EX-99.1 2 ex_709431.htm EXHIBIT 99.1 ex_709431.htm

Exhibit 99.1

 

ex_709431img001.jpg

CONNECTONE BANCORP, INC. REPORTS

THIRD QUARTER 2024 RESULTS;

DECLARES COMMON AND PREFERRED DIVIDENDS

 

Englewood Cliffs, N.J., October 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 Companys Annual Report on Form 10-K, as filed with the U.S. Securities and Exchange Commission, as supplemented by the Companys 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 Ended

   

Nine 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

 
   

(dollars in thousands)

 
Selected Financial Data                                        

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

 
   

(dollars in thousands)

 
Return on Equity Measures                                        

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

 
   

(dollars in thousands, except for per share data)

 
Capital Ratios and Book Value per Share                                        

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, 2024

   

June 30, 2024

   

September 30, 2023

 
   

Average

                   

Average

                   

Average

                 
   

Balance

   

Interest

   

Rate (7)

   

Balance

   

Interest

   

Rate (7)

   

Balance

   

Interest

   

Rate (7)

 
Interest-earning assets:                                                                        

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.