CNOB

Image source: The Motley Fool. Thu, Oct. 22, 2026 - Chief Brand and Innovation Officer - Siya Vansia - Chairman and Chief Executive Officer - Frank S. Sorrentino - Senior Executive Vice President and Chief Financial Officer - William S. Burns Operator: Hello, everyone. Thank you for joining us, and welcome to the ConnectOne Band Inc. Third Quarter 26 Earnings Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press 1. To raise your hand. To withdraw your question, press 1 again. I will now hand the conference over to Siya Vansia, chief brand and innovation officer. Sia, please go ahead. Siya Vansia: Good morning, and welcome to today's conference call to review ConnectOne's results for the third quarter of 26 and to update you on recent developments. On today's conference call will be Frank S. Sorrentino, chairman and chief executive officer and Bill Burns, senior executive vice president and chief financial officer. I would like to caution you that we may make forward looking statements during today's conference call that are subject to risks and uncertainties. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings. The forward looking statements included in this conference call are only made as of the date of this call, and the company is not obligated to publicly update or revise them. In addition, certain terms used in this call are non GAAP financial measures, reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed today on form 8-K with the SEC and may also be accessed through the company's website. I will now turn the call over to Frank S. Sorrentino. Operator: Frank, please go ahead. Frank S. Sorrentino: Thank you, Sia, and good morning, everyone. I am pleased to report that during the third quarter, we continued to drive strong core operating performance and momentum across the franchise. We also took a decisive step to strengthen our balance sheet and enhance our capacity for future growth. When we acquired First of Long Island, we gained a terrific franchise. deep deposit, deep client relationships, and a strong deposit base. The acquisition also included a portfolio of high quality nonrelationship multifamily loans. Last quarter, we told you we were evaluating a bulk sale, and we are pleased to announce we have executed a definitive agreement to sell up to approximately 750 million of those multifamily loans. The transaction, which emphasizes the sale of rent stabilized assets accomplishes several strategic objectives at once. It sharpens our focus on what we do best, serving core banking clients and deepening those connections while further aligning our balance sheet with our relationship focus banking strategy. It accelerates the reduction of our CRE concentration, cuts our rent stabilized exposure by up to 2-thirds, improves our liquidity, and strengthens key capital and performance metrics across the balance sheet. Bill will walk you through some more details on that. Turning to ConnectOne's third quarter performance, our core results were strong and continue to build quarter over quarter. Operating PPNR crossed 2% of average assets and operating return on tangible common equity exceeded 15%. Core deposit growth was exceptional this quarter, Client deposits grew at an annualized pace of 11% led by 14% growth in average non interest bearing demand reflecting the staying power of our homegrown relationship banking culture. Our margin widened again despite higher short term rates and stiff competition for deposits. The pace of margin widening is steady and loan repricing continues to work in our favor. On efficiency, expenses were flat for the quarter, a reflection of our culture. We are always looking for ways to work smarter in our investments in technology including nCino workflows, are freeing our bankers to spend more time serving our clients. Efficiency has always been 1 of our core strengths, and our efforts continue to improve this quality. Credit quality improved across the board. Operating charge offs were just a few basis points, and nonperforming assets declined. Following the loan sale, the remaining rent stabilized loans represent a much smaller well reserved for portion of our total loan portfolio. To provide full clarity and details, Bill will give you some more specific on the remaining portfolio. On capital, we remain disciplined stewards This restructuring enhances our flexibility to support organic growth, return capital through dividends and opportunistic buybacks, and pursue the most advantageous path to redeem our preferred stock. Overall, our third quarter performance clearly demonstrates the strength of our franchise. And looking ahead, enter the final quarter of the year with a more liquid balance sheet growing earnings profile, and a team focused on what we do best, serving our clients. Bill, why do not you walk us through the quarter's financial performance in a little bit more detail? William S. Burns: Alright, Frank. Thank you. Good morning to everyone on the call. Frank S. Sorrentino: As Frank mentioned, we announced 2 items this morning. William S. Burns: First, we delivered a continued step up our core operating performance. And second, we executed on a right sized balance sheet restructuring transaction It meaningfully derisks and repositions the balance sheet. I will start with the restructuring, then we will get to operating results. So as we noted last quarter, we had been exploring a bulk loan sale, and within the past week, we entered into a contractual agreement to sell $750 million pool of performing non relationship multifamily loans to a single buyer at a price north of 90%. Having said that, the 10% discount to par resulted in only a 3% loss on the sale for our bank. that is because we previously recorded significant purchase accounting marks both interest rate and credit marks, on a large part of the pool back in the second quarter of 2025 concurrent with the closing of the First of Long Island acquisition. As a result, the weighted average carrying value of the total pool on ConnectOne's books was 93 cents versus the 90 cents purchase price. Now the sale is expected to be completed in the next week, but for accounting purposes, it was classified as held for sale at September 30 which required the recognition of a 23 million nonoperating pretax charge in the third quarter. To be clear, this charge solely reflects changes in interest rates and does not stem from any additional credit losses. Interest rates are up about 100 basis points on average, since the loans were originated or acquired. Now in terms of our reinvestment of loan proceeds, our intention is to place the majority of the funds into lower risk assets with slightly higher yields, effectively reducing balance sheet risk without impacting earnings power. A smaller portion of the proceeds that will likely be used to pay down wholesale funding may slightly temper short term reinvestment earnings. That strategic shift will expand our net interest margin and return on assets while enhancing capital flexibility. The repositioning improves our balance sheet in several ways. On a pro forma basis, our regulatory CRE concentration declines on a June 30 pro forma basis to 397 from $4.39. Our loan to deposit ratio improves into the high-90s from the low-100s, and securities portfolio as a percent of assets is expected to increase to 12.5% from its current 9%. In addition, post loan sale, our rent regulated book declined significantly from 6% of loans to just 2% or 235 million. I am going to provide more detail on loss coverage of that remaining piece when I cover credit in a few minutes. Now turning to operating results again, we are very pleased with our performance and momentum. Excluding the restructuring charge and other nonoperating items, operating EPS was 95 cents per share, up 13% sequentially from 84 cents last quarter and that builds upon our strong second quarter sequential earnings growth. And from a year ago, quarterly operating earnings are up 35%. Operating return metrics were outstanding with PPNR improving to 2.01% of average assets, return on assets increasing to 1.35%, and return on tangible common equity of more than 15% already hitting the target we laid out earlier this year. Net interest margin widened for the eighth consecutive quarter to 3.44%, a 2-basis-point increase. Looking ahead, loan repricing remains a tailwind. Year to date, just over 1 billion of loan balances have come up for repricing, 20% paid off, but the remainder stayed on our books. A weighted average rate increase of 258 basis points. We expect approximately 1.2 million more to reprice over the next 5 quarters, still significant, although down slightly from prior estimates as a result of the loan sale. And as I mentioned earlier, we expect the restructuring to be additionally accretive to the margin primarily from paying down higher cost wholesale funding. So putting it all together, we are now estimating a margin reaching 3.53% for the fourth quarter for 2027. Our model shows it continuing to widen throughout the year, Whether that gets us to 63 or higher at year end 2027 is going to depend on the number and direction of fed rate moves. For the quarter, loans grew at an annualized rate of approximately 11% sequentially, excluding the effect of the transfer to held for sale, Average client deposits, excluding broker deposits, also grew about 11% annualized. Average noninterest bearing deposits increased about 14% and brokered deposits declined by $150 million or 13.7%. Looking ahead for projections, we are projecting loan and deposit growth remaining in the mid single digits while maintaining a sub-100 loan to deposit ratio. Now I am going to turn to non interest income and operating expenses excluding the restructuring charge, noninterest income was 8.5 million up a little from 7.9 million last quarter. That included some onetime BOLI income items leading to a 1.1 million increase. While quarterly results may fluctuate, execution remains solid on the SBA front, our SBA business continues to strengthen. SBA pipeline is strong, I would not be surprised if we are up 50% or more in SBA gains. In 2027 versus this year. Expenses this quarter came in better than our guidance, Last quarter, we projected 1.5% sequential growth instead noninterest expenses were flat. That reflects our culture of working smarter along with continued technology efficiencies. For your models, I am targeting 2% to 2.5% sequential increase in OpEx for the fourth quarter. In terms of operating expenses as a percent of average assets, we remain an industry leader with just 1.45% of average assets in the current quarter versus 1.47 sequentially and 1.5%, for the prior year quarter. Our operating efficiency ratio improved to 41% from 43 last quarter, and 48 a year ago. We have reported sub-40% efficiency ratios before, and we are on track to get there again. And just wanna remind you, keep in mind, as we disclosed in the release, we will be recognizing approximately $7 million to $8 million of nonoperating pretax transaction costs related to the loan sale that under GAAP are to be recognized not in the third quarter, but need to be recognized in the fourth quarter. Now credit quality, as Frank mentioned, improved across the board. Provision for credit losses was 5 million. that is down from 8.3 million last quarter. Annualized net charge offs excluding those PCD loans and the loan sale were just 7 basis points versus 56 basis points last quarter. Provision expense is expected to remain fairly stable for the foreseeable future. Nonaccrual loans declined to 64 million from 80 million driving the nonperforming asset ratio lower to 0.44% of total assets from 0.5% 1 quarter ago, and 30 to 89-day delinquencies are just 5 basis points, almost nothing. Criticized and classified assets were 2% of loans. that is up from 1.9. But that is only because loans receivable decline as we move loans from loans receivable into loans held for sale. The balance in classified and classified and criticized were relatively stable. The allowance was 1.06% of loans, down from 1.18, that is mechanical. We eliminated 22.2 million of allowance on PCD loans in connection with the sale. Now a word on the rent stabilized loans that remain on our books, which total approximately 235 million. As we said, down to 2% versus 6% prior to the sale. First off, except for a de minimis amount, these loans were not part of the original pool offered for sale by our own design. And of that 235 million more than half consists of long standing clients with related deposits excess of 100 million. Therefore, there was no desire whatsoever to exit those relationships. The remaining balance of about 100 million includes non accruals, select PCD loans acquired from First of Long Island and other criticized credits. And importantly, these remaining loans have robust offsets approximately 30% of unpaid principal balance protecting our exposure. These offsets include prior charge offs, purchase accounting marks, specific reserves, general reserves that we have increased through qualitative allocations. So with a large reduction in overall rent-regulated exposure, combined with significant backstops on any remaining credits The New York City rent regulated issue is in our rearview mirror, that is a result we can all feel good about. Now turning to capital. Tangible book value per share was $24.19, down 1.9% from last quarter. Due primarily to the AOCI. Excluding AOCI changes tangible book value would have grown despite the 1 time charge. And over the past 12 months, tangible book is still up 5.9%, and we would expect to return to an upper path going forward from here. Our tangible common equity ratio was 38 at the end of the quarter, but it is going to be approximately 35 basis points higher due to the loan sale. And regulatory risk based ratios rise on the transaction. With lower risk weighted securities taking the place of higher risk weighted