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Connectone Bancorp, Inc. Reports Fourth Quarter and Full-Year 2024 Results; Declares Common and Preferred Dividends
Источник: Nasdaq GlobeNewswire / 30 янв 2025 07:00:01 America/New_York
ENGLEWOOD CLIFFS, N.J., Jan. 30, 2025 (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 $18.9 million for the fourth quarter of 2024 compared with $15.7 million for the third quarter of 2024 and $17.8 million for the fourth quarter of 2023. Diluted earnings per share were $0.49 for the fourth quarter of 2024 compared with $0.41 for the third quarter of 2024 and $0.46 for the fourth quarter of 2023. Full-year 2024 net income available to common stockholders was $67.8 million, compared to $81.0 million for the full-year 2023. Diluted earnings per share for the full-year 2024 were $1.76, compared with $2.07 for the full-year 2023. Return on average assets was 0.84%, 0.70% and 0.79% for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively. Return on average tangible common equity was 8.27%, 6.93% and 8.18% for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively.
Operating net income available to common stockholders, which excludes non-operating items, as set forth in the reconciliation of GAAP earnings to operating earnings included in the supplemental table attached hereto, was $20.2 million for the fourth quarter of 2024, $16.1 million for the third quarter of 2024 and $19.1 million for the fourth quarter of 2023. Operating diluted earnings per share were $0.52 for the fourth quarter of 2024, $0.42 for the third quarter of 2024 and $0.49 for the fourth quarter of 2023. Operating return on average assets was 0.90%, 0.72% and 0.84% for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively. Operating return on average tangible common equity was 8.77%, 7.03% and 8.67% for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively.
“I’m extremely pleased with ConnectOne’s fourth quarter 2024 financial results highlighted by a 20.5% quarter-over-quarter and an 6.2% year-over-year increase in quarterly net income available to common stockholders, significant margin expansion and growth in both loans and core deposits,” stated Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer. “On a quarter-over-quarter basis, our loan portfolio grew by 2.0% while core deposits grew by 3.2%. The bank’s net interest margin improved by nearly 20 basis-points, benefiting from a more than 25 basis-point improvement in our cost of deposits. This improvement reflects an approximately 40% cycle-to-date beta on interest-bearing deposits and a 3.6% sequential quarterly increase in average noninterest-bearing demand deposits. Moreover, credit quality trends remain stable and, once again, tangible book value advanced despite higher longer-term interest rates.”
“As we move into 2025, we are experiencing strong operating momentum bolstered by improving industry fundamentals, favorable economic conditions, and a potentially more supportive regulatory environment. Importantly, the proposed merger with The First of Long Island Corporation is moving forward as planned. We’re well along in the merger process and anticipate the transaction to close in the second quarter of 2025.” Mr. Sorrentino added, “The strategic rationale behind this financially attractive transaction remains highly compelling, which will meaningfully enhance ConnectOne's presence on Long Island and further our position as a premier New York Metro community bank. We are equally excited about the opportunity to serve The First of Long Island’s clients and to leverage the expertise of its team, creating a significantly enhanced platform for sustained growth at ConnectOne.”
Mr. Sorrentino concluded “Looking ahead, we remain focused and committed to our client-first culture and relationship banking model and are well-positioned to grow and strengthen our valuable franchise.”
Dividend Declarations
The Company announced that its Board of Directors declared a cash dividend on both its common stock and its outstanding preferred stock. A cash dividend on common stock of $0.18 per share will be paid on March 3, 2025, to common stockholders of record on February 18, 2025. A dividend of $0.328125 per depositary share, representing a 1/40th interest in a share of the Company’s 5.25% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, will also be paid on March 3, 2025 to holders of record on February 18, 2025.
Operating Results
Fully taxable equivalent net interest income for the fourth quarter of 2024 was $64.7 million, an increase of $3.8 million, or 6.3%, from the third quarter of 2024, due to a 19 basis-point widening of the net interest margin to 2.86% from 2.67%. Average loans for the fourth quarter of 2024 remained essentially flat from the sequential third quarter, decreasing by $19.8 million, or 0.2%. The widening of the net interest margin was primarily due to a 27 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits, partially offset by a 3 basis-point decline in the rate earned on interest-earning assets. The interest-earning asset rate for the fourth quarter of 2024 was strengthened by an increase in loan prepayment fees and recapture of nonaccrual loan interest. Excluding these aforementioned items, management estimates the net interest margin for the quarter would have been approximately 2.82%. The net interest margin, excluding any non-operating items, is expected to increase to more than 2.90% in the first quarter of 2025 as a result of further improvement in the cost of funds and the deployment of excess cash-on-hand.
