ConnectOne Bancorp (CNOB) investor relations material

Executive summary

• Operating PPNR was 2.01% of average assets, operating ROTCE was 15.17%, and NIM widened to 3.44%.

• A $23.0 million pretax loss reduced Q3 GAAP earnings; the multifamily loan sale is intended to lower CRE exposure and improve liquidity and financial flexibility.

Financial highlights

• Adjusted operating net income was $47.9 million and diluted EPS was $0.95, up 13% QoQ and 35% YoY.

• Q3 net income available to common stockholders was $29.9 million and diluted EPS was $0.59, versus $39.5 million and $0.78 YoY; the quarter included the $23.0 million pretax loan-sale loss.

• FTE net interest income was $118.5 million, up 3.2% QoQ and 14.8% YoY; noninterest expense was $55.4 million, flat QoQ and down $3.3 million YoY.

• Average client deposits grew at an 11% annualized rate; average non-interest-bearing deposits rose 14%, and broker deposits declined $150 million, or 13.7%.

Outlook and guidance

• Q4 NIM is projected at 3.50%, with continued widening modeled through 2027; loan and deposit growth are projected in the mid-single digits.

• Q4 operating expenses are expected to rise 2%–2.5% sequentially, including $7 million–$8 million in loan-sale costs; 2027 expense growth is expected to be no more than mid-single digits.

• Provision expense is expected to remain fairly stable; remaining rent-stabilized loan reductions could involve $3 million–$5 million in quarterly charge-offs.

• Proceeds from the sale are expected to go mostly into government-guaranteed securities at similar yields, with the remainder used to reduce wholesale funding.