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ConnectOne Bancorp, Inc. Reports Second Quarter 2015 Results; Earnings Per Diluted Share Increases 34.6% From Prior Year; Solid Organic Growth Continues

ENGLEWOOD CLIFFS, N.J., July 24, 2015 (GLOBE NEWSWIRE) -- ConnectOne Bancorp, Inc. (Nasdaq:CNOB) (the "Company" or "ConnectOne"), parent company of ConnectOne Bank (the "Bank"), today announced results for the second quarter ended June 30, 2015, the fourth full quarter following the Merger between the Company and legacy ConnectOne completed on July 1, 2014 (the "Merger"). Financial information prior to July 1, 2014 includes only the operations of the Company, the legal and accounting acquirer in the transaction. Concurrent with the Merger, the combined company changed its name to ConnectOne.

For the second quarter of 2015, the Company reported net income available to common stockholders of $10.5 million, or $0.35 per diluted share, compared with net income available to common stockholders of $10.4 million, or $0.34 per diluted share, for the first quarter of 2015 and $4.4 million, or $0.26 per diluted share, for the second quarter of 2014.

In addition to the results presented in accordance with generally accepted accounting principles ("GAAP"), ConnectOne routinely supplements its evaluation with an analysis of certain non-GAAP financial measures including net income available to common stockholders excluding non-core items. ConnectOne believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors in understanding our operating performance and trends, and facilitates comparisons with the performance of peers. Reconciliations of non-GAAP disclosures used in this earnings release to the comparable GAAP measure are provided in the accompanying tables.

Second quarter 2015 results reflect the following non-core items (on an after-tax basis): a $1.3 million insurance recovery; a $1.4 million loss on debt extinguishment; $0.8 million of income resulting from accretion of purchase accounting fair value marks; $0.3 million in additional loan loss provision related to the maturity and extension of acquired portfolio loans; $0.1 million of net securities gains; $0.1 million of pension settlement expenses, which had no impact on total stockholders' equity or book value per share, and $0.1 million in amortization of intangible assets. Excluding non-core items, net income available to common stockholders was $10.2 million, or $0.34 per diluted share, for the second quarter of 2015, $9.9 million, or $0.33 per diluted share, for the first quarter of 2015, and $4.5 million, or $0.27 per diluted share, for the second quarter of 2014.

Frank Sorrentino, ConnectOne's Chairman and CEO, stated, "Earnings momentum continued during the second quarter of 2015 and our strong operating performance was highlighted by second quarter loan growth of $124.5 million, representing an 18.9% annualized sequential growth rate, while deposits grew at an 11.7% annualized sequential rate. On the deposit side, our continued success in building commercial relationships resulted in a 24.0% annualized sequential growth rate in average noninterest-bearing demand deposit balances. As of June 30, 2015, noninterest-bearing demand deposits represented 24.0% of total deposits, up from approximately 19% when the Merger was consummated one year ago. Our performance metrics remain in the upper tier of banking institutions. Core return on average tangible assets and equity was 1.20% and 13.47%, respectively, our operating efficiency ratio for the second quarter of 2015 was 42.0%, while nonperforming assets as a percent of total assets improved to 0.37%. During the second quarter, we successfully completed the private placement of $50 million in holding company subordinated debt thereby improving our total risk-based capital ratio to 12.3%. In addition, during the second quarter of 2015, we recorded a previously announced insurance recovery and prepaid $16.0 million in principal amount of high cost puttable borrowings. The debt extinguishment reflects our continued restructuring of the borrowings portfolio established by the former Center Bancorp management during a higher rate operating environment. The transaction lowers our interest expense in future periods, partially offsetting the increased interest expense associated with the subordinated debt issuance and immediately improves our interest rate risk profile. Looking ahead, we expect our positive operating momentum to contribute to continued loan portfolio growth and a solid second half of the year for ConnectOne."

