ConnectOne Bancorp, Inc. Reports Fourth Quarter and Full-Year 2023 Results; Declares Common and Preferred Dividends
Source: GlobeNewswireENGLEWOOD CLIFFS, N.J., Jan. 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 $17.8 million for the fourth quarter of 2023 compared with $19.9 million for the third quarter of 2023 and $31.0 million for the fourth quarter of 2022. Diluted earnings per share were $0.46 for the fourth quarter of 2023 compared with $0.51 for the third quarter of 2023 and $0.79 for the fourth quarter of 2022. The decrease in net income available to common stockholders and diluted earnings per share from the third quarter of 2023 was primarily due to a $2.1 million FDIC special assessment recognized during the fourth quarter of 2023, a $1.2 million increase in the provision for credit losses and a $0.5 million decrease in net interest income, partially offset by a $1.0 million decrease in income tax expense and a $0.6 million increase in noninterest income. The decrease in net income available to common stockholders from the fourth quarter of 2022 was primarily due to a $16.2 million decrease in net interest income, a $4.5 million increase in noninterest expenses, which included the $2.1 million FDIC special assessment, partially offset by a $6.1 million decrease in income tax expense, a $0.7 million increase in noninterest income and a $0.6 million decrease in the provision for credit losses. Full-year 2023 net income available to common stockholders was $81.0 million, compared to $119.2 million for 2022. Diluted earnings per share for the full-year 2023 was $2.07, compared with $3.01 for 2022.
Diluted earnings per share were $0.50 (excluding the FDIC special assessment) for the fourth quarter of 2023 compared with $0.51 for the third quarter of 2023 and $0.79 for the fourth quarter of 2022. Pre-tax, pre-provision net revenue (“PPNR”) as a percent of average assets was 1.24% (excluding the FDIC special assessment), 1.24% and 2.02% for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively.
Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer, stated, “While 2023 was marked by significant challenges in the banking industry, I’m proud to report that with the strength of our balance sheet, our culture and the commitment to our clients, we were able to stay the course and continue on the path that has made ConnectOne a success since our inception nearly twenty years ago. Earnings, without a doubt, were challenged by the Fed’s unprecedented tightening, causing net interest margins to contract materially. Yet, we were able to increase our tangible book value per share in 2023 by more than 6%, build capital, maintain solid credit quality with best-in-class efficiency, attract new talent to the organization, and continue our investment in technology initiatives. At ConnectOne, we ran counter to industry trends, and remained steadfast to our strategy of building relationship-focused business, rewarding our lending and support teams, and organically and opportunistically building our geographic reach. This philosophy positions us to outperform in 2024 and beyond.”
“Reflecting our long-standing focus on relationship-based lending, we had solid sequential C&I loan growth of 6.8% during the fourth quarter and stabilized noninterest-bearing demand deposits. We remain disciplined, maintaining our sound approach to both credit as well as spreads and, given the market, currently anticipate continued gradual growth in 2024.” Mr. Sorrentino added, “Trends for net interest margin, which compressed by 5 basis points sequentially during the fourth quarter, seem to be stabilizing. We’re seeing a flattening of deposit costs and anticipate that the margin will widen as the Fed eases its interest rate stance.”
“Dating back to year-end 2021, prior to the Fed tightening, our tangible book value has increased by $3.02, or more than 15%,” Mr. Sorrentino commented. “Additionally, while ConnectOne’s efficiency ratio has been impacted by compressing margins, our annualized expenses remain below 1.5% of average assets, placing us in the top tier of efficiency among banks.”
Mr. Sorrentino concluded, “Looking ahead, we have the financial strength, balance sheet, and talent to support our approach and enter 2024 confident in our ability to capitalize on emerging opportunities to enhance ConnectOne’s valuable franchise.”
Dividend Declarations
The Company announced that its Board of Directors declared a quarterly cash dividend on its common stock and declared a cash dividend on its outstanding preferred stock.
A cash dividend on common stock of $0.17 will be paid on March 1, 2024, to common stockholders of record on February 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 March 1, 2024 to preferred stockholders of record on February 15, 2024.
Operating Results
Fully taxable equivalent net interest income for the fourth quarter of 2023 was $62.6 million, a decrease of $0.6 million, or 0.9%, from the third quarter of 2023 due to a 5 basis-point contraction in the net interest margin to 2.71% from 2.76%, partially offset by an $82.7 million, or 0.9%, increase in average interest-earning assets. The net interest margin contraction was due to a 22 basis-point increase in the average cost of deposits, including noninterest-bearing demand, to 3.14%, and was partially offset by an 18 basis-point increase in the loan portfolio yield to 5.81%. The increase in average interest-earning assets from the third quarter of 2023 was primarily attributable to a $99.0 million increase in average loans, partially offset by a decrease in average cash and cash equivalents of $24.0 million.
Fully taxable equivalent net interest income for the fourth quarter of 2023 decreased by $16.1 million, or 20.5%, from the fourth quarter of 2022. The decrease from the fourth quarter of 2022 resulted primarily from a 77 basis-point decrease in the net interest margin to 2.71% from 3.48%, partially offset by an increase in interest-earning assets of $0.2 billion. The contraction of the net interest margin for the fourth quarter of 2023 when compared to the fourth quarter of 2022 was primarily attributable to a 168 basis-point increase in the average costs of deposits, including noninterest-bearing deposits, partially offset by a 61 basis-point increase in the loan portfolio yield.
