enhanced platform for continued growth across all markets and communities we serve. Further, the economic environment and interest rate outlook confirms our belief that this combination will deliver meaningful benefits to our communities, clients and shareholders. We look forward to updating you on our progress in the months and quarters ahead.”

    Mr. Sorrentino added, “Meanwhile, we remain focused and committed to our client-first culture and relationship banking model. During the first nine months of the year, we have actively reduced non-relationship loans from our balance sheet in an effort to improve our loan-to-deposit ratio, diversify our loan mix, and capitalize on the improving interest rate environment.”

    “The net interest margin, for the third quarter, on a core basis was flat; however, as a result of the Fed’s 50 basis-point cut in late September, we ended the quarter with a so-called spot margin upwards of 10 basis points wider. And with our liability-sensitive balance sheet, we are positioned to drive increased profitability through the fourth quarter, into 2025 and post-merger completion.”

    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 December 2, 2024, to common stockholders of record on November 15, 2024. 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 December 2, 2024 to holders of record on November 15, 2024.

    Operating Results

    Fully taxable equivalent net interest income for the third quarter of 2024 was $61.7 million, a decrease of $0.5 million, or 0.9%, from the second quarter of 2024, due to a five basis-point contraction of the net interest margin to 2.67% from 2.72%. During the third quarter of 2024, average loans decreased $89.4 million, or 1.1% when compared to the second quarter of 2024. The contraction of the net interest margin was primarily due to an increase in average cash balances during the third quarter of 2024, as well as a decrease in loan prepayment fees and nonaccrual loan interest recapture. The net interest margin is expected to increase by 10 basis points or more in the fourth quarter of 2024 reflecting the Fed’s actual and expected rate cuts along with deployment of excess cash-on-hand.

    Fully taxable equivalent net interest income for the third quarter of 2024 decreased by $1.5 million, or 2.4%, from the third quarter of 2023. The decrease from the third quarter of 2023 resulted primarily from a nine basis-point contraction in the net interest margin to 2.67% from 2.76%. During the third quarter of 2024, average loans decreased by $45.9 million, or 0.6% when compared to the third quarter of 2023. The contraction of the net interest margin for the third quarter of 2024 when compared to the third quarter of 2023 was primarily attributable to a 40 basis-point increase in the average cost of deposits, including noninterest-bearing deposits, partially offset by a 24 basis-point increase in the loan portfolio yield.

    Noninterest income was $4.7 million in the third quarter of 2024, $4.4 million in the second quarter of 2024 and $3.6 million in the third quarter of 2023. The $0.3 million increase in noninterest income for the third quarter of 2024 when compared to the second quarter of 2024 was due to a $0.6 million increase in net gains on equity securities, a $0.4 million increase in BOLI death benefits and a $0.2 million increase in other deposit, loan and other income, partially offset a $0.9 million decrease in net gains on sale of loans held-for-sale. The $1.2 million increase in noninterest income for the third quarter of 2024 when compared to the third quarter of 2023 was due to a $0.7 million increase in net gains on equity securities, a $0.4 million increase in BOLI death benefits received, a $0.2 million increase in BOLI income, a $0.1 million increase in BoeFly income, and a $0.1 million increase in other deposit, loan and other income, partially offset by a decrease in net gains on sale of loans held-for-sale of $0.3 million.

