Investor Relations

Press Release

ConnectOne Bancorp, Inc. Reports a 14.3% Increase in First Quarter Net Income

Company Release - 4/27/2017 7:00 AM ET

ENGLEWOOD CLIFFS, N.J., April 27, 2017 (GLOBE NEWSWIRE) -- ConnectOne Bancorp, Inc. (Nasdaq:CNOB) (the “Company” or “ConnectOne”), parent company of ConnectOne Bank (the “Bank”), today reported net income of $11.9 million for the first quarter of 2017, a 14.3% increase from $10.4 million earned during the first quarter of 2016.  Diluted earnings per share increased to $0.37 during the current quarter versus $0.34 earned in the prior-year first quarter. During the sequential fourth quarter 2016, the Company reported a loss of $(2.0) million, or $(0.07) per diluted share, due to a $24.0 million charge largely related to transferring the Bank’s taxi medallion portfolio to the held-for-sale category.

Frank Sorrentino, ConnectOne’s Chairman and CEO stated, “ConnectOne has maintained solid momentum executing against key operating objectives and we’re off to a great start in 2017 with strong first quarter results.  Gross loan fundings during the quarter were a robust $340 million, strengthened by an increase in lending opportunities due, in part, to escalating regulatory and capacity pressures on our in-market competition.  Our loans receivable portfolio increased by nearly $100 million from year-end 2016, still strong, but impacted by anticipated borrower pay-downs in the construction portfolio and pay-offs.  Return on average assets reached 1.10%, our return on average tangible equity was in excess of 12%, and our net interest margin widened to 3.40% under GAAP, and to 3.33% excluding the benefit of purchase accounting, reversing a long downward trend due to the protracted low interest rate environment.  Our efficiency ratio increased, reflecting typical seasonality for the first quarter, to 44.0%, but is still indicative of an extraordinarily efficient infrastructure. We expect this ratio to remain in the low 40% range.  Our outlook for 2017 is positive, as we remain well-positioned to capitalize on organic growth opportunities throughout the New York metropolitan region.”

Operating Results

Fully taxable equivalent net interest income for the first quarter of 2017 was $34.0 million, a decrease of $0.2 million, or 0.5%, from the fourth quarter of 2016, due to 2 fewer days in the current quarter, partially offset by a 4 basis-point widening of the net interest margin to 3.40% from 3.36%. Included in net interest income was accretion and amortization of purchase accounting adjustments of $0.6 million and $1.0 million during the first quarter of 2017 and fourth quarter of 2016, respectively.  Excluding these purchase accounting adjustments, the adjusted net interest margin was 3.33% in the first quarter of 2017, widening by 6 basis-points from the fourth quarter 2016 adjusted net interest margin of 3.27%. The increase in the adjusted net interest margin was primarily attributable to higher short-term rates, an improved mix of interest-earning assets and stable rates paid on deposits. Fully taxable equivalent net interest income for the first quarter of 2017 also reflected an increase of $2.0 million, or 6.2%, from the first quarter of 2016, resulting from an 8.7% increase in interest earning assets, partially offset by a 5 basis-point contraction of the net interest margin to 3.40% from 3.45%. Included in net interest income was accretion and amortization of purchase accounting adjustments of $0.6 million and $1.3 million during the first quarter of 2017 and first quarter of 2016, respectively.  Excluding these purchase accounting adjustments, the adjusted net interest margin was 3.33% in the first quarter of 2017, widening by 2 basis-points from the first quarter of 2016 adjusted net interest margin of 3.31%. The slight increase in the adjusted net interest margin was primarily attributable to improved mix and rates on our interest-earning assets.

Noninterest income totaled $3.0 million in the first quarter of 2017, $1.6 million in the fourth quarter of 2016 and $1.2 million in the first quarter of 2016.  The first quarter of 2017 included net securities gains of $1.6 million.  There were no net securities gains during both the fourth quarter of 2016 and first quarter of 2016.  Excluding the securities gains, noninterest income decreased approximately $0.2 million from the sequential quarter and increased $0.2 million from the prior year first quarter.  The decrease from the sequential quarter was primarily attributable to decreases in deposit fees which are typically lower in the first quarter due to seasonal factors.  The increase from the prior year first quarter was primarily attributable to an increase in deposit, loan and other income and BOLI income.  Noninterest income also includes annuities and life insurance commissions.

