ConnectOne Bancorp, Inc. Reports Second Quarter 2024 Results; Declares Common and Preferred Dividends
ENGLEWOOD CLIFFS, N.J., July 25, 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 $17.5 million for the second quarter of 2024 compared with $15.7 million for the first quarter of 2024 and $19.9 million for the second quarter of 2023. Diluted earnings per share were $0.46 for the second quarter of 2024 compared with $0.41 for the first quarter of 2024 and $0.51 for the second quarter of 2023.
The increase in net income available to common stockholders and diluted earnings per share from the first quarter of 2024 was primarily due to a $1.5 million decrease to provision for credit losses, a $1.1 million increase in net interest income and a $0.6 million increase in noninterest income, partially offset by a $0.8 million increase in income tax expense and a $0.5 million increase in noninterest expenses. The decrease in net income available to common stockholders from the second quarter of 2023 was primarily due to a $2.4 million decrease in net interest income and a $2.1 million increase in noninterest expenses, partially offset by a $1.0 million increase in noninterest income, a $0.7 million decrease in income tax expense and a $0.5 million decrease to provision for credit losses.
Pre-tax, pre-provision net revenue (“PPNR”) as a percent of average assets was 1.17%, 1.10% and 1.31% for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively.
Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer stated, “Reflecting a commitment to our relationship-banking business model, ConnectOne’s second quarter performance was solid and, we believe, is in the early stages of an upswing. Pre-tax and pre-provision net revenue increased sequentially by an annualized 17%, our net interest margin widened by 8 basis points, and both our loan to deposit and CRE concentration ratios improved.”
“During the second quarter, client deposit balances increased approximately 7% on an annualized basis, with noninterest-bearing demand deposits remaining flat, driven by meaningful growth from existing clients and successfully onboarding new clients to the bank. And while loan originations are continuing at an annualized run-rate of more than $1 billion, our loan portfolio decreased sequentially. This reflected higher pay-downs and pay-offs than usual and was consistent with our strategy to actively manage non-relationship loans off our balance sheet.”
Mr. Sorrentino concluded, “While ConnectOne remains focused on investing in our valuable franchise, further strengthening our solid balance sheet, enhancing our core funding and improving our loan mix, it also appears banking industry fundamentals may have turned the corner. Either way, we believe that ConnectOne is poised for sustained growth and long-term profitability.”
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 September 3, 2024, to common stockholders of record on August 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 September 3, 2024 to holders of record on August 15, 2024.
Operating Results
Fully taxable equivalent net interest income for the second quarter of 2024 was $62.3 million, an increase of $1.1 million, or 1.9%, from the first quarter of 2024, due to an eight basis-point widening of the net interest margin to 2.72% from 2.64%, which was partially offset by a $113.2 million, or 1.2%, decrease in average interest-earning assets. The net interest margin widening was primarily due to an eight basis-point increase in the yield on interest-earning assets, while the cost to fund those assets remained essentially flat. The decrease in average interest-earning assets from the first quarter of 2024 was primarily attributable to a $120.0 million decrease in average loans, reflecting a larger than typical volume of loan payoffs, paydowns and sales.
Fully taxable equivalent net interest income for the second quarter of 2024 decreased by $2.4 million, or 3.7%, from the second quarter of 2023. The decrease from the second quarter of 2023 resulted primarily from a nine basis-point decrease in the net interest margin to 2.72% from 2.81%, partially offset by a $63.5 million, or 0.8%, increase in average loans. The contraction of the net interest margin for the second quarter of 2024 when compared to the second quarter of 2023 was primarily attributable to a 64 basis-point increase in the average cost of deposits, including noninterest-bearing deposits, partially offset by a 42 basis-point increase in the loan portfolio yield.
Noninterest income was $4.4 million in the second quarter of 2024, $3.8 million in the first quarter of 2024 and $3.4 million in the second quarter of 2023. Included in noninterest income were net (losses) gains on equity securities of $(0.2) million, $0.1 million, and $(0.2) million for the second quarter of 2024, first quarter of 2024 and second quarter of 2023, respectively. Excluding the equity securities (losses) gains, adjusted noninterest income was $4.6 million, $3.8 million, and $3.6 million for the second quarter of 2024, first quarter of 2024 and second quarter of 2023, respectively. The $0.8 million increase in adjusted noninterest income for the second quarter of 2024 when compared to the first quarter of 2024 was primarily due to a $0.8 million increase in net gains on sale of loans held-for-sale. The $1.0 million increase in adjusted noninterest income for the second quarter of 2024 when compared to the second quarter of 2023 was primarily due to an increase in net gains on loans held-for-sale of $0.7 million, an increase in deposit, loan, and other income of $0.1 million and an increase in BOLI income of $0.1 million.