loans. During the quarter, we repurchased 50 thousand shares at an average price of $32 We have approximately 500 thousand shares remaining under our authorization, We will continue to repurchase opportunistically. Our board declared a common dividend of 19.5 cents per share, consistent with last quarter. that is roughly 20% of operating earnings which leaves us significant flexibility. And 1 last item, our noncumulative preferred stock. It reached its reset date, and dividend rate has moved higher to approximately 8.8%. We do intend to redeem that preferred. However, in light of the restructuring and the resulting improvement in regulatory capital ratios, we are still evaluating the best and most advantageous way to do it. As a result, it may remain outstanding at the higher rate for another quarter, but we will update you once we finalize our approach. And with that, Frank, I am going to turn it back over to you. Frank S. Sorrentino: it is great, Bill. Thank you. To wrap things up, the third quarter marked an important step in ConnectOne's evolution. We derisked our balance sheet, strengthened our liquidity, and financial flexibility, and continued to grow ConnectOne's core business with strong client relationships. We are well positioned with a growing earnings profile, sound credit fundamentals, and a balance sheet built for the next phase of growth. And we are confident in our ability to deliver long term value for our shareholders. Our profile has strengthened significantly, reflecting improved quantity and quality of earnings while growth prospects remain solid. With those positives and a discounted valuation, we remain a very compelling investment opportunity. With that, I would like to turn the call over for your questions. Operator? Operator: We will now begin the question-and-answer session. If you would like to ask a question, please press star-1 to raise your hand. To withdraw your question, press star-1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the q and a roster. Your first question comes from the line of Feddie Strickland with Hovde Group. Your line is open. Please go ahead. Feddie Strickland: Hey, good morning, Frank and Bill. Congratulations on the loan sale here. Wanted to ask about the use of proceeds. I know you covered it in your opening comments, and some stuff in the release. But just to make sure I have it clear, the intention to hold those proceeds in government guaranteed securities near-term You will pay down some wholesale funds, and then you are retaining some for, you know, both paying down the preferred here as well as long term organic loan growth. Is that the right way to think about these proceeds here? Frank S. Sorrentino: Yeah. that is the right way to think about it. Feddie Strickland: Okay. And just in terms of the competitive environment on loans, I mean, it seems like you got a pretty good pipeline here given your guidance. Can you talk about what you are seeing on rate and maybe the level of competition Yeah. Frank S. Sorrentino: there is a fair amount of competition in the market today, you know, certainly, we are, you know, competing with every other organization that is in our market. I do think that the rise in rates has dampened some of the demand out there. But believe it or not, there is a very robust economy underneath all of this. Folks are still doing lots of you know, really exciting things within the marketplace. The clients that we have, we are doing more business with and so competitive pressures there are lower. There are lots of other reasons why people seek out ConnectOne. You know, the certainty of execution here at ConnectOne is at an all time high and our clients really respect that. So while I would agree there is increased competition, we seem to have been able to figure out how to continue to get the pricing that we need to get, the proper spreads, make sure we are onboarding the right types of client relationships, and continue to grow the balance sheet. Analyst: Yeah. William S. Burns: And, Feddie, in terms of the rates, I have been very pleased, with, our progress. We originated as much as 800 million of loans in last quarter. And rates in the high sixes. Rates that came off were at lower rates. And my calculations say that contributed about 5 basis points to the margin. And when I when I look at the at the pipeline, we are over 7%. On a similar amount. So I would expect, you know, a similar amount of margin improvement coming from our loan originations. Feddie Strickland: Got it. And just 1 more question on the loan growth side I mean, I appreciate the guidance here. Does reduced pay downs and maybe the ability to hang on to more of the loans reaching maturity given higher rates factor into your overall net loan growth number going forward? Frank S. Sorrentino: I do not know. I do not think so. I think they are, you know, again, thinking about a highly competitive market place. You know, there are institutions out there that are doing lower spread business and so we do see some runoff out of the portfolio. it is welcome when it happens. So, no, I do not really see that dynamic changing all that much. Feddie Strickland: Got it. Thanks for taking my questions. I will step back. Operator: Your next question comes from the line of Bader Hijleh with Piper Sandler. Your line is open. Please go ahead. Bader Hijleh: Hey. Good morning, guys. This is Bader on for Justin Crowley. Yep. I just had a question about the, the impact from the loan sale. I know you guys, guided to a 3.50% margin next quarter. Maybe how much of that is factored in from, you know, the impact from the loan sale versus, you know, overall asset repricing you know, thinking about the margin as we look over the next quarter or 2? William S. Burns: Right. I mean, there is a lot of moving parts to the margin. We have the loan repricing. We have, our regular originations, and we have this, restructuring. And they are all worth, you know, a few basis points each. Offset by increasing deposit cost. But the net is you know, an increase of whatever 3 to 5 basis points a quarter, in the net interest margin. Hope that answers your question. Bader Hijleh: Yeah. And then you mentioned increasing deposit cost Do you happen to have these spot cost of deposits at the end of the quarter? William S. Burns: What was the cost for the.? Yeah. it is been pretty been pretty flat. Frank S. Sorrentino: Right? It just. It had to be pretty flat from. William S. Burns: You know, in the in the in the most recent couple of months, deposit cost has been pretty flat. But I do expect to continue to see upward pressure on deposit pricing. And that is what is tempering. that is what is tempering our margin widening. Projections. Bader Hijleh: Got it. Thank you. And then lastly, if I may, I know you guys mentioned potential closed next week. I do not know how much color you guys can give, but do you know if the interest on the loan sales is coming outside of the banking system or any detail on that process? You can give and then maybe as a follow-up, you know, given that you have taken care of a good sized portion of the rent stabilized exposure, are you guys thinking about potential restructuring of low. Or an additional loan sales down the line? William S. Burns: Well, let's wait. The second question was on rent stabilized, think we have got it down to exposure I said, a little over $200 million. More than half of that are loans we would not want to sell because they are strong quality loans with strong clients. We have a lot of deposits associated with the rest of the portfolio. We have got a lot of reserves against it, and so we will be aggressive in reducing the remaining piece there. On the rent-regulated. Okay? So like I said, as far as the financials go, it is it is in the rearview mirror now. But you will see continued decline in the rent regulated balances that are left. And the first question was, As far as loan sales, we have we have had a history of doing smaller transactions when we determine we have nonrelationship type loans. That have accumulated in the portfolio. So, I mean, that. it is possible, but it would be further down the road. Yeah. If something like that happened. I would not put it I would not put it in your projections for the next year or 2. Okay? Got it. Bader Hijleh: All for me. Thank you very much. Frank S. Sorrentino: Sure. Yeah. Great. Operator: Your next question comes from the line of Timothy Switzer with KBW. Your line is open. Please go ahead. Timothy Switzer: Hey. Good morning. Thanks for taking my question. Frank S. Sorrentino: Hey, Timothy. Timothy Switzer: First 1 I have is on the expense outlook. Could you maybe provide some parameters in your expectations for 2027? And what levers you have to pull in front of you to say if we get into a tougher environment here? William S. Burns: Well, I think you know, at the maximum, it is going to be a mid single digits increase in expenses. Obviously, we can continue to leverage our fixed costs. And continue to drive the efficiency ratio down. So we do not really necessarily have expense budgets that we have to stick to. It depends what is available to us out there, what the opportunities are, and we adjust accordingly, and continue to try to improve our efficiency ratio and our return on equity. Timothy Switzer: Okay. Great. And then, a couple questions on the NIM. Trying to get an idea of the impact of a Fed rate hike. It sounds like you believe you are able to continue expanding the NIM next year regardless of the rate environment. But, yeah, for each rate hike, is it, like, 5 basis points? William S. Burns: No. it is only, like, 2 maybe 2 or 3. And we benefit more on the way down. We benefit more on cuts. Than we get hurt on, on ups. Okay. Timothy Switzer: Nice. And then can you remind us the amount of CD repricing you have over the next year? William S. Burns: Sorry. I mentioned that. Oh, it is not a lot. What do we got? Oh, but it is just a small amount, though. The rate differential. 83? From where is it today? I am sorry. I am asking Steve Premiano, our treasurer. We have we have 3 billion of CDs repricing over the next 17 months. But the differential in rate is not all that much. K. Current rates got 83. We can work on them on there. So. Right. So it says. Yeah. it is repricing, but no change to the margin. Gotcha. Okay. Okay. Timothy Switzer: And then 1 last 1 for me. What was the purchase accounting accretion within NII for the last 2 quarters? William S. Burns: Oh, the purchase accounting accretion? Yes. So it is it is been about. it is it is it is running at about 8 million Okay? And we are gonna lose about 20% of that with the loan sale. You should not look at that is gonna hurt margin in some way because you know, that is the that is the yield on the assets coming off versus the yield going on. I am already taking that into account. The yield of the assets going off is less than the yield of the assets going on. And that includes the purchase accounting accretion. I think it is good that we will have less purchase accounting accretion for those that, you know, treat that as lower quality earnings because good to have it lower. Gotcha. Yep. Sounds like you replaced it with the repurchase. Alright. Thank you. Timothy Switzer: Okay. You are welcome. Operator: Your next question comes from the line of Tyler Cacciator with Stephens Inc. Your line is open. Please go ahead. Tyler Cacciator: Good morning, guys. This is Tyler on for Matthew Breeze. Yes, Tyler. William S. Burns: Hi. Frank S. Sorrentino: Hey, Tyler. Frank, maybe just going back to the multifamily sale. You know, what ultimately led you guys to move forward with the transaction? Was it primarily an opportunity to strengthen the balance sheet? Or was it more of you were starting to see additional signs of stress within the portfolio? Look. You know, we have we have mentioned here, I do not know how many different times about building a business that is really on high valued client relationships where we know we have a depository relationship, cash management, multiple points of contact with those clients, building, you know, a bigger base with each of those clients over time as our balance sheet strengthens. And so when we looked at the portfolio, especially some of the acquired portfolio and saw a very high percentage of non relationship based loans. It almost did not matter to me what they were. But they were not you know, they were transactions. And, so the opportunity was here to you know, get rid of those and free up both capital, liquidity, and resources to be able to redeploy in better assets going forward. And so we, you know, we took the opportunity. It does not you know, it does not it is not lost on anyone that part of that portfolio is the rent stabilized. And since the time we, you know, announced the deal with First of Long Island, the environment for those assets is looking like it is deteriorating over time. But overall, the assets we had were performing well. The multifamily assets that were not rent stabilized were performing extremely well. But they just were not high quality client relationships. And so the opportunity to clean up the balance sheet and give us the, you know, the strength that we now have to move forward, I think, I just think was a smart move for us. To make. Tyler Cacciator: Got it. And then I think you mentioned it a bit in the prepared remarks. But could you provide a bit more color on what the yields were on the loans being sold? How that compares to what you are seeing on reinvestment on the securities front? William S. Burns: Yes. So 30% of the loans in the portfolio were ConnectOne. Originated, and they were on at an average rate of 5 and a quarter. And the loans that we picked up from First of Long Island had been 5 and a quarter or lower, but with the purchase accounting marks, we are actually yielding 6%. So it is, you know, a weighted average between 6% and 30% of 