Noninterest expenses totaled $18.2 million for the first quarter of 2017, up $2.9 million from $15.3 million for the fourth quarter of 2016 and up $3.9 million from $14.4 million for the first quarter of 2016.  The increase from the sequential quarter was mainly attributable to an increase in the taxi medallion loans held-for-sale valuation allowance of $2.6 million.  In addition, increases in salaries and employee benefits expense ($0.3 million), occupancy and equipment expenses ($0.1 million) and other expenses ($0.1 million), partially offset by decreases in professional and consulting expenses ($0.2 million) contributed to the overall increase in noninterest expenses from the fourth quarter of 2016.  The increase from the prior year first quarter was mainly attributable to the aforementioned valuation allowance.  In addition, increases in salaries and employee benefits ($0.6 million), FDIC insurance premiums ($0.3 million), data processing ($0.1 million), marketing and advertising expenses ($0.1 million) and other expense ($0.2 million) contributed to the overall increase in noninterest expense from the first quarter of 2016.  The increases over the prior year first quarter were the result of increased levels of business and staff resulting from organic growth.

Income tax expense was $4.9 million for the first quarter of 2017, compared to an income tax benefit of $(3.4) million for the fourth quarter of 2016 and income tax expense of $4.8 million for the first quarter of 2016.  Included in income tax expense for the first quarter of 2017 is a benefit of $133 thousand which resulted from the effect of implementing ASU 2016-09, which relates to the recognition of excess tax benefits in the income statement (formerly through equity) that result from employee share-based payment awards. The effective tax rate for the current quarter was 29.3% versus 31.5% for the prior-year quarter.  Excluding any changes to the taxi medallion valuation allowance, the effective tax rate for 2017 is expected to be maintained in the low 30% range.

Asset Quality

The provision for loan and lease losses decreased to $1.1 million in the first quarter of 2017 from $25.2 million in the fourth quarter of 2016, and from $3.0 million in the first quarter of 2016.  The decrease from the sequential quarter was largely attributable to additional reserves of approximately $24.0 million specifically allocated to the Bank’s taxi medallion portfolio that occurred during the fourth quarter of 2016, and reflected solid asset quality metrics throughout the Bank’s growing loan receivable portfolio.  The decrease from the prior year quarter was largely attributable to decreases in specific reserves.

As of March 31, 2017, loans held-for-sale included loans secured by taxi medallions totaling $61.3 million (net of a valuation allowance of $2.6 million), compared to $65.6 million as of December 31, 2016.  The decrease was primarily attributable to the aforementioned valuation allowance, a payoff of two corporate medallions for $1.1 million, and debt service applied to loan carrying values.

Nonperforming assets, which includes nonaccrual loans and other real estate owned, were $72.4 million at March 31, 2017, $69.4 million at December 31, 2016 and $23.1 million at March 31, 2016. Included in nonperforming assets were taxi medallion loans, totaling $59.0 million at March 31, 2017, $63.0 million at December 31, 2016 and $1.9 million at March 31, 2016.  Nonperforming assets as a percent of total assets were 1.62% at March 31, 2017, 1.57% at December 31, 2016, and 0.57% at March 31, 2016.  Excluding the taxi medallion loans, nonaccrual loans increased to $12.8 million at March 31, 2017, from $5.7 million at December 31, 2016 and decreased from $19.6 million at March 31, 2016.  Nonaccrual loans as a percent of loans receivable, excluding taxi medallion loans, were 0.36% at March 31, 2017, 0.16% at December 31, 2017 and 0.62% at March 31, 2016.

Annualized net charge-offs were (0.01)% (a net recovery) for the first quarter of 2017, 4.23% for the fourth quarter of 2016, and 0.06% for the first quarter of 2016. The allowance for loan and lease losses represented 0.75%, 0.74%, and 0.89% of loans receivable as of March 31, 2017, December 31, 2016 and March 31, 2016, respectively.  The allowance as a percentage of nonaccruals, excluding taxi medallion loans, was 210.3% as of March 31, 2017, 449.0% as of December 31, 2016 and 117.9% as of March 31, 2016.

Selected Balance Sheet Items

At March 31, 2017, the Company’s total assets were $4.5 billion, an increase of $34.5 million from December 31, 2016. Total loans at March 31, 2017 were $3.6 billion, reflecting net loan growth (loan originations less pay-downs and pay-offs) of $96 million from December 31, 2016, primarily attributable to increases in multifamily ($85 million), other commercial real estate ($37 million) and residential real estate ($10 million), offset by decreases in construction ($26 million) and commercial and industrial ($12 million).