Operating Results

Fully taxable equivalent ("FTE") net interest income for the second quarter of 2015 was $29.3 million, an increase of $17.1 million, or 139.3%, from the same quarter of 2014. This was a result of a 119.0% increase in average interest-earning assets and a 31 basis-point widening of the net interest rate margin, both due to the Merger. Included in net interest income during the second quarter of 2015 was $1.5 million of accretion and amortization of purchase accounting adjustments. Excluding these purchase accounting adjustments, the adjusted net interest margin was 3.42% in the second quarter of 2015, 13 basis points higher than the 2014 second quarter adjusted net interest margin of 3.29%. The improvement in the adjusted net interest margin in the second quarter of 2015 versus the same 2014 period was primarily attributable to an improved mix of interest earning assets arising from a greater proportion of average loans in second quarter of 2015 along with a reduction in the average rate paid on borrowings, which resulted from a $70 million debt extinguishment and subsequent refinancing accomplished at the end of the third quarter of 2014. The adjusted net interest margin for the second quarter of 2015 narrowed by four basis points from the sequential first quarter of 2015, due to moderate margin compression resulting from the continued low interest rate environment and a reduction in loan prepayment penalties.

Noninterest income, excluding an insurance recovery of $2.2 million in 2015 and excluding net securities gains of $0.2 million in 2015 and $0.6 million in 2014, totaled $1.0 million in the second quarter of 2015 and $1.2 million for the second quarter of 2014. Noninterest income includes bank-owned life insurance income, deposit and loan fees, annuities and life insurance commissions, and gains on sales of residential mortgages in the secondary market and represents a relatively small portion of the Bank's total revenue. Although management intends to continue its strategy of de-emphasizing service charges in order to attract new and retain existing clients, it expects fee income to increase modestly in future periods.

Noninterest expenses totaled $12.6 million, excluding debt extinguishment charges of $2.4 million, for the second quarter of 2015 compared with $6.0 million, excluding $0.7 million of Merger-related charges, for the same quarter of 2014. The increase in the second quarter of 2015 was primarily attributable to the Merger as well as an increased level of business and staff resulting from organic growth. The Company's operating efficiency ratio was 42.0% in both the 2015 second and first quarters, and 44.8% in the 2014 second quarter. The decrease from the year-ago quarter reflects realization of Merger cost savings.

Income tax expense was $5.1 million and $2.0 million for the second quarter of 2015 and 2014, respectively, resulting in effective tax rates of 32.5% and 31.2% for the second quarter of 2015 and 2014, respectively. The increase in the effective tax rate for 2015 reflects a decline in the percentage of tax-exempt income to total pretax income. The effective tax rate for the remainder of 2015 is expected to remain fairly constant.

Asset Quality

The provision for loan losses increased to $1.6 million in the second quarter of 2015, compared with $0.3 million in the second quarter of 2014. The increase primarily resulted from higher loan growth and the maturity and extension of acquired portfolio loans.

Nonperforming assets, which includes nonaccrual loans and other real estate owned, were $13.7 million at June 30, 2015, $12.7 million at December 31, 2014, and $4.3 million at June 30, 2014. Nonperforming assets as a percent of total assets was 0.37% at June 30, 2015 and at December 31, 2014, and 0.26% at June 30, 2014. Annualized net charge-offs were zero for the second quarter 2015 and 0.04% in the second quarter of 2014. The allowance for loan losses was $17.5 million, representing 0.63% of loans receivable and 143.9% of nonaccrual loans at June 30, 2015. At December 31, 2014, the allowance was $14.2 million representing 0.56% of loans receivable and 122.0% of nonaccrual loans, and, at June 30, 2014, the allowance was $10.8 million representing 1.08% of loans receivable and 268.5% of nonaccrual loans. In purchase accounting, any allowance for loan losses on an acquired loan portfolio is reversed and a credit risk discount is applied directly to the acquired loan balances. In Management's opinion, a useful non-GAAP metric is the ratio of allowance for loan losses plus the credit risk discount to total loans receivable. This non-GAAP ratio was 1.15% at June 30, 2015, 1.23% at December 31, 2014, and 1.11% at June 30, 2014. The reduction in this ratio from year-end reflects amortization and payoff of acquired loans, a favorable change in loan mix and improving credit trends.

