ENGLEWOOD CLIFFS, N.J., July 25, 2019 (GLOBE NEWSWIRE) -- ConnectOne Bancorp, Inc. (Nasdaq: CNOB) (the “Company” or “ConnectOne”), parent company of ConnectOne Bank (the “Bank”), today reported net income of $19.3 million for the second quarter of 2019 compared with $11.6 million for the first quarter of 2019 and $17.5 million for the second quarter of 2018.  Diluted earnings per share were $0.54 for the second quarter of 2019 compared with $0.33 in the first quarter of 2019 and $0.54 in the second quarter of 2018. 

Adjusted net income amounted to $20.2 million, or $0.57 per diluted share, for the second quarter of 2019; $17.1 million, or $0.49 per diluted share, for the first quarter of 2019; and $17.5 million, or $0.54 per diluted share, for the second quarter of 2018.  Adjusted net income for the first and second quarters of 2019 excludes $5.6 million and $0.3 million, respectively, in after-tax merger-related expenses.  Adjusted net income for the second quarter 2019 also excludes an after-tax $0.7 million charge on the prepayment of higher-cost borrowings.  See supplemental tables for a complete reconciliation of GAAP earnings to adjusted earnings.

Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer stated, “ConnectOne Bank’s second quarter results were highlighted by continued organic loan growth and solid asset quality.  Total loans grew by nearly 10% sequentially on an annualized basis, with a majority of our growth attributable to higher yielding segments, while multi-family and other CRE lending were essentially flat.  Our net interest margin contracted from the sequential quarter by 4 basis points (8 basis points, adjusted), negatively impacted by several factors including rising costs of funding, a flatter yield curve, prepayments in mortgage backed securities, and slightly lower prepayment fees.  The margin outlook remains challenging. However, we are beginning to see a reduction in deposit costs as well as a benefit from our improved loan mix. We also expect to benefit from a recent repurchase of some of our FHLB borrowings.”

“Our performance metrics continue to reflect across-the-board financial strength,” Mr. Sorrentino added. “Return on assets was about 1.3%, return on tangible common equity was 14.8% and, on an adjusted basis, 15.5%, tangible book value per share increased by $0.34 to $15.01, and our efficiency ratio was 41.4%. Our credit quality remains sound. During the first quarter, as previously reported, we had a charge relating to a single loan secured by a commercial office building. Reflecting our philosophy of addressing issues expeditiously and to build timely resolutions, that situation was resolved favorably during the second quarter – the asset was foreclosed on and sold – resulting in a slight recovery. Additionally, in June, we finalized our previously announced acquisition of BoeFly.  An online business lending marketplace, BoeFly helps to connect small- to medium-sized businesses with professional loan brokers and lenders across the United States.  We already have experienced a strong cultural alignment with their FinTech-focused entrepreneurial team, and remain committed to supporting and enhancing the digital lending platform which is expected to augment fee income and generate profitable SBA lending opportunities.” 

Operating Results

Fully taxable equivalent net interest income for the second quarter of 2019 was $46.1 million, an increase of $0.6 million, or 1.2%, from the first quarter of 2019, resulting primarily from an 1.5% increase in average interest-earning assets, offset by a 4 basis-point contraction of the net interest margin to 3.30% from 3.34%.  Included in net interest income were purchase accounting adjustments of $1.7 million during the second quarter of 2019 and $1.2 million during the first quarter of 2019.  Excluding these purchase accounting adjustments, the adjusted net interest margin was 3.17% for the second quarter of 2019 and 3.25% for the first quarter of 2019.  The net interest margin contracted primarily due to higher funding costs and lower yields on securities, partially offset by higher yields on loans.

Noninterest income increased to $1.9 million in the second quarter of 2019 from $1.7 million in the first quarter of 2019 and $1.3 million in the second quarter of 2018.  Noninterest income consists of income on bank owned life insurance, net gains on sales of loans held-for-sale, net gains (losses) on equity securities and deposit service fees, loan fees, and other income. 

