Investor Relations

Press Release

ConnectOne Bancorp, Inc. Reports First Quarter 2018 Results

Company Release - 4/26/2018 7:00 AM ET

ENGLEWOOD CLIFFS, N.J., April 26, 2018 (GLOBE NEWSWIRE) -- ConnectOne Bancorp, Inc. (Nasdaq:CNOB) (the “Company” or “ConnectOne”), parent company of ConnectOne Bank (the “Bank”), today reported net income of $4.3 million for the first quarter of 2018 compared with $10.6 million for the fourth quarter of 2017 and $11.9 million for the first quarter of 2017. Diluted earnings per share were $0.13 for the current quarter versus $0.33 earned in the fourth quarter of 2017 and $0.37 earned in the first quarter of 2017. Earnings for the first quarter 2018 included a $17.0 million pretax provision for loan losses related to the Bank’s New York City taxi medallion loan portfolio.

Adjusted net income amounted to $17.1 million, or $0.53 earnings per share, for the first quarter of 2018; $16.3 million, or $0.51 earnings per share, for the fourth quarter of 2017; and $12.3 million, or $0.38 earnings per share, for the first quarter of 2017. Adjusted net income excludes taxi medallion after-tax charges of $13.4 million for the first quarter 2018, $0.2 million for the fourth quarter of 2017, and $1.5 million for the first quarter 2017. In addition, the first quarter of 2018 excludes $0.5 million of income tax benefit from ASU 2016-19, the fourth quarter of 2017 excludes a $5.6 million deferred tax asset (“DTA”) estimated valuation charge resulting from the Tax Cuts & Jobs Act of 2017 (“Tax Act”), and the first quarter of 2017 excludes $1.1 million of after-tax net gains on sales of securities.

Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer stated, “We are pleased to report continued strong operating performance in the first quarter of 2018 resulting in an adjusted return on average assets of 1.37% and an adjusted return on average tangible common equity of 16.4%. On a quarterly average basis, total loans for the 2018 first quarter increased by an annualized 15.1% sequentially from the 2017 fourth quarter, while average deposits increased by 7.0% on the same basis. Although sequential point-to-point loan and deposit growth was less than typical for ConnectOne due to a large volume of business booked at year-end, we remain on track to achieve strong deposit and loan growth during 2018. We continue to build upon our C&I origination capabilities demonstrated by more than 25% annualized sequential growth in average C&I loans in the 2018 first quarter and, combined with the previously announced $75 million subordinated debt issuance in January 2018, have made substantial headway in reducing our commercial real estate concentration as a percentage of regulatory capital to 509% at March 31, 2018 from 568% at year-end 2017. On the technology front, the implementation of nCino continues, effectively digitizing our loan onboarding process, enhancing our client service capabilities and client experience while also providing additional operating leverage. While our net interest margin in the quarter appeared to contract significantly on a sequential quarter basis, the decrease was primarily attributable to known events and non-recurring items including the early first quarter issuance of $75 million of subordinated debt and a decrease in yield related loan fees. As we continue to invest in our infrastructure and new team members, the efficiency ratio, which due to seasonal factors is typically higher in the first quarter of the year, temporarily increased to 42.5%. In comparison to the first quarter of 2017, the ratio showed an improvement from 44.0%, and still places our organization as one of the best in the industry.”

Mr. Sorrentino added, “Our growth plans include new office centers in Melville, Long Island, which opened in April 2018, and in the Astoria, Queens Market, which is projected to open in the second half of the year. We are pleased with the groundwork we're laying for the continued success of the business and, going forward, our loan and deposit pipeline remains very strong. We continue to project 2018 loan growth to be in the low to mid-teens and remain well positioned to produce strong, sustainable long-term growth.”

