Connectone Bancorp, Inc. · NASDAQ:CNOB
Connectone Bancorp — Piper Jaffray Financial Institutions Conference 2017
36 slides from Connectone Bancorp's conference presentation, May 16, 2017
Slide 1: Piper Jaffray Financial Institutions Conference
Piper Jaffray Financial Institutions Conference May 16 - 17, 2017 Palm Beach, FL
Slide 2: Forward-Looking Statements
Forward - Looking Statements This presentation contains forward - looking statements . Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward - looking . These statements are o
Slide 3: ConnectOne Bancorp, Inc. Overview
ConnectOne Bancorp, Inc. Overview ( NASDAQ: CNOB) □ Holding company for ConnectOne Bank, headquartered in Englewood Cliffs, NJ □ Approximately $ 4.5 billion in total assets, $ 3.6 billion in total loans and $ 3.4 billion in total deposits □ 21 locations across Manhattan, Bergen, Essex, Hudson, Merce
Slide 4: Strategy and Vision
Strategy and Vision □ Offering high - quality, personal service which minimizes client turnover □ Capitalizing on banking dislocation in our region □ Maintaining solid asset quality through strong credit culture □ Utilizing our exceptional market area to grow a high - quality, loyal client base □ Op
Slide 5: Highly Attractive Operating Area
5 □ Strategically placed offices throughout the NJ/NY metro area □ Densely populated, high - growth markets □ Our market footprint accounts for approximately $2 trillion of the $18 trillion United States GDP □ New Jersey ranks amongst the highest in the nation by both median household income and per
Slide 6: ConnectOne Milestones
ConnectOne Milestones ZUNE 2015 MARCH 2014 Seman FEBRUARY 2013 OCTOBER 2009 JANUARY 2005 Joneses REET eae $1 Billion JULY 2014 Hepes omen FEBRUARY 2013 OCTOBER 2006 DECEMBER 2016 JANUARY 2016 JUNE 2016 JULY 2015 = & ConnectOne Bancorp
Slide 7: Performance Trends
7 Performance Trends *Non - GAAP measure which excludes securities gains and charges related to the Bank’s taxi medallion portfolio. See appendix for a reconciliation of GAAP and non - GAAP measures. $0.37 $0.39 $0.41 $0.41 $0.39 $- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 Q1 2016 Q2 2016 Q3 2016 Q4 2016
Slide 8: Performance Trends (cont.)
8 Performance Trends (cont.) $10.78 $11.09 $11.60 $11.96 $12.23 $- $3.00 $6.00 $9.00 $12.00 $15.00 3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017 Tangible Book Value Per Share* Consistently building shareholder value * Non - GAAP measure, see appendix for a reconciliation of GAAP and non - GAAP
Slide 9: Performance Trends (cont.) - Return on Assets
9 Performance Trends (cont.) 1 ) Peer group includes banks and thrifts between $1.0B and $7.5B in assets located in Northeast and Mid - Atlantic regions. Median reflects the most recent 5 quarters of reported results. Data sourced from SNL Financial. 1.17% 1.18% 1.18% 1.20% 1.19% 0.00% 0.20% 0.40% 0
Slide 10: Performance Trends (cont.) - Return on Equity
10 Performance Trends (cont.) 1 ) Peer group includes banks and thrifts between $1.0B and $7.5B in assets located in Northeast and Mid - Atlantic regions. Median reflects the most recent 5 quarters of reported results. Data sourced from SNL Financial. 14.05% 14.35% 14.28% 13.88% 12.91% 0.00% 3.00% 6
Slide 11: Performance Trends (cont.) - Operating Efficiency Ratio
11 Performance Trends (cont.) 1 ) Peer group includes banks and thrifts between $1.0B and $7.5B in assets located in Northeast and Mid - Atlantic regions. Median reflects the most recent 5 quarters of reported results. Data sourced from SNL Financial. 42.7% 41.5% 41.2% 42.5% 44.0% 25.0% 35.0% 45.0%
Slide 12: Capital Strength
12 Capital Strength 9.08% 9.44% 9.79% 9.92% 11.83% 10.24% 10.50% 11.03% 11.03% 11.70% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% TCE Ratio Leverage Ratio CET 1 Ratio Tier 1 Ratio Risk-based Capital Ratio At March 31, 2017 Bancorp Bank Well Capitalized
