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Section 1: 8-K (FORM 8-K)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): October 23, 2018  

CONNECTONE BANCORP, INC.
(Exact Name of Registrant as Specified in Charter)

New Jersey001-1148652-1273725
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

301 Sylvan Avenue, Englewood Cliffs, New Jersey 07632
(Address of Principal Executive Offices) (Zip Code)

(201) 816-8900
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [   ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [   ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [   ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [   ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On October 25, 2018, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information contained in this Item 2.02, including the related information set forth in the Press Release attached hereto and incorporated by reference herein, is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(d)          

(1)  On October 23, 2018, Ms. Katherin Nukk-Freeman was appointed to serve as a director of the Registrant and of ConnectOne Bank, the Registrant’s wholly owned subsidiary and a New Jersey state chartered commercial bank (the “Bank”).  

(2)  There are no arrangements or understandings between Ms. Nukk-Freeman and any other persons pursuant to which Ms. Nukk-Freeman was selected as a Director.

(3)  Ms. Nukk-Freeman has not yet been appointed to any committees of the Board of Directors of the Registrant or the Bank.

(4)  There are no “related party transactions” between Ms. Nukk-Freeman and the Registrant or the Bank which require disclosure.

(5)  There are no material plans, contracts or other arrangements (or amendments thereto) to which Ms. Nukk-Freeman is a party, or in which she participates, that was entered into or amended, in connection with Ms. Nukk-Freeman being appointed as a director of the Registrant and the Bank.

Item 8.01. Other Events.

On October 25, 2018, the Registrant issued a press release announcing the information disclosed in Items 2.02 and 5.02.  A copy of the October 25, 2018 press release is included as Exhibit 99.1 hereto.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number Description
   
99.1 Press Release dated October 25, 2018


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 CONNECTONE BANCORP, INC.
   
  
Date: October 25, 2018By: /s/ William S. Burns        
  William S. Burns
  Executive Vice President and Chief Financial Officer
  

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Section 2: EX-99.1 (PRESS RELEASE)

EdgarFiling

EXHIBIT 99.1

ConnectOne Bancorp, Inc. Reports Third Quarter 2018 Results

ENGLEWOOD CLIFFS, N.J., Oct. 25, 2018 (GLOBE NEWSWIRE) -- ConnectOne Bancorp, Inc. (Nasdaq: CNOB) (the “Company” or “ConnectOne”), parent company of ConnectOne Bank (the “Bank”), today reported net income of $19.9 million for the third quarter of 2018 compared with $17.5 million for the second quarter of 2018 and $13.1 million for the third quarter of 2017.  Diluted earnings per share were $0.61 for the third quarter of 2018 compared with $0.54 earned in the second quarter of 2018 and $0.41 earned in the third quarter of 2017.

Adjusted net income amounted to $18.5 million, or $0.57 earnings per share, for the third quarter of 2018; $17.5 million, or $0.54 earnings per share, for the second quarter of 2018; and $14.9 million, or $0.46 earnings per share, for the third quarter of 2017.  Adjusted net income for the third quarter of 2018 excludes $1.7 million in income tax benefits resulting from deferred tax asset (“DTA”) valuation adjustments and ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, and $0.3 million in after-tax merger-related expenses.

Frank Sorrentino, ConnectOne’s Chairman and Chief Executive Officer stated, “Our third quarter results reflect continued strong core performance and excellent execution across the organization despite the challenging operating environment.  Our performance was highlighted by record quarterly earnings, solid loan and deposit growth, a stable net interest margin, continued strong return on assets and return on tangible common equity, and sequential growth in tangible book value of $0.49 per share.  For the quarter, period-end loans grew on a sequential basis in excess of 9% annualized including commercial loans which grew $78 million, or 38% annualized, while average total deposits increased in excess of 15% annualized including noninterest-bearing demand growth in excess of 23%. Our net interest margin remained essentially flat, contracting 1 basis-point from the prior sequential quarter, while favorably widening by 3 basis-points when excluding the impact of purchase accounting adjustments.  We saw an increasing yield in the loan portfolio, driven by repricing and higher origination rates, and strong growth of our noninterest-bearing deposits, offset by increased rates on interest-bearing deposits.  Our efficiency ratio ticked up slightly to 42.3%, compared to 41.8% from the prior sequential quarter due primarily to previously planned technology investments and opening our new Astoria, Queens, New York office.  We remain one of the most efficient banks in the country.  Looking ahead to the remainder of 2018 and into 2019, we remain well-positioned for strong financial performance with steady, albeit slower, growth.” 