Selected Balance Sheet Items

At June 30, 2015, the Company's total assets were $3.7 billion, an increase of $211 million from December 31, 2014. Loans receivable were $2.8 billion, reflecting net loan growth (loan originations less pay-downs and pay-offs) of $227 million from December 31, 2014, primarily attributable to originated multi-family ($93 million), commercial and industrial ("C&I") ($76 million) and construction ($42 million). Management's current intent is to maintain a multi-family portfolio concentration in the 25-30% range, while growing the C&I and construction segments. The growth in loans was funded with increases in deposits, borrowings and subordinated debt.

The Company's stockholders' equity was $464 million at June 30, 2015, an increase of $18 million from December 31, 2014. The increase in stockholders' equity was due to an $16 million increase in retained earnings and approximately $2 million of equity issuance related to stock-based compensation, including the exercise of options, and was partially offset by an approximately $1 million decrease in unrealized gains on available for sale securities.

As of June 30, 2015, the Company's tangible common equity ratio and tangible book value per share were 8.62% and $10.02, respectively. As of December 31, 2014, the tangible common equity ratio and tangible book value per share were 8.62% and $9.57, respectively. Total goodwill and other intangible assets were $150 million as of June 30, 2015, a decrease of $1.0 million from December 31, 2014.

About ConnectOne Bancorp, Inc.

ConnectOne is a New Jersey corporation and a registered bank holding company pursuant to the Bank Holding Company Act of 1956, as amended, and serves as the holding company for ConnectOne Bank ("the Bank"). The Bank is a community-based, full-service New Jersey-chartered commercial bank that was founded in 2005. The Bank operates from its headquarters located at 301 Sylvan Avenue in the Borough of Englewood Cliffs, Bergen County, New Jersey, and through its 23 other banking offices.

For more information visit https://www.connectonebank.com/.

Forward-Looking Statements

This news release contains certain forward-looking statements which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, those factors set forth in Item 1A – Risk Factors of the Company's Annual Report on Form 10-K, as filed with the Securities Exchange Commission, and changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company's market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