Noninterest income was $4.2 million in the fourth quarter of 2023, $3.6 million in the third quarter of 2023 and $3.5 million in the fourth quarter of 2022. Included in noninterest income were net gains (losses) on equity securities of $0.6 million, $(0.3) million, and $(0.1) million for the fourth quarter of 2023, third quarter of 2023 and fourth quarter of 2022, respectively. Excluding the equity securities gains (losses), adjusted noninterest income was $3.6 million, $3.8 million and $3.6 million for the fourth quarter of 2023, third quarter of 2023 and fourth quarter of 2022, respectively. The $0.2 million decrease in adjusted noninterest income for the fourth quarter of 2023 when compared to the third quarter of 2023 was primarily due to a decrease in net gains on loans held-for-sale of $0.2 million. The net gains on loans held-for-sale consisted primarily of Small Business Administration (“SBA”) loans. The $0.1 million increase in adjusted noninterest income for the fourth quarter of 2023 when compared to the fourth quarter of 2022 was primarily due to an increase in net gains on loans held-for-sale, primarily SBA, of $0.3 million and an increase in BOLI of $0.1 million, partially offset by a decrease in deposit, loan, and other income of $0.3 million.
Noninterest expenses totaled $37.8 million for the fourth quarter of 2023, $35.8 million for the third quarter of 2023 and $33.3 million for the fourth quarter of 2022. 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. Adjusted noninterest expenses were flat from the third quarter of 2023. The following components made up the change between the fourth quarter of 2023 and the third quarter of 2023: an increase of $0.7 million in information technology and communication, offset by decreases in professional and consulting of $0.3 million, marketing and advertising of $0.2 million and salaries and employee benefits of $0.2 million. The increase in adjusted noninterest expenses of $2.4 million from the fourth quarter of 2022 was primarily attributable to increases in information technology and communications of $1.5 million, FDIC insurance of $1.0 million, salaries and employee benefits of $0.3 million, and other expenses of $0.3 million, partially offset by decreases in professional and consulting of $0.6 million and marketing and advertising of $0.1 million. The increase in information technology and communications when compared to the third quarter of 2023 and the fourth quarter of 2022 is primarily attributable to additional investments in technology, equipment, and software.
Income tax expense was $6.2 million for the fourth quarter of 2023, $7.2 million for the third quarter of 2023 and $12.3 million for the fourth quarter of 2022. The effective tax rates for the fourth quarter of 2023, third quarter of 2023 and fourth quarter of 2022 were 24.4%, 25.2% and 27.5%, respectively. The decrease in the effective tax rate when compared to the third quarter of 2023 and fourth quarter of 2022 is largely attributable to lower taxable income.
Asset Quality
The provision for credit losses was $2.7 million for the fourth quarter of 2023, $1.5 million for the third quarter of 2023 and $3.3 million for the fourth quarter of 2022. The increase in the provision for credit losses between the third and fourth quarter of 2023 primarily reflected loan growth.
During the current quarter the Company charged-off $3.9 million of previously-reserved-for taxi medallion loans. The taxi charge-off had no impact on credit loss provisioning or earnings, it increased the annualized quarterly charge-off rate and reduced nonaccrual loans. Total nonperforming assets, which include nonaccrual loans and other real estate owned, were $52.5 million as of December 31, 2023, $56.1 million as of September 30, 2023 and $44.7 million as of December 31, 2022. Nonaccrual loans were $52.5 million as of December 31, 2023, $56.1 million as of September 30, 2023 and $44.5 million as of December 31, 2022. Nonperforming assets as a percentage of total assets were 0.53% as of December 31, 2023, 0.58% as of September 30, 2023 and 0.46% as of December 31, 2022. The ratio of nonaccrual loans to loans receivable was 0.63%, 0.69% and 0.55%, as of December 31, 2023, September 30, 2023 and December 31, 2022, respectively. The annualized net loan charge-offs ratio was 0.43% (0.24%, excluding the above-mentioned taxi charge-off) for the fourth quarter of 2023, 0.12% for the third quarter of 2023 and 0.23% for the fourth quarter of 2022. The allowance for credit losses represented 0.98%, 1.08%, and 1.12% of loans receivable as of December 31, 2023, September 30, 2023 and December 31, 2022, respectively. The allowance for credit losses as a percentage of nonaccrual loans was 156.1% as of December 31, 2023, 157.4% as of September 30, 2023 and 203.6% as of December 31, 2022. Criticized and Classified loans as a percentage of total loans decreased to 1.35% as of December 31, 2023 from 1.44% as of September 30, 2023, and 2.25% as of December 31, 2022.
Selected Balance Sheet Items
The Company’s total assets were $9.856 billion as of December 31, 2023, an increase of $211 million from December 31, 2022. The increase in total assets was primarily due to an increase in loans receivable of $245 million, partially offset by decreases in interest-bearing deposits with banks of $25 million and investment securities of $18 million. Loans receivable was $8.345 billion as of December 31, 2023 and $8.100 billion as of December 31, 2022. Total deposits were $7.536 billion, an increase of $180 million from December 31, 2022.
