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ConnectOne Bancorp to Acquire The First of Long Island for $284M
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ConnectOne Bancorp, Inc. (CNOB - Free Report) has agreed to acquire The First of Long Island Corp. (FLIC - Free Report) . The all-stock transaction is valued at $284 million.
Details of the Acquisition Pursued by ConnectOne Bancorp
The First of Long Island, based in Melville, NY, operates 40 branches in the New York Metropolitan area, with roughly 92% of its deposits belonging to Nassau or Suffolk Counties. As of June 30, 2024, FLIC had approximately $4.2 billion in assets, $3.3 billion in loans and $3.4 billion in deposits.
Upon the closure of the transaction, FLIC will be merged with ConnectOne Bancorp, with an anticipated post-tax merger charge of $38 million.
The combined entity will operate under ConnectOne and is anticipated to have roughly $14 billion in total assets, $11 billion in total deposits and total loans. Per the agreement, CNOB will pay 0.5175 shares of its stock for each share of The First of Long Island common stock.
Further, as part of the deal, ConnectOne Bancorp intends to raise roughly $100 million of tier 2 qualifying subordinated debt before the closure of the deal. These proceeds will be injected into ConnectOne Bancorp’s subsidiary, ConnectOne Bank, as equity capital.
Also, upon the closure of the deal, Chris Becker, CEO of The First of Long Island, will transition into the role of vice chairman of ConnectOne, and two independent members of FLIC will join the board of CNOB. The deal has been unanimously approved by the board of directors of both entities and is expected to close by mid-2025, subject to customary closing conditions.
CNOB’s Rationale Behind the Acquisition
CNOB will likely benefit from expected cost-savings of 35% of FLIC’s non-interest expense, 50% of which will be phased in 2025, and the rest will be realized thereafter.
The deal is anticipated to be 36% accretive to 2025 earnings per share, assuming the execution of cost-savings. Also, tangible book value is expected to dilute by 12% with a projected earn-back period of approximately 2.9 years.
Further, CNOB projects roughly 14% average tangible common equity and 1% return on average assets, alongside an efficiency ratio of 45% in 2025, adjusting for the phased-in cost savings.
This transaction is likely to improve the deposit mix through low-cost deposits with more than 30% non-interest-bearing deposits. Also, it will enhance the bank’s funding profile, alongside boosting liquidity. This will keep the company well-positioned for margin expansion in a falling-rate environment.
Moreover, the deal meaningfully accelerates ConnectOne Bancorp’s Long Island expansion strategy and reduces the loan-to-deposit ratio and commercial real estate concentration, leading to a balanced loan portfolio.
Frank Sorrentino III, chairman and CEO of ConnectOne Bank, stated, “Strategically, this is a compelling transaction which enhances our franchise value, solidifies ConnectOne’s presence in the New York City market and accelerates our Long Island growth strategy. Additionally, adding over $3 billion in deposits, the combination will establish ConnectOne as one of the top 5 banks on Long Island, in terms of deposit market share.”
This move aligns with the company’s inorganic growth strategy. Since January 2019, the company has acquired GHB, BoeFly, and BNJ to enhance its accessibility to superior workforce and talent acquisition or to realize cost or revenue synergies.
Zacks Rank & Price Performance
Year to date, shares of ConnectOne Bancorp have risen 6.7% against the industry’s decline of 1.9%.
Last week, The Bank of New York Mellon Corporation (BK - Free Report) agreed to acquire Archer Holdco, LLC, a leading technology-enabled service provider of managed account solutions to the asset and wealth management industry.
With this acquisition, BK should be able to enhance its enterprise platform to support retail managed accounts. Along with augmenting the company’s existing asset servicing capabilities for managed accounts, Archer will provide BNY Investments and BNY Pershing’s Wove wealth platform for advisors with the expanded distribution of model portfolios and access to its multi-custodial network.
Similarly, last month, VersaBank (VBNK - Free Report) completed the acquisition of Stearns Bank Holdingford N.A., a $62 million asset-sized bank, from Stearns Financial Services, Inc.
This completion of the acquisition marks the official launch of VBNK's Receivable Purchase Program (RPP) in the United States, a program that has seen notable growth in Canada. The RPP will provide point-of-sale finance companies with a secure and efficient funding solution to serve the large, underserved portion of the multi-trillion-dollar U.S. market.