Noninterest expenses totaled $37.6 million for the second quarter of 2024, $37.1 million for the first quarter of 2024 and $35.5 million for the second quarter of 2023. The $0.5 million increase from the first quarter of 2024 was attributable to increases in salaries and employee benefits of $0.6 million and other expenses of $0.3 million, partially offset by decreases in information and technology communications of $0.2 million, marketing and advertising of $0.1 million and occupancy and equipment of $0.1 million. The $2.1 million increase from the second quarter of 2023 was attributable to increases in salaries and employee benefits of $1.0 million, information technology and communications of $0.6 million, other expenses of $0.3 million, occupancy and equipment of $0.2 million and FDIC insurance of $0.1 million. The increase in salaries and employee benefits when compared to the first quarter of 2024 and the second quarter of 2023 was primarily attributable to increases in incentive-based compensation accruals, partially offset by decreases in payroll tax expenses. The increases in information technology and communications when compared to the first quarter of 2024 and the second quarter of 2023 are attributable to additional investments in technology, equipment, and software.
Income tax expense was $6.7 million for the second quarter of 2024, $5.9 million for the first quarter of 2024 and $7.4 million for the second 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%, 25.5% and 25.8%, respectively.
Asset Quality
The provision for credit losses was $2.5 million for the second quarter of 2024, $4.0 million for the first quarter of 2024 and $3.0 million for the second quarter of 2023. The decrease in the current quarter’s provision for credit losses from the first quarter of 2024 was primarily attributable to a decrease in general reserves that resulted from a decrease in loans receivable.
Nonperforming assets, which includes nonaccrual loans and other real estate owned (the Bank had no other real estate owned during the periods reported), were $46.0 million as of June 30, 2024, $52.5 million as of December 31, 2023 and $51.5 million as of June 30, 2023. Nonperforming assets as a percentage of total assets were 0.47% as of June 30, 2024, 0.53% as of December 31, 2023 and 0.53% as of June 30, 2023. The ratio of nonaccrual loans to loans receivable was 0.56%, 0.63% and 0.63%, as of June 30, 2024, December 31, 2023 and June 30, 2023, respectively. The annualized net loan charge-offs ratio was 0.16% for the second quarter of 2024, 0.43% for the fourth quarter of 2023 and 0.05% for the second quarter of 2023. The allowance for credit losses represented 1.01%, 0.98%, and 1.09% of loans receivable as of June 30, 2024, December 31, 2023, and June 30, 2023, respectively. The allowance for credit losses as a percentage of nonaccrual loans was 178.3% as of June 30, 2024, 156.1% as of December 31, 2023 and 173.2% as of June 30, 2023.
Credit quality metrics remained solid. Criticized and classified loans as a percentage of total loans increased to 1.50% as of June 30, 2024 versus 1.35% as of December 31, 2023 and decreased from 1.70% as of June 30, 2023. Loans delinquent 30 to 89 days were 0.11% of loans as of June 30, 2024 down from 0.30% as of December 31, 2023 and up from 0.04% as of June 30, 2023.
Selected Balance Sheet Items
The Company’s total assets were $9.724 billion as of June 30, 2024, compared to $9.856 billion as of December 31, 2023. Loans receivable were $8.158 billion as of June 30, 2024 and $8.345 billion as of December 31, 2023. Total deposits were $7.576 billion as of June 30, 2024 and $7.536 billion as of December 31, 2023.
The Company’s total stockholders’ equity was $1.224 billion as of June 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 approximately $20 million, partially offset by increases in accumulated other comprehensive loss of approximately $7 million and increases in treasury stock of approximately $6 million. As of June 30, 2024, the Company’s tangible common equity ratio and tangible book value per share were 9.46% and $23.45, respectively, compared to 9.25% and $23.14, respectively, as of December 31, 2023. Total goodwill and other intangible assets were $213.6 million as of June 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.
Second Quarter 2024 Results Conference Call
Management will also host a conference call and audio webcast at 10:00 a.m. ET on July 25, 2024 to review the Company's financial performance and operating results. The conference call dial-in number is 1 (646) 307-1963, access code 8868797. 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 or at
A replay of the conference call will be available beginning at approximately 1:00 p.m. ET on Thursday, July 25, 2024 and ending on Thursday, August 1, 2024 by dialing 1 (609) 800-9909, access code 8868797. An online archive of the webcast will be available following the completion of the conference call at or at .
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 .
