425: ConnectOne Bancorp to Acquire The First of Long Island Corporation in $284 Million Deal

ConnectOne Bancorp will acquire The First of Long Island Corporation in an all-stock transaction valued at approximately $284 million, creating a premier New York-metro community bank.

Summary

• ConnectOne Bancorp (CNOB) and The First of Long Island Corporation (FLIC) have entered into a definitive merger agreement.
• FLIC will merge into ConnectOne, with the combined entity operating under the ConnectOne brand.
• The transaction is valued at approximately $284 million.
• FLIC shareholders will receive 0.5175 shares of ConnectOne common stock for each FLIC share.
• The combined company will have approximately $14 billion in total assets, $11 billion in total deposits, and $11 billion in total loans.
• The merger is expected to close in mid-2025, pending shareholder and regulatory approvals.
• ConnectOne plans to raise approximately $100 million in subordinated debt prior to closing.
• The merger is projected to be 36% accretive to ConnectOne's earnings per share in 2025, adjusted for cost savings.
• Tangible book value per share dilution is projected at 12%, with an earnback period of approximately 2.9 years.
• ConnectOne projects a return on average tangible common equity of approximately 14% and an efficiency ratio of approximately 45% in 2025, adjusted for cost savings.

Sentiment

Score: 8

Explanation: The document presents a positive outlook on the merger, highlighting its strategic benefits, financial accretion, and growth potential. While acknowledging some dilution, the overall tone is optimistic and confident.

Positives

• The merger creates a larger, more competitive bank in the New York metro area.
• The transaction is expected to be accretive to ConnectOne's earnings and offers positive pro forma benefits.
• The combined company will have a strong capital and liquidity position.
• The merger enhances ConnectOne's presence on Long Island.
• The transaction allows ConnectOne to leap over the $10 billion asset threshold.
• The merger brings together two companies with compatible client-first cultures.
• The merger is expected to deliver a return on average tangible common equity of approximately 14% and an efficiency ratio of approximately 45% in 2025.

Negatives

• Tangible book value per share dilution is projected at 12%.

Risks

• The merger is subject to shareholder and regulatory approvals, and other customary closing conditions.
• There are risks associated with integrating First of Long Island's business and realizing cost savings.
• Changes in economic conditions, interest rates, and capital markets could impact the combined company's performance.
• The reaction of the companies' clients, employees, and counterparties to the transaction is uncertain.

Future Outlook

The combined company aims to create a premier middle-market bank focused on serving the greater New York metro area, with enhanced scale and a strong capital position. The merger is expected to be accretive to earnings and deliver a high return on equity.

Management Comments

• Frank Sorrentino III, Chairman and Chief Executive Officer of ConnectOne Bank, stated that the transaction is a natural fit and enhances franchise value.
• Chris Becker, CEO of The First National Bank of Long Island, believes the partnership will position the combined company for greater success.

Industry Context

The merger reflects a trend of consolidation in the banking industry, as institutions seek to gain scale, improve efficiency, and expand their market presence. The deal positions ConnectOne to better compete with larger regional and national banks in the New York metro area.

Comparison to Industry Standards

• The combined company's projected return on average tangible common equity of approximately 14% in 2025 would place it among the top-performing banks in the industry.
• An efficiency ratio of approximately 45% in 2025 would also be considered highly competitive.
• The tangible book value earnback period of approximately 2.9 years is within an acceptable range for bank mergers.
• Comparable companies include other regional banks in the Northeast, such as New York Community Bancorp (NYCB) and Valley National Bancorp (VLY), which have also pursued growth through acquisitions.

Management Changes

Stakeholder Impact

• Shareholders of First of Long Island will receive ConnectOne stock.
• Customers of both banks will have access to a wider range of services and enhanced capabilities.
• Employees of both banks will be integrated into the combined organization, with potential for some job losses.
• The merger could impact the competitive landscape for other banks in the New York metro area.

Next Steps

• Obtain shareholder approvals from both First of Long Island and ConnectOne.
• Secure regulatory approvals.
• Raise approximately $100 million in subordinated debt.
• Complete the integration of First of Long Island's business into ConnectOne.

Key Dates