Core Viewpoint - ConnectOne Bancorp, Inc. and The First of Long Island Corporation have received FDIC approval for their merger, which is expected to close around June 1, 2025, pending additional regulatory approvals [1][2][3] Group 1: Merger Details - The merger will combine ConnectOne and First of Long Island, creating a company with approximately $14 billion in total assets, $11 billion in total deposits, and $11 billion in total loans [3] - The combined entity will operate under the ConnectOne brand and will rank among the top 5 community banks on Long Island in terms of deposit market share [3] Group 2: Leadership Statements - Frank Sorrentino III, CEO of ConnectOne, expressed confidence in leveraging ConnectOne's commercial expertise and infrastructure to serve First of Long Island's client base [3] - Chris Becker, CEO of The First National Bank of Long Island, highlighted the readiness of both teams for a seamless integration and emphasized shared values in client service [3] Group 3: Company Backgrounds - ConnectOne Bancorp, Inc. operates through ConnectOne Bank and offers a full suite of banking and lending products focused on small to middle-market businesses [4] - The First of Long Island Corporation, founded in 1927, focuses on business and consumer needs in Long Island and New York City, known for its "Customer First" banking experience [5]

Table of Contents UNITED STATES OF AMERICA SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 000-11486 844-266-2548 (Registrant's Telephone Number, Including Area Code) Securities registered purs ...

Company Overview - ConnectOne Bancorp (CNOB) is based in Englewood Cliffs and operates in the Finance sector, with a year-to-date share price change of -0.74% [3] - The company currently pays a dividend of $0.18 per share, resulting in a dividend yield of 3.17%, which is higher than the Banks - Northeast industry's yield of 2.87% and the S&P 500's yield of 1.64% [3] Dividend Performance - The annualized dividend of $0.72 represents a 1.4% increase from the previous year [4] - Over the past 5 years, ConnectOne Bancorp has increased its dividend 4 times, achieving an average annual increase of 18.45% [4] - The current payout ratio is 38%, indicating that the company pays out 38% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for 2025 projects earnings of $2.48 per share, reflecting a year-over-year earnings growth rate of 36.26% [5] Investment Considerations - Dividends are favored by investors as they enhance stock investing profits, reduce overall portfolio risk, and offer tax advantages [6] - While established firms are typically viewed as the best dividend options, high-growth businesses and tech start-ups rarely offer dividends [7] - CNOB is considered a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold) [7]

ConnectOne Bancorp, Inc. (NASDAQ:CNOB) Q1 2025 Earnings Conference Call April 24, 2025 10:00 AM ET Company Participants Siya Vansia - Chief Brand & Innovation Officer Frank Sorrentino - Chairman & Chief Executive Officer Bill Burns - Senior Executive Vice President & Chief Financial Officer Conference Call Participants Tim Switzer - KBW Feddie Strickland - Hovde Group Daniel Tamayo - Raymond James Matthew Breese - Stephens Inc. Operator Thank you for standing by. My name is Kate, and I will be your conferen ...