The Company’s stockholders’ equity was $540 million at March 31, 2017, an increase of $9.2 million from December 31, 2016. The increase in stockholders’ equity was primarily attributable to an increase of $9.5 million in retained earnings, and approximately $0.4 million of equity issuance related to stock-based compensation, partially offset by an increase to accumulated other comprehensive loss of $0.4 million.  As of March 31, 2017, the Company’s tangible common equity ratio and tangible book value per share were 9.08% and $12.23, respectively.  As of December 31, 2016, the tangible common equity ratio and tangible book value per share were 8.93% and $11.96, respectively. Total goodwill and other intangible assets were approximately $149 million as of March 31, 2017 and December 31, 2016, respectively.

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 financial measures including return on average tangible assets, return on average tangible common equity, operating efficiency ratio, adjusted net interest margin, tangible common equity ratio and tangible book value per common share. 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, and facilitates comparisons with the performance of peers. Reconciliations of non-GAAP disclosures used in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

About ConnectOne Bancorp, Inc.

ConnectOne is a New Jersey corporation and a registered bank holding company pursuant to the Bank Holding Company Act of 1956, as amended, and serves as the holding company for ConnectOne Bank ("the Bank"). The Bank is a community-based, full-service New Jersey-chartered commercial bank that was founded in 2005. The Bank operates from its headquarters located at 301 Sylvan Avenue in the Borough of Englewood Cliffs, Bergen County, New Jersey, and through its 20 other banking offices.

For more information visit 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.

       
CONNECTONE BANCORP, INC. AND SUBSIDIARIES  
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION  
(dollars in thousands)  
 March 31, December 31, March 31, 
 2017 2016 2016 
 (unaudited)   (unaudited) 
ASSETS      
Cash and due from banks$35,867  $37,150  $34,603  
Interest-bearing deposits with banks 126,002   163,249   83,656  
Cash and cash equivalents 161,869   200,399   118,259  
       
Investment securities:      
Available-for-sale 352,476   353,290   191,331  
Held-to-maturity (fair value of $ -, $ -, $229,470) -   -   219,373  
       
Loans held-for-sale (net of $2,600, $ -, $ - valuation allowance) 62,255   78,005   -  
       
Loans receivable  3,571,663   3,475,832    3,263,813  
Less: Allowance for loan and lease losses 26,901   25,744   29,074  
Net loans receivable 3,544,762   3,450,088   3,234,739  
       
Investment in restricted stock, at cost 24,985   24,310   31,487  
Bank premises and equipment, net 22,259   22,075   22,652  
Accrued interest receivable 12,701   12,965   12,604  
Bank owned life insurance 99,063   98,359   79,412  
Other real estate owned 580   626   1,696  
Goodwill 145,909   145,909   145,909  
Core deposit intangibles 2,895   3,088   3,691  
Other assets 31,062   37,234   29,847  
Total assets$4,460,816  $4,426,348  $4,091,000  
       
LIABILITIES      
Deposits:      
Noninterest-bearing$671,183  $694,977  $614,507  
Interest-bearing 2,684,294   2,649,294   2,278,564  
Total deposits 3,355,477   3,344,271   2,893,071  
Borrowings 491,226   476,280   646,501  
Subordinated debentures (net of $580, $621, $763 in debt issuance costs)   54,575   54,534   54,392  
Other liabilities 19,261   20,231   22,309  
Total liabilities 3,920,539   3,895,316   3,616,273  
       
COMMITMENTS AND CONTINGENCIES      
       
STOCKHOLDERS' EQUITY      
Common stock 412,546   412,726   374,287  
Additional paid-in capital 11,796   11,407   9,324  
Retained earnings 135,939   126,462   112,663  
Treasury stock (16,717)  (16,717)  (16,717) 
Accumulated other comprehensive loss (3,287)  (2,846)  (4,830) 
Total stockholders' equity 540,277   531,032   474,727  
Total liabilities and stockholders' equity$4,460,816  $4,426,348  $4,091,000  
       

 

        
CONNECTONE BANCORP, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME  
(dollars in thousands, except for per share data)  
        