    Noninterest expenses were $38.6 million for the third quarter of 2024, $37.6 million for the second quarter of 2024 and $35.8 million for the third quarter of 2023. The $1.0 million increase in noninterest expenses for the third quarter of 2024 when compared to the second quarter of 2024 was primarily due to a $0.7 million increase in merger and restructuring expenses, a $0.3 million increase in information and technology communications, a $0.2 million increase in salaries and employee benefits and a $0.2 million increase in professional and consulting fees, partially offset by decreases in other expenses of $0.4 million. The $2.9 million increase in noninterest expenses for the third quarter of 2024 when compared to the third quarter of 2023 was primarily due to a $1.0 million increase in information technology and communications, a $0.7 million increase in merger and restructuring expenses, a $0.7 million increase in salaries and employee benefits, a $0.3 million increase in professional and consulting, a $0.2 million increase in occupancy and equipment and a $0.1 million increase in marketing and advertising, partially offset by a decrease in other expenses of $0.1 million. The increases in information technology and communications when compared to the second quarter of 2024 and the third quarter of 2023 are attributable to additional investments in technology, equipment, and software. The increase in salaries and employee benefits when compared to the second quarter of 2024 was primarily attributable to increases in incentive-based compensation accruals, partially offset by decreases in payroll tax expenses and other employee benefit expenses. The increase in salaries and employee benefits when compared to the third quarter of 2023 was primarily attributable to increases in incentive-based compensation accruals, and an increase in other employee benefit expenses, partially offset by decreases in stock-compensation expenses.

    Income tax expense was $6.0 million for the third quarter of 2024, $6.7 million for the second quarter of 2024 and $7.2 million for the third quarter of 2023. The effective tax rates for the second quarter of 2024, first quarter of 2024 and second quarter of 2023 were 26.0%, 26.0% and 25.2%, respectively.

    Asset Quality

    The provision for credit losses was $3.8 million for the third quarter of 2024, $2.5 million for the second quarter of 2024 and $1.5 million for the third quarter of 2023. The increase in the current quarter’s provision for credit losses from both the second quarter of 2024 and the third quarter of 2023 was primarily due to increases in specific reserves, partially offset by decreases in general reserves.

    Nonperforming assets, which includes nonaccrual loans and other real estate owned (the Bank had no other real estate owned during the periods reported), was $51.3 million as of September 30, 2024, $52.5 million as of December 31, 2023 and $56.1 million as of September 30, 2023. Nonperforming assets as a percentage of total assets was 0.53% as of September 30, 2024, 0.53% as of December 31, 2023 and 0.58% as of September 30, 2023. The ratio of nonaccrual loans to loans receivable was 0.63%, 0.63% and 0.69%, as of September 30, 2024, December 31, 2023 and September 30, 2023, respectively. The annualized net loan charge-offs ratio was 0.17% for the third quarter of 2024, 0.43% for the fourth quarter of 2023 and 0.12% for the third quarter of 2023. The allowance for credit losses represented 1.02%, 0.98%, and 1.08% of loans receivable as of September 30, 2024, December 31, 2023, and September 30, 2023, respectively. The allowance for credit losses as a percentage of nonaccrual loans was 160.8% as of September 30, 2024, 156.1% as of December 31, 2023 and 157.4% as of September 30, 2023. Criticized and classified loans as a percentage of total loans was 2.23% as of September 30, 2024, up from 1.35% as of December 31, 2023 and up from 1.44% as of September 30, 2023. The increase is primarily due to a loan modification of one CRE relationship that was moved to special mention. Loans delinquent 30 to 89 days was 0.16% of loans as of September 30, 2024, down from 0.30% as of December 31, 2023 and up from 0.04% as of September 30, 2023.

    Selected Balance Sheet Items

    The Company’s total assets were $9.639 billion as of September 30, 2024, compared to $9.856 billion as of December 31, 2023. Loans receivable were $8.112 billion as of September 30, 2024 and $8.345 billion as of December 31, 2023. Total deposits were $7.524 billion as of September 30, 2024 and $7.536 billion as of December 31, 2023.

    The Company’s total stockholders’ equity was $1.239 billion as of September 30, 2024 and $1.217 billion as of December 31, 2023. The increase in total stockholders’ equity was primarily attributable to an increase in retained earnings of $28.5 million, partially offset by an increase in accumulated other comprehensive losses of approximately $1.6 million and increases in treasury stock of approximately $5.8 million. As of September 30, 2024, the Company’s tangible common equity ratio and tangible book value per share were 9.71% and $23.85, respectively, compared to 9.25% and $23.14, respectively, as of December 31, 2023. Total goodwill and other intangible assets were $213.3 million as of September 30, 2024, and $214.2 million as of December 31, 2023.