Noninterest expenses totaled $21.6 million for second quarter of 2019, $28.1 million for the first quarter of 2019 and $17.1 million for the second quarter of 2018.  Included in noninterest expenses for the second and first quarters of 2019 were merger-related expenses of $0.3 million and $7.6 million, respectively.  Also included in noninterest expenses for the second quarter of 2019 is $1.0 million in loss on extinguishment of debt.  Excluding merger-related expenses and loss on extinguishment of debt, noninterest expenses decreased by $0.3 million from the first quarter of 2019 reflecting stable staff levels and reduced loan workout expense.

Income tax expense was $5.5 million for the second quarter of 2019, $2.5 million for the first quarter of 2019 and $4.6 million for the second quarter of 2018.  The effective tax rates for the second quarter of 2019, first quarter of 2019 and second quarter of 2018 were 22.2%, 17.6% and 20.8%, respectively. The increase in the effective tax rate for the current quarter from the sequential quarter was primarily due to a higher proportion of taxable income.

Asset Quality

The provision for loan losses was $1.1 million for the second quarter of 2019, $4.5 million for the first quarter of 2019 and $1.1 million for the second quarter of 2018. The first quarter provision included $3.0 million related to one impaired commercial office building credit.

Nonperforming assets, which includes nonaccrual loans and other real estate owned, were $49.9 million at June 30, 2019, $51.9 million at December 31, 2018 and $50.8 million at June 30, 2018. Included in nonperforming assets were taxi medallion loans totaling $26.5 million at June 30, 2019, $28.0 million at December 31, 2018 and $28.9 million at June 30, 2018.  Nonperforming assets (including taxi medallion loans) as a percentage of total assets were 0.82% at June 30, 2019, 0.95% at December 31, 2018 and 0.96% at June 30, 2018.  Excluding the taxi medallion loans, nonaccrual loans were $23.4 million at June 30, 2019, $23.8 million at December 31, 2018 and $20.8 million at June 30, 2018, representing a ratio of nonaccrual loans (excluding taxi medallion loans) to loans receivable of 0.46%, 0.53% and 0.48%, respectively. Nonaccrual loans at June 30, 2019 included a single $4.7 million credit that was paid off in full early in the third quarter. The annualized net loan charge-off ratio was 0.02% for the second quarter of 2019, 0.08% for the fourth quarter of 2018 and 0.00% for the second quarter of 2018. The allowance for loan losses represented 0.74%, 0.77%, and 0.77% of loans receivable as of June 30, 2019, December 31, 2018 and June 30, 2018, respectively.  The allowance for loan losses as a percentage of nonaccrual loans, excluding taxi medallion loans, was 161.0% as of June 30, 2019, 146.8% as of December 31, 2018 and 161.7% as of June 30, 2018.

Selected Balance Sheet Items

At June 30, 2019, the balance sheet reflected the acquisition of Greater Hudson Bank.  The Company’s total assets were $6.1 billion, an increase of $647 million from December 31, 2018.  Total loans were $5.1 billion, an increase of $549 million from December 31, 2018.  The Company’s stockholders’ equity was $699 million at June 30, 2019, an increase of $85 million from December 31, 2018. The increase in stockholders’ equity was primarily attributable to the acquisition of Greater Hudson Bank, which increased capital by $56 million.  As of June 30, 2019, the Company’s tangible common equity ratio and tangible book value per share were 8.93% and $15.01, respectively.  As of December 31, 2018, the tangible common equity ratio and tangible book value per share were 8.77% and $14.42, respectively. Tangible book value per share increased $0.34, or 2.3%, from the sequential quarter.  Total goodwill and other intangible assets were approximately $169 million as of June 30, 2019 and $148 million and December 31, 2018.

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/adjusted financial measures including an adjusted net income available to common shareholders. 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/adjusted financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

Second Quarter 2019 Results Conference Call

Management will also host a conference call and audio webcast at 10:00 a.m. ET on July 25, 2019 to review the Company's financial performance and operating results. The conference call dial-in number is 323-794-2590, access code 4930630. 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, July 25, 2019 and ending on Thursday, August 1, 2019 by dialing 719-457-0820, access code 4930630. 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., through its subsidiary, ConnectOne Bank offers a full suite of both commercial and consumer banking and lending products and services through its 29 banking offices located in New York and New Jersey.   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.

