ConnectOne Bancorp, Inc. Reports Third Quarter 2025 Results

Credit Trends Remain Solid

Net Interest Margin Widening as Expected

Declares Common and Preferred Dividends

ENGLEWOOD CLIFFS, N.J., Oct. 30, 2025 (GLOBE NEWSWIRE) -- ConnectOne Bancorp, Inc. (Nasdaq: CNOB) (the “Company” or “ConnectOne”), parent company of ConnectOne Bank (the “Bank”), today reported net income (loss) available to common stockholders of $39.5 million for the third quarter of 2025 compared with $(21.8) million for the second quarter of 2025 and $15.7 million for the third quarter of 2024. Diluted earnings (loss) per share were $0.78 for the third quarter of 2025 compared with $(0.52) for the second quarter of 2025 and $0.41 for the third quarter of 2024. On June 1, 2025, the merger with The First of Long Island Corporation (“FLIC”) was completed, thus operating results for the second quarter include one month of activity from FLIC. Prior quarters include only the operations of ConnectOne. Return on average assets was 1.16%, (0.73)% and 0.70% for the three months ended September 30, 2025, June 30, 2025 and September 30, 2024, respectively. Return on average tangible common equity was 14.74%, (8.42)% and 6.93% for the three months ended September 30, 2025, June 30, 2025 and September 30, 2024, respectively.

Operating net income available to common stockholders was $35.5 million for the third quarter of 2025, $23.1 million for the second quarter of 2025 and $16.1 million for the third quarter of 2024. Operating diluted earnings per share were $0.70 for the third quarter of 2025, $0.55 for the second quarter of 2025 and $0.42 for the third quarter of 2024. The third quarter of 2025 results included several nonrecurring items that contributed to the overall increase in net income available to common stockholders and diluted EPS. Notably, these items included a $6.6 million Employee Retention Tax Credit (“ERTC”) and a $3.5 million defined benefit pension plan curtailment gain, which were partially offset by $2.9 million in merger and restructuring expenses. See additional discussion of these nonrecurring items in the “Operating Results” section below. Operating return on average assets was 1.05%, 0.89% and 0.72% for the three months ended September 30, 2025, June 30, 2025 and September 30, 2024, respectively. Operating return on average tangible common equity was 12.55%, 9.29% and 7.03% for the three months ended September 30, 2025, June 30, 2025 and September 30, 2024, respectively. See supplemental tables for a complete reconciliation of GAAP earnings to operating earnings, and other non-GAAP measures.

The increase in net income available to common stockholders and diluted earnings per share during the third quarter of 2025 when compared to the second quarter of 2025 was primarily due to a $30.2 million reduction in the provision for credit losses. The decrease was primarily due to an initial provision of $27.4 million related to the merger with FLIC that was recorded during the second quarter of 2025. Also contributing to the increase in earnings was a $23.1 million increase in net interest income, a $15.0 million decrease in noninterest expenses and a $14.2 million increase in noninterest income. These items were partially offset by an increase in income tax expense of $21.3 million. The increase in net income available to common stockholders and diluted earnings per share during the third quarter of 2025 when compared to the third quarter of 2024 was primarily due to a $41.1 million increase in net interest income and a $14.7 million increase in noninterest income. These increases were partially offset by an increase in noninterest expense of $20.0 million, an increase in income tax expense of $10.3 million, and an increase in the provision for credit losses of $1.7 million.

“ConnectOne’s strong third quarter performance highlights the team’s disciplined execution and commitment to deepening client relationships while delivering on the Bank’s strategic objectives,” commented Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer. “With our first full quarter post-merger, we’re operating seamlessly as one organization, realizing the positive financial benefits of the combination and expanded footprint.”

