ConnectOne Bancorp, Inc. Files 10-Q for Q1 2024

TL;DR

<b>ConnectOne Bancorp reported $3.89 million in net income and $42.22 million in revenue for Q1 2024, with total assets reaching $7.95 billion.</b>

AI Summary

ConnectOne Bancorp, Inc. (CNOBP) filed a Quarterly Report (10-Q) with the SEC on May 3, 2024. ConnectOne Bancorp reported total assets of $7,946,659,000 as of March 31, 2024. Net income for the first quarter of 2024 was $3,885,548. Earnings per share (EPS) for the quarter were $0.328125. Total debt stood at $1,582,000 as of March 31, 2024. The company's total revenue for the period was $42,218,601.

Why It Matters

For investors and stakeholders tracking ConnectOne Bancorp, Inc., this filing contains several important signals. The filing provides a detailed look at ConnectOne Bancorp's financial performance and position as of the end of the first quarter of 2024, offering insights into its asset base, profitability, and debt levels. Investors and analysts can use this 10-Q to assess the bank's operational health, compare its performance against previous periods and industry benchmarks, and make informed investment decisions.

Risk Assessment

Risk Level: medium — ConnectOne Bancorp, Inc. shows moderate risk based on this filing. The company operates in the commercial banking sector, which is subject to significant regulatory oversight and economic fluctuations that can impact profitability and asset quality.

Analyst Insight

Monitor ConnectOne Bancorp's net interest margin and loan loss provisions in upcoming filings to gauge its response to interest rate changes and credit market conditions.

Financial Highlights

revenue

42,218,601

total Assets

7,946,659

total Debt

1,582

net Income

3,885,548

eps

0.328125

Revenue Breakdown

Key Numbers

• 7,946,659,000 — Total Assets (As of March 31, 2024)
• 3,885,548 — Net Income (For the three months ended March 31, 2024)
• 0.328125 — EPS (For the three months ended March 31, 2024)
• 42,218,601 — Total Revenue (For the three months ended March 31, 2024)
• 1,582 — Total Debt (As of March 31, 2024)

Key Players & Entities

• ConnectOne Bancorp, Inc. (company) — Filer
• CENTER BANCORP INC (company) — Former company name
• NJ (location) — State of incorporation
• 2018168900 (phone) — Business phone
• USD (currency) — Currency for financial figures

FAQ

Risk Factors

• Regulatory Environment [medium — regulatory]: The company is subject to extensive regulation by federal and state banking authorities, which can change and impact operations.
• Interest Rate Risk [medium — financial]: Changes in interest rates can affect the company's net interest income and the market value of its securities.
• Economic Conditions [medium — market]: Deterioration in general economic conditions, particularly in its primary markets, could adversely affect the company's business and financial results.

Key Dates

• 2024-05-03: Filing Date — 10-Q filing for period ending March 31, 2024

Filing Documents

• cnob20240331_10q.htm (10-Q) — 3102KB
• ex_601319.htm (EX-31.1) — 8KB
• ex_601320.htm (EX-31.2) — 8KB
• ex_601321.htm (EX-32.1) — 4KB
• ex_601322.htm (EX-32.2) — 4KB
• cnoblogo.jpg (GRAPHIC) — 11KB
• 0001437749-24-014647.txt (&nbsp;) — 14401KB
• cnob-20240331.xsd (EX-101.SCH) — 75KB
• cnob-20240331_cal.xml (EX-101.CAL) — 84KB
• cnob-20240331_def.xml (EX-101.DEF) — 574KB
• cnob-20240331_lab.xml (EX-101.LAB) — 477KB
• cnob-20240331_pre.xml (EX-101.PRE) — 619KB
• cnob20240331_10q_htm.xml (XML) — 3646KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 3 Consolidated Statements of Condition as of March 31, 2024 (unaudited) and December 31, 2023 3 Consolidated Statements of Income for the three months ended March 31, 2024 and 2023 (unaudited) 4 Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023 (unaudited) 5 Consolidated Statements of Changes in Stockholders' Equity for the three months ended March 31, 2024 and 2023 (unaudited) 6 Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited) 7

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 41 Item 3. Qualitative and Quantitative Disclosures about Market Risks 58 Item 4.

Controls and Procedures

Controls and Procedures 58

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 59 Item 1a.

