ConnectOne Bancorp, Inc. (CNOB): what the price requires

At today's price, ConnectOne Bancorp, Inc. (CNOB) is priced for 10.8% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/CNOB

Headline

FieldValue
TickerCNOB
CompanyConnectOne Bancorp, Inc.
Current price$32.40/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Return on equity needed10.8%
Return on equity now5.1%
ROE gap+5.7pp
Price-to-book1.10x

Solve inputs: computed at a 10.2% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.1pp.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.94σ
cohort percentile (of 119 peers)18
sustained it ~10 years at this level74%
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.54x3expensive
Earnings1.73x1expensive
Relative1.16x1expensive
Growth1.01x1expensive

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.6%); the inversion above states its own rate.

Per-Model Detail (n=6)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$12.872.52xyesTBVPS $27.22 × 0.47x (ROE (TTM) 6.2% / CoE 9.3%, g=4.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.32% allowance/loans → ×0.95)
Relative ValuationRelative$27.961.16xyesP/E 12x (blended: static sector reference 10x + trailing (TTM) 17x), scenarios: 9.6x / 12.0x / 14.4x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$21.031.54xyesBV/sh $31.59, ROE (TTM) 6.2%, ke 9.3%
Two-Stage Excess ReturnAsset$16.781.93xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$32.041.01xyesRev $0.4B, growth 30% (input: historical growth; tapered), Terminal P/S: 3.3x / 4.1x / 4.9x (bear / base = today's held flat / bull, cap 12x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$35.070.92xyes√(22.5 × EPS $1.73 × BVPS $31.59) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$1.4522.34xyesEPS $1.73 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative——no—
Earnings YieldEarnings$18.701.73xyesEPS $1.73 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (dilution)6.1%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

At $32.49 ConnectOne trades around 1.2x tangible book of about $27 per share while earning a trailing return on equity near 6%, a depressed figure that reflects the cost of digesting the First of Long Island merger rather than the run-rate the bank is building toward.

The bank-specific valuation reads cluster well below the price: the price-to-tangible-book model lands near $13 on the trailing return, while the relative-multiple read lands near $28. The gap between those numbers and the tape is the bet that post-merger profitability normalizes.

The story this year is scale and margin: the June 2025 acquisition pushed assets from under $10 billion toward $15 billion, net interest margin widened 12 basis points to 3.39% in the first quarter of 2026, and the dividend was raised 8.3%. The offsetting risk is a loan book concentrated in commercial real estate.

Bull Case

Look first at how far the price sits above the methods, because the spread is the whole argument. The bank-appropriate price-to-tangible-book model, working off tangible book near $27 per share and a trailing return on equity of about 6.2% against a cost of equity near 9.3%, lands at roughly $13. The relative-multiple read at a blended P/E near 12x lands near $28, and the simple excess-return read near $21. At $32.49 (June 27, 2026) the stock trades above all of them. That looks expensive until you see why the trailing return is depressed: ConnectOne closed the First of Long Island acquisition in June 2025, a roughly $271 million deal that added 36 branches and scaled the balance sheet from under $10 billion to nearly $15 billion in assets, and the trailing-twelve-month return on equity still carries the merger drag. The bull case is that the methods are anchored to a trough return that is already turning.

The turn is visible in the most recent quarter. First-quarter 2026 diluted EPS was $0.72, operating EPS $0.79, and net interest margin widened 12 basis points to 3.39%. Fully taxable-equivalent net interest income for 2025 rose 42.5% to $357.3 million (FY2025 10-K, accession 0001437749-26-005320), the mechanical result of folding in the acquired balance sheet, and loans and deposits grew at roughly a 10% annualized pace in the quarter. The funding base is the engine: the bank relies on deposits as its primary funding source, with many client relationships beginning as referrals from existing clients that it then cross-sells to grow the relationship (FY2025 10-K, accession 0001437749-26-005320). Low-cost deposit growth funding above-industry loan growth is exactly the flywheel that lifts net interest margin and, with it, return on equity.

The geographic expansion gives the deposit franchise more room. Management has broadened the footprint across the New York City metro region and extended into South Florida, two markets with deep deposit pools. Peers running the same community-bank playbook show what a normalized margin looks like: Glacier Bancorp reported a 2025 net interest margin of 3.32%, up 55 basis points year over year as it repriced its book (GBCI FY2025 10-K, accession 0000868671-26-000023). ConnectOne is already at 3.39% and rising. If the merged bank earns its way back toward a high-single-digit or low-double-digit return on equity, the price-to-tangible-book model re-rates with it, the dividend (just raised 8.3%) keeps growing, and the gap between the trough-based valuation methods and the current price closes from the earnings side rather than the price side.

