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Connectone Bancorp, Inc. Reports First Quarter 2024 Results; Declares Preferred and Increased Common Dividends

ENGLEWOOD CLIFFS. N.J., April 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 $15.7 million for the first quarter of 2024 compared with $17.8 million for the fourth quarter of 2023 and $23.4 million for the first quarter of 2023. Diluted earnings per share were $0.41 for the first quarter of 2024 compared with $0.46 for the fourth quarter of 2023 and $0.59 for the first quarter of 2023. The decrease in net income available to common stockholders and diluted earnings per share from the fourth quarter of 2023 was primarily due to a $1.5 million decrease in net interest income, a $1.3 million increase to the provision for credit losses, and a $0.4 million decrease in noninterest income, partially offset by a $0.3 million decrease in income tax expense and a $0.8 million decrease in noninterest expenses. The decrease in net income available to common stockholders from the first quarter of 2023 was primarily due to a $6.8 million decrease in net interest income, a $3.0 million increase in the provision for credit losses, and a $2.2 million increase in noninterest expenses, partially offset by a $3.2 million decrease in income tax expense and a $1.1 million increase in noninterest income.

Pre-tax, pre-provision net revenue (“PPNR”) as a percent of average assets was 1.10%, 1.15% and 1.46% for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

“ConnectOne moved through the first quarter laser-focused on furthering our relationship-banking model, despite the challenging backdrop. Our team seized opportunities to expand our client base, strengthen our team by adding top-performing talent all while building into new markets.” commented Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer.

“In the first quarter, our team increased client deposit balances sequentially by an annualized 3.2%, driven by 9.9% annualized noninterest-bearing demand deposit growth. Loan balances were down sequentially by an annualized 2.3%, primarily a result of intentionally lower multifamily and other commercial real estate balances, contributing to both a lower loan-to-deposit ratio and lower commercial real estate concentration.” Mr. Sorrentino added, “For the first quarter, while our net interest margin (“NIM”) compressed sequentially by seven basis points, we are already today seeing a gradual expansion of the NIM, even ahead of potential Fed rate cuts.”

“Meanwhile, our tangible common equity ratio remained flat at 9.25%, notwithstanding the repurchase of 282,370 shares during the quarter, and our tangible book value per share increased to $23.26. We’re also pleased to announce a 5.9% increase in our quarterly common stock cash dividend to $0.18, reflecting our ongoing commitment to maximize shareholder value.”

Dividend Declarations

The Company announced that its Board of Directors declared an increased quarterly cash dividend on its common stock and declared a cash dividend on its outstanding preferred stock.

A cash dividend on common stock of $0.18 per share, reflecting a 5.9% sequential increase, will be paid on June 3, 2024, to common stockholders of record on May 15, 2024. A dividend of $0.328125 per depositary share, representing a 1/40th interest in the Company’s 5.25% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, will also be paid on June 3, 2024 to preferred stockholders of record on May 15, 2024.

Operating Results

Fully taxable equivalent net interest income for the first quarter of 2024 was $61.1 million, a decrease of $1.5 million, or 2.4%, from the fourth quarter of 2023 due to a seven basis-point contraction in the net interest margin to 2.64% from 2.71%, partially offset by a $151.1 million, or 1.6%, increase in average interest-earning assets. The net interest margin contraction was primarily due to a nine basis-point increase in the average cost of deposits, including noninterest-bearing demand, to 3.23%, and an increase in average cash and cash equivalents of $84.0 million, partially offset by a one basis-point increase in the loan portfolio yield to 5.82%. The increase in average interest-earning assets from the fourth quarter of 2023 was primarily attributable to the aforementioned $84.0 million increase in average cash and cash equivalents and a $64.5 million increase in average loans.