Operating Results

Fully taxable equivalent net interest income for the first quarter of 2018 was $38.6 million, a decrease of $2.1 million, or 5.2%, from the fourth quarter of 2017, resulting from the effects of a lower day count and a 25 basis-points contraction in the net interest margin to 3.26% from 3.51%, partially offset by a 4.3% increase in average interest earning assets, primarily loans, to $4.8 billion in the first quarter 2018 from $4.6 billion in the fourth quarter 2017. Included in net interest income was accretion and amortization of purchase accounting adjustments of $0.2 million during the first quarter of 2018 and $1.0 million during the fourth quarter of 2017. Excluding these purchase accounting adjustments, the adjusted net interest margin was 3.24% in the first quarter of 2018, contracting by 18 basis-points from the fourth quarter of 2017 adjusted net interest margin of 3.42%. Contributing 9 basis-points to the margin contraction were the subordinated debt issuance and the change in the taxable equivalent adjustment, both of which were anticipated. The margin contraction also reflected approximately 6 basis-points of lower yield related fees which tend to fluctuate from quarter to quarter, with the remaining variance attributable to an increasingly competitive environment on both sides of the balance sheet negatively affecting both spreads and volumes of new business.

Fully taxable equivalent net interest income for the first quarter of 2018 increased by $4.7 million, or 13.7%, from the first quarter of 2017, resulting from an increase in average interest-earning assets of 18.4%, primarily loans, offset by a contraction in the net interest margin of 14 basis-points to 3.26% from 3.40%. Included in net interest income was accretion and amortization of purchase accounting adjustments of $0.2 million during the first quarter of 2018 and $0.6 million during the first quarter of 2017. Excluding these purchase accounting adjustments, the adjusted net interest margin was 3.24% in the first quarter of 2018, contracting by 9 basis-points from the first quarter of 2017 adjusted net interest margin of 3.33%. The decrease in the adjusted net interest margin was primarily attributable to the aforementioned long-term subordinated debt issuance, the change in the taxable equivalent adjustment due to the Tax Act, and increased deposit rates, partially offset by higher rates earned on loans.

Noninterest income totaled $1.4 million in the first quarter of 2018, $2.0 million in the fourth quarter of 2017 and $3.0 million in the first quarter of 2017. Included in the $3.0 million for the first quarter of 2017 were net gains on sale of investment securities of $1.6 million. There were no net gains on sale of investment securities during the first quarter of 2018 or the fourth quarter of 2017. The decrease from the prior sequential quarter was mainly attributable to a $0.5 million gain on sale of non-relationship multifamily loans that took place during the fourth quarter of 2017. The decrease from the prior year quarter was mainly attributable to the aforementioned net gains on sale of investment securities.

Noninterest expenses totaled $17.1 million for the first quarter of 2018, an increase of $0.5 million from $16.6 million for the fourth quarter of 2017 and a decrease of $1.2 million from $18.2 million for the first quarter of 2017. The increase from the prior sequential quarter was mainly attributable to increases in salaries and employee benefits ($0.3 million), occupancy and equipment expenses ($0.2 million) and other expenses ($0.3 million), offset by a valuation allowance adjustment on taxi medallion loans held-for-sale of $0.3 million that occurred during the prior sequential quarter. The decrease in noninterest expenses from the prior year first quarter was mainly attributable to increases in salaries and employee benefits ($1.5 million), offset by valuation allowance adjustment on taxi medallion loans held-for-sale of $2.6 million that occurred during the prior year quarter. The increases over the prior year fourth quarter were the result of increased levels of business and staff resulting from organic growth.

Income tax expense was $0.4 million for the first quarter of 2018, compared to $12.7 million for the fourth quarter of 2017 and $4.9 million for the first quarter of 2017. Included in income tax expenses for the first quarter of 2018 was an income tax benefit of $0.5 million resulting from the effect of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. Included in income tax expenses for the fourth quarter of 2017 was a $5.6 million DTA valuation estimated charge related to the Tax Act. At the present time, the Bank is projecting a 2018 effective tax rate of approximately 21%, exclusive of ASU 2016-09 benefits.

Asset Quality

The provision for loan losses was $17.8 million in the first quarter of 2018, $2.0 million in the fourth quarter of 2017 and $1.1 million in the first quarter of 2017. The increase from the prior sequential quarter was largely attributable to $17.0 million of provision related to the taxi medallion loan portfolio, offset by a decrease in loan growth. The increase from the prior year quarter was mainly attributable to the aforementioned taxi medallion loan provision. The provision related to taxi medallions primarily resulted from decreases in the transfer values as reported by the New York City Taxi and Limousine Commission and a reduction in the Bank’s cash flow valuation model.

