ConnectOne Ban (CNOB) Earnings Date & Reports

Key Takeaways

• ConnectOne reported third-quarter 2026 net income of $31.4 million, or $0.59 in diluted earnings per share (EPS), including a one-time restructuring charge.
• The results included a $23.0 million pretax loss tied to a balance-sheet repositioning and the planned sale of up to roughly $750 million in multifamily loans.
• Excluding one-time items, operating EPS reached $0.95, up 13% sequentially and 35% year over year, beating the consensus estimate of $0.85.
• Net interest income rose 15% year over year to $117.3 million, while net interest margin expanded to 3.44% from 3.11% a year earlier.
• The board declared a quarterly common-stock dividend of $0.195 per share, payable December 1, 2026.

Earnings Context and Why It Matters

ConnectOne Bancorp, the Englewood Cliffs, New Jersey-based parent of ConnectOne Bank, has spent 2026 integrating its acquisition of First of Long Island Corporation. That merger meaningfully expanded its balance sheet while adding a large pool of non-relationship multifamily loans, a segment management has been eager to trim. This quarter's report matters because it pairs a continued step-up in core operating performance with a decisive restructuring designed to reduce commercial real estate (CRE) concentration and free up capital. For investors, the report offers a clear read on whether ConnectOne can keep expanding its net interest margin and earnings while simultaneously de-risking a balance sheet that has drawn scrutiny in the regional-banking sector.

Reported Results

ConnectOne posted third-quarter 2026 net income of $31.4 million, with diluted EPS of $0.59. Net income available to common stockholders was $29.9 million, compared with $40.2 million in the prior quarter and $39.5 million a year earlier. The decline was driven almost entirely by a $23.0 million pretax loss on loans held for sale recorded as part of the balance-sheet restructuring, rather than any deterioration in the underlying business.

On an operating basis, excluding the restructuring charge and other non-operating items, EPS was $0.95 per share, up 13% sequentially from $0.84 and 35% higher than a year ago. That operating result exceeded the Wall Street consensus estimate of $0.85. Reported revenue of $125.83 million rose 3.6% year over year and came in modestly above the $125 million consensus figure.

Net interest income (the difference between interest earned on loans and interest paid on deposits) climbed 15% to $117.3 million, helped by a widening net interest margin (NIM) of 3.44%, up 33 basis points from 3.11% a year ago. Credit quality also improved, with nonperforming assets falling to $64.3 million from $79.7 million in the second quarter and the provision for credit losses easing to $5.0 million from $8.3 million. Total assets stood at $14.8 billion, with deposits of $11.8 billion.

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Market Reaction and Investor Sentiment

The headline EPS figure of $0.59 fell well short of the roughly $0.85 consensus, but the shortfall was attributable to a clearly disclosed, non-operating restructuring charge rather than core weakness. Investors focused instead on the operating EPS of $0.95, which exceeded estimates by roughly 12%. Sentiment entering the report had centered on the fate of the multifamily loan portfolio, and management's announcement of a definitive agreement to sell up to approximately $750 million of those loans addressed that overhang directly. The planned sale cuts the company's exposure to New York City rent-stabilized loans by up to two-thirds, an outcome likely to be read favorably by investors concerned about CRE concentration risk, even as the accounting treatment pressured the reported quarter's bottom line.

Forward Outlook and Key Factors to Monitor

ConnectOne enters the fourth quarter with a more liquid, lower-risk balance sheet and a management team emphasizing core relationship banking. Management guided toward mid-single-digit loan and deposit growth and projected a 2% to 2.5% sequential increase in operating expenses for the fourth quarter, with a projected effective tax rate of 27.5%.

The loan sale is expected to close within about a week of the report, and management intends to reinvest the bulk of the proceeds into lower-risk assets with slightly higher yields while using a smaller portion to pay down wholesale funding. That shift is expected to support net interest margin and return on assets over time, though it may modestly temper near-term reinvestment earnings. Investors should also note that roughly $7 million to $8 million of additional non-operating transaction costs tied to the sale will be recognized in the fourth quarter rather than the third.

Key factors to watch include whether deposit growth sustains its recent double-digit annualized pace, how the remaining rent-stabilized loan book performs, and whether the efficiency ratio continues its improvement after falling to 41%. Capital deployment remains in focus as well, with management citing flexibility for dividends, buybacks, and preferred-stock redemption following the repositioning.

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