ConnectOne Bancorp, Inc.

Greetings and welcome to the Connect One Bancorp Inc. fourth quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Leah Vancia, Chief Brand and Innovation Officer for Connect One Bancorp. Thank you. You may begin.

Good morning and welcome to today's conference call to review Connect One's results for the fourth quarter of 2020 and to update you on recent developments. On today's conference call will be Frank Sorrentino, Chairman and Chief Executive Officer, and Bill Burns, Executive Vice President and Chief Financial Officer. The results as well as notice of this conference call on a listen-only basis over the internet were distributed this morning in a press release that has been covered by the financial media. At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risks, which could cause actual results to differ materially from those anticipated. These risk factors are more fully discussed in the company's filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are made as of the date of this call and the company is not obligated to publicly update or revise them. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed on Form 8K with the SEC and may also be accessed through the company's website at ir.connect1bank.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. I will now turn the call over to Frank Sorrentino. Frank, please go ahead.

Thank you, Susan. Good morning, everyone. As everyone knows, 2020 was an unprecedented year in which we faced a series of unexpected challenges. As the pandemic worked its way through our markets, we watched our communities demonstrate their resilience by continuing to respond and adapt And I'm proud of the role that the Connect One team played in supporting these communities through these challenging times. Our team responded to the pandemic in a way that defines our core values, demonstrating through action, our commitment to our clients, our communities, and our founding principles. This unwavering commitment, coupled with a tech-forward operational environment, allowed us to continue business without skipping a beat. and is clearly demonstrated in our metrics. Today, the outlook is better than when the pandemic first hit. We're certainly not out of the woods yet. However, we see strong signs that we're on track to continue to build positive momentum towards a robust economic rebound and strong performance. Understanding the challenges we faced during 2020 and that we did not achieve some of the strategic goals we had initially set for the company, I am extremely pleased with with the continued execution of our operating strategies. Our financial metrics were, once again, industry-leading, with pre-tax net revenue hitting a record for the second quarter in a row, exceeding 2% as a percent of assets. Bill will get into the details in a little bit. We're very proud of this accomplishment. With solid revenues, increased productivity from technological improvements, and a continued focus on streamlining Connect One's retail brick-and-mortar footprint, our efficiency ratio improved to under 40%, a key metric that we've been focused on. Credit losses and delinquencies remain very low, while deferments and modifications continue their downward trajectories. At year-end, deferrals declined approximately $210 million, or 3.5% of total loans, just as we projected. Turning to loan origination, excluding PPP, our portfolio grew, especially in the latter part of the quarter, as a result of continued increased demand from organizations that have enhanced their businesses through the pandemic. Our loan origination has been strong in the back half of the year. However, the growth was offset by significant payoffs. Looking ahead, our teams remain actively involved with our clients. Our overall pipeline is quite solid, and we continue to expect net loan growth over the next few quarters. accelerating in the back half of the year. We're optimistic that the operating environment will improve during 2021, resulting in opportunities for growth, favorable lending spreads, and best-in-class performance metrics for Connect One. Over the past year, our capital and reserves have grown significantly, positioning us for organic growth, potential M&A, and the return of excess capital. We continue to view share buybacks as an important component of our capital management strategies. And with our capital ratios increasing, our board of directors has reinstated the stock buyback program. We have about 600,000 shares remaining under the current program and expect to opportunistically repurchase shares in the months ahead. Additionally, along with today's earnings release, our board of directors declared a nine cent per share quarterly common dividend. With our growing capital base, Connect One has the capacity Spain a higher dividend, and I expect our board could revisit our dividend levels soon. As we all know, banking is changing, and the environment that COVID created has accelerated its transition with both clients and employees embracing the use of new tools. We've seen meaningful technological shifts, including automated and digitized financial processes, virtual deposits, and reliance on remote mobile banking platforms. As many of you have heard me say before, it's really the year 2030, which is nine years early. Over the past few years, Connect One has made meaningful investments in adopting technology to remain competitive, creating efficiencies, and getting closer to our clients. These investments played a critical role in competitively positioning Connect One as a modern financial services company. We're well positioned to move into the future state of banking and the new digital world. Toward this end, both sides, our FinTech subsidiary, experienced a strong year, pivoting quickly to support both small businesses and banks in the rollout of the PPP program. Bothly's involvement with PPP allowed them to further their marketplace model and expand their brand presence amongst banks, franchisors, and small businesses. Simultaneously, Bothly completed its infrastructure rebuild and now moves into 2021 with a stronger and more robust digital foundation. We're seeing increasing client acquisition on this platform as we invest for the future. We've really only scratched the surface on the benefits gained from this bank fintech alignment and look forward to working with our partners at Bothly as they fuel their forward momentum. We also see attractive opportunities to work with fintech companies to both enhance our digital products as well as to expand Bothly's platform. We remain committed to leveraging our strong technological foundation and look forward to updating you on new digital and tech investments in the quarter ahead. Quarters ahead, rather. Before I turn the call over to Bill, I would like to mention that in December, we further strengthened our management team. We promoted Elizabeth McGinnis, the president of the bank. As you all know, Elizabeth has been a critical part of the bank's growth and strategic direction, and her appointment to president is a natural progression for our company. We also made an important hire with the addition of Michael O'Malley as chief risk officer. Michael brings with him extensive risk and FinTech experience, which will support the bank in building out a more robust risk framework as our balance sheet and our complexity grows. These executive appointments allow us to further our competitive position while supporting our growth into a modern financial services company. So in summary, we're pleased with our performance this past year. I'm exceptionally proud of our team. and their continued resiliency. And we're excited about the prospects for growth in 2021. So with that, I'll turn the call over to Bill to provide some more details on the quarter's performance.