CNOB - Earnings call transcript Q1 2019 | ConnectOne Bancorp, Inc.

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Operator

Good day, and welcome to the ConnectOne Bankcorp Incorporated First Quarter 2019 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Siya Vansia. Please go ahead.

Siya Vansia

Good morning. call XXXX ConnectOne's on and conference first for recent today's of quarter to to to results review the developments. Welcome update you and Bill conference Executive today's call be Sorrentino, On will Officer Chief Burns, Chairman and Financial Officer. Frank Chief of that as listen-only the by financial has distributed been as was call in morning over conference media. notice covered results on this The a Internet this well a basis press release the call and time, or let you assumptions of harbor safe me upon Private in Act information are contain statements Litigation the Securities forward-looking made conference this based At pursuant being that this provisions remind are of XXXX. Reform certain the and to numerous forward-looking materially to known uncertainties differ and risks those actual Such to or anticipated. results are from statements assumptions which subject unknown could cause factors the discussed company's in These more fully Commission. the Securities Exchange risk filings are and with

conference revise the of not only in or update this included and as date obligated the call statements call company is them. of publicly the are Forward-looking to made

In may used in the are X-K SEC the XX, Sorrentino. at to which I and reconciliations be on call addition, the which over been those certain in go reconciliations is will measures, other earnings accompanying all call ir.connectonebank.com. and accessed filed provided please now on are in release the Frank earnings release company's release. through encouraged the ahead. have the company's website provided information XXXX, Form terms or in non-GAAP listener turn Each also of to review Frank, together schedules provided with financial tables April this with

Frank Sorrentino

of continued our XX and systems transaction I'd through and the We more enhanced more accomplishments. we're to after early first completed and attending belt. closing. summary Siya, very well-positioned in days achieved of throughout those and less thanks, XXXX Greater for a And believe than our morning. Hudson like first some our we January quarter quarter go reach capability We've conference call. momentum you the technological with under integrated scale, Good thank

are over the implemented financial clients beneficial shareholders us. transaction be true. saves of of transitions From fully has and believe ConnectOne. would seamlessly Essentially cost we benefits the be why it been value-added have to As this perspective, today and merger proven is a to behind to

Our improved. loan-to-deposit ratio

was Our CRE concentration reduced.

Our upward margin continued. net share of book per interest And was strengthened. the trajectory value tangible

discussed focused is making calls, on shareholder and growth As within on ConnectOne best of expanding value the our target in opportunities, disciplined geographically interests long-term markets prior investments creation.

of invest our held a United people-first and revenue brokers professional BoeFly, financial technology May fintech the with City provides As medium-size leverage a technology in committed also streams. is agreement while here This connect businesses expanding ConnectOne foundation transaction we've to loan with helps an lenders to small- ConnectOne to company. Boston-based and digital to patented built an regard, York New continue culture to at recently stay expected In diversifying we're which growth States. across the and BoeFly this acquire close to our in and to dynamic company we ahead the announced With privately competition. avenue

us allows to it recently-established platform. SBA Additionally, jumpstart our lending

largely brick-and-mortar and believe in we a becoming of the our expand with of We forward, in less and segment future going be the the While lending calls expect to portfolio are SBA this interest area risk-adjusted gone of which a SBA partnerships in radar. don't critical loan this industry lot to strong returns will significant prudent a received has of the under oriented. this for we are like around measured transaction, banking We've way. look

ConnectOne's there's is alignment a with marketplace strategy. by to a national And presence the the companies establishing cultural Given enhance a the in transaction this synergies, digital bank downside. low-cost very digital meaningful between strong upside the limited

in an BoeFly shareholders the brand ConnectOne. will as potentially model. to the independent We look road and expertise growth. the will business position be current operate team It CEO value welcoming forward division ConnectOne our its Additionally, an to create significant to BoeFly and Rozman, down effort to it of led leveraging drive for BoeFly under Mike BoeFly's by operating

we've disciplined ConnectOne. in very While areas growth in exciting, all is successful also in of investing been process improvements

supporting evaluating determine funding, operations, the As back where we've efficiencies to technology while every bank's demand discussed, we've always-on can for banking office gathering services. and also been of our deposit client's create area