Fully taxable equivalent net interest income for the fourth quarter of 2024 increased by $3.0 million, or 4.7%, from the fourth quarter of 2023. The increase from the fourth quarter of 2023 resulted primarily from a 15 basis-point widening in the net interest margin to 2.86% from 2.71%, partially offset by a $164.7 million, or 2.0%, decrease in average loans. The widening of the net interest margin for the fourth quarter of 2024 when compared to the fourth quarter of 2023 was primarily due to a 102 basis-point decrease in the average cost of borrowings, a 9 basis-point decrease in average cost of deposits, including noninterest-bearing deposits, and a 3 basis-point increase in the loan portfolio yield, partially offset by an increase in average cash balances during the fourth quarter of 2024.
Noninterest income was $3.7 million in the fourth quarter of 2024, $4.7 million in the third quarter of 2024 and $4.2 million in the fourth quarter of 2023. The $1.0 million decrease in noninterest income for the fourth quarter of 2024 when compared to the third quarter of 2024 was due to a $0.7 million decrease in net gains on equity securities, a $0.5 million decrease in BOLI income, primarily due to reduced death benefits, partially offset by a $0.2 million increase in net gains on sale of loans held-for-sale. The $0.5 million decrease in noninterest income for the fourth quarter of 2024 when compared to the fourth quarter of 2023 was due to a $0.9 million decrease in net gains on equity securities, partially offset a $0.3 million increase in other deposit, loan and other income and an increase in net gains on sale of loans held-for-sale of $0.1 million.
Noninterest expenses were $38.5 million for the fourth quarter of 2024, $38.6 million for the third quarter of 2024 and $37.8 million for the fourth quarter of 2023. The $0.1 million decrease in noninterest expenses for the fourth quarter of 2024 when compared to the third quarter of 2024 was primarily due to a $0.7 million decrease in salaries and employee benefits, a $0.2 million decrease in other expenses, a $0.1 million decrease in marketing and advertising expenses and a $0.1 million decrease in occupancy and equipment expense, partially offset by a $0.5 million charge related to a branch closing, a $0.3 million increase in professional and consulting expenses, a $0.1 million increase in merger expenses and a $0.1 million increase in information and technology communications.
The $0.7 million increase in noninterest expenses for the fourth quarter of 2024 when compared to the fourth quarter of 2023 was primarily due to a $0.9 million increase merger expenses, a $0.9 million increase in professional and consulting expenses, a $0.5 million increase in branch closing expenses, a $0.4 million increase in information technology and communications, a $0.2 million increase in salaries and employee benefits, a $0.1 million increase in marketing and advertising expenses and a $0.1 million increase in occupancy and equipment expenses, partially offset by decreases in FDIC insurance of $2.1 million and $0.3 million decrease in other expenses. The $0.9 million increase in merger expenses compared to the fourth quarter of 2023 was due to the planned merger with The First of Long Island Corporation. The $0.9 million increase in professional and consulting expenses was primarily due to increases in legal and audit accruals, as well as an increase in loan work-out expenses. The $0.5 million increase in branch closing expenses is due to the aforementioned branch closing. The $2.1 million decrease in FDIC insurance expense is due to the FDIC special assessment charge that was accrued during the fourth quarter of 2023.
Income tax expense was $6.1 million for the fourth quarter of 2024, $6.0 million for the third quarter of 2024 and $6.2 million for the fourth quarter of 2023. The effective tax rates for the fourth quarter of 2024, third quarter of 2024 and fourth quarter of 2023 were 23%, 26% and 24%, respectively. The effective tax rate for the fourth quarter reflects a year-end adjustment for the effective tax rate for the full-year 2024. Our projected tax rate for 2025 is in the range of 26%-27%.