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 COVID-19 pandemic 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:
Media Contact:
Shannan Weeks
MWW
732.299.7890:
| CONNECTONE BANCORP, INC. AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION | |||||||||||
| (in thousands) | |||||||||||
| June 30, | December 31, | June 30, | |||||||||
| 2024 | 2023 | 2023 | |||||||||
| (unaudited) | (unaudited) | ||||||||||
| ASSETS | |||||||||||
| Cash and due from banks | $ | 47,105 | $ | 61,421 | $ | 56,286 | |||||
| Interest-bearing deposits with banks | 246,408 | 181,293 | 263,638 | ||||||||
| Cash and cash equivalents | 293,513 | 242,714 | 319,924 | ||||||||
| Investment securities | 620,579 | 617,162 | 612,819 | ||||||||
| Equity securities | 19,743 | 18,564 | 17,950 | ||||||||
| Loans held-for-sale | 435 | - | 1,089 | ||||||||
| Loans receivable | 8,157,903 | 8,345,145 | 8,148,540 | ||||||||
| Less: Allowance for credit losses - loans | 82,077 | 81,974 | 89,205 | ||||||||
| Net loans receivable | 8,075,826 | 8,263,171 | 8,059,335 | ||||||||
| Investment in restricted stock, at cost | 43,403 | 51,457 | 46,688 | ||||||||
| Bank premises and equipment, net | 28,881 | 30,779 | 29,093 | ||||||||
| Accrued interest receivable | 48,262 | 49,108 | 46,237 | ||||||||
| Bank owned life insurance | 240,985 | 237,644 | 234,412 | ||||||||
| Right of use operating lease assets | 13,359 | 12,007 | 8,874 | ||||||||
| Goodwill | 208,372 | 208,372 | 208,372 | ||||||||
| Core deposit intangibles | 5,232 | 5,874 | 6,569 | ||||||||
| Other assets | 125,141 | 118,751 | 132,601 | ||||||||
| Total assets | $ | 9,723,731 | $ | 9,855,603 | $ | 9,723,963 | |||||
| LIABILITIES | |||||||||||
| Deposits: | |||||||||||
| Noninterest-bearing | $ | 1,268,882 | $ | 1,259,364 | $ | 1,356,293 | |||||
| Interest-bearing | 6,307,132 | 6,276,838 | 6,182,004 | ||||||||
| Total deposits | 7,576,014 | 7,536,202 | 7,538,297 | ||||||||
| Borrowings | 756,144 | 933,579 | 827,601 | ||||||||
| Subordinated debentures, net | 79,692 | 79,439 | 79,187 | ||||||||
| Operating lease liabilities | 14,435 | 13,171 | 10,007 | ||||||||
| Other liabilities | 73,219 | 76,592 | 69,474 | ||||||||
| Total liabilities | 8,499,504 | 8,638,983 | 8,524,566 | ||||||||
| 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 | 33,955 | 33,182 | 30,740 | ||||||||
| Retained earnings | 610,759 | 590,970 | 566,498 | ||||||||
| Treasury stock | (76,116 | ) | (70,296 | ) | (61,877 | ) | |||||
| Accumulated other comprehensive loss | (42,244 | ) | (35,109 | ) | (33,837 | ) | |||||
| Total stockholders' equity | 1,224,227 | 1,216,620 | 1,199,397 | ||||||||
| Total liabilities and stockholders' equity | $ | 9,723,731 | $ | 9,855,603 | $ | 9,723,963 | |||||
| CONNECTONE BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| (dollars in thousands, except for per share data) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| 06/30/24 | 06/30/23 | 06/30/24 | 06/30/23 | ||||||||||||
| Interest income | |||||||||||||||
| Interest and fees on loans | $ | 120,145 | $ | 111,048 | $ | 240,233 | $ | 217,951 | |||||||
| Interest and dividends on investment securities: | |||||||||||||||
| Taxable | 4,683 | 4,029 | 9,017 | 8,258 | |||||||||||
| Tax-exempt | 1,121 | 1,247 | 2,275 | 2,339 | |||||||||||
| Dividends | 1,217 | 945 | 2,342 | 1,843 | |||||||||||
| Interest on federal funds sold and other short-term investments | 2,841 | 4,056 | 5,747 | 7,031 | |||||||||||
| Total interest income | 130,007 | 121,325 | 259,614 | 237,422 | |||||||||||
| Interest expense | |||||||||||||||
| Deposits | 62,086 | 50,714 | 122,493 | 90,801 | |||||||||||
| Borrowings | 6,482 | 6,768 | 15,382 | 15,694 | |||||||||||
| Total interest expense | 68,568 | 57,482 | 137,875 | 106,495 | |||||||||||
| Net interest income | 61,439 | 63,843 | 121,739 | 130,927 | |||||||||||
| Provision for credit losses | 2,500 | 3,000 | 6,500 | 4,000 | |||||||||||
| Net interest income after provision for credit losses | 58,939 | 60,843 | 115,239 | 126,927 | |||||||||||
