ConnectOne's 4Q Beat Shows Ongoing Momentum: Earnings Outlook

Summary

Episode Overview

Episode: ConnectOne's 4Q Beat Shows Ongoing Momentum: Earnings Outlook
Podcast: Bloomberg Businessweek
Date: February 6, 2026
Guests: Frank Sorrentino, Founder, Chairman & CEO of ConnectOne Bancorp
Hosts: Carol Massar, Tim Stenovec

This episode features an in-depth conversation with Frank Sorrentino, CEO of ConnectOne Bank. The discussion focuses on the bank’s recent strong earnings, consolidation trends in the US banking sector, the competitive landscape for regional banks, and enduring opportunities in small business and construction lending. Sorrentino also shares candid perspectives on the US housing shortage, infrastructure needs, and macroeconomic policy, including a new Federal Reserve Chair appointment.

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Key Discussion Points & Insights

ConnectOne's Earnings and Market Momentum

• Recent Performance
  • ConnectOne Bancorp reported strong quarterly earnings, leading to a stock bump (~1.6% daily, ~7% YTD) and a new price target lift from Keith Bru Eden Woods to $32/share. (00:14–00:35)
  • Sorrentino projects optimism for 2026:

    "26 is a great year ahead of us, I really believe... things are looking really, really up." (00:47)

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Market Consolidation & Foreign Investment

• Banking Landscape in the US
  • The US stands out globally with over 4,300 banks, fueling ongoing consolidation.
  • The current administration and regulators are accommodating M&A activity.
  • Sorrentino remarks on foreign capital's eagerness to enter the US, referencing a major deal highlighted by the hosts:

    "There's a lot of foreign capital that wants to find its way into the United States... We see that as a boon for us." (01:13)

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Impact of Mergers on Community and Regional Banks

• Opportunities for Smaller Banks

  • Consolidation creates disruptions: changes in loan products, client uncertainty, and product phase-outs. Smaller banks are positioned to "pick up the pieces":

    "Generally, smaller banks are there to pick up the pieces... We're excited to see this transaction take place." (02:10)

• Acquisition Posture

  • Sorrentino maintains that ConnectOne strives to "make ourselves unavailable to be sold," but all banks should be open to acquisition inquiries:

    "Our job is to continue to make ourselves unavailable to be sold. But certainly that's always a possibility for every institution... It forces you to run your company in the best way possible." (02:43–04:06)

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Growth Strategy & Client Needs

• Sophistication and Scale of Clients
  • The needs of ConnectOne’s clients, especially in the NY metro area, are evolving—demanding more complex banking products. Growth is necessary to serve clients as they expand:

    "If we're not growing ConnectOne, we're not going to be able to satisfy our clients' needs as they're growing... that's an incredibly important part of our organization." (04:58)

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Outlook on Small Business, Construction, and Housing

• Stable Optimism in Construction Lending

  • Sorrentino expresses continued bullishness on construction, particularly multi-family, warehousing, and manufacturing:

    "There's just not enough product on the market... we are so woefully short, specifically here in the NY metro market... To say I'm optimistic would be an understatement." (06:14)

• Affordable Housing Obstacles

  • Real barrier isn’t capital or lending, but regulatory hurdles (zoning, environmental, insurance, local opposition):

    "The real impediment... is not because of capital and it's not because of bank lending... There's political change that has sort of crept into the system. You just can't build... Unleash the ability for builders to build and you'll have affordable housing." (07:16)

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Infrastructure Investments

• Indirect Participation
  • ConnectOne typically isn’t large enough to finance massive infrastructure projects but benefits from the downstream economic activity:

    "I use the subway often here in New York. I mean, there's clearly a need for infrastructure spending just about everywhere." (08:50) "[Infrastructure spending is] great for the economy. They all need shovels. The workers need to go to the deli... and those are all the businesses that ConnectOne supports." (09:19)

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Economic Policy and the Federal Reserve

• Fed Chair Appointment Commentary
  • Sorrentino welcomes the new chair’s data-driven approach, especially focus on Fed balance sheet over just interest rates:

