Connectone Bancorp, Inc. · NASDAQ:CNOB

Connectone Bancorp — Investor Presentation (September 2020)

29 slides from Connectone Bancorp's investor presentation, Sep 9, 2020

  1. Slide 1: CNOB September 9, 2020 Investor Presentation

    CNOB September 9, 2020 Investor Presentation

  2. Slide 2: About ConnectOne Bancorp, Inc.

    About ConnectOne Bancorp, Inc. o Client first and sense of urgency in every business decision from top to bottom of organization Strong Culture Founded in 2005 to capitalize on poor customer service offered to middle market clients by other institutions Over $7.6* Billion in Total Assets ConnectOne

  3. Slide 3: History of ConnectOne Bancorp, Inc.

    History of ConnectOne Bancorp, Inc. 3 JANUARY 2005 Founded as North Jersey Community Bank by Frank Sorrentino III & local businesses and civic leaders JULY 2014 Merged with Union Center National Bank; assets $3.1billion JULY 2015 Launched ConnectOne University, an Internal employee development & tra

  4. Slide 4: Investment highlights

    Diversified and Granular Loan Portfolio Franchise Overview 4 Robust Profitability and Capital Generation Solid Capital Base with Significant Cushion Above Well - capitalized Levels Robust Core Net Interest Margin Quality Deposit Franchise with Branch - Lite Distribution Model Best - In - Class Effic

  5. Slide 5: Strong Markets, Attractive Franchise

    Strong Markets, Attractive Franchise Strategically placed offices throughout NY/NJ metro area 5 The market we operate in accounts for approximately $1.7 trillion of the $21 trillion United States GDP Market is largely dominated by the largest institutions in the country, leaving tremendous opportuni

  6. Slide 6: Completed acquisitions: Greater Hudson Bank and Bancorp of New Jersey

    6  Completed transaction on January 2, 2019 and integrated systems less than 30 days after closing  Value - add transaction; many benefits realized — Loan - to - deposit ratio improved — CRE concentration reduced — Net interest margin widened — Upward trajectory of tangible book value per share co

  7. Slide 7: High Operating Performance

    High Operating Performance PPNR * 7 1.91% 41.8% 3.42% 9.0% Trailing 12 - Month Return Metrics T1 Leverage Ratio NIM Efficiency Ratio * PPNR represents net income excluding the impacts of taxes, merger and restructuring charges and provisions for loan losses. See appendix for a reconciliation of GAAP

  8. Slide 8: COVID-Response & PPP

    8 COVID - 19 Response & PPP  Initially, 90% of our staff are working from home. Started pilot program in June for return to work  Retail offices pivoted to a leaner contactless environment  Temporarily closed certain branch locations and directing branch clients to drive - thru windows and online

  9. Slide 9: Loan deferrals and exposed industries

    9 ($ in millions) Directly Exposed Industries 1 Deferrals by Loan Type 2 Commentary Indirectly Exposed Property Types: Retail CRE Composition 1 Source: Company Information and Company Designations Note: Balances do not include purchase accounting, premiums, and deferred fees. Numbers may not sum to

  10. Slide 10: High Quality Asset Composition and Reserves

    10 Loan Loss Reserves / Loans Receivable Nonperforming Assets Additional Detail Current Expected Credit Losses (“CECL”)  Opted to maintain Incurred Loss Method under the CARES Act and stand ready to implement at any point in time  Total 2020 provision through 2Q ($31M pre - tax) considers COVID -

  11. Slide 11: Strong Underwriting Culture

    11 Strong Underwriting Culture  Disciplined LTV and DSC standards  Loan origination process supported by specialized teams of credit analysts  High - quality direct commercial lending platform with little or no reliance on participants or wholesale purchases  Prudent growth Multi - Faceted Stres

  12. Slide 12: Diversified and Granular Loan Portfolio

     Lending within geographic footprint — NY / NJ metro market economically strong and diverse  Average loan size: ~$1.1M  No borrower relationship exposure greater than 1.3% of total loan portfolio  ~99+% of portfolio through relationship lending 12 Diversified and Granular Loan Portfolio ($ in mi

  13. Slide 13: Diversified and Granular Loan Portfolio (excl. PPP)

     Project feasibility  Developers background and expertise  Strict loan to cost advances  Rental fallback  Plan and cost review  Interest reserve  Personal guarantees with reliance on liquidity  Bank engineer oversight and inspection 13 Diversified and Granular Loan Portfolio (excl. PPP) ($ i

  14. Slide 14: Loan Portfolio Detail (excludes PPP)

    14 Loan Portfolio Detail (excludes PPP) ($ in millions) Note: Numbers may not sum to 100% due to rounding. Other CRE 36% Multifamily 29% Business Loans 29% Residential/ Consumer 6% Type Balance Percentage Type Balance Percentage CRE - Other / Misc $ 406 7% OOC - Warehouse / Industrial $ 129 2% CRE -