The Company’s total stockholders’ equity was $1.217 billion as of December 31, 2023, an increase of $38 million from December 31, 2022. The increase was primarily attributable to an increase in retained earnings of $55 million, partially offset by an increase in treasury stock of $17 million. As of December 31, 2023, the Company’s tangible common equity ratio and tangible book value per share were 9.25% and $23.14, respectively, increases from 9.04% and $21.71, respectively, as of December 31, 2022. Total goodwill and other intangible assets were $214.2 million as of December 31, 2023, and $215.7 million as of December 31, 2022.
Share Repurchase Program
During the fourth quarter of 2023, the Company repurchased 102,200 shares of common stock at an average price of $21.17, leaving 923,488 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.
Fourth Quarter 2023 Results Conference Call
Management will also host a conference call and audio webcast at 10:00 a.m. ET on January 25, 2024 to review the Company's financial performance and operating results. The conference call dial-in number is 1-646-307-1583, access code 9727224. 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, January 25, 2024 and ending on Thursday, February 1, 2024 by dialing 1-647-362-9199, access code 9727224. 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) | |||||||
| December 31, | December 31, | ||||||
| 2023 | 2022 | ||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 61,421 | $ | 61,629 | |||
| Interest-bearing deposits with banks | 181,293 | 206,686 | |||||
| Cash and cash equivalents | 242,714 | 268,315 | |||||
| Investment securities | 617,162 | 634,884 | |||||
| Equity securities | 18,564 | 15,811 | |||||
| Loans held-for-sale | - | 13,772 | |||||
| Loans receivable | 8,345,145 | 8,099,689 | |||||
| Less: Allowance for credit losses - loans | 81,974 | 90,513 | |||||
| Net loans receivable | 8,263,171 | 8,009,176 | |||||
| Investment in restricted stock, at cost | 51,457 | 46,604 | |||||
| Bank premises and equipment, net | 30,779 | 27,800 | |||||
| Accrued interest receivable | 49,108 | 46,062 | |||||
| Bank owned life insurance | 237,644 | 231,328 | |||||
| Right of use operating lease assets | 12,007 | 10,179 | |||||
| Other real estate owned | - | 264 | |||||
| Goodwill | 208,372 | 208,372 | |||||
| Core deposit intangibles | 5,874 | 7,312 | |||||
| Other assets | 118,751 | 125,069 | |||||
| Total assets | $ | 9,855,603 | $ | 9,644,948 | |||
| LIABILITIES | |||||||
| Deposits: | |||||||
| Noninterest-bearing | $ | 1,259,364 | $ | 1,501,614 | |||
| Interest-bearing | 6,276,838 | 5,855,008 | |||||
| Total deposits | 7,536,202 | 7,356,622 | |||||
| Borrowings | 933,579 | 857,622 | |||||
| Subordinated debentures, net | 79,439 | 153,255 | |||||
| Operating lease liabilities | 13,171 | 11,397 | |||||
| Other liabilities | 76,592 | 87,301 | |||||
| Total liabilities | 8,638,983 | 8,466,197 | |||||
| COMMITMENTS AND CONTINGENCIES | |||||||
| STOCKHOLDERS' EQUITY | |||||||
| Preferred stock | 110,927 | 110,927 | |||||
| Common stock | 586,946 | 586,946 | |||||
| Additional paid-in capital | 33,182 | 30,126 | |||||
| Retained earnings | 590,970 | 535,915 | |||||
| Treasury stock | (70,296 | ) | (52,799 | ) | |||
| Accumulated other comprehensive loss | (35,109 | ) | (32,364 | ) | |||
| Total stockholders' equity | 1,216,620 | 1,178,751 | |||||
| Total liabilities and stockholders' equity | $ | 9,855,603 | $ | 9,644,948 | |||
| CONNECTONE BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
| (dollars in thousands, except for per share data) | ||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||
| 12/31/23 | 12/31/22 | 12/31/23 | 12/31/22 | |||||||||||
| Interest income | ||||||||||||||
| Interest and fees on loans | $ | 120,636 | $ | 104,952 | $ | 453,992 | $ | 352,993 | ||||||
| Interest and dividends on investment securities: | ||||||||||||||
| Taxable | 4,280 | 4,225 | 16,666 | 12,712 | ||||||||||
| Tax-exempt | 1,166 | 1,185 | 4,641 | 3,893 | ||||||||||
| Dividends | 912 | 712 | 3,662 | 1,655 | ||||||||||
