ConnectOne Bancorp, Inc. Reports Second Quarter 2025 Results; Declares Common and Preferred Dividends

ENGLEWOOD CLIFFS, N.J., July 29, 2025 (GLOBE NEWSWIRE) -- ConnectOne Bancorp, Inc. (Nasdaq: CNOB) (the “Company” or “ConnectOne”), parent company of ConnectOne Bank (the “Bank”), today reported a net loss available to common stockholders of $(21.8) million for the second quarter of 2025 compared with net income available to common stockholders of $18.7 million for the first quarter of 2025 and $17.5 million for the second quarter of 2024. Diluted earnings per share were $(0.52) for the second quarter of 2025 compared with $0.49 for the first quarter of 2025 and $0.46 for the second quarter of 2024. On June 1, 2025, the merger with The First of Long Island Corporation (“FLIC”) was completed. The full quarter results of the combined entity include one month of activity from FLIC. Historical financial information includes only the operations of ConnectOne, pre-merger. Return on average assets was (0.73)%, 0.84% and 0.79% for the three months ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively. Return on average tangible common equity was (8.42)%, 8.25% and 7.98% for the three months ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively.

Operating net income available to common stockholders, which excludes non-operating items (primarily merger-related expenses and an initial provision for credit losses totaling $58.1 million, pre-tax, in the aggregate), was $23.1 million for the second quarter of 2025, $19.7 million for the first quarter of 2025 and $17.9 million for the second quarter of 2024. Operating diluted earnings per share were $0.55 for the second quarter of 2025, $0.51 for the first quarter of 2025 and $0.47 for the second quarter of 2024. Operating return on average assets was 0.89%, 0.88% and 0.80% for the three months ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively. Operating return on average tangible common equity was 9.29%, 8.59% and 8.05% for the three months ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively. See supplemental tables for a complete reconciliation of GAAP earnings to operating earnings, and other non-GAAP measures.

The decrease in net income available to common stockholders and diluted earnings per share during the second quarter of 2025 when compared to the first quarter of 2025 was primarily due to a $34.3 million increase in noninterest expenses, which included $30.7 million in merger expenses and a $32.2 million increase in provision for credit losses. The provision for credit losses during the second quarter of 2025 included $27.4 million in an initial provision for credit losses related to the merger with FLIC. The increase in noninterest expenses and provision for credit losses was partially offset by a $13.1 million increase in net interest income, a $0.7 million increase in noninterest income and a $12.1 million decrease in income tax expenses. The decrease in net income available to common stockholders and diluted earnings per share during the second quarter of 2025 when compared to the second quarter of 2024 was primarily due to a $36.1 million increase in noninterest expenses, which included the aforementioned $30.7 million in merger expenses and a $33.2 million increase in provision for credit losses, which included the aforementioned $27.4 million initial provision for credit losses related to the merger with FLIC. These increases were partially offset by a $17.4 million increase in net interest income, a $0.8 million increase in noninterest income and a $11.7 decrease in income tax expenses.

“ConnectOne’s solid second quarter reflects continued momentum in executing our strategy and the integration of the largest merger in our Company's history,” commented Frank Sorrentino, Chairman and Chief Executive Officer of ConnectOne. “Following completion of the merger on June 1st, we immediately opened as a unified organization with one team, and fully deployed the ConnectOne brand across our new markets. This transformational merger establishes ConnectOne as a $14 billion regional financial institution with 61 locations and more than 700 banking professionals.”

“The merger and the addition of our new team members continues to exceed expectations. Our core systems conversion was successfully completed, and our client-centric execution has resulted in strong client retention. We’ve also seen steady momentum in new client onboarding, reinforcing the complementary nature of both organizations.” Mr. Sorrentino added, “Operationally, the merger has significantly improved our loan and deposit mix, net interest margin, credit metrics, and profitability ratios. At June 30, 2025 total loans were $11.2 billion, deposits totaled $11.3 billion, and our market capitalization now exceeds $1.2 billion. The current loan-to-deposit ratio of 99% and noninterest-bearing demand composition exceeding 21% reflect both the merger and our relationship-based approach.”

“I’m incredibly proud of how seamlessly our teams have come together as one organization, with a shared commitment to client success and operational excellence. We believe these early results reflect the compelling value of the transaction and reinforce our confidence in the long-term potential of the combined franchise,” Mr. Sorrentino concluded.