   Three Months Ended  
  03/31/17 12/31/16 03/31/16 
Interest income       
Interest and fees on loans $38,006 $38,600  $35,017 
Interest and dividends on investment securities:       
Taxable  1,548  1,389   2,140 
Tax-exempt  954  959   883 
Dividends  330  336   352 
Interest on federal funds sold and other short-term investments    246  215   134 
Total interest income  41,084  41,499   38,526 
Interest expense       
Deposits  5,109  5,135   3,939 
Borrowings  2,834  2,957   3,267 
Total interest expense  7,943  8,092   7,206 
        
Net interest income  33,141  33,407   31,320 
Provision for loan and lease losses  1,100  25,200   3,000 
Net interest income after provision for loan and lease losses    32,041  8,207   28,320 
        
Noninterest income       
Annuities and insurance commissions  39  51   40 
Income on bank owned life insurance  703  715   612 
Net gains on sale of loans held-for-sale  21  86   35 
Deposit, loan and other income  643  721   515 
Net gains on sale of investment securities  1,596  -   - 
Total noninterest income  3,002  1,573   1,202 
        
Noninterest expenses       
Salaries and employee benefits  8,206  7,888   7,599 
Occupancy and equipment  2,255  2,122   2,247 
FDIC insurance  895  985   595 
Professional and consulting  718  901   711 
Marketing and advertising  256  222   184 
Data processing  1,149  1,106   1,024 
Amortization of core deposit intangible  193  193   217 
Increase in valuation allowance, loans held-for-sale  2,600  -   - 
Other expenses  1,977  1,835   1,776 
Total noninterest expenses  18,249  15,252   14,353 
        
Income (loss) before income tax expense  16,794  (5,472)  15,169 
Income tax expense (benefit)  4,914  (3,448)  4,778 
Net income (loss)  11,880  (2,024)  10,391 
Less: Preferred stock dividends  -  -   22 
Net income (loss) available to common stockholders $  11,880 $  (2,024) $  10,369 
        
Earnings per common share:       
Basic $0.37 $(0.07) $0.35 
Diluted  0.37  (0.07)  0.34 
        
Dividends per common share $0.075 $0.075  $0.075 
        

 

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 
(dollars in thousands, except share data) 
 As of 
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 
 2017 2016 2016 2016 2016 
Selected Financial Data          
Total assets$4,460,816  $4,426,348  $4,327,804  $4,262,914  $4,091,000  
Loans receivable:          
Commercial 541,690   554,065   644,430   630,425   601,708  
Commercial real estate-other 1,192,074   1,154,154   1,139,641   1,104,214   1,087,388  
Commercial real estate-multifamily 1,134,760   1,050,067   961,163   967,555   940,913  
Commercial construction 460,611   486,228   471,109   443,277   402,594  
Residential 242,883   232,547   229,401   230,497   231,319  
Consumer 2,811   2,380   2,879   1,976   1,851  
Gross loans 3,574,829   3,479,441   3,448,623   3,377,944   3,265,773  
Unearned net origination fees (3,166)  (3,609)  (3,147)  (2,324)  (1,960) 
Loans receivable 3,571,663   3,475,832   3,445,476   3,375,620   3,263,813  
Loans held-for-sale (net of valuation allowance) 62,255   78,005   15,112   360   -  
Total loans 3,633,918   3,553,837   3,460,588   3,375,980   3,263,813  
           
Securities available-for-sale 352,476   353,290   338,459   208,266   191,331  
Securities held-to-maturity -   -   -   214,718   219,373  
Goodwill and other intangible assets 148,804   148,997   149,190   149,383   149,600  
Deposits:          
Noninterest-bearing 671,183   694,977   655,683   648,664   614,508  
Interest-bearing 547,934   563,740   531,500   523,742   517,809  
Savings 188,790   205,551   207,717   210,040   219,865  
Money market 977,357   911,867   866,710   866,643   678,222  
Time deposits 970,213   968,136   1,007,339   951,904   862,667  
Total deposits 3,355,477   3,344,271   3,268,949   3,200,993   2,893,071  
           
Borrowings 491,226   476,280   481,337   496,414   646,501  
Subordinated debentures (net of issuance costs) 54,575   54,534   54,490   54,441   54,392  
Total stockholders' equity 540,277   531,032   499,588   484,414   474,727  
           