As of March 31, 2018, loans secured by New York City taxi medallions had a carrying value of $29.4 million, down significantly from $46.8 million as of December 31, 2017, reflecting the aforementioned provision (and subsequent charge-off) and cash flow applied to principal. As of March 31, 2018, the medallion loans had a carrying value of approximately $216,000 per medallion, compared to $343,000 as of December 31, 2017. 

Nonperforming assets, which includes nonaccrual loans and other real estate owned, were $51.1 million at March 31, 2018, $66.2 million at December 31, 2017 and $72.4 million at March 31, 2017. Included in nonperforming assets were taxi medallion loans totaling $29.4 million at March 31, 2018, $46.8 million at December 31, 2017 and $59.1 million at March 31, 2017. Excluding the taxi medallion loans, nonaccrual loans were $20.6 million at March 31, 2018, $18.8 million at December 31, 2017 and $12.8 million at March 31, 2017, representing 0.49%, 0.46% and 0.36%, respectively, of nonaccrual loans (excluding taxis) as a percentage of loans receivable. Nonperforming assets as a percentage of total assets were 0.99% at March 31, 2018, 1.29% at December 31, 2017 and 1.62% at March 31, 2017. 

The net loan charge-offs (recoveries) ratio was 1.63% for the first quarter of 2018, 0.01% for the fourth quarter of 2017 and (0.01%) for the first quarter of 2017. The increase in the net loan charge-off ratio for the first quarter of 2018 was attributable to a $17.0 million charge-off related to the taxi medallion portfolio. The allowance for loan losses represented 0.77%, 0.76%, and 0.75% of loans receivable as of March 31, 2018, December 31, 2017 and March 31, 2017, respectively. The allowance for loan losses as a percentage of nonaccrual loans was 65.0% as of March 31, 2018, 48.4% as of December 31, 2017 and 37.4% as of March 31, 2017. Excluding the taxi medallion loans, allowance for loan losses as a percentage of nonaccrual loans was 157.7% as of March 31, 2018, 168.4% as of December 31, 2017 and 210.3% as of March 31, 2017.

Selected Balance Sheet Items

At March 31, 2018, the Company’s total assets were $5.2 billion, an increase of $50 million from December 31, 2017, largely a result of net loan growth (loan originations less pay-downs and pay-offs) of $52 million. The Company’s stockholders’ equity was $564 million at March 31, 2018, a decrease of $1 million from December 31, 2017. The decrease in stockholders’ equity was primarily attributable to increases in other comprehensive losses of $3 million, offset by an increase of $2 million in retained earnings. As of March 31, 2018, the Company’s tangible common equity ratio and tangible book value per share were 8.31% and $12.93, respectively. As of December 31, 2017, the tangible common equity ratio and tangible book value per share were 8.41% and $13.01, respectively. Total goodwill and other intangible assets were approximately $148 million as of March 31, 2018 and December 31, 2017.

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.

First Quarter 2018 Conference Call

Management will also host a conference call and audio webcast at 10:00 a.m. ET on April 26, 2018 to review the Company's financial performance and operating results. The conference call dial-in number is 334-323-0522, access code 4265482. 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 "Shareholders" 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, April 26, 2018 and ending on Thursday, May 3, 2018 by dialing 719-457-0820, access code 4265482. 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 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 21 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     
(in thousands)      
       
 March 31, December 31, March 31, 
 2018 2017 2017 
 (unaudited)   (unaudited) 
ASSETS      
Cash and due from banks$  36,396  $  52,565  $  35,867  
Interest-bearing deposits with banks   106,391     97,017     126,002  
    Cash and cash equivalents   142,787     149,582     161,869  
       
Securities available-for-sale   424,322     435,284     352,476  
Equity securities   11,607     -     -  
       
