ConnectOne Bancorp(US:CNOB)2023-01-26 18:22Financial Data and Key Metrics Changes - The company reported a return on assets exceeding 1.3% and a return on tangible common equity of nearly 15% [5] - The pre-provision net revenue (PPNR) as a percentage of assets exceeded 2%, marking the 10th consecutive quarter of strong performance [5] - The tangible common equity ratio stood at over 9% at year-end, indicating a strong capital position [6] - The tangible book value per share increased by 8% in 2022, following a 15% increase in 2021, totaling nearly 25% growth over two years [11] - The net interest margin (NIM) for the year was recorded at 3.70%, a record for the company [12] Business Line Data and Key Metrics Changes - The loan portfolio grew over 19% year-over-year, while deposits increased by more than 16% [6] - The company achieved record levels in both loan originations and deposits, benefiting from investments in team and infrastructure [6] - Nonperforming assets (NPAs) declined by more than 20%, with delinquencies remaining near zero [29] Market Data and Key Metrics Changes - The company noted increased competition for deposits due to the Federal Reserve's actions to combat inflation, leading to historically fierce competition for interest-bearing deposits [26][60] - The company is focusing on expanding its market share in Southeast Florida and Eastern Long Island, which have shown promising performance [9][70] Company Strategy and Development Direction - The company is committed to a client-centric business model, emphasizing long-term shareholder value creation [24] - Investments in technology and infrastructure are ongoing, with partnerships aimed at enhancing client experience and operational efficiency [8] - The company plans to be aggressive in deposit rate competition to retain existing clients and grow its commercial client base [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging economic environment but expressed confidence in the company's ability to navigate it and capitalize on growth opportunities [17][28] - The company anticipates continued pressure on NIM in the short term but expects to return to higher margins once the yield curve normalizes [61][98] - Management indicated that 2023 may present challenges but remains optimistic about maintaining strong performance metrics [92] Other Important Information - The company plans to call $75 million of subordinated debt, which was pre-funded in 2021, and is considering dividend increases and stock repurchases for 2023 [16] - The efficiency ratio for the year was 39%, even with ongoing investments in technology and staff [12] Q&A Session Summary Question: What are the expectations for net interest margin (NIM) and deposit competition? - Management noted that deposit competition is expected to remain intense, impacting NIM, but they are focused on maintaining client relationships despite the pressures [66][98] Question: How does the company view its growth prospects in 2023? - Management indicated that while growth opportunities exist, 2023 may be more challenging due to the economic environment and liquidity issues, but they are committed to supporting existing clients [92] Question: What is the outlook for credit quality and reserves? - Management expressed confidence in current credit quality metrics but acknowledged that normalization in delinquency rates is expected over time [86][95]