    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.

    Third Quarter 2024 Results Conference Call

    Management will also host a conference call and audio webcast at 10:00 a.m. ET on October 24, 2024 to review the Company's financial performance and operating results. The conference call dial-in number is 1 (646) 307-1963, access code 5504182. 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 Thursday, October 24, 2024 and ending on Thursday, October 31, 2024 by dialing 1 (609) 800-9909, access code 5504182. 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. Burns
    Senior Executive Vice President & CFO
    201.816.4474: bburns@cnob.com

    Media Contact:
    Shannan Weeks 
    MikeWorldWide
    732.299.7890: sweeks@mww.com



    CONNECTONE BANCORP, INC. AND SUBSIDIARIES      
    CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION     
    (in thousands)      
           
     September 30, December 31, September 30, 
      2024   2023   2023  
     (unaudited)   (unaudited) 
    ASSETS      
    Cash and due from banks$61,093  $61,421  $56,170  
    Interest-bearing deposits with banks 186,155   181,293   197,128  
    Cash and cash equivalents 247,248   242,714   253,298  
           
    Investment securities 646,713   617,162   581,867  
    Equity securities 20,399   18,564   17,677  
           
    Loans receivable 8,111,976   8,345,145   8,181,109  
    Less: Allowance for credit losses - loans 82,494   81,974   88,230  
    Net loans receivable 8,029,482   8,263,171   8,092,879  
           
    Investment in restricted stock, at cost 42,772   51,457   49,387  
    Bank premises and equipment, net 29,068   30,779   28,432  
    Accrued interest receivable 46,951   49,108   46,795  
    Bank owned life insurance 242,016   237,644   236,009  
    Right of use operating lease assets 14,211   12,007   11,229  
    Goodwill 208,372   208,372   208,372  
    Core deposit intangibles 4,935   5,874   6,222  
    Other assets 107,436   118,751   146,718  
    Total assets$9,639,603  $9,855,603  $9,678,885  
           
    LIABILITIES      
    Deposits:      
    Noninterest-bearing$1,262,568  $1,259,364  $1,224,125  
    Interest-bearing 6,261,537   6,276,838   6,214,370  
    Total deposits 7,524,105   7,536,202   7,438,495  
    Borrowings 742,133   933,579   887,590  
    Subordinated debentures, net 79,818   79,439   79,313  
    Operating lease liabilities 15,252   13,171   12,424  
    Other liabilities 38,799   76,592   72,909  
    Total liabilities 8,400,107   8,638,983   8,490,731  
           
    COMMITMENTS AND CONTINGENCIES      
           
    STOCKHOLDERS' EQUITY      
    Preferred stock 110,927   110,927   110,927  
    Common stock 586,946   586,946   586,946  
    Additional paid-in capital 34,995   33,182   32,027  
    Retained earnings 619,497   590,970   579,776  
    Treasury stock (76,116)  (70,296)  (68,108) 
    Accumulated other comprehensive loss (36,753)  (35,109)  (53,414) 
    Total stockholders' equity 1,239,496   1,216,620   1,188,154  
    Total liabilities and stockholders' equity$9,639,603  $9,855,603  $9,678,885  
           



    CONNECTONE BANCORP, INC. AND SUBSIDIARIES        
    CONSOLIDATED STATEMENTS OF INCOME        
    (dollars in thousands, except for per share data)        
             
