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ConnectOne Bancorp, Inc. Reports First Quarter 2025 Results; Declares Common and Preferred Dividends
Source: Nasdaq GlobeNewswire / 24 Apr 2025 06:00:01 America/Chicago
ENGLEWOOD CLIFFS, N.J., April 24, 2025 (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 $18.7 million for the first quarter of 2025 compared with $18.9 million for the fourth quarter of 2024 and $15.7 million for the first quarter of 2024. Diluted earnings per share were $0.49 for the first quarter of 2025 compared with $0.49 for the fourth quarter of 2024 and $0.41 for the first quarter of 2024. Return on average assets was 0.84%, 0.84% and 0.70% for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively. Return on average tangible common equity was 8.25%, 8.27% and 7.15% for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively.
Operating net income available to common stockholders, which excludes non-operating items (primarily merger and branch closure related expenses), was $19.7 million for the first quarter of 2025, $20.2 million for the fourth quarter of 2024 and $15.9 million for the first quarter of 2024. Operating diluted earnings per share were $0.51 for the first quarter of 2025, $0.52 for the fourth quarter of 2024 and $0.41 for the first quarter of 2024. Operating return on average assets was 0.88%, 0.90% and 0.71% for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively. Operating return on average tangible common equity was 8.59%, 8.77% and 7.12% for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively. See supplemental tables for a complete reconciliation of GAAP earnings to operating earnings, and other non-GAAP measures.
Net income available to common stockholders and diluted earnings per share during the first quarter of 2025 were essentially flat when compared to the fourth quarter of 2024, reflecting modest changes in all statement of income categories. The increase of $3.0 million in net income available to common stockholders versus the first quarter of 2024 was primarily due to a $5.5 million increase in net interest income, a $0.5 million decrease in provision for credit losses and a $0.6 million increase in noninterest income, partially offset by a $2.2 million increase in noninterest expenses and a $1.3 million increase in income tax expense.“We are pleased with ConnectOne’s solid performance to start the year, demonstrating disciplined execution across the organization,” said Frank Sorrentino, Chairman and Chief Executive Officer of ConnectOne. “We look forward to finalizing our planned merger with The First of Long Island Corporation in the second quarter- bringing together two highly compatible relationship focused institutions to create a premier New York Metro community bank, providing attractive opportunities for our combined client base and the markets we serve.”
“Our net interest margin widened meaningfully again as expected -- increasing 7 basis points during the 2025 first quarter -- driven by a strengthened balance sheet and favorable interest rate positioning. We anticipate this positive momentum to carry through the remainder of the year and into 2026, supporting continued margin expansion.” Mr. Sorrentino commented, “Although the loan portfolio contracted slightly since year-end, our loan pipeline is robust, backed by solid credits at attractive spreads, and continues to reflect steady, diversified growth.”
“Credit quality trends remained stable during the first quarter with nonaccrual loans decreasing to 0.61% of total loans and annualized quarterly charge-offs remaining below 0.18% for the fifth consecutive quarter,” Mr. Sorrentino added. “In addition, our tangible book value per share continues to build ahead of the merger, increasing by more than 3% since announcing the transaction, our loan to deposit ratio declined to 105.6%, and our regulatory CRE concentration ratio improved by 15 percentage points to 420%.”
Mr. Sorrentino concluded, “Although there is an increasing industry-wide focus on the impact of potential tariff policy on borrower health in various loan segments, our direct exposure to import/export-dependent segments is very limited. Our ongoing portfolio reviews have shown very limited disruption to date, and we remain confident in the stability and resilience of our credit portfolio.”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 June 2, 2025, to common stockholders of record on May 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 June 2, 2025 to holders of record on May 15, 2025.