Quarterly Average Balances          
Total assets$4,382,314  $4,349,961  $4,344,796  $4,212,307  $4,034,375  
Loans receivable:          
Commercial 557,347   644,263   632,892   626,902   585,773  
Commercial real estate (including multifamily) 2,222,795   2,130,955   2,081,741   2,056,263   2,005,872  
Commercial construction 466,455   479,342   462,399   418,769   361,108  
Residential 237,418   229,738   229,953   231,553   236,404  
Consumer 2,460   2,777   2,771   2,865   2,670  
Gross loans 3,486,475   3,487,075   3,409,756   3,336,352   3,191,827  
Unearned net origination fees (3,304)  (3,151)  (2,956)  (2,295)  (2,397) 
Loans receivable 3,483,171   3,483,924   3,406,800   3,334,057   3,189,430  
Loans held-for-sale 65,860   4,549   478   395   142  
Total loans 3,549,031   3,488,473   3,407,278   3,334,452   3,189,572  
           
Securities available-for-sale 367,940   351,809   269,895   202,103   222,776  
Securities held-to-maturity -   -   143,146   218,220   194,474  
Goodwill and other intangible assets 148,930   149,123   149,317   149,525   149,741  
Deposits:          
Noninterest-bearing 655,597   666,913   640,323   581,743   609,312  
Interest-bearing 549,335   534,127   553,401   528,954   503,896  
Savings 199,000   205,477   211,162   215,267   215,491  
Money market 958,656   891,764   872,937   791,845   656,557  
Time deposits 963,976   985,944   1,007,530   889,561   807,801  
Total deposits 3,326,564   3,284,225   3,285,353   3,007,370   2,793,057  
           
Borrowings 442,595   476,925   488,015   639,054   684,469  
Subordinated debentures 55,155   55,155   55,155   55,155   55,155  
Total stockholders' equity 539,544   511,663   495,141   483,519   482,503  
                     
                     
 Three Months Ended 
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 
 2017 2016 2016 2016 2016 
Net interest income$33,141  $33,407  $33,024  $32,394  $31,320  
Provision for loan and lease losses 1,100   25,200   6,750   3,750   3,000  
Net interest income after provision for loan and lease losses 32,041   8,207   26,274   28,644   28,320  
Noninterest income          
Annuity and insurance commissions 39   51   68   32   40  
Income on bank owned life insurance 703   715   615   616   612  
Net gains on sale of loans held-for-sale 21   86   56   56   35  
Deposit, loan and other income 643   721   706   763   515  
Net gains on sale of investment securities 1,596   -   4,131   103   -  
Total noninterest income 3,002   1,573   5,576   1,570   1,202  
Noninterest expenses          
Salaries and employee benefits 8,206   7,888   7,791   7,753   7,599  
Occupancy and equipment 2,255   2,122   2,049   2,154   2,247  
FDIC insurance 895   985   745   615   595  
Professional and consulting 718   901   667   700   711  
Marketing and advertising 256   222   293   250   184  
Data processing 1,149   1,106   1,002   1,010   1,024  
Amortization of core deposit intangible 193   193   193   217   217  
Increase in valuation allowance, loans held-for-sale 2,600   -   -   -   -  
Other expenses 1,977   1,835   1,811   1,653   1,776  
Total noninterest expenses 18,249   15,252   14,551   14,352   14,353  
           
Income (loss) before income tax expense 16,794   (5,472)  17,299   15,862   15,169  
Income tax expense (benefit) 4,914   (3,448)  5,443   5,003   4,778  
Net income (loss)$11,880  $(2,024) $11,856  $10,859  $10,391  
Less: preferred dividends -   -   -   -   22  
Net income (loss) available to common stockholders$11,880  $(2,024) $11,856  $10,859  $10,369  
Weighted average diluted shares outstanding 32,192,643   30,729,359   30,401,684   30,340,376   30,257,676  
Diluted EPS$0.37  $(0.07) $0.39  $0.36  $0.34  
           
Return on Assets Measures          
Average assets$4,382,314  $4,349,961  $4,344,796  $4,212,307  $4,034,375  
Less: average intangible assets (148,930)  (149,123)  (149,317)  (149,525)  (149,741) 
Average tangible assets$4,233,384  $4,200,838  $4,195,479  $4,062,782  $3,884,634  
Return on avg. assets (GAAP) 1.10%  -0.19%  1.09%  1.04%  1.04% 
Return on avg. tangible assets (Non-GAAP) (1) 1.15%  -0.18%  1.14%  1.09%  1.09% 
_____          
(1) Net income excluding amortization of intangible assets divided by average tangible assets.
 
