8-K
ConnectOne Bancorp, Inc. (CNOB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 28, 2022
_______________________________
CONNECTONE
BANCORP, INC.
(Exact name of registrant as specified in its charter)
_______________________________
| New Jersey | 000-11486 | 52-1273725 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
301 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
(Address of Principal Executive Offices) (Zip Code)
(201) 816-8900
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
_______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock | CNOB | NASDAQ |
| Depositary Shares (each representing a 1/40th interest in a share of 5.25% Series A Non-Cumulative, perpetual preferred stock) | CNOBP | NASDAQ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and FinancialCondition.
On July 28, 2022, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
| 99.1 | Press Release dated July 28, 2022 |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ConnectOne Bancorp, Inc. | ||
|---|---|---|
| Date: July 28, 2022 | By: | /s/ William S. Burns |
| William S. Burns | ||
| Senior Executive Vice President and Chief Financial Officer |
EdgarFiling EXHIBIT 99.1
ConnectOne Bancorp, Inc. Reports Second Quarter 2022 Results; Declares Common and Preferred Dividends
ENGLEWOOD CLIFFS, N.J., July 28, 2022 (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 $30.8 million for the second quarter of 2022 compared with $29.9 million for the first quarter of 2022 and $32.2 million for the second quarter of 2021. Diluted earnings per share were $0.78 for the second quarter of 2022 compared with $0.75 in the first quarter of 2022 and $0.81 in the second quarter of 2021. The increase in net income available to common stockholders and diluted earnings per share from the first quarter of 2022 was primarily due to an increase in net interest income of $5.2 million and an increase in noninterest income of $0.3 million, partially offset by an increase in provision for credit losses of $1.6 million, an increase in noninterest expenses of $2.5 million, and an increase in income tax expense of $0.5 million. The decrease in net income available to common stockholders and diluted earnings per share from the second quarter of 2021 was primarily due to an increase in provision for credit losses of $4.6 million, an increase in noninterest expenses of $5.4 million, an increase in preferred dividends of $1.5 million, a decrease in noninterest income of $1.1 million, and an increase in income tax expenses of $1.2 million, partially offset by an increase in net interest income of $12.6 million.
Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer stated, “We again demonstrated the effectiveness of our relationship-banking business model by delivering solid second quarter financial results. Pre-tax, pre-provision earnings as a percent of assets increased to 2.28%, while return on assets was 1.56%, and return on tangible common equity was 15.3%. In addition, our net interest margin expanded, the efficiency ratio remained below 40% and the nonperforming asset ratio declined. Notably, our tangible book value per share has increased by more than 10% over the last twelve months to $20.79, reflecting both strong earnings and prudent management of our available-for-sale securities portfolio.”
“Organic growth remains strong at ConnectOne. The loan portfolio increased sequentially by 17% on an annualized basis, reflecting both our strong origination franchise and market conditions, while noninterest-bearing deposits grew by 20% on an annualized basis. Non-interest demand deposits now represent a record of 26% of total deposits. The loan and deposit growth also reflects the success of our strategy to invest in, and further strengthen, our origination franchise. In that regard, we are gaining traction in all our markets including Florida, where we are successfully leveraging our client-centric culture to both originate commercial loans and grow deposits with existing ConnectOne clients as well as new Florida-based businesses. And we continue to capitalize on disruption caused by industry M&A by hiring experienced bankers, which facilitates organic expansion into synergistic geographies and verticals.”
“Our tech-first philosophy creates opportunities for back-office efficiencies, additional distribution channels and increased revenue. Investments we’ve made over the years are paying dividends, allowing us to scale efficiently while improving internal processes such as loan underwriting and closing processes. We continue to make investments to enhance our commercial banking model, deliver best-in-class client experience and optimize our operations. To that end, we are excited to announce a partnership with MANTL to help streamline and digitize our entire deposit onboarding processing. This partnership, along with other technologies we are implementing, will modernize client onboarding, create new verticals, and provide better penetration into existing business lines.” Mr. Sorrentino added, “We’re building for the future and, even with these investments, we are confident in our ability to remain one of the most efficient banks in the industry.”
Dividend Declarations
The Company announced that its Board of Directors declared a cash dividend on its common stock and a quarterly cash dividend on its preferred stock.
A cash dividend on common stock of $0.155 per share will be paid on September 1, 2022, to common stockholders of record on August 15, 2022. A dividend of $0.328125 per share for every depositary share, representing a 1/40^th^ interest in the Company’s 5.25% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, will also be paid on September 1, 2022 to preferred stockholders of record on August 15, 2022.
Operating Results
Fully taxable equivalent net interest income for the second quarter of 2022 was $76.1 million, an increase of $5.3 million, or 7.5%, from the first quarter of 2022 resulting primarily from a 2.0% sequential increase in average loans, a 12% sequential increase in average investment securities and a 20 basis-point widening of the net interest margin to 3.91% from 3.71%. The increase net interest margin primarily reflected an increase in total interest-earning asset yields of 26 basis points, resulting from increased rates on total loans and securities, along with an improved mix away from lower yielding assets, while the cost of interest-bearing liabilities increased by only 8 basis-points. Excluding purchase accounting adjustments, the adjusted net interest margin was 3.86% for the second quarter of 2022 and 3.64% for the first quarter of 2022. Included in interest income in the second quarter 2022 was a $1.5 million recovery on a purchased credit deteriorated (PCD) loan. Also included in interest income in the second and first quarters of 2022 was the accretion of Paycheck Protection Program (“PPP”) fee income of $2.3 million and $2.0 million, respectively. Remaining deferred and unrecognized PPP fees were $0.3 million as of June 30, 2022.
Fully taxable equivalent net interest income for the second quarter of 2022 increased by $12.7 million, or 20.1%, from the second quarter of 2021. The increase from the second quarter of 2021 resulted primarily from a 12.1% increase in average loans, a 37.3% increase in average investment securities, and a 31 basis-point widening of the net interest margin to 3.91% from 3.60%. The widening of the net interest margin resulted from a 24 basis-point increase in the yield on average interest-earning assets and a 7 basis-point reduction in the cost of interest-bearing liabilities.