     Three Months EndedNine Months Ended 
     09/30/24 09/30/23 09/30/24 09/30/23 
    Interest income        
    Interest and fees on loans$119,280 $115,405  $359,513 $333,356  
    Interest and dividends on investment securities:        
    Taxable 4,740  4,128   13,757  12,386  
    Tax-exempt 1,119  1,136   3,394  3,475  
    Dividends 1,048  907   3,390  2,750  
    Interest on federal funds sold and other short-term investments 4,055  2,110   9,802  9,141  
    Total interest income 130,242  123,686   389,856  361,108  
    Interest expense        
    Deposits 63,785  56,043   186,278  146,844  
    Borrowings 5,570  5,286   20,952  20,980  
    Total interest expense 69,355  61,329   207,230  167,824  
             
    Net interest income 60,887  62,357   182,626  193,284  
    Provision for credit losses 3,800  1,500   10,300  5,500  
    Net interest income after provision for credit losses 57,087  60,857   172,326  187,784  
             
    Noninterest income        
    Deposit, loan and other income 1,817  1,605   5,063  4,553  
    Income on bank owned life insurance 2,145  1,597   5,486  4,681  
    Net gains on sale of loans held-for-sale 343  633   2,126  1,232  
    Net losses (gains) on equity securities 432  (273)  309  (674) 
    Total noninterest income 4,737  3,562   12,984  9,792  
             
    Noninterest expenses        
    Salaries and employee benefits 22,957  22,251   67,809  66,213  
    Occupancy and equipment 2,889  2,738   8,797  8,176  
    FDIC insurance 1,800  1,800   5,400  4,465  
    Professional and consulting 2,147  1,834   5,998  5,960  
    Marketing and advertising 635  554   1,925  1,642  
    Information technology and communications 4,464  3,487   13,051  10,192  
    Merger and restructuring 742  -   742  -  
    Amortization of core deposit intangibles 297  347   939  1,090  
    Other expenses 2,710  2,773   8,639  8,366  
    Total noninterest expenses 38,641  35,784   113,300  106,104  
             
    Income before income tax expense 23,183  28,635   72,010  91,472  
    Income tax expense 6,022  7,228   18,588  23,742  
    Net income 17,161  21,407   53,422  67,730  
    Preferred dividends 1,509  1,509   4,527  4,527  
    Net income available to common stockholders$15,652 $19,898  $48,895 $63,203  
             
    Earnings per common share:        
    Basic$0.41 $0.51  $1.27 $1.62  
    Diluted 0.41  0.51   1.27  1.61  
             



    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 
     Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, 
      2024   2024   2024   2023   2023  
    Selected Financial Data(dollars in thousands) 
    Total assets$9,639,603  $9,723,731  $9,853,964  $9,855,603  $9,678,885  
    Loans receivable:          
    Commercial$1,505,743  $1,491,079  $1,561,063  $1,564,768  $1,464,479  
    Commercial real estate 3,261,160   3,274,941   3,333,488   3,342,603   3,288,704  
    Multifamily 2,482,258   2,499,581   2,507,893   2,566,904   2,559,927  
    Commercial construction 616,087   639,168   646,593   620,496   622,748  
    Residential 250,249   256,786   254,214   256,041   251,416  
    Consumer 835   945   850   1,029   936  
    Gross loans 8,116,332   8,162,500   8,304,101   8,351,841   8,188,210  
    Net deferred loan fees (4,356)  (4,597)  (6,144)  (6,696)  (7,101) 
    Loans receivable 8,111,976   8,157,903   8,297,957   8,345,145   8,181,109  
    Loans held-for-sale -   435   -   -   -  
    Total loans$8,111,976  $8,158,338  $8,297,957  $8,345,145  $8,181,109  
               
    Investment and equity securities$667,112  $640,322  $638,854  $635,726  $599,544  
    Goodwill and other intangible assets 213,307   213,604   213,925   214,246   214,594  
    Deposits:          
    Noninterest-bearing demand$1,262,568  $1,268,882  $1,290,523  $1,259,364  $1,224,125  
    Time deposits 2,614,187   2,593,165   2,623,391   2,531,371   2,522,210  
    Other interest-bearing deposits 3,647,350   3,713,967   3,674,740   3,745,467   3,692,160  
    Total deposits$7,524,105  $7,576,014  $7,588,654  $7,536,202  $7,438,495  
               