Forward-Looking Statements

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 Securities 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 and accounting principles and guidelines. 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
Executive VP & CFO
201.816.4474; bburns@cnob.com

Media Contact:
Thomas Walter, MWWPR
202.600.4532; twalter@mww.com 

CONNECTONE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(in thousands)
	June 30,				December 31,				June 30,
		2019				2018				2018
	(unaudited)								(unaudited)
ASSETS
Cash and due from banks	$	51,950			$	39,161			$	56,931
Interest-bearing deposits with banks		133,700				133,205				119,238
Cash and cash equivalents		185,650				172,366				176,169
Securities available-for-sale		441,911				412,034				400,015
Equity securities		11,152				11,460				11,559
Loans receivable		5,090,492				4,541,092				4,360,854
Less: Allowance for loan losses		37,698				34,954				33,594
Net loans receivable		5,052,794				4,506,138				4,327,260
Investment in restricted stock, at cost		31,767				31,136				32,441
Bank premises and equipment, net		19,781				19,062				20,389
Accrued interest receivable		21,272				18,214				16,754
Bank owned life insurance		126,132				113,820				112,275
Right of use operating lease assets		16,397				-				-
Other real estate owned		-				-				1,076
Goodwill		162,574				145,909				145,909
Core deposit intangibles		6,140				1,737				2,027
Other assets		33,496				30,216				29,494
Total assets	$	6,109,066			$	5,462,092			$	5,275,368
LIABILITIES
Deposits:
Noninterest-bearing	$	813,635			$	768,584			$	765,150
Interest-bearing		3,827,508				3,323,508				3,140,260
Total deposits		4,641,143				4,092,092				3,905,410
Borrowings		597,317				600,001				628,995
Operating lease liabilities		17,787				-				-
Subordinated debentures (net of $1,435, $1,599 and $1,763 in debt issuance costs)		128,720				128,556				128,392
Other liabilities		24,875				27,516				34,014
Total liabilities		5,409,842				4,848,165				4,696,811
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock		471,071				412,546				412,546
Additional paid-in capital		17,277				15,542				13,756
Retained earnings		235,649				211,345				177,619
Treasury stock		(21,892	)			(16,717	)			(16,717	)
Accumulated other comprehensive loss		(2,881	)			(8,789	)			(8,647	)
Total stockholders' equity		699,224				613,927				578,557
Total liabilities and stockholders' equity	$	6,109,066			$	5,462,092			$	5,275,368

 

CONNECTONE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except for per share data)
	Three Months Ended								Six Months Ended
	06/30/19				06/30/18				06/30/19				06/30/18
Interest income
Interest and fees on loans	$	63,524			$	49,494			$	123,850			$	96,519
Interest and dividends on investment securities:
Taxable		2,573				2,150				5,515				4,037
Tax-exempt		1,081				778				2,208				1,592
Dividends		410				502				867				987
Interest on federal funds sold and other short-term investments		290				160				647				424
Total interest income		67,878				53,084				133,087				103,559
Interest expense
Deposits		16,596				9,169				31,947				16,857
Borrowings		5,752				4,970				10,658				9,610
Total interest expense		22,348				14,139				42,605				26,467
Net interest income		45,530				38,945				90,482				77,092
Provision for loan losses		1,100				1,100				5,600				18,900
Net interest income after provision for loan losses		44,430				37,845				84,882				58,192
Noninterest income
Income on bank owned life insurance		833				775				1,655				1,549
Net gains on sales of loans held-for-sale		46				12				65				29
Deposit, loan and other income		914				601				1,700				1,217
Net gains (losses) on equity securities		158				(47	)			261				(168	)
Net losses on sales of securities available-for-sale		(9	)			-				(1	)			-
Total noninterest income		1,942				1,341				3,680				2,627
Noninterest expenses
Salaries and employee benefits		11,822				9,736				23,805				19,415
Occupancy and equipment		2,357				2,031				4,852				4,174
FDIC insurance		825				765				1,580				1,615
Professional and consulting		1,370				825				2,579				1,548
Marketing and advertising		397				337				607				544
Data processing		1,139				1,091				2,294				2,239
Merger expenses		331				-				7,893				-
Loss on extinguishment of debt		1,047				-				1,047				-
Amortization of core deposit intangibles		364				169				728				338
Other expenses		1,938				2,107				4,267				4,126
Total noninterest expenses		21,590				17,061				49,652				33,999
Income before income tax expense		24,782				22,125				38,910				26,820
Income tax expense		5,501				4,598				7,994				5,042
Net income	$	19,281			$	17,527			$	30,916			$	21,778
Earnings per common share:
Basic	$	0.55			$	0.54			$	0.88			$	0.68
Diluted		0.54				0.54				0.87				0.67
Dividends per common share	$	0.090			$	0.075			$	0.180			$	0.150