Noninterest income was $3.4 million in the second quarter of 2022, $3.1 million in the first quarter of 2022 and $4.5 million in the second quarter of 2021. Included in noninterest income were net losses on equity securities of $0.4 million and $0.6 million for the second quarter 2022 and first quarter 2022, respectively. Excluding the equity securities losses, adjusted noninterest income was $3.8 million, $3.7 million and $4.5 million for the second quarter 2022, first quarter 2022 and second quarter 2021, respectively. The $0.1 million increase in adjusted noninterest income for the current quarter versus the first quarter 2022 was primarily due to an increase in deposit, loan, and other income of $0.1 million and an increase on income of bank owned life insurance (“BOLI”) of $0.1 million, partially offset by decreases in net gains on loans held-for-sale of $0.1 million. The $0.7 million decrease in adjusted noninterest income for the current quarter versus the second quarter 2021 was primarily due to a decrease in PPP fee income earned by BoeFly of $0.7 million, a decrease in net gains on loans held-for-sale of $0.3 million, and a decrease in net gains on sale/redemption of investment securities of $0.2 million, partially offset by increases in deposit, loan, and other income of $0.4 million and an increase in BOLI income of $0.2 million.
Noninterest expenses totaled $31.7 million for the second quarter of 2022, $29.2 million for the first quarter of 2022 and $26.3 million for the second quarter of 2021. Included in noninterest expense during the first quarter of 2022 was a $0.9 million favorable dissolution of a merger lease obligation. Excluding that item, noninterest expenses increased by $1.6 million from the first quarter of 2022 and was primarily attributable to an increase in salaries and employee benefits of $0.9 million, professional and consulting of $0.3 million, other expenses of $0.2 million, acquisition expenses related to BoeFly of $0.2 million, and marketing and advertising of $0.1 million. The increase in noninterest expenses of $5.4 million from the second quarter of 2021 was primarily attributable to increases in salaries and employee benefits of $4.2 million and BoeFly acquisition expense of $0.8 million. The increase in salaries and employee benefits from the prior sequential quarter and prior year quarter was attributable to increased staff in both the revenue and back-office areas of the bank, base salary increases, and bonus accruals.
Income tax expense was $11.9 million for the second quarter of 2022, $11.4 million for the first quarter of 2022 and $10.7 million for the second quarter of 2021. The effective tax rates for the second quarter of 2022, first quarter of 2022 and second quarter of 2021 were 26.9%, 26.6% and 24.8%, respectively.
Asset Quality
The provision for (reversal of) credit losses was $3.0 million for the second quarter of 2022, $1.5 million for the first quarter of 2022 and $(1.6) million for the second quarter of 2021. The provision for credit losses during the second quarter of 2022 and the first quarter of 2022 reflected strong organic loan growth and forecasted macroeconomic conditions, which remained fairly stable from the sequential quarter. The reversal of provision for credit losses during the second quarter of 2021 was the result of improved forecasted macroeconomic conditions when compared to the prior period.
Nonperforming assets, which includes nonaccrual loans and other real estate owned, were $61.1 million as of June 30, 2022, $61.7 million as of December 31, 2021 and $56.2 million as of June 30, 2021. Nonaccrual loans were $60.8 million as of June 30, 2022, $61.7 million as of December 31, 2021 and $56.2 million as of June 30, 2021. Nonperforming assets as a percentage of total assets were 0.69% as of June 30, 2022, 0.76% as of December 31, 2021 and 0.73% as of June 30, 2021. The ratio of nonaccrual loans to loans receivable was 0.84%, 0.90% and 0.88%, as of June 30, 2022, December 31, 2021 and June 30, 2021, respectively. The annualized net loan charge-offs ratio was 0.02% for the second quarter of 2022, 0.01% for the fourth quarter of 2021 and 0.01% for the second quarter of 2021. The allowance for credit losses represented 1.14%, 1.15%, and 1.23% of loans receivable as of June 30, 2022, December 31, 2021 and June 30, 2021, respectively. Excluding PPP loans, the allowance for credit losses represented 1.14%, 1.17%, and 1.29% of loans receivable as of June 30, 2022, December 31, 2021 and June 30, 2021, respectively. The allowance for credit losses as a percentage of nonaccrual loans was 136.2% as of June 30, 2022, 127.7% as of December 31, 2021 and 140.0% as of June 30, 2021.
Selected Balance Sheet Items
The Company’s total assets were $8.8 billion as of June 30, 2022, an increase of $712.0 million from December 31, 2021. Loans receivable were $7.3 billion, an increase of $446.0 million from December 31, 2021. The increase in loans receivable was attributable to organic loan originations.
The Company’s total stockholders’ equity was $1.1 billion as of June 30, 2022, an increase of $18.9 million from December 31, 2021. The increase in retained earnings of $49.5 million was the primary reason for the overall increase in stockholders’ equity, in addition to an increase in additional paid-in capital of $0.3 million, partially offset by a decrease in accumulated other comprehensive income of $17.7 million, reflecting the after-tax decline in the fair value of investment securities net of unrealized hedge gains recorded in other assets, and an increase in treasury stock of $13.1 million. As of June 30, 2022, the Company’s tangible common equity ratio and tangible book value per share were 9.46% and $20.79, respectively. As of December 31, 2021, the tangible common equity ratio and tangible book value per share were 10.06% and $20.12, respectively. Total goodwill and other intangible assets were $216.5 million as of June 30, 2022, and $217.4 million as of December 31, 2021.
Share Repurchase Program
During the second quarter of 2022, the Company repurchased 302,315 shares of common stock leaving approximately 1.8 million shares remaining authorized for repurchase under the current Board approved repurchase program. The Company may repurchase shares from time-to-time in the open market, in privately negotiated stock purchases or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission and applicable federal securities laws. The share repurchase plan does not obligate the Company to acquire any particular amount of common stock, and they may be modified or suspended at any time at the Company's discretion.