    "The thing that I like the most is that he is data driven... Interest rates maybe aren't the most important thing we need to be focused on, but the Fed balance sheet is, and very few people want to talk about that... It is causing market distortions. And really, interest rates can afford to be lower if we get the Fed balance sheet under control. And I happen to absolutely agree with that position." (09:56–10:52)

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Notable Quotes & Memorable Moments

• On US Banking Uniqueness:

  "The United States is sort of a rare breed across the globe where we have some 4,300 banks today, which you don't find in most countries." (01:13)

• On M&A and Value Creation:

  "The value is what someone's willing to pay you for it. Right? So... how do you set the company up to be the most profitable, the best market in the products that you provide?" (03:13)

• On Affordable Housing:

  "So unleash, unleash the ability for builders to build and you'll have affordable housing." (07:16)

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Timestamps for Key Segments

• ConnectOne’s 4Q performance and outlook – 00:14–01:01
• Banking consolidation, foreign investment – 01:01–01:57
• Effects of mergers, ConnectOne’s M&A view – 02:10–04:06
• Client needs and growth strategy – 04:46–05:57
• Small business and construction optimism – 05:57–06:50
• Housing shortage, regulatory obstacles – 06:50–07:54
• Infrastructure & indirect bank role – 08:30–09:49
• Fed Chair appointment, balance sheet focus – 09:49–10:54

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Summary & Takeaways

Frank Sorrentino’s appearance sheds light on the resilience and optimism within regional banking, navigating heavy industry consolidation and adapting to ever-evolving client needs. He is strongly optimistic about construction lending, recognizing affordable housing as stymied by regulatory barriers rather than lending constraints. Sorrentino also underscores the broad economic benefits of infrastructure investment—even if smaller banks aren’t direct lenders, they’re key supporters of the ecosystem around big projects. His data-driven, nuanced view on monetary policy and inflation rounds out a forward-looking, pragmatic perspective on both banking and the broader economy as 2026 unfolds.

Transcript

[Host 1]

Bloomberg Audio Studios Podcasts Radio news.

[Frank Sorrentino]

You're listening to Bloomberg businessweek with Carol Massar and Tim Stanvak on Bloomberg Radio.

[Host 1]

Our next guest is already betting on the US has been for a while. We were talking about Connect One Bancorp, which reported earnings last week. Stock is trading up about 1.6% today, up about 5% in the past three trading sessions. And I should point out that Keith Bru Eden woods raising its price target on the the stock to $32 a share. That Tim happening on Friday.

[Carol Massar]

Great to have back with us, Frank Sorrentino. He's founder, chairman and CEO of the New Jersey Base Connect one bank has a $1.4 billion market cap up close to 7% so far this year. Welcome back. How are you doing?

[Frank Sorrentino]

Great. 26 is a great year ahead of us, I really believe. I had a lot of people said, you know, survive till 25. Well, here we are, it's 2026 and things are looking really, really up. So very confident about what's, what's happening.

[Carol Massar]

Well, as Carol mentioned, it's not just that you guys betting on the U.S. spain's largest bank betting big on the U.S. we already have foreign banks here. What's your view on the deal? What's the competitive landscape for the U.S. like for business?

[Frank Sorrentino]

Look, you know, there's a lot of consolidation going on in the US Markets for financial institutions. You know, the United States is sort of a rare breed across the globe where we have some 4,300 banks today, which you don't find in most countries. And so there's a natural consolidation going on. We have a very, very accommod administration and regulatory agencies that are allowing for some of those M and A activities to take place. And, you know, notwithstanding what everyone would like to say about the US and all the headlines and whatnot, there's a lot of foreign capital that wants to find its way into the United States. And so when you see a deal like this that you just announced, clearly that's foreign capital moving to make an investment here in the United States. You know, for banks like Connect One that are in the market in the region that Webster was in or is in, you know, we see that as a boon for us.

[Host 1]

So why?

[Frank Sorrentino]

Well, anytime there's consolidation like that or a merger, clients get impacted. You know, the ability to do certain types of loans may go away, certain products get phased out or whatnot. There's a lot of there's a lot of turmoil in that wake. And so generally smaller banks are there to pick up the pieces. And so we're, you know, we're, we're excited to see this transaction take place.