Fully taxable equivalent net interest income for the first quarter of 2024 decreased by $6.7 million, or 9.9%, from the first quarter of 2023. The decrease from the first quarter of 2023 resulted primarily from a 36 basis-point decrease in the net interest margin to 2.64% from 3.00%, partially offset by a $149.1 million, or 1.6%, increase in average interest-earning assets. The contraction of the net interest margin for the first quarter of 2024 when compared to the first quarter of 2023 was primarily attributable to a 103 basis-point increase in the average costs of deposits, including noninterest-bearing deposits, partially offset by a 47 basis-point increase in the loan portfolio yield.

Noninterest income was $3.9 million in the first quarter of 2024, $4.2 million in the fourth quarter of 2023 and $2.8 million in the first quarter of 2023. Included in noninterest income were net gains (losses) on equity securities of $0.1 million, $0.6 million, and $(0.2) million for the first quarter of 2024, fourth quarter of 2023 and first quarter of 2023, respectively. Excluding the equity securities gains (losses), adjusted noninterest income was $3.8 million, $3.7 million, and $3.0 million for the first quarter of 2024, fourth quarter of 2023 and first quarter of 2023, respectively. The $0.1 million increase in adjusted noninterest income for the first quarter of 2024 when compared to the fourth quarter of 2023 was primarily due to a $0.1 million increase in deposit, loan, and other income. The $0.8 million increase in adjusted noninterest income for the first quarter of 2024 when compared to the first quarter of 2023 was primarily due to an increase in net gains on loans held-for-sale, primarily SBA, of $0.5 million, an increase in deposit, loan, and other income of $0.2 million and an increase in BOLI income of $0.1 million.

Noninterest expenses totaled $37.1 million for the first quarter of 2024, $37.8 million for the fourth quarter of 2023 and $34.9 million for the first quarter of 2023. Included in noninterest expenses for the fourth quarter of 2023 was a $2.1 million FDIC special assessment. Excluding the assessment, adjusted noninterest expenses totaled $35.7 million for the fourth quarter of 2023. Noninterest expenses for the first quarter of 2024 increased by $1.3 million when compared to the adjusted noninterest expenses for the fourth quarter of 2023. The increase was primarily attributable to increases in marketing and advertising of $0.4 million, occupancy and equipment of $0.3 million, professional and consulting of $0.3 million, information and technology communications of $0.2 million, and salaries and employee benefits of $0.1 million. Noninterest expenses for the first quarter of 2024 increased by $2.2 million when compared to the first quarter of 2023. The increase was primarily attributable to increases in information technology and communications of $1.3 million, FDIC insurance of $0.9 million, and occupancy and equipment of $0.3 million, partially offset by decreases in professional and consulting of $0.2 million and salaries and employee benefits of $0.1 million. The increases in information technology and communications when compared to the fourth quarter of 2023 and the first quarter of 2023 are attributable to additional investments in technology, equipment, and software. The increase in FDIC insurance expense when compared to the first quarter of 2023 is primarily attributable to balance sheet growth and a two-basis point increase in the Bank’s initial base rate. The increase in salaries and employee benefits when compared to the prior year quarter was primarily attributable to new hires and seasonal increases in payroll taxes.

Income tax expense was $5.9 million for the first quarter of 2024, $6.2 million for the fourth quarter of 2023 and $9.1 million for the first quarter of 2023. The effective tax rates for the first quarter of 2024, fourth quarter of 2023 and first quarter of 2023 were 25.5%, 24.4% and 26.7%, respectively.

Asset Quality

The provision for credit losses was $4.0 million for the first quarter of 2024, $2.7 million for the fourth quarter of 2023 and $1.0 million for the first quarter of 2023. The increase in the current quarter’s provision for credit losses from the fourth quarter of 2023 reflected increases in changes in macroeconomic forecasts, qualitative factors and specific reserves.