Use of Non-GAAP Financial Measures
In addition to the results presented in accordance with Generally Accepted Accounting Principles ("GAAP"), ConnectOne routinely supplements its evaluation with an analysis of certain non-GAAP measures. ConnectOne believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors in understanding our operating performance and trends. These non-GAAP measures have inherent limitations and are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for an analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of non-GAAP financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the accompanying tables.
Second Quarter 2022 Results Conference Call
Management will also host a conference call and audio webcast at 10:00 a.m. ET on July 28, 2022 to review the Company's financial performance and operating results. The conference call dial-in number is 1-201-689-8471, access code 13731034. 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 28, 2022 and ending on Thursday, August 4, 2022 by dialing 1-412-317-6671, access code 13731034. 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.
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, as supplemented by the Company’s subsequent filings with the Securities and Exchange Commission, and changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company's market area, changes in accounting principles and guidelines and the impact of the COVID-19 pandemic on the Company, its employees and operations, and its customers. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Investor Contact : William S. Burns Senior Executive VP & CFO 201.816.4474: bburns@cnob.com
Media Contact : Sutton Resler, MWW 571.236.4966: sresler@mww.com
| C ONNECT O NE B ANCORP, I NC. AND S UBSIDIARIES | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION | ||||||||||||
| (in thousands) | ||||||||||||
| June 30, | December 31, | June 30, | ||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| ASSETS | ||||||||||||
| Cash and due from banks | $ | 58,807 | $ | 54,352 | $ | 59,148 | ||||||
| Interest-bearing deposits with banks | 240,513 | 211,184 | 290,269 | |||||||||
| Cash and cash equivalents | 299,320 | 265,536 | 349,417 | |||||||||
| Investment securities | 675,941 | 534,507 | 458,933 | |||||||||
| Equity securities | 15,993 | 13,794 | 13,223 | |||||||||
| Loans held-for-sale | 3,182 | 250 | 6,159 | |||||||||
| Loans receivable | 7,274,573 | 6,828,622 | 6,407,904 | |||||||||
| Less: Allowance for credit losses - loans | 82,739 | 78,773 | 78,684 | |||||||||
| Net loans receivable | 7,191,834 | 6,749,849 | 6,329,220 | |||||||||
| Investment in restricted stock, at cost | 47,287 | 27,826 | 22,563 | |||||||||
| Bank premises and equipment, net | 28,391 | 29,032 | 28,811 | |||||||||
| Accrued interest receivable | 34,615 | 34,152 | 34,001 | |||||||||
| Bank owned life insurance | 228,279 | 195,731 | 193,209 | |||||||||
| Right of use operating lease assets | 10,809 | 11,017 | 12,504 | |||||||||
| Other real estate owned | 316 | - | - | |||||||||
| Goodwill | 208,372 | 208,372 | 208,372 | |||||||||
| Core deposit intangibles | 8,130 | 8,997 | 9,963 | |||||||||
| Other assets | 89,037 | 50,417 | 43,707 | |||||||||
| Total assets | $ | 8,841,506 | $ | 8,129,480 | $ | 7,710,082 | ||||||
| LIABILITIES | ||||||||||||
| Deposits: | ||||||||||||
| Noninterest-bearing | $ | 1,712,875 | $ | 1,617,049 | $ | 1,485,952 | ||||||
| Interest-bearing | 4,904,724 | 4,715,904 | 4,706,561 | |||||||||
| Total deposits | 6,617,599 | 6,332,953 | 6,192,513 | |||||||||
| Borrowings | 874,964 | 468,193 | 353,462 | |||||||||
| Subordinated debentures, net | 153,103 | 152,951 | 152,800 | |||||||||
| Operating lease liabilities | 12,116 | 12,417 | 14,235 | |||||||||
| Other liabilities | 40,577 | 38,754 | 32,112 | |||||||||
| Total liabilities | 7,698,359 | 7,005,268 | 6,745,122 | |||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||
| Preferred stock | 110,927 | 110,927 | - | |||||||||
| Common stock | 586,946 | 586,946 | 586,946 | |||||||||
| Additional paid-in capital | 27,536 | 27,246 | 24,606 | |||||||||
| Retained earnings | 489,640 | 440,169 | 386,280 | |||||||||
| Treasury stock | (52,799 | ) | (39,672 | ) | (32,682 | ) | ||||||
| Accumulated other comprehensive loss | (19,103 | ) | (1,404 | ) | (190 | ) | ||||||
| Total stockholders' equity | 1,143,147 | 1,124,212 | 964,960 | |||||||||
| Total liabilities and stockholders' equity | $ | 8,841,506 | $ | 8,129,480 | $ | 7,710,082 | ||||||
| CONNECTONE BANCORP, INC. AND SUBSIDIARIES | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
| (dollars in thousands, except for per share data) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| 06/30/22 | 06/30/21 | 06/30/22 | 06/30/21 | |||||||||
