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ConnectOne warns of possible Q4 loss, launches stock offering

ConnectOne Bancorp Inc. said that deterioration in the value of its New York City taxi medallion portfolio could result in a fourth-quarter loss, and it has commenced a common stock offering that will support potential actions regarding the portfolio.

The company expects additional provisions for loan losses ranging from $18 million to $24 million, on a pretax basis, related to the medallion portfolio. That would bring total provisioning on the portfolio to $31 million to $37 million, or up to 36% of the total loan balances.

ConnectOne priced an offering of 1,443,299 common shares at $24.25 per share for proceeds of approximately $33.4 million, or up to $38.4 million should underwriters exercise their overallotment option of up to 216,495 additional shares. Keefe Bruyette & Woods, a Stifel company, and Raymond James & Associates Inc. are serving as joint book running managers.

The company is considering a number of options for the portfolio, including a sale, loan restructurings, charge-offs and others.

FBR & Co., which reiterated its outperform rating for the company, said the capital raise bodes well for the company's growth.

As for the loan loss provision, FBR & Co. senior research analyst Bob Ramsey estimated that the "sizable" charge will result in a fourth-quarter loss of 5 cents per share to 10 cents per share, but added that the charge will "significantly" reduce the company's taxi exposure.

ConnectOne Bancorp is the holding company of ConnectOne Bank.