Nonperforming assets, which includes nonaccrual loans and other real estate owned (the Bank had no other real estate owned during the periods reported), were $47.4 million as of March 31, 2024, $52.5 million as of December 31, 2023 and $47.7 million as of March 31, 2023. Nonperforming assets as a percentage of total assets were 0.48% as of March 31, 2024, 0.53% as of December 31, 2023 and 0.48% as of March 31, 2023. The ratio of nonaccrual loans to loans receivable was 0.57%, 0.63% and 0.59%, as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively. As of March 31, 2024, one loan for $23.6 million was past due more than 90 days and still accruing; the loan is well-secured at a loan-to-value ratio of approximately 60% and is in the process of collection. The annualized net loan charge-offs ratio was 0.15% for the first quarter of 2024, 0.43% for the fourth quarter of 2023 and 0.22% for the first quarter of 2023. The allowance for credit losses represented 1.00%, 0.98%, and 1.07% of loans receivable as of March 31, 2024, December 31, 2023, and March 31, 2023, respectively. The allowance for credit losses as a percentage of nonaccrual loans was 174.7% as of March 31, 2024, 156.1% as of December 31, 2023 and 182.5% as of March 31, 2023.

Criticized and classified loans as a percentage of total loans decreased to 1.30% as of March 31, 2024 versus 1.35% as of December 31, 2023 and 1.74% as of March 31, 2023. Loans delinquent 30 to 89 days were 0.04% of loans as of March 31, 2024 down from 0.30% as of December 31, 2023 and 0.17% as of March 31, 2023.

Selected Balance Sheet Items

The Company’s total assets were $9.854 billion as of March 31, 2024, compared to $9.856 billion as of December 31, 2023. Loans receivable was $8.298 billion as of March 31, 2024 and $8.345 billion as of December 31, 2023. Total deposits were $7.589 billion as of March 31, 2024 and $7.536 billion as of December 31, 2023.

The Company’s total stockholders’ equity was $1.217 billion at both March 31, 2024 and December 31, 2023. Retained earnings increased by approximately $9 million and was offset by increases in treasury stock of $6 million and increases in accumulated other comprehensive loss of $3 million. As of March 31, 2024, the Company’s tangible common equity ratio and tangible book value per share were 9.25% and $23.26, respectively, compared to 9.25% and $23.14, respectively, as of December 31, 2023. Total goodwill and other intangible assets were $213.9 million as of March 31, 2024, and $214.2 million as of December 31, 2023.

Share Repurchase Program

During the first quarter of 2024, the Company repurchased 282,370 shares of common stock at an average price of $20.24, leaving 641,118 shares authorized for repurchase under the current Board approved repurchase program. The Company may repurchase shares from time-to-time in the open market, in privately negotiated stock purchases or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission and applicable federal securities laws. The share repurchase plan does not obligate the Company to acquire any particular amount of common stock, and the plan may be modified or suspended at any time at the Company's discretion. 

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 2024 Results Conference Call

Management will also host a conference call and audio webcast at 10:00 a.m. ET on April 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 6725677. 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 25, 2024 and ending on Thursday, May 2, 2024 by dialing 1-647-362-9199, access code 6725677. 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 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: bburns@cnob.com

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

CONNECTONE BANCORP, INC. AND SUBSIDIARIES     
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION    
(in thousands)     
      
 March 31, December 31,  March 31,
  2024   2023   2023 
 (unaudited)
ASSETS     
Cash and due from banks$45,322  $61,421  $58,063 
Interest-bearing deposits with banks 232,261   181,293   504,353 
Cash and cash equivalents 277,583   242,714   562,416 
      
Investment securities 619,397   617,162   629,001 
Equity securities 19,457   18,564   18,025 
      
Loans held-for-sale -   -   11,197 
      
Loans receivable 8,297,957   8,345,145   8,132,119 
Less: Allowance for credit losses - loans 82,869   81,974   87,002 
Net loans receivable 8,215,088   8,263,171   8,045,117 
      