Asset Quality
The provision for credit losses was $3.5 million for the fourth quarter of 2024, $3.8 million for the third quarter of 2024 and $2.7 million for the fourth quarter of 2023, reflecting loan growth, economic outlook and specific reserves. The provision for credit losses was $13.8 million for the full-year 2024 compared to $8.2 million for the full-year 2023. The increase in the full-year 2024 provision for credit losses when compared to the full-year 2023 was primarily due to increases in specific reserves, partially offset by a decrease in the level of general reserves.
Nonperforming assets, which includes nonaccrual loans and other real estate owned (the Bank had no other real estate owned during the periods reported), was $57.3 million as of December 31, 2024, $51.3 million as of September 30, 2024 and $52.5 million as of December 31, 2023. Nonperforming assets as a percentage of total assets was 0.58% as of December 31, 2024, 0.53% as of September 31, 2024 and 0.53% as of December 31, 2023. The ratio of nonaccrual loans to loans receivable was 0.69%, 0.63% and 0.63%, as of December 31, 2024, September 30, 2024 and December 31, 2023, respectively. The annualized net loan charge-offs ratio was 0.16% for the fourth quarter of 2024, 0.17% for the third quarter of 2024 and 0.43% for the fourth quarter of 2023. The allowance for credit losses represented 1.00%, 1.02%, and 0.98% of loans receivable as of December 31, 2024, September 31, 2024, and December 31, 2023, respectively. The allowance for credit losses as a percentage of nonaccrual loans was 144.3% as of December 31, 2024, 160.8% as of September 30, 2024 and 156.1% as of December 31, 2023. Criticized and classified loans as a percentage of loans receivable was 2.66% as of December 31, 2024, up from 2.23% as of September 30, 2024 and 1.35% as of December 31, 2023. Loans delinquent 30 to 89 days was 0.04% of loans receivable as of December 31, 2024, down from 0.16% as of September 30, 2024 and 0.30% as of December 31, 2023. The overall credit quality metrics of the Bank’s loan portfolio remain sound, with expected levels of charge-offs, nonaccruals, delinquencies, and classified loans expected to remain within historical ranges.
Selected Balance Sheet Items
The Company’s total assets were $9.880 billion as of December 31, 2024, compared to $9.856 billion as of December 31, 2023. Loans receivable were $8.275 billion as of December 31, 2024 and $8.345 billion as of December 31, 2023. Total deposits were $7.820 billion as of December 31, 2024 and $7.536 billion as of December 31, 2023.
The Company’s total stockholders’ equity was $1.242 billion as of December 31, 2024 and $1.217 billion as of December 31, 2023. The increase in total stockholders’ equity was primarily due to an increase in retained earnings of $40.5 million, partially offset by an increase in accumulated other comprehensive losses of approximately $12.7 million and an increase in treasury stock of approximately $5.8 million. As of December 31, 2024, the Company’s tangible common equity ratio and tangible book value per share were 9.49% and $23.92, respectively, compared to 9.25% and $23.14, respectively, as of December 31, 2023. Total goodwill and other intangible assets were $213.0 million as of December 31, 2024, and $214.2 million as of December 31, 2023.
Use of Non-GAAP Financial Measures
In addition to the results presented in accordance with Generally Accepted Accounting Principles ("GAAP"), ConnectOne routinely supplements its evaluation with an analysis of certain non-GAAP measures. ConnectOne believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors in understanding our operating performance and trends. These non-GAAP measures have inherent limitations and are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for an analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of non-GAAP financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the accompanying tables.
