DEFM14A: ConnectOne Bancorp to Acquire The First of Long Island Corporation in All-Stock Merger

ConnectOne Bancorp and The First of Long Island Corporation have agreed to a merger where FLIC will merge into ConnectOne, pending shareholder and regulatory approvals.

Summary

• ConnectOne Bancorp and The First of Long Island Corporation (FLIC) have entered into a merger agreement.
• FLIC will merge with and into ConnectOne, with ConnectOne as the surviving entity.
• The First National Bank of Long Island, a FLIC subsidiary, will merge into ConnectOne Bank, a ConnectOne subsidiary.
• FLIC shareholders will receive 0.5175 shares of ConnectOne common stock for each FLIC share they own.
• ConnectOne expects to issue up to 11,880,597 shares of ConnectOne common stock to FLIC shareholders.
• Former FLIC shareholders are estimated to own approximately 24% of ConnectOne after the merger, with existing ConnectOne shareholders owning 76%.
• Special meetings for ConnectOne and FLIC shareholders to vote on the merger are scheduled for February 14, 2025.
• Both boards of directors unanimously recommend shareholders vote in favor of the proposals.
• The merger is expected to qualify as a reorganization for federal income tax purposes, meaning FLIC shareholders generally won't recognize a gain or loss.
• ConnectOne anticipates raising additional capital, potentially $100 million via subordinated debt, to support the combined entity's capital ratios.
• The deal is expected to close in the first or second calendar quarter of 2025, pending regulatory and shareholder approvals.

Sentiment

Score: 7

Explanation: The document is generally positive, outlining the benefits of the merger and the recommendations of both boards of directors. However, it also acknowledges potential risks and uncertainties, preventing a higher score.

Positives

• The merger is expected to be a tax-free reorganization for FLIC shareholders.
• The combined company is expected to be a larger, more competitive institution.
• FLIC shareholders will have the opportunity to participate in the future performance of ConnectOne.
• The merger will expand ConnectOne's presence in the Long Island market.
• The combined company will have a strong capital base.

Negatives

• FLIC shareholders will have a smaller ownership percentage in the combined company.
• The value of the merger consideration is subject to fluctuation in ConnectOne's stock price.
• There are integration risks associated with combining the two companies.
• The merger could be delayed or not completed.

Risks

• The market price of ConnectOne common stock could decline before the merger is completed.
• The combined company may not achieve the expected cost savings and revenue enhancements.
• Regulatory approvals may be delayed or impose burdensome conditions.
• Key employees may not be retained after the merger.
• Shareholder litigation could delay or prevent the completion of the merger.

Future Outlook

The merger is expected to be completed in the first or second calendar quarter of 2025, pending regulatory and shareholder approvals. ConnectOne anticipates raising additional capital to support the combined entity's capital ratios.

Management Comments

• The boards of directors of FLIC and ConnectOne are proposing to merge FLIC into ConnectOne because they believe that combining the strengths of these two financial institutions is in the best interests of both companies, their respective shareholders and their respective customers.

Industry Context

The merger reflects a trend of consolidation in the banking industry, particularly among community banks seeking to gain scale and compete more effectively in crowded markets.

Comparison to Industry Standards

• The document includes a selected companies analysis comparing ConnectOne and FLIC to other banks in the New York City MSA, New Jersey, and Connecticut.
• The document includes a selected transactions analysis of recent bank and thrift mergers with deal values between $150 million and $1 billion.
• The document includes a relative contribution analysis of ConnectOne and FLIC to various pro forma balance sheet and income statement items.

Management Changes

Stakeholder Impact

• FLIC shareholders will receive ConnectOne shares and become ConnectOne shareholders.
• ConnectOne shareholders will see their ownership diluted but will be part of a larger entity.
• Customers of both banks will have access to a broader range of services and a larger branch network.
• Employees of both banks may experience changes in their roles and responsibilities.

Next Steps

• ConnectOne and FLIC shareholders will vote on the merger agreement.
• Regulatory approvals from the Federal Reserve Board, FDIC, and New Jersey Department of Banking and Insurance must be obtained.
• The merger will be completed upon satisfaction of all closing conditions.

Key Dates

Keywords

merger, acquisition, ConnectOne Bancorp, The First of Long Island Corporation, FLIC, CNOB, bank, financial institution, shareholders, regulatory approvals