CONNECTONE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(in thousands, except for share data) June 30, December 31,
2015 2014
(unaudited) (audited)
ASSETS
Cash and due from banks $ 41,454 $ 31,813
Interest-bearing deposits with banks 84,029 95,034
Cash and cash equivalents 125,483 126,847
Investment securities:
Available-for-sale 264,098 289,532
Held-to-maturity (fair value of $237,208 and $231,445) 232,557 224,682
Loans held for sale 124 --
Loans receivable 2,765,288 2,538,641
Less: Allowance for loan and lease losses 17,480 14,160
Net loans receivable 2,747,808 2,524,481
Investment in restricted stock, at cost 27,078 23,535
Bank premises and equipment, net 21,252 20,653
Accrued interest receivable 12,055 11,700
Bank-owned life insurance 53,293 52,518
Other real estate owned 1,564 1,108
Goodwill 145,909 145,909
Core deposit intangibles 4,343 4,825
Other assets 24,493 22,782
Total assets $ 3,660,057 $ 3,448,572
LIABILITIES
Deposits:
Noninterest-bearing $ 553,008 $ 492,515
Interest-bearing 2,016,223 1,983,092
Total deposits 2,569,231 2,475,607
Borrowings 548,758 495,553
Subordinated debentures 55,155 5,155
Other liabilities 22,931 26,038
Total liabilities 3,196,075 3,002,353
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $1,000 liquidation value per share, authorized 5,000,000 shares;
issued and outstanding 11,250 shares of Series B preferred stock at June 30, 2015 and
December 31, 2014; total liquidation value of $11,250 at June 30, 2015 and December 31, 2014
11,250 11,250
Common stock, no par value, authorized 50,000,000 shares; issued 32,260,653
shares at June 30, 2015 and 31,758,828 at December 31, 2014; outstanding 30,196,731
shares at June 30, 2015 and 29,694,906 at December 31, 2014
374,287 374,287
Additional paid-in capital 8,120 6,015
Retained earnings 88,772 72,398
Treasury stock, at cost (2,063,922 common shares at June 30, 2015 and December 31, 2014) (16,717) (16,717)
Accumulated other comprehensive loss (1,730) (1,014)
Total stockholders' equity 463,982 446,219
Total liabilities and stockholders' equity $ 3,660,057 $ 3,448,572
CONNECTONE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(dollars in thousands, except for per share data)
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
Interest income
Interest and fees on loans $ 30,217 $ 10,461 $ 59,531 $ 20,572
Interest and dividends on investment securities:
Taxable 2,760 2,909 5,671 5,925
Tax-exempt 883 895 1,765 1,951
Dividends 280 136 500 290
Interest on federal funds sold and other short-term investments 41 -- 84 --
Total interest income 34,181 14,401 67,551 28,738
Interest expense
Deposits 3,301 1,301 6,325 2,617
Borrowings 2,202 1,432 4,256 2,843
Total interest expense 5,503 2,733 10,581 5,460
Net interest income 28,678 11,668 56,970 23,278
Provision for loan and lease losses 1,550 284 3,375 909
Net interest income after provision for loan and lease losses 27,128 11,384 53,595 22,369
Noninterest income
Annuities and insurance commissions 46 105 133 205
Bank-owned life insurance 388 256 774 511
Net gains on sale of loans held for sale 99 43 213 79
Deposit, loan and other income 458 746 921 1,461
Insurance recovery 2,224 -- 2,224 --
Net gains on sale of investment securities 221 574 726 1,989
Total noninterest income 3,436 1,724 4,991 4,245
Noninterest expenses
Salaries and employee benefits 6,948 3,184 13,575 6,516
Occupancy and equipment 1,788 816 3,869 1,896
FDIC insurance 440 288 1,000 588
Professional and consulting 715 306 1,209 561
Marketing and advertising 193 27 387 67
Data processing 829 373 1,729 718
Merger expenses -- 729 -- 1,789
Loss on extinguishment of debt 2,397 -- 2,397 --
Amortization of core deposit intangible 241 -- 483 --
Other expenses 1,423 1,021 2,955 2,105
Total noninterest expenses 14,974 6,744 27,604 14,240
Income before income tax expense 15,590 6,364 30,982 12,374