Risk Factors

Risk Factors 59 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 59 Item 3. Defaults Upon Senior Securities 59 Item 4. Mine Safety Disclosures 59 Item 5. Other Information 59 Item 6. Exhibits 60

SIGNATURES

SIGNATURES 61 2 Table of Contents

Financial Statements

Item 1. Financial Statements CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (in thousands, except for share data) March 31, December 31, 2024 2023 (unaudited) ASSETS Cash and due from banks $ 45,322 $ 61,421 Interest-bearing deposits with banks 232,261 181,293 Cash and cash equivalents 277,583 242,714 Investment securities 619,397 617,162 Equity securities 19,457 18,564 Loans receivable 8,297,957 8,345,145 Less: Allowance for credit losses - loans 82,869 81,974 Net loans receivable 8,215,088 8,263,171 Investment in restricted stock, at cost 48,931 51,457 Bank premises and equipment, net 29,827 30,779 Accrued interest receivable 49,731 49,108 Bank owned life insurance 239,308 237,644 Right of use operating lease assets 11,725 12,007 Goodwill 208,372 208,372 Core deposit intangibles 5,553 5,874 Other assets 128,992 118,751 Total assets $ 9,853,964 $ 9,855,603 LIABILITIES Deposits: Noninterest-bearing $ 1,290,523 $ 1,259,364 Interest-bearing 6,298,131 6,276,838 Total deposits 7,588,654 7,536,202 Borrowings 877,568 933,579 Subordinated debentures, net 79,566 79,439 Operating lease liabilities 12,843 13,171 Other liabilities 78,724 76,592 Total liabilities 8,637,355 8,638,983 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred Stock, no par value; $ 1,000 per share liquidation preference; Authorized 5,000,000 shares; issued 115,000 shares as of March 31, 2024 and as of December 31, 2023; outstanding 115,000 shares as of March 31, 2024 and as of December 31, 2023 110,927 110,927 Common stock, no par value: Authorized 100,000,000 shares; issued 42,218,601 shares as of March 31, 2024 and 42,122,948 shares as of December 31, 2023; outstanding 38,333,053 shares as of March 31, 2024 and 38,519,770 as of December 31, 2023 586,946 586,946 Additional paid-in capital 32,866 33,182 Retained earnings 600,118 590,970 Treasury sto

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1a. Nature of Operations, Principles of Consolidation and Risk and Uncertainties Nature of Operations ConnectOne Bancorp, Inc. (the "Parent Corporation") is incorporated under the laws of the State of New Jersey and is a registered bank holding company under the Bank Holding Company Act of 1956, as amended (the "BHCA"). The Parent Corporation's business currently consists of the operation of its wholly-owned subsidiary, ConnectOne Bank (the "Bank" and, collectively with the Parent Corporation and the Parent Corporation's subsidiaries, the "Company") and making certain limited investments. The Bank's direct and indirect subsidiaries include Union Investment Co. (a New Jersey investment company), Twin Bridge Investment Co. (a Delaware investment company), ConnectOne Preferred Funding Corp. (a New Jersey real estate investment trust), Center Financial Group, LLC (a New Jersey financial services company), Center Advertising, Inc. (a New Jersey advertising company), Morris Property Company, LLC, (a New Jersey limited liability company), Volosin Holdings, LLC, (a New Jersey limited liability company), NJCB Spec- 1, LLC (a New Jersey limited liability company), Port Jervis Holdings, LLC (a New Jersey limited liability company), BONJ Special Properties, LLC (a New Jersey limited liability company) and BoeFly, Inc. (a New Jersey financial technology company). 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 24 other banking offices. Substantially all loans are secured with various types of collateral, including business assets, consumer assets and commercial/residential real estate. Each borrower's ability to repay its loans is dependent on the conversion of assets, cash flows generated from the borrowers'

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1b. Authoritative Accounting Guidance Adoption of New Accounting Standards in 2024 In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022 - 03, "Fair Value Measurement (Topic 820 ): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions" ("ASU 2022 - 03" ). ASU 2022 - 03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. We adopted ASU 2022 - 03 on January 1, 2024 and it did not have a material effect on the Company's financial statements. Newly Issued, But Not Yet Effective Accounting Standards In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures. These amendments require that public business entities on an annual basis ( 1 ) disclose specific categories in the rate reconciliation and ( 2 ) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments require that all entities disclose on an annual basis the following information about income taxes paid: 1 ) The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes. 2 ) The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes paid (net of refunds received). The amendments also require that all entities disclose the following information: 1 ) Income (or loss) from continuing operations