| Interest income | ||||||||||||
| Interest and fees on loans | $ | 81,285 | $ | 71,101 | $ | 157,310 | $ | 141,563 | ||||
| Interest and dividends on investment securities: | ||||||||||||
| Taxable | 2,551 | 995 | 4,424 | 2,083 | ||||||||
| Tax-exempt | 916 | 608 | 1,625 | 1,374 | ||||||||
| Dividends | 291 | 263 | 505 | 519 | ||||||||
| Interest on federal funds sold and other short-term investments | 313 | 84 | 433 | 133 | ||||||||
| Total interest income | 85,356 | 73,051 | 164,297 | 145,672 | ||||||||
| Interest expense | ||||||||||||
| Deposits | 5,709 | 6,424 | 10,719 | 14,009 | ||||||||
| Borrowings | 4,056 | 3,618 | 7,629 | 7,491 | ||||||||
| Total interest expense | 9,765 | 10,042 | 18,348 | 21,500 | ||||||||
| Net interest income | 75,591 | 63,009 | 145,949 | 124,172 | ||||||||
| Provision for (reversal of) credit losses | 3,000 | (1,649 | ) | 4,450 | (7,415 | ) | ||||||
| Net interest income after provision for credit losses | 72,591 | 64,658 | 141,499 | 131,587 | ||||||||
| Noninterest income | ||||||||||||
| Deposit, loan and other income | 1,866 | 2,222 | 3,609 | 3,390 | ||||||||
| Income on bank owned life insurance | 1,342 | 1,185 | 2,548 | 2,249 | ||||||||
| Net gains on sale of loans held-for-sale | 556 | 847 | 1,257 | 1,554 | ||||||||
| Gain on sale of branches | - | - | - | 674 | ||||||||
| Net losses on equity securities | (405 | ) | 23 | (1,001 | ) | (164 | ) | |||||
| Net gains on sale/redemption of investment securities | - | 195 | - | 195 | ||||||||
| Total noninterest income | 3,359 | 4,472 | 6,413 | 7,898 | ||||||||
| Noninterest expenses | ||||||||||||
| Salaries and employee benefits | 19,519 | 15,284 | 38,159 | 30,849 | ||||||||
| Occupancy and equipment | 2,733 | 3,187 | 4,662 | 6,591 | ||||||||
| FDIC insurance | 725 | 580 | 1,331 | 1,515 | ||||||||
| Professional and consulting | 2,124 | 2,117 | 3,916 | 4,073 | ||||||||
| Marketing and advertising | 426 | 278 | 777 | 519 | ||||||||
| Information technology and communications | 2,801 | 2,636 | 5,667 | 5,161 | ||||||||
| Amortization of core deposit intangible | 434 | 508 | 867 | 1,015 | ||||||||
| Increase in value of acquisition price | 833 | - | 1,516 | - | ||||||||
| Other expenses | 2,108 | 1,669 | 4,038 | 3,021 | ||||||||
| Total noninterest expenses | 31,703 | 26,259 | 60,933 | 52,744 | ||||||||
| Income before income tax expense | 44,247 | 42,871 | 86,979 | 86,741 | ||||||||
| Income tax expense | 11,889 | 10,652 | 23,240 | 21,523 | ||||||||
| Net income | 32,358 | 32,219 | 63,739 | 65,218 | ||||||||
| Preferred dividends | 1,509 | - | 3,018 | - | ||||||||
| Net income available to common stockholders | $ | 30,849 | $ | 32,219 | $ | 60,721 | $ | 65,218 | ||||
| Earnings per common share: | ||||||||||||
| Basic | $ | 0.78 | $ | 0.81 | $ | 1.54 | $ | 1.64 | ||||
| Diluted | 0.78 | 0.81 | 1.53 | 1.63 |
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.
| C ONNECT O NE B ANCORP, I NC. | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SUPPLEMENTAL GAAP AND NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||
| As of | ||||||||||||||||||||||||||
| Jun. 30 | Mar. 31, | Dec. 30, | Sep. 30, | Jun. 30, | ||||||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||||||||||||
| Selected Financial Data | (dollars in thousands) | |||||||||||||||||||||||||
| Total assets | $ | 8,841,506 | $ | 8,334,301 | $ | 8,129,480 | $ | 7,949,514 | $ | 7,710,082 | ||||||||||||||||
| Loans receivable: | ||||||||||||||||||||||||||
| Commercial | $ | 1,274,280 | $ | 1,161,867 | $ | 1,163,442 | $ | 1,116,535 | $ | 1,046,965 | ||||||||||||||||
| Paycheck Protection Program ("PPP") loans | 18,004 | 54,301 | 93,057 | 177,829 | 326,788 | |||||||||||||||||||||
| Commercial real estate | 2,727,120 | 2,516,065 | 2,446,807 | 2,354,209 | 2,252,484 | |||||||||||||||||||||
| Multifamily | 2,442,603 | 2,465,337 | 2,337,712 | 2,113,541 | 1,914,978 | |||||||||||||||||||||
| Commercial construction | 569,789 | 539,058 | 540,178 | 552,896 | 587,121 | |||||||||||||||||||||
| Residential | 249,379 | 250,205 | 255,269 | 270,793 | 286,907 | |||||||||||||||||||||
| Consumer | 1,248 | 1,140 | 1,886 | 2,093 | 6,355 | |||||||||||||||||||||
| Gross loans | 7,282,423 | 6,987,973 | 6,838,351 | 6,587,896 | 6,421,598 | |||||||||||||||||||||
| Unearned net origination fees | (7,850 | ) | (8,378 | ) | (9,729 | ) | (11,457 | ) | (13,694 | ) | ||||||||||||||||
| Loans receivable | 7,274,573 | 6,979,595 | 6,828,622 | 6,576,439 | 6,407,904 | |||||||||||||||||||||
| Loans held-for-sale | 3,182 | 2,742 | 250 | 5,596 | 6,159 | |||||||||||||||||||||
| Total loans | $ | 7,277,755 | $ | 6,982,337 | $ | 6,828,872 | $ | 6,582,035 | $ | 6,414,063 | ||||||||||||||||