Fourth Quarter 2024 Results Conference Call
Management will also host a conference call and audio webcast at 10:00 a.m. ET on January 30, 2025 to review the Company's financial performance and operating results. The conference call dial-in number is 1 (646) 307-1963, access code 1691400. 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 30, 2025 and ending on Thursday, February 6, 2025 by dialing 1 (609) 800-9909, access code 1691400. 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 health emergencies and natural disasters on the Company, its employees and operations, and its customers. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Investor Contact:
William S. Burns
Senior Executive Vice President & CFO
201.816.4474: bburns@cnob.comMedia Contact:
Shannan Weeks
MikeWorldWide
732.299.7890: sweeks@mww.comCONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (in thousands) December 31, December 31, 2024 2023 (unaudited) ASSETS Cash and due from banks $ 57,816 $ 61,421 Interest-bearing deposits with banks 298,672 181,293 Cash and cash equivalents 356,488 242,714 Investment securities 612,847 617,162 Equity securities 20,092 18,564 Loans held-for-sale 743 - Loans receivable 8,274,810 8,345,145 Less: Allowance for credit losses - loans 82,685 81,974 Net loans receivable 8,192,125 8,263,171 Investment in restricted stock, at cost 40,449 51,457 Bank premises and equipment, net 28,447 30,779 Accrued interest receivable 45,498 49,108 Bank owned life insurance 243,672 237,644 Right of use operating lease assets 14,489 12,007 Goodwill 208,372 208,372 Core deposit intangibles 4,639 5,874 Other assets 111,739 118,751 Total assets $ 9,879,600 $ 9,855,603 LIABILITIES Deposits: Noninterest-bearing $ 1,422,044 $ 1,259,364 Interest-bearing 6,398,070 6,276,838 Total deposits 7,820,114 7,536,202 Borrowings 688,064 933,579 Subordinated debentures, net 79,944 79,439 Operating lease liabilities 15,498 13,171 Other liabilities 34,276 76,592 Total liabilities 8,637,896 8,638,983 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock 110,927 110,927 Common stock 586,946 586,946 Additional paid-in capital 36,347 33,182 Retained earnings 631,446 590,970 Treasury stock (76,116 ) (70,296 ) Accumulated other comprehensive loss (47,846 ) (35,109 ) Total stockholders' equity 1,241,704 1,216,620 Total liabilities and stockholders' equity $ 9,879,600 $ 9,855,603 CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except for per share data) Three Months Ended Year Ended 12/31/24 12/31/23 12/31/24 12/31/23 Interest income Interest and fees on loans $ 118,346 $ 120,636 $ 477,859 $ 453,992 Interest and dividends on investment securities: Taxable 4,804 4,280 18,561 16,666 Tax-exempt 1,109 1,166 4,503 4,641 Dividends 959 912 4,349 3,662 Interest on federal funds sold and other short-term investments 2,815 1,963 12,617 11,104 Total interest income 128,033 128,957 517,889 490,065 Interest expense Deposits 58,568 59,332 244,846 206,176 Borrowings 4,754 7,803 25,706 28,783 Total interest expense 63,322 67,135 270,552 234,959 Net interest income 64,711 61,822 247,337 255,106 Provision for credit losses 3,500 2,700 13,800 8,200 Net interest income after provision for credit losses 61,211 59,122 233,537 246,906 Noninterest income Deposit, loan and other income 1,798 1,545 6,861 6,098 Income on bank owned life insurance 1,656 1,635 7,142 6,316 Net gains on sale of loans held-for-sale 597 472 2,723 1,704 Net losses (gains) on equity securities (307 ) 557 2 (117 ) Total noninterest