| Interest on federal funds sold and other short-term investments | 1,963 | 1,395 | 11,104 | 2,493 | ||||||||||
| Total interest income | 128,957 | 112,469 | 490,065 | 373,746 | ||||||||||
| Interest expense | ||||||||||||||
| Deposits | 59,332 | 26,543 | 206,176 | 50,561 | ||||||||||
| Borrowings | 7,803 | 7,917 | 28,783 | 21,066 | ||||||||||
| Total interest expense | 67,135 | 34,460 | 234,959 | 71,627 | ||||||||||
| Net interest income | 61,822 | 78,009 | 255,106 | 302,119 | ||||||||||
| Provision for credit losses | 2,700 | 3,300 | 8,200 | 17,750 | ||||||||||
| Net interest income after provision for credit losses | 59,122 | 74,709 | 246,906 | 284,369 | ||||||||||
| Noninterest income | ||||||||||||||
| Deposit, loan and other income | 1,545 | 1,894 | 6,098 | 7,472 | ||||||||||
| Income on bank owned life insurance | 1,635 | 1,528 | 6,316 | 5,597 | ||||||||||
| Net gains on sale of loans held-for-sale | 472 | 176 | 1,704 | 1,695 | ||||||||||
| Net losses on equity securities | 557 | (90 | ) | (117 | ) | (1,521 | ) | |||||||
| Total noninterest income | 4,209 | 3,508 | 14,001 | 13,243 | ||||||||||
| Noninterest expenses | ||||||||||||||
| Salaries and employee benefits | 22,010 | 21,676 | 88,223 | 80,717 | ||||||||||
| Occupancy and equipment | 2,708 | 2,603 | 10,884 | 9,865 | ||||||||||
| FDIC insurance | 3,900 | 830 | 8,365 | 2,881 | ||||||||||
| Professional and consulting | 1,587 | 2,157 | 7,547 | 8,053 | ||||||||||
| Marketing and advertising | 323 | 454 | 1,965 | 1,692 | ||||||||||
| Information technology and communications | 4,148 | 2,694 | 14,340 | 11,108 | ||||||||||
| Amortization of core deposit intangible | 348 | 409 | 1,438 | 1,685 | ||||||||||
| Increase in value of acquisition price | - | - | - | 1,516 | ||||||||||
| Other expenses | 2,821 | 2,489 | 11,187 | 8,871 | ||||||||||
| Total noninterest expenses | 37,845 | 33,312 | 143,949 | 126,388 | ||||||||||
| Income before income tax expense | 25,486 | 44,905 | 116,958 | 171,224 | ||||||||||
| Income tax expense | 6,213 | 12,348 | 29,955 | 46,013 | ||||||||||
| Net income | 19,273 | 32,557 | 87,003 | 125,211 | ||||||||||
| Preferred dividends | 1,509 | 1,509 | 6,036 | 6,036 | ||||||||||
| Net income available to common stockholders | $ | 17,764 | $ | 31,048 | $ | 80,967 | $ | 119,175 | ||||||
| Earnings per common share: | ||||||||||||||
| Basic | $ | 0.46 | $ | 0.79 | $ | 2.08 | $ | 3.03 | ||||||
| Diluted | 0.46 | 0.79 | 2.07 | 3.01 | ||||||||||
| 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 | |||||||||||||||||||
| Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | |||||||||||||||
| 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||||||
| Selected Financial Data | (dollars in thousands) | ||||||||||||||||||
| Total assets | $ | 9,855,603 | $ | 9,678,885 | $ | 9,723,963 | $ | 9,960,467 | $ | 9,644,948 | |||||||||
| Loans receivable: | |||||||||||||||||||
| Commercial | $ | 1,564,768 | $ | 1,464,479 | $ | 1,462,245 | $ | 1,403,865 | $ | 1,455,316 | |||||||||
| Commercial real estate | 3,342,603 | 3,288,704 | 3,237,559 | 3,245,990 | 3,170,760 | ||||||||||||||
| Multifamily | 2,566,904 | 2,559,927 | 2,604,230 | 2,600,251 | 2,641,886 | ||||||||||||||
| Commercial construction | 620,496 | 622,748 | 596,362 | 630,469 | 574,139 | ||||||||||||||
| Residential | 256,041 | 251,416 | 254,405 | 259,166 | 264,748 | ||||||||||||||
| Consumer | 1,029 | 936 | 1,416 | 1,435 | 2,312 | ||||||||||||||
| Gross loans | 8,351,841 | 8,188,210 | 8,156,217 | 8,141,176 | 8,109,161 | ||||||||||||||
| Net deferred loan fees | (6,696 | ) | (7,101 | ) | (7,677 | ) | (9,057 | ) | (9,472 | ) | |||||||||
| Loans receivable | 8,345,145 | 8,181,109 | 8,148,540 | 8,132,119 | 8,099,689 | ||||||||||||||
| Loans held-for-sale | - | - | 1,089 | 11,197 | 13,772 | ||||||||||||||
| Total loans | $ | 8,345,145 | $ | 8,181,109 | $ | 8,149,629 | $ | 8,143,316 | $ | 8,113,461 | |||||||||
| Investment and equity securities | $ | 635,726 | $ | 599,544 | $ | 630,769 | $ | 647,026 | $ | 650,695 | |||||||||