Mr. Sorrentino added, “On the operations side, we are extremely pleased with our recent expansion into Astoria with our newest banking office, the launch of our partnership with Zelle and our continued roll out of nCino.  The Zelle offering was launched on our ConnectOne Bank mobile banking app, allowing our clients to quickly and safely send money directly from person to person.  ConnectOne was part of the original consortium of 30 banks in the U.S. to partner with Zelle and provide a fast and easy way to send and receive money and we are very pleased with how our clients are adopting the new service.  We continue to integrate the nCino operating system into our day-to-day business and it is proving to be a powerful tool, allowing us to maintain our best-in-class efficiency metrics.  All of these efforts, as well as expanding into new digital offerings, remain incredibly important to ConnectOne as we continue to enter into new markets, serve new clients, and bolster our existing client relationships.  Finally, with regard to the previously announced acquisition of Greater Hudson Bank, we recently received FDIC approval and the transaction remains on track to close in early January 2019.”  

Operating Results

Fully taxable equivalent net interest income for the third quarter of 2018 was $40.4 million, an increase of $1.0 million, or 2.6%, from the second quarter of 2018, resulting primarily from an increase in total interest-earning assets of 1.8%, and slightly offset by a contraction in the net interest margin of 1 basis-point to 3.30% from 3.31%.  Included in net interest income were purchase accounting adjustments of $0.2 million during the third quarter of 2018 and $0.7 million during the second quarter of 2018.  Excluding these purchase accounting adjustments, the adjusted net interest margin was 3.29% in the third quarter of 2018, widening by 3 basis-points from the second quarter of 2018 adjusted net interest margin of 3.26%.  The increase in the adjusted net interest margin was primarily attributable to a higher yield earned on loans, an improved asset-mix and growth in noninterest-bearing deposits, partially offset by increases in deposit funding costs.

Fully taxable equivalent net interest income for the third quarter of 2018 increased by $2.5 million, or 6.6%, from the third quarter of 2017, resulting from a 10.9% increase in total average interest-earning assets, primarily loans, and partially offset by a contraction in the net interest margin of 14 basis-points to 3.30% from 3.44%. Included in net interest income were purchase accounting adjustments of $0.2 million during the third quarter of 2018 and $0.3 million during the third quarter of 2017.  Excluding these purchase accounting adjustments, the adjusted net interest margin was 3.29% in the third quarter of 2018, contracting by 12 basis-points from the third quarter of 2017 adjusted net interest margin of 3.41%. The decrease in the adjusted net interest margin was primarily attributable to a long-term subordinated debt issuance, a change in the taxable equivalent adjustment and increased deposit rates, partially offset by higher rates earned on loans.   

Noninterest income totaled $1.4 million in the third and second quarters of 2018 and $1.8 million in the third quarter of 2017.  Noninterest income consists of income on bank owned life insurance, net gains on sales of loans held-for-sale and deposit service fees, loan fees, and other income. Last year’s third quarter included a BOLI death benefit.

Noninterest expenses totaled $18.3 million for the third quarter of 2018, $17.1 million for the second quarter of 2018 and $18.6 million for the third quarter of 2017.  Noninterest expenses increased by $1.2 million from the prior sequential quarter due primarily to increases in salaries and employee benefits ($0.4 million), largely due to compensation accrual adjustments, merger-related expenses ($0.4 million) and other expenses ($0.4 million), including a loss on sale of an OREO property.  Noninterest expenses decreased by $0.4 million from the prior year third quarter due primarily to a $3.0 million valuation allowance adjustment on taxi medallion loans held-for-sale that occurred during the prior year third quarter, partially offset by increases in salaries and employee benefits ($1.3 million), other expenses ($0.9 million), both due to increased levels of business and staff resulting from organic growth, and merger-related expenses ($0.4 million).