income 3,744 4,209 16,728 14,001 Noninterest expenses Salaries and employee benefits 22,244 22,010 90,053 88,223 Occupancy and equipment 2,818 2,708 11,615 10,884 FDIC insurance 1,800 3,900 7,200 8,365 Professional and consulting 2,449 1,587 8,447 7,547 Marketing and advertising 495 323 2,420 1,965 Information technology and communications 4,523 4,148 17,574 14,340 Merger expenses 863 - 1,605 - Branch closing expenses 477 - 477 - Amortization of core deposit intangibles 296 348 1,235 1,438 Other expenses 2,533 2,821 11,172 11,187 Total noninterest expenses 38,498 37,845 151,798 143,949 Income before income tax expense 26,457 25,486 98,467 116,958 Income tax expense 6,086 6,213 24,674 29,955 Net income 20,371 19,273 73,793 87,003 Preferred dividends 1,509 1,509 6,036 6,036 Net income available to common stockholders $ 18,862 $ 17,764 $ 67,757 $ 80,967 Earnings per common share: Basic $ 0.49 $ 0.46 $ 1.77 $ 2.08 Diluted 0.49 0.46 1.76 2.07 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, Sept. 30, Jun. 30, Mar. 31, Dec. 31, 2024 2024 2024 2024 2023 Selected Financial Data (dollars in thousands) Total assets $ 9,879,600 $ 9,639,603 $ 9,723,731 $ 9,853,964 $ 9,855,603 Loans receivable: Commercial $ 1,522,308 $ 1,505,743 $ 1,491,079 $ 1,561,063 $ 1,564,768 Commercial real estate 3,384,319 3,261,160 3,274,941 3,333,488 3,342,603 Multifamily 2,506,782 2,482,258 2,499,581 2,507,893 2,566,904 Commercial construction 616,246 616,087 639,168 646,593 620,496 Residential 249,691 250,249 256,786 254,214 256,041 Consumer 1,136 835 945 850 1,029 Gross loans 8,280,482 8,116,332 8,162,500 8,304,101 8,351,841 Net deferred loan fees (5,672 ) (4,356 ) (4,597 ) (6,144 ) (6,696 ) Loans receivable 8,274,810 8,111,976 8,157,903 8,297,957 8,345,145 Loans held-for-sale 743 - 435 - - Total loans $ 8,275,553 $ 8,111,976 $ 8,158,338 $ 8,297,957 $ 8,345,145 Investment and equity securities $ 632,939 $ 667,112 $ 640,322 $ 638,854 $ 635,726 Goodwill and other intangible assets 213,011 213,307 213,604 213,925 214,246 Deposits: Noninterest-bearing demand $ 1,422,044 $ 1,262,568 $ 1,268,882 $ 1,290,523 $ 1,259,364 Time deposits 2,557,200 2,614,187 2,593,165 2,623,391 2,531,371 Other interest-bearing deposits 3,840,870 3,647,350 3,713,967 3,674,740 3,745,467 Total deposits $ 7,820,114 $ 7,524,105 $ 7,576,014 $ 7,588,654 $ 7,536,202 Borrowings $ 688,064 $ 742,133 $ 756,144 $ 877,568 $ 933,579 Subordinated debentures (net of debt issuance costs) 79,944 79,818 79,692 79,566 79,439 Total stockholders' equity 1,241,704 1,239,496 1,224,227 1,216,609 1,216,620 Quarterly Average Balances Total assets $ 9,653,446 $ 9,742,853 $ 9,745,853 $ 9,860,753 $ 9,690,746 Loans receivable: Commercial $ 1,487,850 $ 1,485,777 $ 1,517,446 $ 1,552,360 $ 1,510,634 Commercial real estate (including multifamily) 5,733,188 5,752,467 5,789,498 5,890,853 5,874,854 Commercial construction 631,022 628,740 652,227 637,993 630,468 Residential 250,589 252,975 254,284 252,965 253,200 Consumer 5,204 7,887 5,155 5,091 6,006 Gross loans 8,107,853 8,127,846 8,218,610 8,339,262 8,275,162 Net deferred loan fees (4,727 ) (4,513 ) (5,954 ) (6,533 ) (6,894 ) Loans receivable 8,103,126 8,123,333 8,212,656 8,332,729 8,268,268 Loans held-for-sale 498 83 169 99 31 Total loans $ 8,103,624 $ 8,123,416 $ 8,212,825 $ 8,332,828 $ 8,268,299 Investment and equity securities $ 653,988 $ 650,897 $ 637,551 $ 633,270 $ 602,287 Goodwill and other intangible assets 213,205 213,502 213,813 214,133 214,472 Deposits: Noninterest-bearing demand $ 1,304,699 $ 1,259,912 $ 1,256,251 $ 1,254,201 $ 1,248,132 Time deposits 2,478,163 2,625,329 2,587,706 2,567,767 2,495,091 Other interest-bearing deposits 3,838,575 3,747,427 3,721,167 3,696,374 3,747,093 Total deposits $ 7,621,437 $ 7,632,668 $ 7,565,124 $ 7,518,342 $ 7,490,316 Borrowings $ 648,300 $ 717,586 $ 787,256 $ 947,003 $ 823,123 Subordinated debentures (net of debt issuance costs) 79,862 79,735 79,609 79,483 79,356 Total stockholders' equity 1,241,738 1,234,724 1,220,621 1,220,818 1,198,389 Three Months Ended Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, 2024 2024 2024 2024 2023 (dollars in thousands, except for per share data) Net interest income $ 64,711 $ 60,887 $ 61,439 $ 60,300 $ 61,822 Provision for credit losses 3,500 3,800 2,500 4,000 2,700 Net interest income after provision for credit losses 61,211 57,087 58,939 56,300 59,122 Noninterest income Deposit, loan and other income 1,798 1,817 1,654 1,592 1,545 Income on bank owned life insurance 1,656 2,145 1,677 1,664 1,635 Net gains on sale of loans held-for-sale 597 343 1,277 506 472 Net (losses) gains on equity securities (307 ) 432 (209 ) 86 557 Total noninterest income 3,744 4,737 4,399 3,848 4,209 Noninterest expenses Salaries and employee benefits 22,244 22,957 22,721 22,131 22,010 Occupancy and equipment 2,818 2,889 2,899 3,009 2,708 FDIC insurance 1,800 1,800 1,800 1,800 3,900 Professional and consulting 2,449 2,147 1,923 1,928 1,587 Marketing and advertising 495 635 613 677 323 Information technology and communications 4,523 4,464 4,198 4,389 4,148 Merger expenses 863 742 - - - Branch closing expenses 477 - - - - Amortization of core deposit intangible 296 297 321 321 348 Other expenses 2,533 2,710 3,119 2,810 2,821 Total noninterest expenses 38,498 38,641 37,594 37,065 37,845 Income before income tax expense 26,457 23,183 25,744 23,083 25,486 Income tax expense 6,086 6,022 6,688 5,878 6,213 Net income 20,371 17,161 19,056 17,205 19,273 Preferred dividends 1,509 1,509 1,509 1,509 1,509 Net income available to common stockholders $ 18,862 $ 15,652 $ 17,547 $ 15,696 $ 17,764 Weighted average diluted common shares outstanding 38,519,581 38,525,484 38,448,594 38,511,747 38,651,391 Diluted EPS $ 0.49 $ 0.41 $ 0.46 $ 0.41 $ 0.46 Reconciliation of GAAP Net Income to Operating Net Income: Net income $ 20,371 $ 17,161 $ 19,056 $ 17,205 $ 19,273 FDIC special assessment - - - - 2,100 Merger expenses 863 742 - - - Branch closing expenses 477 - - - - Amortization of core deposit intangibles 296 297 321 321 348 Net losses (gains) on equity securities 307 (432 ) 209 (86 ) (557 ) Tax impact of adjustments (585 ) (171 ) (149 ) (66 ) (569 ) Operating net income $ 21,729 $ 17,597 $ 19,437 $ 17,374 $ 20,595 Preferred dividends 1,509 1,509 1,509 1,509 1,509 Operating net income available to common stockholders $ 20,220 $ 16,088 $ 17,928 $ 15,865 $ 19,086 Operating diluted EPS (non-GAAP) (1) $ 0.52 $ 0.42 $ 0.47 $ 0.41 $ 0.49 Return on Assets Measures Average assets $ 9,653,446 $ 9,742,853 $ 9,745,853 $ 9,860,753 $ 9,690,746 Return on avg. assets 0.84 % 0.70 % 0.79 % 0.70 % 0.79 % Operating return on avg. assets (non-GAAP) (2) 0.90 0.72 0.80 0.71 0.84 (1) Operating net income available to common stockholders divided by weighted average diluted shares outstanding. (2) Operating net income divided by average assets. Three Months Ended Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, 2024 2024 2024 2024 2023 Return on Equity Measures (dollars in thousands) Average stockholders' equity $ 1,241,738 $ 1,234,724 $ 1,220,621 $ 1,220,818 $ 1,198,389 Less: average preferred stock (110,927 ) (110,927 ) (110,927 ) (110,927 ) (110,927 ) Average common equity $ 1,130,811 $ 1,123,797 $ 1,109,694 $ 1,109,891 $ 1,087,462 Less: average intangible assets (213,205 ) (213,502 ) (213,813 ) (214,133 ) (214,472 ) Average tangible common equity $ 917,606 $ 910,295 $ 895,881 $ 895,758 $ 872,990 Return on avg. common equity (GAAP) 6.64 % 5.54 % 6.36 % 5.69 % 6.48 % Operating return on avg. common equity (non-GAAP) (3) 7.11 5.70 6.50 5.75 6.96 Return on avg. tangible common equity (non-GAAP) (4) 8.27 6.93 7.98 7.15 8.18 Operating return on avg. tangible common equity (non-GAAP) (5) 8.77 7.03 8.05 7.12 8.67 Efficiency Measures Total noninterest expenses $ 38,498 $ 38,641 $ 37,594 $ 37,065 $ 37,845 FDIC special assessment - - - - (2,100 ) Merger expenses (863 ) (742 ) - - - Branch closing expenses (477 ) - - - - Amortization of core deposit intangibles (296 ) (297 ) (321 ) (321 ) (348 ) Operating noninterest expense $ 36,862 $ 37,602 $ 37,273 $ 36,744 $ 35,397 Net interest income (tax equivalent basis) $ 65,593 $ 61,710 $ 62,255 $ 61,111 $ 62,627 Noninterest income 3,744 4,737 4,399 3,848 4,209 Net losses (gains) on equity securities 307 (432 ) 209 (86 ) (557 ) Operating revenue $ 69,644 $ 66,015 $ 66,863 $ 64,873 $ 66,279 Operating efficiency ratio (non-GAAP) (6) 52.9 % 57.0 % 55.7 % 56.6 % 53.4 % Net Interest Margin Average interest-earning assets $ 9,117,201 $ 9,206,038 $ 9,210,050 $ 9,323,291 $ 9,172,165 Net interest income (tax equivalent basis) 65,593 61,710 62,255 61,111 62,627 Net interest margin (GAAP) 2.86 % 2.67 % 2.72 % 2.64 % 2.71 % (3) Operating net income available to common stockholders divided by average common equity. (4) Net income available to common stockholders, excluding amortization of intangible assets, divided by average tangible common equity. (5) Operating net income available to common stockholders, divided by average tangible common equity. (6) Operating noninterest expense divided by operating revenue. As of Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, 2024 2024 2024 2024 2023 Capital Ratios and Book Value per Share (dollars in thousands, except for per share data) Stockholders equity $ 1,241,704 $ 1,239,496 $ 1,224,227 $ 1,216,609 $ 1,216,620 Less: preferred stock (110,927 ) (110,927 ) (110,927 ) (110,927 ) (110,927 ) Common equity $ 1,130,777 $ 1,128,569 $ 1,113,300 $ 1,105,682 $ 1,105,693 Less: intangible assets (213,011 ) (213,307 ) (213,604 ) (213,925 ) (214,246 ) Tangible common equity $ 917,766 $ 915,262 $ 899,696 $ 891,757 $ 891,447 Total assets $ 9,879,600 $ 9,639,603 $ 9,723,731 $ 9,853,964 $ 9,855,603 Less: intangible assets (213,011 ) (213,307 ) (213,604 ) (213,925 ) (214,246 ) Tangible assets $ 9,666,589 $ 9,426,296 $ 9,510,127 $ 9,640,039 $ 9,641,357 Common shares outstanding 38,370,317 38,368,217 38,365,069 38,333,053 38,519,770 Common equity ratio (GAAP) 11.45 % 11.71 % 11.45 % 11.22 % 11.22 % Tangible common equity ratio (non-GAAP) (7) 9.49 9.71 9.46 9.25 9.25 Regulatory capital ratios (Bancorp): Leverage ratio 11.33 % 11.10 % 10.97 % 10.73 % 10.86 % Common equity Tier 1 risk-based ratio 10.97 11.07 10.90 10.70 10.62 Risk-based Tier 1 capital ratio 12.29 12.42 12.25 12.03 11.95 Risk-based total capital ratio 14.11 14.29 14.10 13.88 13.77 Regulatory capital ratios (Bank): Leverage ratio 11.66 % 11.43 % 11.29 % 11.10 % 11.20 % Common equity Tier 1 risk-based ratio 12.63 12.79 12.60 12.43 12.31 