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ConnectOne Bancorp to Acquire The First of Long Island for $284M
ConnectOne Bancorp, Inc. (CNOB - Free Report) has agreed to acquire The First of Long Island Corp. (FLIC - Free Report) . The all-stock transaction is valued at $284 million.
Details of the Acquisition Pursued by ConnectOne Bancorp
The First of Long Island, based in Melville, NY, operates 40 branches in the New York Metropolitan area, with roughly 92% of its deposits belonging to Nassau or Suffolk Counties. As of June 30, 2024, FLIC had approximately $4.2 billion in assets, $3.3 billion in loans and $3.4 billion in deposits.
Upon the closure of the transaction, FLIC will be merged with ConnectOne Bancorp, with an anticipated post-tax merger charge of $38 million.
The combined entity will operate under ConnectOne and is anticipated to have roughly $14 billion in total assets, $11 billion in total deposits and total loans. Per the agreement, CNOB will pay 0.5175 shares of its stock for each share of The First of Long Island common stock.
Further, as part of the deal, ConnectOne Bancorp intends to raise roughly $100 million of tier 2 qualifying subordinated debt before the closure of the deal. These proceeds will be injected into ConnectOne Bancorp’s subsidiary, ConnectOne Bank, as equity capital.
Also, upon the closure of the deal, Chris Becker, CEO of The First of Long Island, will transition into the role of vice chairman of ConnectOne, and two independent members of FLIC will join the board of CNOB. The deal has been unanimously approved by the board of directors of both entities and is expected to close by mid-2025, subject to customary closing conditions.
CNOB’s Rationale Behind the Acquisition
CNOB will likely benefit from expected cost-savings of 35% of FLIC’s non-interest expense, 50% of which will be phased in 2025, and the rest will be realized thereafter.
The deal is anticipated to be 36% accretive to 2025 earnings per share, assuming the execution of cost-savings. Also, tangible book value is expected to dilute by 12% with a projected earn-back period of approximately 2.9 years.
Further, CNOB projects roughly 14% average tangible common equity and 1% return on average assets, alongside an efficiency ratio of 45% in 2025, adjusting for the phased-in cost savings.
This transaction is likely to improve the deposit mix through low-cost deposits with more than 30% non-interest-bearing deposits. Also, it will enhance the bank’s funding profile, alongside boosting liquidity. This will keep the company well-positioned for margin expansion in a falling-rate environment.
Moreover, the deal meaningfully accelerates ConnectOne Bancorp’s Long Island expansion strategy and reduces the loan-to-deposit ratio and commercial real estate concentration, leading to a balanced loan portfolio.
Frank Sorrentino III, chairman and CEO of ConnectOne Bank, stated, “Strategically, this is a compelling transaction which enhances our franchise value, solidifies ConnectOne’s presence in the New York City market and accelerates our Long Island growth strategy. Additionally, adding over $3 billion in deposits, the combination will establish ConnectOne as one of the top 5 banks on Long Island, in terms of deposit market share.”
This move aligns with the company’s inorganic growth strategy. Since January 2019, the company has acquired GHB, BoeFly, and BNJ to enhance its accessibility to superior workforce and talent acquisition or to realize cost or revenue synergies.
Zacks Rank & Price Performance
Year to date, shares of ConnectOne Bancorp have risen 6.7% against the industry’s decline of 1.9%.
Image Source: Zacks Investment Research
Currently, CNOB carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Similar Steps by Other Banks
Last week, The Bank of New York Mellon Corporation (BK - Free Report) agreed to acquire Archer Holdco, LLC, a leading technology-enabled service provider of managed account solutions to the asset and wealth management industry.
With this acquisition, BK should be able to enhance its enterprise platform to support retail managed accounts. Along with augmenting the company’s existing asset servicing capabilities for managed accounts, Archer will provide BNY Investments and BNY Pershing’s Wove wealth platform for advisors with the expanded distribution of model portfolios and access to its multi-custodial network.
Similarly, last month, VersaBank (VBNK - Free Report) completed the acquisition of Stearns Bank Holdingford N.A., a $62 million asset-sized bank, from Stearns Financial Services, Inc.
This completion of the acquisition marks the official launch of VBNK's Receivable Purchase Program (RPP) in the United States, a program that has seen notable growth in Canada. The RPP will provide point-of-sale finance companies with a secure and efficient funding solution to serve the large, underserved portion of the multi-trillion-dollar U.S. market.