Loans held-for-sale   45,886     24,845     62,255  
       
Loans receivable   4,202,679     4,171,456     3,571,663  
Less: Allowance for loan losses   32,529     31,748     26,901  
    Net loans receivable   4,170,150     4,139,708     3,544,762  
       
Investment in restricted stock, at cost   34,622     33,497     24,985  
Bank premises and equipment, net   21,039     21,659     22,259  
Accrued interest receivable   16,020     15,470     12,701  
Bank owned life insurance   111,500     111,311     99,063  
Other real estate owned   1,076     538     580  
Goodwill   145,909     145,909     145,909  
Core deposit intangibles   2,195     2,364     2,895  
Other assets   31,255     28,275     31,062  
   Total assets$  5,158,368  $  5,108,442  $  4,460,816  
       
LIABILITIES      
Deposits:      
    Noninterest-bearing$  739,174  $  776,843  $  671,183  
    Interest-bearing   3,010,413     3,018,285     2,684,294  
       Total deposits   3,749,587     3,795,128     3,355,477  
Borrowings   695,032     670,077     491,226  
Subordinated debentures (net of $1,845, $456 and $580 in debt issuance costs)   128,310     54,699     54,575  
Other liabilities   21,173     23,101     19,261  
   Total liabilities   4,594,102     4,543,005     3,920,539  
       
COMMITMENTS AND CONTINGENCIES      
       
STOCKHOLDERS' EQUITY      
Common stock   413,958     412,546     412,546  
Additional paid-in capital   12,022     13,602     11,796  
Retained earnings   162,510     160,025     135,939  
Treasury stock   (16,717)    (16,717)    (16,717) 
Accumulated other comprehensive loss   (7,507)    (4,019)    (3,287) 
   Total stockholders' equity   564,266     565,437     540,277  
   Total liabilities and stockholders' equity$  5,158,368  $  5,108,442  $  4,460,816  
       


       
CONNECTONE BANCORP, INC. AND SUBSIDIARIES      
CONSOLIDATED STATEMENTS OF INCOME      
(dollars in thousands, except for per share data)      
       
  Three Months Ended  
 03/31/18 12/31/17 03/31/17 
Interest income      
  Interest and fees on loans$  47,025 $  46,945 $  38,006 
  Interest and dividends on investment securities:      
     Taxable   1,887    1,757    1,548 
     Tax-exempt   814    914    954 
     Dividends   485    439    330 
  Interest on federal funds sold and other short-term investments   264    156    246 
     Total interest income   50,475    50,211    41,084 
Interest expense      
  Deposits   7,688    6,953    5,109 
  Borrowings   4,640    3,450    2,834 
     Total interest expense   12,328    10,403    7,943 
       
Net interest income   38,147    39,808    33,141 
  Provision for loan losses   17,800    2,000    1,100 
Net interest income after provision for loan losses   20,347    37,808    32,041 
       
Noninterest income      
     Annuities and insurance commissions   -    -    39 
     Income on bank owned life insurance   774    779    703 
     Net gains on sale of loans held-for-sale   17    588    21 
     Deposit, loan and other income   616    657    643 
     Net gains on sale of investment securities   -    -    1,596 
        Total noninterest income   1,407    2,024    3,002 
       
Noninterest expenses      
     Salaries and employee benefits   9,679    9,418    8,206 
     Occupancy and equipment   2,143    1,948    2,255 
     FDIC insurance   850    935    895 
     Professional and consulting   723    671    718 
     Marketing and advertising   207    226    256 
     Data processing   1,148    1,069    1,149 
     Amortization of core deposit intangible   169    169    193 
     Increase in valuation allowance, loans held-for-sale   -    267    2,600 
     Other expenses   2,140    1,863    1,977 
        Total noninterest expenses   17,059    16,566    18,249 
       
Income before income tax expenses   4,695    23,266    16,794 
     Income tax expenses   444    12,686    4,914 
Net income$  4,251 $  10,580 $  11,880 
       
Earnings per common share:      
     Basic$  0.13 $  0.33 $  0.37 
     Diluted   0.13    0.33    0.37 
       