| Goodwill and other intangible assets | 214,246 | 214,594 | 214,941 | 215,312 | 215,684 | ||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand | $ | 1,259,364 | $ | 1,224,125 | $ | 1,356,293 | $ | 1,345,265 | $ | 1,501,614 | |||||||||
| Time deposits | 2,531,371 | 2,522,210 | 2,621,148 | 2,706,662 | 2,394,190 | ||||||||||||||
| Other interest-bearing deposits | 3,745,467 | 3,692,160 | 3,560,856 | 3,701,249 | 3,460,818 | ||||||||||||||
| Total deposits | $ | 7,536,202 | $ | 7,438,495 | $ | 7,538,297 | $ | 7,753,176 | $ | 7,356,622 | |||||||||
| Borrowings | $ | 933,579 | $ | 887,590 | $ | 827,601 | $ | 852,611 | $ | 857,622 | |||||||||
| Subordinated debentures (net of debt issuance costs) | 79,439 | 79,313 | 79,187 | 79,060 | 153,255 | ||||||||||||||
| Total stockholders' equity | 1,216,620 | 1,188,154 | 1,199,397 | 1,190,970 | 1,178,751 | ||||||||||||||
| Quarterly Average Balances | |||||||||||||||||||
| Total assets | $ | 9,690,746 | $ | 9,625,625 | $ | 9,765,582 | $ | 9,700,530 | $ | 9,490,477 | |||||||||
| Loans receivable: | |||||||||||||||||||
| Commercial (including PPP loans) | $ | 1,510,634 | $ | 1,471,006 | $ | 1,427,153 | $ | 1,442,180 | $ | 1,456,247 | |||||||||
| Commercial real estate (including multifamily) | 5,874,854 | 5,821,794 | 5,847,147 | 5,813,388 | 5,758,594 | ||||||||||||||
| Commercial construction | 630,468 | 625,640 | 611,492 | 606,214 | 558,086 | ||||||||||||||
| Residential | 253,200 | 253,114 | 256,924 | 261,560 | 261,969 | ||||||||||||||
| Consumer | 6,006 | 4,972 | 6,733 | 3,894 | 4,630 | ||||||||||||||
| Gross loans | 8,275,162 | 8,176,526 | 8,149,449 | 8,127,236 | 8,039,526 | ||||||||||||||
| Unearned net origination fees | (6,894 | ) | (7,387 | ) | (8,591 | ) | (9,664 | ) | (9,666 | ) | |||||||||
| Loans receivable | 8,268,268 | 8,169,139 | 8,140,858 | 8,117,572 | 8,029,860 | ||||||||||||||
| Loans held-for-sale | 31 | 171 | 8,516 | 13,463 | 7,933 | ||||||||||||||
| Total loans | $ | 8,268,299 | $ | 8,169,310 | $ | 8,149,374 | $ | 8,131,035 | $ | 8,037,793 | |||||||||
| Investment and equity securities | $ | 602,287 | $ | 628,429 | $ | 642,915 | $ | 649,744 | $ | 650,479 | |||||||||
| Goodwill and other intangible assets | 214,472 | 214,822 | 215,182 | 215,556 | 215,951 | ||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand | $ | 1,248,132 | $ | 1,275,325 | $ | 1,347,268 | $ | 1,451,654 | $ | 1,610,044 | |||||||||
| Time deposits | 2,495,091 | 2,606,122 | 2,658,673 | 2,357,332 | 2,035,362 | ||||||||||||||
| Other interest-bearing deposits | 3,747,093 | 3,723,561 | 3,640,939 | 3,565,904 | 3,558,881 | ||||||||||||||
| Total deposits | $ | 7,490,316 | $ | 7,605,008 | $ | 7,646,880 | $ | 7,374,890 | $ | 7,204,287 | |||||||||
| Borrowings | $ | 823,123 | $ | 651,112 | $ | 756,303 | $ | 941,266 | $ | 913,960 | |||||||||
| Subordinated debentures (net of debt issuance costs) | 79,356 | 79,230 | 79,104 | 103,637 | 153,205 | ||||||||||||||
| Total stockholders' equity | 1,198,389 | 1,202,647 | 1,197,043 | 1,191,216 | 1,165,588 | ||||||||||||||
| Three Months Ended | |||||||||||||||||||
| Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | |||||||||||||||
| 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||||||
| (dollars in thousands, except for per share data) | |||||||||||||||||||
| Net interest income | $ | 61,822 | $ | 62,357 | $ | 63,843 | $ | 67,084 | $ | 78,009 | |||||||||
| Provision for credit losses | 2,700 | 1,500 | 3,000 | 1,000 | 3,300 | ||||||||||||||
| Net interest income after provision for credit losses | 59,122 | 60,857 | 60,843 | 66,084 | 74,709 | ||||||||||||||
| Noninterest income | |||||||||||||||||||
| Deposit, loan and other income | 1,545 | 1,605 | 1,545 | 1,403 | 1,894 | ||||||||||||||
| Income on bank owned life insurance | 1,635 | 1,597 | 1,553 | 1,531 | 1,528 | ||||||||||||||
| Net gains on sale of loans held-for-sale | 472 | 633 | 550 | 49 | 176 | ||||||||||||||
| Net gains (losses) on equity securities | 557 | (273 | ) | (210 | ) | (191 | ) | (90 | ) | ||||||||||
| Total noninterest income | 4,209 | 3,562 | 3,438 | 2,792 | 3,508 | ||||||||||||||
| Noninterest expenses | |||||||||||||||||||