Slide 13: Loan Portfolio Diversification
13 Loan Portfolio Diversification As of 3/31/17 - $ 3.6 Billion Other CRE 38% Multifamily 31% Business Loans 24% Residential/ Consumer 7% Type Balance Percentage Type Balance Percentage CRE - Retail $ 329 9% OOC - Retail $ 87 2% CRE - Office 158 5% OOC - Warehouse / Industrial 71 2% CRE - Warehouse
Slide 14: Loan Portfolio and Loan-to-Deposit Ratio
14 Loan Portfolio and Loan - to - Deposit Ratio $3,264 $3,376 $3,461 $3,554 $3,634 112.8% 105.5% 105.9% 106.3% 108.3% 85.0% 90.0% 95.0% 100.0% 105.0% 110.0% 115.0% 120.0% 125.0% 130.0% 135.0% $0 $600 $1,200 $1,800 $2,400 $3,000 $3,600 $4,200 3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017 Total L
Slide 15: Loan Funding Metrics
15 Loan Funding Metrics *Excludes impact of $36.5 million taxi m edallion charge - off for the quarter ended December 31, 2016. $279 $238 $229 $374 $342 $114 $126 $144 $244 $262 $165 $112 $85 $130 $80 4.00% 4.17% 4.28% 4.00% 4.21% 2.50% 2.75% 3.00% 3.25% 3.50% 3.75% 4.00% 4.25% 4.50% $- $100 $200 $3
Slide 16: Commitment to Solid Credit Quality
16 Commitment to Solid Credit Quality □ Comprehensive underwriting standards and processes Disciplined LTV and DSC standards Loan origination process supported by specialized teams of credit analysts □ We stick to what we do best High quality direct commercial lending No reliance on particip
Slide 17: Commitment to Solid Credit Quality (cont.)
17 Commitment to Solid Credit Quality (cont.) *Non - GAAP measure which excludes taxi medallion loans. See appendix for a reconciliation of GAAP and non - GAAP measures. 0.62% 0.55% 0.24% 0.16% 0.36% 0.06% 0.01% 0.20% 0.06% 0.01% 0.00% 0.50% 1.00% 1.50% 2.00% 3/31/2016 6/30/2016 9/30/2016 12/31/2016
Slide 18: CRE Concentrations - Positive Trends
18 CRE Concentrations - Positive Trends □ ConnectOne has maintained high levels of CRE concentration for an extended period of time □ Our combination of strong organic growth and sound asset quality is our hallmark □ We continue to focus on loan diversification □ Our policies and procedures have sto
Slide 19: CRE Portfolio (excluding Multifamily)
19 CRE Portfolio (excluding Multifamily) □ Approximately 70% located in New Jersey and 24% is located in New York □ Relationship based lending to seasoned sponsors with strong track records □ Underwriting standards require a maximum LTV of 75% and a minimum debt service coverage ratio of 1.25x on CR
Slide 20: Multifamily Portfolio
20 Multifamily Portfolio □ Total portfolio $1.1 billion; approximately 90% located in Northern New Jersey □ Portfolio average loan size $2.1mm; duration just over 3 years; yield ~3.70% □ Targeted concentration: approximately 1/3 of total loan portfolio □ We have been originating multifamily loans si
Slide 21: C&I Lending
21 C&I Lending □ Objective is to increase non - CRE lending and increase relationship deposits □ C&I teams are targeting both small and middle - market businesses, including manufacturing, service - related and distributors □ Business sizes range from $2 million to $100 million in average annual rev
Slide 22: Taxi Medallion Portfolio
22 Taxi Medallion Portfolio □ $61.3 million at March 31, 2017 □ Exclusively NYC - Manhattan medallions; 95% corporate □ We have reduced our exposure to only 1.7% of total loans and 13.8% of Bank’s Tier 1 capital, thus virtually no impact on our pursuit of strategic plans and goals □ Our current inte
Slide 23: Total Deposit Composition
23 Total Deposit Composition Note: Wholesale deposits include brokered deposits, excluding reciprocal, and listing services. Wholesale 18% Interest Transaction 61% CDs 15% Noninterest Demand 24% Franchise Deposits 82% As of 03/31/17 - $3.4 Billion