  
  
 Three Months Ended 
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 
 2017
 2016
 2016
 2016
 2016
 
Return on Equity Measures          
Average common equity$539,544  $511,663  $495,141  $483,519  $473,849  
Less: average intangible assets (148,930)  (149,123)  (149,317)  (149,525)  (149,741) 
Average tangible common equity$390,614  $362,540  $345,824  $333,994  $324,108  
           
Return on avg. common equity (GAAP) 8.93%  -1.57%  9.53%  9.03%  8.80% 
Return on avg. tangible common equity (non-GAAP) (2) 12.45%  -2.10%  13.77%  13.23%  13.03% 
           
Efficiency Measures          
Total noninterest expenses$18,249  $15,252  $14,551  $14,352  $14,353  
Increase in valuation allowance, loans held-for-sale (2,600)  -   -   -   -  
Foreclosed property expense (100)  (81)  (37)  10   (167) 
Operating noninterest expense$15,549  $15,171  $14,514  $14,362  $14,186  
           
Net interest income (FTE)$33,956  $34,120  $33,762  $33,112  $31,985  
Noninterest income 3,002   1,573   5,576   1,570   1,202  
Net gains on sales of investment securities (1,596)  -   (4,131)  (103)  -  
Operating revenue$35,362  $35,693  $35,207  $34,579  $33,187  
           
Operating efficiency ratio (non-GAAP) (3) 44.0%  42.5%  41.2%  41.5%  42.7% 
           
Net Interest Margin          
Average interest-earning assets$4,053,324  $4,038,030  $4,041,020  $3,912,802  $3,728,958  
           
Net interest income (FTE)$33,956  $34,120  $33,762  $33,112  $31,985  
Impact of purchase accounting fair value marks (649)  (960)  (1,045)  (1,245)  (1,335) 
Adjusted net interest income$33,307  $33,160  $32,717  $31,867  $30,650  
           
Net interest margin (GAAP) 3.40%  3.36%  3.32%  3.40%  3.45% 
Adjusted net interest margin (non-GAAP) (4) 3.33%  3.27%  3.22%  3.28%  3.31% 
_____          
(2) Earnings available to common stockholders excluding amortization of intangibles divided by average tangible common equity.
 
(3) Operating noninterest expense divided by operating revenue.
 
(4) Adjusted net interest income divided by average interest-earning assets.
 
  
  
 As of 
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 
(dollars in thousands, except share data)2017
 2016
 2016
 2016
 2016
 
Capital Ratios and Book Value per Share          
Common equity$540,277  $531,032  $499,588  $484,414  $474,727  
Less: intangible assets (148,804)  (148,997)  (149,190)  (149,383)  (149,600) 
Tangible common equity$391,473  $382,035  $350,398  $335,031  $325,127  
           
Total assets$4,460,816  $4,426,348  $4,327,804  $4,262,914  $4,091,000  
Less: intangible assets (148,804)  (148,997)  (149,190)  (149,383)  (149,600) 
Tangible assets$4,312,012  $4,277,351  $4,178,614  $4,113,531  $3,941,400  
           
Common shares outstanding 32,004,471   31,944,403   30,197,318   30,197,318   30,163,078  
           
Common equity ratio (GAAP) 12.11%  12.00%  11.54%  11.36%  11.60% 
Tangible common equity ratio (non-GAAP) (5) 9.08%  8.93%  8.39%  8.14%  8.25% 
           
Regulatory capital ratios (Bancorp):          
Leverage ratio 9.44%  9.29%  8.49%  8.52%  8.66% 
Common equity Tier 1 risk-based ratio 9.79%  9.74%  9.25%  9.10%  9.06% 
Risk-based Tier 1 capital ratio 9.92%  9.87%  9.38%  9.23%  9.20% 
Risk-based total capital ratio 11.83%  11.78%  11.69%  11.44%  11.36% 
           
Regulatory capital ratios (Bank):          
Leverage ratio 10.50%  10.34%  9.57%  9.62%  9.83% 
Common equity Tier 1 risk-based ratio 11.03%  10.98%  10.58%  10.43%  10.45% 
Risk-based Tier 1 capital ratio 11.03%  10.98%  10.58%  10.43%  10.45% 
Risk-based total capital ratio 11.70%  11.63%  11.57%  11.30%  11.24% 
           