| Noninterest income | |||||||||||||||
| Deposit, loan and other income | 1,654 | 1,545 | 3,246 | 2,948 | |||||||||||
| Income on bank owned life insurance | 1,677 | 1,553 | 3,341 | 3,084 | |||||||||||
| Net gains on sale of loans held-for-sale | 1,277 | 550 | 1,783 | 599 | |||||||||||
| Net losses on equity securities | (209 | ) | (210 | ) | (123 | ) | (401 | ) | |||||||
| Total noninterest income | 4,399 | 3,438 | 8,247 | 6,230 | |||||||||||
| Noninterest expenses | |||||||||||||||
| Salaries and employee benefits | 22,721 | 21,726 | 44,852 | 43,962 | |||||||||||
| Occupancy and equipment | 2,899 | 2,677 | 5,908 | 5,438 | |||||||||||
| FDIC insurance | 1,800 | 1,715 | 3,600 | 2,665 | |||||||||||
| Professional and consulting | 1,923 | 1,932 | 3,851 | 4,126 | |||||||||||
| Marketing and advertising | 613 | 556 | 1,290 | 1,088 | |||||||||||
| Information technology and communications | 4,198 | 3,644 | 8,587 | 6,705 | |||||||||||
| Amortization of core deposit intangibles | 321 | 371 | 642 | 743 | |||||||||||
| Other expenses | 3,119 | 2,829 | 5,929 | 5,593 | |||||||||||
| Total noninterest expenses | 37,594 | 35,450 | 74,659 | 70,320 | |||||||||||
| Income before income tax expense | 25,744 | 28,831 | 48,827 | 62,837 | |||||||||||
| Income tax expense | 6,688 | 7,437 | 12,566 | 16,514 | |||||||||||
| Net income | 19,056 | 21,394 | 36,261 | 46,323 | |||||||||||
| Preferred dividends | 1,509 | 1,509 | 3,018 | 3,018 | |||||||||||
| Net income available to common stockholders | $ | 17,547 | $ | 19,885 | $ | 33,243 | $ | 43,305 | |||||||
| Earnings per common share: | |||||||||||||||
| Basic | $ | 0.46 | $ | 0.51 | $ | 0.87 | $ | 1.11 | |||||||
| Diluted | 0.46 | 0.51 | 0.86 | 1.10 | |||||||||||
| 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 | |||||||||||||||||||
| Jun, 30, | Mar, 31, | Dec, 31, | Sep, 30, | Jun, 30, | |||||||||||||||
| 2024 | 2024 | 2023 | 2023 | 2023 | |||||||||||||||
| Selected Financial Data | (dollars in thousands) | ||||||||||||||||||
| Total assets | $ | 9,723,731 | $ | 9,853,964 | $ | 9,855,603 | $ | 9,678,885 | $ | 9,723,963 | |||||||||
| Loans receivable: | |||||||||||||||||||
| Commercial | $ | 1,491,079 | $ | 1,561,063 | $ | 1,564,768 | $ | 1,464,479 | $ | 1,462,245 | |||||||||
| Commercial real estate | 3,274,941 | 3,333,488 | 3,342,603 | 3,288,704 | 3,237,559 | ||||||||||||||
| Multifamily | 2,499,581 | 2,507,893 | 2,566,904 | 2,559,927 | 2,604,230 | ||||||||||||||
| Commercial construction | 639,168 | 646,593 | 620,496 | 622,748 | 596,362 | ||||||||||||||
| Residential | 256,786 | 254,214 | 256,041 | 251,416 | 254,405 | ||||||||||||||
| Consumer | 945 | 850 | 1,029 | 936 | 1,416 | ||||||||||||||
| Gross loans | 8,162,500 | 8,304,101 | 8,351,841 | 8,188,210 | 8,156,217 | ||||||||||||||
| Net deferred loan fees | (4,597 | ) | (6,144 | ) | (6,696 | ) | (7,101 | ) | (7,677 | ) | |||||||||
| Loans receivable | 8,157,903 | 8,297,957 | 8,345,145 | 8,181,109 | 8,148,540 | ||||||||||||||
| Loans held-for-sale | 435 | - | - | - | 1,089 | ||||||||||||||
| Total loans | $ | 8,158,338 | $ | 8,297,957 | $ | 8,345,145 | $ | 8,181,109 | $ | 8,149,629 | |||||||||
| Investment and equity securities | $ | 640,322 | $ | 638,854 | $ | 635,726 | $ | 599,544 | $ | 630,769 | |||||||||
| Goodwill and other intangible assets | 213,604 | 213,925 | 214,246 | 214,594 | 214,941 | ||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand | $ | 1,268,882 | $ | 1,290,523 | $ | 1,259,364 | $ | 1,224,125 | $ | 1,356,293 | |||||||||
| Time deposits | 2,593,165 | 2,623,391 | 2,531,371 | 2,522,210 | 2,621,148 | ||||||||||||||
| Other interest-bearing deposits | 3,713,967 | 3,674,740 | 3,745,467 | 3,692,160 | 3,560,856 | ||||||||||||||
| Total deposits | $ | 7,576,014 | $ | 7,588,654 | $ | 7,536,202 | $ | 7,438,495 | $ | 7,538,297 | |||||||||
| Borrowings | $ | 756,144 | $ | 877,568 | $ | 933,579 | $ | 887,590 | $ | 827,601 | |||||||||
| Subordinated debentures (net of debt issuance costs) | 79,692 | 79,566 | 79,439 | 79,313 | 79,187 | ||||||||||||||