 

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. AND SUBSIDIARIES
SUPPLEMENTAL GAAP AND NON-GAAP FINANCIAL MEASURES
	As of
	June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,
		2019				2019				2018				2018				2018
Selected Financial Data	(dollars in thousands)
Total assets	$	6,109,066			$	6,048,976			$	5,462,092			$	5,368,641			$	5,275,368
Loans receivable:
Commercial	$	1,018,951			$	1,012,930			$	925,229			$	886,212			$	808,604
Commercial real estate		1,555,542				1,483,852				1,279,502				1,282,766				1,282,426
Multifamily		1,589,340				1,608,613				1,562,195				1,504,134				1,480,243
Commercial construction		602,213				548,039				465,389				494,206				498,607
Residential		326,661				319,214				309,991				295,948				288,449
Consumer		2,041				4,157				2,593				2,508				5,637
Gross loans		5,094,748				4,976,805				4,544,899				4,465,774				4,363,966
Unearned net origination fees		(4,256	)			(4,154	)			(3,807	)			(3,287	)			(3,112	)
Loans receivable		5,090,492				4,972,651				4,541,092				4,462,487				4,360,854
Loans held-for-sale (net of valuation allowance)		-				368				-				270				-
Total loans	$	5,090,492			$	4,973,019			$	4,541,092			$	4,462,757			$	4,360,854
Investment securities	$	453,063			$	528,103			$	423,494			$	421,442			$	411,574
Goodwill and other intangible assets		168,714				162,747				147,646				147,791				147,936
Deposits:
Noninterest-bearing demand	$	813,635			$	833,090			$	768,584			$	758,213			$	765,150
Time deposits		1,623,948				1,544,247				1,366,054				1,322,747				1,315,843
Other interest-bearing deposits		2,203,560				2,216,661				1,957,454				1,907,805				1,824,417
Total deposits	$	4,641,143			$	4,593,998			$	4,092,092			$	3,988,765			$	3,905,410
Borrowings	$	597,317			$	603,412			$	600,001			$	629,979			$	628,995
Subordinated debentures (net of debt issuance costs)		128,720				128,638				128,556				128,474				128,392
Total stockholders' equity		699,224				682,395				613,927				594,871				578,557
Quarterly Average Balances
Total assets	$	6,001,669			$	5,909,061			$	5,261,493			$	5,186,173			$	5,104,661
Loans receivable:
Commercial	$	1,024,617			$	1,035,874			$	896,032			$	803,702			$	764,028
Commercial real estate (including multifamily)		3,088,231				3,011,692				2,771,239				2,769,908				2,699,012
Commercial construction		571,130				524,952				464,556				494,460				494,092
Residential		322,517				335,574				304,954				294,758				282,504
Consumer		3,252				3,397				4,292				3,205				5,685
Gross loans		5,009,747				4,911,489				4,441,073				4,366,033				4,245,321
Unearned net origination fees		(4,463	)			(3,930	)			(3,340	)			(3,182	)			(3,208	)
Loans receivable		5,005,284				4,907,559				4,437,733				4,362,851				4,242,113
Loans held-for-sale		225				124				211				54				30,099
Total loans	$	5,005,509			$	4,907,683			$	4,437,944			$	4,362,905			$	4,272,212
Investment securities	$	513,814			$	524,394			$	421,316			$	415,074			$	424,854
Goodwill and other intangible assets		164,709				162,814				147,741				147,883				148,046
Deposits:
Noninterest-bearing demand	$	800,856			$	824,115			$	775,824			$	761,782			$	719,372
Time deposits		1,551,014				1,515,249				1,329,743				1,296,165				1,280,471
Other interest-bearing deposits		2,183,384				2,236,630				1,915,353				1,854,763				1,765,577
Total deposits	$	4,535,254			$	4,575,994			$	4,020,920			$	3,912,710			$	3,765,420
