ConnectOne Bancorp's first-quarter efficiency ratio of 49.2% was also impressive, improving from 51.9% a year earlier. The efficiency ratio is, essentially, the number of pennies of overhead a bank incurs for each dollar of revenue. An efficiency ratio below 50% is a strong number for any community bank. The aggregate fourth-quarter efficiency ratio for all U.S. banks in the fourth quarter was 61.6%, according to the FDIC.
Focusing on growth without increasing the branch count is a key to the bank's efficiency. "For a billion dollar bank you typically see an average of 15 branches," according to Sorrentino "We have only eight, which is an important strategy, in that we are growing this business without growing a lot of brick and mortar."
Sorrentino adds "We are using technology to bring in customers. We are way above and beyond what a typical community bank competitor has, and these products create enormous efficiencies." The bank's electronic deposit services include online banking, remote capture, and mobile deposit capture.
Within the bank, Sorrentino says "we are constantly looking to improve technology. We have one of the highest ratios of assets to full-time employees in the industry, because of that reason." The bank's fully electronic lending process is among the efficiencies listed by Sorrentino.
The bank's asset quality is good, with nonperforming assets making up 0.79% of total assets as of March 31, improving from 0.90% at the end of 2012.
Connect One's first-quarter return on average assets was 0.99%, compared to 1.01% in the fourth quarter and 0.99% in the first quarter of 2012. The company's return on average equity (ROE) was 9.77% in the first quarter, declining from 12.70% the previous quarter and 12.80% a year earlier.
The lower ROE of course reflects the company's higher capital base following the IPO. ConnectOne had $122.4 million in total stockholder's equity as of March 31. The company's tangible common equity ratio was a very strong 12.15% as of March 31, increasing from 7.76% the previous quarter, and leaving plenty of room for significant expansion. "The story for this bank is that it is strong and consistent," Sorrentino says. "We stick to our knitting."
-- Written by Philip van Doorn in Jupiter, Fla.