[Carol Massar]

We've asked you in the past about M and A, mostly from the perspective of you going out and buying other banks. What about bigger banks coming knocking on your door? Does that happen?

[Frank Sorrentino]

Listen, it's always. Yeah, it's always, you know, I've said to our investors, you know, everyone, where, you know, our job is to continue to make ourselves unavailable to be sold. But certainly that's always a possibility for every institution and it should be for every company. Right. A. It forces you to run your company in the best way possible. But, you know, certainly there's always that opportunity out there.

[Host 1]

Did you say availability to be sold?

[Frank Sorrentino]

Always. Every company should, Every company should look at their, their, you know, their business plan and their model. Looking at what value. If you want to talk about a value of a company.

[Host 1]

Right.

[Frank Sorrentino]

The value is what someone's willing to pay you for it. Right, Right. So, you know, how do you, you know, how do you set the company up to be the most profitable, the best market in the products that you provide? And if that's true, there'll always be someone interested in an acquisition.

[Host 1]

But sometimes you have to spend money. Right. To do a strategy that pays off longer term.

[Frank Sorrentino]

So profitable it may not be financial profitability. You know, I mean, are we creating value? And so, you know, one of the things I'm most proud of, we've been at Connect1 21 years with pretty much the same management team, and we've created an enormous amount of value over those 21 years. And no one's been able to buy us.

[Carol Massar]

Not yet. That's right.

[Host 1]

But you're open to it?

[Frank Sorrentino]

As I said, I think everyone, I think everyone should be open to that.

[Host 1]

We were talking with our team here, by the way.

[Frank Sorrentino]

You just saw it in the transaction, right?

[Host 1]

Yeah.

[Frank Sorrentino]

That was a fantastic company. Well run, well managed, great markets, and someone offered them, you know, a price they just could not refuse.

[Host 1]

I mean, what's fascinating, I think around us we used to have a bunch of retailers and then they left and two banks have opened up. Citibank across from us and is a capital one. It's like a cafe and so on and so forth. It's not retail that's coming in. I just feel like banks are popping up. I mean, banking has been a pretty good business for a while.

[Frank Sorrentino]

Yes.

[Host 1]

Especially the last couple of years, it feels like.

[Frank Sorrentino]

Yeah. And I think it will continue to be.

[Host 1]

And is it because of the consolidation or is It.

[Frank Sorrentino]

Well, that's part of it. What is it?

[Host 1]

That's really juicing it look part of it.

[Frank Sorrentino]

Certainly if you have less banks. Yeah, it's, you know, you're going to, first off, you're going to have bigger banks, banks that have bigger balance sheets and the ability to provide better products and services and that's more desirable. We're also seeing, you know, at the ground floor, all of our clients are getting bigger and smarter and more sophisticated and so they have needs for, you know, more financial products. So not to dismiss, you know, the small community bank that doesn't have a lot of that product and service set, but what we see here, certainly in the New York metro market, our clients are getting larger, they're getting bigger, they're entertaining M and A. And so they're leapfrogging in size. And so they need, they need a bank that can continue to service their needs. And so part of our growth strategy, yeah, it's, you know, we want to create value and we want to grow our earnings and all that other stuff. But I also recognize if we're not growing Connect one, we're not going to be able to satisfy our clients needs as they're growing. And to me that's an incredibly important part of our organization.

[Carol Massar]

One of the reasons we like to talk to you is because you have a great view on small business, specifically on construction, on builders. That's sort of the DNA of your bank. You've been really consistently quarter after quarter, at least with us optimistic about that demographic that you serve. Does that optimism remain today?

[Frank Sorrentino]

Yeah, nothing's really changed in my view and through, you know, the clientele that we have relative to when we talk specifically about construction and you know, probably in multifamily and industrial warehouse and manufacturing in those areas, there's just not enough product on the market. And when it comes to, you know, apartments and homes and condos, we are so woefully short, specifically here in the New York metro market that I don't think you could build enough to satisfy that in any short period of time. So to say I'm optimistic would be an understatement.