As competitive and our experience products to client's consumer digital companies with enhance offer continue technology part of our improve of to a suite our to leading digital approach we to partner products.

platform Towards this continues. end rollout nCino our

you recall, nCino the lending between the our gathering, lines was business expanding process. deposit We're further focused initially rollout process now and the strengthening may alignment originations. deposit As on additional our including loan into digitizing

billion who the and banks operators. an that notice double saw charge commercial our responsibly office was our markets while to expanded one assets branch for a our total isolated ultimately addition the strategy, earnings loan investments owners York In release Those had to average million, well fact surrounding We target $XX $XX our within in than per technological mismanaged above, we related continuing more credit on under Jersey placing building our footprint assets. has New ConnectOne rationalization employee grown City. us probably the increasing a by for also to New you in

While very we disappointed, are this ConnectOne. rare is occurrence very a for also

a our these than recovery reserved. you believe improved measures with more are We Bill adequately shortly. the now avenues And metrics a quarter. during bit and pursue significantly be have said, we to improved overall That various credit about quality more sharing little will

our stock highlight repurchase call economics, X.X Bill the or repurchase approximately our to capital of levels of common current given and the the to million plan to favorable program. X.X% our performance, that rising I'd shares recently up over like strong we announced turning stock. The financial authorizes Before repurchase

to the cash flow on reflect our call track investment use share. time this in over decisions increased We our to Bill. capital These to record, ability XX% free the by return $X.XX our impeding our also confidence to recently our I'll our to At shareholders turn without and quarterly dividend strategy. a future

Bill Burns

Frank. you, Thank

So it productive Then dig to your details. very was going a of and And the be one. busy answer little quarter any to I I'm happy questions. but Frank more will a into a

Frank of mentioned, Hudson the Greater closed As go we And beginning acquisition transaction. the the quarter. to impact at going I'm the financial of through the

from Greater in and now merger past slightly year the XXX% with of loan by than First, in contributed $XXX at the had concentrated sequential about On growth growth X% XXX% and a increased XX% million and than of little our so year-end. million footings X% further and added $XXX that, book quarter, $XX.XX by is our ago. organically growth the less book bank XXX%. CRE for improved dilution contributed decline CRE quarter about about loan-increased that more improvement to for Tangible ConnectOne, XXX% merger deposit average of value year. Tangible per more over X% top was from X% annualized merger we XX%. down which a grew deposits. from concentration to by in of the the for annualized the than more and loan-to-deposit of The we including nearly Hudson in further metrics, per to value our a up loans to is share $XX.XX, share deposits now than ratio,

assets. X.XX% the about interest With up accounting accounting attributable increase points last year's able basis margin $X widened pre-tax point little basis after going of quarter bit tails in to to first that net was can currently interest this at NIM purchase over by purchase course of consistent the off a a margin I'm due in conservative the income forecast challenging And forward compression without million of pressures the quarter. slight a Our in quarter. But We've to maps rate until accretion little the competitive from that sequential the end in out acquired remainder maintain to bit level XXXX, and accretion the this That a X even amount fairly depending year. the on of to going similar of quarterly maintained vary quarter. environment. core be X and been performance

of saves. for cost already cost XX% the merger full of as phase-in today saves, targeted we achieved As have

During the saves any were those branch percent about probably was realized, without closures. that of and XX first quarter

Although entire we we probably coming months. to be the in branch X our network, rationalize or continue will closing X

overall earnings for the to quarter. Turning

and and As Frank to assets Non-performing percent year from X.XX% Nonaccrual a and had it to mentioned, charge and excluding a common return isolated our improved X.XX% at taxies, year X.XX% decrease strong taxis slight about metrics. of ago, as loans jumped X.XX% credit had ago. metrics quality excluding Nevertheless, from the a that ratio, relative we performance and Reserves provision charges one metrics one tangible the was to loans both total very on taxis from X% as was an of from that ROA a percentage from with significantly, sequentially our year-end. to nonaccruals X.XX% excluding XXX% XXX% Meanwhile, declined X.XX% peers. the quarter merger in XX.X%, includes elevated declines ago.