Investment in restricted stock, at cost 48,931   51,457   46,379 
Bank premises and equipment, net 29,827   30,779   29,603 
Accrued interest receivable 49,731   49,108   46,301 
Bank owned life insurance 239,308   237,644   232,859 
Right of use operating lease assets 11,725   12,007   9,541 
Goodwill 208,372   208,372   208,372 
Core deposit intangibles 5,553   5,874   6,940 
Other assets 128,992   118,751   114,716 
Total assets$9,853,964  $9,855,603  $9,960,467 
      
LIABILITIES     
Deposits:     
Noninterest-bearing$1,290,523  $1,259,364  $1,345,265 
Interest-bearing 6,298,131   6,276,838   6,407,911 
Total deposits 7,588,654   7,536,202   7,753,176 
Borrowings 877,568   933,579   852,611 
Subordinated debentures, net 79,566   79,439   79,060 
Operating lease liabilities 12,843   13,171   10,717 
Other liabilities 78,724   76,592   73,933 
Total liabilities 8,637,355   8,638,983   8,769,497 
      
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 32,866   33,182   31,350 
Retained earnings 600,118   590,970   553,261 
Treasury stock (76,116)  (70,296)  (57,652)
Accumulated other comprehensive loss (38,132)  (35,109)  (33,862)
Total stockholders' equity 1,216,609   1,216,620   1,190,970 
Total liabilities and stockholders' equity$9,853,964  $9,855,603  $9,960,467 
      


CONNECTONE BANCORP, INC. AND SUBSIDIARIES     
CONSOLIDATED STATEMENTS OF INCOME     
(dollars in thousands, except for per share data)     
      
 Three Months Ended
 03/31/24 12/31/23 03/31/23
Interest income     
Interest and fees on loans$120,088  $120,636  $106,903 
Interest and dividends on investment securities:     
Taxable 4,334   4,280   4,229 
Tax-exempt 1,154   1,166   1,092 
Dividends 1,125   912   898 
Interest on federal funds sold and other short-term investments 2,906   1,963   2,975 
Total interest income 129,607   128,957   116,097 
Interest expense     
Deposits 60,407   59,332   40,087 
Borrowings 8,900   7,803   8,926 
Total interest expense 69,307   67,135   49,013 
      
Net interest income 60,300   61,822   67,084 
Provision for credit losses 4,000   2,700   1,000 
Net interest income after provision for credit losses 56,300   59,122   66,084 
      
Noninterest income     
Deposit, loan and other income 1,592   1,545   1,403 
Income on bank owned life insurance 1,664   1,635   1,531 
Net gains on sale of loans held-for-sale 506   472   49 
Net gains (losses) on equity securities 86   557   (191)
Total noninterest income 3,848   4,209   2,792 
      
Noninterest expenses     
Salaries and employee benefits 22,131   22,010   22,236 
Occupancy and equipment 3,009   2,708   2,761 
FDIC insurance 1,800   3,900   950 
Professional and consulting 1,928   1,587   2,194 
Marketing and advertising 677   323   532 
Information technology and communications 4,389   4,148   3,061 
Amortization of core deposit intangibles 321   348   372 
Other expenses 2,810   2,821   2,764 
Total noninterest expenses 37,065   37,845   34,870 
      
Income before income tax expense 23,083   25,486   34,006 
Income tax expense 5,878   6,213   9,077 
Net income 17,205   19,273   24,929 
Preferred dividends 1,509   1,509   1,509 
Net income available to common stockholders$15,696  $17,764  $23,420 
      
Earnings per common share:     
Basic$0.41  $0.46  $0.60 
Diluted 0.41   0.46   0.59 
      