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         
           
 As of 
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 
 2018 2017 2017 2017 2017 
Selected Financial Data(dollars in thousands) 
Total assets$  5,158,368  $  5,108,442  $  4,844,755  $  4,681,280  $  4,460,816  
Loans receivable:          
  Commercial   768,640     781,698     641,613     610,442     541,690  
  Commercial real estate   1,275,764     1,232,037     1,254,720     1,218,995     1,192,074  
  Multifamily   1,400,420     1,403,256     1,330,485     1,251,962     1,134,760  
  Commercial construction   479,190     483,216     399,453     431,049     460,611  
  Residential   278,985     271,795     264,244     251,108     242,883  
  Consumer   2,461     2,808     1,912     2,005     2,811  
  Gross loans   4,205,460     4,174,810     3,892,427     3,765,561     3,574,829  
Unearned net origination fees   (2,781)    (3,354)    (3,138)    (3,989)    (3,166) 
  Loans receivable   4,202,679     4,171,456     3,889,289     3,761,572     3,571,663  
  Loans held-for-sale (net of valuation allowance)   45,886     24,845     89,386     51,124     62,255  
Total loans$  4,248,565  $  4,196,301  $  3,978,675  $  3,812,696  $  3,633,918  
           
Investment securities$  435,929  $  435,284  $  400,516  $  402,130  $  352,476  
Goodwill and other intangible assets   148,104     148,273     148,442     148,611     148,804  
Deposits:          
  Noninterest-bearing demand   739,174     776,843     719,582     695,522     671,183  
  Other interest-bearing deposits   1,754,759     1,838,316     1,825,828     1,752,523     1,714,081  
  Time deposits   1,255,654     1,179,969     1,078,359     982,328     970,213  
Total deposits$  3,749,587  $  3,795,128  $  3,623,769  $  3,430,373  $  3,355,477  
           
Borrowings   695,032  $  670,077     585,124     626,173     491,226  
Subordinated debentures (net of issuance costs)   128,310     54,699     54,657     54,616     54,575  
Total stockholders' equity   564,266     565,437     557,691     546,173     540,277  
           
Quarterly Average Balances          
Total assets$  5,088,823  $  4,916,549  $  4,713,487  $  4,494,978  $  4,381,707  
Loans receivable:          
  Commercial   820,562     761,147     671,525     603,733     557,347  
  Commercial real estate (including multifamily)   2,643,466     2,566,959     2,502,846     2,337,499     2,222,795  
  Commercial construction   482,391     439,629     418,439     451,038     466,455  
  Residential   275,263     268,047     255,755     246,864     237,418  
  Consumer   4,659     3,849     2,555     2,929     2,460  
  Gross loans   4,226,341     4,039,631     3,851,120     3,642,063     3,486,475  
Unearned net origination fees   (3,110)    (3,485)    (3,724)    (3,967)    (3,304) 
  Loans receivable   4,223,231     4,036,146     3,847,396     3,638,096     3,483,171  
  Loans held-for-sale   24,766     57,812     51,008     61,259     65,860  
Total loans$  4,247,997  $  4,093,958  $  3,898,404  $  3,699,355  $  3,549,031  
           
Investment securities   437,141     417,560     398,635     391,965     367,940  
Goodwill and other intangible assets   148,215     148,383     148,553     148,737     148,930  
Deposits:          
  Noninterest-bearing demand   724,471     712,391     688,707     667,461     655,597  
  Other interest-bearing deposits   1,815,122     1,855,688     1,816,162     1,712,875     1,706,991  
  Time deposits   1,207,369     1,114,670     1,005,997     976,012     963,976  
Total deposits$  3,746,962  $  3,682,749  $  3,510,866  $  3,356,348  $  3,326,564  
           
Borrowings   630,117  $  588,260     570,711     514,161     442,595  
Subordinated debentures (net of issuance costs)   115,182     54,672     54,630     54,560     54,548  
Total stockholders' equity   575,029     567,308     556,620     549,748     539,544  
           