Dividend Declarations

The Company announced that its Board of Directors declared a cash dividend on both its common stock and its outstanding preferred stock. A cash dividend on common stock of $0.18 per share will be paid on September 2, 2025, to common stockholders of record on August 15, 2025. A dividend of $0.328125 per depositary share, representing a 1/40^th interest in a share of the Company’s 5.25% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, will also be paid on September 2, 2025 to holders of record on August 15, 2025.

Operating Results

Fully taxable equivalent net interest income for the second quarter of 2025 was $79.8 million, an increase of $13.2 million, or 19.9%, from the first quarter of 2025, due to a 13 basis-point widening of the net interest margin to 3.06% from 2.93%, and a 13.5% increase in average interest earning assets. The increase in average interest-earning assets was primarily due to the merger with FLIC. Accretion of purchase accounting adjustments of $3.3 million contributed approximately 13 basis points to the net interest margin during the second quarter of 2025. The margin also benefited from an 11 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits, partially offset by higher average cash balances and the impact of a $200 million long-term subordinated debt issuance, with a rate of 8.125%, that was consummated on May 15, 2025.

Fully taxable equivalent net interest income for the second quarter of 2025 increased $17.6 million, or 28.2%, from the second quarter of 2024, due to a 34 basis-point widening of the net interest margin to 3.06% from 2.72%, and a 13.7% increase in average interest earning assets. The increase in average interest-earning assets was primarily due to the merger with FLIC. The aforementioned accretion of purchase accounting adjustments contributed approximately 13 basis points to the net interest margin during the second quarter of 2025. The margin also benefited from a 56 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits, partially offset by higher average cash balances and the subordinated debt issuance discussed above.

Noninterest income was $5.2 million in the second quarter of 2025, $4.5 million in the first quarter of 2025 and $4.4 million in the second quarter of 2024. The $0.7 million increase in noninterest income for the second quarter of 2025 when compared to the first quarter of 2025 was primarily due to a $0.6 million increase in deposit, loan and other income and a $0.5 million increase in BOLI income (partially resulting from 1035 exchanges), partially offset by a $0.2 million decrease in net gains on sale of loans held-for-sale and a $0.2 million decrease in net gains on equity securities. The merger with FLIC primarily contributed to all of the aforementioned increases. The $0.8 million increase in noninterest income for the second quarter of 2025 when compared to the second quarter of 2024 was primarily due to a $0.9 million increase in deposit, loan and other income, a $0.6 million increase in net gains on equity securities and a $0.4 million increase in BOLI income, partially offset by a $1.1 million decrease in net gains on sale of loans held-for-sale.

Noninterest expenses were $73.6 million for the second quarter of 2025, $39.3 million for the first quarter of 2025 and $37.6 million for the second quarter of 2024. The increase of $34.3 million during the second quarter of 2025 when compared to the first quarter of 2025 was primarily due to a $29.4 million increase in merger expenses, a $2.7 million increase in salaries and employee benefits, a $1.0 million increase in amortization of core deposit intangibles and a $0.8 million increase in occupancy and equipment. The $36.1 million increase in noninterest expenses for the second quarter of 2025 when compared to the second quarter of 2024 was primarily due to a $30.7 million increase in merger expenses, a $2.5 million increase in salaries and employee benefits, a $0.9 million increase in amortization of core deposit intangibles, a $0.7 million increase in professional and consulting expenses, a $0.6 million increase in occupancy and equipment expenses and a $0.6 million increase in information technology and communications expenses, partially offset by a $0.4 decrease in other expenses. The increases from the first quarter of 2025 and the second quarter of 2024 were primarily due to the merger with FLIC.

There was a net income tax benefit of $5.0 million during the second quarter of 2025 compared to income tax expense of $7.2 million during the first quarter of 2025 and $6.7 million during the second quarter of 2024. Included in the second quarter of 2025 was an estimated $3.0 million state tax liability resulting from intercompany dividends. The overall decrease in income tax expense when compared to the first quarter of 2025 and the second quarter of 2024 was primarily due to lower taxable income that resulted from the additional expenses due to the FLIC merger.