Operating Results
Fully taxable equivalent net interest income for the first quarter of 2025 was $65.8 million, an increase of $1.0 million, or 1.6%, from the fourth quarter of 2024, due to a seven basis-point widening of the net interest margin to 2.93% from 2.86%, and a 1.2% increase in average interest earning assets, partially offset by a lower day-count. The widening of the net interest margin was primarily due to a 21 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits, partially offset by an 11 basis-point decline in the rate earned on interest-earning assets.
Fully taxable equivalent net interest income for the first quarter of 2025 increased by $5.5 million, or 9.0%, from the first quarter of 2024. The increase from the first quarter of 2024 resulted primarily from a 29 basis-point widening in the net interest margin to 2.93% from 2.64%. During the first quarter of 2025, average total loans decreased by $123.8 million, or 1.5% when compared to the first quarter of 2024. The widening of the net interest margin for the first quarter of 2025 when compared to the first quarter of 2024 was primarily due to a 42 basis-point decrease in the average cost of total funds, including noninterest-bearing deposits, partially offset by a nine basis-point decrease in the loan portfolio yield.
Noninterest income was $4.5 million in the first quarter of 2025, $3.7 million in the fourth quarter of 2024 and $3.8 million in the first quarter of 2024. The $0.7 million increase in noninterest income for the first quarter of 2025 when compared to the fourth quarter of 2024 was primarily due to a $0.8 million increase in net gains on equity securities, including a $0.4 million gain on the sale of a strategic equity investment, and a $0.3 million decrease in net gains on sale of loans held-for-sale. The $0.6 million increase in noninterest income for the first quarter of 2025 when compared to the first quarter of 2024 was primarily due to a $0.4 million increase in deposit, loan and other income and a $0.4 million gain on the sale of a strategic equity investment, partially offset by a $0.2 million decrease in net gains on sale of loans held-for-sale.
Noninterest expenses were $39.3 million for the first quarter of 2025, $38.5 million for the fourth quarter of 2024 and $37.1 million for the first quarter of 2024. The $0.8 million increase in noninterest expenses for the first quarter of 2025 when compared to the fourth quarter of 2024 was primarily due to a $0.5 million increase in merger expenses, a $0.3 million increase in salaries and employee benefits and a $0.3 million bank owned life insurance (“BOLI”) restructuring charge in the first quarter of 2025, partially offset by a $0.5 million decrease in charges related to a branch closing in the fourth quarter of 2024. The $2.2 million increase in noninterest expenses for the first quarter of 2025 when compared to the first quarter of 2024 was primarily due to a $1.3 million increase in merger expenses, a $0.5 million increase in salaries and employee benefits and the aforementioned $0.3 million BOLI restructuring charge. The increases in merger expenses when compared to the fourth quarter of 2024 and the first quarter of 2024 are due to the planned merger with The First of Long Island Corporation.
Income tax expense was $7.2 million for the first quarter of 2025, $6.1 million for the fourth quarter of 2024 and $5.9 million for the first quarter of 2024. The effective tax rates for the first quarter of 2025, fourth quarter of 2024 and first quarter of 2024 were 26.1%, 23.0% and 25.5%, respectively. The effective tax rate for the fourth quarter of 2024 reflects year-end adjustments for the effective tax rate for the full-year 2024. The overall increase in the effective tax rate during the first quarter of 2025 when compared to the fourth quarter of 2024 and the first quarter of 2024 was due to an increase in income before income tax expense and a decrease in tax-free adjustments.