Financial Data and Key Metrics Changes - ConnectOne reported a nearly 20% year-over-year increase in net income available to common shareholders [6] - The net interest margin expanded to 2.93, slightly higher than expected, with expectations to reach 3% in the second quarter [13][14] - Tangible book value per share increased by about 4% since the announcement of the merger with First of Long Island, reaching $24.16 [7][16] Business Line Data and Key Metrics Changes - The loan portfolio contracted slightly due to elevated payoff activity in the commercial real estate segment, but the loan pipeline remains robust with healthy demand [7][14] - Average demand deposits increased sequentially despite a decline in demand deposit balances since year-end [8] Market Data and Key Metrics Changes - Credit quality trends remain stable, with nonaccrual loans declining by 13% this quarter [17] - Thirty to eighty-nine day delinquencies increased slightly but remain low at 0.18% of total loans [17] Company Strategy and Development Direction - The company is focused on finalizing the merger with First of Long Island, which is expected to close in the second quarter, enhancing its scale and market reach [10][11] - ConnectOne aims to leverage its South Florida footprint to support First of Long Island clients, indicating a strategy of expanding into new markets [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating market uncertainties and believes the impact of tariff policies on clients will be limited [12] - The company anticipates loan growth of at least 2.5% for the second quarter and mid to high single-digit growth for the year [14][48] Other Important Information - The company is experiencing strong early synergies from the merger integration planning efforts [11] - All capital ratios have increased, with the tangible common equity ratio standing at 9.73% and the bank leverage ratio at 11.67% [15] Q&A Session Summary Question: Economic uncertainty and customer behavior changes - Management noted that while there are some changes in specific industries, overall client behavior remains stable with no dramatic shifts observed [22][24] Question: Update on cost savings from the merger - Management confirmed that they expect to achieve approximately $24 million in total cost savings, although the timeline for full realization may extend beyond initial projections [28][30] Question: Credit quality and repricing opportunities - Credit quality remains strong with low delinquencies, and there are ongoing opportunities for loan repricing, with about $1 billion of loans already repriced [36][37] Question: Loan growth expectations - Management indicated a strong loan pipeline and expects loan growth to be in the mid to high single digits for the year, with a robust pipeline supporting this outlook [48][52] Question: Regulatory conversations regarding the merger - Management reported positive relationships with regulators and noted that the process remains standard without significant changes in focus [58][60] Question: Expense growth expectations - Management anticipates a 4% to 5% growth in expenses on a standalone basis, with some cost savings already reflected in the current quarter [66][68] Question: Closing timing for the merger and capital raise - The merger is expected to close by the end of the second quarter, and the company plans to proceed with a subordinated debt raise prior to closing [78][81]

Financial Performance - Net income available to common stockholders for Q1 2025 was $18.7 million, compared to $18.9 million in Q4 2024 and $15.7 million in Q1 2024, reflecting a year-over-year increase of 18.9%[2] - Diluted earnings per share for Q1 2025 were $0.49, unchanged from Q4 2024 and up from $0.41 in Q1 2024[2] - Operating net income for Q1 2025 was $19.7 million, down from $20.2 million in Q4 2024 but up from $15.9 million in Q1 2024[3] - Net income for the three months ended March 31, 2025, was $20,242, slightly down from $20,371 in the previous quarter, indicating a decrease of 0.6%[24] - Earnings per common share for the three months ended March 31, 2025, remained stable at $0.49, consistent with the previous quarter[24] - Operating net income available to common stockholders was $19,710,000 in Q1 2025, compared to $20,220,000 in Q4 2024, a decline of 2.5%[30] Interest Income and Margin - Fully taxable equivalent net interest income for Q1 2025 was $65.8 million, an increase of $1.0 million or 1.6% from Q4 2024, and up $5.5 million or 9.0% from Q1 2024[7][9] - Net interest income for the three months ended March 31, 2025, was $65,756, an increase of 2.4% compared to $64,711 for the previous quarter[24] - The net interest margin widened by 7 basis points to 2.93% in Q1 2025, driven by a decrease in average costs of deposits[7] - The net interest margin (GAAP) rose to 2.93% in Q1 2025, compared to 2.86% in Q4 2024[30] - The net interest spread improved to 2.17%, up from 2.05% year-over-year[35] Noninterest Income and Expenses - Noninterest income increased to $4.5 million in Q1 2025, compared to $3.7 million in Q4 2024 and $3.8 million in Q1 2024[10] - Noninterest income totaled $4,451,000 in Q1 2025, up from $3,744,000 in Q4 2024, reflecting a growth of 18.9%[28] - Noninterest expenses were $39.3 million in Q1 2025, up from $38.5 million in Q4 2024 and $37.1 million in Q1 2024, primarily due to increased merger expenses[11] - Total noninterest expenses rose to $39,305 for the three months ended March 31, 2025, compared to $38,498 in the previous quarter, an increase of 2.1%[24] Assets and Liabilities - Total assets as of March 31, 2025, were $9.759 billion, a decrease from $9.880 billion as of December 31, 2024[15] - Total assets as of March 31, 2025, were $9,759,255, a decrease of 1.2% from $9,879,600 on December 31, 2024[23] - Net loans receivable decreased to $8,118,731 as of March 31, 2025, from $8,192,125 on December 31, 2024, reflecting a decline of 0.9%[23] - Total deposits were $7,767,230 as of March 31, 2025, down from $7,820,114 on December 31, 2024, representing a decrease of 0.7%[23] - Total stockholders' equity of $1,252,939 as of March 31, 2025, up from $1,241,704 on December 31, 2024, representing an increase of 0.9%[23] Credit Quality - The provision for credit losses was $3.5 million for Q1 2025, consistent with Q4 2024 and down from $4.0 million in Q1 2024[13] - Net loan charge-offs for the quarter were $3,400,000, slightly up from $3,334,000 in the previous quarter, indicating a 2% increase[32] - Nonaccrual loans decreased to $49,860,000 from $57,310,000, a reduction of 13%[32] - The allowance for credit losses on loans stood at $82,403,000, consistent with the previous quarter's $82,685,000[32] Future Plans - The Company plans to finalize its merger with The First of Long Island Corporation in Q2 2025, aiming to create a premier community bank in the New York Metro area[5]