XX $XX X.XX% capital, for to X/XX. company's know, a the And of basis at the for repurchase buy a closed you window common able as the early holding plan. point quarter were over we terms the consecutive stock year. And increased quarter That's announced fourth before increase past share. just In year at about this stock the the we to tangible some ratio equity

We dividend our performance on quarter expect this XX% soon. to to for quarter our Also share common based $X.XX expectations resume forward. we strong repurchase activity increased going per very per

revision of not other are to taking core any approach. increase color state middle-of-the-road around in taxes. Now year's on some for That a legislation. our We're our raises clear clarification with let XX% effective to tax XX%. approximately impact still exact the you we rate me words, New reserving give In Jersey moderate last a providing

this We undertaking, marketplace predefined acquisition. BoeFly's The expenses, on XX.X%, rate functionality the variable to our a rate. quarter came BoeFly platform. result in that only is millions merger low-risk and is through which but income, the a generation. income talk based from was targets. lower notice versus leads fees little revenue sources, Currently, digital strictly about I low certain view may that price referral of You performance largely in adding the single fee and high-reward of is effective to a taxable that at largerly asset entry the for percentage tax to earned as digit nontaxable decreased like the

SBA to market those some well either goal revenues sale on as as or bank expand opportunities provide dictate. portfolio conditions as is for lending at for the Our gain for

just for it after So I'm integrated going recap the to merger Hudson closed. these quarter. is Greater months X highlights fully

Our performance forward targeting rate. strong. even ROE And we this quarter a very metrics, although still going are usual XX% slightly lower higher with are than a tax

value book to tangible share on eye a nice an which at keep pace. continues to per always, as continue, We increase

Our tough has a remarkably been in net margin interest stable very operating environment.

space. credit to metrics are with significantly. we positioned of the finally, lending fintech improved participate in And the digital Our quality acquisition BoeFly now

Going M&A. will continue and to focus both forward, And Frank. turn we to back organic opportunistic on over time now it's enhancing to value growth

Frank Sorrentino

even covered Thanks. track that more grow rate as year lot an environment Great, continue transform effectively. excellent we're high a technologically and our And build both tough And are by demonstrated we We in see expanding we single transactions well-positioned than We're upon. digital with Bill. a integrating the for are loans. to to a We've even becoming to to a ConnectOne -- the note, today. our and record and focused in foundation of quickly in that organically I'll deposits continuing channels acquirer has still digits before. and skilled growth

our to As questions listening. good any stewards efficiency, our make we'll of we remainder ConnectOne. to I strategic execution, everyone and audience. XXXX best-in-class remain supplementing from continuing organic solid operator, the look investments your for with of thank growth want our being interest And this capital shareholders' advancing M&A, to at the the appreciate priorities We time, future. in for ahead take

Operator

Thank Instructions]. you [Operator

The go sir. Wallace first ahead, with question will come William Raymond Please James. from

William Wallace

you that run brokers the might with On to with the give grow might and you the business, of a be economics BoeFly loans you business able help to as to sense lenders maybe And aggressively is connecting sense get the a then of currently of us rate us be. what how I'd think that. maybe like can

Bill Burns

number. grow million referral platform. to $X that range currently. rate the number that current to on in Look, so there to we're is And and run annually, from million we're the and exact on obviously fees first, is that marketplace to give I an a $X going going can't try to try you grow Well that

William Wallace

opportunity on put potential this there that that As you sheet Should be I you the we far that willing Or about your balance there a does from loans sheet balance that assume your in what as, opportunity might any mentioned market? believe put is prospective? sheet expand could a business. from would be it from on balance be thinkings to BoeFly you geographic

Frank Sorrentino

I'll take question. that Wally,

are just we've itself. been certainly for And along here plus banks for today. So at roster. we are would would headquartered the market within lenders the that look that to us that be other participating added is maybe the either here marketplace platform. marketplace to or same model area that for that outside are currently on opportunities running a have the we go which be make for many our be all clients the We presence ability fit would market that There within sense organizations yes, one loans looking are that that to loans the that of

William Wallace

And charge that up in had already that was then on, on nonperforming? the the you office building

Bill Burns

Yes, had nonaccrual it and a previous on already been on was there it. charge

William Wallace

had this you a while back on Had fell contract building a through? that

Frank Sorrentino

Not best knowledge. of to my

Bill Burns

No.