Asset Quality
The provision for credit losses was $3.5 million for the first quarter of 2025, $3.5 million for the fourth quarter of 2024 and $4.0 million for the first quarter of 2024. In each of the quarters presented, the provision for credit losses reflected net portfolio growth, charges related to individually evaluated loans, and changing economic 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 $49.9 million as of March 31, 2025, $57.3 million as of December 31, 2024 and $47.4 million as of March 31, 2024. Nonperforming assets as a percentage of total assets were 0.51% as of March 31, 2025, 0.58% as of December 31, 2024 and 0.48% as of March 31, 2024. The ratio of nonaccrual loans to loans receivable was 0.61%, 0.69% and 0.57%, as of March 31, 2025, December 31, 2024 and March 31, 2024, respectively. The annualized net loan charge-offs ratio was 0.17% for the first quarter of 2025, 0.16% for the fourth quarter of 2024 and 0.15% for the first quarter of 2024. The allowance for credit losses represented 1.00% of loans receivable as of March 31, 2025, December 31, 2024, and March 31, 2024. The allowance for credit losses as a percentage of nonaccrual loans was 165.3% as of March 31, 2025, 144.3% as of December 31, 2024 and 174.7% as of March 31, 2024. Criticized and classified loans as a percentage of loans receivable was 2.79% as of March 31, 2025, up slightly from 2.68% as of December 31, 2024 and up from 1.30% as of March 31, 2024. Loans delinquent 30 to 89 days were 0.18% of loans receivable as of March 31, 2025, up from 0.04% as of December 31, 2024 and up from 0.04% as of March 31, 2024. The overall credit quality metrics of the Bank’s loan portfolio are sound, reflecting charge-offs, nonaccruals, delinquencies and classified loans all remaining within historical ranges.
Selected Balance Sheet Items
The Company’s total assets were $9.759 billion as of March 31, 2025, compared to $9.880 billion as of December 31, 2024. Loans receivable were $8.201 billion as of March 31, 2025 and $8.275 billion as of December 31, 2024. Total deposits were $7.767 billion as of March 31, 2025 and $7.820 billion as of December 31, 2024.
The Company’s total stockholders’ equity was $1.253 billion as of March 31, 2025 and $1.242 billion as of December 31, 2024. The increase in total stockholders’ equity was primarily due to an increase in retained earnings of $11.8 million. As of March 31, 2025, the Company’s tangible common equity ratio and tangible book value per share were 9.73% and $24.16, respectively, compared to 9.49% and $23.92, respectively, as of December 31, 2024. Total goodwill and other intangible assets were $212.7 million as of March 31, 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.
First Quarter 2025 Results Conference Call
Management will also host a conference call and audio webcast at 10:00 a.m. ET on April 24, 2025 to review the Company's financial performance and operating results. The conference call dial-in number is 1 (646) 307-1963, access code 5043609. 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, April 24, 2025 and ending on Thursday, May 1, 2025 by dialing 1 (609) 800-9909, access code 5043609. 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.comMedia Contact:
Shannan Weeks