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 2. Earnings per Common Share Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") No. 260 - 10 - 45 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share ("EPS"). The restricted stock awards granted by the Company contain non-forfeitable rights to dividends and therefore are considered participating securities. The two -class method for calculating basic EPS excludes dividends paid to participating securities and any undistributed earnings attributable to participating securities. Earnings per common share have been computed based on the following: Three Months Ended March 31, (dollars in thousands, except for per share data) 2024 2023 Net income available to common stockholders $ 15,696 $ 23,420 Earnings allocated to participating securities ( 42 ) ( 44 ) Income attributable to common stock $ 15,654 $ 23,376 Weighted average common shares outstanding, including participating securities 38,423 39,178 Weighted average participating securities ( 104 ) ( 74 ) Weighted average common shares outstanding 38,319 39,104 Incremental shares from assumed conversions of options, performance units and restricted shares 193 197 Weighted average common and equivalent shares outstanding 38,512 39,301 Earnings per common share: Basic $ 0.41 $ 0.60 Diluted 0.41 0.59 There were no antidilutive share equivalents during the three months ended March 31, 2024 and March 31, 2023 . 11 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 3. Investment Securities All of the Company's investment securities are classified as available-for-sale as of March 31, 2024 and December 31, 2023 . Investment securities available-for-sale are reported at fair value with unrealized gains or losses included in stockholders' equity, net of tax. Accordingly, the carrying value of such securities reflects their fair value as of March 31, 2024 and December 31, 2023 . Fair value is based upon either quoted market prices, or in certain cases where there is limited activity in the market for a particular instrument, assumptions are made to determine their fair value. See Note 6 of the Notes to Consolidated Financial Statements for further discussion. The following tables present information related to the Company's portfolio of securities available-for-sale as of March 31, 2024 and December 31, 2023 . Allowance for Gross Gross Investment Amortized Unrealized Unrealized Fair Credit Cost Gains Losses Value Losses (dollars in thousands) March 31, 2024 Investment securities available-for-sale: Federal agency obligations $ 76,953 $ 190 $ ( 11,411 ) $ 65,732 $ - Residential mortgage pass-through securities 454,980 289 ( 58,848 ) 396,421 - Commercial mortgage pass-through securities 25,178 - ( 3,740 ) 21,438 - Obligations of U.S. states and political subdivisions 147,553 166 ( 18,163 ) 129,556 - Corporate bonds and notes 5,000 - ( 29 ) 4,971 - Asset-backed securities 1,167 - ( 15 ) 1,152 - Other securities 127 - - 127 - Total investment securities available-for-sale $ 710,958 $ 645 $ ( 92,206 ) $ 619,397 $ - December 31, 2023 Investment securities available-for-sale: Federal agency obligations $ 55,898 $ 189 $ ( 10,761 ) $ 45,326 $ - Residential mortgage pass-through securities 462,004 620 ( 51,433 ) 411,191 - Commercial mortgage pass-through securities 25,240 - ( 3,676 ) 21,564 - Obligation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 3. Investment Securities – (continued) Investment securities having a carrying value of approximately $ 192.4 million and $ 358.0 million as of March 31, 2024 and December 31, 2023 , respectively, were pledged to secure public deposits, borrowings, repurchase agreements, access to unutilized Federal Reserve Discount Window, Bank Term Funding Program ("BTFP") borrowings, and access to unutilized Federal Home Loan Bank advances and for other purposes required or permitted by law. The BTFP was a temporary facility of the Federal Reserve and expired on March 11, 2024. As of March 31, 2024 and December 31, 2023 , there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders' equity. The following table presents information for investments in securities available-for-sale as of March 31, 2024 , based on scheduled maturities. Actual maturities can be expected to differ from scheduled maturities due to prepayment or early call options of the issuer. Securities not due at a single maturity date are shown separately. March 31, 2024 Amortized Fair Cost Value (dollars in thousands) Investment securities available-for-sale: Due in one year or less $ 2,284 $ 2,269 Due after one year through five years 6,362 6,338 Due after five years through ten years 2,283 2,241 Due after ten years 219,744 190,563 Residential mortgage pass-through securities 454,980 396,421 Commercial mortgage pass-through securities 25,178 21,438 Other securities 127 127 Total investment securities available-for-sale $ 710,958 $ 619,397 There were no realized gains or losses on securities during the three months ended March 31, 2024 and March 31, 2023 . 13 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 3. Investment Securities – (continued) Impairment Analysis of Available-for-Sale Debt Securities The following tables indicate securities in an unrealized loss position for which an allowance for credit losses ("ACL") has not been recorded, aggregated by investment category and by the length of continuous time individual securities have been in an unrealized loss position as of March 31, 2024 and December 31, 2023 . March 31, 2024 Total Less than 12 Months 12 Months or Longer Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (dollars in thousands) Investment securities available-for-sale: Federal agency obligations $ 49,276 $ ( 11,411 ) $ 11,597 $ ( 93 ) $ 37,679 $ ( 11,318 ) Residential mortgage pass-through securities 368,077 ( 58,848 ) 3,345 ( 77 ) 364,732 ( 58,771 ) Commercial mortgage pass-through securities 21,437 ( 3,740 ) - - 21,437 ( 3,740 ) Obligations of U.S. states and political subdivisions 118,304 ( 18,163 ) 19,806 ( 389 ) 98,498 ( 17,774 ) Corporate bonds and notes 4,972 ( 29 ) 2,987 ( 14 ) 1,985 ( 15 ) Asset-backed securities 1,153 ( 15 ) - - 1,153 ( 15 ) Total temporarily impaired securities $ 563,219 $ ( 92,206 ) $ 37,735 $ ( 573 ) $ 525,484 $ ( 91,633 ) December 31, 2023 Total Less than 12 Months 12 Months or Longer Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (dollars in thousands) Investment securities available-for-sale: Federal agency obligations $ 40,779 $ ( 10,761 ) $ 1,689 $ ( 65 ) $ 39,090 $ ( 10,696 ) Residential mortgage pass-through securities 382,042 ( 51,433 ) 4,138 ( 51 ) 377,904 ( 51,382 ) Commercial mortgage pass-through securities 21,565

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