    Borrowings$742,133  $756,144  $877,568  $933,579  $887,590  
    Subordinated debentures (net of debt issuance costs) 79,818   79,692   79,566   79,439   79,313  
    Total stockholders' equity 1,239,496   1,224,227   1,216,609   1,216,620   1,188,154  
               
    Quarterly Average Balances          
    Total assets$9,742,853  $9,745,853  $9,860,753  $9,690,746  $9,625,625  
    Loans receivable:          
    Commercial$1,485,777  $1,517,446  $1,552,360  $1,510,634  $1,471,006  
    Commercial real estate (including multifamily) 5,752,467   5,789,498   5,890,853   5,874,854   5,821,794  
    Commercial construction 628,740   652,227   637,993   630,468   625,640  
    Residential 252,975   254,284   252,965   253,200   253,114  
    Consumer 7,887   5,155   5,091   6,006   4,972  
    Gross loans 8,127,846   8,218,610   8,339,262   8,275,162   8,176,526  
    Net deferred loan fees (4,513)  (5,954)  (6,533)  (6,894)  (7,387) 
    Loans receivable 8,123,333   8,212,656   8,332,729   8,268,268   8,169,139  
    Loans held-for-sale 83   169   99   31   171  
    Total loans$8,123,416  $8,212,825  $8,332,828  $8,268,299  $8,169,310  
               
    Investment and equity securities$650,897  $637,551  $633,270  $602,287  $628,429  
    Goodwill and other intangible assets 213,502   213,813   214,133   214,472   214,822  
    Deposits:          
    Noninterest-bearing demand$1,259,912  $1,256,251  $1,254,201  $1,248,132  $1,275,325  
    Time deposits 2,625,329   2,587,706   2,567,767   2,495,091   2,606,122  
    Other interest-bearing deposits 3,747,427   3,721,167   3,696,374   3,747,093   3,723,561  
    Total deposits$7,632,668  $7,565,124  $7,518,342  $7,490,316  $7,605,008  
               
    Borrowings$717,586  $787,256  $947,003  $823,123  $651,112  
    Subordinated debentures (net of debt issuance costs) 79,735   79,609   79,483   79,356   79,230  
    Total stockholders' equity 1,234,724   1,220,621   1,220,818   1,198,389   1,202,647  
               
     Three Months Ended 
     Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, 
      2024   2024   2024   2023   2023  
     (dollars in thousands, except for per share data) 
    Net interest income$60,887  $61,439  $60,300  $61,822  $62,357  
    Provision for credit losses 3,800   2,500   4,000   2,700   1,500  
    Net interest income after provision for credit losses 57,087   58,939   56,300   59,122   60,857  
    Noninterest income          
    Deposit, loan and other income 1,817   1,654   1,592   1,545   1,605  
    Income on bank owned life insurance 2,145   1,677   1,664   1,635   1,597  
    Net gains on sale of loans held-for-sale 343   1,277   506   472   633  
    Net gains (losses) on equity securities 432   (209)  86   557   (273) 
    Total noninterest income 4,737   4,399   3,848   4,209   3,562  
    Noninterest expenses          
    Salaries and employee benefits 22,957   22,721   22,131   22,010   22,251  
    Occupancy and equipment 2,889   2,899   3,009   2,708   2,738  
    FDIC insurance 1,800   1,800   1,800   3,900   1,800  
    Professional and consulting 2,147   1,923   1,928   1,587   1,834  
    Marketing and advertising 635   613   677   323   554  
    Information technology and communications 4,464   4,198   4,389   4,148   3,487  
    Merger and restructuring 742   -   -   -   -  
    Amortization of core deposit intangible 297   321   321   348   347  
    Other expenses 2,710   3,119   2,810   2,821   2,773  
    Total noninterest expenses 38,641   37,594   37,065   37,845   35,784  
               