MikeWorldWide
732.299.7890; sweeks@mww.comCONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (in thousands) March 31, December 31, March 31, 2025 2024 2024 (unaudited) (unaudited) ASSETS Cash and due from banks $ 49,759 $ 57,816 $ 45,322 Interest-bearing deposits with banks 242,844 298,672 232,261 Cash and cash equivalents 292,603 356,488 277,583 Investment securities 636,806 612,847 619,397 Equity securities 18,859 20,092 19,457 Loans held-for-sale 202 743 - Loans receivable 8,201,134 8,274,810 8,297,957 Less: Allowance for credit losses - loans 82,403 82,685 82,869 Net loans receivable 8,118,731 8,192,125 8,215,088 Investment in restricted stock, at cost 37,031 40,449 48,931 Bank premises and equipment, net 27,624 28,447 29,827 Accrued interest receivable 46,740 45,498 49,731 Bank owned life insurance 244,651 243,672 239,308 Right of use operating lease assets 13,755 14,489 11,725 Goodwill 208,372 208,372 208,372 Core deposit intangibles 4,360 4,639 5,553 Other assets 109,521 111,739 128,992 Total assets $ 9,759,255 $ 9,879,600 $ 9,853,964 LIABILITIES Deposits: Noninterest-bearing $ 1,319,196 $ 1,422,044 $ 1,290,523 Interest-bearing 6,448,034 6,398,070 6,298,131 Total deposits 7,767,230 7,820,114 7,588,654 Borrowings 613,053 688,064 877,568 Subordinated debentures, net 80,071 79,944 79,566 Operating lease liabilities 14,737 15,498 12,843 Other liabilities 31,225 34,276 78,724 Total liabilities 8,506,316 8,637,896 8,637,355 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 36,007 36,347 32,866 Retained earnings 643,265 631,446 600,118 Treasury stock (76,116 ) (76,116 ) (76,116 ) Accumulated other comprehensive loss (48,090 ) (47,846 ) (38,132 ) Total stockholders' equity 1,252,939 1,241,704 1,216,609 Total liabilities and stockholders' equity $ 9,759,255 $ 9,879,600 $ 9,853,964 CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except for per share data) Three Months Ended 03/31/25 12/31/24 03/31/24 Interest income Interest and fees on loans $ 115,351 $ 118,346 $ 120,088 Interest and dividends on investment securities: Taxable 4,987 4,804 4,334 Tax-exempt 1,097 1,109 1,154 Dividends 889 959 1,125 Interest on federal funds sold and other short-term investments 2,465 2,815 2,906 Total interest income 124,789 128,033 129,607 Interest expense Deposits 53,992 58,568 60,407 Borrowings 5,041 4,754 8,900 Total interest expense 59,033 63,322 69,307 Net interest income 65,756 64,711 60,300 Provision for credit losses 3,500 3,500 4,000 Net interest income after provision for credit losses 62,256 61,211 56,300 Noninterest income Deposit, loan and other income 2,006 1,798 1,592 Income on bank owned life insurance 1,584 1,656 1,664 Net gains on sale of loans held-for-sale 332 597 506 Net gains (losses) on equity securities 529 (307 ) 86 Total noninterest income 4,451 3,744 3,848 Noninterest expenses Salaries and employee benefits 22,578 22,244 22,131 Occupancy and equipment 2,680 2,818 3,009 FDIC insurance 1,800 1,800 1,800 Professional and consulting 2,366 2,449 1,928 Marketing and advertising 595 495 677 Information technology and communications 4,604 4,523 4,389 Merger expenses 1,320 863 - Branch closing expenses - 477 - Bank owned life insurance restructuring charge 327 - - Amortization of core deposit intangibles 279 