Connectone Bancorp, Inc. · NASDAQ:CNOB
Connectone Bancorp — Debt Investor Presentation (June 2020)
35 slides from Connectone Bancorp's debt investor presentation, Jun 10, 2020
Slide 1: ConnectOne Bancorp, Inc. Investor Presentation
& ConnectOne Bancorp, Inc. CNOB Investor Presentation
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 often, bu
Slide 3: Terms of Proposed Subordinated Notes Offering
Terms of Proposed Subordinated Notes Offering ™ ConnectOne Bancorp, Inc. (NASDAQ: CNOB) Holding company subordinated debt ™ BBB- by Kroll Bond Rating Agency 1 Fixed-to-floating rate (after 5 years based on SOFR) SEC registered ™ 10 years 1 Non-call for 5 years; Callable on any interest payment date
Slide 4: About ConnectOne Bancorp, Inc.
About ConnectOne Bancorp, Inc. Overview ™ ConnectOne Bancorp, Inc. (NASDAQ: CNOB) is a high performing commercial bank serving the New York & New Jersey metropolitan market Headquartered in Englewood Cliffs, New Jersey = Strong culture with a focus on people first and a sense of urgency in every bus
Slide 5: Experienced Leadership
Experienced Leadership Management Team with Over 20 Years of Experience On Average Frank Sorrentino Ill Chairman, President and CEO Years of Experience Founder of CNOB 15 Years Industry Prior Experience ™ President of FSS Construction Christopher Ewing Executive VP and Chief’ Operations Officer Year
Slide 6: COVID-19 Impact Update
COVID-19 Impact Update Organization and People 90% of our staff are working from home Retail offices pivoted to a leaner contactless environment Temporarily closed certain branch locations and directing branch clients to drive-thru windows and online banking services In the spirit of showing our sup
Slide 7: Franchise Overview and Investment Highlights
Franchise Overview and Investment Highlights POPDODE HHH HH H S<
Slide 8: Franchise Overview and Investment Highlights
Franchise Overview and Investment Highlights 1 Robust Profitability and Capital Generation Solid Capital Base with Significant Cushion Above Well Capitalized Levels 3 Stable Core Net Interest Margin C4 ) Quality Deposit Franchise with Branch-Light Distribution Model 5 Best-In-Class Efficiency 6 Stro
Slide 9: Robust Profitability and Capital Generation
y and Capital Generation @ Robust Profitabili Pre-Provision Net Revenue’ / Average Assets Tangible Book Value per Share Growth Decline reflects BNI $16.06 $15.93 | sequisiion 1.91% 1.91% 1.83 % 1.82% 184% 1.83% we $10.51 % 1.62% = 154% 154% "60% aN 1.46% 2015Y 2016Y + 2017Y_-«2018Y = 2019Y_-— 120 20
Slide 10: Solid Capital Base with Significant Cushion Above Well Capitalized Levels
e Solid Capital Base with Significant Cushion Above Well Capitalized Levels ConnectOne Bancorp, Inc. ‘Common Equity Tier 1 Jer 1 Ri , 4 5 Maes eats Tier 1 Risk-Based Ratio Tier 1 Leverage Ratio Total Risk-Based Capital Ratio Mustrative Pro Forma Capital" 13.45% 12.96% S&S 9.75% 9.95% = 9.63% SEER: A
Slide 11: Stable Core NIM Well Positioned for Current Rate Environment
© Stable Core Net Interest Margin Stable Core NIM Well Positioned for Current Rate Environment Yields and Costs 5.08 % 494% 451% 443% 447% 4.68% $ = = 487% —- z 472% 4.26% 417% 4.29% 4.49% 1.62 % 1.29 % 1.37 % 0.75% 0.84% 0.89% - o— = 2015Y 2016Y 2017¥ 2018Y 2019Y 1020 —e-Loans —e-Interest-Eaming As
Slide 12: Quality Deposit Franchise with Branch-Light Distribution Model
Quality Deposit Franchise with Branch-Light Distribution Model ($ in millions) Average Deposit Balances* GR: 16% $5,579 a-Yoar CAS $4,637 Sas $3,470 $3,862 — I L] LJ Siatea Dopoets (SM 2015Y 2016Y 2017Y 2018Y 2019Y 1020 CNOB $107.3 $128.6 $140.6 $141.1 $153.8 $183.6 Peers? 71.1 83.5 85.7 89.6 99.9 1
