CNOB · ConnectOne Bancorp, Inc.

ConnectOne Bancorp's first quarter 2026 results reflect continued momentum from the FLIC merger and improving core operations. Net income available to common stockholders was $36.3 million, down from $38.0 million in Q4 2025 due to a $2.9 million increase in provision for credit losses and higher expenses, but significantly above $18.7 million in Q1 2025, driven by the merger. Diluted EPS of $0.72 compared to $0.75 in Q4 and $0.49 in the prior year quarter. On an operating (non-GAAP) basis, net income was $39.6 million and diluted EPS was $0.79.

The key positive was net interest margin expansion of 12 basis points to 3.39%, benefiting from loan repricing and a 12 bps decline in average deposit costs. Fully taxable equivalent net interest income rose 2.1% sequentially to $110.0 million. Loans and deposits both grew at an annualized rate of approximately 10%, reflecting strong organic growth. Management highlighted accelerating portfolio loan yields and expects continued margin expansion even without further rate cuts.

Noninterest income increased to $6.8 million from $6.0 million in Q4, driven by gains on equity securities. Subsequent to quarter-end, the company realized an additional $1.1 million in SBA loan sale gains in April. Noninterest expenses rose to $57.9 million, including $2.0 million in restructuring charges related to the FLIC merger; excluding merger and restructuring costs, expenses were $55.7 million, up modestly from $55.2 million in Q4.

Credit quality remained solid. The provision for credit losses increased to $5.2 million from $2.3 million in Q4, driven by loan growth and higher qualitative factors, partially offset by improved economic forecasts. Nonperforming assets declined to $41.6 million (0.29% of assets) from $45.9 million, and the nonaccrual loan ratio improved to 0.35%. However, 30-59 day delinquencies rose to 0.81% of loans from 0.19%, primarily due to a $63.8 million interrelated series of credits secured by NYC rent-regulated multifamily properties. Management is working to resolve these credits and noted a solid reserve position with significant credit marks on the acquired FLIC portfolio.

Tangible book value per share increased 8.3% to $23.93, approaching the pre-merger level of $24.16. The company declared an increased quarterly common dividend of $0.195 per share, up 8.3%, and repurchased 90,000 shares at an average price of $26.21 during the quarter. Overall, the results demonstrate successful integration of FLIC, margin expansion, and strong capital returns, though elevated delinquencies in the rent-regulated portfolio warrant monitoring.