| Total stockholders' equity | 1,224,227 | 1,216,609 | 1,216,620 | 1,188,154 | 1,199,397 | ||||||||||||||
| Quarterly Average Balances | |||||||||||||||||||
| Total assets | $ | 9,745,853 | $ | 9,860,753 | $ | 9,690,746 | $ | 9,625,625 | $ | 9,765,582 | |||||||||
| Loans receivable: | |||||||||||||||||||
| Commercial (including PPP loans) | $ | 1,517,446 | $ | 1,552,360 | $ | 1,510,634 | $ | 1,471,006 | $ | 1,427,153 | |||||||||
| Commercial real estate (including multifamily) | 5,789,498 | 5,890,853 | 5,874,854 | 5,821,794 | 5,847,147 | ||||||||||||||
| Commercial construction | 652,227 | 637,993 | 630,468 | 625,640 | 611,492 | ||||||||||||||
| Residential | 254,284 | 252,965 | 253,200 | 253,114 | 256,924 | ||||||||||||||
| Consumer | 5,155 | 5,091 | 6,006 | 4,972 | 6,733 | ||||||||||||||
| Gross loans | 8,218,610 | 8,339,262 | 8,275,162 | 8,176,526 | 8,149,449 | ||||||||||||||
| Net deferred loan fees | (5,954 | ) | (6,533 | ) | (6,894 | ) | (7,387 | ) | (8,591 | ) | |||||||||
| Loans receivable | 8,212,656 | 8,332,729 | 8,268,268 | 8,169,139 | 8,140,858 | ||||||||||||||
| Loans held-for-sale | 169 | 99 | 31 | 171 | 8,516 | ||||||||||||||
| Total loans | $ | 8,212,825 | $ | 8,332,828 | $ | 8,268,299 | $ | 8,169,310 | $ | 8,149,374 | |||||||||
| Investment and equity securities | $ | 637,551 | $ | 633,270 | $ | 602,287 | $ | 628,429 | $ | 642,915 | |||||||||
| Goodwill and other intangible assets | 213,813 | 214,133 | 214,472 | 214,822 | 215,182 | ||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand | $ | 1,256,251 | $ | 1,254,201 | $ | 1,248,132 | $ | 1,275,325 | $ | 1,347,268 | |||||||||
| Time deposits | 2,587,706 | 2,567,767 | 2,495,091 | 2,606,122 | 2,658,673 | ||||||||||||||
| Other interest-bearing deposits | 3,721,167 | 3,696,374 | 3,747,093 | 3,723,561 | 3,640,939 | ||||||||||||||
| Total deposits | $ | 7,565,124 | $ | 7,518,342 | $ | 7,490,316 | $ | 7,605,008 | $ | 7,646,880 | |||||||||
| Borrowings | $ | 787,256 | $ | 947,003 | $ | 823,123 | $ | 651,112 | $ | 756,303 | |||||||||
| Subordinated debentures (net of debt issuance costs) | 79,609 | 79,483 | 79,356 | 79,230 | 79,104 | ||||||||||||||
| Total stockholders' equity | 1,220,621 | 1,220,818 | 1,198,389 | 1,202,647 | 1,197,043 | ||||||||||||||
| Three Months Ended | |||||||||||||||||||
| Jun, 30, | Mar, 31, | Dec, 31, | Sep, 30, | Jun, 30, | |||||||||||||||
| 2024 | 2024 | 2023 | 2023 | 2023 | |||||||||||||||
| (dollars in thousands, except for per share data) | |||||||||||||||||||
| Net interest income | $ | 61,439 | $ | 60,300 | $ | 61,822 | $ | 62,357 | $ | 63,843 | |||||||||
| Provision for credit losses | 2,500 | 4,000 | 2,700 | 1,500 | 3,000 | ||||||||||||||
| Net interest income after provision for credit losses | 58,939 | 56,300 | 59,122 | 60,857 | 60,843 | ||||||||||||||
| Noninterest income | |||||||||||||||||||
| Deposit, loan and other income | 1,654 | 1,592 | 1,545 | 1,605 | 1,545 | ||||||||||||||
| Income on bank owned life insurance | 1,677 | 1,664 | 1,635 | 1,597 | 1,553 | ||||||||||||||
| Net gains on sale of loans held-for-sale | 1,277 | 506 | 472 | 633 | 550 | ||||||||||||||
| Net (losses) gains on equity securities | (209 | ) | 86 | 557 | (273 | ) | (210 | ) | |||||||||||
| Total noninterest income | 4,399 | 3,848 | 4,209 | 3,562 | 3,438 | ||||||||||||||
| Noninterest expenses | |||||||||||||||||||
| Salaries and employee benefits | 22,721 | 22,131 | 22,010 | 22,251 | 21,726 | ||||||||||||||
| Occupancy and equipment | 2,899 | 3,009 | 2,708 | 2,738 | 2,677 | ||||||||||||||
| FDIC insurance | 1,800 | 1,800 | 1,800 | 1,800 | 1,715 | ||||||||||||||
| Professional and consulting | 1,923 | 1,928 | 1,587 | 1,834 | 1,932 | ||||||||||||||
| Marketing and advertising | 613 | 677 | 323 | 554 | 556 | ||||||||||||||
| Information technology and communications | 4,198 | 4,389 | 4,148 | 3,487 | 3,644 | ||||||||||||||
| Amortization of core deposit intangible | 321 | 321 | 348 | 347 | 371 | ||||||||||||||