Borrowings	$	603,260			$	486,687			$	477,800			$	531,251			$	613,763
Subordinated debentures (net of debt issuance costs)		128,666				128,585				128,502				128,420				128,339
Total stockholders' equity		694,978				680,168				606,378				590,128				574,992
	Three Months Ended
	June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,
		2019				2019				2018				2018				2018
	(dollars in thousands, except for per share data)
Net interest income	$	45,530			$	44,952			$	40,161			$	39,962			$	38,945
Provision for loan losses		1,100				4,500				1,100				1,100				1,100
Net interest income after provision for loan losses		44,430				40,452				39,061				38,862				37,845
Noninterest income
Income on bank owned life insurance		833				822				794				751				775
Net gains on sales of loans held-for-sale		46				19				30				2				12
Deposit, loan and other income		914				786				691				676				601
Net gains (losses) on equity securities		158				103				58				(157	)			(47	)
Net (losses) gains on sales of securities available-for-sale		(9	)			8				-				-				-
Total noninterest income		1,942				1,738				1,573				1,272				1,341
Noninterest expenses
Salaries and employee benefits		11,822				11,983				9,988				10,181				9,736
Occupancy and equipment		2,357				2,495				2,001				2,137				2,031
FDIC insurance		825				755				765				735				765
Professional and consulting		1,370				1,209				1,129				891				825
Marketing and advertising		397				210				244				192				337
Data processing		1,139				1,155				1,080				1,102				1,091
Merger expenses		331				7,562				936				375				24
Loss on extinguishment of debt		1,047				-				-				-				-
Amortization of core deposit intangibles		364				364				144				145				169
Other expenses		1,938				2,329				2,037				2,372				2,083
Total noninterest expenses		21,590				28,062				18,324				18,130				17,061
Income before income tax expense		24,782				14,128				22,310				22,004				22,125
Income tax expense		5,501				2,493				3,638				2,102				4,598
Net income	$	19,281			$	11,635			$	18,672			$	19,902			$	17,527
Reconciliation of GAAP Earnings to Earnings Excluding the Following Items:
Net income	$	19,281			$	11,635			$	18,672			$	19,902			$	17,527
Merger expenses (after taxes)		274				5,597				739				297				-
Loss on extinguishment of debt (after taxes)		732				-				-				-				-
Net losses (gains) on sales of securities available-for-sale (after taxes)		2				(6	)			-				-				-
Net gains on equity securities (after taxes)		(110	)			(74	)			(40	)			110				33
Deferred tax valuation charge/adjustment		-				-				-				(1,408	)			-
Tax benefit on employee share-based awards (ASU 2016-09)		-				(20	)			(223	)			(297	)			(49	)
Net income-adjusted	$	20,179			$	17,132			$	19,148			$	18,604			$	17,511
Weighted average diluted shares outstanding		35,397,362				35,309,503				32,378,739				32,319,060				32,321,150
Diluted EPS (GAAP)	$	0.54			$	0.33			$	0.58			$	0.61			$	0.54
Diluted EPS-adjusted (Non-GAAP) (1)		0.57				0.49				0.59				0.58				0.54
Return on Assets Measures
Net income-adjusted	$	20,179			$	17,132			$	19,148			$	18,604			$	17,511
Average assets	$	6,001,669			$	5,909,061			$	5,261,493			$	5,186,173			$	5,104,661
Less: average intangible assets		(164,709	)			(162,814	)			(147,741	)			(147,883	)			(148,046	)
Average tangible assets	$	5,836,960			$	5,746,247			$	5,113,752			$	5,038,290			$	4,956,615
Return on avg. assets (GAAP)		1.29		%		0.80		%		1.41		%		1.52		%		1.38		%