 Three Months Ended 
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 
 2018 2017 2017 2017 2017 
  (dollars in thousands, except for per share data)  
Net interest income$  38,147  $  39,808  $  37,019  $  35,101  $  33,141  
 Provision for loan losses   17,800     2,000     1,450     1,450     1,100  
Net interest income after provision for loan losses   20,347     37,808     35,569     33,651     32,041  
Noninterest income          
 Annuity and insurance commissions   -     -     -     -     39  
 Income on bank owned life insurance   774     779     985     714     703  
 Net gains on sale of loans held-for-sale   17     588     50     49     21  
 Deposit, loan and other income   616     657     721     659     643  
 Net gains on sale of investment securities   -     -     -     -     1,596  
     Total noninterest income   1,407     2,024     1,756     1,422     3,002  
Noninterest expenses          
 Salaries and employee benefits   9,679     9,418     8,872     8,632     8,206  
 Occupancy and equipment   2,143     1,948     1,969     1,991     2,255  
 FDIC insurance   850     935     840     815     895  
 Professional and consulting   723     671     740     734     718  
 Marketing and advertising   207     226     225     289     256  
 Data processing   1,148     1,069     1,176     1,149     1,149  
 Amortization of core deposit intangible   169     169     169     193     193  
 Increase in valuation allowance, loans held-for-sale   -     267     3,000     9,725     2,600  
 Other expenses   2,140     1,863     1,650     1,775     1,977  
     Total noninterest expenses   17,059     16,566     18,641     25,303     18,249  
           
Income before income tax expense   4,695     23,266     18,684     9,770     16,794  
 Income tax expense   444     12,686     5,607     2,087     4,914  
Net income$  4,251  $  10,580  $  13,077  $  7,683  $  11,880  
           
Reconciliation of GAAP Earnings to Earnings Excluding the
Following Items:
          
Net income$  4,251  $  10,580  $  13,077  $  7,683  $  11,880  
Net gains on sales of securities (after taxes)   -     -     -     -     (1,093) 
Deferred tax valuation charge   -     5,574     -     -     -  
Tax benefit on employee share-based awards (ASU 2016-09)   (541)    -     -     (133)    (47) 
Provision related to taxi medallion loans (after taxes)   13,430     -     -     -     -  
Increase in valuation allowance, loans held-for-sale (after taxes)   -     182     1,776     5,719     1,538  
Net income-adjusted$  17,140  $  16,336  $  14,853  $  13,269  $  12,278  
Weighted average diluted shares outstanding   32,238,048     32,252,759     32,182,016     32,255,770     32,192,643  
Diluted EPS (GAAP)$  0.13  $  0.33  $  0.41  $  0.24  $  0.37  
Diluted EPS-adjusted (Non-GAAP) (1)   0.53     0.51     0.46     0.41     0.38  
           
Return on Assets Measures          
Net income-adjusted$  17,140  $  16,336  $  14,853  $  13,269  $  12,278  
           
Average assets$  5,088,823  $  4,916,549  $  4,713,487  $  4,494,978  $  4,381,707  
Less: average intangible assets   (148,215)    (148,383)    (148,553)    (148,737)    (148,930) 
Average tangible assets$  4,940,608  $  4,768,166  $  4,564,934  $  4,346,241  $  4,232,777  
Return on avg. assets (GAAP)   0.34 %   0.85 %   1.10 %   0.69 %   1.10 %
Return on avg. assets-adjusted (non-GAAP) (2)   1.37     1.32     1.25     1.18     1.14  
           
(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 
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 
 2018 2017 2017 2017 2017 
Return on Equity Measures(dollars in thousands) 
Net income-adjusted$  17,140  $  16,336  $  14,853  $  13,269  $  12,278  
           
Average common equity$  575,029  $  567,308  $  556,620  $  549,748  $  539,544  
Less: average intangible assets   (148,215)    (148,383)    (148,553)    (148,737)    (148,930) 
Average tangible common equity$  426,814  $  418,925  $  408,067  $  401,011  $  390,614  
           
Return on avg. common equity (GAAP)   3.00 %   7.40 %   9.32 %   5.61 %   8.93 %
Return on avg. common equity-adjusted (non-GAAP) (3)   12.09     11.42     10.59     9.68     9.23  
Return on avg. tangible common equity (non-GAAP) (4)   4.15     10.11     12.81     7.80     12.45  
Return on avg. tangible common equity-adjusted (non-GAAP) (5)   16.40     15.57     14.54     13.39     12.87  
           
