ConnectOne Bancorp, Inc. (NASDAQ:CNOB) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 10:00 am ET

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ConnectOne Bancorp, Inc. (NASDAQ:CNOB) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Executive
William S. Burns

long run that BoeFly, through the PPP program, has increased the distribution channels. And so, on net, this is a good thing. The fees the generated from the PPP and the outlook for the future and that's offset slightly by lower fees for their regular business through the duration of the crisis. Okay?

Analyst
Matthew Breese

Okay. Just last one really quick. Tax rate is coming in at about 14.5% the first two quarters of the year. Where do you expect that to be for the back half of the year and then in 2021?

Executive
William S. Burns

Well, it depends on the level of pre-tax income. So right, it gets impacted by what the level of provisioning is. Should the level of provisioning go lower, we're going to get back up to the 20% range. If it stays at this level, it'll sort of be consistent with, what it was this quarter.

Analyst
Matthew Breese

Understood, okay. Thanks. That's all I had.

Executive
William S. Burns

Thanks, Matt.

Executive
Frank S. Sorrentino III

Thanks, Matt.

Operator
Operator

[Operator Instructions] The next question comes from Chris O'Connell of KBW. Please go ahead.

Analyst
Chris O'Connell

Hi. Good morning. This is Chris, filling in for Collyn.

Executive
William S. Burns

Hey, Chris.

Analyst
Chris O'Connell

Just wanted to start off -- morning. Just wanted to start off on the expenses, appreciate the guidance and the efficiency. Is the four additional branches, is that outside of the original cost save plans, for the acquisition?

Executive
William S. Burns

Yes. That is separate from the acquisition. So it's additional savings.

Analyst
Chris O'Connell

And do you have an idea of the timing of that or the plans for the timing in the back half of the year?

Executive
William S. Burns

By the end of the year.

Analyst
Chris O'Connell

Okay. Any idea if it's going to be more weighted for the savings coming in the third quarter or the fourth quarter?

Executive
William S. Burns

No. The accounting has changed over the years. But it's more -- you're right, there'll be more in the third quarter, will accrue...

Analyst
Chris O'Connell

Okay.

Executive
William S. Burns

To the bottom line.

Analyst
Chris O'Connell

Got it. Okay, great. And then, as for the -- you mentioned that, you're already starting to work down the excess liquidity levels?

Executive
William S. Burns

Right.

Analyst
Chris O'Connell

To our understanding, is that the non-interest-bearing deposits are coming down as well as customers utilize the PPP funds?

Executive
William S. Burns

No. It's not the non-interest-bearing balances. Those have remained pretty constant. And that's really good news, because they went up with the PPP program. And even as the PPP funds are being used, our non-interest-bearing demand balances are staying higher. So that's good news for profitability and the margin. In terms of the liquidity coming off, we have the PPP borrowings. We'll save 35 basis points, 40 basis points on the liability side. If you're trying to calculate this, we're getting 9 basis points and we're paying 35 basis points on it. So there's a negative spread -- okay. If that helps.

Analyst
Chris O'Connell

Do you see the cash over the next two quarters to three quarters coming back down to kind of that $135 million?

Executive
William S. Burns

I was going to say $150 million, but $135 million is fine too.

Analyst
Chris O'Connell

Okay, great. And how are you guys