Risk-based Tier 1 capital ratio 12.63 12.79 12.60 12.43 12.31 Risk-based total capital ratio 13.60 13.77 13.58 13.41 13.28 Book value per share (GAAP) $ 29.47 $ 29.41 $ 29.02 $ 28.84 $ 28.70 Tangible book value per share (non-GAAP) (8) 23.92 23.85 23.45 23.26 23.14 Net Loan Charge-offs (Recoveries): Net loan charge-offs (recoveries): Charge-offs $ 3,363 $ 3,559 $ 3,595 $ 3,185 $ 8,960 Recoveries (29 ) (53 ) (324 ) (23 ) - Net loan charge-offs $ 3,334 $ 3,506 $ 3,271 $ 3,162 $ 8,960 Net loan charge-offs as a % of average loans receivable (annualized) 0.16 % 0.17 % 0.16 % 0.15 % 0.43 % Asset Quality Nonaccrual loans $ 57,310 $ 51,300 $ 46,026 $ 47,438 $ 52,524 Other real estate owned - - - - - Nonperforming assets $ 57,310 $ 51,300 $ 46,026 $ 47,438 $ 52,524 Allowance for credit losses - loans ("ACL") $ 82,685 $ 82,494 $ 82,077 $ 82,869 $ 81,974 Loans receivable 8,274,810 8,111,976 8,157,903 8,297,957 8,345,145 Nonaccrual loans as a % of loans receivable 0.69 % 0.63 % 0.56 % 0.57 % 0.63 % Nonperforming assets as a % of total assets 0.58 0.53 0.47 0.48 0.53 ACL as a % of loans receivable 1.00 1.02 1.01 1.00 0.98 ACL as a % of nonaccrual loans 144.3 160.8 178.3 174.7 156.1 (7) Tangible common equity divided by tangible assets (8) Tangible common equity divided by common shares outstanding at period-end CONNECTONE BANCORP, INC. NET INTEREST MARGIN ANALYSIS (dollars in thousands) For the Quarter Ended December 31, 2024 September 30, 2024 December 31, 2023 Average Average Average Interest-earning assets: Balance Interest Rate (7) Balance Interest Rate (7) Balance Interest Rate (7) Investment securities (1) (2) $ 736,131 $ 6,207 3.35 % $ 736,946 $ 6,157 3.32 % $ 723,433 $ 5,757 3.16 % Loans receivable and loans held-for-sale (2) (3) (4) 8,103,624 118,934 5.84 8,123,416 119,805 5.87 8,268,299 121,130 5.81 Federal funds sold and interest- bearing deposits with banks 238,957 2,815 4.69 304,009 4,056 5.31 134,168 1,963 5.80 Restricted investment in bank stock 38,489 959 9.91 41,667 1,048 10.01 46,265 912 7.82 Total interest-earning assets 9,117,201 128,915 5.63 9,206,038 131,066 5.66 9,172,165 129,762 5.61 Allowance for credit losses (83,938 ) (83,355 ) (88,861 ) Noninterest-earning assets 620,183 620,170 607,442 Total assets $ 9,653,446 $ 9,742,853 $ 9,690,746 Interest-bearing liabilities: Time deposits $ 2,478,163 27,374 4.39 $ 2,625,329 30,245 4.58 $ 2,495,091 26,486 4.21 Other interest-bearing deposits 3,838,575 31,194 3.23 3,747,427 33,540 3.56 3,747,093 32,846 3.48 Total interest-bearing deposits 6,316,738 58,568 3.69 6,372,756 63,785 3.98 6,242,184 59,332 3.77 Borrowings 648,300 3,430 2.10 717,586 4,239 2.35 823,123 6,467 3.12 Subordinated debentures, net 79,862 1,305 6.50 79,735 1,312 6.55 79,356 1,313 6.56 Finance lease 1,280 19 5.91 1,349 20 5.90 1,546 23 5.90 Total interest-bearing liabilities 7,046,180 63,322 3.58 7,171,426 69,356 3.85 7,146,209 67,135 3.73 Noninterest-bearing demand deposits 1,304,699 1,259,912 1,248,132 Other liabilities 60,829 76,791 98,016 Total noninterest-bearing liabilities 1,365,528 1,336,703 1,346,148 Stockholders' equity 1,241,738 1,234,724 1,198,389 Total liabilities and stockholders' equity $ 9,653,446 $ 9,742,853 $ 9,690,746 Net interest income (tax equivalent basis) 65,593 61,710 62,627 Net interest spread (5) 2.05 % 1.82 % 1.89 % Net interest margin (6) 2.86 % 2.67 % 2.71 % Tax equivalent adjustment (882 ) (823 ) (805 ) Net interest income $ 64,711 $ 60,887 $ 61,822 (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. 
