CNOB

ConnectOne Bancorp($CNOB) Directors Buy $231K During Merger Losses..."Confident in Long-term Outlook"

08/05/2025 18:16

Two directors of ConnectOne Bancorp ($CNOB) simultaneously purchased shares in early August during a stock price decline, drawing attention from investors as a signal that goes beyond typical insider trading. This appears to reflect management's strong confidence in the future of this regional bank that recently completed a major merger. Headquartered in Englewood Cliffs, New Jersey, ConnectOne Bancorp is a regional bank holding company established in 1982, primarily serving small and mid-sized businesses and individual customers with comprehensive financial services. The company completed its merger with The First of Long Island Corporation in June, growing into a mid-sized regional bank with approximately $14 billion in total assets. This merger, the largest in company history, significantly strengthened its market position in the New York Metro area. On August 1st, Director Susan O'donnell purchased approximately $60,000 worth of shares at $22.30 per share, while Director Stephen Boswell bought approximately $171,000 worth of shares at $22.24 per share on the same day. Notably, Boswell's purchase was made indirectly through an irrevocable trust for the benefit of his spouse and descendants, suggesting a long-term investment perspective. The timing of their purchases was highly strategic. $CNOB had surged over 50% from the $17 range in July 2024 to near $26, before correcting to the $22 range due to merger-related costs and market volatility. The insiders captured this correction as a buying opportunity. Indeed, ConnectOne's Q2 results showed a temporary net loss of $21.8 million due to merger costs and increased loan loss provisions. However, this was within expected ranges for one-time expenses, and management expects quarterly earnings accretion of approximately $9.8 million from merger synergies. Net interest margin is projected to improve to 3.25% by year-end, with ROA expected to reach 1.2% by early 2026. Merger benefits are already appearing in some metrics. The loan-to-deposit ratio improved from 106% to 99%, and noninterest-bearing demand deposits increased to 21% of total deposits. Core deposit balances grew at a 17% annualized rate, securing a stable funding base. Regional banking sector experts view this insider buying positively. Despite net interest margin pressures and commercial real estate lending concerns facing regional banks, management's investment in company shares demonstrates strong confidence in intrinsic value. While ConnectOne's commercial real estate concentration ratio is elevated at 438%, the company plans to reduce it below 400% by year-end. Currently, $CNOB trades at a P/E ratio of 27.7x and P/B ratio of 0.82x, with a dividend yield of 3.17%. Analysts maintain an average 'buy' rating with a $30 price target, suggesting approximately 32% upside potential from current levels. While merger integration costs are expected to continue short-term, economies of scale and synergy effects should materialize over the medium to long term. Expanded market share in the New York Metro area and increased cross-selling opportunities will serve as future growth drivers. What investors should note is not just that insiders viewed the stock decline as a buying opportunity, but that they demonstrated unwavering confidence in the company's long-term prospects even during challenging times immediately following merger completion. This should be interpreted as an important signal reflecting management's confidence in future performance improvements.