  15. Slide 15: Robust Profitability and Capital Generation

    15 Robust Profitability and Capital Generation Note: Please refer to Non - GAAP reconciliation in Appendix. 1 Excludes merger expenses, nonrecurring items and securities gains. 2 As reported by S&P Global Market Intelligence, peers include BDGE, BHLB, BMTC, BRKL, CUBI, EBTC, EGBN, FFIC, FLIC, INDB,

  16. Slide 16: Yields and Costs; Strong Core Net Interest Margin

    Yields and Costs 16 Strong Core Net Interest Margin (numbers will be updated) Net Interest Margin 13.5 % 9.1 % 10.7 % 13.8 % 13.6 % 10.5 % 10.9 % 10.3 % 12.0 % 12.6 % 2015 2016 2017 2018 2019 CNOB Peers¹ Source: Company Filings, S&P Global Market Intelligence Note: Please refer to Non - GAAP reconci

  17. Slide 17: Best-In-Class Efficiency

    17 Best - In - Class Efficiency $1 8.2 M Assets Per Employee Investments in digital banking and FinTech solutions allow ConnectOne to scale efficiently. Locations utilize technology to serve as “business hubs” supporting clients beyond geographic footprint Historical Operating Performance Source: Co

  18. Slide 18: Branch Rationalization

    Branch Rationalization 18 January 1 Assets ($B) # of Branches Acquired Opened Closed 2017 $4.4 21 0 0 0 2018 5.1 21 7 2 1 2019 6.0 29 9 0 1 2020 $7.1 37 0 0 11 (est.) 2021 (est.) TBD 26 TBD TBD TBD The shift from retail branches to banking hubs

  19. Slide 19: Strategy & Vision

    Strategy & Vision ConnectOne Believes It Remains Well - positioned To Execute: 19  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 Robus

  20. Slide 20: Client Testimonials

    “ ,, ,, ConnectOne Bank was our recipe for success! Their responsive and creative management team offered us all the necessary ingredients to expand and serve our community of chefs, restaurants & food lovers. “ Client Testimonials 20 President | James Beard Foundation Susan Ungaro “ ,, The responsi

  21. Slide 21: ConnectOne Bancorp, Inc.

    & ConnectOne Bancorp, Inc.

  22. Slide 22: Appendix

    Appendix & ConnectOne Bancorp, Inc.

  23. Slide 23: Reconciliation of GAAP and non-GAAP measures

    23 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) $ in Thousands June 30, Mar. 31, Dec. 31, Sept. 30, Trailing Twelve 2020 2020 2019 2019 Months Reconciliation of GAAP Earnings to Pre-tax, Pre-provision and Pre-merger Charges Earnings Net income 14,832$ 6,030$ 20,783$ 21,696$ 63,341

  24. Slide 24: Reconciliation of GAAP and non-GAAP measures (cont.)

    24 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) $ in Thousands June 30, Mar. 31, Dec. 31, Sept. 30, Trailing Twelve 2020 2020 2019 2019 Months Efficiency Measures Total noninterest expenses 33,063$ 35,058$ 22,197$ 20,379$ 110,697$ Amortization of core deposit intangibles (652) (65

  25. Slide 25: Reconciliation of GAAP and non-GAAP measures (cont.)

    25 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) $ in Thousands 6/30/2020 3/31/2020 2019 2018 2017 2016 2015 Net Loan Charge-Off (Recoveries) Detail Average Loans - Including Loans Held-for-Sale 6,332,503$ 5,922,814$ 5,049,458$ 4,330,874$ 3,811,922$ 3,355,452$ 2,793,952$ Net loan c

  26. Slide 26: Reconciliation of GAAP and non-GAAP measures (cont.)

    26 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) $ in Thousands 6/30/2020 3/31/2020 2019 2018 2017 2016 2015 Allowance for loan losses ("ALLL") ALLL 68,724$ 54,169$ 38,293$ 34,954$ 31,748$ 25,744$ 26,572$ Plus: Nonaccretable loan discount 6,039 9,831 8,381 4,312 4,312 4,548 4,796 A

  27. Slide 27: Reconciliation of GAAP and non-GAAP measures (cont.)

    27 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) $ in Thousands 6/30/2020 3/31/2020 2019 2018 2017 2016 2015 ($s thousands, except per share data) Net income 14,832$ 6,030$ 73,395$ 60,352$ 43,220$ 31,082$ 41,311$ Income tax expense 2,516 1,047 20,631 10,782 25,294 11,776 19,926 Mer

  28. Slide 28: Reconciliation of GAAP and non-GAAP measures (cont.)

    28 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) $ in Thousands 6/30/2020 3/31/2020 2019 2018 2017 2016 2015 Efficiency Measures Total noninterest expenses 33,063$ 35,058$ 92,228$ 70,454$ 78,759$ 58,507$ 54,484$ Amortization of core deposit intangibles (652) (652) (1,408) (627) (72

  29. Slide 29: Reconciliation of GAAP and non-GAAP measures (cont.)

    29 Appendix Reconciliation of GAAP and non - GAAP measures (cont.) $ in Thousands (2) Operating noninterest expense divided by operating revenue. (3) Tangible common equity divided by common shares outstanding at period-end. (1) Adjusted net interest margin excludes impact of purchase accounting fai

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