Return on avg. assets-adjusted (non-GAAP) (2)		1.35				1.18				1.44				1.42				1.38
(1) Represents adjusted earnings available to common stockholders divided by weighted average diluted shares outstanding.
(2) Adjusted net income divided by average assets.
	Three Months Ended
	June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,
		2019				2019				2018				2018				2018
Return on Equity Measures	(dollars in thousands)
Net income-adjusted	$	20,179			$	17,132			$	19,148			$	18,604			$	17,511
Average common equity	$	694,978			$	680,168			$	606,378			$	590,128			$	574,992
Less: average intangible assets		(164,709	)			(162,814	)			(147,741	)			(147,883	)			(148,046	)
Average tangible common equity	$	530,269			$	517,354			$	458,637			$	442,245			$	426,946
Return on avg. common equity (GAAP)		11.13		%		6.94		%		12.22		%		13.38		%		12.23		%
Return on avg. common equity-adjusted (non-GAAP) (3)		11.65				10.22				12.53				12.51				12.22
Return on avg. tangible common equity (non-GAAP) (4)		14.78				9.33				16.24				17.95				16.58
Return on avg. tangible common equity-adjusted (non-GAAP) (5)		15.46				13.63				16.65				16.78				16.57
Efficiency Measures
Total noninterest expenses	$	21,590			$	28,062			$	18,324			$	18,130			$	17,061
Amortization of core deposit intangibles		(364	)			(364	)			(144	)			(145	)			(169	)
Merger expenses		(331	)			(7,562	)			(936	)			(375	)			-
Loss on extinguishment of debt		(1,047	)			-				-				-				-
Foreclosed property expense		-				1				(8	)			(196	)			(11	)
Operating noninterest expense	$	19,848			$	20,137			$	17,236			$	17,414			$	16,881
Net interest income (tax equivalent basis)	$	46,092			$	45,523			$	40,678			$	40,444			$	39,409
Noninterest income		1,942				1,738				1,573				1,272				1,341
Net gains (losses) on equity securities		(158	)			(103	)			(58	)			157				47
Net losses (gains) on sales of securities available-for-sale		9				(8	)			-				-				-
Operating revenue	$	47,885			$	47,150			$	42,193			$	41,873			$	40,797
Operating efficiency ratio (non-GAAP) (6)		41.4		%		42.7		%		40.9		%		41.6		%		41.4		%
Net Interest Margin
Average interest-earning assets	$	5,607,086			$	5,522,934			$	4,941,425			$	4,856,678			$	4,771,523
Net interest income (tax equivalent basis)	$	46,092			$	45,523			$	40,678			$	40,444			$	39,409
Impact of purchase accounting fair value marks		(1,742	)			(1,233	)			(148	)			(195	)			(680	)
Adjusted net interest income (tax equivalent basis)	$	44,350			$	44,290			$	40,530			$	40,249			$	38,729
Net interest margin (GAAP)		3.30		%		3.34		%		3.27		%		3.30		%		3.31		%
Adjusted net interest margin (non-GAAP) (7)		3.17				3.25				3.25				3.29				3.26
(3) Adjusted earnings available to common stockholders divided by average common equity.
(4) Earnings available to common stockholders excluding amortization of intangible assets divided by average tangible common equity.
(5) Adjusted earnings available to common stockholders excluding amortization of intangible assets divided by average tangible common equity.
(6) Operating noninterest expense divided by operating revenue.
(7) Adjusted net interest margin excludes impact of purchase accounting fair value marks.
	As of
	June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,
		2019				2019				2018				2018				2018
Capital Ratios and Book Value per Share	(dollars in thousands, except for per share data)
