CNOB

ConnectOne has transformed itself through what the numbers unmistakably flag as a large acquisition: total assets jumped 41.7% to $14.0B, liabilities rose 43.9%, equity climbed 26.7% to $1.57B, and shares outstanding swelled 31% to 50.3M in a single year. The 10-K's clean PCAOB opinion (effective internal controls as of 12/31/2025) and the expanded 59-office footprint across New Jersey, NYC, Long Island and Florida are consistent with a closed, integrated deal rather than a troubled one. But the deal has not yet paid for itself: net income grew only 9.0% to $80.4M while the 31% larger share count drove diluted EPS DOWN 7.4% to $1.63. That is textbook acquisition dilution.

The quality problem is return on capital. ROE of 5.1% is poor for a commercial bank — well below a reasonable cost of equity — and net income, at $80.4M, is still far below the $130M and $125M the bank earned in FY2021–2022. Earnings have effectively round-tripped lower over five years even as the balance sheet doubled. On those depressed earnings, a 20.3x P/E is expensive; banks earning sub-6% ROE typically trade at a discount to book, not 20x earnings. The one thing keeping this from a sell is book value: equity of $1.57B against 50.3M shares is ~$31.2 per share, so the stock trades at roughly 1.06x book — undemanding, and a floor if integration synergies lift the return profile (note goodwill from the deal means tangible book, and thus P/TBV, is higher).