Book value per share (GAAP)$16.88  $16.62  $16.54  $16.04  $15.74  
Tangible book value per share (non-GAAP) (6) 12.23   11.96   11.60   11.09   10.78  
           
           
 Three Months Ended 
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 
 2017
 2016
 2016
 2016
 2016
 
Net Charge-Off Detail          
Net loan charge-offs:          
Charge-offs$71  $37,074  $1,910  $77  $512  
Recoveries (129)  (2)  (12)  (16)  (14) 
Net loan charge-offs$(58) $37,072  $1,898  $61  $498  
as a % of average total loans (annualized) -0.01%  4.23%  0.22%  0.01%  0.06% 
           
Asset Quality          
Nonaccrual taxi medallion loans$59,054  $63,044  $3,637  $3,882  $1,871  
Nonaccrual loans, excluding taxi medallion loans 12,790   5,734   7,856   18,029   19,579  
Other real estate owned 580   626   626   2,029   1,696  
Total nonperforming assets$72,424  $69,404  $12,119  $23,940  $23,146  
           
Performing troubled debt restructurings$10,005  $13,338  $105,338  $97,831  $95,122  
           
Allowance for loan and lease losses ("ALLL")$26,901  $25,744  $37,615  $32,763  $29,074  
ALLL, net of taxi specific reserves 26,901   25,744   25,081   25,026   23,087  
           
Nonaccrual loans as a % of loans receivable, excluding taxi medallion loans 0.36%  0.16%  0.24%  0.55%  0.62% 
Nonperforming assets as a % of total assets 1.62%  1.57%  0.28%  0.56%  0.57% 
ALLL as a % of loans receivable 0.75%  0.74%  1.09%  0.97%  0.89% 
ALLL as a % of nonaccrual loans 37.4%  37.4%  327.3%  149.5%  135.5% 
ALLL (excluding taxi medallion specific reserves) as a % of nonaccrual loans (excluding taxi medallion loans) 210.3%  449.0%  319.3%  138.8%  117.9% 
ALLL (excluding taxi medallion specific reserves) as a % of loans receivable (excluding taxi medallion loans) 0.75%  0.74%  0.75%  0.76%  0.73% 
_____          
(5) Tangible common equity divided by tangible assets.          
(6) 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  
    March 31, 2017December 31, 2016March 31, 2016 
    Average      Average      Average      
Interest-earning assets: Balance Interest
 Rate (8)  Balance Interest
 Rate (8)  Balance Interest
 Rate (8)  
Investment securities (1) (2) $366,473  $3,015  3.34% $346,377  $2,864  3.29% $415,481  $3,499  3.39% 
Loans receivable and loans held-for-sale (2) (3) (4) 3,549,031   38,308  4.38   3,488,473   38,797  4.42   3,189,572   35,206  4.44  
Federal funds sold and interest-                  
  bearing deposits with banks  115,025   246  0.87   178,845   215  0.48   90,712   134  0.59  
Restricted investment in bank stock   22,795     330  5.87     24,335     336  5.49     33,193     352  4.26  
Total interest-earning assets 4,053,324   41,899  4.19   4,038,030   42,212  4.16   3,728,958   39,191  4.23  
Allowance for loan losses  (26,215)      (38,932)      (27,221)     
Noninterest-earning assets  355,205       350,863       332,638      
Total assets  $4,382,314      $4,349,961      $4,034,375      
                      
Interest-bearing liabilities:                   
Money market deposits  958,656   1,515  0.64   891,764   1,346  0.60   656,557   812  0.50  
Savings deposits   199,000   79  0.16   205,477   146  0.28   215,491   157  0.29  
Time deposits   963,976   3,091  1.30   985,944   3,199  1.29   807,801   2,535  1.26  
Other interest-bearing deposits   549,335     424  0.31     534,127     444  0.33     503,896     435  0.35  
Total interest-bearing deposits 2,670,967   5,109  0.78   2,617,312   5,135  0.78   2,183,745   3,939  0.73  
                      
Borrowings   442,595   1,985  1.82   476,925   2,105  1.76   684,469   2,413  1.42  
Subordinated debentures (5)  55,155   808  5.94   55,155   810  5.84   55,155   811  5.91  
Capital lease obligation    2,752     41  6.04     2,783     42  6.00     2,874     43  6.02  
Total interest-bearing liabilities 3,171,469   7,943  1.02   3,152,175   8,092  1.02   2,926,243   7,206  0.99  
                      
Demand deposits   655,597       666,913