ConnectOne Bancorp in Englewood Cliffs, N.J., reported lower quarterly profit after agreeing to sell a pool of multifamily loans.
The $14.8 billion-asset company said in a press release that its third-quarter earnings fell 24% from a year earlier, to $29.9 million.
The company plans to sell up to $750 million in unpaid principal balance of non-relationship multifamily loans to an unnamed buyer. The transaction is expected to close this month.
Loans secured by New York City rent-stabilized properties represent about 61% of the pool. ConnectOne originated about 30% of the loans; the rest were originated by First National Bank of Long Island, which the company bought last year.
The loan pool was transferred to held-for-sale, at the lower of cost or fair value of $678.9 million as of Sept. 30, resulting in a $23 million pretax loss on loans held-for-sale, recorded in noninterest income. The recognized loss on the pool reflects increases in market interest rates since the loans were originated.
The company will recognize transaction costs tied to the restructuring of about $7 million to $8 million in the fourth quarter.
Most of the net proceeds will be reinvested in government-guaranteed securities at yields similar to those of the loans sold, with the remaining balance used to pay down wholesale funding. The restructuring reduces the bank’s regulatory CRE concentration ratio to about 397% from 439% as of June 30. Exposure to New York City rent-stabilized assets is expected to fall to roughly 2% of total loans, from 6% in mid-2026.