Common equity	$	699,224			$	682,395			$	613,927			$	594,871			$	578,557
Less: intangible assets		(168,714	)			(162,747	)			(147,646	)			(147,791	)			(147,936	)
Tangible common equity	$	530,510			$	519,648			$	466,281			$	447,080			$	430,621
Total assets	$	6,109,066			$	6,048,976			$	5,462,092			$	5,368,641			$	5,275,368
Less: intangible assets		(168,714	)			(162,747	)			(147,646	)			(147,791	)			(147,936	)
Tangible assets	$	5,940,352			$	5,886,229			$	5,314,446			$	5,220,850			$	5,127,432
Common shares outstanding		35,352,866				35,432,468				32,328,542				32,238,264				32,184,047
Common equity ratio (GAAP)		11.45		%		11.28		%		11.24		%		11.08		%		10.97		%
Tangible common equity ratio (non-GAAP) (8)		8.93				8.83				8.77				8.56				8.40
Regulatory capital ratios (Bancorp):
Leverage ratio		9.14		%		9.12		%		9.34		%		9.15		%		8.93		%
Common equity Tier 1 risk-based ratio		9.65				9.68				9.75				9.50				9.33
Risk-based Tier 1 capital ratio		9.74				9.77				9.86				9.61				9.44
Risk-based total capital ratio		12.72				12.79				13.15				12.94				12.81
Regulatory capital ratios (Bank):
Leverage ratio		10.42		%		10.43		%		10.78		%		10.64		%		10.43		%
Common equity Tier 1 risk-based ratio		11.12				11.17				11.37				11.18				11.02
Risk-based Tier 1 capital ratio		11.12				11.17				11.37				11.18				11.02
Risk-based total capital ratio		12.40				12.46				12.75				12.57				12.42
Book value per share (GAAP)	$	19.78			$	19.26			$	18.99			$	18.45			$	17.98
Tangible book value per share (non-GAAP) (9)		15.01				14.67				14.42				13.87				13.38
Net Loan Charge-Off (Recoveries) Detail
Net loan charge-offs (recoveries) :
Charge-offs	$	406			$	2,676			$	920			$	6			$	47
Recoveries		(146	)			(80	)			(25	)			(61	)			(12	)
Net loan charge-offs (recoveries)	$	260			$	2,596			$	895			$	(55	)		$	35
Net loan charge-offs (recoveries) as a % of average loans receivable (annualized)		0.02		%		0.21		%		0.08		%		(0.01	)	%		0.00		%
Asset Quality
Nonaccrual taxi medallion loans	$	26,498			$	27,287			$	28,043			$	28,482			$	28,944
Nonaccrual loans (excluding taxi medallion loans)		23,419				20,393				23,812				24,533				20,771
Other real estate owned		-				-				-				-				1,076
Total nonperforming assets	$	49,917			$	47,680			$	51,855			$	53,015			$	50,791
Performing troubled debt restructurings	$	16,332			$	8,191			$	11,165			$	11,243			$	12,827
Allowance for loan losses ("ALLL")	$	37,698			$	36,858			$	34,954			$	34,749			$	33,594
Loans receivable	$	5,090,492			$	4,972,651			$	4,541,092			$	4,462,487			$	4,360,854
Less: taxi medallion loans		28,054				28,911				28,043				28,482				28,944
Loans receivable (excluding taxi medallion loans)	$	5,062,438			$	4,943,740			$	4,513,049			$	4,434,005			$	4,331,910
Nonaccrual loans (excluding taxi medallion loans) as a % of loans receivable (excluding taxi medallion loans)		0.46		%		0.41		%		0.53		%		0.55		%		0.48		%
Nonaccrual loans as a % of loans receivable		0.98				0.96				1.14				1.19				1.14
Nonperforming assets as a % of total assets		0.82				0.79				0.95				0.99				0.96
ALLL as a % of loans receivable		0.74				0.74				0.77				0.78				0.77
ALLL as a % of nonaccrual loans (excluding taxi medallion loans)		161.0				180.7				146.8				141.6				161.7
ALLL as a % of nonaccrual loans		75.5				77.3				67.4				65.5				67.6
(8) Tangible common equity divided by tangible assets.
(9) Tangible common equity divided by common shares outstanding at period-end.