Bear Case

The competitive pressure that matters most to a bank this size is on the funding side, and it is structural. ConnectOne competes for the same deposits as money-center banks with national brands, online banks paying high rates with no branch costs, and a swarm of fintech cash-management products that have trained depositors to chase yield. The bank itself concedes the dependence: deposits are the primary funding source for its assets, and the relationships are built one referral and one cross-sell at a time (FY2025 10-K, accession 0001437749-26-005320). That is a slow, relationship-driven moat, and it is precisely the kind of advantage that erodes when a rate-sensitive depositor can move money to a higher-paying competitor with a few taps. If deposit costs rise faster than asset yields, the 3.39% margin that anchors the bull case compresses, and a sub-scale regional has less pricing power to defend it than a JPMorgan or a Bank of America.

The second problem is concentration. ConnectOne states plainly that it has a significant concentration in commercial real estate, that its loan portfolio is made up largely of commercial real estate loans, and that these loans carry a higher degree of credit risk than residential mortgages (FY2025 10-K, accession 0001437749-26-005320). It adds that any weakening of the commercial real estate market raises the likelihood of default and could hit asset quality and force collateral liquidation (accession 0001437749-26-005320). New York City metro CRE is exactly the exposure the market has worried about since office values reset, and a regional bank with the bulk of its book there is levered to that one question. The benign credit environment that flatters earnings today is not guaranteed.

Third, the merger that drives the growth story is also an integration and credit risk. The First of Long Island deal added $11.9 million of goodwill whose support depends on the acquired loans performing as projected, and the bank flags that results could suffer if Long Island and New York City conditions deviate from management's original projections (FY2025 10-K, accession 0001437749-26-005320). Acquired loan marks, deal synergies, and credit normalization all have to land for the trough return on equity to climb the way the bull case needs. Meanwhile, share count has grown about 6% over the period from the stock issued in the deal, so per-share progress requires the combined bank to earn more than the sum of the parts. At 1.2x tangible book the price already pays for that to work; the bank-based valuation methods, anchored near $13 to $28, say there is little cushion if it does not.

Valuation

Banks are valued on tangible book and the return earned on it, not on a corporate DCF, and the methods sort that way. The simple excess-return read lands near $21, and the relative-valuation read, blending a sector P/E near 10x with the trailing multiple, lands near $28. The blended bank-relevant reads center around $21, below the $32.49 price. The disagreement is entirely about whether to value the bank on its trough trailing return or its normalizing forward return.

The key qualifier is that the trailing return on equity is artificially low because it spans the First of Long Island integration. A bank earning 6% on equity deserves to trade below tangible book; a bank earning 10% deserves a premium. The market, at 1.2x tangible book, is pricing the latter, betting that the merged franchise earns its way to a higher return as the deal seasons, net interest margin holds above 3.3%, and merger costs roll off. A financials-basis band on the inversion spans roughly $9 at the bear end, $23 at the base, and $32 at the bull end, which puts the current price right at the optimistic edge. So the valuation is coherent only if profitability normalizes; the methods anchored to today's reported return say the stock is ahead of itself, and the resolution comes down to whether the return on equity climbs from here.

Catalysts

First-quarter 2026 was the recent reference point: net income available to common of $36.3 million, diluted EPS of $0.72, operating EPS of $0.79, and net interest margin up 12 basis points to 3.39%. Management framed it as a strong-momentum start, citing loan growth, margin expansion, improving return metrics, and continued progress integrating the First of Long Island acquisition. Loans and deposits grew at roughly a 10% annualized pace, and the quarterly common dividend was raised 8.3% to $0.195. (Sources: ConnectOne Q1 2026 results via StockTitan; Q1 2026 earnings call transcript via Insider Monkey; Ticker Report earnings highlights.)

The defining event behind the numbers is the June 2025 acquisition of The First of Long Island Corporation, valued at about $270.8 million, which added 36 branches and scaled the balance sheet from under $10 billion toward $15 billion in assets while extending the footprint across the New York City metro region and into South Florida. The forward catalysts are integration milestones and cost synergies, since the merger drag on return on equity should fade as those land. (Sources: ConnectOne Q1 2026 earnings coverage; First of Long Island merger filings via SEC.)

The items to watch over the next two quarters are whether net interest margin keeps expanding as the acquired book reprices, whether commercial real estate credit stays benign in the New York metro market, and whether deposit costs hold as the bank funds above-industry loan growth. Each is a direct input into the return-on-equity normalization the valuation depends on. (Source: ConnectOne first-quarter 2026 commentary via StockTitan.)

Peer Cohorts (Per Segment, With Filing Citations)

Banking operations (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive CNOB report on boothcheck