William Wallace

And just the given then update current on rate thoughts could us question. your you the and interest around last potential. net the margin environment Bill,

Bill Burns

noninterest-bearing in in than the we've is bit well But rate the feel on to deposits. The successful slower has little of increase it difficult. as a success the depends I go cost been our margin. loans on been of loan Yes, But maintaining going all portfolio mix it as raising of deposits. very our

compression. that hopeful can quarter we X or basis that. than So points my X again better do I'm is guess best

Operator

from the Please proceed Thank question you Breese with Matthew with question. from come The Piper will next Jaffray. question. your

Matthew Breese

you accretable I Bill, mentioned the thought know what you might yield be.

Did you or $X quarter missed I XXXX? through say year-end a think it. million I through

Bill Burns

XXXX. Through

Matthew Breese

So similarly…

Bill Burns

And Greater from yes, that's from Hudson the transaction. Greater the Hudson,

Matthew Breese

we then about think And as

Bill Burns

Center about still, There Union Hudson. million it from was $X over from is some left Greater but

Matthew Breese

I X% prior you stacks up versus now on hoping up to how then this And related the stack loan the average gain quarter? on color was okay. yield Understood, versus balance roughly to some that And does blended the how that pipeline, the had sheet period. the

Bill Burns

loans always digits slow X% have the -- on so still we adjusting the high going pipeline XXX is Greater we're And but that question is yield. average so look, cost. Hudson. little now the deposit our -- strong base, first the so loan single increase robust. is only And and in the There year the is growth quarter expected, the by on the lending about a in probably pipeline the for see target to is side, beginning our Yes, competitive originating after still the in we bit the at how pressures compare we still continued grew it's increase in as of to

Frank Sorrentino

the of mix mix, with it's the just And a perspective expect I from increases you some in think would portion. C&I

Matthew Breese

to you you be seeing that pretty any stiff. seems quarter the at well? is competition would you this Now noted off. characterize number mention leveling deposit environment Or your as still competition A differently? that of have least competitors did Are

Frank Sorrentino

-- you see, yesterday. about how we depends this It talked

is what the increase has of I So off. that is think the of in heightened competition in there's competition going I But level leveled happening the on. a clearly level increase pretty believe increases the as competition for in dollar fierce. or going into rates today but expectation is not strong, continued probably each future is though of the the certainly out increasing

Bill Burns

this even fed spreads total think is on of better. it's affecting deposits isn't that increasing having just the rollover The cost we're impact not raising is CD if ConnectOne I getting And still the aren't of funds rates. And everyone. the

Matthew Breese

rate. the to in understand better just middle-of-the-road to is the one wanted last I approach. tax regards My

scenario And be? then it in best-case then are So could what it scenario XX%, on waiting we worst-case a And about to the for it? think back to would be is way clarification? what that

Bill Burns

up it's X. basis by X Yes, to to points or be probably down -- could it by X X

how from X that right this Sorry, but said we nobody different it handle our what XX. by is reported, And percentage different reserve. sure. percentage banks think X now to could tax return. up not I are it points reporting be X it's what or -- for knows it's And a to we by down to we X middle necessarily I course And amounts XX of on points

right creating we're right. reserve So a now, essentially

Matthew Breese

we for where of XX% range have should you XX% to the anticipate year the you it's of that So the and remainder that the actually we'll then at clarity file? when in accrue some end year

Bill Burns

if guess end Well, the before asking of get we'll me you're year. to clarification

And won't. could take a very know probably long we sure. think I time that to for

is rest knows it then adjust we'll obviously everybody my so and continue going how to And year. immediately. If the of this guess that the work, we'll changes is best

