ConnectOne Bancorp (CNOB) Q1 2025 earnings summary

Executive summary

• Net income available to common stockholders for Q1 2025 was $18.7 million, up nearly 20% year-over-year, with diluted EPS rising to $0.49 from $0.41 and net interest margin expanding, driven by higher net interest income and lower provision for credit losses.

• Tangible book value per share rose over 3% since the First of Long Island merger announcement, reaching $24.16, and integration planning is progressing well with early synergies emerging.

• The balance sheet remains well-positioned, with optimism for continued momentum both standalone and post-merger.

• Q1 2025 included $1.3 million in merger expenses related to the pending merger with The First of Long Island Corporation.

• Board declared $0.18/share common dividend and $0.328125/share preferred dividend, both payable June 2, 2025.

Financial highlights

• Net interest margin expanded to 2.93% in Q1 2025, up 30 basis points year-over-year, with net interest income at $65.8 million, and expectations to reach 3% in Q2.

• Tangible book value per share increased to $24.16 as of March 31, 2025.

• Commercial real estate concentration declined to 420%, with a target below 400% in 2026.

• Nonaccrual loans totaled $49.9 million (0.61% of total loans), with nonperforming assets at 0.51% of total assets and allowance for credit losses at 1.00% of loans.

• Total assets were $9.76 billion, loans receivable $8.2 billion, and total deposits $7.77 billion as of March 31, 2025.

Outlook and guidance

• Management expects continued net interest margin expansion through 2025 and into 2026, supported by a robust loan pipeline and favorable rate environment.

• Loan growth expected to be at least 2.5% sequentially in Q2, with full-year growth projected at 5% from December 31.

• Upon full merger cost savings, return on assets is projected to exceed 1.2% and return on tangible common equity to reach approximately 15%, supported by a net interest margin of 3.20% or greater.

• Interest rate risk models indicate a 200 basis-point rate increase would decrease net interest income by 5.3% over one year; a 100 basis-point decrease would increase it by 2.27%.

• The merger with The First of Long Island Corporation is expected to create a combined company with approximately $14 billion in assets, $11 billion in deposits, and $11 billion in loans.