Slide 13: Best-In-Class Efficiency
Locations utilize @ Best-In-Class Efficiency iadinleanaceRoes “business hubs” supporting clients beyond Historical Operating Performance geographic footprint 41.0 041-4 0 on 41.4 91.9 8 42.7 % —- 9 9 $ 9 9 $18.2M Investments in digital Assets Per banking and FinTech Employee solutions allow 2 = = =
Slide 14: Strong Liquidity Profile
© Strong Liquidity Profile ($ in millions) Historical Liquidity a D> & 620 $467 $428 «= $423, $441 $506 ] i$ 283, “i iid dj 2015Y 2016Y + 2017Y + 2018Y-_ 2019Y 1420 = Cash and Cash Equivalents —_m Total Liquid Assets" Historical FHLB Borrowing Capacity $1,000 $1,000 gay 2015Y 2016Y + 2017Y += 2018Y
Slide 15: High Quality Asset Composition and Reserves
(7) High Quality Asset Composition and Reserves Additional Detail Loan Loss Reserves / Loans Receivable Opted to maintain Incurred Loss Method under the CARES Act and stand ready to implement at any point in time 1Q20 provision ($16.0M pre-tax) considers 0 0.90 %| COVID-19 estimated impacts Current
Slide 16: Strong Underwriting Culture
3] Strong Underwriting Culture Comprehensive Underwriting Multi-Faceted Stress Testing ™ Disciplined LTV and DSC standards = Every loan tested during underwriting process 1 Loan origination process supported by specialized ™ Quarterly modeling performed in conjunction teams of credit analysts with A
Slide 17: Diversified and Granular Loan Portfolio
© Diversified and Granular Loan Portfolio ($ in millions) Underwriting Standards Constructio. $621 Project feasbity Developers background and expertise ‘Stict loan to cost advances Rental fallback Plan and cost review Interest reserve Personal guarantees wih reliance on quity Bank engineer oversight
Slide 18: Diversified and Granular Loan Portfolio
© Diversifi ($ in millions) Loan Composition as of 31-Mar-2020 Residential Commerc 20% Multifamily 29% @ Lending within geographic footprint — NY/NJ metro market economically strong and diverse ™ Average loan size: ~$1.1M No single borrower exposure greater than 1.3% of total loan portfolio 1 ~99+%
Slide 19: Additional Detail on COVID-19 Loan Exposure
© Addi H in millions) onal Detail on COVID-19 Loan Exposure Potential Exposures [ Loan Deferral Activity Directly Exposed Industries‘ Deferrals by Loan sue Deferrals én Total _ Approved or Booked Under Review sono scm sm my) ta —_ $ # $ comecfensine mh gate ake ago saeT na Hotels sm 12% 7 su 2 $20 m
Slide 20: Strategy & Vision
Strategy & Vision ConnectOne believes it remains well-positioned to execute: @ Achieving Prudent Growth @ Increasing & Expanding Commercial Client Relationships @ Enhancing Our Presence in the New York & New Jersey Metro Market @ Further Improving Best-in-Class Efficiency @ Sustaining Robust Profita
Slide 21: ConnectOne Bancorp
$ ConnectOne Bancorp
Slide 22: Appendix
Appendix > hh HH HH H H H.
Slide 23: Overview of Results — Q1 2020 Income Statement
Overview of Results — Q1 2020 Income Statement ($ in thousands, except per share data) Forthe quarters Margin expansion driven by additional Tar 34,2020 Dec. 24,2019 Mar 31,2019 purchase accounting accretion Interest Income $7074 $68,008 '$ 65200 Core margin contraction by 6 bps driven —— Tel aor ma
Slide 24: Overview of Results — Q1 2020 Balance Sheet
Overview of Results — Q1 2020 Balance Sheet ($ in thousands, except per share data) Commentai Asset Quality Point-to-point annualized after adjusting for the acquisition was in the high single digits sequentially As of 31-May-2020, CNOB has closed or approved with the SBA approximately 2,200 PPP loa
Slide 25: History of ConnectOne Bancorp, Inc.