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, Sep. 30, Jun. 30, Mar. 31,
  2024   2023   2023   2023   2023 
Selected Financial Data(dollars in thousands)
Total assets$9,853,964  $9,855,603  $9,678,885  $9,723,963  $9,960,467 
Loans receivable:         
Commercial$1,561,063  $1,564,768  $1,464,479  $1,462,245  $1,403,865 
Commercial real estate 3,333,488   3,342,603   3,288,704   3,237,559   3,245,990 
Multifamily 2,507,893   2,566,904   2,559,927   2,604,230   2,600,251 
Commercial construction 646,593   620,496   622,748   596,362   630,469 
Residential 254,214   256,041   251,416   254,405   259,166 
Consumer 850   1,029   936   1,416   1,435 
Gross loans 8,304,101   8,351,841   8,188,210   8,156,217   8,141,176 
Net deferred loan fees (6,144)  (6,696)  (7,101)  (7,677)  (9,057)
Loans receivable 8,297,957   8,345,145   8,181,109   8,148,540   8,132,119 
Loans held-for-sale -   -   -   1,089   11,197 
Total loans$8,297,957  $8,345,145  $8,181,109  $8,149,629  $8,143,316 
          
Investment and equity securities$638,854  $635,726  $599,544  $630,769  $647,026 
Goodwill and other intangible assets 213,925   214,246   214,594   214,941   215,312 
Deposits:         
Noninterest-bearing demand$1,290,523  $1,259,364  $1,224,125  $1,356,293  $1,345,265 
Time deposits 2,623,391   2,531,371   2,522,210   2,621,148   2,706,662 
Other interest-bearing deposits 3,674,740   3,745,467   3,692,160   3,560,856   3,701,249 
Total deposits$7,588,654  $7,536,202  $7,438,495  $7,538,297  $7,753,176 
          
Borrowings$877,568  $933,579  $887,590  $827,601  $852,611 
Subordinated debentures (net of debt issuance costs) 79,566   79,439   79,313   79,187   79,060 
Total stockholders' equity 1,216,609   1,216,620   1,188,154   1,199,397   1,190,970 
          
Quarterly Average Balances         
Total assets$9,860,753  $9,690,746  $9,625,625  $9,765,582  $9,700,530 
Loans receivable:         
Commercial (including PPP loans)$1,552,360  $1,510,634  $1,471,006  $1,427,153  $1,442,180 
Commercial real estate (including multifamily) 5,890,853   5,874,854   5,821,794   5,847,147   5,813,388 
Commercial construction 637,993   630,468   625,640   611,492   606,214 
Residential 252,965   253,200   253,114   256,924   261,560 
Consumer 5,091   6,006   4,972   6,733   3,894 
Gross loans 8,339,262   8,275,162   8,176,526   8,149,449   8,127,236 
Net deferred loan fees (6,533)  (6,894)  (7,387)  (8,591)  (9,664)
Loans receivable 8,332,729   8,268,268   8,169,139   8,140,858   8,117,572 
Loans held-for-sale 99   31   171   8,516   13,463 
Total loans$8,332,828  $8,268,299  $8,169,310  $8,149,374  $8,131,035 
          
Investment and equity securities$633,270  $602,287  $628,429  $642,915  $649,744 
Goodwill and other intangible assets 214,133   214,472   214,822   215,182   215,556 
Deposits:         
Noninterest-bearing demand$1,254,201  $1,248,132  $1,275,325  $1,347,268  $1,451,654 
Time deposits 2,567,767   2,495,091   2,606,122   2,658,673   2,357,332 
Other interest-bearing deposits 3,696,374   3,747,093   3,723,561   3,640,939   3,565,904 
Total deposits$7,518,342  $7,490,316  $7,605,008  $7,646,880  $7,374,890 
          
Borrowings$947,003  $823,123  $651,112  $756,303  $941,266 
Subordinated debentures (net of debt issuance costs) 79,483   79,356   79,230   79,104   103,637 
Total stockholders' equity 1,220,818   1,198,389   1,202,647   1,197,043   1,191,216 
          