| Investment and equity securities | $ | 691,934 | $ | 525,228 | $ | 548,301 | $ | 476,584 | $ | 472,156 | ||||||||||||||||
| Goodwill and other intangible assets | 216,502 | 216,936 | 217,369 | 217,852 | 218,335 | |||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 1,712,875 | $ | 1,631,292 | $ | 1,617,049 | $ | 1,500,754 | $ | 1,485,952 | ||||||||||||||||
| Time deposits | 1,285,409 | 1,065,814 | 1,150,109 | 0 | 1,221,911 | 1,301,807 | ||||||||||||||||||||
| Other interest-bearing deposits | 3,619,315 | 3,863,299 | 3,565,795 | 3,675,673 | 3,404,754 | |||||||||||||||||||||
| Total deposits | $ | 6,617,599 | $ | 6,560,405 | $ | 6,332,953 | $ | 6,398,338 | $ | 6,192,513 | ||||||||||||||||
| Borrowings | $ | 874,964 | $ | 412,170 | $ | 468,193 | $ | 253,225 | $ | 353,462 | ||||||||||||||||
| Subordinated debentures (net of debt issuance costs) | 153,103 | 153,027 | 152,951 | 152,875 | 152,800 | |||||||||||||||||||||
| Total stockholders' equity | 1,143,147 | 1,138,519 | 1,124,212 | 1,098,433 | 964,960 | |||||||||||||||||||||
| Quarterly Average Balances | ||||||||||||||||||||||||||
| Total assets | $ | 8,322,823 | $ | 8,263,382 | $ | 8,027,169 | $ | 7,837,997 | $ | 7,566,676 | ||||||||||||||||
| Loans receivable: | ||||||||||||||||||||||||||
| Commercial (including PPP loans) | $ | 1,245,812 | $ | 1,231,703 | $ | 1,278,048 | $ | 1,296,066 | $ | 1,485,918 | ||||||||||||||||
| Commercial real estate (including multifamily) | 4,974,297 | 4,850,349 | 4,625,371 | 4,312,092 | 3,925,497 | |||||||||||||||||||||
| Commercial construction | 544,084 | 541,642 | 547,038 | 572,920 | 553,396 | |||||||||||||||||||||
| Residential | 247,208 | 253,589 | 268,112 | 279,063 | 293,633 | |||||||||||||||||||||
| Consumer | 5,029 | 3,682 | 4,938 | 2,649 | 3,148 | |||||||||||||||||||||
| Gross loans | 7,016,430 | 6,880,965 | 6,723,507 | 6,462,790 | 6,261,592 | |||||||||||||||||||||
| Unearned net origination fees | (9,222 | ) | (9,870 | ) | (10,873 | ) | (13,064 | ) | (13,076 | ) | ||||||||||||||||
| Loans receivable | 7,007,208 | 6,871,095 | 6,712,634 | 6,449,726 | 6,248,516 | |||||||||||||||||||||
| Loans held-for-sale | 966 | 382 | 5,051 | 6,226 | 3,696 | |||||||||||||||||||||
| Total loans | $ | 7,008,174 | $ | 6,871,477 | $ | 6,717,685 | $ | 6,455,952 | $ | 6,252,212 | ||||||||||||||||
| Investment and equity securities | $ | 567,140 | $ | 536,090 | $ | 481,276 | $ | 465,103 | $ | 450,543 | ||||||||||||||||
| Goodwill and other intangible assets | 216,786 | 217,219 | 217,685 | 218,170 | 218,662 | |||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 1,607,465 | $ | 1,547,055 | $ | 1,537,316 | $ | 1,495,456 | $ | 1,432,707 | ||||||||||||||||
| Time deposits | 1,103,418 | 1,124,614 | 1,204,374 | 1,252,818 | 1,324,510 | |||||||||||||||||||||
| Other interest-bearing deposits | 3,717,531 | 3,851,558 | 3,672,311 | 3,582,261 | 3,320,400 | |||||||||||||||||||||
| Total deposits | $ | 6,428,414 | $ | 6,523,227 | $ | 6,414,001 | $ | 6,330,535 | $ | 6,077,617 | ||||||||||||||||
| Borrowings | $ | 548,675 | $ | 404,907 | $ | 292,847 | $ | 276,183 | $ | 331,633 | ||||||||||||||||
| Subordinated debentures (net of debt issuance costs) | 153,053 | 152,977 | 152,902 | 152,825 | 152,750 | |||||||||||||||||||||
| Total stockholders' equity | 1,143,092 | 1,131,968 | 1,113,524 | 1,032,191 | 952,019 | |||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| Jun. 30 | Mar. 31, | Dec. 30, | Sep. 30, | Jun. 30, | ||||||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||||||||||||
| (dollars in thousands, except for per share data) | ||||||||||||||||||||||||||
| Net interest income | $ | 75,591 | $ | 70,358 | $ | 70,461 | $ | 68,245 | $ | 63,009 | ||||||||||||||||
| Provision for (reversal of) credit losses | 3,000 | 1,450 | 815 | 1,100 | (1,649 | ) | ||||||||||||||||||||
| Net interest income after provision for credit losses | 72,591 | 68,908 | 69,646 | 67,145 | 64,658 | |||||||||||||||||||||
| Noninterest income | ||||||||||||||||||||||||||
| Deposit, loan and other income | 1,866 | 1,743 | 1,525 | 1,702 | 2,222 | |||||||||||||||||||||
| Income on bank owned life insurance | 1,342 | 1,206 | 1,244 | 1,278 | 1,185 | |||||||||||||||||||||
| Net gains on sale of loans held-for-sale | 556 | 701 | 1,139 | 1,114 | 847 | |||||||||||||||||||||
| Net (losses) gains on equity securities | (405 | ) | (596 | ) | (131 | ) | (78 | ) | 23 | |||||||||||||||||
| Net gains on sale/redemption of investment securities | - | - | - | - | 195 | |||||||||||||||||||||
| Total noninterest income | 3,359 | 3,054 | 3,777 | 4,016 | 4,472 | |||||||||||||||||||||
| Noninterest expenses | ||||||||||||||||||||||||||
| Salaries and employee benefits | 19,519 | 18,640 | 16,483 | 16,740 | 15,284 | |||||||||||||||||||||