Core Points - ConnectOne Bancorp reported net income available to common stockholders of $18.7 million for Q1 2025, slightly down from $18.9 million in Q4 2024 but up from $15.7 million in Q1 2024 [1][3] - Diluted earnings per share remained stable at $0.49 for Q1 2025, consistent with Q4 2024 and an increase from $0.41 in Q1 2024 [1][3] - The company experienced a return on average assets of 0.84% for Q1 2025, compared to 0.84% in Q4 2024 and 0.70% in Q1 2024 [1] Financial Performance - Operating net income, excluding non-operating items, was $19.7 million for Q1 2025, down from $20.2 million in Q4 2024 and up from $15.9 million in Q1 2024 [2] - Operating diluted earnings per share were $0.51 for Q1 2025, compared to $0.52 in Q4 2024 and $0.41 in Q1 2024 [2] - The net interest income for Q1 2025 was $65.8 million, a 1.6% increase from Q4 2024, driven by a widening net interest margin of 2.93% [6][7] Income and Expenses - Noninterest income increased to $4.5 million in Q1 2025 from $3.7 million in Q4 2024 and $3.8 million in Q1 2024, primarily due to gains on equity securities [8] - Noninterest expenses rose to $39.3 million in Q1 2025 from $38.5 million in Q4 2024 and $37.1 million in Q1 2024, largely due to increased merger expenses [9] - Income tax expense was $7.2 million for Q1 2025, up from $6.1 million in Q4 2024 and $5.9 million in Q1 2024, with an effective tax rate of 26.1% [10] Asset Quality - The provision for credit losses was stable at $3.5 million for Q1 2025 and Q4 2024, down from $4.0 million in Q1 2024 [11] - Nonperforming assets decreased to $49.9 million as of March 31, 2025, from $57.3 million at the end of Q4 2024 [12] - The allowance for credit losses represented 1.00% of loans receivable as of March 31, 2025, consistent with previous quarters [13] Balance Sheet Highlights - Total assets were $9.759 billion as of March 31, 2025, down from $9.880 billion at the end of Q4 2024 [14] - Loans receivable decreased to $8.201 billion as of March 31, 2025, from $8.275 billion at the end of Q4 2024 [14] - Total stockholders' equity increased to $1.253 billion as of March 31, 2025, primarily due to an increase in retained earnings [15] Strategic Outlook - The company is preparing for a merger with The First of Long Island Corporation, expected to enhance its market position in the New York Metro area [4] - Management anticipates continued margin expansion supported by a robust loan pipeline and stable credit quality trends [4]

Group 1 - ConnectOne Bancorp, Inc. plans to release its first quarter results for the period ended March 31, 2025, before the market opens on April 24, 2025 [1] - A conference call will be hosted by Chairman and CEO Frank Sorrentino III and CFO William S. Burns at 10:00 a.m. ET on April 24, 2025, to discuss the financial performance and operating results [2] - The conference call will be accessible via a dial-in number and an audio webcast available on the Company's website [2][3] Group 2 - ConnectOne Bancorp, Inc. operates through its subsidiary ConnectOne Bank and its fintech subsidiary BoeFly, Inc., focusing on small to middle-market businesses [4] - ConnectOne Bank offers a comprehensive range of banking and lending products and services [4] - BoeFly, Inc. serves as a fintech marketplace connecting franchise borrowers with funding solutions through a network of partner banks [4]