296 321 Other expenses 2,756 2,533 2,810 Total noninterest expenses 39,305 38,498 37,065 Income before income tax expense 27,402 26,457 23,083 Income tax expense 7,160 6,086 5,878 Net income 20,242 20,371 17,205 Preferred dividends 1,509 1,509 1,509 Net income available to common stockholders $ 18,733 $ 18,862 $ 15,696 Earnings per common share: Basic $ 0.49 $ 0.49 $ 0.41 Diluted 0.49 0.49 0.41 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 Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31, 2025 2024 2024 2024 2024 Selected Financial Data (dollars in thousands) Total assets $ 9,759,255 $ 9,879,600 $ 9,639,603 $ 9,723,731 $ 9,853,964 Loans receivable: Commercial 1,483,392 $ 1,522,308 $ 1,505,743 $ 1,491,079 $ 1,561,063 Commercial real estate 3,356,943 3,384,319 3,261,160 3,274,941 3,333,488 Multifamily 2,490,256 2,506,782 2,482,258 2,499,581 2,507,893 Commercial construction 617,593 616,246 616,087 639,168 646,593 Residential 256,555 249,691 250,249 256,786 254,214 Consumer 1,604 1,136 835 945 850 Gross loans 8,206,343 8,280,482 8,116,332 8,162,500 8,304,101 Net deferred loan fees (5,209 ) (5,672 ) (4,356 ) (4,597 ) (6,144 ) Loans receivable 8,201,134 8,274,810 8,111,976 8,157,903 8,297,957 Loans held-for-sale 202 743 - 435 - Total loans $ 8,201,336 $ 8,275,553 $ 8,111,976 $ 8,158,338 $ 8,297,957 Investment and equity securities $ 655,665 $ 632,939 $ 667,112 $ 640,322 $ 638,854 Goodwill and other intangible assets 212,732 213,011 213,307 213,604 213,925 Deposits: Noninterest-bearing demand $ 1,319,196 $ 1,422,044 $ 1,262,568 $ 1,268,882 $ 1,290,523 Time deposits 2,550,223 2,557,200 2,614,187 2,593,165 2,623,391 Other interest-bearing deposits 3,897,811 3,840,870 3,647,350 3,713,967 3,674,740 Total deposits $ 7,767,230 $ 7,820,114 $ 7,524,105 $ 7,576,014 $ 7,588,654 Borrowings $ 613,053 $ 688,064 $ 742,133 $ 756,144 $ 877,568 Subordinated debentures (net of debt issuance costs) 80,071 79,944 79,818 79,692 79,566 Total stockholders' equity 1,252,939 1,241,704 1,239,496 1,224,227 1,216,609 Quarterly Average Balances Total assets $ 9,748,605 $ 9,563,446 $ 9,742,853 $ 9,745,853 $ 9,860,753 Loans receivable: Commercial $ 1,488,962 $ 1,487,850 $ 1,485,777 $ 1,517,446 $ 1,552,360 Commercial real estate (including multifamily) 5,852,342 5,733,188 5,752,467 5,789,498 5,890,853 Commercial construction 610,859 631,022 628,740 652,227 637,993 Residential 256,430 250,589 252,975 254,284 252,965 Consumer 5,687 5,204 7,887 5,155 5,091 Gross loans 8,214,280 8,107,853 8,127,846 8,218,610 8,339,262 Net deferred loan fees (5,525 ) (4,727 ) (4,513 ) (5,954 ) (6,533 ) Loans receivable 8,208,755 8,103,126 8,123,333 8,212,656 8,332,729 Loans held-for-sale 259 498 83 169 99 Total loans $ 8,209,014 $ 8,103,624 $ 8,123,416 $ 8,212,825 $ 8,332,828 Investment and equity securities $ 655,191 $ 653,988 $ 650,897 $ 637,551 $ 633,270 Goodwill and other intangible assets 212,915 213,205 213,502 213,813 214,133 Deposits: Noninterest-bearing demand $ 1,305,722 $ 1,304,699 $ 1,259,912 $ 1,256,251 $ 1,254,201 Time deposits 2,480,990 2,478,163 2,625,329 2,587,706 2,567,767 Other interest-bearing deposits 3,888,131 3,838,575 3,747,427 3,721,167 3,696,374 Total deposits $ 7,674,843 $ 7,621,437 $ 7,632,668 $ 7,565,124 $ 7,518,342 Borrowings $ 686,391 $ 648,300 $ 717,586 $ 787,256 $ 947,003 Subordinated debentures (net of debt issuance costs) 79,988 79,862 79,735 79,609 79,483 Total stockholders' equity 1,254,373 1,241,738 1,234,724 1,220,621 1,220,818 Three Months Ended Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31, 2025 2024 2024 2024 2024 (dollars in thousands, except for per share data) Net interest income $ 65,756 $ 64,711 $ 60,887 $ 61,439 $ 60,300 Provision for credit losses 3,500 3,500 3,800 2,500 4,000 Net interest income after provision for credit losses 62,256 61,211 57,087 58,939 56,300 Noninterest income Deposit, loan and other income 2,006 1,798 1,817 1,654 1,592 Income on bank owned life insurance 1,584 1,656 2,145 1,677 1,664 Net gains on sale of loans held-for-sale 332 597 343 1,277 506 Net gains (losses) on equity securities 529 (307 ) 432 (209 ) 86 Total noninterest income 4,451 3,744 4,737 4,399 3,848 Noninterest expenses Salaries and employee benefits 22,578 22,244 22,957 22,721 22,131 Occupancy and equipment 2,680 2,818 2,889 2,899 3,009 FDIC insurance 1,800 1,800 1,800 1,800 1,800 Professional and consulting 2,366 2,449 2,147 1,923 1,928 Marketing and advertising 595 495 635 613 677 Information technology and communications 4,604 4,523 4,464 4,198 4,389 Merger expenses 1,320 863 742 - - Branch closing expenses - 477 - - - Bank owned life insurance restructuring charge 327 - - - - Amortization of core deposit intangible 279 296 297 321 321 Other expenses 2,756 2,533 2,710 3,119 2,810 Total noninterest expenses 39,305 38,498 38,641 37,594 37,065 Income before income tax expense 27,402 26,457 23,183 25,744 23,083 Income tax expense 7,160 6,086 6,022 6,688 5,878 Net income 20,242 20,371 17,161 19,056 17,205 Preferred dividends 1,509 1,509 1,509 1,509 1,509 Net income available to common stockholders $ 18,733 $ 18,862 $ 15,652 $ 17,547 $ 15,696 Weighted average diluted common shares outstanding 38,511,237 38,519,581 38,525,484 38,448,594 38,511,747 Diluted EPS $ 0.49 $ 0.49 $ 0.41 $ 0.46 $ 0.41 Reconciliation of GAAP Net Income to Operating Net Income: Net income $ 20,242 $ 20,371 $ 17,161 $ 19,056 $ 17,205 Merger expenses 1,320 863 742 - - Branch closing expenses - 477 - - - Bank owned life insurance restructuring charge 327 - - - - Amortization of core deposit intangibles 279 296 297 321 321 Net (gains) losses on equity securities (529 ) 307 (432 ) 209 (86 ) Tax impact of adjustments (420 ) (585 ) (171 ) (149 ) (66 ) Operating net income $ 21,219 $ 21,729 $ 17,597 $ 19,437 $ 17,374 Preferred dividends 1,509 1,509 1,509 1,509 1,509 Operating net income available to common stockholders $ 19,710 $ 20,220 $ 16,088 $ 17,928 $ 15,865 Operating diluted EPS (non-GAAP) (1) $ 0.51 $ 0.52 $ 0.42 $ 0.47 $ 0.41 Return on Assets Measures Average assets $ 9,748,605 $ 9,653,446 $ 9,742,853 $ 9,745,853 $ 9,860,753 Return on avg. assets 0.84 % 0.84 % 0.70 % 0.79 % 0.70 Operating return on avg. assets (non-GAAP) (2) 0.88 0.90 0.72 0.80 0.71 (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 Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31, 2025 2024 2024 2024 2024 Return on Equity Measures (dollars in thousands) Average stockholders' equity $ 1,254,373 $ 1,241,738 $ 1,234,724 $ 1,220,621 $ 1,220,818 Less: average preferred stock (110,927 ) (110,927 ) (110,927 ) (110,927 ) (110,927 ) Average common equity $ 1,143,446 $ 1,130,811 $ 1,123,797 $ 1,109,694 $ 1,109,891 Less: average intangible assets (212,915 ) (213,205 ) (213,502 ) (213,813 ) (214,133 ) Average tangible common equity $ 930,531 $ 917,606 $ 910,295 $ 895,881 $ 895,758 Return on avg. common equity (GAAP) 6.64 % 6.64 % 5.54 % 6.36 % 5.69 Operating return on avg. common equity (non-GAAP) (3) 6.99 7.11 5.70 6.50 5.75 Return on avg. tangible common equity (non-GAAP) (4) 8.25 8.27 6.93 7.98 7.15 Operating return on avg. tangible common equity (non-GAAP) (5) 8.59 8.77 7.03 8.05 7.12 Efficiency Measures Total noninterest expenses $ 39,305 $ 38,498 $ 38,641 $ 37,594 $ 37,065 Merger expenses (1,320 ) (863 ) (742 ) - - Branch closing expenses - (477 ) - - - Bank owned life insurance restructuring charge (327 ) - - - - Amortization of core deposit intangibles (279 ) (296 ) (297 ) (321 ) (321 ) Operating noninterest expense $ 37,379 $ 36,862 $ 37,602 $ 37,273 $ 36,744 Net interest income (tax equivalent basis) $ 66,580 $ 65,593 $ 61,710 $ 62,255 $ 61,111 Noninterest income 4,451 3,744 4,737 4,399 3,848 Net (gains) losses on equity securities (529 ) 307 (432 ) 209 (86 ) Operating revenue $ 70,502 $ 69,644 $ 66,015 $ 66,863 $ 64,873 Operating efficiency ratio (non-GAAP) (6) 53.0 % 52.9 % 57.0 % 55.7 % 56.6 Net Interest Margin Average interest-earning assets $ 9,224,712 $ 9,117,201 $ 9,206,038 $ 9,210,050 $ 9,323,291 Net interest income (tax equivalent basis) 66,580 65,593 61,710 62,255 61,111 Net interest margin (GAAP) 2.93 % 2.86 % 2.67 % 2.72 % 2.64 (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 Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31, 2025 2024 2024 2024 2024 Capital Ratios and Book Value per Share (dollars in thousands, except for per share data) Stockholders equity $ 1,252,939 $ 1,241,704 $ 1,239,496 $ 1,224,227 $ 1,216,609 Less: preferred stock (110,927 ) (110,927 ) (110,927 ) (110,927 ) (110,927 ) Common equity $ 1,142,012 $ 1,130,777 $ 1,128,569 $ 1,113,300 $ 1,105,682 Less: intangible assets (212,732 ) (213,011 ) (213,307 ) (213,604 ) (213,925 ) Tangible common equity $ 929,280 $ 917,766 $ 915,262 $ 899,696 $ 891,757 Total assets $ 9,759,255 $ 9,879,600 $ 9,639,603 $ 9,723,731 $ 9,853,964 Less: intangible assets (212,732 ) (213,011 ) (213,307 ) (213,604 ) (213,925 ) Tangible assets $ 9,546,523 $ 9,666,589 $ 9,426,296 $ 9,510,127 $ 9,640,039 Common shares outstanding 38,469,975 38,370,317 38,368,217 38,365,069 38,333,053 Common equity ratio (GAAP) 11.70 % 11.45 % 11.71 % 11.45 % 11.22 Tangible common equity ratio (non-GAAP) (7) 9.73 9.49 9.71 9.46 9.25 Regulatory capital ratios (Bancorp): Leverage ratio 11.33 % 11.33 % 11.10 % 10.97 % 10.73 Common equity Tier 1 risk-based ratio 11.14 10.97 11.07 10.90 10.70 Risk-based Tier 1 capital ratio 12.46 12.29 12.42 12.25 12.03 Risk-based total capital ratio 14.29 14.11 14.29 14.10 13.88 Regulatory capital ratios (Bank): Leverage ratio 11.67 % 11.66 % 11.43 % 11.29 % 11.10 Common equity Tier 1 risk-based ratio 12.82 12.63 12.79 12.60 12.43 Risk-based Tier 1 capital ratio 12.82 12.63 12.79 12.60 12.43 Risk-based total capital ratio 13.79 13.60 13.77 13.58 13.41 Book value per share (GAAP) $ 29.69 $ 29.47 $ 29.41 $ 29.02 $ 28.84 Tangible book