Income tax expense was $2.1 million for the third quarter of 2018, $4.6 million for the second quarter of 2018 and $5.6 million for the third quarter of 2017.  Included in income tax expense for the current quarter were benefits of $1.4 million resulting from Federal and NJ DTA adjustments and $0.3 million resulting from ASU 2016-09.   Excluding these income tax expense adjustments, the Company’s effective tax rate declined to 17% for the third quarter of 2018 from 21% during the first half of 2018. This reduction is the result of implementing certain tax strategies in the second half of 2018. The effective tax rate, exclusive of income tax expense adjustments, is anticipated to increase to approximately 26% for 2019, due to the recent NJ corporate tax legislation.

Asset Quality

The provision for loan losses was $1.1 million in both the third and second quarters of 2018, and $1.5 million in the third quarter of 2017.  The provision for loan losses remained flat when compared to the prior sequential quarter.  The decrease from the prior year third quarter was the result of increased provision for the acquired portfolio during the prior year third quarter.

Nonperforming assets, which includes nonaccrual loans and other real estate owned, were $53.0 million at September 30, 2018, $66.2 million at December 31, 2017 and $61.2 million at September 30, 2017. Included in nonperforming assets were taxi medallion loans totaling $28.5 million at September 30, 2018, $46.8 million at December 31, 2017 and $47.4 million at September 30, 2017.  Nonperforming assets (including taxi) as a percentage of total assets were 0.99% at September 30, 2018, 1.29% at December 31, 2017 and 1.26% at September 30, 2017.  Excluding the taxi medallion loans, nonaccrual loans were $24.5 million at September 30, 2018, $18.8 million at December 31, 2017 and $13.8 million at September 30, 2017, representing a ratio of nonaccrual loans (excluding taxi) to loans receivable of 0.55%, 0.46% and 0.35%, respectively.  The annualized net loan charge-off (recovery) ratio was (0.01)% for the third quarter of 2018, 0.01% for the fourth quarter of 2017 and (0.00%) for the third quarter of 2017. The allowance for loan losses represented 0.78%, 0.76%, and 0.77% of loans receivable as of September 30, 2018, December 31, 2017 and September 30, 2017, respectively.  The allowance for loan losses as a percentage of nonaccrual loans was 65.5% as of September 30, 2018, 48.4% as of December 31, 2017 and 48.8% as of September 30, 2017.  Excluding the taxi medallion loans, allowance for loan losses as a percentage of nonaccrual loans was 141.6% as of September 30, 2018, 168.4% as of December 31, 2017 and 217.2% as of September 30, 2017.

Selected Balance Sheet Items

At September 30, 2018, the Company’s total assets were $5.4 billion, an increase of $260 million from December 31, 2017, largely the result of an increase in total loans (loan originations less pay-downs and pay-offs) of $266 million. The Company’s stockholders’ equity was $595 million at September 30, 2018, an increase of $29 million from December 31, 2017. The increase in stockholders’ equity was primarily attributable to increases in retained earnings of $35 million, primarily offset by increases in accumulated other comprehensive losses of $7 million.  As of September 30, 2018, the Company’s tangible common equity ratio and tangible book value per share were 8.56% and $13.87, respectively.  Tangible book value per share increased $0.49, or 3.7%, from the sequential quarter.  As of December 31, 2017, the tangible common equity ratio and tangible book value per share were 8.41% and $13.01, respectively. Total goodwill and other intangible assets were approximately $148 million as of September 30, 2018 and December 31, 2017.

ConnectOne Appoints New Independent Board Member

The Company also announced today that Katherin Nukk-Freeman, co-founding partner and CEO of Nukk-Freeman & Cerra, P.C., has been elected to ConnectOne’s Board of Directors. With more than 20 years of experience in employment law, Ms. Nukk-Freeman serves as a trusted advisor to corporate leaders in addressing and effectively managing workplace issues. Most recently, she co-founded SHIFT, a technology startup that provides HR compliance training tools to companies of all sizes.

