A successful initial public offering is helping ConnectOne Bancorp (CNOB) get into a New York state of mind.
ConnectOne made its public debut Tuesday. Its stock price rose nearly 6% from its IPO price, finishing the day at $29.65 a share. More than 880,000 shares changed hands during the first day of trading.
Overall, the Englewood Cliffs, N.J., company sold roughly 1.6 million shares to generate gross proceeds of nearly $45 million.
Broadly, management will use the funds to expand lending and "acquire other banks or financial institutions," according to regulatory filings. Specifically, some industry observers believe the company could open branches and hire lenders in Manhattan.
"We're a stone's throw away from the George Washington Bridge," Frank Sorrentino 3rd, ConnectOne's chief executive, said Tuesday, referring to the 4,760-foot-long suspension bridge that spans the Hudson River and connects New Jersey to northern end of Manhattan.
"We have some business in New York today, and it's clearly a market that's interesting to us," Sorrentino says.
From its 2005 opening to last month, the $929 million-asset ConnectOne had been known as North Jersey Community Bancorp. Sorrentino dumped that name last month, saying it was "too restrictive," adopting ConnectOne as its replacement.
Industry observers have said that it makes strategic sense for ConnectOne to branch out. Nearly 94% of its $769 million in deposits come from its home turf in Bergen County, N.J. ConnectOne also said in its IPO prospectus that it could look to expand in central New Jersey.
Sorrentino dismissed the notion that New York has become a magnet for growth-starved community banks, even though a number of acquisitions have taken place there in the city over the past year.
"I don't know that there are so many people that want to be there," he said. "As it is, there are so many people there."
Proceeds from the public offering create "a currency for us so that we can look at other opportunities … whether of the M&A type or the ability to attract and retain good people," Sorrentino said.
In addition to its expansion plans, ConnectOne's offering will provide original investors with an opportunity to cash out, Sorrentino says.
"This gives them liquid currency or a trading security that they can decide what they want to do," added Sorrentino, who owns roughly 6.5% of the company's common stock, according to the offering's prospectus.
Bank investors could view the early returns from ConnectOne's offering, which was priced at the high end of the company's projected range, as a promising development for the rest of the industry, Sorrentino says.
The performance stands in contrast to recent initial public offerings bank companies such as Capital Bank Financial (CBF) in Coral Gables, Fla., and National Bank Holdings (NBHC) in Greenwood, Colo. Both of those companies completed offerings at prices that fell short of expectations.
"We've heard a lot of discussion that the capital markets are virtually closed for community banks," Sorrentino said. "This might be evidence that [such a theory] might not be true."