value per share (non-GAAP) (8) 24.16 23.92 23.85 23.45 23.26 Net Loan Charge-offs (Recoveries): Net loan charge-offs (recoveries): Charge-offs $ 3,555 $ 3,363 $ 3,559 $ 3,595 $ 3,185 Recoveries (155 ) (29 ) (53 ) (324 ) (23 ) Net loan charge-offs $ 3,400 $ 3,334 $ 3,506 $ 3,271 $ 3,162 Net loan charge-offs as a % of average loans receivable (annualized) 0.17 % 0.16 % 0.17 % 0.16 % 0.15 Asset Quality Nonaccrual loans $ 49,860 $ 57,310 $ 51,300 $ 46,026 $ 47,438 Other real estate owned - - - - - Nonperforming assets $ 49,860 $ 57,310 $ 51,300 $ 46,026 $ 47,438 Allowance for credit losses - loans ("ACL") $ 82,403 $ 82,685 $ 82,494 $ 82,077 $ 82,869 Loans receivable 8,201,134 8,274,810 8,111,976 8,157,903 8,297,957 Nonaccrual loans as a % of loans receivable 0.61 % 0.69 % 0.63 % 0.56 % 0.57 Nonperforming assets as a % of total assets 0.51 0.58 0.53 0.47 0.48 ACL as a % of loans receivable 1.00 1.00 1.02 1.01 1.00 ACL as a % of nonaccrual loans 165.3 144.3 160.8 178.3 174.7 (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 March 31, 2025 December 31, 2024 March 31, 2024 Average Average Average Interest-earning assets: Balance Interest Rate (7) Balance Interest Rate (7) Balance Interest Rate (7) Investment securities (1) (2) $ 745,873 $ 6,375 3.47 % $ 736,131 $ 6,207 3.35 % $ 720,303 $ 5,794 3.24 % Loans receivable and loans held-for-sale (2) (3) (4) 8,209,014 115,883 5.73 8,103,624 118,934 5.84 8,332,828 120,592 5.82 Federal funds sold and interest- bearing deposits with banks 229,491 2,466 4.36 238,957 2,815 4.69 218,212 2,906 5.36 Restricted investment in bank stock 40,334 889 8.94 38,489 959 9.91 51,948 1,126 8.72 Total interest-earning assets 9,224,712 125,613 5.52 9,117,201 128,915 5.63 9,323,291 130,418 5.63 Allowance for loan losses (84,027 ) (83,938 ) (84,005 ) Noninterest-earning assets 607,920 620,183 621,467 Total assets $ 9,748,605 $ 9,653,446 $ 9,860,753 Interest-bearing liabilities: Money market deposits 1,572,287 11,287 2.91 1,642,737 12,694 3.07 1,571,640 13,191 3.38 Savings deposits 656,789 5,227 3.23 559,450 4,710 3.35 441,551 3,385 3.08 Time deposits 2,480,990 25,154 4.11 2,478,163 27,374 4.39 2,567,767 28,038 4.39 Other interest-bearing deposits 1,659,055 12,324 3.01 1,636,388 13,790 3.35 1,683,183 15,793 3.77 Total interest-bearing deposits 6,369,121 53,992 3.44 6,316,738 58,568 3.69 6,264,141 60,407 3.88 Borrowings 686,391 3,725 2.20 648,300 3,430 2.10 947,003 7,567 3.21 Subordinated debentures 79,988 1,298 6.58 79,862 1,305 6.50 79,483 1,311 6.63 Finance lease 1,210 18 6.03 1,280 19 5.91 1,483 22 5.97 Total interest-bearing liabilities 7,136,710 59,033 3.35 7,046,180 63,322 3.58 7,292,110 69,307 3.82 Noninterest-bearing demand deposits 1,305,722 1,304,699 1,254,201 Other liabilities 51,800 60,829 93,624 Total noninterest-bearing liabilities 1,357,522 1,365,528 1,347,825 Stockholders' equity 1,254,373 1,241,738 1,220,818 Total liabilities and stockholders' equity $ 9,748,605 $ 9,653,446 $ 9,860,753 Net interest income (tax equivalent basis) 66,580 65,593 61,111 Net interest spread (5) 2.17 % 2.05 % 1.80 % Net interest margin (6) 2.93 % 2.86 % 2.64 % Tax equivalent adjustment (824 ) (882 ) (811 ) Net interest income $ 65,756 $ 64,711 $ 60,300 (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. 
