CONNECTONE BN(CNOBP) - 2023 Q2 - Quarterly Report

Financial Performance - Net income available to common stockholders for Q2 2023 was $19.9 million, down from$30.8 million in Q2 2022, representing a decrease of 35.5%[149] - Diluted earnings per share for the six months ended June 30, 2023, were $1.10, compared to$1.53 for the same period in 2022, a decline of 28.1%[150] - Noninterest income for the six months ended June 30, 2023, was $6.2 million, down from$6.4 million in the same period of 2022[1] - Noninterest expenses increased to $70.3 million for the six months ended June 30, 2023, compared to$60.9 million for the same period in 2022[1] Interest Income and Margin - Net interest income for Q2 2023 decreased by $11.5 million, or 15.1$14.5 million, or 9.9%, compared to the same period in 2022[153] - The net interest margin contracted to 2.81% in Q2 2023 from 3.91% in Q2 2022, reflecting a 110 basis-point decrease[152] - The net interest margin for the six months ended June 30, 2023, was 2.89%, down from 3.81% in the same period of 2022[1] - The company reported a net interest spread of 2.18% for the six months ended June 30, 2023, compared to 3.62% for the same period in 2022[1] Asset and Loan Growth - Total interest-earning assets increased to $9.23 billion in Q2 2023 from$7.81 billion in Q2 2022, an increase of 18.2%[156] - The average balance of total loans increased to $8.15 billion in Q2 2023 from$7.01 billion in Q2 2022, an increase of 16.3%[156] - Gross loans totaled $8.16 billion as of June 30, 2023, reflecting an increase of$47.1 million or 0.6% from December 31, 2022[1] - Average loans receivable increased to $8,140,859 thousand in Q2 2023 from$7,007,207 thousand in Q2 2022, representing a growth of 16.2%[1] Tax and Expenses - The company reported a $6.7 million decrease in income tax expense for the first half of 2023 compared to the same period in 2022[150] - Noninterest expenses increased by$3.7 million in Q2 2023 compared to Q2 2022, contributing to the decline in net income[149] Credit Quality - The allowance for credit losses for loans was $89.2 million as of June 30, 2023, a decrease of$1.3 million from December 31, 2022[1] - Net charge-offs for the six months ended June 30, 2023, were $5.5 million, compared to$0.5 million for the same period in 2022[1] - Total charge-offs for the six months ended June 30, 2023, were $5,602 thousand, compared to$576 thousand for the same period in 2022, indicating a significant increase in charge-offs[1] - Nonaccrual loans rose to $51,496 thousand as of June 30, 2023, from$44,454 thousand as of June 30, 2022, reflecting an increase of 2.3%[1] - The ratio of annualized net charge-offs to average loans receivable was 0.14% for the six months ended June 30, 2023, compared to 0.01% for the same period in 2022[1] - The allowance for credit losses (ACL) as a percentage of loans receivable was 1.09% as of June 30, 2023, down from 1.14% in the prior year[1] - Nonperforming assets to total assets ratio increased to 0.53% as of June 30, 2023, from 0.46% in the previous year[1] Capital and Liquidity - Total assets of the company as of June 30, 2023, were $9.77 billion, up from$8.32 billion as of June 30, 2022, an increase of 17.5%[156] - Total assets increased to $9.73 billion as of June 30, 2023, compared to$8.29 billion as of June 30, 2022[1] - As of June 30, 2023, liquid assets totaled $591.8 million, representing 6.1$760.0 million (7.9%) as of December 31, 2022[198] - Total deposits increased by $181.7 million, or 2.5$7.5 billion as of June 30, 2023, primarily due to increases in time deposits and interest-bearing deposits[202] - Cash and cash equivalents rose to $319.9 million, an increase of$51.6 million from $268.3 million as of December 31, 2022[200] - Stockholders' equity was$1.2 billion as of June 30, 2023, an increase of $20.6 million from December 31, 2022, driven by retained earnings[207] - The tangible common equity ratio improved to 9.19$1,023.3 million, representing a ratio of 10.62% as of June 30, 2023, exceeding the minimum requirement of 4.00%[214] - Total risk-based capital for the Bank was $1,145.98 million, with a ratio of 13.33$64.6 million as of June 30, 2023, compared to $61.8 million as of December 31, 2022, due to changes in market conditions[1] - The estimated impact of a 200 basis-point increase in interest rates would decrease net interest income by 1.87$3.3 billion as of June 30, 2023, after accounting for $1.4 billion in outstanding borrowings[199] - The Bank's borrowing capacity included$2.9 billion from the Federal Home Loan Bank and $1.3 billion from the Federal Reserve Bank of New York[199]