 Three Months Ended
 Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
  2024   2023   2023   2023   2023 
 (dollars in thousands, except for per share data)
Net interest income$60,300  $61,822  $62,357  $63,843  $67,084 
Provision for credit losses 4,000   2,700   1,500   3,000   1,000 
Net interest income after provision for credit losses 56,300   59,122   60,857   60,843   66,084 
Noninterest income         
Deposit, loan and other income 1,592   1,545   1,605   1,545   1,403 
Income on bank owned life insurance 1,664   1,635   1,597   1,553   1,531 
Net gains on sale of loans held-for-sale 506   472   633   550   49 
Net gains (losses) on equity securities 86   557   (273)  (210)  (191)
Total noninterest income 3,848   4,209   3,562   3,438   2,792 
Noninterest expenses         
Salaries and employee benefits 22,131   22,010   22,251   21,726   22,236 
Occupancy and equipment 3,009   2,708   2,738   2,677   2,761 
FDIC insurance 1,800   1,800   1,800   1,715   950 
Professional and consulting 1,928   1,587   1,834   1,932   2,194 
Marketing and advertising 677   323   554   556   532 
Information technology and communications 4,389   4,148   3,487   3,644   3,061 
Amortization of core deposit intangible 321   348   347   371   372 
Other expenses 2,810   2,821   2,773   2,829   2,764 
Total noninterest expenses (excluding FDIC special assessment) 37,065   35,745   35,784   35,450   34,870 
          
FDIC special assessment -   2,100   -   -   - 
Total noninterest expenses 37,065   37,845   35,784   35,450   34,870 
          
Income before income tax expense 23,083   25,486   28,635   28,831   34,006 
Income tax expense 5,878   6,213   7,228   7,437   9,077 
Net income 17,205   19,273   21,407   21,394   24,929 
Preferred dividends 1,509   1,509   1,509   1,509   1,509 
Net income available to common stockholders$15,696  $17,764  $19,898  $19,885  $23,420 
          
Weighted average diluted common shares outstanding 38,511,747   38,651,391   38,829,681   39,016,839   39,300,733 
Diluted EPS$0.41  $0.46  $0.51  $0.51  $0.59 
          
Reconciliation of GAAP Earnings to Pre-tax and Pre-provision Net Revenue        
Net income$17,205  $19,273  $21,407  $21,394  $24,929 
Income tax expense 5,878   6,213   7,228   7,437   9,077 
Provision for credit losses 4,000   2,700   1,500   3,000   1,000 
Pre-tax and pre-provision net revenue$27,083  $28,186  $30,135  $31,831  $35,006 
          
Return on Assets Measures         
Average assets$9,860,753  $9,690,746  $9,625,625  $9,765,582  $9,700,530 
Return on avg. assets 0.70%  0.79%  0.88%  0.88%  1.04 
Return on avg. assets (pre-tax and pre-provision) 1.10   1.15   1.24   1.31   1.46 
          
 Three Months Ended
 Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
  2024   2023   2023   2023   2023 
Return on Equity Measures(dollars in thousands)
Average stockholders' equity$1,220,818  $1,198,389  $1,202,647  $1,197,043  $1,191,216 
Less: average preferred stock (110,927)  (110,927)  (110,927)  (110,927)  (110,927)
Average common equity$1,109,891  $1,087,462  $1,091,720  $1,086,116  $1,080,289 
Less: average intangible assets (214,133)  (214,472)  (214,822)  (215,182)  (215,556)
Average tangible common equity$895,758  $872,990  $876,898  $870,934  $864,733 
          
Return on avg. common equity (GAAP) 5.69%  6.48%  7.23%  7.34%  8.79 
Return on avg. tangible common equity ("TCE") (non-GAAP) (1) 7.15   8.18   9.11   9.28   11.11 
Return on avg. tangible common equity (pre-tax and pre-provision) 12.26   12.92   13.74   14.78   16.54 
          