| Occupancy and equipment | 2,733 | 1,929 | 2,762 | 2,656 | 2,916 | |||||||||||||||||||||
| FDIC insurance | 725 | 606 | 625 | 525 | 580 | |||||||||||||||||||||
| Professional and consulting | 2,124 | 1,792 | 1,996 | 2,217 | 2,117 | |||||||||||||||||||||
| Marketing and advertising | 426 | 351 | 454 | 345 | 278 | |||||||||||||||||||||
| Information technology and communications | 2,801 | 2,866 | 3,058 | 3,048 | 2,636 | |||||||||||||||||||||
| Amortization of core deposit intangible | 434 | 433 | 483 | 483 | 508 | |||||||||||||||||||||
| Increase in value of acquisition price | 833 | 683 | - | - | - | |||||||||||||||||||||
| Other expenses | 2,108 | 1,930 | 2,223 | 2,169 | 1,940 | |||||||||||||||||||||
| Total noninterest expenses | 31,703 | 29,230 | 28,084 | 28,183 | 26,259 | |||||||||||||||||||||
| Income before income tax expense | 44,247 | 42,732 | 45,339 | 42,978 | 42,871 | |||||||||||||||||||||
| Income tax expense | 11,889 | 11,351 | 12,301 | 10,881 | 10,652 | |||||||||||||||||||||
| Net income | 32,358 | $ | 31,381 | $ | 33,038 | $ | 32,097 | $ | 32,219 | |||||||||||||||||
| Preferred dividends | 1,509 | 1,509 | 1,717 | - | - | |||||||||||||||||||||
| Net income available to common stockholders | $ | 30,849 | $ | 29,872 | $ | 31,321 | $ | 32,097 | $ | 32,219 | ||||||||||||||||
| Weighted average diluted common shares outstanding | 39,481,689 | 39,727,606 | 39,792,937 | 39,869,468 | 39,872,829 | |||||||||||||||||||||
| Diluted EPS | $ | 0.78 | $ | 0.75 | $ | 0.79 | $ | 0.80 | $ | 0.81 | ||||||||||||||||
| Reconciliation of GAAP Earnings to Pre-tax and Pre-provision Net Revenue | ||||||||||||||||||||||||||
| Net income | $ | 32,358 | $ | 31,381 | $ | 33,038 | $ | 32,097 | $ | 32,219 | ||||||||||||||||
| Income tax expense | 11,889 | 11,351 | 12,301 | 10,881 | 10,652 | |||||||||||||||||||||
| Provision for (reversal of) credit losses | 3,000 | 1,450 | 815 | 1,100 | (1,649 | ) | ||||||||||||||||||||
| Pre-tax and pre-provision net revenue | $ | 47,247 | $ | 44,182 | $ | 46,154 | $ | 44,078 | $ | 41,222 | ||||||||||||||||
| Return on Assets Measures | ||||||||||||||||||||||||||
| Average assets | $ | 8,322,823 | $ | 8,263,382 | $ | 8,027,169 | $ | 7,837,997 | $ | 7,566,676 | ||||||||||||||||
| Return on avg. assets | 1.56 | % | 1.54 | % | 1.63 | % | 1.62 | % | 1.71 | % | ||||||||||||||||
| Return on avg. assets (pre-tax and pre-provision) | 2.28 | 2.17 | 2.28 | 2.23 | 2.19 | |||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| Jun. 30 | Mar. 31, | Dec. 30, | Sep. 30, | Jun. 30, | ||||||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||||||||||||
| Return on Equity Measures | (dollars in thousands) | |||||||||||||||||||||||||
| Average stockholders' equity | $ | 1,143,097 | $ | 1,131,968 | $ | 1,113,524 | $ | 1,032,195 | $ | 952,019 | ||||||||||||||||
| Less: average preferred stock | (110,927 | ) | (110,927 | ) | (110,927 | ) | (51,847 | ) | - | |||||||||||||||||
| Average common equity | $ | 1,032,170 | $ | 1,021,041 | $ | 1,002,597 | $ | 980,348 | $ | 952,019 | ||||||||||||||||
| Less: average intangible assets | (216,786 | ) | (217,219 | ) | (217,685 | ) | (218,170 | ) | (218,662 | ) | ||||||||||||||||
| Average tangible common equity | $ | 815,384 | $ | 803,822 | $ | 784,912 | $ | 762,178 | $ | 733,357 | ||||||||||||||||
| Return on avg. common equity (GAAP) | 11.99 | % | 11.87 | % | 12.39 | % | 12.99 | % | 13.57 | % | ||||||||||||||||
| Return on avg. tangible common equity ("TCE") (non-GAAP)^(1)^ | 15.32 | 15.22 | 16.00 | 16.88 | 17.82 | |||||||||||||||||||||
| Return on avg. tangible common equity (pre-tax, pre-provision) | 23.39 | 22.44 | 23.50 | 23.12 | 22.74 | |||||||||||||||||||||
| Efficiency Measures | ||||||||||||||||||||||||||
| Total noninterest expenses | $ | 31,703 | $ | 29,230 | $ | 28,084 | $ | 28,183 | $ | 26,259 | ||||||||||||||||
| Amortization of core deposit intangibles | (434 | ) | (433 | ) | (483 | ) | (483 | ) | (508 | ) | ||||||||||||||||
| Operating noninterest expense | $ | 31,269 | $ | 28,797 | $ | 27,601 | $ | 27,700 | $ | 25,751 | ||||||||||||||||
| Net interest income (tax equivalent basis) | $ | 76,146 | $ | 70,842 | $ | 70,890 | $ | 68,761 | $ | 63,418 | ||||||||||||||||
| Noninterest income | 3,359 | 3,054 | 3,777 | 4,016 | 4,472 | |||||||||||||||||||||
| Net losses (gains) on equity securities | 405 | 596 | 131 | 78 | (23 | ) | ||||||||||||||||||||
| Net gains on sale/redemption of investment securities | - | - | - | - | (195 | ) | ||||||||||||||||||||
| Operating revenue | $ | 79,910 | $ | 74,492 | $ | 74,798 | $ | 72,855 | $ | 67,672 | ||||||||||||||||
| Operating efficiency ratio (non-GAAP)^(2)^ | 39.1 | % | 38.7 | % | 36.9 | % | 38.0 | % | 38.1 | % | ||||||||||||||||
| Net Interest Margin | ||||||||||||||||||||||||||