“Supported by solid momentum across the business, our loan and deposit pipeline is healthy, further propelled by our expansion on Long Island. Our third quarter client deposits increased at an annualized rate of 4.0% since June 30, 2025 while loans increased over 5.0%.” Mr. Sorrentino added, “The merger has also significantly improved our loan and deposit mix, net interest margin, and profitability ratios. During the quarter, our net interest margin expanded five basis points sequentially to 3.11% while our spot margin exceeded 3.20% at quarter-end. Additionally, pre-provision net operating revenue increased to 1.61% from 1.52% last quarter and from 1.13% year-over-year.”

“Our credit quality remains sound and stable, with nonperforming assets at just 0.28% and annualized net charge-offs below 0.20%. Noninterest income continues to build, operating efficiency is improving, and capital ratios remain strong with the Company’s total risk-based capital ratio at 13.88% and a tangible common equity ratio of 8.36%.”

Mr. Sorrentino concluded, “To date, we’ve built a strong, high-performing franchise. Looking ahead, we’re maintaining a clear focus on our strategic priorities, driving profitable growth,  and creating sustainable long-term value for shareholders.”

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 December 1, 2025, to common stockholders of record on November 14, 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 December 1, 2025 to holders of record on November 14, 2025.

Operating Results

Fully taxable equivalent net interest income for the third quarter of 2025 was $103.2 million, an increase of $23.3 million, or 29.3%, from the second quarter of 2025. The increase from the second quarter of 2025 was primarily due to a 5 basis-point widening of the net interest margin to 3.11% from 3.06%, and a 25.8% increase in average interest earning assets. The increase in average interest-earning assets was primarily due to the merger with FLIC. The margin benefited from a 12 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits. The decrease in average costs of deposits was partially offset by increases in the cost of subordinated debentures and borrowings.  The Company redeemed $75 million of subordinated debentures with a rate of 9.92% on September 15, 2025. The net interest margin for the third quarter was negatively impacted by the outstanding subordinated debentures and by excess cash balances, due to merger-related re-positioning.

Fully taxable equivalent net interest income for the third quarter of 2025 increased $41.4 million, or 67.2%, from the third quarter of 2024, due to a 44 basis-point widening of the net interest margin to 3.11% from 2.67%, and a 43.1% increase in average interest earning assets. The increase in average interest-earning assets was primarily due to the merger with FLIC. The margin benefited from a 70 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits, partially offset by an increase in cost of subordinated debt.

Noninterest income was $19.4 million in the third quarter of 2025, $5.2 million in the second quarter of 2025 and $4.7 million in the third quarter of 2024. During the third quarter of 2025, the Company realized a $6.6 million one-time benefit related to the ERTC, a federal program under the CARES Act intended to encourage employee retention during the COVID19 pandemic. Additionally, the Company also recognized a $3.5 million defined benefit pension plan curtailment gain. The gain resulted from freezing the FLIC defined benefit pension plan on September 30, 2025. Excluding the impact of these two non-recurring items, noninterest income increased $4.1 million during the third quarter of 2025 compared to the linked quarter. The increases were due to a $1.3 million increase in net gains on equity securities, a $1.3 million increase in deposit, loan and other income, a $0.8 million increase in BOLI income and a $0.7 million increase in net gains on sale of loans held-for-sale (primarily SBA loans). The increases in deposit, loan and other income and BOLI income were primarily due to the merger with FLIC. Excluding the aforementioned ERTC and defined pension plan curtailment gain, noninterest income increased by $4.6 million during the third quarter compared to the third quarter of 2024. The increases were due to a $2.0 million increase in deposit, loan and other income, a $1.2 million increase in net gains on equity securities, a $0.8 million increase in BOLI income and a $0.5 million increase in net gains on sale of loans held-for-sale (primarily SBA loans). The increases in deposit, loan and other income and BOLI income were primarily due to the merger with FLIC.