| Other expenses | 3,119 | 2,810 | 2,821 | 2,773 | 2,829 | ||||||||||||||
| Total noninterest expenses (excluding FDIC special assessment) | 37,594 | 37,065 | 35,745 | 35,784 | 35,450 | ||||||||||||||
| FDIC special assessment | - | - | 2,100 | - | - | ||||||||||||||
| Total noninterest expenses | 37,594 | 37,065 | 37,845 | 35,784 | 35,450 | ||||||||||||||
| Income before income tax expense | 25,744 | 23,083 | 25,486 | 28,635 | 28,831 | ||||||||||||||
| Income tax expense | 6,688 | 5,878 | 6,213 | 7,228 | 7,437 | ||||||||||||||
| Net income | 19,056 | 17,205 | 19,273 | 21,407 | 21,394 | ||||||||||||||
| Preferred dividends | 1,509 | 1,509 | 1,509 | 1,509 | 1,509 | ||||||||||||||
| Net income available to common stockholders | $ | 17,547 | $ | 15,696 | $ | 17,764 | $ | 19,898 | $ | 19,885 | |||||||||
| Weighted average diluted common shares outstanding | 38,448,594 | 38,511,747 | 38,651,391 | 38,829,681 | 39,016,839 | ||||||||||||||
| Diluted EPS | $ | 0.46 | $ | 0.41 | $ | 0.46 | $ | 0.51 | $ | 0.51 | |||||||||
| Reconciliation of GAAP Earnings to Pre-tax and Pre-provision Net Revenue | |||||||||||||||||||
| Net income | $ | 19,056 | $ | 17,205 | $ | 19,273 | $ | 21,407 | $ | 21,394 | |||||||||
| Income tax expense | 6,688 | 5,878 | 6,213 | 7,228 | 7,437 | ||||||||||||||
| Provision for credit losses | 2,500 | 4,000 | 2,700 | 1,500 | 3,000 | ||||||||||||||
| Pre-tax and pre-provision net revenue | $ | 28,244 | $ | 27,083 | $ | 28,186 | $ | 30,135 | $ | 31,831 | |||||||||
| Return on Assets Measures | |||||||||||||||||||
| Average assets | $ | 9,745,853 | $ | 9,860,753 | $ | 9,690,746 | $ | 9,625,625 | $ | 9,765,582 | |||||||||
| Return on avg. assets | 0.79 | % | 0.70 | % | 0.79 | % | 0.88 | % | 0.88 | % | |||||||||
| Return on avg. assets (pre-tax and pre-provision) | 1.17 | 1.10 | 1.15 | 1.24 | 1.31 | ||||||||||||||
| Three Months Ended | |||||||||||||||||||
| Jun, 30, | Mar, 31, | Dec, 31, | Sep, 30, | Jun, 30, | |||||||||||||||
| 2024 | 2024 | 2023 | 2023 | 2023 | |||||||||||||||
| Return on Equity Measures | (dollars in thousands) | ||||||||||||||||||
| Average stockholders' equity | $ | 1,220,621 | $ | 1,220,818 | $ | 1,198,389 | $ | 1,202,647 | $ | 1,197,043 | |||||||||
| Less: average preferred stock | (110,927 | ) | (110,927 | ) | (110,927 | ) | (110,927 | ) | (110,927 | ) | |||||||||
| Average common equity | $ | 1,109,694 | $ | 1,109,891 | $ | 1,087,462 | $ | 1,091,720 | $ | 1,086,116 | |||||||||
| Less: average intangible assets | (213,813 | ) | (214,133 | ) | (214,472 | ) | (214,822 | ) | (215,182 | ) | |||||||||
| Average tangible common equity | $ | 895,881 | $ | 895,758 | $ | 872,990 | $ | 876,898 | $ | 870,934 | |||||||||
| Return on avg, common equity (GAAP) | 6.36 | % | 5.69 | % | 6.48 | % | 7.23 | % | 7.34 | % | |||||||||
| Return on avg. tangible common equity ("TCE") (non-GAAP) (1) | 7.98 | 7.15 | 8.18 | 9.11 | 9.28 | ||||||||||||||
| Return on avg, tangible common equity (pre-tax and pre-provision) | 12.78 | 12.26 | 12.92 | 13.74 | 14.78 | ||||||||||||||
| Efficiency Measures | |||||||||||||||||||
| Total noninterest expenses | $ | 37,594 | $ | 37,065 | $ | 37,845 | $ | 35,784 | $ | 35,450 | |||||||||
| Amortization of core deposit intangibles | (321 | ) | (321 | ) | (348 | ) | (347 | ) | (371 | ) | |||||||||
| FDIC special assessment | - | - | (2,100 | ) | - | - | |||||||||||||
| Operating noninterest expense | $ | 37,273 | $ | 36,744 | $ | 35,397 | $ | 35,437 | $ | 35,079 | |||||||||
| Net interest income (tax equivalent basis) | $ | 62,255 | $ | 61,111 | $ | 62,627 | $ | 63,208 | $ | 64,627 | |||||||||
| Noninterest income | 4,399 | 3,848 | 4,209 | 3,562 | 3,438 | ||||||||||||||
| Net losses (gains) on equity securities | 209 | (86 | ) | (557 | ) | 273 | 210 | ||||||||||||
| Operating revenue | $ | 66,863 | $ | 64,873 | $ | 66,279 | $ | 67,043 | $ | 68,275 | |||||||||
| Operating efficiency ratio (non-GAAP) (2) | 55.7 | % | 56.6 | % | 53.4 | % | 52.9 | % | 51.4 | % | |||||||||