5 and a quarter. And we expect to reinvest at yields in the low sixes on average. Tyler Cacciator: Got it. And then, Bill, I guess, another 1 for you. Average deposit growth looked pretty strong over the quarter, but period-end balances were a bit more modest. Can you just walk us through the dynamics there and what you are seeing early in the fourth quarter? William S. Burns: Well, 1 is you have to be careful to exclude broker in there. And so when you exclude brokered, the actual. The point to point may have been a little bit higher. And I. Listen. This is the way I look at it. When it comes to loans, I review our success on a period end to period end basis. But when it comes to deposits, it is always average over average. Okay? Deposits are going up and down every single day. So not a great exercise to review success based on period end to period end. Tyler Cacciator: Got it. That will be it for me. Thank you very much. Operator: Just a reminder, if you would like to ask a question, please press star-1 to raise your hand. Your next question comes from the line of Daniel Tamayo with Raymond James. Your line is open. Please go ahead. Daniel Tamayo: Yeah. Thank you. Morning, Frank. Morning, Bill. William S. Burns: Hi, Dan. Frank S. Sorrentino: Hi. Daniel Tamayo: Maybe just starting, you have got this loan sale now in the rearview mirror. Really, outside of the rent regulated has been strong recently. Curious how we how we should think about the net charge off profile going forward here. William S. Burns: Well, we do not have a huge pipeline, okay, of charge offs, which is great. The only place that I might be using it is that I would like to continue to be aggressive to get off the books any remaining. That small remaining piece of rent regulated And so I would not be surprised to see further decreases in that. With small levels of charge offs. You know? No more than, than we. Than the than 3 to 5 million, say, a quarter. Okay? Daniel Tamayo: Okay. Alright. that is helpful. And so that is the half that you are you are gonna be getting rid of. And just to put a fine point on what you have remaining there, the 30% protection reserves marks prior charge offs is against the total remaining or just the half that or less than half or whatever that he talked about? William S. Burns: it is it is 30 it is 30% on that remaining half. The rest has a. Actually has a larger reserve than our loan portfolio, maybe about 3%. Okay. But those loans are all performing, and I think the weighted average rating is 4.1. On those loans, which is very strong. Frank S. Sorrentino: Yeah. Low LTV, strong Yeah. Strong debt service coverage. They can withstand a lot of change. that is going on in the marketplace there and rent stabilized world in New York City. William S. Burns: And strong. Very strong borrowers if you if you said that. Yeah. Daniel Tamayo: Okay. Great. And then just wanted to dig into the maybe the sensitivity on demand from rate hikes you mentioned there is still kind of plenty of loan demand right now. But as you see it, if we continue to get hikes from here, is there a level that things really start to slow down from your perspective, or is it somewhat rateable as we move up if we do on the rate side? I am just curious how you are thinking about the loan environment if we get some meaningful amount of hikes this year. Frank S. Sorrentino: Next year? You know, I think what is happening in the marketplace today is that there is a very robust economy going on underneath all of the headlines that is causing a lot of uncertainty. The clarity part, though, is that we that have a strong economy. Rates are going up because there are some inflationary pressures. there is, again, uncertainty, you know, due to the wars and fuel prices, AI investment. Many of those things cannot be controlled by higher interest rates. And so I think if the Fed continues to raise interest rates, which by the way, I do not think they are going to, but if they were, it would be an indication that the economy continues to get stronger and continues to build on that strength. If the economy is building on that strength, there is going to be increased demand for lending. And so because you can if things are strong, you are gonna be able to borrow at higher rates and still make whatever it is you are doing make sense. And, you know, we do not. It should not be lost on anybody either that from a historical perspective, rates are not high. They are higher but they are not really high relative to the cost of capital and what you can get as far as a return from whether it is you know, a business opportunity, you know, construction opportunity, development opportunity, whatever it happens to be. And I and I think we are gonna settle into that environment a little bit more. I believe we are going to see increased demand or increased opportunities for lending going forward irrespective of which way rates go. If rates start coming down dramatically, going to portend that the economy is slowing. I am more concerned about that than I am with where we are right at the present. Daniel Tamayo: Got it. Well, I appreciate your thoughts on that, Frank. that is all I had. Frank S. Sorrentino: Great. Operator: There are no further questions at this time. I will now turn the call back to management for closing remarks. Frank S. Sorrentino: Okay. Well, again, thanks everyone for joining us today, and we look forward to speaking with you during the fourth quarter earnings conference call in a few months. Have a great day, and thank you again for joining. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in ConnectOne Bancorp, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ConnectOne Bancorp wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. ConnectOne (CNOB) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

ConnectOne Bancorp (CNOB) reported $125.83 million in revenue for the quarter ended September 2026, representing a year-over-year increase of 3.6%. EPS of $0.95 for the same period compares to $0.70 a year ago. The reported revenue represents a surprise of +0.66% over the Zacks Consensus Estimate of $125 million. With the consensus EPS estimate being $0.85, the EPS surprise was +11.77%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how ConnectOne performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: - Net Interest Margin (non-GAAP): 3.4% versus 3.5% estimated by three analysts on average. - Efficiency Ratio (non-GAAP): 41.3% versus the three-analyst average estimate of 44.8%. - Average Balance - Total interest-earning assets: $13.69 billion compared to the $13.61 billion average estimate based on three analysts. - Net loan charge-offs as a % of average loans receivable (annualized): 0.1% versus the two-analyst average estimate of 0.3%. - Total Noninterest Income: $8.53 million versus $7.46 million estimated by three analysts on average. - Net gains on sale of loans held-for-sale: $1.2 million versus $0.95 million estimated by two analysts on average. - Net Interest Income (tax equivalent basis): $118.54 million versus $119.06 million estimated by two analysts on average. - Net Interest Income: $117.3 million versus the two-analyst average estimate of $117.31 million. - Income on bank owned life insurance: $4.14 million versus $3.02 million estimated by two analysts on average. - Deposit, loan and other income: $3.35 million versus $3.18 million estimated by two analysts on average. View all Key Company Metrics for ConnectOne here>>> Shares of ConnectOne have returned +1.3% over the past month versus the Zacks S&P 500 composite's no change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ConnectOne Bancorp, Inc. (CNOB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

- Interested in ConnectOne Bancorp, Inc.? Here are five stocks we like better. - ConnectOne agreed to sell approximately $750 million of performing multifamily loans at above 90% of par, reducing commercial real estate concentration and rent-regulated loans to about 2% of total loans. Most proceeds will be reinvested in lower-risk assets, with some used to reduce wholesale funding. - Excluding restructuring costs, third-quarter operating EPS rose 13% sequentially to $0.95, while net interest margin expanded to 3.44% for its eighth consecutive quarterly increase. Management expects the margin to reach 3.50% in the fourth quarter and anticipates mid-single-digit loan and deposit growth. - Credit metrics improved, with net charge-offs falling to 7 basis points, non-accrual loans declining to $64 million and non-performing assets dropping to 0.44% of assets. The loan sale is expected to increase the tangible common equity ratio by roughly 35 basis points, although additional transaction costs are expected in the fourth quarter. - The 5 top-rated dividend stocks by analysts ConnectOne Bancorp (NASDAQ:CNOB) said its third-quarter operating performance improved as it advanced a balance-sheet restructuring centered on the planned sale of up to approximately $750 million of performing, non-relationship multifamily loans. Chairman and Chief Executive Officer Frank Sorrentino said the transaction is intended to sharpen the bank's focus on relationship-based banking, reduce commercial real estate concentration, lower exposure to rent-stabilized properties and improve liquidity and capital flexibility. → Aurora Rejects Curaleaf's Higher Bid, But the Takeover Fight Isn't Over The loan pool, which was acquired in part through ConnectOne's acquisition of First of Long Island, includes rent-stabilized assets as well as other multifamily loans that do not have core customer relationships attached, management said. The company expects the transaction to close within the following week. Chief Financial Officer Bill Burns said ConnectOne entered into an agreement to sell the $750 million pool to a single buyer at a price above 90% of par. Although the price represents roughly a 10% discount to par, Burns said the transaction results in only a 3% loss to the bank because of purchase-accounting interest-rate and credit marks recorded when the First of Long Island acquisition closed in the second quarter of 2025. → Could Quantinuum's Breakthrough Make Its Sell-Off a Bargain? The weighted-average carrying value of the loans was $0.93 on the dollar, compared with a purchase price of $0.90, Burns said. Because the portfolio was classified as held for sale as of Sept. 30, the company recognized a $23 million non-operating pre-tax charge during the third quarter. Burns said the charge reflected interest-rate movements rather than additional credit losses. The company expects to invest most of the proceeds in lower-risk assets with slightly higher yields, while using a smaller portion to reduce wholesale funding. Burns said the strategy should improve the net interest margin, return on assets and capital flexibility. - Pro forma regulatory commercial real estate concentration is expected to decline to 397% from 439%. - The loan-to-deposit ratio is expected to move into the high 90% range from the low 100% range. - Securities as a percentage of assets are expected to rise to 12.5% from 9%. - Rent-regulated loans are expected to decline to about $235 million, or 2% of total loans, from 6% before the sale. → IonQ's Bold Expansion Could Leave Shareholders Paying the Price Sorrentino said the sale was driven primarily by the company's preference for client relationships that include deposits, cash-management services and multiple customer touchpoints. While he said the multifamily assets being sold were generally performing well, they were not considered core relationship loans. Excluding the restructuring charge and other non-operating items, ConnectOne reported operating earnings per share of $0.95, up 13% sequentially from $0.84 and 35% from a year earlier. Operating pre-provision net revenue reached 2.01% of average assets, while operating return on tangible common equity exceeded 15%. Net interest margin expanded for an eighth consecutive quarter to 3.44%, up 2 basis points from the prior quarter. Burns said more than $1 billion of loan balances have repriced year to date. Of the repricing loans, 20% paid off, while the balance remained on the company's books at a weighted-average rate increase of 258 basis points. Management expects roughly $1.2 billion of additional loans to reprice over the next five quarters, reduced somewhat from earlier estimates because of the loan sale. Burns said the company expects net interest margin to reach 3.50% in the fourth quarter and continue widening during 2027, though the year-end level will depend on Federal Reserve rate actions. During the quarter, loans grew at an annualized rate of about 11%, excluding the transfer of loans to held-for-sale status. Average client deposits also increased about 11% annualized, while average non-interest-bearing deposits rose about 14%. Brokered deposits declined by $150 million, or 13.7%. Looking ahead, the company expects loan and deposit growth to remain in the mid-single digits while maintaining a loan-to-deposit ratio below 100%. Non-interest expenses were flat from the second quarter, better than management's prior expectation for 1.5% sequential growth. The operating efficiency ratio improved to 41% from 43% in the prior quarter and 48% a year earlier. Burns projected a 2% to 2.5% sequential increase in operating expenses in the fourth quarter and said a mid-single-digit increase would be the maximum expectation for 2027. The company expects to recognize an additional $7 million to $8 million of non-operating pre-tax transaction costs tied to the loan sale in the fourth quarter. Credit metrics improved during the quarter. The provision for credit losses declined to $5 million from $8.3 million in the second quarter. Annualized net charge-offs, excluding purchased credit-deteriorated loans and the loan sale, were 7 basis points, compared with 56 basis points in the prior quarter. Non-accrual loans fell to $64 million from $80 million, and the non-performing asset ratio declined to 0.44% of total assets from 0.55%. Burns said the approximately $235 million of remaining rent-stabilized loans includes more than half in longstanding customer relationships with related deposits exceeding $100 million. The remaining balance includes non-accruals, select acquired purchased credit-deteriorated loans and other criticized credits. He said that portion has offsets equal to about 30% of unpaid principal balance, including prior charge-offs, purchase-accounting marks and reserves. Tangible book value per share was $24.19, down 1.9% from the prior quarter, primarily because of accumulated other comprehensive income. The tangible common equity ratio stood at 8.38% at quarter-end and is expected to increase by about 35 basis points following the loan sale. ConnectOne repurchased 50,000 shares during the quarter at an average price of $32 and has about 500,000 shares remaining under its authorization. The board maintained its common dividend at $0.195 per share. Management also said it intends to redeem its non-cumulative preferred stock, whose dividend rate has reset to about 8.8%, though it may remain outstanding for another quarter as the company evaluates the most advantageous approach. ConnectOne Bancorp, Inc is the parent company of ConnectOne Bank, a full-service commercial bank headquartered in Englewood Cliffs, New Jersey. The bank primarily serves businesses, entrepreneurs, professionals, nonprofit organizations and individuals in the New York metropolitan area and surrounding communities. ConnectOne Bank provides a range of commercial and personal banking products, including checking and savings accounts, certificates of deposit, commercial and industrial loans, commercial real estate financing, construction loans, residential mortgage loans and consumer lending. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What ConnectOne Bancorp (CNOB) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