History of ConnectOne Bancorp, Inc. JANUARY 2005 Founded as North jdbc pete ieraed wit) ee coat JULY 2014 TEE partnership with ncino | | Greater ‘Sorrentino Ill & local (Merged with Union Launched = Assets $501 Seronma 6 es. Center National Bank; ConnectOne milion bse assets $3.tbilion University an
Slide 26: Disciplined Expansion Through M&A with Demonstrated Expertise as a Skilled Acquiror
Disciplined Expansion Through M&A with Demonstrated Expertise as a Skilled Acquiror ™ Completed transaction on = Completed in-Market Acquisition of $18 January 2, 2019 and integrated systems commercial Bank on January 2, 2020 less than 30 days after closing ™ Enhances Scale and Future Growth Opportu
Slide 27: Historical Interest Coverage & Double Leverage
Historical Interest Coverage & Double Leverage ($ in millions) Forth Years Ene, For the Quarter Ended, Pro Forma for $50M Offering® 31-0e62016 _31-De02017 _31-Deo2018__31-Deo2018 star 2020 31-2020 uty ivesiment in Bank Sbsiciry $680 sei $003 seit $038 $036 onsoidated Eauty 331 $505 sei 3731 ses 3064
Slide 28: Schedule of Parent Company Debt Outstanding
Schedule of Parent Company Debt Outstanding ($ in thousands) rent Company Debt Obligations as of 31-Mar-2020 Optional Date Redemption Total Debt Coupon Name Issued Maturity Date Outstanding Structure [Subsidiary Trust Preferred Center Bancorp Statutory Trust II 1219/2003 112312034 112312003" $5,000
Slide 29: Credit Ratings Profile
Credit Ratings Profile Kroll Ratings ‘Senior Unsecured Debt BBB Stable ‘Subordinated Debt" BBB. Stable ‘Short-Term Debt k3 NIA Deposit BBB+ Stable ‘Senior Unsecured Debt BBB+ Stable ‘Subordinated Debt BBB Stable ‘Short-Term Deposit K2 NIA ‘Short-Term Debt k2 NA
Slide 30: Reconciliation of GAAP and Non-GAAP Measures
Reconciliation of GAAP and Non-GAAP Measures ($ in thousands, except per share data) ‘As of of For the Quarters Ended, ‘As of or Forthe Years Ended December 34, 34-Mar-2019 34-Dec-2019 31-Mar-2020 ___34-Deo-2015 31-Dec-2016 31-Dec-2017 31-Dec-2018 31-Dec-2019 Reconciliation of GAAP Earnings to Eamin
Slide 31: Reconciliation of GAAP and Non-GAAP Measures, Continued
Reconciliation of GAAP and Non-GAAP Measures, Continued ($ in thousands) For the Quarter Ended, ‘As of of For the Years Ended December 31, 34-Mar-2020 34-Dec-2015 31-Dec-2016 31-Dec-2017 31-Dec-2018 31-Dec-2019 Net Loan Charge-Off (Recoveries) Detail $127 $538 $39573 $239 $1011 $5076 (3) (345) . $12
Slide 32: Reconciliation of GAAP and Non-GAAP Measures, Continued
Reconciliation of GAAP and Non-GAAP Measures, Continued ($ in thousands) For the Quarter Ended, As of or For the Years Ended December 31, 31-Mar-2020 31-Dec-2015 31-Dec-2016 31-Dec-2017 31-Dec-2018 31-Dec-2019 Allowance for Loan Losses: Allowance for Loan Losses ("ALLL") ‘$54,169 $26,572 $25,744 $31
Slide 33: Reconciliation of GAAP and Non-GAAP Measures, Continued
Reconciliation of GAAP and Non-GAAP Measures, Continued ($ in thousands) ‘As of or For the Quarters Ended, ‘As of or Forthe Years Ended December 34, 34-Mar-2019 34-Dec-2019 31-Mar-2020 ___34-Deo-2015 34-Dec-2016 31-Dec-2017 31-Dec-2018 31-Dec-2019 Efficiency Measures otal Noninterest Expenses $28062
Slide 34: Reconciliation of GAAP and Non-GAAP Measures
Reconciliation of GAAP and Non-GAAP Measures, ($ in thousands) As of or For the Quarters Ended, 31-Mar-2019 31-Dec-2019 31-Mar-2020 Return on Equity Measures Net Income $11,635 $ 20,783 $6,030 Amortization of Core Deposit Intangible -After-Tax 255, 238 461 Net Income Adjusted for Intangible Expenses
Slide 35: Reconciliation of GAAP and Non-GAAP Measures, Continued
Vieasures, Continued * Tangible common equity divided by common shares outstanding at period-end. * Operating noninterest expense divided by operating revenue, 5 Earnings available to common stockholders excluding amortization of intangible assets divided by average tangible common equity. * Adjuste
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