“Katherin’s extensive knowledge of human resource compliance and law coupled with her technological knowledge will be a valuable asset to ConnectOne. I am thrilled to welcome her to our Board,” commented Mr. Sorrentino.

Use of Non-GAAP Financial Measures

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/adjusted financial measures including an adjusted net income available to common shareholders. 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.  These non-GAAP measures have inherent limitations and are not required to be uniformly applied and are not audited.  They should not be considered in isolation or as a substitute for an analysis of results reported under GAAP.  These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

Reconciliations of non-GAAP/adjusted financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

Third Quarter 2018 Results Conference Call

Management will also host a conference call and audio webcast at 10:00 a.m. ET on October 25, 2018 to review the Company's financial performance and operating results.  The conference call dial-in number is 334-323-0522, access code 6919110. Please dial in at least five minutes before the start of the call to register. An audio webcast of the conference call will be available to the public, on a listen-only basis, via the "Investor Relations" link on the Company's website https://www.ConnectOneBank.com or at http://ir.connectonebank.com.  

A replay of the conference call will be available beginning at approximately 1:00 p.m. ET on Thursday, October 25, 2018 and ending on Thursday, November 1, 2018 by dialing 719-457-0820, access code 6919110. An online archive of the webcast will be available following the completion of the conference call at https://www.ConnectOneBank.com or at http://ir.connectonebank.com.

About ConnectOne Bancorp, Inc.

ConnectOne Bancorp, Inc., through its subsidiary, ConnectOne Bank offers a broad range of commercial banking and lending services and products through its 22 banking offices located in New York and New Jersey.   ConnectOne Bancorp, Inc. is traded on the Nasdaq Global Market under the trading symbol "CNOB," and information about ConnectOne may be found at 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.

Investor Contact:

William S. Burns
Executive VP & CFO
201.816.4474; bburns@cnob.com

Media Contact:
Thomas Walter, MWWPR
202.600.4532; twalter@mww.com

      
CONNECTONE BANCORP, INC. AND SUBSIDIARIES     
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION    
(in thousands)     
      
 September 30, December 31, September 30,
 2018
 2017
 2017
 (unaudited)   (unaudited)
ASSETS     
Cash and due from banks$37,058  $52,565  $41,114 
Interest-bearing deposits with banks 118,790   97,017   100,148 
Cash and cash equivalents 155,848   149,582   141,262 
      
Securities available-for-sale 410,039   435,284   400,516 
Equity securities 11,403   -   - 
      
Loans held-for-sale 270   24,845   89,386 
      
Loans receivable 4,462,487   4,171,456   3,889,289 
Less: Allowance for loan losses 34,749   31,748   29,870 
Net loans receivable 4,427,738   4,139,708   3,859,419 
      
Investment in restricted stock, at cost 32,486   33,497   29,672 
Bank premises and equipment, net 20,998   21,659   21,917 
Accrued interest receivable 17,690   15,470   14,841 
Bank owned life insurance 113,026   111,311   110,762 
Other real estate owned -   538   - 
Goodwill 145,909   145,909   145,909 
Core deposit intangibles 1,882   2,364   2,533 
Other assets 31,352   28,275   28,538 
Total assets$5,368,641  $5,108,442  $4,844,755 
      
LIABILITIES     
Deposits:     
Noninterest-bearing$758,213  $776,843  $719,582 
Interest-bearing 3,230,552   3,018,285   2,904,187 
Total deposits 3,988,765   3,795,128   3,623,769 
Borrowings 629,979   670,077   585,124 
Subordinated debentures (net of $1,681, $456 and $498 in debt issuance costs) 128,474   54,699   54,657 
Other liabilities 26,552   23,101   23,514 
Total liabilities 4,773,770   4,543,005   4,287,064 
      