This article first appeared on GuruFocus. - Operating EPS: $0.95 per share, up 13% sequentially from $0.84 and up 35% year-over-year. - PPNR: 2.01% of average assets. - Return on Assets: 1.35%. - Return on Tangible Common Equity: Exceeded 15%. - Net Interest Margin: Widened for the eighth consecutive quarter to 3.44%, up 2 basis points; Q4 guidance ~3.50%. - Loan Growth: ~11% annualized sequentially (excluding held-for-sale transfer); mid-single-digit projected going forward. - Client Deposit Growth: ~11% annualized; average non-interest-bearing demand up ~14%; brokered deposits down $150 million (13.7%). - Non-Interest Income: $8.5 million, up from $7.9 million last quarter (includes one-time BOLI income). - Non-Interest Expenses: Flat sequentially; 1.45% of average assets vs. 1.47% prior quarter and 1.5% year-ago; Q4 OpEx guidance +2% to 2.5%. - Efficiency Ratio: Improved to 41% from 43% last quarter and 48% a year ago. - Provision for Credit Losses: $5 million, down from $8.3 million last quarter. - Net Charge-Offs: 7 basis points annualized (excluding PCI loans in the sale) vs. 56 basis points last quarter. - Non-Performing Assets: Non-accrual loans declined to $64 million from $80 million; NPA ratio 0.44% of total assets vs. 0.55% prior quarter. - Allowance for Credit Losses: 1.06% of loans, down from 1.18% (mechanical, reflecting $22.2 million allowance eliminated on sold loans). - Tangible Book Value per Share: $24.19, down 1.9% sequentially on AOCI; up 5.9% over 12 months. - Tangible Common Equity Ratio: 8.38%, expected ~35 basis points higher from the loan sale. - Loan Sale: Agreement to sell up to ~$750 million of multifamily loans at price north of 90%; $23 million non-operating pre-tax charge in Q3; $78 million non-operating transaction costs expected in Q4. - Balance Sheet Repositioning: CRE concentration down to 397 from 439 pro forma; loan-to-deposit ratio into high 90s from low 100s; securities to ~12.5% of assets from 9%; rent-regulated loans down to 2% of loans ($235 million) from 6%. - Capital Returns: Repurchased 50,000 shares at average price of $32; ~500,000 shares remaining under authorization; common dividend of $0.19 per share declared. - Warning! GuruFocus has detected 7 Warning Signs with CNOB. - Is CNOB fairly valued? Test your thesis with our free DCF calculator. Release Date: October 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Operating EPS rose 13% sequentially to $0.95 and 35% year-over-year, with operating PPNR exceeding 2% of average assets and return on tangible common equity above 15%. - Core deposits grew at an 11% annualized pace, led by 14% growth in average non-interest-bearing demand deposits, reflecting strong relationship banking. - Net interest margin widened for the eighth consecutive quarter to 3.44%, and loan repricing remains a tailwind with a weighted average rate increase of 258 basis points on repriced loans. - Credit quality improved with annualized net charge-offs of just 7 basis points, non-performing assets declining to 0.44% of total assets, and a lower provision expense of $5 million. - The $750 million multifamily loan sale reduces CRE concentration, cuts rent-stabilized exposure by two-thirds, improves liquidity and capital ratios, and sharpens focus on relationship banking. - The loan sale resulted in a $23 million non-operating pre-tax charge in Q3 due to interest rate changes, and additional transaction costs of $7-8 million will be recognized in Q4. - Deposit costs are expected to face continued upward pressure, which tempers margin widening projections despite loan repricing benefits. - The preferred stock dividend rate has reset higher, and the company may keep it outstanding for another quarter while evaluating redemption, adding to funding costs. - Tangible book value per share declined 1.9% sequentially to $24.19, primarily due to AOCI changes, despite being up 5.9% year-over-year. - Competition for loans remains intense, and rising rates have dampened some demand; the company expects only mid-single-digit loan growth and may see continued runoff from lower-spread business. Q: What ultimately drove the decision to move forward with the $750 million multifamily loan sale balance sheet strengthening or signs of stress in the portfolio? A: CFO William Burns explained the sale was primarily about executing ConnectOne's relationship-focused strategy. A high percentage of the acquired portfolio consisted of non-relationship, transaction-based loans, and the opportunity allowed the bank to free up capital, liquidity, and resources to redeploy into better relationship-based assets. He noted the rent-stabilized environment has been deteriorating since the First of Long Island deal was announced, but the non-rent-stabilized multifamily assets were performing extremely well they simply weren't high-quality client relationships. Q: What are the expected uses of the loan sale proceeds? A: CEO Frank Sorrentino confirmed the plan: hold proceeds in government-guaranteed securities near-term, pay down some wholesale funding, and retain capital for both redeeming the preferred stock and long-term organic loan growth. CFO Bill Burns added that the majority of funds will go into lower-risk assets with slightly higher yields, reducing balance sheet risk without impacting earnings power. Q: How should we think about the net interest margin trajectory, including the impact of the loan sale versus asset repricing? A: CFO William Burns guided to a 350 margin for Q4 2026, with continued widening through 2027 depending on Fed rate moves. He noted loan repricing, originations, and the restructuring each contribute a few basis points, offset by rising deposit costs netting 3 to 5 basis points of improvement per quarter. He added that each Fed rate hike costs only about 2-3 basis points, while the bank benefits more on the way down than it gets hurt on the way up. Q: What is the credit outlook and net charge-off profile going forward, particularly for the remaining rent-stabilized loans? A: CEO Frank Sorrentino said there is no large pipeline of charge-offs, but the bank intends to be aggressive in exiting the small remaining rent-stabilized piece, with potential charge-offs of no more than $3-5 million per quarter. CFO Burns noted the remaining ~$235 million rent-regulated book has roughly 30% protection from prior charge-offs, purchase accounting marks, and reserves on the criticized half, while the performing half carries reserves above the portfolio average (~3%) with a weighted average rating of 4.1, low LTVs, and strong debt service coverage. Q: What are the expense expectations for 2027, and what levers exist if the environment gets tougher? A: CFO William Burns said expense growth would be mid-single-digit at maximum, with continued leverage of fixed costs and technology efficiencies driving the efficiency ratio lower. He emphasized the bank doesn't have rigid expense budgets and adjusts based on available opportunities, targeting ongoing improvement in efficiency ratio and return on equity. For Q4 2026, he guided to a 2% to 2.5% sequential OpEx increase. Q: What are the yields on the loans being sold versus reinvestment yields? A: CFO William Burns said 30% of the pool was ConnectOne-originated at an average rate of 5.25%, while the First of Long Island loans yielded about 6% after purchase accounting marks a weighted average of roughly 5.8%. Proceeds are expected to be reinvested at yields in the low 6s, meaning the assets going on the books yield more than those coming off, even accounting for lost purchase accounting accretion. Q: How much purchase accounting accretion is running through NII, and what happens after the loan sale? A: CFO William Burns said purchase accounting accretion has been running at about $8 million, and roughly 20% of that will be lost with the loan sale. However, he stressed this won't hurt the margin because the yield on assets coming off (including accretion) is lower than the yield on assets going on and lower purchase accounting accretion improves earnings quality for investors who view it skeptically. Q: What is the competitive environment for loans, and is the bank seeing reduced paydowns given higher rates? A: CEO Frank Sorrentino acknowledged significant competition but said rising rates have dampened some demand while a robust economy persists underneath. He credited ConnectOne's certainty of execution at an all-time high for winning business and maintaining proper spreads. CFO Burns noted originations of up to $800 million last quarter at rates in the high 6s contributed about 5 basis points to the margin, with the pipeline now over 7%. Sorrentino said he doesn't expect the paydown dynamic to change much, as some runoff from lower-spread competitors is welcome. Q: Are there plans for additional loan sales or balance sheet restructuring down the line? A: CFO William Burns said the bank has a history of smaller transactions when non-relationship loans accumulate, so it's possible further down the road, but he wouldn't put it into projections for the next year or two. On the remaining rent-stabilized exposure, he said more than half consists of strong clients with significant deposits that the bank wouldn't want to sell, and the bank will be aggressive in reducing the remaining criticized piece declaring the NYC rent-regulated issue "in the rearview mirror." Q: What is the outlook for deposit growth and deposit costs? A: CFO William Burns said deposit costs have been pretty flat in recent months but he expects continued upward pressure on deposit pricing, which is tempering margin widening projections. He noted average client deposits grew about 11% annualized, led by 14% growth in non-interest-bearing demand, while brokered deposits declined $150 million. He emphasized deposits should be measured average-over-average rather than period-end, since balances fluctuate daily. Q: How is the bank thinking about loan demand if the Fed continues raising rates? A: CEO Frank Sorrentino said a robust economy is running underneath the headlines, and if the Fed hikes further, it would signal economic strength which would drive increased lending demand, since borrowers can still make projects work at higher rates. He noted rates remain historically moderate relative to cost of capital and returns available on construction and development opportunities. He said he's more concerned about a dramatic rate decline, which would portend an economic slowdown, than about the current rate environment. Q: What is the status of the preferred stock redemption given the higher reset rate? For the complete transcript of the earnings call, please refer to the full earnings call transcript.