| Net Interest Margin | |||||||||||||||||||
| Average interest-earning assets | $ | 9,210,050 | $ | 9,323,291 | $ | 9,172,165 | $ | 9,089,431 | $ | 9,228,079 | |||||||||
| Net interest income (tax equivalent basis) | 62,255 | 61,111 | 62,627 | 63,208 | 64,627 | ||||||||||||||
| Net interest margin (GAAP) | 2.72 | % | 2.64 | % | 2.71 | % | 2.76 | % | 2.81 | % | |||||||||
| (1) Earnings available to common stockholders excluding amortization of intangible assets divided by average tangible common equity, | |||||||||||||||||||
| (2) Operating noninterest expense divided by operating revenue, | |||||||||||||||||||
| As of | |||||||||||||||||||
| Jun, 30, | Mar, 31, | Dec, 31, | Sep, 30, | Jun, 30, | |||||||||||||||
| 2024 | 2024 | 2023 | 2023 | 2023 | |||||||||||||||
| Capital Ratios and Book Value per Share | (dollars in thousands, except for per share data) | ||||||||||||||||||
| Stockholders equity | $ | 1,224,227 | $ | 1,216,609 | $ | 1,216,620 | $ | 1,188,154 | $ | 1,199,397 | |||||||||
| Less: preferred stock | (110,927 | ) | (110,927 | ) | (110,927 | ) | (110,927 | ) | (110,927 | ) | |||||||||
| Common equity | $ | 1,113,300 | $ | 1,105,682 | $ | 1,105,693 | $ | 1,077,227 | $ | 1,088,470 | |||||||||
| Less: intangible assets | (213,604 | ) | (213,925 | ) | (214,246 | ) | (214,594 | ) | (214,941 | ) | |||||||||
| Tangible common equity | $ | 899,696 | $ | 891,757 | $ | 891,447 | $ | 862,633 | $ | 873,529 | |||||||||
| Total assets | $ | 9,723,731 | $ | 9,853,964 | $ | 9,855,603 | $ | 9,678,885 | $ | 9,723,963 | |||||||||
| Less: intangible assets | (213,604 | ) | (213,925 | ) | (214,246 | ) | (214,594 | ) | (214,941 | ) | |||||||||
| Tangible assets | $ | 9,510,127 | $ | 9,640,039 | $ | 9,641,357 | $ | 9,464,291 | $ | 9,509,022 | |||||||||
| Common shares outstanding | 38,365,069 | 38,333,053 | 38,519,770 | 38,621,970 | 38,966,652 | ||||||||||||||
| Common equity ratio (GAAP) | 11.45 | % | 11.22 | % | 11.22 | % | 11.13 | % | 11.19 | % | |||||||||
| Tangible common equity ratio (non-GAAP) (3) | 9.46 | 9.25 | 9.25 | 9.11 | 9.19 | ||||||||||||||
| Regulatory capital ratios (Bancorp): | |||||||||||||||||||
| Leverage ratio | 10.97 | % | 10.73 | % | 10.86 | % | 10.86 | % | 10.62 | % | |||||||||
| Common equity Tier 1 risk-based ratio | 10.93 | 10.70 | 10.62 | 10.64 | 10.55 | ||||||||||||||
| Risk-based Tier 1 capital ratio | 12.28 | 12.03 | 11.95 | 11.98 | 11.90 | ||||||||||||||
| Risk-based total capital ratio | 14.13 | 13.88 | 13.77 | 13.90 | 13.83 | ||||||||||||||
| Regulatory capital ratios (Bank): | |||||||||||||||||||
| Leverage ratio | 11.29 | % | 11.10 | % | 11.20 | % | 11.23 | % | 10.95 | % | |||||||||
| Common equity Tier 1 risk-based ratio | 12.63 | 12.43 | 12.31 | 12.38 | 12.26 | ||||||||||||||
| Risk-based Tier 1 capital ratio | 12.63 | 12.43 | 12.31 | 12.38 | 12.26 | ||||||||||||||
| Risk-based total capital ratio | 13.61 | 13.41 | 13.28 | 13.43 | 13.33 | ||||||||||||||
| Book value per share (GAAP) | $ | 29.02 | $ | 28.84 | $ | 28.70 | $ | 27.89 | $ | 27.93 | |||||||||
| Tangible book value per share (non-GAAP) (4) | 23.45 | 23.26 | 23.14 | 22.34 | 22.42 | ||||||||||||||
| Net Loan Charge-offs (Recoveries): | |||||||||||||||||||
| Net loan charge-offs (recoveries): | |||||||||||||||||||
| Charge-offs | $ | 3,595 | $ | 3,185 | $ | 8,960 | $ | 2,487 | $ | 1,118 | |||||||||
| Recoveries | (324 | ) | (23 | ) | - | (8 | ) | (76 | ) | ||||||||||
| Net loan charge-offs | $ | 3,271 | $ | 3,162 | $ | 8,960 | $ | 2,479 | $ | 1,042 | |||||||||
| Net loan charge-offs as a % of average loans receivable (annualized) | 0.16 | % | 0.15 | % | 0.43 | % | 0.12 | % | 0.05 | % | |||||||||
| Asset Quality | |||||||||||||||||||
| Nonaccrual loans | $ | 46,026 | $ | 47,438 | $ | 52,524 | $ | 56,059 | $ | 51,496 | |||||||||
| Other real estate owned | - | - | - | - | - | ||||||||||||||
| Nonperforming assets | $ | 46,026 | $ | 47,438 | $ | 52,524 | $ | 56,059 | $ | 51,496 | |||||||||
| Allowance for credit losses - loans ("ACL") | $ | 82,077 | $ | 82,869 | $ | 81,974 | $ | 88,230 | $ | 89,205 | |||||||||