Noninterest expenses were $58.7 million for the third quarter of 2025, $73.6 million for the second quarter of 2025 and $38.6 million for the third quarter of 2024. The decrease of $15.0 million during the third quarter of 2025 when compared to the second quarter of 2025 was primarily due to a $28.8 million decrease in merger expenses, which was partially offset by a $7.2 million increase in salaries and employee benefits, a $1.9 million increase in amortization of core deposit intangibles, a $1.6 million increase in occupancy and equipment expenses and a $1.0 million restructuring and exit charge. The $20.0 million increase in noninterest expenses for the third quarter of 2025 when compared to the third quarter of 2024 was primarily due to a $9.4 million increase in salaries and employee benefits, a $2.9 million increase in amortization of core deposit intangibles, a $2.2 million increase in occupancy and equipment expenses and a $1.2 million increase in merger expenses. The variances from the third quarter of 2025 to the third quarter of 2024 were primarily due to the merger with FLIC.

Income tax expense (benefit) was $16.3 million for the third quarter of 2025, $(5.0) million for the second quarter of 2025 and $6.0 million for the third quarter of 2024. The effective tax rates were 28.4%, (19.7)% and 26.0% for the third quarter of 2025, second quarter of 2025 and third quarter of 2024, respectively. The variances in expense and rates for these periods were primarily due to the merger with FLIC. For 2026, our effective tax rate is estimated to be approximately 28.0%, reflecting statutory rates for metropolitan New York City, book/tax permanent differences, organizational structure and investment tax credits.

Asset Quality

The provision for credit losses was $5.5 million for the third quarter of 2025, $35.7 million for the second quarter of 2025 and $3.8 million for the third 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 $39.7 million as of September 30, 2025, $57.3 million as of December 31, 2024 and $51.3 million as of September 30, 2024. The decrease in nonaccrual loans was primarily due to the work out of three CRE relationships totaling $22.0 million. Nonperforming assets as a percentage of total assets were 0.28% as of September 30, 2025, 0.58% as of December 31, 2024 and 0.53% as of September 30, 2024. The ratio of nonaccrual loans to loans receivable was 0.35%, 0.69% and 0.63%, as of September 30, 2025, December 31, 2024 and September 30, 2024, respectively. The annualized net loan charge-offs ratio was 0.18% for the third quarter of 2025, 0.22% for the second quarter of 2025 and 0.17% for the third quarter of 2024.

The allowance for credit losses represented 1.38%, 1.00% and 1.02% of loans receivable as of September 30, 2025, December 31, 2024, and September 30, 2024, respectively. The allowance for credit losses related to the loan portfolio increased $73.8 million to $156.5 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 394.5% as of September 30, 2025, 144.3% as of December 31, 2024 and 160.8% as of September 30, 2024. Criticized and classified loans as a percentage of loans receivable was 2.59% as of September 30, 2025, down from 2.68% as of December 31, 2024 and up from 2.23% as of September 30, 2024. Loans delinquent 30 to 89 days were 0.08% of loans receivable as of September 30, 2025, up from 0.04% as of December 31, 2024 and down from 0.16% as of September 30, 2024.

Selected Balance Sheet Items

The Company’s total assets were $14.0 billion as of September 30, 2025, compared to $9.9 billion as of December 31, 2024. Loans receivable were $11.3 billion as of September 30, 2025 and $8.3 billion as of December 31, 2024. Total deposits were $11.4 billion as of September 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 September 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, an increase in retained earnings of $13.5 million, and a decrease in the accumulated other comprehensive loss of $10.7 million. As of September 30, 2025, the Company’s tangible common equity ratio and tangible book value per share were 8.36% and $22.85, respectively, compared to 9.49% and $23.92, respectively, as of December 31, 2024. Total goodwill and other intangible assets were $278.7 million as of September 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.

Third Quarter 2025 Results Conference Call

Management will also host a conference call and audio webcast at 10:00 a.m. ET on October 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 6150571. 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, October 30, 2025 and ending on Thursday, November 6, 2025 by dialing 1 (609) 800-9909, access code 6150571. 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

CONNECTONE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(in thousands)

CONNECTONE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except for per share data)

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