OPERATING PERFORMANCE ACCELERATES PPNR RATIO SURPASSES 2% AND OPERATING RETURN ON TANGIBLE COMMON EQUITY TOPS 15% KEY METRICS STRENGTHENED BY BALANCE SHEET RESTRUCTURING TOTAL LOANS AND AVERAGE CLIENT DEPOSITS BOTH ACHIEVE 11% SEQUENTIAL ANNUALIZED GROWTH NET INTEREST MARGIN EXPANDS TO 3.44% COMMON AND PREFERRED DIVIDENDS DECLARED ENGLEWOOD CLIFFS, N.J., Oct. 22, 2026 (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 $29.9 million for the third quarter of 2026 compared with $40.2 million for the second quarter of 2026 and $39.5 million for the third quarter of 2025. Diluted earnings per share was $0.59 for the third quarter of 2026 compared with $0.80 for the second quarter of 2026 and $0.78 for the third quarter of 2025. Return on average assets was 0.86%, 1.17% and 1.16% for the three months ended September 30, 2026, June 30, 2026 and September 30, 2025, respectively. Return on average tangible common equity was 10.1%, 13.8% and 14.7% for the three months ended September 30, 2026, June 30, 2026 and September 30, 2025, respectively. Third quarter results include a $23.0 million pretax charge related to the balance sheet restructuring and repositioning, discussed below. Operating net income available to common stockholders (which excludes the $23.0 million pretax restructuring charge, among other non-operating items – see supplemental tables discussed below) was $47.9 million for the third quarter of 2026, $42.2 million for the second quarter of 2026 and $35.5 million for the third quarter of 2025. Operating diluted earnings per share was $0.95 for the third quarter of 2026, $0.84 for the second quarter of 2026 and $0.70 for the third quarter of 2025. Operating return on average assets was 1.35%, 1.23% and 1.05% for the three months ended September 30, 2026, June 30, 2026 and September 30, 2025, respectively. Operating return on average tangible common equity was 15.2%, 13.8% and 12.6% for the three months ended September 30, 2026, June 30, 2026 and September 30, 2025, respectively. Pre-provision net operating revenue ("Operating PPNR") as a percentage of average assets was 2.01%, 1.94% and 1.61% for the three months ended September 30, 2026, June 30, 2026 and September 30, 2025, respectively. See supplemental tables for a complete reconciliation of GAAP earnings to operating earnings and other non-GAAP measures. The decrease in net income available to common stockholders and diluted earnings per share for the third quarter of 2026, compared to the second quarter of 2026, was primarily due to the $23.0 million pretax restructuring charge related to the above-mentioned balance sheet repositioning. This charge was partially offset by a $3.7 million increase in net interest income, a $3.3 million reduction in the provision for credit losses and a $5.2 million decrease in income tax expense. Compared to the third quarter of 2025, the decrease in net income available to common stockholders and diluted earnings per share was primarily due to a $33.9 million decrease in noninterest income. The decrease in noninterest income was mainly attributable to the aforementioned $23.0 million pretax charge in the third quarter of 2026, as well as $10.1 million of non-recurring income recognized in the third quarter of 2025, consisting of a $6.6 million employee retention tax credit ("ERTC") and a $3.5 million defined benefit pension plan curtailment gain. The decrease was partially offset by a $15.3 million increase in net interest income, a $5.3 million decrease in income tax expense, a $3.3 million decrease in noninterest expenses and a $0.5 million reduction in the provision for credit losses. Balance Sheet Restructuring and Repositioning The transaction. During the third quarter of 2026, the Company completed a strategic review of its balance sheet. As a result, during the fourth quarter, the Company entered into an agreement to sell a pool of up to approximately $750 million in unpaid principal balance of non-relationship multifamily loans, subject to adjustment as provided for under the transaction agreements, to a single third-party purchaser. Loans secured by NYC rent-stabilized properties represent approximately 61% of the pool. The pool consists of loans originated by ConnectOne Bank (30%) and the First National Bank of Long Island ("FLIC") (70%), which was acquired by the Company in June 2025. The transaction is expected to close in late October, and the final balance of loans sold will be determined at the closing. Third quarter impact. The loan pool was transferred to held-for-sale, at the lower of cost or fair value of $678.9 million as of September 30, 2026, resulting in a $23.0 million pretax loss on loans held-for-sale, recorded in noninterest income. This charge reflects the gross discount on the sale price, substantially offset by the interest-rate and credit purchase accounting marks previously recorded on the FLIC-originated loans, as part of the merger with FLIC's parent company. The recognized loss on the pool is attributed to increases in market interest rates since the loans were originated. The charge is excluded from operating earnings. Fourth quarter impact and timing. The transaction is scheduled to close in late October, 2026. Transaction costs related to the restructuring of approximately $7 to $8 million will be recognized upon closing and payment in the fourth quarter of 2026. Use of proceeds and benefits. The majority of net proceeds from the sale are expected to be reinvested in government-guaranteed securities at yields similar to those of the loans sold, with the remaining balance used to pay down wholesale funding. The restructuring reduces the Company's concentrations in commercial real estate ("CRE") and NYC rent-stabilized properties while strengthening the Bank's liquidity position. The Bank's regulatory CRE concentration ratio declines to approximately 397% proforma for the loan sale from 439% at June 30, 2026, and exposure to NYC rent-stabilized assets is projected to decline to approximately 2% of total loans, from 6% as of June 30, 2026. The balance sheet repositioning also reduced the Bank's loan-to-deposit ratio to 97.1% at September 30, 2026, and will expand its liquid assets. "Our core performance was strong and reflects the successful execution of our relationship-driven banking strategy. Operating PPNR exceeded 2% of average assets and operating return on tangible common equity topped 15%," commented Frank Sorrentino, ConnectOne's Chairman and Chief Executive Officer. "Loans and average client deposits each grew at an annualized rate of about 11%, and our net interest margin widened to 3.44% despite higher short-term rates and a competitive funding environment. Disciplined expense management kept costs well controlled, and credit quality metrics improved." "Furthermore, we executed a definitive agreement to sell a pool of up to approximately $750 million of multifamily loans, executing on the balance sheet repositioning we have been contemplating. By selectively divesting non-relationship loans, this transaction reduces our CRE and rent-stabilized concentrations, strengthens key financial metrics and enhances our financial flexibility, while largely preserving our earnings power." Mr. Sorrentino concluded, "As we approach year-end, we remain focused on operational excellence, disciplined growth and deepening client relationships. With a stronger balance sheet and solid momentum in our core business, we believe ConnectOne is well positioned to create long-term value for our shareholders." Dividend Declarations The Board of Directors declared cash dividends on the Company's common and outstanding preferred stock. A cash dividend on common stock of $0.195 per share will be paid on December 1, 2026, to common stockholders of record on November 13, 2026. A dividend of $0.556620 per depositary share, representing a 1/40th interest in a share of the Company's 5.25% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, will also be paid on December 1, 2026, to holders of record on November 13, 2026. Operating Results Fully taxable equivalent net interest income for the third quarter of 2026 was $118.5 million, an increase of $3.7 million, or 3.2%, from the second quarter of 2026, largely due to a 2 basis-point widening of the net interest margin to 3.44% from 3.42% and a 1.7% increase in average interest-earning assets. The margin benefited from a 5 basis-point increase in the yield on interest-earning assets, primarily due to loan repricing, partially offset by a 3 basis-point increase in the average cost of deposits, including noninterest-bearing deposits. Fully taxable equivalent net interest income for the third quarter of 2026 increased $15.3 million, or 14.8%, from the third quarter of 2025, due to a 33 basis-point widening of the net interest margin to 3.44% from 3.11%, and a 3.9% increase in average interest-earning assets. The margin benefited from a 15 basis-point increase in the yield on interest-earning assets and a 17 basis-point decrease in the average cost of deposits, including noninterest-bearing deposits. Noninterest income was $(14.5) million in the third quarter of 2026, $7.9 million in the second quarter of 2026 and $19.4 million in the third quarter of 2025. Noninterest income for the third quarter of 2026 included the $23.0 million pretax restructuring charge. Excluding this item, noninterest income increased $0.6 million compared to the second quarter of 2026, primarily due to a $1.1 million increase in BOLI income, driven by death benefits recorded in the third quarter of 2026, partially offset by a $0.4 million decrease in net gains on sale of loans held-for-sale, primarily SBA loans. During the third quarter of 2025, the Company recognized $10.1 million in non-recurring gains, consisting of a $6.6 million one-time benefit related to the ERTC and a $3.5 million defined benefit pension plan curtailment gain. Excluding these items, noninterest income decreased $0.8 million, compared to the third quarter of 2025, primarily due to a $1.9 million decrease in net gains on equity securities and a $0.5 million decrease in deposit, loan and other income, partially offset by a $1.2 million increase in BOLI income, driven by the aforementioned death benefits and a $0.3 million increase in net gains on sale of loans held-for-sale, primarily SBA loans. Noninterest expenses were $55.4 million for the third quarter of 2026, $55.4 million for the second quarter of 2026 and $58.7 million for the third quarter of 2025. Noninterest expenses were unchanged compared to the second quarter of 2026, as a $1.4 million increase in salaries and employee benefits was offset by a $0.5 million decrease in occupancy and equipment expenses, a $0.4 million decrease in other expenses, a $0.2 million decrease in marketing and advertising expenses, a $0.2 million decrease in FDIC insurance expense and a $0.1 million decrease in information technology and communication expenses. The $3.3 million decrease compared to the third quarter of 2025 was primarily due to a $2.9 million decrease in merger, restructuring and exit expenses, a $0.9 million decrease in FDIC insurance expense, a $0.4 million decrease in amortization of core deposit intangibles, a $0.1 million decrease in occupancy and equipment expenses and a $0.1 million decrease in other expenses, partially offset by a $0.5 million increase in salaries and employee benefits, a $0.4 million increase in professional and consulting expenses and a $0.2 million increase in marketing and advertising expenses. Income tax expense was $11.0 million for the third quarter of 2026, $16.2 million for the second quarter of 2026 and $16.3 million for the third quarter of 2025. The effective tax rates were 26.0%, 28.0% and 28.4% for the third quarter of 2026, second quarter of 2026 and third quarter of 2025, respectively. The decrease in income tax expense and the effective tax rate for the third quarter of 2026 was primarily due to lower taxable income resulting from the loss on loans held-for-sale related to the balance sheet restructuring. The projected effective tax rate for the fourth quarter of 2026 is 27.5%. Asset Quality The provision for credit losses was $5.0 million for the third quarter of 2026, $8.3 million for the second quarter of 2026 and $5.5 million for the third quarter of 2025. The provision for credit losses for the third quarter of 2026, reflected core loan growth, charge-offs, and specific reserves, partially offset by the transfer of loans to loans held-for-sale at fair value. The provision in the second quarter of 2026 was elevated primarily due to charge-offs on certain NYC rent-stabilized multifamily loans during the second quarter of 2026. Nonperforming assets, which include nonaccrual loans and other real estate owned (the Bank had no other real estate owned during the periods reported), were $64.3 million as of September 30, 2026, $79.7 million as of June 30, 2026 and $39.7 million as of September 30, 2025. Nonperforming assets as a percentage of total assets was 0.44% as of September 30, 2026, compared to 0.55% as of June 30, 2026 and 0.28% as of September 30, 2025. The ratio of nonaccrual loans to loans receivable was 0.56%, as of September 30, 2026, compared to 0.67% as of June 30, 2026 and 0.35% as of September 30, 2025. The sequential decrease in nonaccrual loans was primarily driven by work-out loan sales, charge-offs and principal payments. Excluding PCD loan charge-offs ($22.2 million in the third quarter of 2026, $4.5 million in the second quarter of 2026 and none in the third quarter of 2025), the annualized net loan charge-off ratio was 0.07% for the third quarter of 2026, 0.71% for the second quarter of 2026 and 0.18% for the third quarter of 2025. The elevated charge-off ratio, excluding PCD charge-offs, for the second quarter of 2026 included charge-offs related to a previously disclosed group of NYC rent-stabilized loans. The allowance for credit losses ("ACL") represented 1.06%, 1.18% and 1.38% of loans receivable as of September 30, 2026, June 30, 2026 and September 30, 2025, respectively. The ACL decreased $19.5 million to $120.6 million as of September 30, 2026, compared to $140.1 million as of June 30, 2026, primarily reflecting the charge-off of $22.2 million of allowance on PCD loans in connection with the pending loan sale, partially offset by provision expense in excess of non-PCD net charge-offs. The charge-offs associated with the pending loan sale related to PCD loans for which an allowance for credit losses had previously been established in connection with the FLIC acquisition and required no additional provision for credit losses in the current quarter. The ACL as a percentage of nonaccrual loans was 187.5% as of September 30, 2026, 175.9% as of June 30, 2026 and 394.5% as of September 30, 2025. Criticized and classified loans as a percentage of loans receivable were 2.02% as of September 30, 2026, compared to 1.89% as of June 30, 2026 and 2.57% as of September 30, 2025. The increase from June 30, 2026 was primarily due to the decrease in loans receivable resulting from the transfer of loans to held-for-sale; criticized and classified loan balances