COMMITMENTS AND CONTINGENCIES     
      
STOCKHOLDERS' EQUITY     
Common stock 412,546   412,546   412,546 
Additional paid-in capital 14,625   13,602   12,840 
Retained earnings 195,101   160,025   151,851 
Treasury stock (16,717)  (16,717)  (16,717)
Accumulated other comprehensive loss (10,684)  (4,019)  (2,829)
Total stockholders' equity 594,871   565,437   557,691 
Total liabilities and stockholders' equity$5,368,641  $5,108,442  $4,844,755 
            


CONNECTONE BANCORP, INC. AND SUBSIDIARIES       
CONSOLIDATED STATEMENTS OF INCOME       
(dollars in thousands, except for per share data)       
        
  Three Months Ended   Nine Months Ended
 09/30/18 09/30/17 09/30/18 09/30/17
Interest income       
Interest and fees on loans$51,699 $43,241 $148,218 $121,879
Interest and dividends on investment securities:       
Taxable 2,154  1,695  6,191  5,042
Tax-exempt 785  870  2,377  2,655
Dividends 530  362  1,517  982
Interest on federal funds sold and other short-term investments 183  170  607  555
Total interest income 55,351  46,338  158,910  131,113
Interest expense       
Deposits 10,681  6,113  27,538  16,717
Borrowings 4,708  3,206  14,318  9,135
Total interest expense 15,389  9,319  41,856  25,852
        
Net interest income 39,962  37,019  117,054  105,261
Provision for loan losses 1,100  1,450  20,000  4,000
Net interest income after provision for loan losses 38,862  35,569  97,054  101,261
        
Noninterest income       
Annuities and insurance commissions -  -  -  39
Income on bank owned life insurance 751  985  2,300  2,402
Net gains on sale of loans held-for-sale 2  50  31  120
Deposit, loan and other income 676  721  1,893  2,023
Net gains on sale of investment securities -  -  -  1,596
Total noninterest income 1,429  1,756  4,224  6,180
        
Noninterest expenses       
Salaries and employee benefits 10,181  8,872  29,596  25,710
Occupancy and equipment 2,137  1,969  6,311  6,215
FDIC insurance 735  840  2,350  2,550
Professional and consulting 891  740  2,439  2,192
Marketing and advertising 192  225  736  770
Data processing 1,102  1,176  3,341  3,474
Merger expenses 375  -  399  -
Amortization of core deposit intangible 145  169  483  555
Increase in valuation allowance, loans held-for-sale -  3,000  -  15,325
Other expenses 2,529  1,650  6,799  5,402
Total noninterest expenses 18,287  18,641  52,454  62,193
        
Income before income tax expense 22,004  18,684  48,824  45,248
Income tax expense 2,102  5,607  7,144  12,608
Net income$19,902 $13,077 $41,680 $32,640
        
Earnings per common share:       
Basic$0.62 $0.41 $1.30 $1.02
Diluted 0.61  0.41  1.29  1.01
        
Dividends per common share$0.075 $0.075 $0.225 $0.225


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        
          
          
 As of
 Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
 2018
 2018
 2018
 2017
 2017
  
Selected Financial Data(dollars in thousands)
Total assets$5,368,641  $5,275,368  $5,158,368  $5,108,442  $4,844,755 
Loans receivable:         
Commercial$886,212  $808,604  $768,640  $781,698  $641,613 
Commercial real estate 1,282,766   1,282,426   1,275,764   1,232,037   1,254,720 
Multifamily 1,504,134   1,480,243   1,400,420   1,403,256   1,330,485 
Commercial construction 494,206   498,607   479,190   483,216   399,453 
Residential 295,948   288,449   278,985   271,795   264,244 
Consumer 2,508   5,637   2,461   2,808   1,912 
Gross loans 4,465,774   4,363,966   4,205,460   4,174,810   3,892,427 
Unearned net origination fees (3,287)  (3,112)  (2,781)  (3,354)  (3,138)
Loans receivable 4,462,487   4,360,854   4,202,679   4,171,456   3,889,289 
Loans held-for-sale (net of valuation allowance) 270   -   45,886   24,845   89,386 
Total loans$4,462,757  $4,360,854  $4,248,565  $4,196,301  $3,978,675 
          