| Salaries and employee benefits | 22,010 | 22,251 | 21,726 | 22,236 | 21,676 | ||||||||||||||
| Occupancy and equipment | 2,708 | 2,738 | 2,677 | 2,761 | 2,603 | ||||||||||||||
| FDIC insurance | 1,800 | 1,800 | 1,715 | 950 | 830 | ||||||||||||||
| Professional and consulting | 1,587 | 1,834 | 1,932 | 2,194 | 2,157 | ||||||||||||||
| Marketing and advertising | 323 | 554 | 556 | 532 | 454 | ||||||||||||||
| Information technology and communications | 4,148 | 3,487 | 3,644 | 3,061 | 2,694 | ||||||||||||||
| Amortization of core deposit intangible | 348 | 347 | 371 | 372 | 409 | ||||||||||||||
| Other expenses | 2,821 | 2,773 | 2,829 | 2,764 | 2,489 | ||||||||||||||
| Total noninterest expenses (excluding FDIC special assessment) | 35,745 | 35,784 | 35,450 | 34,870 | 33,312 | ||||||||||||||
| FDIC special assessment | 2,100 | - | - | - | - | ||||||||||||||
| Total noninterest expenses | 37,845 | 35,784 | 35,450 | 34,870 | 33,312 | ||||||||||||||
| Income before income tax expense | 25,486 | 28,635 | 28,831 | 34,006 | 44,905 | ||||||||||||||
| Income tax expense | 6,213 | 7,228 | 7,437 | 9,077 | 12,348 | ||||||||||||||
| Net income | 19,273 | 21,407 | 21,394 | 24,929 | 32,557 | ||||||||||||||
| Preferred dividends | 1,509 | 1,509 | 1,509 | 1,509 | 1,509 | ||||||||||||||
| Net income available to common stockholders | $ | 17,764 | $ | 19,898 | $ | 19,885 | $ | 23,420 | $ | 31,048 | |||||||||
| Weighted average diluted common shares outstanding | 38,651,391 | 38,829,681 | 39,016,839 | 39,300,733 | 39,378,137 | ||||||||||||||
| Diluted EPS | $ | 0.46 | $ | 0.51 | $ | 0.51 | $ | 0.59 | $ | 0.79 | |||||||||
| Reconciliation of GAAP Earnings to Pre-tax and Pre-provision Net Revenue | |||||||||||||||||||
| Net income | $ | 19,273 | $ | 21,407 | $ | 21,394 | $ | 24,929 | $ | 32,557 | |||||||||
| Income tax expense | 6,213 | 7,228 | 7,437 | 9,077 | 12,348 | ||||||||||||||
| Provision for credit losses | 2,700 | 1,500 | 3,000 | 1,000 | 3,300 | ||||||||||||||
| Pre-tax and pre-provision net revenue | $ | 28,186 | $ | 30,135 | $ | 31,831 | $ | 35,006 | $ | 48,205 | |||||||||
| Return on Assets Measures | |||||||||||||||||||
| Average assets | $ | 9,690,746 | $ | 9,625,625 | $ | 9,765,582 | $ | 9,700,530 | $ | 9,490,477 | |||||||||
| Return on avg. assets | 0.79 | % | 0.88 | % | 0.88 | % | 1.04 | % | 1.36 | % | |||||||||
| Return on avg. assets (pre-tax and pre-provision) | 1.15 | 1.24 | 1.31 | 1.46 | 2.02 | ||||||||||||||
| Three Months Ended | |||||||||||||||||||
| Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | |||||||||||||||
| 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||||||
| Return on Equity Measures | (dollars in thousands) | ||||||||||||||||||
| Average stockholders' equity | $ | 1,198,389 | $ | 1,202,647 | $ | 1,197,043 | $ | 1,191,216 | $ | 1,165,588 | |||||||||
| Less: average preferred stock | (110,927 | ) | (110,927 | ) | (110,927 | ) | (110,927 | ) | (110,927 | ) | |||||||||
| Average common equity | $ | 1,087,462 | $ | 1,091,720 | $ | 1,086,116 | $ | 1,080,289 | $ | 1,054,661 | |||||||||
| Less: average intangible assets | (214,472 | ) | (214,822 | ) | (215,182 | ) | (215,556 | ) | (215,951 | ) | |||||||||
| Average tangible common equity | $ | 872,990 | $ | 876,898 | $ | 870,934 | $ | 864,733 | $ | 838,710 | |||||||||
| Return on avg. common equity (GAAP) | 6.48 | % | 7.23 | % | 7.34 | % | 8.79 | % | 11.68 | % | |||||||||
| Return on avg. tangible common equity ("TCE") (non-GAAP)(1) | 8.18 | 9.11 | 9.28 | 11.11 | 14.82 | ||||||||||||||
| Return on avg. tangible common equity (pre-tax and pre-provision) | 12.92 | 13.74 | 14.78 | 16.54 | 22.94 | ||||||||||||||
| Efficiency Measures | |||||||||||||||||||
| Total noninterest expenses | $ | 37,845 | $ | 35,784 | $ | 35,450 | $ | 34,870 | $ | 33,312 | |||||||||
| Amortization of core deposit intangibles | (348 | ) | (347 | ) | (371 | ) | (372 | ) | (409 | ) | |||||||||
| FDIC special assessment | (2,100 | ) | - | - | - | - | |||||||||||||
| Operating noninterest expense | $ | 35,397 | $ | 35,437 | $ | 35,079 | $ | 34,498 | $ | 32,903 | |||||||||
