ENGLEWOOD CLIFFS, N.J. - ConnectOne Bancorp, Inc. (NASDAQ:CNOB) and The First of Long Island Corporation (NASDAQ:FLIC) announced today a definitive agreement for First of Long Island to merge into ConnectOne. The merged entity will operate under the ConnectOne brand and is expected to hold $14 billion in assets, $11 billion in deposits, and $11 billion in loans.
First of Long Island shareholders are set to receive 0.5175 shares of ConnectOne common stock for each share they own. The deal is valued at approximately $284 million, or around $12.40 per share of First of Long Island, based on ConnectOne's closing stock price as of September 4, 2024.
First of Long Island, headquartered in Melville, NY, currently operates 40 branches within the New York Metropolitan area, predominantly in Nassau and Suffolk Counties. As of June 30, 2024, it reported $4.2 billion in assets, $3.3 billion in loans, and $3.4 billion in deposits.
Frank Sorrentino III, Chairman and CEO of ConnectOne, expressed enthusiasm for the merger, highlighting the shared values and strong financial performance of both banks. He anticipates the merger will enhance ConnectOne's presence in New York City and accelerate growth on Long Island, establishing the bank as a top-five institution in the region by deposit market share.
Chris Becker, CEO of The First National Bank of Long Island, also supported the move, anticipating benefits from the combined strengths and resources.
The transaction is expected to be accretive to ConnectOne's earnings per share in 2025, with estimated cost savings fully phased in. The merger is projected to result in a tangible book value per share dilution of 12%, with an earnback period of about 2.9 years. ConnectOne also plans to raise $100 million in subordinated debt to support the transaction.
Upon closing, Chris Becker will assume the role of Vice Chairman of ConnectOne, and two independent members from First of Long Island's board will join ConnectOne's Board of Directors.
The merger is subject to approval by shareholders of both banks, regulatory approvals, and other customary closing conditions, with an anticipated completion in mid-2025.
This news is based on a press release statement.
In other recent news, ConnectOne Bancorp has demonstrated a robust performance in its second-quarter earnings, surpassing both Piper Sandler's estimate and the consensus. The earnings per share (EPS) of $0.46 exceeded expectations due to factors such as a reduction in loan loss provisions and stronger net interest income and fees. Following these results, Piper Sandler raised its price target for ConnectOne Bancorp shares to $25, maintaining an Overweight rating on the stock.
The company has also reported significant growth in deposits and strong origination levels, with an increase in net interest margin anticipated to continue. Non-interest income saw improvements, significantly contributed by the SBA lending platform. In addition, ConnectOne Bancorp declared a quarterly cash dividend of $0.18 per share, reflecting a solid capital position and commitment to shareholder returns.
ConnectOne Bancorp is investing in new markets, including Long Island, as part of its future growth strategy. The company is focusing on driving noninterest income and expanding commercial and industrial initiatives while reducing commercial real estate concentration. These recent developments reflect the company's strong performance and the favorable conditions anticipated to support its financial growth in the coming months.
InvestingPro Insights
As ConnectOne Bancorp, Inc. (NASDAQ:CNOB) prepares to merge with The First of Long Island Corporation, investors are closely monitoring the financial metrics that could impact the future performance of the combined entity. According to InvestingPro data, ConnectOne has a market capitalization of approximately $917.07 million and a price-to-earnings (P/E) ratio of 12.9, suggesting the market currently values the company's earnings relatively moderately compared to some industry peers.
InvestingPro Tips reveal that ConnectOne has a history of rewarding shareholders, having raised its dividend for 5 consecutive years, and maintained dividend payments for an impressive 51 years. This track record indicates a strong commitment to returning value to shareholders, a factor that could reassure investors of the bank's stability post-merger. With analysts revising their earnings upwards for the upcoming period, there is optimism surrounding the bank's financial prospects. It's worth noting, however, that net income is expected to drop this year, which investors should consider when evaluating the company's short-term performance.
Despite some concerns over weak gross profit margins, the bank has shown strong returns over the last month and three months, with price total returns of 13.43% and 34.14% respectively. These figures suggest that the market has responded positively to recent developments and may have confidence in the bank's strategic direction. ConnectOne's dividend yield stands at 3.0%, which, combined with the positive return on assets of 0.79%, paints a picture of a potentially attractive investment for income-focused investors.
For those seeking a deeper analysis of ConnectOne's financial health and future prospects, InvestingPro offers a wealth of additional tips, with 9 tips currently available to guide investment decisions. To explore these insights further, visit https://www.investing.com/pro/CNOB.
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