    Income before income tax expense 23,183   25,744   23,083   25,486   28,635  
    Income tax expense 6,022   6,688   5,878   6,213   7,228  
    Net income 17,161   19,056   17,205   19,273   21,407  
    Preferred dividends 1,509   1,509   1,509   1,509   1,509  
    Net income available to common stockholders$15,652  $17,547  $15,696  $17,764  $19,898  
               
    Weighted average diluted common shares outstanding 38,525,484   38,448,594   38,511,747   38,651,391   38,829,681  
    Diluted EPS (GAAP)$0.41  $0.46  $0.41  $0.46  $0.51  
               
    Reconciliation of GAAP Net Income to Operating Net Income:          
    Net income$17,161  $19,056  $17,205  $19,273  $21,407  
    Merger and restructuring 742   -   -   -   -  
    Amoritization of core deposit intangibles 297   321   321   348   347  
    FDIC special assessment -   -   -   2,100   -  
    Net (gains) losses on equity securities (432)  209   (86)  (557)  273  
    Tax impact of adjustments (171)  (149)  (66)  (569)  (187) 
    Operating net income$17,597  $19,437  $17,374  $20,595  $21,840  
    Preferred dividends 1,509   1,509   1,509   1,509   1,509  
    Operating net income available to common stockholders$16,088  $17,928  $15,865  $19,086  $20,331  
               
    Opearting diluted EPS (non-GAAP)(1)$0.42  $0.47  $0.41  $0.49  $0.52  
               
    Return on Assets Measures          
    Average assets$9,742,853  $9,745,853  $9,860,753  $9,690,746  $9,625,625  
    Return on avg. assets 0.70%  0.79%  0.70%  0.79%  0.88% 
    Operating return on avg. assets (non-GAAP)(2) 0.72   0.80   0.71   0.84   0.90  
    _________________________           
    (1)Operating net income available to common stockholders divided by weighted average diluted shares outstanding.
    (2)Operating net income divided by average assets.
               
     Three Months Ended 
     Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, 
      2024   2024   2024   2023   2023  
    Return on Equity Measures(dollars in thousands) 
    Average stockholders' equity$1,234,724  $1,220,621  $1,220,818  $1,198,389  $1,202,647  
    Less: average preferred stock (110,927)  (110,927)  (110,927)  (110,927)  (110,927) 
    Average common equity$1,123,797  $1,109,694  $1,109,891  $1,087,462  $1,091,720  
    Less: average intangible assets (213,502)  (213,813)  (214,133)  (214,472)  (214,822) 
    Average tangible common equity$910,295  $895,881  $895,758  $872,990  $876,898  
    Return on avg. common equity (GAAP) 5.54%  6.36%  5.69%  6.48%  7.23% 
    Operating return on avg. common equity (non-GAAP)(3) 5.70   6.50   5.75   6.96   7.39  
    Return on avg. tangible common equity (non-GAAP)(4) 6.93   7.98   7.15   8.18   9.11  
    Operating return on avg. tangible common equity (non-GAAP)(5) 7.03   8.05   7.12   8.67   9.20  
               
    Efficiency Measures          
    Total noninterest expenses$38,641  $37,594  $37,065  $37,845  $35,784  
    Merger and restructuring (742)  -   -   -   -  
    Amortization of core deposit intangibles (297)  (321)  (321)  (348)  (347) 
    FDIC special assessment -   -   -   (2,100)  -  
    Operating noninterest expense$37,602  $37,273  $36,744  $35,397  $35,437  
               
    Net interest income (tax equivalent basis)$61,710  $62,255  $61,111  $62,627  $63,208  
    Noninterest income 4,737   4,399   3,848   4,209   3,562  
    Net (gains) losses on equity securities (432)  209   (86)  (557)  273  
    Operating revenue$66,015  $66,863  $64,873  $66,279  $67,043  
               
