ConnectOne Bancorp Inc (NASDAQ:CNOB) reported its fourth-quarter and full-year 2025 financial results, delivering core earnings that surpassed analyst expectations. The market reaction in pre-market trading was decisively positive, with shares rising over 7%, indicating investor approval of the report's key metrics and forward-looking commentary.
Earnings and Revenue Versus Estimates
The bank's performance for the quarter ended December 31, 2025, exceeded consensus forecasts on both the top and bottom lines. The results highlight strong underlying profitability, particularly when viewed through the lens of operating earnings, which management emphasizes.
- Earnings Per Share (EPS): ConnectOne reported operating diluted EPS of $0.83 for Q4 2025. This comfortably beat the analyst estimate of $0.74.
- Revenue: Total revenue, reflected as net interest income plus noninterest income, reached approximately $112.6 million for the quarter. This also came in above the estimated $112.2 million.
The outperformance was driven by a significant expansion in the bank's net interest margin—a core measure of lending profitability—which widened by 16 basis points sequentially to 3.27%. Chairman and CEO Frank Sorrentino attributed this to a reduction in funding costs and stable loan yields, a trend he expects to continue into 2026.
Market Reaction and Sentiment
The strong pre-market gain of more than 7% suggests the report was received as a positive surprise. Investors appear to be focusing on several encouraging signals:
- Margin Expansion Trajectory: Management's explicit guidance that the net interest margin is expected to continue its upward trend in 2026 provides a clear positive catalyst.
- Solid Credit Quality: The bank reported stable asset quality, with a low nonperforming asset ratio of 0.33% and net charge-offs at 0.17%, alleviating concerns about credit deterioration in a changing economic environment.
- Operating Momentum: Key profitability metrics showed improvement, with the operating return on average tangible common equity rising to 14.27% from 12.55% in the prior quarter.
Key Highlights from the Quarterly Report
Beyond the earnings beat, ConnectOne's report outlined a company in a strong operational position following its merger with The First of Long Island Corporation (FLIC).
- Core Earnings Strength: Net income available to common stockholders was $38.0 million for Q4 ($0.75 per diluted share on a GAAP basis). On an operating basis, which excludes merger-related and other one-time items, earnings were $42.0 million.
- Balance Sheet Growth: Total assets grew to $14.0 billion, primarily due to the FLIC merger. Loans and deposits both saw sequential growth.
- Efficiency Initiatives: The company announced a branch rationalization plan resulting in five closures, expected to be completed in Q1 2026, aimed at improving operational efficiency.
- Dividend Declared: The Board declared a quarterly cash dividend of $0.18 per common share, payable in March 2026.
Looking Ahead
While the press release did not provide specific quantitative financial guidance for 2026 beyond the margin commentary, analyst estimates provide a benchmark. For the full year 2026, the current consensus sales estimate stands at approximately $480.6 million. For the upcoming first quarter of 2026, analysts are estimating sales of about $114.2 million and EPS of $0.76.
Management expressed confidence, with CEO Frank Sorrentino stating, "2025 was a very strong year for ConnectOne and we enter 2026 with solid operating momentum." The focus for the coming year will be on leveraging its scalable platform and relationship-driven strategy to drive growth.
For a detailed breakdown of future quarterly and annual analyst estimates for ConnectOne Bancorp, you can review the earnings and estimates data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, an endorsement, or a recommendation to buy, sell, or hold any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