Operator

question from Austin next come will Stephens. Nicholas The with

Austin Nicholas

questions you see of on that top the of expense the But you're you answered. were maybe feel is maybe how BoeFly. kind from on that? could of back here just give Most base million trending then on the my a expense outlook on $X expenses, maybe Can from some you what provide of just fees incremental million to kind of getting $X us that and of

Bill Burns

same. at the the basically a roughly time. breakeven present It's It's

I estimate So change at wouldn't to the rate. any run earnings current relative BoeFly

range the the I the expense for really efficiency time And of revenue we're maintaining depends relatively growth. that. mean answer ratio As all on I far as see growth, our give I It kind in in same now. the

the So in we've the -- growth. mid-single-digit been expense single probably in

Austin Nicholas

the capital. that remainder integrating you're opportunities then on kind acquisitions year. And and Any updated the environment Any in viewing uses your seeing just of with M&A capital on thoughts maybe to market? you're of the how the of

Frank Sorrentino

seller. we and buyer for someone us, make something don't got got Yes, to lot or our got it's has gain think do something it's expands a market it we the deposit but has be you is We've boxes. to It's opportunities to as in believe lots either a be expertise an check that way to we there's right? mean of where got of to is sense have I a a market we be has a meaningful. be to And franchise, I think a good either today, someone know, that in

lots So anything looking the It's sheet. it it not just just has fill to in. that boxes for to balance of out before fits we're check

we've the I end we've patient time when and strike that at looks for think I to value day time think but be our again And shareholders. of demonstrated been the transaction we've right. able the created

Bill Burns

than based on with of event, growth projections, repurchase the some return terms our and like -- it able In program continue able and other be our that level. dividends handle be looks we'll capital-changing the growth also other dividend stock to continue our higher and all to

Operator

for [Operator you Thank your Instructions]. question

question Collyn Please next ahead. Your KBW. go with Gilbert will from come

Collyn Gilbert

Just to on repurchase. follow up on the stock your comment

get You tool. foresee your of part as a kind authorization? longer go trying just to be had issue Do continue. indicated you scenario you capital to repurchases of the view utilizing on to term where able another would and Or management

Bill Burns

Well, that. this one That's done first But my would take before what doing at when we're addressing look another this finish one. one with a I let's say. we'll

Collyn Gilbert

your are level you price closed And How said before about… around XX. window was thinking you the

Bill Burns

price Yes, growing… the is stock

Collyn Gilbert

are… how Yes,

Frank Sorrentino

undervalued. really we Yes, stock think the is

back this So stock happy to we're level. very buy at

Collyn Gilbert

assume mix term know kind the sort of you Frank, loan you, loans the And term then growth you're how of too. of just construction near but seeing then I pipeline as and or just, on whatever, similar kind going forward longer said, front. of

Frank Sorrentino

We're completed fairly level been has pipeline construction good or refinanced, getting seeing our Projects whatever. of are think being sold portfolio. a within I the and turnover consistent. Yes,

one ahead it. it and, an is and where this things place provides moment demand going seen get about it way pretty like feel the we much are to over we're rates time it what portfolio we to is have specific to the interest cycle we depending areas the confident happens would with like about lending, so But market. the that as goes and borrowers expect doing up asset down we the And right market at in change I quarters, have and other. And we payoffs to then class. that and conversation that still completion But the on asset relative that. we and the for way materially to now can believe into look have continue But extent you've not or and this past of as today. do the a whatever go construction they in that that marketplace we're in we the in the bigger inviting we the for that the through to the

Operator

you. Thank management Q&A I'll now today's to back session. closing remarks. concludes it for turn This

Frank Sorrentino

thanks earnings with quarter all. great. joining look for interest next forward on we We Well, thank you our call. speaking again time. us to Well, appreciate And you your first and

and all day. you thank So have great a

Operator

today's Thank concludes and you, ladies gentlemen. This conference.

You disconnect may now your lines.

ConnectOne Bancorp (CNOB) 28 Apr 192019 Q1 Earnings call transcript