Income tax expense 5,069 1,986 10,081 3,598
Net income 10,521 4,378 20,901 8,776
Less: Preferred stock dividends 28 28 56 56
Net income available to common stockholders $ 10,493 $ 4,350 $ 20,845 $ 8,720
Earnings per common share:
Basic $ 0.35 $ 0.27 $ 0.70 $ 0.53
Diluted 0.35 0.26 0.69 0.53
Weighted average common shares outstanding:
Basic 29,868,247 16,372,885 29,812,521 16,361,596
Diluted 30,231,480 16,430,376 30,203,682 16,422,339
Dividend per common share $ 0.075 $ 0.075 $ 0.150 $ 0.150
ConnectOne's management believes that the supplemental financial information, including non-GAAP measures, provided below is useful to investors. The non-GAAP measures should not be viewed as a substitute for financial results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP financial measures presented by other companies.
CONNECTONE BANCORP, INC.
SUPPLEMENTAL GAAP AND NON-GAAP FINANCIAL MEASURES
(dollars in thousands, except share data)
Three Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30,
2015 2015 2014 2014 2014
Earnings, EPS and Operating Data
Net income (GAAP) $ 10,521 $ 10,379 $ 8,023 $ 1,766 $ 4,378
Less: preferred dividends 28 28 28 28 28
Net income available to common stockholders (GAAP) 10,493 10,351 7,995 1,738 4,350
Net gains on sales of securities (221) (506) (718) (111) (574)
Partial settlements of pension obligation 243 559 -- -- --
Insurance recovery (2,223) -- -- -- --
Merger-related expenses -- -- 1,816 8,784 729
Loss on debt extinguishment 2,397 -- -- 4,550 --
Amortization of intangible assets 241 241 245 248 6
Provision related to maturity and extension of acquired portfolio loans 502 757 787 336 --
Charge due to wire fraud -- -- 2,374 -- --
Accretion of purchase accounting fair value marks (1,513) (1,802) (2,491) (2,892) 7
Non-core items (574) (751) 2,013 10,915 168
Income tax (expense) benefit (234) (307) 294 4,044 59
Non-core items, after taxes (340) (444) 1,719 6,871 109
Core earnings available to common stockholders (non-GAAP) $ 10,153 $ 9,907 $ 9,714 $ 8,609 $ 4,459
Weighted average diluted shares outstanding 30,231,480 30,149,469 30,149,244 30,115,520 16,430,376
Diluted EPS (GAAP) $ 0.35 $ 0.34 $ 0.27 $ 0.06 $ 0.26
Core Diluted EPS (Non-GAAP) (1) $ 0.34 $ 0.33 $ 0.32 $ 0.29 $ 0.27
Return on Assets Measures
Core earnings available to common stockholders (non-GAAP) $ 10,153 $ 9,907 $ 9,714 $ 8,609 $ 4,459
Add: preferred dividends 28 28 28 28 28
Core net income (non-GAAP) $ 10,181 $ 9,935 $ 9,742 $ 8,637 $ 4,487
Average assets $ 3,551,597 $ 3,466,820 $ 3,369,402 $ 3,350,599 $ 1,657,440
Less: average intangible assets (150,407) (150,650) (150,934) (151,142) (16,819)
Average tangible assets $ 3,401,190 $ 3,316,170 $ 3,218,468 $ 3,199,457 $ 1,640,621
Return on avg. assets (GAAP) 1.19% 1.21% 0.94% 0.21% 1.06%
Core return on avg. assets (Non-GAAP) (2) 1.15% 1.16% 1.15% 1.02% 1.09%
Return on avg. tangible assets (Non-GAAP) (3) 1.26% 1.29% 1.01% 0.24% 1.06%
Core return on avg. tangible assets (Non-GAAP) (4) 1.20% 1.22% 1.20% 1.07% 1.10%
(1) Represents core earnings available to common stockholders divided by weighted average diluted shares outstanding.
(2) Core net income divided by average assets.
(3) Net income excluding amortization of intangible assets divided by average tangible assets.
(4) Core net income divided by average tangible assets.
Three Months Ended
(dollars in thousands, except share data) June 30, March 31, Dec. 31, Sept. 30, June 30,
2015 2015 2014 2014 2014
Return on Equity Measures
Core earnings available to common stockholders $ 10,153 $ 9,907 $ 9,714 $ 8,609 $ 4,459
Average common equity $ 452,754 $ 442,970 $ 437,136 $ 432,331 $ 165,301
Less: average intangible assets (150,407) (150,650) (150,934) (151,142) (16,819)
Average tangible common equity $ 302,347 $ 292,320 $ 286,202 $ 281,189 $ 148,482