    Operating efficiency ratio (non-GAAP)(6) 57.0%  55.7%  56.6%  53.4%  52.9% 
               
    Net Interest Margin          
    Average interest-earning assets$9,206,038  $9,210,050  $9,323,291  $9,172,165  $9,089,431  
    Net interest income (tax equivalent basis) 61,710   62,255   61,111   62,627   63,208  
    Net interest margin (GAAP) 2.67%  2.72%  2.64%  2.71%  2.76% 
    _________________________           
    (3)Operating net income available to common stockholders divided by average common equity.
    (4)Net income available to common stockholders, excluding amortization of intangible assets, divided by average tangible common equity.
    (5)Operating net income available to common stockholders, divided by average tangible common equity.
    (6)Operating noninterest expense divided by operating revenue.
               
     As of 
     Sept. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, 
      2024   2024   2024   2023   2023  
    Capital Ratios and Book Value per Share(dollars in thousands, except for per share data) 
    Stockholders equity$1,239,496  $1,224,227  $1,216,609  $1,216,620  $1,188,154  
    Less: preferred stock (110,927)  (110,927)  (110,927)  (110,927)  (110,927) 
    Common equity$1,128,569  $1,113,300  $1,105,682  $1,105,693  $1,077,227  
    Less: intangible assets (213,307)  (213,604)  (213,925)  (214,246)  (214,594) 
    Tangible common equity$915,262  $899,696  $891,757  $891,447  $862,633  
               
    Total assets$9,639,603  $9,723,731  $9,853,964  $9,855,603  $9,678,885  
    Less: intangible assets (213,307)  (213,604)  (213,925)  (214,246)  (214,594) 
    Tangible assets$9,426,296  $9,510,127  $9,640,039  $9,641,357  $9,464,291  
               
    Common shares outstanding 38,368,217   38,365,069   38,333,053   38,519,770   38,621,970  
               
    Common equity ratio (GAAP) 11.71%  11.45%  11.22%  11.22%  11.13% 
    Tangible common equity ratio (non-GAAP)(7) 9.71   9.46   9.25   9.25   9.11  
               
    Regulatory capital ratios (Bancorp):          
    Leverage ratio 11.10%  10.97%  10.73%  10.86%  10.86% 
    Common equity Tier 1 risk-based ratio 11.07   10.90   10.70   10.62   10.64  
    Risk-based Tier 1 capital ratio 12.42   12.25   12.03   11.95   11.98  
    Risk-based total capital ratio 14.29   14.10   13.88   13.77   13.90  
               
    Regulatory capital ratios (Bank):          
    Leverage ratio 11.43%  11.29%  11.10%  11.20%  11.23% 
    Common equity Tier 1 risk-based ratio 12.79   12.60   12.43   12.31   12.38  
    Risk-based Tier 1 capital ratio 12.79   12.60   12.43   12.31   12.38  
    Risk-based total capital ratio 13.77   13.58   13.41   13.28   13.43  
               
    Book value per share (GAAP)$29.41  $29.02  $28.84  $28.70  $27.89  
    Tangible book value per share (non-GAAP)(8) 23.85   23.45   23.26   23.14   22.34  
               
    Net Loan Charge-offs (Recoveries):          
    Net loan charge-offs (recoveries):          
    Charge-offs$3,559  $3,595  $3,185  $8,960  $2,487  
    Recoveries (53)  (324)  (23)  -   (8) 
    Net loan charge-offs$3,506  $3,271  $3,162  $8,960  $2,479  
    Net loan charge-offs as a % of average loans receivable (annualized) 0.17%  0.16%  0.15%  0.43%  0.12% 
               
    Asset Quality          
    Nonaccrual loans$51,300  $46,026  $47,438  $52,524  $56,059  
    Other real estate owned -   -   -   -   -  
    Nonperforming assets$51,300  $46,026  $47,438  $52,524  $56,059  
               