Investment securities$421,442  $411,574  $435,929  $435,284  $400,516 
Goodwill and other intangible assets 147,791   147,936   148,104   148,273   148,442 
Deposits:         
Noninterest-bearing demand$758,213  $765,150  $739,174  $776,843  $719,582 
Time deposits 1,322,747   1,315,843   1,255,654   1,179,969   1,078,359 
Other interest-bearing deposits 1,907,805   1,824,417   1,754,759   1,838,316   1,825,828 
Total deposits$3,988,765  $3,905,410  $3,749,587  $3,795,128  $3,623,769 
          
Borrowings$629,979  $628,995  $695,032  $670,077  $585,124 
Subordinated debentures (net of debt issuance costs) 128,474   128,392   128,310   54,699   54,657 
Total stockholders' equity 594,871   578,557   564,266   565,437   557,691 
          
Quarterly Average Balances         
Total assets$5,186,173  $5,104,661  $5,088,823  $4,916,549  $4,713,487 
Loans receivable:         
Commercial$850,038  $808,764  $820,562  $761,147  $671,525 
Commercial real estate (including multifamily) 2,723,572   2,654,276   2,643,466   2,566,959   2,502,846 
Commercial construction 494,460   494,092   482,391   439,629   418,439 
Residential 294,758   282,504   275,263   268,047   255,755 
Consumer 3,205   5,685   4,659   3,849   2,555 
Gross loans 4,366,033   4,245,321   4,226,341   4,039,631   3,851,120 
Unearned net origination fees (3,182)  (3,208)  (3,110)  (3,485)  (3,724)
Loans receivable 4,362,851   4,242,113   4,223,231   4,036,146   3,847,396 
Loans held-for-sale 54   30,099   24,766   57,812   51,008 
Total loans$4,362,905  $4,272,212  $4,247,997  $4,093,958  $3,898,404 
          
Investment securities$415,074  $424,854  $437,141  $417,560  $398,635 
Goodwill and other intangible assets 147,883   148,046   148,215   148,383   148,553 
Deposits:         
Noninterest-bearing demand$761,782  $719,372  $724,471  $712,391  $688,707 
Time deposits 1,296,165   1,280,471   1,207,368   1,114,670   1,005,997 
Other interest-bearing deposits 1,854,763   1,765,577   1,815,122   1,855,688   1,816,162 
Total deposits$3,912,710  $3,765,420  $3,746,961  $3,682,749  $3,510,866 
          
Borrowings$531,251  $613,763  $630,117  $588,260  $570,711 
Subordinated debentures (net of debt issuance costs) 128,420   128,339   115,182   54,672   54,630 
Total stockholders' equity 590,128   574,992   575,029   567,308   556,620 
          
 Three Months Ended
 Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
 2018
 2018
 2018
 2017
 2017
  
  (dollars in thousands, except for per share data)
Net interest income$39,962  $38,945  $38,147  $39,808  $37,019 
Provision for loan losses 1,100   1,100   17,800   2,000   1,450 
Net interest income after provision for loan losses 38,862   37,845   20,347   37,808   35,569 
Noninterest income         
Income on bank owned life insurance 751   775   774   779   985 
Net gains on sale of loans held-for-sale 2   12   17   588   50 
Deposit, loan and other income 676   601   616   657   721 
Total noninterest income 1,429   1,388   1,407   2,024   1,756 
Noninterest expenses         
Salaries and employee benefits 10,181   9,736   9,679   9,418   8,872 
Occupancy and equipment 2,137   2,031   2,143   1,948   1,969 
FDIC insurance 735   765   850   935   840 
Professional and consulting 891   825   723   671   740 
Marketing and advertising 192   337   207   226   225 
Data processing 1,102   1,091   1,148   1,069   1,176 
Merger expenses 375   24   -   -   - 
Amortization of core deposit intangible 145   169   169   169   169 
Increase in valuation allowance, loans held-for-sale -   -   -   267   3,000 
Other expenses 2,529   2,130   2,140   1,863   1,650 
Total noninterest expenses 18,287   17,108   17,059   16,566   18,641 
          