[Host 1]

Well, what do you make of the story? I mean, we were watching homebuilders on the move this week and this is. Was it Lennar? And I forget who else that has apparently approached the administration about building affordable homes. They call them trump homes, including private investors. It sounds like there's a lot details to be worked out. I don't know how are you viewing something like that? Does this Kind of make sense as maybe a first step to figuring out a strategy. Or does it? I don't know.

[Carol Massar]

Yeah.

[Frank Sorrentino]

So the answer is yes, it's a great idea to think about affordability first, you know, relative to, you know, new homes, home ownership, again, rent to buy. I think, I think home ownership is great. You know, all these other things. But, you know, the real impediment and the reason why we don't have enough homes today is not because of capital and it's not because of bank lending. It's, there's, there's pollution. Political change that has sort of crept into the system. You just can't build. You have to, you know, between environmental issues and, you know, the parochial town issue, town by town issues, zoning issues, insurance needs, whatever it is creating, you know, creating this environment where it's just difficult to build. So unleash, unleash the ability for builders to build and you'll have affordable housing.

[Carol Massar]

Well, our producer Talia has got one eye on the show and one eye on what Bill Pulte is saying on Fox News right now, Fox Business. He's actually saying he's the head of Fannie and Freddie, not actively looking at the Trump homes idea. He's saying this on Fox Business as we speak.

[Host 1]

So come and go pretty quickly.

[Carol Massar]

Well, that's just one. Yeah, yeah, one, one voice there, but.

[Host 1]

An important one when it comes to certainly the housing market.

[Carol Massar]

You guys, you're talking about housing and, and you've got me thinking about infrastructure. And maybe it's because we're seeing this right now in the midst of a sort of unprecedented or historic freezing weather here in New York and challenges that are associated with that. But you've got a lot of big players betting big on infrastructure right now. Are you, are you able to play in infrastructure at all?

[Frank Sorrentino]

Most of it's bigger than, you know, what we can manage. But I would agree that there is so much need for infrastructure. Build, drive on any road, go across any bridge. It's really, you know, I use the subway often here in New York. I mean, there's clearly a need for infrastructure spending just about everywhere.

[Carol Massar]

But it's right now that's a little too big of a swing.

[Frank Sorrentino]

Generally. Those things are, yeah, they're, they're beyond our balance sheet capabilities.

[Host 1]

We've been talking kind of macro and big.

[Frank Sorrentino]

But hold on, those, but however, yeah, all of that infrastructure, I'm excited. That's part of my speech too, that all that infrastructure capital that's coming in, you know, when they, when they repave the turnpike or they build a new section to the subway or, you know, build any of these products. Think about it. They all need shovels. The workers all have to go to the deli. They all need their clothes clean. They all need to buy shoes. And those are all the businesses that connect one supports economic velocity, infrastructure. Yeah, infrastructure spending is great for the economy.

[Host 1]

All right, what about President Trump's new choice of a Fed chair? Will he be potentially great for the U.S. economy?

[Frank Sorrentino]

Look, you know, he's an interesting, he's an interesting choice based on what everyone expected. I think he's the exact opposite of what everyone expected would actually happen. And if you look at his history and what he's focused on, the thing that I like the most is that he is data driven. And I've said that those words on this show often. You know, I think the Fed needs to look at the data and make decisions about what they're going to do with our money supply. He's, you've heard me speak to many times on this show about that. Interest rates maybe aren't the most important thing we need to be focused on, but the Fed balance sheet is, and very few people want to talk about that. He wants to talk about that and he is saying that the balance sheet is too big. It needs to be reined in. It is causing market distortions. And really, interest rates can afford to be lower if we get the Fed balance sheet under control. And I happen to absolutely agree with that position.

[Host 1]

Don't go. Can we just stick around? We got like, what, two and a half hours to go. Always appreciate it. We get such a great view of what's going on. Glad you're optimistic. We could use some optimism, certainly here in 2026. Frank, thank you so much.

[Carol Massar]

Always great to be here.

[Host 1]

Always appreciate it. Frank Sorrentino, founder, chairman and chief executive officer of Connect One Bancorp, joining us right here in studio.