| Average interest-earning assets | $ | 7,807,445 | $ | 7,753,881 | $ | 7,508,973 | $ | 7,321,771 | $ | 7,059,965 | ||||||||||||||||
| Net interest income (tax equivalent basis) | $ | 76,146 | $ | 70,842 | $ | 70,890 | $ | 68,761 | $ | 63,418 | ||||||||||||||||
| Impact of purchase accounting fair value marks | (1,014 | ) | (1,179 | ) | (1,674 | ) | (1,849 | ) | (2,012 | ) | ||||||||||||||||
| Adjusted net interest income (tax equivalent basis) | $ | 75,132 | $ | 69,663 | $ | 69,216 | $ | 66,912 | $ | 61,406 | ||||||||||||||||
| Net interest margin (GAAP) | 3.91 | % | 3.71 | % | 3.75 | % | 3.73 | % | 3.60 | % | ||||||||||||||||
| Adjusted net interest margin (non-GAAP)^(3)^ | 3.86 | 3.64 | 3.66 | 3.63 | 3.49 | |||||||||||||||||||||
| ^(1)^Earnings available to common stockholders excluding amortization of intangible assets divided by average tangible common equity. | ||||||||||||||||||||||||||
| ^(2)^Operating noninterest expense divided by operating revenue. | ||||||||||||||||||||||||||
| ^(3)^Adjusted net interest margin excludes impact of purchase accounting fair value marks. | ||||||||||||||||||||||||||
| As of | ||||||||||||||||||||||||||
| Jun. 30 | Mar. 31, | Dec. 30, | Sep. 30, | Jun. 30, | ||||||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||||||||||||
| Capital Ratios and Book Value per Share | (dollars in thousands, except for per share data) | |||||||||||||||||||||||||
| Stockholders equity | $ | 1,143,147 | $ | 1,138,519 | $ | 1,124,212 | $ | 1,098,433 | $ | 964,960 | ||||||||||||||||
| Less: preferred stock | (110,927 | ) | (110,927 | ) | (110,927 | ) | (110,927 | ) | - | |||||||||||||||||
| Common equity | $ | 1,032,220 | $ | 1,027,592 | $ | 1,013,285 | $ | 987,506 | $ | 964,960 | ||||||||||||||||
| Less: intangible assets | (216,502 | ) | (216,936 | ) | (217,369 | ) | (217,852 | ) | (218,335 | ) | ||||||||||||||||
| Tangible common equity | $ | 815,718 | $ | 810,656 | $ | 795,916 | $ | 769,654 | $ | 746,625 | ||||||||||||||||
| Total assets | $ | 8,841,506 | $ | 8,334,301 | $ | 8,129,480 | $ | 7,949,514 | $ | 7,710,082 | ||||||||||||||||
| Less: intangible assets | (216,502 | ) | (216,936 | ) | (217,369 | ) | (217,852 | ) | (218,335 | ) | ||||||||||||||||
| Tangible assets | $ | 8,625,004 | $ | 8,117,365 | $ | 7,912,111 | $ | 7,731,662 | $ | 7,491,747 | ||||||||||||||||
| Common shares outstanding | 39,243,123 | 39,518,411 | 39,568,090 | 39,602,199 | 39,794,815 | |||||||||||||||||||||
| Common equity ratio (GAAP) | 11.67 | % | 12.33 | % | 12.46 | % | 12.42 | % | 12.52 | % | ||||||||||||||||
| Tangible common equity ratio (non-GAAP)^(4)^ | 9.46 | 9.99 | 10.06 | 9.95 | 9.97 | |||||||||||||||||||||
| Regulatory capital ratios (Bancorp): | ||||||||||||||||||||||||||
| Leverage ratio | 11.63 | % | 11.57 | % | 11.65 | % | 11.60 | % | 10.19 | % | ||||||||||||||||
| Common equity Tier 1 risk-based ratio | 10.63 | 10.69 | 10.64 | 10.73 | 11.09 | |||||||||||||||||||||
| Risk-based Tier 1 capital ratio | 12.11 | 12.21 | 12.19 | 12.35 | 11.17 | |||||||||||||||||||||
| Risk-based total capital ratio | 15.09 | 15.25 | 15.26 | 15.54 | 14.58 | |||||||||||||||||||||
| Regulatory capital ratios (Bank): | ||||||||||||||||||||||||||
| Leverage ratio | 11.61 | % | 11.41 | % | 11.43 | % | 11.33 | % | 11.34 | % | ||||||||||||||||
| Common equity Tier 1 risk-based ratio | 12.08 | 12.04 | 11.96 | 12.06 | 12.42 | |||||||||||||||||||||
| Risk-based Tier 1 capital ratio | 12.08 | 12.04 | 11.96 | 12.06 | 12.42 | |||||||||||||||||||||
| Risk-based total capital ratio | 13.55 | 13.55 | 13.44 | 13.61 | 14.07 | |||||||||||||||||||||
| Book value per share (GAAP) | $ | 26.30 | $ | 26.00 | $ | 25.61 | $ | 24.94 | $ | 24.25 | ||||||||||||||||
| Tangible book value per share (non-GAAP)^(5)^ | 20.79 | 20.51 | 20.12 | 19.43 | 18.76 | |||||||||||||||||||||
| Net Loan (Recoveries) Charge-Off Detail | ||||||||||||||||||||||||||
| Net loan charge-offs (recoveries): | ||||||||||||||||||||||||||
| Charge-offs | $ | 302 | $ | 274 | $ | 458 | $ | 1,727 | $ | 212 | ||||||||||||||||
| Recoveries | (32 | ) | (32 | ) | (217 | ) | (113 | ) | (14 | ) | ||||||||||||||||
| Net loan charge-offs (recoveries) | $ | 270 | $ | 242 | $ | 241 | $ | 1,614 | $ | 198 | ||||||||||||||||
| Net loan charge-offs (recoveries) as a % of average loans receivable (annualized) | 0.02 | % | 0.01 | % | 0.01 | % | 0.10 | % | 0.01 | % | ||||||||||||||||
| Asset Quality | ||||||||||||||||||||||||||
| Nonaccrual loans | $ | 60,756 | $ | 59,403 | $ | 61,700 | $ | 65,959 | $ | 56,213 | ||||||||||||||||
| OREO | 316 | 316 | - | - | - | |||||||||||||||||||||
| Nonperforming assets | $ | 61,072 | $ | 59,719 | $ | 61,700 | $ | 65,959 | $ | 56,213 | ||||||||||||||||