Income before income tax expense 22,004   22,125   4,695   23,266   18,684 
Income tax expense 2,102   4,598   444   12,686   5,607 
Net income$19,902  $17,527  $4,251  $10,580  $13,077 
          
Reconciliation of GAAP Earnings to Adjusted Earnings:         
Net income$19,902  $17,527  $4,251  $10,580  $13,077 
Merger expenses (after taxes) 297   19   -   -   - 
Deferred tax valuation adjustment (1,408)  -   -   5,574   - 
Tax benefit on employee share-based awards (ASU 2016-09) (297)  (49)  (541)  -   - 
Provision related to taxi medallion loans (after taxes) -   -   13,430   -   - 
Increase in valuation allowance, loans held-for-sale (after taxes) -   -   -   182   1,776 
Net income-adjusted$18,494  $17,497  $17,140  $16,336  $14,853 
          
Weighted average diluted shares outstanding 32,319,060   32,321,150   32,238,048   32,252,759   32,182,016 
          
Diluted EPS (GAAP)$0.61  $0.54  $0.13  $0.33  $0.41 
Diluted EPS-adjusted (Non-GAAP) (1) 0.57   0.54   0.53   0.51   0.46 
          
Return on Assets Measures         
Net income-adjusted$18,494  $17,497  $17,140  $16,336  $14,853 
          
Average assets$5,186,173  $5,104,661  $5,088,823  $4,916,549  $4,713,487 
Less: average intangible assets (147,883)  (148,046)  (148,215)  (148,383)  (148,553)
Average tangible assets$5,038,290  $4,956,615  $4,940,608  $4,768,166  $4,564,934 
Return on avg. assets (GAAP) 1.52%  1.38%  0.34%  0.85%  1.10%
Return on avg. assets-adjusted (non-GAAP) (2) 1.41   1.37   1.37   1.32   1.25 
          
(1) Represents adjusted earnings available to common stockholders divided by weighted average diluted shares outstanding.  
(2) Adjusted net income divided by average assets.         
          
 Three Months Ended
 Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
 2018
 2018
 2018
 2017
 2017
  
Return on Equity Measures(dollars in thousands)
Net income-adjusted$18,494  $17,497  $17,140  $16,336  $14,853 
          
Average common equity$590,128  $574,992  $575,029  $567,308  $556,620 
Less: average intangible assets (147,883)  (148,046)  (148,215)  (148,383)  (148,553)
Average tangible common equity$442,245  $426,946  $426,814  $418,925  $408,067 
          
Return on avg. common equity (GAAP) 13.38%  12.23%  3.00%  7.40%  9.32%
Return on avg. common equity-adjusted (non-GAAP) (3) 12.43   12.21   12.09   11.42   10.59 
Return on avg. tangible common equity (non-GAAP) (4) 17.95   16.58   4.15   10.11   12.81 
Return on avg. tangible common equity-adjusted (non-GAAP) (5) 16.68   16.55   16.40   15.57   14.54 
          
Efficiency Measures         
Total noninterest expenses$18,287  $17,108  $17,059  $16,566  $18,641 
Increase in valuation allowance, loans held-for-sale -   -   -   (267)  (3,000)
Merger expenses (375)  (24)  -   -   - 
Foreclosed property expense (196)  (11)  (51)  (32)  (46)
Operating noninterest expense$17,716  $17,073  $17,008  $16,267  $15,595 
          
Net interest income (tax equivalent basis)$40,444  $39,409  $38,610  $40,744  $37,929 
Noninterest income 1,429   1,388   1,407   2,024   1,756 
Operating revenue$41,873  $40,797  $40,017  $42,768  $39,685 
          
Operating efficiency ratio (non-GAAP) (6) 42.3%  41.8%  42.5%  38.0%  39.3%
          
Net Interest Margin         
Average interest-earning assets$4,856,678  $4,771,523  $4,799,453  $4,603,659  $4,378,537 
          
Net interest income (tax equivalent basis)$40,444  $39,409  $38,610  $40,744  $37,929 
Impact of purchase accounting fair value marks (195)  (680)  (240)  (1,026)  (317)
Adjusted net interest income (tax equivalent basis)$40,249  $38,729  $38,370  $39,718  $37,612 
          