Efficiency Measures          
Total noninterest expenses$  17,059  $  16,566  $  18,641  $  25,303  $  18,249  
Increase in valuation allowance, loans held-for-sale   -     (267)    (3,000)    (9,725)    (2,600) 
Foreclosed property expense   (51)    (32)    (46)    (71)    (100) 
Operating noninterest expense $  17,008  $  16,267  $  15,595  $  15,507  $  15,549  
           
Net interest income (tax equivalent basis)$  38,610  $  40,744  $  37,929  $  35,839  $  33,956  
Noninterest income   1,407     2,024     1,756     1,422     3,002  
Net gains on sales of investment securities   -     -     -     -     (1,596) 
Operating revenue $  40,017  $  42,768  $  39,685  $  37,261  $  35,362  
           
Operating efficiency ratio (non-GAAP) (6)   42.5 %   38.0 %   39.3 %   41.6 %   44.0 %
           
Net Interest Margin          
Average interest-earning assets$  4,799,453  $  4,603,659  $  4,378,537  $  4,168,344  $  4,053,324  
           
Net interest income (tax equivalent basis)$  38,610  $  40,744  $  37,929  $  35,839  $  33,956  
Impact of purchase accounting fair value marks   (240)    (1,026)    (317)    (316)    (649) 
Adjusted net interest income (tax equivalent basis)$  38,370  $  39,718  $  37,612  $  35,523  $  33,307  
           
Net interest margin (GAAP)   3.26 %   3.51 %   3.44 %   3.45 %   3.40 %
Adjusted net interest margin (non-GAAP) (7)   3.24     3.42     3.41     3.42     3.33  
           
(3) Adjusted earnings available to common stockholders divided by average common equity.       
(4) Earnings available to common stockholders excluding amortization of intangibles assets divided by average tangible common equity.   
(5) Adjusted earnings available to common stockholders divided by average tangible common equity.       
(6) Operating noninterest expense divided by operating revenue.          
(7) Adjusted net interest income excluding amortization of intangibles assets divided by average interest-earning assets.    
           
 As of 
 Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 
 2018 2017 2017 2017 2017 
Capital Ratios and Book Value per Share(dollars in thousands, except for per share data) 
Common equity$  564,266  $  565,437  $  557,691  $  546,173  $  540,277  
Less: intangible assets   (148,104)    (148,273)    (148,442)    (148,611)    (148,804) 
Tangible common equity$  416,162  $  417,164  $  409,249  $  397,562  $  391,473  
           
Total assets$  5,158,368  $  5,108,442  $  4,844,755  $  4,681,280  $  4,460,816  
Less: intangible assets   (148,104)    (148,273)    (148,442)    (148,611)    (148,804) 
Tangible assets$  5,010,264  $  4,960,169  $  4,696,313  $  4,532,669  $  4,312,012  
           
Common shares outstanding   32,175,233     32,071,860     32,015,317     32,015,317     32,004,471  
           
Common equity ratio (GAAP)   10.94 %   11.07 %   11.51 %   11.67 %   12.11 %
Tangible common equity ratio (non-GAAP) (8)   8.31     8.41     8.71     8.77     9.08  
           
Regulatory capital ratios (Bancorp):          
  Leverage ratio   8.65 %   8.92 %   9.13 %   9.33 %   9.44 %
  Common equity Tier 1 risk-based ratio   9.14     9.15     9.40     9.48     9.79  
  Risk-based Tier 1 capital ratio   9.25     9.26     9.52     9.60     9.92  
  Risk-based total capital ratio   12.66     11.04     11.34     11.46     11.83  
Regulatory capital ratios (Bank):          
  Leverage ratio   10.20 %   9.84 %   10.11 %   10.34 %   10.50 %
  Common equity Tier 1 risk-based ratio   10.91     10.21     10.54     10.64     11.03  
  Risk-based Tier 1 capital ratio   10.91     10.21     10.54     10.64     11.03  
  Risk-based total capital ratio   12.31     10.90     11.22     11.32     11.70  
           