| Net interest income (tax equivalent basis) | $ | 62,627 | $ | 63,208 | $ | 64,627 | $ | 67,828 | $ | 78,773 | |||||||||
| Noninterest income | 4,209 | 3,562 | 3,438 | 2,792 | 3,508 | ||||||||||||||
| Net losses on equity securities | (557 | ) | 273 | 210 | 191 | 90 | |||||||||||||
| Operating revenue | $ | 66,279 | $ | 67,043 | $ | 68,275 | $ | 70,811 | $ | 82,371 | |||||||||
| Operating efficiency ratio (non-GAAP)(2) | 53.4 | % | 52.9 | % | 51.4 | % | 48.7 | % | 39.9 | % | |||||||||
| Net Interest Margin | |||||||||||||||||||
| Average interest-earning assets | $ | 9,172,165 | $ | 9,089,431 | $ | 9,228,079 | $ | 9,174,167 | $ | 8,972,063 | |||||||||
| Net interest income (tax equivalent basis) | 62,627 | 63,208 | 64,627 | 67,828 | 78,773 | ||||||||||||||
| Net interest margin (GAAP) | 2.71 | % | 2.76 | % | 2.81 | % | 3.00 | % | 3.48 | % | |||||||||
| (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 | |||||||||||||||||||
| Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | Dec. 31, | |||||||||||||||
| 2023 | 2023 | 2023 | 2023 | 2022 | |||||||||||||||
| Capital Ratios and Book Value per Share | (dollars in thousands, except for per share data) | ||||||||||||||||||
| Stockholders equity | $ | 1,216,620 | $ | 1,188,154 | $ | 1,199,397 | $ | 1,190,970 | $ | 1,178,751 | |||||||||
| Less: preferred stock | (110,927 | ) | (110,927 | ) | (110,927 | ) | (110,927 | ) | (110,927 | ) | |||||||||
| Common equity | $ | 1,105,693 | $ | 1,077,227 | $ | 1,088,470 | $ | 1,080,043 | $ | 1,067,824 | |||||||||
| Less: intangible assets | (214,246 | ) | (214,594 | ) | (214,941 | ) | (215,312 | ) | (215,684 | ) | |||||||||
| Tangible common equity | $ | 891,447 | $ | 862,633 | $ | 873,529 | $ | 864,731 | $ | 852,140 | |||||||||
| Total assets | $ | 9,855,603 | $ | 9,678,885 | $ | 9,723,963 | $ | 9,960,467 | $ | 9,644,948 | |||||||||
| Less: intangible assets | (214,246 | ) | (214,594 | ) | (214,941 | ) | (215,312 | ) | (215,684 | ) | |||||||||
| Tangible assets | $ | 9,641,357 | $ | 9,464,291 | $ | 9,509,022 | $ | 9,745,155 | $ | 9,429,264 | |||||||||
| Common shares outstanding | 38,519,770 | 38,621,970 | 38,966,652 | 39,179,051 | 39,243,123 | ||||||||||||||
| Common equity ratio (GAAP) | 11.22 | % | 11.13 | % | 11.19 | % | 10.84 | % | 11.07 | % | |||||||||
| Tangible common equity ratio (non-GAAP)(3) | 9.25 | 9.11 | 9.19 | 8.87 | 9.04 | ||||||||||||||
| Regulatory capital ratios (Bancorp): | |||||||||||||||||||
| Leverage ratio | 10.86 | % | 10.86 | % | 10.62 | % | 10.60 | % | 10.68 | % | |||||||||
| Common equity Tier 1 risk-based ratio | 10.62 | 10.64 | 10.55 | 10.55 | 10.30 | ||||||||||||||
| Risk-based Tier 1 capital ratio | 11.95 | 11.98 | 11.90 | 11.92 | 11.66 | ||||||||||||||
| Risk-based total capital ratio | 13.77 | 13.90 | 13.83 | 13.85 | 14.45 | ||||||||||||||
| Regulatory capital ratios (Bank): | |||||||||||||||||||
| Leverage ratio | 11.20 | % | 11.23 | % | 10.95 | % | 10.62 | % | 10.64 | % | |||||||||
| Common equity Tier 1 risk-based ratio | 12.31 | 12.38 | 12.26 | 11.92 | 11.60 | ||||||||||||||
| Risk-based Tier 1 capital ratio | 12.31 | 12.38 | 12.26 | 11.92 | 11.60 | ||||||||||||||
| Risk-based total capital ratio | 13.28 | 13.43 | 13.33 | 13.27 | 13.02 | ||||||||||||||
| Book value per share (GAAP) | $ | 28.70 | $ | 27.89 | $ | 27.93 | $ | 27.57 | $ | 27.21 | |||||||||
| Tangible book value per share (non-GAAP)(4) | 23.14 | 22.34 | 22.42 | 22.07 | 21.71 | ||||||||||||||
| Net Loan Charge-offs (Recoveries): | |||||||||||||||||||
| Net loan charge-offs (recoveries): | |||||||||||||||||||
| Charge-offs | $ | 8,960 | $ | 2,487 | $ | 1,118 | $ | 4,484 | $ | 4,456 | |||||||||
| Recoveries | - | (8 | ) | (76 | ) | (1 | ) | - | |||||||||||
| Net loan charge-offs (recoveries) | $ | 8,960 | $ | 2,479 | $ | 1,042 | $ | 4,483 | $ | 4,456 | |||||||||
| Net loan charge-offs (recoveries) as a % of average loans receivable (annualized) | 0.43 | % | 0.12 | % | 0.05 | % | 0.22 | % | 0.23 | % | |||||||||
| Asset Quality | |||||||||||||||||||