Company Overview - ConnectOne Bancorp (CNOB) is based in Englewood Cliffs and operates in the Finance sector, with a year-to-date share price change of 10.17% [3] - The company currently pays a dividend of $0.18 per share, resulting in a dividend yield of 2.85%, which is higher than the Banks - Northeast industry's yield of 2.58% and the S&P 500's yield of 1.55% [3] Dividend Performance - The current annualized dividend of $0.72 represents a 1.4% increase from the previous year [4] - Over the past five years, ConnectOne Bancorp has increased its dividend four times, achieving an average annual increase of 19.41% [4] - The company's current payout ratio is 40%, indicating that it pays out 40% of its trailing 12-month earnings per share as dividends [4] Earnings Growth Expectations - For the fiscal year, CNOB anticipates solid earnings growth, with the Zacks Consensus Estimate for 2025 projected at $2.23 per share, reflecting a year-over-year earnings growth rate of 22.53% [5] Investment Appeal - ConnectOne Bancorp is viewed as a compelling investment opportunity due to its attractive dividend and strong Zacks Rank of 2 (Buy) [7]

Assets and Mergers - ConnectOne Bancorp, Inc. has total assets of $9.880 billion[25] - The company completed the merger with Greater Hudson Bank, acquiring approximately $0.4 billion in loans and deposits[16] - The merger with Bancorp of New Jersey, Inc. resulted in the acquisition of approximately $0.8 billion in loans and deposits[18] - The upcoming merger with The First of Long Island Corporation is expected to close in the first or second quarter of 2025, with FLIC having total assets of $4.1 billion and total deposits of $3.3 billion[20] - The company's total assets were $9.880 billion as of December 31, 2024, and will exceed $10 billion upon consummation of the FLIC merger[145] - The company has acquired GHB, BoeFly, and BNJ since January 1, 2019, and is pending regulatory approval for the acquisition of FLIC[137] Business Model and Operations - ConnectOne Bank operates a "branch-lite" model, focusing on efficiency and technology investments to serve clients in the New York Metropolitan area and South Florida[26] - ConnectOne Bank offers a wide range of deposit and loan products, including personal and business checking accounts, money market accounts, and various types of loans[31] - BoeFly, a subsidiary of ConnectOne Bank, connects small to medium-sized businesses with funding solutions through a digital marketplace[27] - The company has expanded its market presence by opening an office in West Palm Beach, Florida, in August 2022[29] Financial Performance and Revenue - The company derives a majority of its revenue from net interest income, which is the difference between interest received on loans and paid on deposits[31] - The Bank's legal lending limit to any one borrower is 15% of the Bank's capital base ($172.0 million) and 25% for loans secured by readily marketable collateral ($286.7 million) as of December 31, 2024[38] - The largest committed relationship was $212.7 million, with the single largest loan outstanding at $64.0 million[38] - The Company accrued $2.1 million as of December 31, 2023, related to the special assessment[86] - The Company paid $7.2 million and $5.7 million in total FDIC assessments in 2024 and 2023, respectively, with the increase in 2024 attributed to additional premiums related to the FDIC special assessment[82] Competition and Market Environment - The Bank faces substantial competition from various financial institutions, including commercial banks, savings banks, and fintech companies[39] - The Bank's largest competitors have greater financial resources for advertising and marketing, necessitating a focus on high-quality personal service and competitive rates[40] - Increased competition for deposits may require the company to raise interest rates to attract or retain deposits[121] - The company faces substantial competition from fintech companies, which may offer more favorable terms and reduce margins on banking services[125] Employee Development and Corporate Culture - In 2024, 71 employees were promoted into new roles, reflecting the Bank's focus on internal promotions[48] - ConnectOne University provided training for 125 managers and supported advanced education through tuition reimbursement of up to $5,250 for eligible coursework[44] - The Bank's employee wellness programs include a Preventative Care Incentive Program and flu shot vaccination time-off, emphasizing health and safety[45] Regulatory