ConnectOne Bancorp(US:CNOB)2025-10-30 15:00Financial Data and Key Metrics Changes - The operating return on assets increased by over 30 basis points to 1.05% [7] - Pre-provision net revenue (PPNR) as a percentage of assets rose by approximately 50 basis points over the past year to 1.6% [7] - The net interest margin (NIM) grew to 3.11% from 3.06% in the sequential quarter and from 2.67% a year ago, with expectations for the fourth quarter margin to reach 3.25% or higher [8] - Non-performing assets were just 0.28% at the end of the quarter, with annualized net charge-offs remaining below 0.25% [5][13] - The tangible common equity ratio rose to 8.4%, with a goal to reach 9% [13] Business Line Data and Key Metrics Changes - Loan originations for the quarter were over $465 million, indicating healthy growth [4] - Core deposits continued to grow across both established and newly acquired client relationships [4] - The loan to deposit ratio remained below 100%, with expectations for loan growth to accelerate in the fourth quarter [9] Market Data and Key Metrics Changes - The company experienced robust deposit growth, with client deposit growth approximately 4% annualized, building on a second quarter growth of 17% [9] - The company is well-positioned for growth in various sectors, including commercial real estate and SBA lending, demonstrating the strength of its franchise [5] Company Strategy and Development Direction - The integration of the merger is complete, with a focus on client dedication and operational efficiency [3] - The company aims to leverage its position in attractive markets, particularly Long Island, to drive growth [4] - There is a strong emphasis on maintaining a relationship banking model that focuses on high-quality clients [44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow, citing a healthy and diversified pipeline across various lending sectors [5] - The company anticipates that the end of quantitative tightening will positively impact deposit growth and pricing in the market [20] - Management expects to see loan growth in the 5% range in 2026, depending on economic conditions and loan demand [9] Other Important Information - The company recognized two non-recurring items that boosted pre-tax income by more than $10 million, including a $6.6 million employee retention tax credit and a $3.5 million pension curtailment gain [10][11] - Operating expenses net of merger and restructuring charges were $55.8 million, with guidance for the fourth quarter remaining approximately $55 to $56 million [12] Q&A Session Summary Question: Profitability targets for next year - Management confirmed that profitability targets of 1.2% ROA and 15% ROTCE for 2026 remain in line with previous statements [18][19] Question: Impact of the end of quantitative tightening on deposit growth - Management believes that increased liquidity will lead to deposit growth and reduce competitive pressures in the market [20][21] Question: Capital allocation and share repurchases - Management indicated flexibility in capital deployment for 2026, including potential share repurchases [31][32] Question: Update on BoeFly and SBA growth outlook - Management reported significant growth in the BoeFly platform and expects continued revenue expansion from SBA sales [36][38] Question: Deposit growth and loan matching - Management aims to match deposit growth with loan growth while maintaining a sub-100% loan to deposit ratio [43][44] Question: Fixed rate loan repricing opportunities - Management indicated a large opportunity for repricing, with approximately $1 billion expected to reprice in 2026 [62] Question: Credit quality and charge-offs - Management expects charge-offs to remain steady in the high teens to low 20s range [65]