Asset Quality

The provision for credit losses was $35.7 million for the second quarter of 2025, $3.5 million for the first quarter of 2025 and $2.5 million for the second quarter of 2024. Included in the provision for the second quarter of 2025 was a $27.4 million initial provision for credit losses related to the FLIC merger. In each of the quarters presented, the provision for credit losses reflected net portfolio growth, charges related to individually evaluated loans, and changing macroeconomic forecasts and conditions.

Nonperforming assets, which includes nonaccrual loans and other real estate owned (the Bank had no other real estate owned during the periods reported), were $39.2 million as of June 30, 2025, $57.3 million as of December 31, 2024 and $46.0 million as of June 30, 2024. The decrease in nonaccruals was primarily due to the work out of three CRE relationships totaling $22.0 million, partially offset by $4.3 million in loans placed into nonaccrual status.   Nonperforming assets as a percentage of total assets were 0.28% as of June 30, 2025, 0.58% as of December 31, 2024 and 0.47% as of June 30, 2024. The ratio of nonaccrual loans to loans receivable was 0.35%, 0.69% and 0.56%, as of June 30, 2025, December 31, 2024 and June 30, 2024, respectively. The annualized net loan charge-offs ratio was 0.22% for the second quarter of 2025, 0.17% for the first quarter of 2025 and 0.16% for the second quarter of 2024.

The allowance for credit losses represented 1.40%, 1.00% and 1.01% of loans receivable as of June 30, 2025, December 31, 2024 and June 30, 2024, respectively. The allowance for credit losses related to the loan portfolio increased $73.5 million to $156.2 million, compared to $82.7 million as of December 31, 2024. The increase was primarily due to the FLIC merger: $43.3 million of allowance recorded through goodwill related to the purchased credit-deteriorated loans and $27.4 million reflecting the initial provision for credit losses. The allowance for credit losses as a percentage of nonaccrual loans was 398.2% as of June 30, 2025, 144.3% as of December 31, 2024 and 178.3% as of June 30, 2024. Criticized and classified loans as a percentage of loans receivable was 2.44% as of June 30, 2025, down from 2.68% as of December 31, 2024 and up from 1.50% as of June 30, 2024.   Loans delinquent 30 to 89 days were 0.13% of loans receivable as of June 30, 2025, up from 0.04% as of December 31, 2024 and up from 0.11% as of June 30, 2024.

Selected Balance Sheet Items

As of June 30, 2025, the balance sheet reflected the merger with FLIC. The Company’s total assets were $13.9 billion as of June 30, 2025, compared to $9.9 billion as of December 31, 2024. Loans receivable were $11.2 billion as of June 30, 2025 and $8.3 billion as of December 31, 2024. Total deposits were $11.3 billion as of June 30, 2025 and $7.8 billion as of December 31, 2024. The increase in total assets, loans receivable and total deposits were primarily due to the merger with FLIC.

The Company’s total stockholders’ equity was $1.5 billion as of June 30, 2025 and $1.2 billion as of December 31, 2024. The increase in total stockholders’ equity was primarily due to an increase in common stock of $270.8 million which represented the fair value stock consideration issued for the FLIC merger, partially offset by a $16.9 million decrease in retained earnings. As of June 30, 2025, the Company’s tangible common equity ratio and tangible book value per share were 8.09% and $21.95, respectively, compared to 9.49% and $23.92, respectively, as of December 31, 2024. Total goodwill and other intangible assets were $281.9 million as of June 30, 2025, and $213.0 million as of December 31, 2024.

Use of Non-GAAP Financial Measures

In addition to the results presented in accordance with Generally Accepted Accounting Principles ("GAAP"), ConnectOne routinely supplements its evaluation with an analysis of certain non-GAAP measures. ConnectOne believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors in understanding our operating performance and trends. These non-GAAP measures have inherent limitations and are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for an analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of non-GAAP financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

Second Quarter 2025 Results Conference Call

Management will also host a conference call and audio webcast at 10:00 a.m. ET on July 29, 2025 to review the Company's financial performance and operating results. The conference call dial-in number is 1 (646) 307-1963, access code 7519286. 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 Tuesday, July 29, 2025 and ending on Tuesday, August 5, 2025 by dialing 1 (609) 800-9909, access code 7519286. 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.com

Media Contact:
Shannan Weeks 
MikeWorldWide
732.299.7890; sweeks@mww.com