Return on avg. common equity (GAAP) 9.30% 9.48% 7.26% 1.59% 10.56%
Core return on avg. common equity (non-GAAP) (5) 9.00% 9.07% 8.82% 7.90% 10.82%
Return on avg. tangible common equity (non-GAAP) (6) 14.11% 14.56% 11.28% 2.66% 11.76%
Core return on avg. tangible common equity (non-GAAP) (7) 13.47% 13.75% 13.47% 12.15% 12.04%
Efficiency Measures
Total noninterest expenses $ 14,974 $ 12,631 $ 15,164 $ 25,400 $ 6,744
Partial settlements of pension obligation (243) (559) -- -- --
Merger-related expenses -- -- (1,816) (8,784) (729)
Loss on debt extinguishment (2,397) -- -- (4,550) --
Charge due to wire fraud -- -- (2,374) -- --
Amortization of intangible assets and fair value marks (241) (241) (218) (224) (6)
Operating non-interest expense $ 12,093 $ 11,831 $ 10,756 $ 11,842 $ 6,009
Net interest income (FTE) 29,316 28,906 29,135 28,146 12,252
Impact of purchase accounting fair value marks (1,487) (1,776) (2,464) (2,868) 7
Noninterest income 3,436 1,555 2,076 1,173 1,724
Less: insurance recovery (2,224) -- -- -- --
Less: net gains on sales of securities (221) (506) (718) (111) (574)
Operating revenue $ 28,820 $ 28,179 $ 28,029 $ 26,340 $ 13,409
Operating Efficiency Ratio (non-GAAP) (8) 42.0% 42.0% 38.4% 45.0% 44.8%
Net Interest Margin
Average interest earning assets $ 3,266,382 $ 3,182,894 $ 3,082,934 $ 3,050,564 $ 1,491,297
Net interest income (FTE) $ 29,316 $ 28,906 $ 29,135 $ 28,146 $ 12,252
Impact of purchase accounting fair value marks (1,487) (1,776) (2,464) (2,868) 7
Adjusted net interest income $ 27,829 $ 27,130 $ 26,671 $ 25,278 $ 12,259
Net interest margin (GAAP) 3.60% 3.68% 3.75% 3.66% 3.29%
Adjusted net interest margin (non-GAAP) (9) 3.42% 3.46% 3.43% 3.29% 3.29%
(5) Core earnings available to common stockholders divided by average common equity.
(6) Earnings available to common stockholders excluding amortization of intangibles divided by average tangible common equity.
(7) Core earnings available to common stockholders divided by average tangible common equity.
(8) Operating noninterest expense divided by operating revenue.
(9) Adjusted net interest income divided by average interest earning assets.
As of
(dollars in thousands, except share data) June 30, March 31, Dec. 31, Sept. 30, June 30,
2015 2015 2014 2014 2014
Capital Ratios and Book Value per Share
Common equity $ 452,732 $ 444,944 $ 434,969 $ 429,650 $ 167,028
Less: intangible assets (150,252) (150,493) (150,734) (150,979) (16,815)
Tangible common equity $ 302,480 $ 294,451 $ 284,235 $ 278,671 $ 150,213
Total assets $ 3,660,057 $ 3,505,891 $ 3,448,572 $ 3,356,257 $ 1,665,809
Less: intangible assets (150,252) (150,493) (150,734) (150,979) (16,815)
Tangible assets $ 3,509,805 $ 3,355,398 $ 3,297,838 $ 3,205,278 $ 1,648,994
Common shares outstanding 30,196,731 29,864,602 29,694,906 29,644,037 16,413,490
Common equity ratio (GAAP) 12.37% 12.69% 12.61% 12.80% 10.03%
Tangible common equity ratio (non-GAAP) (10) 8.62% 8.78% 8.62% 8.69% 9.11%
Regulatory capital ratios (Bancorp):
Leverage ratio 9.49% 9.45% 9.37% 9.23% 10.08%
Common equity Tier 1 risk-based ratio 9.63% 9.75% n/a n/a n/a
Risk-based Tier 1 capital ratio 10.14% 10.29% 10.44% 10.63% 12.59%
Risk-based total capital ratio 12.26% 10.82% 10.94% 11.07% 13.43%
Regulatory capital ratios (Bank):
Leverage ratio 10.48% 9.41% 9.33% 9.16% 9.99%
Common equity Tier 1 risk-based ratio 11.19% 10.24% n/a n/a n/a
Risk-based Tier 1 capital ratio 11.19% 10.24% 10.40% 10.59% 12.48%
Risk-based total capital ratio 11.74% 10.77% 10.90% 11.04% 13.32%
Book value per share (GAAP) $ 14.99 $ 14.90 $ 14.65 $ 14.49 $ 10.18
Tangible book value per share (non-GAAP) (11) 10.02 9.86 9.57 9.40 9.15
Asset Quality
Nonaccrual loans $ 12,145 $ 14,585 $ 11,610 $ 6,083 $ 4,032
Other real estate owned 1,564 870 1,108 1,442 220
Total nonperforming assets $ 13,709 $ 15,455 $ 12,718 $ 7,525 $ 4,252