remained relatively stable during the quarter. Loans past due 30-89 days were 0.05% of loans receivable as of September 30, 2026, 0.03% as of June 30, 2026 and 0.08% as of September 30, 2025. Selected Balance Sheet Items The Company's total assets were $14.8 billion as of September 30, 2026, compared to $14.0 billion as of December 31, 2025. Loans receivable were $11.4 billion as of September 30, 2026 and $11.5 billion as of December 31, 2025. Loans receivable as of September 30, 2026 excluded $0.8 billion of loans transferred to held-for-sale. Total deposits were $11.8 billion as of September 30, 2026 and $11.2 billion as of December 31, 2025. The Company's total stockholders' equity increased to $1.599 billion as of September 30, 2026 from $1.573 billion as of December 31, 2025. Retained earnings increased $77.7 million, partially offset by an increase in the accumulated other comprehensive loss of $51.0 million. As of September 30, 2026, the Company's tangible common equity ratio and tangible book value per share were 8.38% and $24.19, respectively, compared to 8.62% and $23.52, respectively, as of December 31, 2025. Total goodwill and other intangible assets were $271.6 million as of September 30, 2026 and $280.2 million as of December 31, 2025. Proforma for the loan sale, the tangible common equity ratio was 8.83% as of September 30, 2026. Share Repurchase Program During the third quarter of 2026, the Company repurchased 50,000 shares of common stock at an average price of $32.37 per share. For the nine months ended September 30, 2026, the Company repurchased 140,000 shares of common stock at an average price of $28.26 per share, leaving 501,118 shares authorized for repurchase under the current Board approved repurchase program. The Company intends to 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 program does not obligate the Company to acquire any particular amount of common stock and the plan 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. Third Quarter 2026 Results Conference Call Management will host a conference call and audio webcast at 10:00 a.m. ET on Thursday, October 22, 2026, to review the Company's financial performance and operating results. Chairman and Chief Executive Officer Frank Sorrentino III and Senior Executive Vice President and Chief Financial Officer William S. Burns will host the call. The conference call dial-in number is 1 (585) 542-9983, meeting ID: 828 757 770. 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 at https://www.ConnectOneBank.com or at http://ir.connectonebank.com. An archive of the webcast will be available following the completion of the call at the same locations. 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. 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 U.S. Securities and Exchange Commission, as supplemented by the Company's subsequent filings with the U.S. 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 health emergencies and natural disasters 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 Vice President & CFO 201.816.4474; [email protected] Media Contact: Shannan Weeks MikeWorldWide 732.299.7890; [email protected] CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (in thousands) | | | | | | | | | September 30, | | | December 31, | | | September 30, | | 2026 | | | 2025 | | | 2025 | | (unaudited) | | | | | | | (unaudited) | ASSETS | | | | | | | | | | | Cash and due from banks | $ | 50,643 | | | $ | 92,406 | | | $ | 96,990 | Interest-bearing deposits with banks | | 262,705 | | | | 288,489 | | | | 445,744 | Cash and cash equivalents | | 313,348 | | | | 380,895 | | | | 542,734 | | | | | | | | | | | | Investment securities | | 1,323,789 | | | | 1,250,938 | | | | 1,252,202 | Equity securities | | 21,947 | | | | 19,287 | | | | 20,133 | | | | | | | | | | | | Loans held-for-sale | | 678,880 | | | | 391 | | | | — | | | | | | | | | | | | Loans receivable | | 11,432,533 | | | | 11,453,280 | | | | 11,303,636 | Less: Allowance for credit losses - loans | | 120,620 | | | | 154,305 | | | | 156,499 | Net loans receivable | | 11,311,913 | | | | 11,298,975 | | | | 11,147,137 | | | | | | | | | | | | Investment in restricted stock, at cost | | 62,661 | | | | 54,722 | | | | 51,516 | Bank premises and equipment, net | | 48,351 | | | | 55,285 | | | | 55,888 | Accrued interest receivable | | 66,657 | | | | 60,761 | | | | 60,630 | Bank owned life insurance | | 378,361 | | | | 370,713 | | | | 367,767 | Right of use operating lease assets | | 30,228 | | | | 29,603 | | | | 29,283 | Goodwill | | 220,235 | | | | 220,235 | | | | 215,611 | Core deposit intangibles | | 51,387 | | | | 59,923 | | | | 63,119 | Other assets | | 270,948 | | | | 200,972 | | | | 217,565 | Total assets | $ | 14,778,705 | | | $ | 14,002,700 | | | $ | 14,023,585 | | | | | | | | | | | | LIABILITIES | | | | | | | | | | | Deposits: | | | | | | | | | | | Noninterest-bearing | $ | 2,479,625 | | | $ | 2,420,397 | | | $ | 2,513,102 | Interest-bearing | | 9,298,717 | | | | 8,820,218 | | | | 8,856,193 | Total deposits | | 11,778,342 | | | | 11,240,615 | | | | 11,369,295 | Borrowings | | 1,072,398 | | | | 903,489 | | | | 833,443 | Subordinated debentures, net | | 202,423 | | | | 201,864 | | | | 201,677 | Operating lease liabilities | | 32,807 | | | | 32,446 | | | | 33,185 | Other liabilities | | 94,135 | | | | 50,946 | | | | 47,641 | Total liabilities | | 13,180,105 | | | | 12,429,360 | | | | 12,485,241 | | | | | | | | | | | | COMMITMENTS AND CONTINGENCIES | | | | | | | | | | | | | | | | | | | | | | STOCKHOLDERS' EQUITY | | | | | | | | | | | Preferred stock | | 110,927 | | | | 110,927 | | | | 110,927 | Common stock | | 857,765 | | | | 857,765 | | | | 857,765 | Additional paid-in capital | | 41,329 | | | | 38,763 | | | | 37,934 | Retained earnings | | 751,575 | | | | 673,897 | | | | 644,944 | Treasury stock | | (80,138 | ) | | | (76,116 | ) | | | (76,116 | ) Accumulated other comprehensive loss | | (82,858 | ) | | | (31,896 | ) | | | (37,110 | ) Total stockholders' equity | | 1,598,600 | | | | 1,573,340 | | | | 1,538,344 | Total liabilities and stockholders' equity | $ | 14,778,705 | | | $ | 14,002,700 | | | $ | 14,023,585 | | | | | | | | | | | | CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except for per share data) | | | | | | | Three Months Ended | | | Nine Months Ended | | 09/30/26 | | | 09/30/25 | | | 09/30/26 | | | 09/30/25 | Interest income | | | | | | | | | | | | | | | Interest and fees on loans | $ | 182,428 | | | $ | 165,937 | | | $ | 526,976 | | | $ | 413,604 | Interest and dividends on investment securities: | | | | | | | | | | | | | | | Taxable | | 12,580 | | | | 12,033 | | | | 34,361 | | | | 24,457 | Tax-exempt | | 1,858 | | | | 2,014 | | | | 5,743 | | | | 4,530 | Dividends | | 843 | | | | 1,081 | | | | 2,725 | | | | 2,758 | Interest on federal funds sold and other short-term investments | | 2,432 | | | | 6,644 | | | | 7,640 | | | | 13,179 | Total interest income | | 200,141 | | | | 187,709 | | | | 577,445 | | | | 458,528 | Interest expense | | | | | | | | | | | | | | | Deposits | | 72,102 | | | | 75,209 | | | | 207,355 | | | | 189,440 | Borrowings | | 10,741 | | | | 10,483 | | | | 30,349 | | | | 22,432 | Total interest expense | | 82,843 | | | | 85,692 | | | | 237,704 | | | | 211,872 | | | | | | | | | | | | | | | | Net interest income | | 117,298 | | | | 102,017 | | | | 339,741 | | | | 246,656 | Provision for credit losses | | 5,000 | | | | 5,500 | | | | 18,500 | | | | 44,700 | Net interest income after provision for credit losses | | 112,298 | | | | 96,517 | | | | 321,241 | | | | 201,956 | | | | | | | | | | | | | | | | Noninterest income | | | | | | | | | | | | | | | Deposit, loan and other income | | 3,347 | | | | 3,836 | | | | 9,954 | | | | 8,412 | Defined benefit pension plan curtailment gain | | — | | | | 3,501 | | | | — | | | | 3,501 | Employee retention tax credit | | — | | | | 6,608 | | | | — | | | | 6,608 | Income on bank owned life insurance | | 4,136 | | | | 2,931 | | | | 10,104 | | | | 6,602 | Gains on sale of loans held-for-sale | | 1,203 | | | | 859 | | | | 3,220 | | | | 1,372 | (Loss) on sale of loans held-for-sale-CRE restructuring | | (23,025 | ) | | | — | | | | (23,025 | ) | | | — | (Losses) gains on equity securities | | (159 | ) | | | 1,674 | | | | (28 | ) | | | 2,550 | Total noninterest income | | (14,498 | ) | | | 19,409 | | | | 225 | | | | 29,045 | | | | | | | | | | | | | | | | Noninterest expenses | | | | | | | | | | | | | | | Salaries and employee benefits | | 32,922 | | | | 32,401 | | | | 97,227 | | | | 80,212 | Occupancy and equipment | | 4,968 | | | | 5,122 | | | | 15,832 | | | | 11,280 | FDIC insurance | | 1,500 | | | | 2,400 | | | | 5,200 | | | | 6,200 | Professional and consulting | | 3,278 | | | | 2,929 | | | | 9,513 | | | | 7,893 | Marketing and advertising | | 951 | | | | 771 | | | | 3,038 | | | | 2,206 | Information technology and communications | | 5,277 | | | | 5,243 | | | | 15,914 | | | | 14,639 | Restructuring and exit charges | | — | | | | 994 | | | | — | | | | 994 | Merger expenses and restructuring charges | | — | | | | 1,898 | | | | 2,233 | | | | 33,963 | Bank owned life insurance restructuring charge | | — | | | | — | | | | — | | | | 327 | Amortization of core deposit intangibles | | 2,846 | | | | 3,196 | | | | 8,536 | | | | 4,726 | Other expenses | | 3,627 | | | | 3,719 | | | | 11,161 | | | | 9,187 | Total noninterest expenses | | 55,369 | | | | 58,673 | | | | 168,654 | | | | 171,627 | | | | | | | | | | | | | | | | Income before income tax expense | | 42,431 | | | | 57,253 | | | | 152,812 | | | | 59,374 | Income tax expense | | 11,032 | | | | 16,277 | | | | 41,923 | | | | 18,449 | Net income | | 31,399 | | | | 40,976 | | | | 110,889 | | | | 40,925 | Preferred dividends | | 1,509 | | | | 1,509 | | | | 4,527 | | | | 4,527 | Net income available to common stockholders | $ | 29,890 | | | $ | 39,467 | | | $ | 106,362 | | | $ | 36,398 | | | | | | | | | | | | | | | | Earnings per common share: | | | | | | | | | | | | | | | Basic | $ | 0.59 | | | $ | 0.79 | | | $ | 2.12 | | | $ | 0.83 | Diluted | | 0.59 | | | | 0.78 | | | | 2.10 | | | | 0.83 | | | | | | | | | | | | | | | | 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 | | Sept. 30, | | | Jun. 30, | | | Mar. 31, | | | Dec. 31, | | | Sept. 30, | | 2026 | | | 2026 | | | 2026 | | | 2025 | | | 2025 | Selected Financial Data | (dollars in thousands) | Total assets | $ | 14,778,705 | | | $ | 14,411,864 | | | $ | 14,209,561 | | | $ | 14,002,700 | | | $ | 14,023,585 | Loans receivable: | | | | | | | | | | | | | | | | | | | Commercial | $ | 1,650,434 | | | $ | 1,598,678 | | | $ | 1,638,836 | | | $ | 1,558,436 | | | $ | 1,613,421 | Commercial real estate | | 4,930,142 | | | | 4,871,086 | | | | 4,750,508 | | | | 4,625,143 | | | | 4,310,159 | Multifamily | | 3,057,962 | | | | 3,679,302 | | | | 3,574,336 | | | | 3,437,080 | | | | 3,420,465 | Commercial construction | | 585,707 | | | | 528,103 | | | | 571,073 | | | | 623,902 | | | | 728,615 | Residential | | 1,207,092 | | | | 1,192,033 | | | | 1,202,539 | | | | 1,210,980 | | | | 1,233,305 | Consumer | | 4,306 | | | | 3,313 | | | | 1,801 | | | | 2,017 | | | | 2,166 | Gross loans | | 11,435,643 | | | | 11,872,515 | | | | 11,739,093 | | | | 11,457,558 | | | | 11,308,131 | Net deferred loan fees | | (3,110 | ) | | | (3,481 | ) | | | (3,497 | ) | | | (4,278 | ) | | | (4,495 | ) Loans receivable | | 11,432,533 | | | | 11,869,034 | | | | 11,735,596 | | | | 11,453,280 | | | | 11,303,636 | Loans held-for-sale | | 678,880 | | | | — | | | | 10,222 | | | | 391 | | | | — | Total loans | $ | 12,111,413 | | | $ | 11,869,034 | | | $ | 11,745,818 | | | $ | 11,453,671 | | | $ | 11,303,636 | | | | | | | | | | | | | | | | | | | | Investment and equity securities | $ | 1,345,736 | | | $ | 1,199,051 | | | $ | 1,215,806 | | | $ | 1,270,225 | | | $ | 1,272,335 | Goodwill and other intangible assets | | 271,622 | | | | 274,468 | | | | 277,313 | | | | 280,158 | | | | 278,730 | Deposits: | | | | | | | | | | | | | | | | | | | Noninterest-bearing demand | $ | 2,479,625 | | | $ | 2,512,964 | | | $ | 2,393,938 | | | $ | 2,420,397 | | | $ | 2,513,102 | Time deposits | | 3,119,593 | | | | 2,927,930 | | | | 3,010,971 | | | | 2,796,877 | | | | 2,977,952 | Other interest-bearing deposits | | 6,179,124 | | | | 6,299,469 | | | | 6,108,144 | | | | 6,023,341 | | | | 5,878,241 | Total deposits | $ | 11,778,342 | | | $ | 11,740,363 | | | $ | 11,513,053 | | | $ | 11,240,615 | | | $ | 11,369,295 | | | | | | | | | | | | | | | | | | | | Borrowings | $ | 1,072,398 | | | $ | 715,416 | | | $ | 827,477 | | | $ | 903,489 | | | $ | 833,443 | Subordinated debentures (net of debt issuance costs) | | 202,423 | | | | 202,236 | | | | 202,050 | | | | 201,864 | | | | 201,677 | Total stockholders' equity | | 1,598,600 | | | | 1,626,525 | | | | 1,591,547 | | | | 1,573,340 | | | | 1,538,344 | | | | | | | | | | | | | | | | | | | | Quarterly Average Balances | | | | | | | | | | | | | | | | | | | Total assets | $ | 14,534,596 | | | $ | 14,254,280 | | | $ | 13,999,581 | | | $ | 13,963,138 | | | $ | 14,050,585 | Loans receivable: | | | | | | | | | | | | | | | | | | | Commercial | $ | 1,623,410 | | | $ | 1,652,412 | | | $ | 1,579,368 | | | $ | 1,597,123 | | | $ | 1,583,673 | Commercial real estate (including multifamily) | | 8,600,502 | | | | 8,433,558 | | | | 8,137,515 | | | | 7,822,943 | | | | 7,630,195 | Commercial construction | | 544,828 | | | | 524,023 | | | | 613,661 | | | | 646,414 | | | | 704,170 | Residential | | 1,199,565 | | | | 1,198,244 | | | | 1,204,082 | | | | 1,221,171 | | | | 1,241,375 | Consumer | | 10,242 | | | | 10,855 | | | | 6,851 | | | | 5,473 | | | | 6,747 | Gross loans | | 11,978,547 | | | | 11,819,092 | | | | 11,541,477 | | | | 11,293,124 | | | | 11,166,160 | Net deferred loan fees | | (3,287 | ) | | | (3,331 | ) | | | (4,042 | ) | | | (4,708 | ) | | | (4,418 | ) Loans receivable | | 11,975,260 | | | | 11,815,761 | | | | 11,537,435 | | | | 11,288,416 | | | | 11,161,742 | Loans held-for-sale | | 7,623 | | | | 107 | | | | 335 | | | | 230 | | | | 318 | Total loans | $ | 11,982,883 | | | $ | 11,815,868 | | | $ | 11,537,770 | | | $ | 11,288,646 | | | $ | 11,162,060 | | | | | | | | | | | | | | | | | | | | Investment and equity securities | $ | 1,307,476 | | | $ | 1,208,532 | | | $ | 1,256,147 | | | $ | 1,269,275 | | | $ | 1,274,000 | Goodwill and other intangible assets | | 273,499 | | | | 276,313 | | | | 279,158 | | | | 279,165 | | | | 280,814 | Deposits: | | | | | | | | | | | | | | | | | | | Noninterest-bearing demand | $ | 2,510,843 | | | $ | 2,424,773 | | | $ | 2,384,883 | | | $ | 2,473,596 | | | $ | 2,486,993 | Time deposits | | 2,920,335 | | | | 2,992,440 | | | | 2,901,327 | | | | 2,946,459 | | | | 3,019,848 | Other interest-bearing deposits | | 6,252,427 | | | | 6,122,264 | | | | 5,996,487 | | | | 5,907,547 | | | | 5,889,230 | Total deposits | $ | 11,683,605 | | | $ | 11,539,477 | | | $ | 11,282,697 | | | $ | 11,327,602 | | | $ | 11,396,071 | | | | | | | | | | | | | | | | | | | | Borrowings | $ | 874,544 | | | $ | 812,384 | | | $ | 833,551 | | | $ | 781,388 | | | $ | 783,994 | Subordinated debentures (net of debt issuance costs) | | 202,300 | | | | 202,114 | | | | 201,928 | | | | 201,741 | | | | 263,511 | Total stockholders' equity | | 1,636,171 | | | | 1,612,528 | | | | 1,594,699 | | | | 1,558,366 | | | | 1,513,892 | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Sept. 30, | | | Jun. 30, | | | Mar. 31, | | | Dec. 31, | | | Sept. 30, | | 2026 | | | 2026 | | | 2026 | | | 2025 | | | 2025 | | (dollars in thousands, except for per share data) | Net interest income | $ | 117,298 | | | $ | 113,639 | | | $ | 108,804 | | | $ | 106,595 | | | $ | 102,017 | Provision for credit losses | | 5,000 | | | | 8,300 | | | | 5,200 | | | | 2,300 | | | | 5,500 | Net interest income after provision for credit losses | | 112,298 | | | | 105,339 | | | | 103,604 | | | | 104,295 | | | | 96,517 | Noninterest income | | | | | | | | | | | | | | | | | | | Deposit, loan and other income | | 3,347 | | | | 3,324 | | | | 3,283 | | | | 3,289 | | | | 3,836 | Defined benefit pension plan curtailment gain | | — | | | | — | | | | — | | | | — | | | | 3,501 | Employee retention tax credit | | — | | | | — | | | | — | | | | — | | | | 6,608 | Income on bank owned life insurance | | 4,136 | | | | 3,017 | | | | 2,951 | | | | 2,946 | | | | 2,931 | Gains on sale of loans held-for-sale | | 1,203 | | | | 1,590 | | | | 427 | | | | 631 | | | | 859 | (Loss) on sale of loans held-for-sale-CRE restructuring | | (23,025 | ) | | | — | | | | — | | | | — | | | | — | (Losses) gains on equity securities | | (159 | ) | | | (4 | ) | | | 135 | | | | (846 | ) | | | 1,674 | Total noninterest income | | (14,498 | ) | | | 7,927 | | | | 6,796 | | | | 6,020 | | | | 19,409 | Noninterest expenses | | | | | | | | | | | | | | | | | | | Salaries and employee benefits | | 32,922 | | | | 31,537 | | | | 32,768 | | | | 31,211 | | | | 32,401 | Occupancy and equipment | | 4,968 | | | | 5,519 | | | | 5,345 | | | | 5,265 | | | | 5,122 | FDIC insurance | | 1,500 | | | | 1,700 | | | | 2,000 | | | | 2,400 | | | | 2,400 | Professional and consulting | | 3,278 | | | | 3,127 | | | | 3,108 | | | | 2,908 | | | | 2,929 | Marketing and advertising | | 951 | | | | 1,161 | | | | 926 | | | | 974 | | | | 771 | Information technology and communications | | 5,277 | | | | 5,394 | | | | 5,243 | | | | 5,366 | | | | 5,243 | Restructuring and exit charges | | — | | | | — | | | | — | | | | — | | | | 994 | Merger expenses and restructuring charges | | — | | | | 108 | | | | 2,125 | | | | 498 | | | | 1,898 | Branch closing expenses | | — | | | | — | | | | — | | | | 1,275 | | | | — | Amortization of core deposit intangible | | 2,846 | | | | 2,845 | | | | 2,845 | | | | 3,196 | | | | 3,196 | Other expenses | | 3,627 | | | | 4,025 | | | | 3,509 | | | | 3,853 | | | | 3,719 | Total noninterest expenses | | 55,369 | | | | 55,416 | | | | 57,869 | | | | 56,946 | | | | 58,673 | | | | | | | | | | | | | | | | | | | | Income before income tax expense | | 42,431 | | | | 57,850 | | | | 52,531 | | | | 53,369 | | | | 57,253 | Income tax expense | | 11,032 | | | | 16,182 | | | | 14,709 | | | | 13,851 | | | | 16,277 | Net income | | 31,399 | | | | 41,668 | | | | 37,822 | | | | 39,518 | | | | 40,976 | Preferred dividends | | 1,509 | | | | 1,509 | | | | 1,509 | | | | 1,509 | | | | 1,509 | Net income available to common stockholders | $ | 29,890 | | | $ | 40,159 | | | $ | 36,313 | | | $ | 38,009 | | | $ | 39,467 | | | | | | | | | | | | | | | | | | | | Weighted average diluted common shares outstanding | | 50,455,230 | | | | 50,404,698 | | | | 50,382,297 | | | | 50,414,115 | | | | 50,462,030 | Diluted EPS | $ | 0.59 | | | $ | 0.80 | | | $ | 0.72 | | | $ | 0.75 | | | $ | 0.78 | | | | | | | | | | | | | | | | | | | | Reconciliation of GAAP Net Income to Operating Net Income: | | | | | | | | | | | | | | | | | | | Net income | $ | 31,399 | | | $ | 41,668 | | | $ | 37,822 | | | $ | 39,518 | | | $ | 40,976 | Restructuring and exit charges | | — | | | | — | | | | — | | | | — | | | | 994 | Merger expenses and restructuring charges | | — | | | | 108 | | | | 2,125 | | | | 498 | | | | 1,898 | Branch closing expenses | | — | | | | — | | | | — | | | | 1,275 | | | | — | Amortization of core deposit intangibles | | 2,846 | | | | 2,845 | | | | 2,845 | | | | 3,196 | | | | 3,196 | Loss on sale of loans held-for-sale-CRE restructuring | | 23,025 | | | | — | | | | — | | | | — | | | | — | Losses (gains) on equity securities | | 159 | | | | 4 | | | | (135 | ) | | | 846 | | | | (1,674 | ) Defined benefit pension plan curtailment gain | | — | | | | — | | | | — | | | | — | | | | (3,501 | ) Employee retention tax credit | | — | | | | — | | | | — | | | | — | | | | (6,608 | ) Tax impact of adjustments | | (8,069 | ) | | | (917 | ) | | | (1,499 | ) | | | (1,802 | ) | | | 1,737 | Operating net income | $ | 49,360 | | | $ | 43,708 | | | $ | 41,158 | | | $ | 43,531 | | | $ | 37,018 | Preferred dividends | | 1,509 | | | | 1,509 | | | | 1,509 | | | | 1,509 | | | | 1,509 | Operating net income available to common stockholders | $ | 47,851 | | | $ | 42,199 | | | $ | 39,649 | | | $ | 42,022 | | | $ | 35,509 | | | | | | | | | | | | | | | | | | | | Operating diluted EPS (non-GAAP) (1) | $ | 0.95 | | | $ | 0.84 | | | $ | 0.79 | | | $ | 0.83 | | | $ | 0.70 | | | | | | | | | | | | | | | | | | | | Return on Assets Measures | | | | | | | | | | | | | | | | | | | Average assets | $ | 14,534,596 | | | $ | 14,254,280 | | | $ | 13,999,581 | | | $ | 13,963,138 | | | $ | 14,050,585 | Return on avg. assets | | 0.86 | % | | | 1.17 | % | | | 1.10 | % | | | 1.12 | % | | | 1.16 | % Operating return on avg. assets (non-GAAP) (2) | | 1.35 | | | | 1.23 | | | | 1.19 | | | | 1.24 | | | | 1.05 | Pre-provision net operating revenue ("PPNR") return on avg. assets (non-GAAP) (3) | | 2.01 | | | | 1.94 | | | | 1.81 | | | | 1.75 | | | | 1.61 | ____________________________ (1) | Operating net income available to common stockholders divided by weighted average diluted shares outstanding. (2) | Operating net income divided by average assets. (3) | Net income before income tax expense, provision for credit losses, merger expenses and restructuring charges, branch closing expenses, BOLI restructuring charges, restructuring and exit charges, CRE restructuring, employee retention tax credit, defined benefit pension plan curtailment gain, amortization of core deposit intangibles and net gains on equity securities divided by average assets. | Three Months Ended | | Sept. 30, | | | Jun. 30, | | | Mar. 31, | | | Dec. 31, | | | Sept. 30, | | 2026 | | | 2026 | | | 2026 | | | 2025 | | | 2025 | Return on Equity Measures | (dollars in thousands) | Average stockholders' equity | $ | 1,636,171 | | | $ | 1,612,528 | | | $ | 1,594,699 | | | $ | 1,558,366 | | | $ | 1,513,892 | Less: average preferred stock | | (110,927 | ) | | | (110,927 | ) | | | (110,927 | ) | | | (110,927 | ) | | | (110,927 | ) Average common equity | $ | 1,525,244 | | | $ | 1,501,601 | | | $ | 1,483,772 | | | $ | 1,447,439 | | | $ | 1,402,965 | Less: average intangible assets | | (273,499 | ) | | | (276,313 | ) | | | (279,158 | ) | | | (279,165 | ) | | | (280,814 | ) Average tangible common equity | $ | 1,251,745 | | | $ | 1,225,288 | | | $ | 1,204,614 | | | $ | 1,168,274 | | | $ | 1,122,151 | Return on avg. common equity (GAAP) | | 7.77 | % | | | 10.73 | % | | | 9.93 | % | | | 10.42 | % | | | 11.16 | % Operating return on avg. common equity (non-GAAP) (4) | | 12.45 | | | | 11.27 | | | | 10.84 | | | | 11.52 | | | | 10.04 | Return on avg. tangible common equity (non-GAAP) (5) | | 10.10 | | | | 13.79 | | | | 12.89 | | | | 13.66 | | | | 14.74 | Operating return on avg. tangible common equity (non-GAAP) (6) | | 15.17 | | | | 13.81 | | | | 13.35 | | | | 14.27 | | | | 12.55 | | | | | | | | | | | | | | | | | | | | Efficiency Measures | | | | | | | | | | | | | | | | | | | Total noninterest expenses | $ | 55,369 | | | $ | 55,416 | | | $ | 57,869 | | | $ | 56,946 | | | $ | 58,673 | Restructuring and exit charges | | — | | | | — | | | | — | | | | — | | | | (994 | ) Merger expenses and restructuring charges | | — | | | | (108 | ) | | | (2,125 | ) | | | (498 | ) | | | (1,898 | ) Branch closing expenses | | — | | | | — | | | | — | | | | (1,275 | ) | | | — | Amortization of core deposit intangibles | | (2,846 | ) | | | (2,845 | ) | | | (2,845 | ) | | | (3,196 | ) | | | (3,196 | ) Operating noninterest expense | $ | 52,523 | | | $ | 52,463 | | | $ | 52,899 | | | $ | 51,977 | | | $ | 52,585 | | | | | | | | | | | | | | | | | | | | Net interest income (tax equivalent basis) | $ | 118,541 | | | $ | 114,841 | | | $ | 109,976 | | | $ | 107,761 | | | $ | 103,155 | Noninterest income | | (14,498 | ) | | | 7,927 | | | | 6,796 | | | | 6,020 | | | | 19,409 | Defined benefit pension plan curtailment gain | | — | | | | — | | | | — | | | | — | | | | (3,501 | ) Employee retention tax credit | | — | | | | — | | | | — | | | | — | | | | (6,608 | ) Loss on sale of loans held-for-sale-CRE restructuring | | 23,025 | | | | — | | | | — | | | | — | | | | — | Losses (gains) on equity securities | | 159 | | | | 4 | | | | (135 | ) | | | 846 | | | | (1,674 | ) Operating revenue | $ | 127,227 | | | $ | 122,772 | | | $ | 116,637 | | | $ | 114,627 | | | $ | 110,781 | | | | | | | | | | | | | | | | | | | | Operating efficiency ratio (non-GAAP) (7) | | 41.3 | % | | | 42.7 | % | | | 45.4 | % | | | 45.3 | % | | | 47.5 | % | | | | | | | | | | | | | | | | | | | Net Interest Margin | | | | | | | | | | | | | | | | | | | Average interest-earning assets | $ | 13,685,961 | | | $ | 13,451,804 | | | $ | 13,160,794 | | | $ | 13,093,053 | | | $ | 13,172,443 | Net interest income (tax equivalent basis) | $ | 118,541 | | | $ | 114,841 | | | $ | 109,976 | | | $ | 107,761 | | | $ | 103,155 | Net interest margin (non-GAAP) | | 3.44 | % | | | 3.42 | % | | | 3.39 | % | | | 3.27 | % | | | 3.11 | % ____________________________ (4) | Operating net income available to common stockholders divided by average common equity. (5) | Net income available to common stockholders, excluding amortization of intangible assets, divided by average tangible common equity. (6) | Operating net income available to common stockholders, divided by average tangible common equity. (7) | Operating noninterest expense divided by operating revenue. | As of | | Sept. 30, | | | Jun. 30, | | | Mar. 31, | | | Dec. 31, | | | Sept. 30, | | 2026 | | | 2026 | | | 2026 | | | 2025 | | | 2025 | Capital Ratios and Book Value per Share | (dollars in thousands, except for per share data) | Stockholders equity | $ | 1,598,600 | | | $ | 1,626,525 | | | $ | 1,591,547 | | | $ | 1,573,340 | | | $ | 1,538,344 | Less: preferred stock | | (110,927 | ) | | | (110,927 | ) | | | (110,927 | ) | | | (110,927 | ) | | | (110,927 | ) Common equity | $ | 1,487,673 | | | $ | 1,515,598 | | | $ | 1,480,620 | | | $ | 1,462,413 | | | $ | 1,427,417 | Less: intangible assets | | (271,622 | ) | | | (274,468 | ) | | | (277,313 | ) | | | (280,158 | ) | | | (278,730 | ) Tangible common equity | $ | 1,216,051 | | | $ | 1,241,130 | | | $ | 1,203,307 | | | $ | 1,182,255 | | | $ | 1,148,687 | | | | | | | | | | | | | | | | | | | | Total assets | $ | 14,778,705 | | | $ | 14,411,864 | | | $ | 14,209,561 | | | $ | 14,002,700 | | | $ | 14,023,585 | Less: intangible assets | | (271,622 | ) | | | (274,468 | ) | | | (277,313 | ) | | | (280,158 | ) | | | (278,730 | ) Tangible assets | $ | 14,507,083 | | | $ | 14,137,396 | | | $ | 13,932,248 | | | $ | 13,722,542 | | | $ | 13,744,855 | | | | | | | | | | | | | | | | | | | | Common shares outstanding | | 50,268,879 | | | | 50,319,832 | | | | 50,288,494 | | | | 50,271,854 | | | | 50,273,089 | | | | | | | | | | | | | | | | | | | | Common equity ratio (GAAP) | | 10.07 | % | | | 10.52 | % | | | 10.42 | % | | | 10.44 | % | | | 10.18 | % Tangible common equity ratio (non-GAAP) (8) | | 8.38 | | | | 8.78 | | | | 8.64 | | | | 8.62 | | | | 8.36 | | | | | | | | | | | | | | | | | | | | Regulatory capital ratios (Bancorp): | | | | | | | | | | | | | | | | | | | Leverage ratio | | 9.80 | % | | | 9.85 | % | | | 9.79 | % | | | 9.61 | % | | | 9.35 | % Common equity Tier 1 risk-based ratio | | 10.10 | | | | 10.28 | | | | 10.23 | | | | 10.24 | | | | 10.17 | Risk-based Tier 1 capital ratio | | 11.01 | | | | 11.22 | | | | 11.19 | | | | 11.22 | | | | 11.17 | Risk-based total capital ratio | | 13.44 | | | | 13.71 | | | | 13.81 | | | | 13.88 | | | | 13.88 | | | | | | | | | | | | | | | | | | | | Regulatory capital ratios (Bank): | | | | | | | | | | | | | | | | | | | Leverage ratio | | 10.78 | % | | | 10.81 | % | | | 10.81 | % | | | 10.59 | % | | | 10.35 | % Common equity Tier 1 risk-based ratio | | 12.11 | | | | 12.31 | | | | 12.35 | | | | 12.36 | | | | 12.37 | Risk-based Tier 1 capital ratio | | 12.11 | | | | 12.31 | | | | 12.35 | | | | 12.36 | | | | 12.37 | Risk-based total capital ratio | | 12.99 | | | | 13.20 | | | | 13.33 | | | | 13.33 | | | | 13.38 | | | | | | | | | | | | | | | | | | | | Book value per share (GAAP) | $ | 29.59 | | | $ | 