| Allowance for credit losses - loans ("ACL") | 82,739 | 80,070 | 78,773 | 77,986 | 78,684 | |||||||||||||||||||||
| Loans receivable | $ | 7,274,573 | $ | 6,979,595 | $ | 6,828,622 | $ | 6,576,439 | $ | 6,407,904 | ||||||||||||||||
| Less: PPP loans | 18,004 | 54,301 | 93,057 | 177,829 | 326,788 | |||||||||||||||||||||
| Loans receivable (excluding PPP loans) | $ | 7,256,569 | $ | 6,925,294 | $ | 6,735,565 | $ | 6,398,610 | $ | 6,081,116 | ||||||||||||||||
| Nonaccrual loans as a % of loans receivable | 0.84 | % | 0.85 | % | 0.90 | % | 1.00 | % | 0.88 | % | ||||||||||||||||
| Nonperforming assets as a % of total assets | 0.69 | 0.72 | 0.76 | 0.83 | 0.73 | |||||||||||||||||||||
| ACL as a % of loans receivable | 1.14 | 1.15 | 1.15 | 1.19 | 1.23 | |||||||||||||||||||||
| ACL as a % of loans receivable (excluding PPP loans) | 1.14 | 1.16 | 1.17 | 1.22 | 1.29 | |||||||||||||||||||||
| ACL as a % of nonaccrual loans | 136.2 | 134.8 | 127.7 | 118.2 | 140.0 | |||||||||||||||||||||
| ^(4)^Tangible common equity divided by tangible assets. | ||||||||||||||||||||||||||
| ^(5)^Tangible common equity divided by common shares outstanding at period-end. | ||||||||||||||||||||||||||
| CONNECTONE BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| NET INTEREST MARGIN ANALYSIS | ||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | ||||||||||||||||||||||||
| Average | Average | Average | ||||||||||||||||||||||||
| Interest-earning assets: | Balance | Interest | Rate^(7)^ | Balance | Interest | Rate^(7)^ | Balance | Interest | Rate^(7)^ | |||||||||||||||||
| Investment securities^(1) (2)^ | $ | 610,465 | $ | 3,710 | 2.44 | % | $ | 545,203 | $ | 2,771 | 2.06 | % | $ | 444,461 | $ | 1,765 | 1.59 | % | ||||||||
| Loans receivable and loans held-for-sale^(2) (3) (4)^ | 7,008,174 | 81,597 | 4.67 | 6,871,477 | 76,320 | 4.50 | 6,252,212 | 71,348 | 4.58 | |||||||||||||||||
| Federal funds sold and interest- | ||||||||||||||||||||||||||
| bearing deposits with banks | 157,201 | 313 | 0.80 | 312,224 | 120 | 0.16 | 341,885 | 84 | 0.10 | |||||||||||||||||
| Restricted investment in bank stock | 31,605 | 291 | 3.69 | 24,977 | 214 | 3.47 | 21,407 | 263 | 4.93 | |||||||||||||||||
| Total interest-earning assets | 7,807,445 | 85,911 | 4.41 | 7,753,881 | 79,425 | 4.15 | 7,059,965 | 73,460 | 4.17 | |||||||||||||||||
| Allowance for loan losses | (81,012 | ) | (79,763 | ) | (80,548 | ) | ||||||||||||||||||||
| Noninterest-earning assets | 596,390 | 589,264 | 587,259 | |||||||||||||||||||||||
| Total assets | $ | 8,322,823 | $ | 8,263,382 | $ | 7,566,676 | ||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||
| Time deposits | $ | 1,103,418 | 2,179 | 0.79 | $ | 1,124,614 | $ | 2,154 | 0.78 | 1,324,510 | 3,963 | 1.20 | ||||||||||||||
| Other interest-bearing deposits | 3,717,531 | 3,530 | 0.38 | 3,851,558 | 2,856 | 0.30 | 3,320,400 | 2,461 | 0.30 | |||||||||||||||||
| Total interest-bearing deposits | 4,820,949 | 5,709 | 0.47 | 4,976,172 | 5,010 | 0.41 | 4,644,910 | 6,424 | 0.55 | |||||||||||||||||
| Borrowings | 548,675 | 1,849 | 1.35 | 404,907 | 1,377 | 1.38 | 331,633 | 1,419 | 1.72 | |||||||||||||||||
| Subordinated debentures | 153,053 | 2,179 | 5.71 | 152,977 | 2,168 | 5.75 | 152,750 | 2,168 | 5.69 | |||||||||||||||||
| Capital lease obligation | 1,865 | 28 | 6.02 | 1,917 | 28 | 5.92 | 2,066 | 31 | 6.02 | |||||||||||||||||
| Total interest-bearing liabilities | 5,524,542 | 9,765 | 0.71 | 5,535,973 | 8,583 | 0.63 | 5,131,359 | 10,042 | 0.78 | |||||||||||||||||
| Noninterest-bearing demand deposits | 1,607,465 | 1,547,055 | 1,432,707 | |||||||||||||||||||||||
| Other liabilities | 47,719 | 48,386 | 50,591 | |||||||||||||||||||||||
| Total noninterest-bearing liabilities | 1,655,184 | 1,595,441 | 1,483,298 | |||||||||||||||||||||||
| Stockholders' equity | 1,143,097 | 1,131,968 | 952,019 | |||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 8,322,823 | $ | 8,263,382 | $ | 7,566,676 | ||||||||||||||||||||
| Net interest income (tax equivalent basis) | 76,146 | 70,842 | 63,418 | |||||||||||||||||||||||
| Net interest spread^(5)^ | 3.70 | % | 3.53 | % | 3.39 | % | ||||||||||||||||||||
| Net interest margin^(6)^ | 3.91 | % | 3.71 | % | 3.60 | % | ||||||||||||||||||||
| Tax equivalent adjustment | (555 | ) | (484 | ) | (409 | ) | ||||||||||||||||||||
| Net interest income | $ | 75,591 | $ | 70,358 | $ | 63,009 | ||||||||||||||||||||
| ^(1)^Average balances are calculated on amortized cost. | ||||||||||||||||||||||||||
| ^(2)^Interest income is presented on a tax equivalent basis using 21% federal tax rate. | ||||||||||||||||||||||||||
| ^(3)^Includes loan fee income and accretion of purchase accounting adjustments. | ||||||||||||||||||||||||||
| ^(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. |