Environment and Compliance - The Dodd-Frank Act requires banking regulators to apply the same capital requirements to bank holding companies as to their bank subsidiaries, impacting capital management strategies[59] - The Economic Growth, Regulatory Relief and Consumer Protection Act raised the asset threshold for stress tests from $10 billion to $250 billion, providing regulatory relief for smaller institutions[61] - The Company and the Bank are required to maintain a Common Equity Tier 1 Capital Ratio of 4.5%, a Tier 1 Capital Ratio of 6.0%, and a Total Capital Ratio of 8.0%[74] - The Company and the Bank have a CET1 of 7%, a Tier 1 Capital Ratio of 8.5%, and a Total Capital Ratio of 10.5%[74] - The Company adopted the CECL standard effective January 1, 2021, which addresses changes to credit loss accounting under GAAP[77] - The Company has elected not to opt into the Community Bank Leverage Ratio (CBLR) framework[80] - The Company is studying the revisions to the Community Reinvestment Act (CRA) regulations to determine the impact on its operations, which is currently uncertain[89] Loan Portfolio and Credit Risk - As of December 31, 2024, the company had $6.3 billion in commercial real estate loans, representing 76.2% of total loans receivable[105] - Commercial real estate loans accounted for 435% of the Bank's Tier 1 capital plus the allowance for credit losses on loans[105] - A significant portion of the loan portfolio will reset interest rates in 2025 and 2026, potentially increasing borrowers' repayment costs[112] - The company targets small-to medium-sized businesses, which may be more vulnerable to economic downturns, impacting their ability to repay loans[115] - The allowance for credit losses maintained by ConnectOne may not be adequate to cover actual losses, which could adversely affect earnings[162] - The Company's allowance for credit losses for loans totaled $82.7 million as of December 31, 2024, an increase of $0.7 million from $82.0 million in 2023[206] Dividend Policy and Capital Management - The ability to pay dividends is subject to compliance with capital requirements and the financial condition of the Bank[99] - The New Jersey Banking Act requires that dividends may only be paid if the Bank's capital stock remains unimpaired and surplus is maintained[98] - The company may need to raise additional capital to maintain regulatory capital ratios necessary for growth[103] - The company may need to raise up to $200 million in new capital to obtain necessary regulatory approval for the merger[150] Cybersecurity and Operational Risks - Cybersecurity is a material part of ConnectOne's business, and any incidents could have a significant effect on its operations and reputation[179] - The Company maintains insurance that may provide coverage for expenses and certain losses incurred in connection with a cybersecurity incident[184] - The Company has an internal Incident Response Plan and Team that performs a table-top exercise at least annually to prepare for potential cybersecurity incidents[183] Merger-Related Considerations - ConnectOne expects to issue approximately 12 million shares of common stock to FLIC shareholders as part of the merger, which may lead to fluctuations in the market price of ConnectOne's common stock[160] - The merger may incur substantial costs, including legal, accounting, and financial advisory fees, which could adversely impact ConnectOne's future earnings per share[157] - ConnectOne's management has devoted considerable time and effort to the merger, and if it is not completed, the company will bear certain fees and expenses without realizing any benefits[157] - The success of the merger will depend on the combined company's ability to retain key employees from both ConnectOne and FLIC, as their departure could disrupt operations and lead to loss of customers[156] - ConnectOne has agreed to operate its business in the ordinary course prior to the merger's closing, which may limit its ability to pursue new business opportunities[154] - Unanticipated costs related to the merger could have a material adverse effect on the combined company's financial condition and results of operations[159] Interest Rate and Economic Factors - Changes in interest rates and the Federal Reserve's monetary policy may negatively impact ConnectOne's net interest income and overall financial condition[163] - The most severe historical loss rates for commercial and commercial real estate loans were 2.37% and 1.96%, respectively, as of December 31, 2024[208]