Performing troubled debt restructurings $ 1,697 $ 1,731 $ 1,763 $ 1,876 $ 1,586
Loans past due 90 days and still accruing -- 638 1,211 -- 144
Nonaccrual loans as a % of loans receivable 0.44% 0.55% 0.46% 0.25% 0.40%
Nonperforming assets as a % of total assets 0.37% 0.44% 0.37% 0.22% 0.26%
Allowance for loan losses as a % of nonaccrual loans 143.9% 109.2% 122.0% 199.2% 268.5%
Annualized net charge-offs as a % of average loans -- % 0.01% 0.07% 0.03% 0.04%
Total loans receivable $ 2,765,288 $ 2,640,739 $ 2,538,641 $ 2,426,765 $ 1,006,256
Less: acquired loans (1,060,632) (1,110,859) (1,190,085) (1,286,482) (29,821)
Loans receivable, excluding acquired loans $ 1,704,656 $ 1,529,880 $ 1,348,556 $ 1,140,283 $ 976,435
Allowance for loan losses $ 17,480 $ 15,933 $ 14,160 $ 12,118 $ 10,825
Accretable credit risk discount on acquired loans 14,331 15,800 17,017 18,835 371
Total allowance for loan losses and accretable credit risk discount on acquired loans $ 31,811 $ 31,733 $ 31,177 $ 30,953 $ 11,196
Allowance for loan losses as a % of loans receivable 0.63% 0.60% 0.56% 0.50% 1.08%
Allowance for loan losses as a % of loans receivable, excluding acquired loans 1.03% 1.04% 1.05% 1.06% 1.11%
Allowance for loan losses and accretable credit risk discount on loans as a % of loans receivable 1.15% 1.20% 1.23% 1.28% 1.11%
(10) Tangible common equity divided by tangible assets.
(11) Tangible common equity divided by common shares outstanding at period-end.
CONNECTONE BANCORP, INC.
NET INTEREST MARGIN ANALYSIS
(dollars in thousands)
For the Three Months Ended
June 30, 2015 June 30, 2014
Average Average Average Average
Interest-earning assets: Balance Interest Rate (7) Balance Interest Rate (7)
Investment securities (1) (2) $ 495,805 $ 4,118 3.33% $ 492,633 $ 4,325 3.51%
Loans receivable (2) (3) (4) 2,689,525 30,380 4.53% 989,454 10,563 4.27%
Federal funds sold and interest-bearing deposits with banks 54,087 41 0.30% -- -- -- %
Restricted investment in bank stock 26,965 280 4.16% 9,210 97 4.22%
Total interest-earning assets 3,266,382 34,819 4.28% 1,491,297 14,985 4.02%
Allowance for loan losses (16,463) (10,756)
Non-interest earning assets 301,677 176,899
Total assets $ 3,551,597 $ 1,657,440
Interest-bearing liabilities:
Money market deposits $ 660,481 689 0.42% $ 395,912 491 0.50%
Savings deposits 218,845 157 0.29% 161,522 124 0.31%
Time deposits 748,780 2,131 1.14% 173,544 383 0.88%
Other interest-bearing deposits 347,068 324 0.37% 350,761 303 0.35%
Total interest-bearing deposits 1,975,173 3,301 0.67% 1,081,739 1,301 0.48%
Borrowings 565,094 2,110 1.50% 150,934 1,393 3.69%
Capital lease obligation 2,961 44 5.96% -- -- -- %
Subordinated debentures 5,704 48 3.38% 5,155 39 3.02%
Total interest-bearing liabilities 2,548,932 5,503 0.87% 1,237,828 2,733 0.88%
Demand deposits 510,369 228,873
Other liabilities 28,292 14,188
Total noninterest-bearing liabilities 538,661 243,061
Stockholders' equity 464,004 176,551
Total liabilities and stockholders' equity $ 3,551,597 $ 1,657,440
Net interest income (tax equivalent basis) 29,316 12,252
Net interest spread (5) 3.41% 3.14%
Net interest margin (6) 3.60% 3.29%
Tax equivalent adjustment (638) (584)
Net interest income $ 28,678 $ 11,668
(1) Average balances are calculated on amortized cost.
(2) Interest income is presented on a tax equivalent basis using 35 percent federal tax rate.
(3) Includes loan fee income.
(4) Loans include non-accrual loans.
(5) Represents difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a tax equivalent basis.
(6) Represents net interest income on a tax equivalent basis divided by average total interest-earning assets.
(7) Rates are annualized.

CONTACT: Investor Contact: William S. Burns Executive VP & CFO 201.816.4474; bburns@cnob.com Media Contact: Dawn Lauer, MWW 212.827.3744; dlauer@mww.comSource:ConnectOne Bank