 

CONNECTONE BANCORP, INC.
NET INTEREST MARGIN ANALYSIS
(dollars in thousands)
				For the Three Months Ended
				June 30, 2019								March 31, 2019									June 30, 2018
				Average									Average									Average
Interest-earning assets:				Balance			Interest			Rate (8)			Balance			Interest			Rate (8)			Balance			Interest			Rate (8)
Investment securities (1) (2)				$	515,022		$	3,941		3.07	%		$	531,083		$	4,369		3.34	%		$	432,493		$	3,136		2.91	%
Total loans (2) (3) (4)					5,005,509			63,799		5.11				4,907,683			60,597		5.01				4,272,212			49,750		4.67
Federal funds sold and interest-
bearing deposits with banks					54,619			290		2.13				57,690			357		2.51				35,315			159		1.81
Restricted investment in bank stock					31,936			410		5.15				26,478			457		7.00				31,503			502		6.39
Total interest-earning assets					5,607,086			68,440		4.90				5,522,934			65,780		4.83				4,771,523			53,547		4.50
Allowance for loan losses					(37,390	)								(35,499	)								(32,668	)
Noninterest-earning assets					431,973									421,626									365,806
Total assets				$	6,001,669								$	5,909,061								$	5,104,661
Interest-bearing liabilities:
Time deposits				$	1,551,014			9,366		2.42			$	1,515,249			8,303		2.22			$	1,280,471			5,830		1.83
Other interest-bearing deposits					2,183,384			7,230		1.33				2,236,630			7,048		1.28				1,765,577			3,338		0.76
Total interest-bearing deposits					3,734,398			16,596		1.78				3,751,879			15,351		1.66				3,046,048			9,168		1.21
Borrowings					603,260			3,870		2.57				486,687			3,024		2.52				613,763			3,091		2.02
Subordinated debentures (5)					128,666			1,845		5.75				128,585			1,845		5.82				128,339			1,840		5.75
Capital lease obligation					2,436			37		6.09				2,479			37		6.05				2,589			39		6.04
Total interest-bearing liabilities					4,468,760			22,348		2.01				4,369,630			20,257		1.88				3,790,739			14,138		1.50
Noninterest-bearing demand deposits					800,856									824,115									719,372
Other liabilities					37,075									35,148									19,558
Total noninterest-bearing liabilities					837,931									859,263									738,930
Stockholders' equity					694,978									680,168									574,992
Total liabilities and stockholders' equity				$	6,001,669								$	5,909,061								$	5,104,661
Net interest income (tax equivalent basis)								46,092									45,523									39,409
Net interest spread (6)										2.89	%								2.95	%								3.00	%
Net interest margin (7)										3.30	%								3.34	%								3.31	%
Tax equivalent adjustment								(562	)								(571	)								(463	)
Net interest income							$	45,530								$	44,952								$	38,946
(1) Average balances are calculated on amortized cost and includes equity securities.
(2) Interest income is presented on a tax equivalent basis using a 21% federal tax rate.
(3) Includes loan fee income.
(4) Loans include nonaccrual loans.
(5) Average balances are net of debt issuance costs of $1,489, $1,570 and $1,816 for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018, respectively.
Amortization expense related to debt issuance costs included in interest expense was $82, $82 and $82 for the three months ended June 30, 2019, March 31, 2019
and June 30, 2018, respectively.
(6) 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.
(7) Represents net interest income on a tax equivalent basis divided by average total interest-earning assets.
(8) Rates are annualized.

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.