Book value per share (GAAP)$  17.54  $  17.63  $  17.42  $  17.06  $  16.88  
Tangible book value per share (non-GAAP) (9)   12.93     13.01     12.78     12.42     12.23  
           
Net Charge-Off (Recoveries) Detail          
Net loan charge-offs (recoveries) :          
 Charge-offs$  17,038  $  156  $  -  $  10  $  72  
 Recoveries   (19)    (34)    (20)    (60)    (129) 
  Net loan charge-offs (recoveries)$  17,019  $  122  $  (20) $  (50) $  (57) 
  Net loan charge-offs (recoveries) as a % of average loans
receivable (annualized)
   1.63 %   0.01 %   (0.00)%   (0.01)%   (0.01)%
           
Asset Quality          
Nonaccrual taxi medallion loans$  29,405  $  46,765  $  47,430  $  48,884  $  59,054  
Nonaccrual loans (excluding taxi medallion loans)   20,631     18,848     13,755     14,055     12,790  
Other real estate owned   1,076     538     -     580     580  
Total nonperforming assets$  51,112  $  66,151  $  61,185  $  63,519  $  72,424  
           
Performing troubled debt restructurings$  14,349  $  14,920  $  12,749  $  10,221  $  10,005  
           
Allowance for loan losses ("ALLL")$  32,529  $  31,748  $  29,870  $  28,401  $  26,901  
           
Loans receivable$  4,202,679  $  4,171,456  $  3,889,289  $  3,761,572  $  3,571,663  
Less: taxi medallion loans   29,405     46,765     -     -     -  
Loans receivable (excluding taxi medallion loans)$  4,173,274  $  4,124,691  $  3,889,289  $  3,761,572  $  3,571,663  
           
Loans held-for-sale (taxi medallion loans)$  -  $  -  $  47,430  $  50,891  $  61,319  
           
Nonaccrual loans (excluding taxi medallion loans) as a % of loans
receivable (excluding taxi medallion loans)
   0.49 %   0.46 %   0.35 %   0.37 %   0.36 %
Nonaccrual loans as a % of loans receivable   1.19     1.57     1.57     1.67     2.01  
Nonperforming assets as a % of total assets   0.99     1.29     1.26     1.36     1.62  
ALLL as a % of loans receivable   0.77     0.76     0.77     0.76     0.75  
ALLL as a % of nonaccrual loans (excluding taxi medallion loans)   157.7     168.4     217.2     202.1     210.3  
ALLL as a % of nonaccrual loans   65.0     48.4     48.8     45.1     37.4  
           
(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 
 March 31, 2018December 31, 2017March 31, 2017 
 Average     Average     Average    
Interest-earning assets:BalanceInterestRate (8)  BalanceInterestRate (8)  BalanceInterestRate (8) 
Investment securities (1) (2)$  441,563  $  2,917   2.68% $  417,954  $  3,162   3.00% $  366,473  $  3,015   3.34 
Total loans (2) (3) (4)   4,247,997     47,272   4.51     4,093,958     47,389   4.59     3,549,031     38,308   4.38 
Federal funds sold and interest-              
  bearing deposits with banks   78,194     264   1.37     61,933     156   1.00     115,025     246   0.87 
Restricted investment in bank stock   31,699     485   6.21     29,814     440   5.86     22,795     330   5.87 
   Total interest-earning assets   4,799,453     50,938   4.30     4,603,659     51,147   4.41     4,053,324     41,899   4.19 
Allowance for loan losses   (32,113)       (30,478)       (26,215)   
Noninterest-earning assets   321,483        343,368        354,598    
   Total assets$  5,088,823     $  4,916,549     $  4,381,707    
               
Interest-bearing liabilities:              
 Time deposits   1,207,369     4,789   1.61     1,114,670     4,172   1.48     963,976     3,091   1.30 
 Other interest-bearing deposits   1,815,122     2,900   0.65     1,855,688     2,780   0.59