With its pending $284 million acquisition of The First of Long Island preparing to make ConnectOne Bank a more prominent regional banking player in the field, the CEO of the New Jersey-based buyer said that the bank is “absolutely” considering more acquisitions.
For ConnectOne, Donald Trump’s second term in 2025 will create a more favorable regulatory climate, which “is welcome,” said CEO Frank Sorrentino III. Given the presidential election outcome, Sorrentino expects a “dramatic” change in the regulatory agencies’ leadership and a more pro-growth, pro-business attitude within the Trump administration.
“The election certainly has spoken to some change that we’re going to see,” including what he expects will be a “more common-sense approach” to the creation of new regulation and the enforcement of existing rules in the banking industry, Sorrentino said, adding that he anticipates “accelerated enhancements” to regulators’ bank M&A review processes, aimed at streamlining and expediting approvals.
The Impending Purchase
ConnectOne’s purchase of the $4.2 billion asset First of Long Island remains on track to close in the first half of 2025, Sorrentino said, adding that he isn’t sure whether approval might come earlier or later in that time frame. The bank has submitted a merger application to the Federal Deposit Insurance Corp., the Federal Reserve, and the New Jersey Department of Banking, and this month filed an S-4 with the Securities and Exchange Commission.
“While this transaction is welcome in that it propels us over $10 billion, it wasn’t necessary” to cross that threshold, he said. “We were prepared to go over $10 billion next year no matter what.”
The bank doesn’t have much consumer business, so he deemed the loss of Durbin Amendment income “inconsequential” since it will face a cap on debit interchange fees.
ConnectOne has made several acquisitions over the years to bolster growth. Melville, New York-based First of Long Island’s market is one “we’ve absolutely coveted,” Sorrentino explained. The bank’s 40-branch footprint will instantly grow ConnectOne’s exposure across Long Island.
“It would have taken us years, maybe more than years, to accomplish what we’re going to get here by putting this deal together,” Sorrentino said.
“The game is getting more complicated” for community banks, given rising competition from fintechs and other companies in the banking space, he added.
Leveling Up at ConnectOne
The deal is poised to make ConnectOne more of a regional player. Looking ahead, “if the right M&A transaction shows up, sure, we’ll absolutely look at it,” Sorrentino said. “Will the environment be a little bit easier going forward? That’s what everyone says. I don’t know for sure. But certainly, we would take advantage of that if it’s something that made sense for us.”
Sorrentino said that includes opportunities that would present the right “strategic fit” and offer more products and services to the bank’s clients. First of Long Island’s $3.3 billion in deposits will bring down ConnectOne’s loan-to-deposit ratio, which is 107.81%. Sorrentino said the smaller bank’s substantial residential portfolio will reduce ConnectOne’s overall commercial real estate exposure.
ConnectOne has sought to reduce its nonrelationship loans this year to improve its loan-to-deposit ratio. However, Sorrentino took a bullish stance on CRE despite broader industry concerns.
“Retail, office, manufacturing, industrial, habitational – all forms of real estate, there just isn’t enough of,” Sorrentino said. “I have a slightly different sense of commercial real estate. I still think it’s one of the best assets out there.”
Sorrentino maintained the bank has a strong underwriting team and takes a “disciplined approach to how we lend money, the types of projects we get involved in, the types of real estate that we do lend against.”
