ConnectOne Soars: Merger Success Fuels Growth and a Dividend Hike

ENGLEWOOD CLIFFS, N.J. – April 23, 2026 – ConnectOne Bancorp, Inc. (Nasdaq: CNOB) delivered a powerful start to 2026, reporting first-quarter results that signal its recent merger strategy is bearing significant fruit. The bank announced robust growth in loans and deposits, a notable expansion of its net interest margin, and rewarded shareholders with an 8.3% dividend increase, painting a picture of a regional player hitting its stride in a competitive banking landscape.

Net income available to common stockholders reached $36.3 million, or $0.72 per diluted share. The performance showcases the bank's ability to not only absorb but thrive following its major acquisition, positioning it for what management anticipates will be a strong year ahead.

Post-Merger Momentum Fuels Growth Engine

The first quarter results offer the clearest evidence yet of the strategic benefits flowing from the June 2025 merger with The First of Long Island Corporation (FLIC). The deal created a formidable regional bank with approximately $14.2 billion in assets and a diversified footprint across New Jersey, New York, and Southeast Florida. That increased scale is now translating into tangible performance.

"ConnectOne began 2026 with robust momentum, positioning us for what we expect to be a strong year," commented Frank Sorrentino, ConnectOne's Chairman and Chief Executive Officer, in the company's earnings release. The numbers back up his confidence: both loans and deposits grew at an impressive annualized rate of approximately 10% during the quarter.

This growth is not coming at the expense of shareholder value. The bank reported a 1.7% sequential increase in tangible book value per share to $23.93. This puts ConnectOne on the cusp of a significant milestone, as Sorrentino noted, "we are now approximately one quarter away from returning to our pre-merger tangible book value per share of $24.16." Achieving this so quickly after a major acquisition underscores a successful integration and disciplined capital management.

While the integration continues, with $2.0 million in related restructuring charges recorded in the quarter, the strategic focus is clearly on future growth and efficiency.

Widening Margins and a Shareholder Windfall

A key highlight of the quarter was the 12-basis-point expansion in the bank's net interest margin (NIM), which climbed to 3.39%. This crucial measure of profitability benefited from rising yields on its loan portfolio, driven by contractual repricing, coupled with disciplined management of deposit costs. In an economic environment where the Federal Reserve is expected to hold rates steady for the remainder of 2026, ConnectOne's ability to expand margins organically is a significant advantage.

"Accelerating portfolio loan yields are expected to support continued net interest margin expansion in the quarters ahead, even without further rate cuts," Sorrentino stated, signaling confidence that the trend is sustainable. The bank has a steady stream of fixed-rate loans, approximately $100 million per month, set to reprice at higher current market rates, providing a predictable tailwind for its interest income.

This strong operating performance has enabled a direct return of capital to shareholders. The Board of Directors declared an 8.3% increase in the quarterly cash dividend on its common stock, raising it to $0.195 per share. This move, combined with the repurchase of 90,000 shares of common stock during the quarter, reflects a strong belief in the company's earnings power and a commitment to delivering shareholder value. With over 550,000 shares still authorized for repurchase, the bank retains flexibility to continue opportunistically buying back stock.

Navigating the Complexities of New York Real Estate

Amid the strong results, ConnectOne demonstrated prudent risk management in a challenging segment of the market. The bank's overall credit quality remained solid, with annualized net charge-offs declining to a recent low of just 0.08% and the ratio of nonperforming assets to total assets improving to 0.29%.

However, the report did flag a notable uptick in early-stage delinquencies. Loans past due 30-59 days rose, an increase the bank attributed almost entirely to "an interrelated series of credits totaling $63.8 million secured by 19 multifamily NYC rent-regulated properties." While the bank is actively working with the client, this development casts a spotlight on the well-documented pressures within New York City's rent-stabilized property market.

Despite this, management conveyed a sense of control. Sorrentino emphasized that credit quality "remained solid this quarter" and that the rise in delinquencies was due to "one isolated credit relationship." The bank's broader criticized and classified asset metrics remained at historically low levels, and it maintains a substantial reserve position against this specific portfolio, including an embedded cushion of over $80 million in general reserves and purchase accounting marks from the FLIC acquisition.

A Digital Edge in Regional Banking

Underpinning ConnectOne's performance is a strategic focus on technology and efficiency. In his comments, Sorrentino pointed to the bank's ability to keep expenses well-controlled by leveraging "merger synergies and drive additional productivity gains through increasing use of AI workflow across the organization."

This embrace of artificial intelligence places ConnectOne at the forefront of a key trend in the financial industry, where regional banks are increasingly adopting new technologies to automate processes, reduce costs, and enhance competitiveness against both larger institutions and nimble fintech startups. By integrating AI into its workflows, ConnectOne aims to streamline operations from loan underwriting to back-office functions, boosting productivity.

This tech-forward mindset is also embodied by the company's fintech subsidiary, BoeFly, Inc., a marketplace connecting franchise borrowers with funding solutions. This dual approach—a high-performing traditional commercial bank combined with a modern fintech platform—differentiates ConnectOne from its peers and positions it as an innovator in the sector.

Looking ahead, the bank's momentum appears set to continue. Noninterest income is building, driven by accelerating SBA loan sale activity, which generated an additional $1.1 million in gains in April alone. As Sorrentino concluded, "we're executing against our strategic priorities and remain well positioned to deliver long-term value for our shareholders in 2026 and beyond."