Efficiency Measures         
Total noninterest expenses$37,065  $37,845  $35,784  $35,450  $34,870 
Amortization of core deposit intangibles (321)  (348)  (347)  (371)  (372)
FDIC special assessment -   (2,100)  -   -   - 
Operating noninterest expense$36,744  $35,397  $35,437  $35,079  $34,498 
          
Net interest income (tax equivalent basis)$61,111  $62,627  $63,208  $64,627  $67,828 
Noninterest income 3,848   4,209   3,562   3,438   2,792 
Net (gains) losses on equity securities (86)  (557)  273   210   191 
Operating revenue$64,873  $66,279  $67,043  $68,275  $70,811 
          
Operating efficiency ratio (non-GAAP) (2) 56.6%  53.4%  52.9%  51.4%  48.7 
          
Net Interest Margin         
Average interest-earning assets$9,323,291  $9,172,165  $9,089,431  $9,228,079  $9,174,167 
Net interest income (tax equivalent basis) 61,111   62,627   63,208   64,627   67,828 
Net interest margin (GAAP) 2.64%  2.71%  2.76%  2.81%  3.00 
          
(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
 Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
  2024   2023   2023   2023   2023 
Capital Ratios and Book Value per Share(dollars in thousands, except for per share data)
Stockholders equity$1,216,609  $1,216,620  $1,188,154  $1,199,397  $1,190,970 
Less: preferred stock (110,927)  (110,927)  (110,927)  (110,927)  (110,927)
Common equity$1,105,682  $1,105,693  $1,077,227  $1,088,470  $1,080,043 
Less: intangible assets (213,925)  (214,246)  (214,594)  (214,941)  (215,312)
Tangible common equity$891,757  $891,447  $862,633  $873,529  $864,731 
          
Total assets$9,853,964  $9,855,603  $9,678,885  $9,723,963  $9,960,467 
Less: intangible assets (213,925)  (214,246)  (214,594)  (214,941)  (215,312)
Tangible assets$9,640,039  $9,641,357  $9,464,291  $9,509,022  $9,745,155 
          
Common shares outstanding 38,333,053   38,519,770   38,621,970   38,966,652   39,179,051 
          
Common equity ratio (GAAP) 11.22%  11.22%  11.13%  11.19%  10.84 
Tangible common equity ratio (non-GAAP) (3) 9.25   9.25   9.11   9.19   8.87 
          
Regulatory capital ratios (Bancorp):         
Leverage ratio 10.73%  10.86%  10.86%  10.62%  10.60 
Common equity Tier 1 risk-based ratio 10.69   10.62   10.64   10.55   10.55 
Risk-based Tier 1 capital ratio 12.03   11.95   11.98   11.90   11.92 
Risk-based total capital ratio 13.88   13.77   13.90   13.83   13.85 
          
Regulatory capital ratios (Bank):         
Leverage ratio 11.10%  11.20%  11.23%  10.95%  10.62 
Common equity Tier 1 risk-based ratio 12.43   12.31   12.38   12.26   11.92 
Risk-based Tier 1 capital ratio 12.43   12.31   12.38   12.26   11.92 
Risk-based total capital ratio 13.41   13.28   13.43   13.33   13.27 
          
Book value per share (GAAP)$28.84  $28.70  $27.89  $27.93  $27.57 
Tangible book value per share (non-GAAP) (4) 23.26   23.14   22.34   22.42   22.07 
          
Net Loan Charge-offs (Recoveries):         
Net loan charge-offs (recoveries):         
Charge-offs$3,185  $8,960  $2,487  $1,118  $4,484 
Recoveries (23)  -   (8)  (76)  (1)
Net loan charge-offs$3,162  $8,960  $2,479  $1,042  $4,483 
Net loan charge-offs as a % of average loans receivable (annualized) 0.15%  0.43%  0.12%  0.05%  0.22 
          
Asset Quality         
Nonaccrual loans$47,438  $52,524  $56,059  $51,496  $47,667 
Other real estate owned -   -   -   -   - 
Nonperforming assets$47,438  $52,524  $56,059  $51,496  $47,667 
          