Net interest margin (GAAP) 3.30%  3.31%  3.26%  3.51%  3.44%
Adjusted net interest margin (non-GAAP) (7) 3.29   3.26   3.24   3.42   3.41 
          
(3) Adjusted earnings available to common stockholders divided by average common equity.      
(4) Earnings available to common stockholders excluding amortization of intangible assets divided by average tangible common equity.  
(5) Adjusted earnings available to common stockholders excluding amortization of intangible assets divided by average tangible common equity.
(6) Operating noninterest expense divided by operating revenue.         
(7) Adjusted net interest margin excludes impact of purchase accounting fair value marks.      
          
 As of
 Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
 2018
 2018
 2018
 2017
 2017
  
Capital Ratios and Book Value per Share(dollars in thousands, except for per share data)
Common equity$594,871  $578,557  $564,266  $565,437  $557,691 
Less: intangible assets (147,791)  (147,936)  (148,104)  (148,273)  (148,442)
Tangible common equity$447,080  $430,621  $416,162  $417,164  $409,249 
          
Total assets$5,368,641  $5,275,368  $5,158,368  $5,108,442  $4,844,755 
Less: intangible assets (147,791)  (147,936)  (148,104)  (148,273)  (148,442)
Tangible assets$5,220,850  $5,127,432  $5,010,264  $4,960,169  $4,696,313 
          
Common shares outstanding 32,238,264   32,184,047   32,175,233   32,071,860   32,015,317 
          
Common equity ratio (GAAP) 11.08%  10.97%  10.94%  11.07%  11.51%
Tangible common equity ratio (non-GAAP) (8) 8.56   8.40   8.31   8.41   8.71 
          
Regulatory capital ratios (Bancorp):         
Leverage ratio 9.15%  8.93%  8.65%  8.92%  9.13%
Common equity Tier 1 risk-based ratio 9.50   9.33   9.14   9.15   9.40 
Risk-based Tier 1 capital ratio 9.61   9.44   9.25   9.26   9.52 
Risk-based total capital ratio 12.94   12.81   12.66   11.04   11.34 
          
Regulatory capital ratios (Bank):         
Leverage ratio 10.64%  10.43%  10.20%  9.84%  10.11%
Common equity Tier 1 risk-based ratio 11.18   11.02   10.91   10.21   10.54 
Risk-based Tier 1 capital ratio 11.18   11.02   10.91   10.21   10.54 
Risk-based total capital ratio 12.57   12.42   12.31   10.90   11.22 
          
Book value per share (GAAP)$18.45  $17.98  $17.54  $17.63  $17.42 
Tangible book value per share (non-GAAP) (9) 13.87   13.38   12.93   13.01   12.78 
          
Net Loan Charge-Off (Recoveries) Detail         
Net loan charge-offs (recoveries) :         
Charge-offs$6  $47  $17,038  $156  $- 
Recoveries (61)  (12)  (19)  (34)  (20)
Net loan charge-offs (recoveries)$(55) $35  $17,019  $122  $(20)
Net loan charge-offs (recoveries) as a % of average loans receivable (annualized) (0.01)%  0.00%  1.63%  0.01%  (0.00)
          
Asset Quality         
Nonaccrual taxi medallion loans$28,482  $28,944  $29,405  $46,765  $47,430 
Nonaccrual loans (excluding taxi medallion loans) 24,533   20,771   20,631   18,848   13,755 
Other real estate owned -   1,076   1,076   538   - 
Total nonperforming assets$53,015  $50,791  $51,112  $66,151  $61,185 
          
Performing troubled debt restructurings$11,243  $12,827  $14,349  $14,920  $12,749 
          
Allowance for loan losses ("ALLL")$34,749  $33,594  $32,529  $31,748  $29,870 
          
Loans receivable$4,462,487  $4,360,854  $4,202,679  $4,171,456  $3,889,289 
Less: taxi medallion loans 28,482   28,944   29,405   46,765   - 
Loans receivable (excluding taxi medallion loans)$4,434,005  $4,331,910  $4,173,274  $4,124,691