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Jun 30, 2020
ConnectOne Bancorp Q2 2020 Earnings Report
Reported net income increase due to rise in net interest income, noninterest income, and decrease in noninterest expenses and provision for loan losses.
Key Takeaways
ConnectOne Bancorp reported a strong second quarter with net income of $14.8 million and earnings per share of $0.37. The company's performance was driven by increases in net interest income and noninterest income, as well as decreases in noninterest expenses and provision for loan losses. The company also saw an increase in tangible book value per share.
Net income for the second quarter of 2020 was $14.8 million, compared to $6.0 million in the first quarter of 2020.
Diluted earnings per share were $0.37 in the second quarter of 2020, compared to $0.15 in the first quarter of 2020.
Fully taxable equivalent net interest income for the second quarter of 2020 was $61.3 million, an increase of $5.5 million from the first quarter of 2020.
Over $470 million of PPP loans were funded.
Nonperforming assets (including taxi medallion loans) as a percentage of total assets were 0.85% at June 30, 2020.
ConnectOne Bancorp
ConnectOne Bancorp
Forward Guidance
While the nation and the banking industry face considerable uncertainty about the length of the pandemic, ConnectOne has reason to be optimistic due to their low loss history in commercial real estate lending, low exposure to hot button industries, and focus on lending in low-risk industries.
Positive Outlook
- ConnectOne has always been a commercial real estate lender with low loss history.
- ConnectOne has low exposure to hot button industries.
- ConnectOne's C&I portfolio has focused on lending in low-risk industries.
- ConnectOne's capital levels are solid.
- ConnectOne's portfolio is underwritten with low LTVs and reasonable cap rates.
Challenges Ahead
- The nation and the banking industry face considerable uncertainty about the length of the pandemic.
- There remains potential for increased levels of impaired loans across all segments of the portfolio as the pandemic crisis persists.
- The aggregate payment deferrals are expected to decrease by more than 50% to less than $450 million, as we will commence billing on more than $500 million of loans deferred during the second quarter of 2020.
- The Company has postponed the adoption of the current expected credit losses (“CECL”) accounting standards as permitted under regulatory guidance.
- We expect the level of PPP loans to decline significantly over the course of 2020 and into the first quarter of 2021 as the loans are forgiven and paid down by the SBA through the guarantee provisions the CARES Act.