Allowance for credit losses - loans ("ACL")$82,869  $81,974  $88,230  $89,205  $87,002 
Loans receivable 8,297,957   8,345,145   8,181,109   8,148,540   8,132,119 
          
Nonaccrual loans as a % of loans receivable 0.57%  0.63%  0.69%  0.63%  0.59 
Nonperforming assets as a % of total assets 0.48   0.53   0.58   0.53   0.48 
ACL as a % of loans receivable 1.00   0.98   1.08   1.09   1.07 
ACL as a % of nonaccrual loans 174.7   156.1   157.4   173.2   182.5 
          
(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 
 March 31, 2024December 31, 2023March 31, 2023
 Average     Average     Average    
Interest-earning assets:BalanceInterestRate (7) BalanceInterestRate (7) BalanceInterestRate (7)
Investment securities (1) (2)$720,303  $5,794  3.24% $723,433  $5,757  3.16% $732,929  $5,620  3.11%
Loans receivable and loans held-for-sale (2) (3) (4) 8,332,828   120,592  5.82   8,268,299   121,130  5.81   8,131,035   107,348  5.35 
Federal funds sold and interest-              
bearing deposits with banks 218,212   2,906  5.36   134,168   1,963  5.80   260,297   2,975  4.64 
Restricted investment in bank stock 51,948   1,126  8.72   46,265   912  7.82   49,906   898  7.30 
Total interest-earning assets$9,323,291   130,418  5.63  $9,172,165   129,762  5.61   9,174,167   116,841  5.17 
Allowance for credit losses (84,005)      (88,861)      (90,182)    
Noninterest-earning assets 621,467       607,442       616,545     
Total assets$9,860,753      $9,690,746      $9,700,530     
               
Interest-bearing liabilities:              
Time deposits 2,567,767   28,038  4.39   2,495,091   26,486  4.21  $2,357,332   17,267  2.97 
Other interest-bearing deposits 3,696,374   32,369  3.52   3,747,093   32,846  3.48   3,565,904   22,820  2.60 
Total interest-bearing deposits 6,264,141   60,407  3.88   6,242,184   59,332  3.77   5,923,236   40,087  2.74 
               
Borrowings 947,003   7,567  3.21   832,123   6,467  3.08   941,266   7,322  3.15 
Subordinated debentures, net 79,483   1,311  6.63   79,356   1,313  6.56   103,638   1,579  6.18 
Finance lease 1,483   22  5.97   1,546   23  5.90   1,714   25  5.92 
Total interest-bearing liabilities 7,292,110   69,307  3.82   7,155,209   67,135  3.72   6,969,854   49,013  2.85 
               
Noninterest-bearing demand deposits 1,254,201       1,248,132       1,451,654     
Other liabilities 93,624       98,016       87,807     
Total noninterest-bearing liabilities 1,347,825       1,346,148       1,539,461     
Stockholders' equity 1,220,818       1,198,389       1,191,215     
Total liabilities and stockholders' equity$9,860,753      $9,699,746      $9,700,530     
               
Net interest income (tax equivalent basis)  61,111       62,627       67,828    
Net interest spread (5)  1.80%   1.89%   2.31%
               
Net interest margin (6)  2.64%   2.71%   3.00%
               
Tax equivalent adjustment  (811)      (805)      (744)   
Net interest income $60,300      $61,822      $67,084    
               
(1) Average balances are calculated on amortized cost.             
(2) Interest income is presented on a tax equivalent basis using 21% federal tax rate.          
(3) Includes loan fee income.              
(4) Loans include nonaccrual loans.              
(5) Represents difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities and
     is presented on a tax equivalent basis.
(6) Represents net interest income on a tax equivalent basis divided by average total interest-earning assets.       
(7) Rates are annualized.              

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