| Nonaccrual loans | $ | 52,524 | $ | 56,059 | $ | 51,496 | $ | 47,667 | $ | 44,454 | |||||||||
| Other real estate owned | - | - | - | - | 264 | ||||||||||||||
| Nonperforming assets | $ | 52,524 | $ | 56,059 | $ | 51,496 | $ | 47,667 | $ | 44,718 | |||||||||
| Allowance for credit losses - loans ("ACL") | $ | 81,974 | $ | 88,230 | $ | 89,205 | $ | 87,002 | $ | 90,513 | |||||||||
| Loans receivable | 8,345,145 | 8,181,109 | 8,148,540 | 8,132,119 | 8,099,689 | ||||||||||||||
| Nonaccrual loans as a % of loans receivable | 0.63 | % | 0.69 | % | 0.63 | % | 0.59 | % | 0.55 | % | |||||||||
| Nonperforming assets as a % of total assets | 0.53 | 0.58 | 0.53 | 0.48 | 0.46 | ||||||||||||||
| ACL as a % of loans receivable | 0.98 | 1.08 | 1.09 | 1.07 | 1.12 | ||||||||||||||
| ACL as a % of nonaccrual loans | 156.1 | 157.4 | 173.2 | 182.5 | 203.6 | ||||||||||||||
| (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 | ||||||||||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||
| Average | Average | Average | ||||||||||||||||||||||||
| Interest-earning assets: | Balance | Interest | Rate(7) | Balance | Interest | Rate(7) | Balance | Interest | Rate(7) | |||||||||||||||||
| Investment securities(1) (2) | $ | 723,433 | $ | 5,757 | 3.16 | % | $ | 723,408 | $ | 5,566 | 3.05 | % | $ | 743,917 | $ | 5,725 | 3.05 | % | ||||||||
| Loans receivable and loans held-for-sale(2) (3) (4) | 8,268,299 | 121,130 | 5.81 | 8,169,310 | 115,954 | 5.63 | 8,037,793 | 105,402 | 5.20 | |||||||||||||||||
| Federal funds sold and interest- | ||||||||||||||||||||||||||
| bearing deposits with banks | 134,168 | 1,963 | 5.80 | 158,155 | 2,110 | 5.29 | 142,489 | 1,394 | 3.88 | |||||||||||||||||
| Restricted investment in bank stock | 46,265 | 912 | 7.82 | 38,558 | 907 | 9.33 | 47,864 | 712 | 5.90 | |||||||||||||||||
| Total interest-earning assets | $ | 9,172,165 | 129,762 | 5.61 | $ | 9,089,431 | 124,537 | 5.44 | 8,972,063 | 113,233 | 5.01 | |||||||||||||||
| Allowance for loan losses | (88,861 | ) | (89,966 | ) | (91,621 | ) | ||||||||||||||||||||
| Noninterest-earning assets | 607,442 | 626,160 | 610,035 | |||||||||||||||||||||||
| Total assets | $ | 9,690,746 | $ | 9,625,625 | $ | 9,490,477 | ||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||
| Time deposits | 2,495,091 | 26,486 | 4.21 | 2,606,122 | 25,437 | 3.87 | $ | 2,035,362 | 11,601 | 2.26 | ||||||||||||||||
| Other interest-bearing deposits | 3,747,093 | 32,846 | 3.48 | 3,723,561 | 30,606 | 3.26 | 3,558,881 | 14,942 | 1.67 | |||||||||||||||||
| Total interest-bearing deposits | 6,242,184 | 59,332 | 3.77 | 6,329,683 | 56,043 | 3.51 | 5,594,243 | 26,543 | 1.88 | |||||||||||||||||
| Borrowings | 823,123 | 6,467 | 3.12 | 651,112 | 3,950 | 2.41 | 913,960 | 5,665 | 2.46 | |||||||||||||||||
| Subordinated debentures, net | 79,356 | 1,313 | 6.56 | 79,230 | 1,312 | 6.57 | 153,205 | 2,217 | 5.74 | |||||||||||||||||
| Finance lease | 1,546 | 23 | 5.90 | 1,603 | 24 | 5.94 | 1,760 | 35 | 7.89 | |||||||||||||||||
| Total interest-bearing liabilities | 7,146,209 | 67,135 | 3.73 | 7,061,628 | 61,329 | 3.45 | 6,663,168 | 34,460 | 2.05 | |||||||||||||||||
| Noninterest-bearing demand deposits | 1,248,132 | 1,275,325 | 1,610,044 | |||||||||||||||||||||||
| Other liabilities | 98,016 | 86,025 | 51,677 | |||||||||||||||||||||||
| Total noninterest-bearing liabilities | 1,346,148 | 1,361,350 | 1,661,721 | |||||||||||||||||||||||
| Stockholders' equity | 1,198,389 | 1,202,647 | 1,165,588 | |||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 9,690,746 | $ | 9,625,625 | $ | 9,490,477 | ||||||||||||||||||||
| Net interest income (tax equivalent basis) | 62,627 | 63,208 | 78,773 | |||||||||||||||||||||||
| Net interest spread(5) | 1.89 | % | 1.99 | % | 2.96 | % | ||||||||||||||||||||
| Net interest margin(6) | 2.71 | % | 2.76 | % | 3.48 | % | ||||||||||||||||||||
| Tax equivalent adjustment | (805 | ) | (851 | ) | (764 | ) | ||||||||||||||||||||
| Net interest income | $ | 61,822 | $ | 62,357 | $ | 78,009 | ||||||||||||||||||||
| (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. | ||||||||||||||||||||||||||