30.12 | | | $ | 29.44 | | | $ | 29.09 | | | $ | 28.39 | Tangible book value per share (non-GAAP) (9) | | 24.19 | | | | 24.66 | | | | 23.93 | | | | 23.52 | | | | 22.85 | | | | | | | | | | | | | | | | | | | | Net Loan Charge-offs (Recoveries) (10): | | | | | | | | | | | | | | | | | | | Charge-offs | $ | 3,179 | | | $ | 17,022 | | | $ | 2,758 | | | $ | 5,613 | | | $ | 5,174 | Recoveries | | (941 | ) | | | (531 | ) | | | (467 | ) | | | (836 | ) | | | (38 | ) Net loan charge-offs | $ | 2,238 | | | $ | 16,491 | | | $ | 2,291 | | | $ | 4,777 | | | $ | 5,136 | Net loan charge-offs as a % of average loans receivable (annualized) | | 0.07 | % | | | 0.56 | % | | | 0.08 | % | | | 0.17 | % | | | 0.18 | % | | | | | | | | | | | | | | | | | | | Asset Quality | | | | | | | | | | | | | | | | | | | Nonaccrual loans | $ | 64,330 | | | $ | 79,664 | | | $ | 41,579 | | | $ | 45,915 | | | $ | 39,671 | Other real estate owned | | — | | | | — | | | | — | | | | — | | | | — | Nonperforming assets | $ | 64,330 | | | $ | 79,664 | | | $ | 41,579 | | | $ | 45,915 | | | $ | 39,671 | | | | | | | | | | | | | | | | | | | | Allowance for credit losses - loans (excluding nonaccretable credit marks) | $ | 108,818 | | | $ | 106,120 | | | $ | 115,609 | | | $ | 112,282 | | | $ | 113,163 | Add: nonaccretable credit marks | | 11,802 | | | | 34,029 | | | | 37,447 | | | | 42,023 | | | | 43,336 | Allowance for credit losses - loans ("ACL") | $ | 120,620 | | | $ | 140,149 | | | $ | 153,056 | | | $ | 154,305 | | | $ | 156,499 | | | | | | | | | | | | | | | | | | | | Loans receivable | $ | 11,432,533 | | | $ | 11,869,034 | | | $ | 11,735,596 | | | $ | 11,453,280 | | | $ | 11,303,636 | | | | | | | | | | | | | | | | | | | | Nonaccrual loans as a % of loans receivable | | 0.56 | % | | | 0.67 | % | | | 0.35 | % | | | 0.40 | % | | | 0.35 | % Nonperforming assets as a % of total assets | | 0.44 | | | | 0.55 | | | | 0.29 | | | | 0.33 | | | | 0.28 | ACL as a % of loans receivable | | 1.06 | | | | 1.18 | | | | 1.30 | | | | 1.35 | | | | 1.38 | ACL as a % of nonaccrual loans | | 187.5 | | | | 175.9 | | | | 368.1 | | | | 336.1 | | | | 394.5 | ____________________________ (8) | Tangible common equity divided by tangible assets. (9) | Tangible common equity divided by common shares outstanding at period-end. (10) | Includes only non-PCD loans. CONNECTONE BANCORP, INC. NET INTEREST MARGIN ANALYSIS (dollars in thousands) | | | For the Three Months Ended | | September 30, 2026 | | | June 30, 2026 | | | September 30, 2025 | Interest-earning assets: | Average Balance | | | Interest | | | Rate(7) | | | Average Balance | | | Interest | | | Rate(7) | | | Average Balance | | | Interest | | | Rate(7) | Investment securities (1) (2) | $ | 1,387,589 | | | $ | 14,931 | | | | 4.27 | % | | $ | 1,275,125 | | | $ | 13,397 | | | | 4.21 | % | | $ | 1,355,775 | | | $ | 14,581 | | | | 4.27 | % Loans receivable and loans held-for-sale (2) (3) (4) | | 11,982,883 | | | | 183,178 | | | | 6.06 | | | | 11,815,868 | | | | 176,944 | | | | 6.01 | | | | 11,162,060 | | | | 166,541 | | | | 5.92 | Federal funds sold and interest- | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ bearing deposits with banks | | 262,118 | | | | 2,432 | | | | 3.68 | | | | 309,872 | | | | 2,821 | | | | 3.65 | | | | 605,344 | | | | 6,644 | | | | 4.35 | Restricted investment in bank stock | | 53,371 | | | | 843 | | | | 6.27 | | | | 50,939 | | | | 947 | | | | 7.46 | | | | 49,264 | | | | 1,081 | | | | 8.71 | Total interest-earning assets | | 13,685,961 | | | | 201,384 | | | | 5.84 | | | | 13,451,804 | | | | 194,109 | | | | 5.79 | | | | 13,172,443 | | | | 188,847 | | | | 5.69 | Allowance for loan losses | | (142,006 | ) | | | | ​ | | | | ​ | | | (155,399 | ) | | | | ​ | | | | ​ | | | (159,157 | ) | | | | ​ | | | | ​ Noninterest-earning assets | | 990,641 | | | | | ​ | | | | ​ | | | 957,875 | | | | | ​ | | | | ​ | | | 1,037,299 | | | | | ​ | | | | ​ Total assets | $ | 14,534,596 | | | | | ​ | | | | ​ | | $ | 14,254,280 | | | | | ​ | | | | ​ | | $ | 14,050,585 | | | | | ​ | | | | ​ | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ Interest-bearing liabilities: | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ Money market deposits | | 3,065,588 | | | | 22,998 | | | | 2.98 | | | | 3,052,487 | | | | 22,148 | | | | 2.91 | | | | 3,041,528 | | | | 24,578 | | | | 3.21 | Savings deposits | | 942,742 | | | | 6,234 | | | | 2.62 | | | | 978,961 | | | | 6,339 | | | | 2.60 | | | | 949,775 | | | | 7,198 | | | | 3.01 | Time deposits | | 2,920,335 | | | | 27,603 | | | | 3.75 | | | | 2,992,440 | | | | 27,776 | | | | 3.72 | | | | 3,019,848 | | | | 30,072 | | | | 3.95 | Other interest-bearing deposits | | 2,244,097 | | | | 15,267 | | | | 2.70 | | | | 2,090,816 | | | | 13,308 | | | | 2.55 | | | | 1,897,927 | | | | 13,361 | | | | 2.79 | Total interest-bearing deposits | | 9,172,762 | | | | 72,102 | | | | 3.12 | | | | 9,114,704 | | | | 69,571 | | | | 3.06 | | | | 8,909,078 | | | | 75,209 | | | | 3.35 | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ Borrowings | | 874,544 | | | | 6,393 | | | | 2.90 | | | | 812,384 | | | | 5,402 | | | | 2.67 | | | | 783,994 | | | | 4,550 | | | | 2.30 | Subordinated debentures | | 202,300 | | | | 4,337 | | | | 8.51 | | | | 202,114 | | | | 4,283 | | | | 8.50 | | | | 263,511 | | | | 5,917 | | | | 8.91 | Finance lease | | 769 | | | | 11 | | | | 5.68 | | | | 845 | | | | 12 | | | | 5.70 | | | | 1,068 | | | | 16 | | | | 5.94 | Total interest-bearing liabilities | | 10,250,375 | | | | 82,843 | | | | 3.21 | | | | 10,130,047 | | | | 79,268 | | | | 3.14 | | | | 9,957,651 | | | | 85,692 | | | | 3.41 | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ Noninterest-bearing demand deposits | | 2,510,843 | | | | | ​ | | | | ​ | | | 2,424,773 | | | | | ​ | | | | ​ | | | 2,486,993 | | | | | ​ | | | | ​ Other liabilities | | 137,207 | | | | | ​ | | | | ​ | | | 86,932 | | | | | ​ | | | | ​ | | | 92,049 | | | | | ​ | | | | ​ Total noninterest-bearing liabilities | | 2,648,050 | | | | | ​ | | | | ​ | | | 2,511,705 | | | | | ​ | | | | ​ | | | 2,579,042 | | | | | ​ | | | | ​ Stockholders' equity | | 1,636,171 | | | | | ​ | | | | ​ | | | 1,612,528 | | | | | ​ | | | | ​ | | | 1,513,892 | | | | | ​ | | | | ​ Total liabilities and stockholders' equity | $ | 14,534,596 | | | | | ​ | | | | ​ | | $ | 14,254,280 | | | | | ​ | | | | ​ | | $ | 14,050,585 | | | | | ​ | | | | ​ | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ Net interest income (tax equivalent basis) | | | ​ | | | 118,541 | | | | | ​ | | | | ​ | | | 114,841 | | | | | ​ | | | | ​ | | | 103,155 | | | | | ​ Net interest spread (5) | | | ​ | | | | ​ | | | 2.63 | % | | | | ​ | | | | ​ | | | 2.65 | % | | | | ​ | | | | ​ | | | 2.28 | % | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ Net interest margin (6) | | | ​ | | | | ​ | | | 3.44 | % | | | | ​ | | | | ​ | | | 3.42 | % | | | | ​ | | | | ​ | | | 3.11 | % | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ | | | | ​ Tax equivalent adjustment | | | ​ | | | (1,243 | ) | | | | ​ | | | | ​ | | | (1,202 | ) | | | | ​ | | | | ​ | | | (1,138 | ) | | | | ​ Net interest income | | | ​ | | $ | 117,298 | | | | | ​ | | | | ​ | | $ | 113,639 | | | | | ​ | | | | ​ | | $ | 102,017 | | | | | ​ ____________________________ (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. (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. This press release was published by a CLEAR® Verified individual.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Executed a definitive agreement to sell approximately 750 million of non-relationship multifamily loans to sharpen focus on core banking clients. - The transaction reduces rent-stabilized exposure by approximately two-thirds and significantly lowers commercial real estate concentration. - Core performance remains strong with operating PPNR crossing 2% of average assets and return on tangible common equity exceeding 15%. - Exceptional client deposit growth of 11% annualized was led by a 14% increase in non-interest bearing demand accounts. - Net interest margin widened for the eighth consecutive quarter despite higher short-term rates and intense deposit competition. - Operational efficiency improved through technology investments like nCino workflows, keeping expenses flat despite growth. - Credit quality showed broad improvement with declining nonperforming assets and operating charge-offs limited to a few basis points. - Management expects the net interest margin to reach 3.53% by the fourth quarter of 2027, driven by continued loan repricing tailwinds. - Proceeds from the loan sale will be reinvested into lower-risk assets and used to pay down higher-cost wholesale funding. - Loan and deposit growth are projected to remain in the mid-single digits while maintaining a loan-to-deposit ratio below 100%. - SBA business gains are anticipated to potentially increase by 50% or more in 2027 compared to current levels. - The company intends to redeem its non-cumulative preferred stock but is evaluating the most advantageous timing following the capital ratio improvements. - Recognized a 23 million non-operating pretax charge in Q3 due to interest rate changes affecting the held-for-sale loan pool. - Approximately 7 million to 8 million in additional non-operating transaction costs related to the loan sale will be recognized in Q4. - Remaining rent-stabilized exposure is now just 2% of the total portfolio, with 30% offset protection via reserves and purchase accounting marks. - Regulatory risk-based capital ratios are expected to rise as lower risk-weighted securities replace the sold multifamily loans. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management emphasized exiting non-relationship 'transactional' loans to free up capital and liquidity for high-value client relationships. - While the assets were performing, the deteriorating environment for rent-stabilized assets made it a prudent time to clean the balance sheet. - Frank Sorrentino noted that a robust underlying economy continues to drive demand despite higher rates. - Management believes further rate hikes would signal economic strength, which historically supports borrowing for business and development opportunities. - The bank expects the margin to continue expanding regardless of the rate environment, though it benefits more from rate cuts than hikes. - Each rate hike is estimated to impact the margin by only 2 to 3 basis points, while loan repricing remains a dominant positive driver. - The remaining 235 million in rent-stabilized loans includes high-quality clients with significant deposits that the bank intends to keep. - Management will be aggressive in reducing the smaller, non-core portion of the remaining book through natural runoff or small targeted sales.

ConnectOne Bancorp (CNOB) came out with quarterly earnings of $0.95 per share, beating the Zacks Consensus Estimate of $0.85 per share. This compares to earnings of $0.7 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +11.77%. A quarter ago, it was expected that this holding company for ConnectOne Bank would post earnings of $0.83 per share when it actually produced earnings of $0.84, delivering a surprise of +1.2%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. ConnectOne, which belongs to the Zacks Banks - Northeast industry, posted revenues of $125.83 million for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 0.66%. This compares to year-ago revenues of $121.43 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. ConnectOne shares have added about 17.8% since the beginning of the year versus the S&P 500's gain of 13.3%. While ConnectOne has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for ConnectOne was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.87 on $127.17 million in revenues for the coming quarter and $3.24 on $489.18 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Northeast is currently in the top 26% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Hanover Bancorp, Inc. (HNVR), is yet to report results for the quarter ended September 2026. This company is expected to post quarterly earnings of $0.60 per share in its upcoming report, which represents a year-over-year change of +27.7%. The consensus EPS estimate for the quarter has been revised 0.2% higher over the last 30 days to the current level. Hanover Bancorp, Inc.'s revenues are expected to be $20.03 million, up 11.2% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ConnectOne Bancorp, Inc. (CNOB) : Free Stock Analysis Report Hanover Bancorp, Inc. (HNVR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Wall Street expects a year-over-year increase in earnings on higher revenues when ConnectOne Bancorp (CNOB) reports results for the quarter ended September 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 22. On the other hand, if they miss, the stock may move lower. While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise. This holding company for ConnectOne Bank is expected to post quarterly earnings of $0.85 per share in its upcoming report, which represents a year-over-year change of +21.4%. Revenues are expected to be $125 million, up 2.9% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 1.14% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For ConnectOne, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -1.56%. On the other hand, the stock currently carries a Zacks Rank of #3. So, this combination makes it difficult to conclusively predict that ConnectOne will beat the consensus EPS estimate. While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that ConnectOne would post earnings of $0.83 per share when it actually produced earnings of $0.84, delivering a surprise of +1.20%. Over the last four quarters, the company has beaten consensus EPS estimates four times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. ConnectOne doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ConnectOne Bancorp, Inc. (CNOB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research