Slide 24: Noninterest-bearing Deposit Trends
24 Noninterest - bearing Deposit Trends $609 $582 $640 $667 $656 $615 $649 $656 $695 $671 $300 $350 $400 $450 $500 $550 $600 $650 $700 $750 $800 3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017 Average Quarterly Balance As of Balance $ MM
Slide 25: Liquidity Management
25 Liquidity Management □ We focus on core deposit growth, particularly noninterest - bearing demand Recent strategic initiatives have proven successful towards both growing upon existing relationships and attracting new clients □ ConnectOne has historically managed a loan - to - deposit ratio ove
Slide 26: Net Interest Margin and Interest Rate Risk
26 Net Interest Margin and Interest Rate Risk 3.45% 3.40% 3.32% 3.36% 3.40% 3.31% 3.28% 3.22% 3.27% 3.33% 3.30% 3.25% 3.24% 3.33% 3.30% 3.15% 3.25% 3.35% 3.45% 3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017 GAAP NIM Adjusted NIM* Peer Median 1) - 2.9% 3.0% 5.8% 8.4% - 2.9% 2.4% 4.7% 6.7% -5.0% 0
Slide 27: Three Ways To Win
27 Three Ways To Win 1. Organic Growth □ Loan growth rates well in excess of market averages □ Increasing percentage of DDA to total deposits □ Efficient operating structure, with potential to further leverage □ Untapped sources of revenue 2. Expansion through Opportunistic Acquisition □ Skilled acq
Slide 28: A Compelling Investment Opportunity
Proven growth - oriented investment Highly attractive franchise with enhanced size, scale and geographic footprint in key NJ/NY metro market Robust organic loan generator with history of strong credit quality Skilled acquiror - Poised to benefit from opportunistic transactions Engaged and experience
Slide 29: ConnectOne Bancorp, Inc.
& ConnectOne Bancorp, Inc.
Slide 30: Appendix
& ConnectOne Bancorp, Inc. APPENDIX
Slide 31: Appendix Reconciliation measures
31 Appendix Reconciliation of GAAP and non - GAAP measures (dollars in thousands, except share data) Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2017 2016 2016 2016 2016 Net income (loss) (GAAP) 11,880$ (2,024)$ 11,856$ 10,859$ 10,391$ Less: preferred dividends - - - - 22 Net income (loss) availab
Slide 32: Appendix Reconciliation measures (cont.)
32 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) (dollars in thousands, except share data) Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2017 2016 2016 2016 2016 Return on Assets Measures Adjusted earnings available to common stockholders (non-GAAP) 12,433$ 12,647$ 12,412$ 11,913$
Slide 33: Appendix Reconciliation measures (cont.)
33 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) (dollars in thousands, except share data) Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2017 2016 2016 2016 2016 Efficiency Measures Total noninterest expenses 18,249$ 15,252$ 14,551$ 14,352$ 14,353$ Increase in valuation allowance (
Slide 34: Appendix Reconciliation measures (cont.)
34 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, (dollars in thousands, except share data) 2017 2016 2016 2016 2016 Capital Ratios and Book Value per Share Common equity 540,277$ 531,032$ 499,588$ 484,414$ 474,727$ Less: intangible asse
Slide 35: Appendix Reconciliation measures (cont.)
35 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2017 2016 2016 2016 2016 NCO Detail Net loan charge-offs: Charge-offs 71$ 37,074$ 1,910$ 77$ 512$ Recoveries (129) (2) (12) (16) (14) Net loan charge-offs (58)$ 37,072$ 1,898$ 61$ 498$ as
Slide 36: Appendix Reconciliation measures (cont.)
36 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) (1) Adjusted earnings available to common stockholders divided by weighted average diluted shares outstanding. (2) Adjusted net income divided by average assets. (3) Adjusted net income excluding amortization of intangible assets div
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