CONNECTONE BN(CNOBP) - 2024 Q1 - Quarterly Report

Financial Performance - Net income available to common stockholders for Q1 2024 was $15.7 million, down from$23.4 million in Q1 2023, representing a decrease of 33.6%[149] - Diluted earnings per share for Q1 2024 were $0.41, compared to$0.59 in Q1 2023, a decrease of 30.5%[149] - Noninterest income totaled $3.9 million for Q1 2024, an increase from$2.8 million in Q1 2023, primarily driven by gains on loan sales[158] - Noninterest expenses rose to $37.1 million in Q1 2024, up from$34.9 million in Q1 2023, an increase of 6.3%[159] - Income tax expense decreased to $5.9 million in Q1 2024 from$9.1 million in Q1 2023, reflecting lower income before tax[160] - The effective tax rate for Q1 2024 was 25.5%, down from 26.7% in Q1 2023, due to lower taxable income[160] Loan Portfolio - Gross loans totaled $8.3 billion as of March 31, 2024, a decrease of$47.7 million, or 0.6%, compared to December 31, 2023[163] - The commercial real estate loan segment accounted for 70.2% of the total loan portfolio as of March 31, 2024[163] - As of March 31, 2024, total commercial real estate loans amounted to $5,829,950, a slight decrease from$5,895,545 as of December 31, 2023, maintaining a loan-to-value ratio of 56%[165] - The total multifamily loans as of March 31, 2024, were $2,496,821, a decrease from$2,553,401 as of December 31, 2023[166] - Average loans receivable increased to $8,332,729 for the three months ended March 31, 2024, compared to$8,117,572 for the same period in 2023[174] Credit Quality - The allowance for credit losses for loans increased to $82.9 million as of March 31, 2024, up from$82.0 million as of December 31, 2023[169] - The provision for credit losses for the three months ended March 31, 2024, was $4.0 million, compared to$1.0 million for the same period in 2023, reflecting changes in macroeconomic forecasts[170] - Net charge-offs for the three months ended March 31, 2024, were $3.2 million, a decrease from$4.5 million in the same period of 2023[171] - Nonaccrual loans decreased to $47,438 as of March 31, 2024, from$52,524 as of December 31, 2023, representing 0.57% of total loans receivable[178] - The ratio of annualized net charge-offs to average loans receivable during the period was 0.15% for the three months ended March 31, 2024, compared to 0.22% for the same period in 2023[174] Liquidity and Deposits - As of March 31, 2024, liquid assets totaled $706.2 million, representing 7.2$516.3 million (5.2%) as of December 31, 2023[195] - Average total deposits increased by $142 million, or 1.9$7.5 billion for Q1 2024 from $7.4 billion for Q1 2023, primarily due to a$210 million increase in time deposits[199] - Total deposits increased by $53 million, or 0.7$7.6 billion as of March 31, 2024, compared to $7.5 billion as of December 31, 2023[209] - Time deposits increased by$92 million, savings deposits by $41 million, and noninterest-bearing demand deposits by$31 million, while demand, interest-bearing & NOW deposits decreased by $111 million[209] - The bank's liquidity position is deemed adequate to meet short and long-term obligations, with liquid assets supporting operational needs[195] Interest Rate Sensitivity - The estimated change in Economic Value of Equity (EVE) for a 200 basis-point increase in interest rates would decrease EVE by 12.46$1.1 billion in ICS reciprocal deposits for Q1 2024, compared to $376 million for Q1 2023, reflecting a shift in client deposits due to market conditions[202] - The beta for nonreciprocal brokered deposits is higher than that of ICS and CDARS reciprocal deposits, indicating a stronger correlation to market interest rates[203] Capital Position - Stockholders' equity remained flat at approximately$1.2 billion as of March 31, 2024, with retained earnings increasing by $9 million[214] - The tangible common equity ratio was 9.25$648 million of time deposits with balances in excess of $250,000 as of March 31, 2024[211] - The interest rate for subordinated debentures was 8.43$9.85 billion as of March 31, 2024[216] - The Company and Bank satisfied the capital conservation buffer requirements as of March 31, 2024[222]