ConnectOne Bancorp, Inc. Reports Fourth Quarter and Full-Year 2023 Results; Declares Common and Preferred Dividends

Source: GlobeNewswire
ConnectOne Bancorp, Inc. Reports Fourth Quarter and Full-Year 2023 Results; Declares Common and Preferred Dividends

ENGLEWOOD 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 EndedTwelve 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, 2023September 30, 2023December 31, 2022 
 Average    Average    Average   
Interest-earning assets:BalanceInterestRate(7) BalanceInterestRate(7) BalanceInterestRate(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.