    Allowance for credit losses - loans ("ACL")$82,494  $82,077  $82,869  $81,974  $88,230  
    Loans receivable 8,111,976   8,157,903   8,297,957   8,345,145   8,181,109  
               
    Nonaccrual loans as a % of loans receivable 0.63%  0.56%  0.57%  0.63%  0.69% 
    Nonperforming assets as a % of total assets 0.53   0.47   0.48   0.53   0.58  
    ACL as a % of loans receivable 1.02   1.01   1.00   0.98   1.08  
    ACL as a % of nonaccrual loans 160.8   178.3   174.7   156.1   157.4  
     _________________________           
    (7)Tangible common equity divided by tangible assets.
    (8)Tangible common equity divided by common shares outstanding at period-end.
               



    CONNECTONE BANCORP, INC.              
    NET INTEREST MARGIN ANALYSIS              
    (dollars in thousands)               
                      
        For the Quarter Ended 
        September 30, 2024June 30, 2024September 30, 2023
        Average    Average    Average   
    Interest-earning assets: BalanceInterestRate(7) BalanceInterestRate(7) BalanceInterestRate(7)
    Investment securities(1) (2)$736,946 $6,157 3.32% $739,591 $6,102 3.32% $723,408 $5,566 3.05%
    Loans receivable and loans held-for-sale(2) (3) (4)    8,123,416  119,805 5.87   8,212,825  120,663 5.91   8,169,310  115,954 5.63 
    Federal funds sold and interest-              
    bearing deposits with banks 304,009  4,056 5.31   212,811  2,841 5.37   158,155  2,110 5.29 
    Restricted investment in bank stock 41,667  1,048 10.01   44,823  1,217 10.92   38,558  907 9.33 
    Total interest-earning assets 9,206,038  131,066 5.66   9,210,050  130,823 5.71   9,089,431  124,537 5.44 
    Allowance for credit losses (83,355)     (84,681)     (89,966)   
    Noninterest-earning assets  620,170      620,484      626,160    
    Total assets  $9,742,853     $9,745,853     $9,625,625    
                      
    Interest-bearing liabilities:              
    Time deposits  $2,625,329  30,245 4.58  $2,587,706  28,898 4.49  $2,606,122  25,437 3.87 
    Other interest-bearing deposits 3,747,427  33,540 3.56   3,721,167  33,188 3.59   3,723,561  30,606 3.26 
    Total interest-bearing deposits 6,372,756  63,785 3.98   6,308,873  62,086 3.96   6,329,683  56,043 3.51 
                      
    Borrowings   717,586  4,239 2.35   787,256  5,150 2.63   651,112  3,950 2.41 
    Subordinated debentures, net 79,735  1,312 6.55   79,609  1,311 6.62   79,230  1,312 6.57 
    Finance lease   1,349  20 5.90   1,416  21 5.96   1,603  24 5.94 
    Total interest-bearing liabilities 7,171,426  69,356 3.85   7,177,154  68,568 3.84   7,061,628  61,329 3.45 
                      
    Noninterest-bearing demand deposits 1,259,912      1,256,251      1,275,325    
    Other liabilities   76,791      91,827      86,025    
    Total noninterest-bearing liabilities 1,336,703      1,348,078      1,361,350    
    Stockholders' equity  1,234,724      1,220,621      1,202,647    
    Total liabilities and stockholders' equity$9,742,853     $9,745,853     $9,625,625    
                      
    Net interest income (tax equivalent basis)  61,710      62,255      63,208   
    Net interest spread(5)   1.82%   1.87%   1.99%
                      
    Net interest margin(6)   2.67%   2.72%   2.76%
                      
    Tax equivalent adjustment   (823)     (816)     (851)  
    Net interest income  $60,887     $61,439     $62,357   
    _________________________                  
    (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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