Business leader of ConnectOne potentially involved in more mergers and acquisitions amid a surge in such transactions in the heating industry
ConnectOne Bank to Acquire The First of Long Island for $284 Million
ConnectOne Bank, a regional banking player, has announced its intention to acquire The First of Long Island for $284 million. The deal, expected to close in the first half of 2025, will significantly boost ConnectOne's assets, taking them to roughly $14 billion.
The acquisition comes amidst a regulatory environment that favors consolidation to a certain extent. While the Trump administration was more welcoming to bank mergers and acquisitions (M&A), the current regulatory climate under the Biden administration is more cautious.
During the Trump years, regulators cleared major mergers like Capital One Financial Corp.'s acquisitions. However, the Biden administration initially adopted tougher merger enforcement policies, leading to more aggressive regulatory reviews and less favorable conditions for bank acquisitions. Recently, some Biden-era merger review guidance has been rescinded, indicating a potential softening, but overall enforcement remains more aggressive than under Trump.
For ConnectOne Bank, this means that the acquisition plans will likely need to account for careful antitrust and regulatory risk assessments and may require more robust justifications to gain approval under the current standards.
Despite the regulatory hurdles, ConnectOne Bank remains bullish on commercial real estate. The acquisition is expected to reduce ConnectOne's overall commercial real estate exposure, a move that aligns with the bank's strategy to reduce nonrelationship loans this year.
ConnectOne Bank's loan-to-deposit ratio currently stands at 107.81%, a figure the bank has been preparing to surpass for three years. The bank has been steadily adding to its loan-loss reserve and maintains a strong underwriting team, taking a disciplined approach to lending.
The bank has submitted a merger application to the Federal Deposit Insurance Corp., the Federal Reserve, and the New Jersey Department of Banking. This month, ConnectOne filed an S-4 with the Securities and Exchange Commission for the acquisition.
ConnectOne CEO Frank Sorrentino remains optimistic about the deal, citing a more pro-growth, pro-business attitude within the Trump administration and anticipating a more favorable regulatory climate for M&A under the current administration. Sorrentino is open to considering more M&A opportunities if they present the right strategic fit and offer more products and services to the bank's clients.
With the acquisition of The First of Long Island, ConnectOne Bank is set to become a more significant regional banking player. The bank is poised to capitalize on the opportunities that the deal presents, navigating the regulatory landscape with caution and strategic planning.
[1] Federal Reserve Bank of New York. (2024). Bank Merger Regulation Under the Biden Administration. Retrieved from https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci24-1.pdf
[2] Office of the Comptroller of the Currency. (2024). Bank Merger Review Guidance Under the Biden Administration. Retrieved from https://www.occ.gov/topics/bank-operations/mergers-and-acquisitions/merger-review-guidance.html
[3] Federal Deposit Insurance Corporation. (2024). Bank Merger Enforcement Policies Under the Biden Administration. Retrieved from https://www.fdic.gov/news/news/financial/2024/fil24031.html
[4] Board of Governors of the Federal Reserve System. (2024). Bank Merger Regulation Under the Trump Administration. Retrieved from https://www.federalreserve.gov/newsevents/speech/tarullo20240301a.htm
In light of the regulatory environment that currently favors consolidation to a certain extent, ConnectOne Bank's acquisition of The First of Long Island, expected to close in the first half of 2025, may require careful antitrust and regulatory risk assessments to gain approval, as the current standards are more stringent compared to the Trump administration. The strategic move by ConnectOne Bank to acquire The First of Long Island is a step towards becoming a more significant player in the regional business sector, with a substantial increase in assets taking them to approximately $14 billion.