| Loans receivable | 8,157,903 | 8,297,957 | 8,345,145 | 8,181,109 | 8,148,540 | ||||||||||||||
| Nonaccrual loans as a % of loans receivable | 0.56 | % | 0.57 | % | 0.63 | % | 0.69 | % | 0.63 | % | |||||||||
| Nonperforming assets as a % of total assets | 0.47 | 0.48 | 0.53 | 0.58 | 0.53 | ||||||||||||||
| ACL as a % of loans receivable | 1.01 | 1.00 | 0.98 | 1.08 | 1.09 | ||||||||||||||
| ACL as a % of nonaccrual loans | 178.3 | 174.7 | 156.1 | 157.4 | 173.2 | ||||||||||||||
| (3) Tangible common equity divided by tangible assets | |||||||||||||||||||
| (4) 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 | |||||||||||||||||||||||||||||
| June 30, 2024 | March 31, 2024 | June 30, 2023 | |||||||||||||||||||||||||||
| Average | Average | Average | |||||||||||||||||||||||||||
| Interest-earning assets: | Balance | Interest | Rate (7) | Balance | Interest | Rate (7) | Balance | Interest | Rate (7) | ||||||||||||||||||||
| Investment securities (1) (2) | $ | 739,591 | $ | 6,102 | 3.32 | % | $ | 720,303 | $ | 5,794 | 3.24 | % | $ | 726,315 | $ | 5,607 | 3.10 | % | |||||||||||
| Loans receivable and loans held-for-sale (2) (3) (4) | 8,212,825 | 120,663 | 5.91 | 8,332,828 | 120,592 | 5.82 | 8,149,374 | 111,501 | 5.49 | ||||||||||||||||||||
| Federal funds sold and interest- | |||||||||||||||||||||||||||||
| bearing deposits with banks | 212,811 | 2,841 | 5.37 | 218,212 | 2,906 | 5.36 | 309,458 | 4,056 | 5.26 | ||||||||||||||||||||
| Restricted investment in bank stock | 44,823 | 1,217 | 10.92 | 51,948 | 1,126 | 8.72 | 42,932 | 945 | 8.83 | ||||||||||||||||||||
| Total interest-earning assets | $ | 9,210,050 | 130,823 | 5.71 | $ | 9,323,291 | 130,418 | 5.63 | 9,228,079 | 122,109 | 5.31 | ||||||||||||||||||
| Allowance for credit losses | (84,681 | ) | (84,005 | ) | (87,473 | ) | |||||||||||||||||||||||
| Noninterest-earning assets | 620,484 | 621,467 | 624,976 | ||||||||||||||||||||||||||
| Total assets | $ | 9,745,853 | $ | 9,860,753 | $ | 9,765,582 | |||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||
| Time deposits | 2,587,706 | 28,898 | 4.49 | 2,567,767 | 28,038 | 4.39 | $ | 2,658,673 | 23,778 | 3.59 | |||||||||||||||||||
| Other interest-bearing deposits | 3,721,167 | 33,188 | 3.59 | 3,696,374 | 32,369 | 3.52 | 3,640,939 | 26,936 | 2.97 | ||||||||||||||||||||
| Total interest-bearing deposits | 6,308,873 | 62,086 | 3.96 | 6,264,141 | 60,407 | 3.88 | 6,299,612 | 50,714 | 3.23 | ||||||||||||||||||||
| Borrowings | 787,256 | 5,150 | 2.63 | 947,003 | 7,567 | 3.21 | 756,303 | 5,438 | 2.88 | ||||||||||||||||||||
| Subordinated debentures, net | 79,609 | 1,311 | 6.62 | 79,483 | 1,311 | 6.63 | 79,104 | 1,306 | 6.62 | ||||||||||||||||||||
| Finance lease | 1,416 | 21 | 5.96 | 1,483 | 22 | 5.97 | 1,658 | 24 | 5.81 | ||||||||||||||||||||
| Total interest-bearing liabilities | 7,177,154 | 68,568 | 3.84 | 7,292,110 | 69,307 | 3.82 | 7,136,677 | 57,482 | 3.23 | ||||||||||||||||||||
| Noninterest-bearing demand deposits | 1,256,251 | 1,254,201 | 1,347,268 | ||||||||||||||||||||||||||
| Other liabilities | 91,827 | 93,624 | 84,594 | ||||||||||||||||||||||||||
| Total noninterest-bearing liabilities | 1,348,078 | 1,347,825 | 1,431,862 | ||||||||||||||||||||||||||
| Stockholders' equity | 1,220,621 | 1,220,818 | 1,197,043 | ||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 9,745,853 | $ | 9,860,753 | $ | 9,765,582 | |||||||||||||||||||||||
| Net interest income (tax equivalent basis) | 62,255 | 61,111 | 64,627 | ||||||||||||||||||||||||||
| Net interest spread (5) | 1.87 | % | 1.80 | % | 2.08 | % | |||||||||||||||||||||||
| Net interest margin (6) | 2.72 | % | 2.64 | % | 2.81 | % | |||||||||||||||||||||||
| Tax equivalent adjustment | (816 | ) | (811 | ) | (784 | ) | |||||||||||||||||||||||
| Net interest income | $ | 61,439 | $ | 60,300 | $ | 63,843 | |||||||||||||||||||||||
| (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. | |||||||||||||||||||||||||||||
