Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — Investor Presentation (June 2023)
32 slides from Oceanfirst Financial's investor presentation, Jun 14, 2023
Slide 1: OceanFirst Financial Corp. Investor Presentation June 2023
. . . 1 The 1Q 2023 Investor Presentation should be read in conjunction with the Earnings Release furnished as Exhibit 99.1 to Form 8-K filed with the SEC on April 20, 2023. Exhibit 99.1 OceanFirst Financial Corp. Investor Presentation June 2023
Slide 2: Legal Disclaimer
. . .Legal Disclaimer FORWARD LOOKING STATEMENTS. In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strateg
Slide 3: Overview of OceanFirst
. . .Overview of OceanFirst 3 Tailored Footprint Across Key Markets Corporate Overview & Market Data Ticker OCFC (NASDAQ) HQ Red Bank, NJ Branch Network 38 branches and 8 commercial banking centers Core Markets New Jersey, New York City, Greater Philadelphia Expansion Markets Boston and Baltimore Ba
Slide 4: Our Shareholder Value Proposition
. . .Our Shareholder Value Proposition Forward-thinking risk management – Shifted focus from loan growth to securing back-up liquidity sources and maintaining price and credit structure discipline. Strong balance sheet – Strategically planned balance sheet provides ample liquidity, high-quality inve
Slide 5: Proven Historical Net Interest Income and Loan Growth
. . .Proven Historical Net Interest Income and Loan Growth 5 76,829 120,262 169,218 240,502 255,971 312,951 305,338 377,477 98,802 3.25% 2015 3.46% 2016 3.52% 2017 3.71% 2018 3.62% 2019 3.16% 2020 2.93% 2021 3.37% 2022 3.34% 301,895 Q1-23 Net Interest Margin Q1-23 Annualized Net Interest Income Peer
Slide 6: Successful Commercial Loan Growth and Geographic Diversification
. . .Successful Commercial Loan Growth and Geographic Diversification 6 49% 69% 2015 Q1-23 +20% (Commercial % of Loan Portfolio) Commercial Loans by Geography as of Q1-23 52% of commercial loans originated in Philadelphia and NY Emphasis on Commercial Increase of $5.9B in commercial loans since 2015
Slide 7: Balanced Approach to Deposit Pricing and Growth
. . .Balanced Approach to Deposit Pricing and Growth 7 Deposit Composition ($’millions) 256 646 607 867 937 1,373 775 1,542 2,387 311 673 661 877 898 1,491 1,608 1,488 1,309 153 784 736 714 616 860 1,627 1,954 2,350 2,539 3,647 4,202 3,830 3,697 337 783 757 1,151 1,377 2,133 2,412 2,101 1,984 2015 4
Slide 8: Conservative Credit Risk Profile
. . .Conservative Credit Risk Profile 8 0.21% 2016 0.01% 0.36% 0.05% 0.11% 2017 0.03% 0.10% 0.05% 0.13% 2018 0.00% 0.12% 0.04% 0.12% 2019 0.02% 0.30% 0.03% 0.11% 2020 0.00% 0.12% 0.02% 0.07% 2021 0.00% 0.11% 0.02% 0.06% 2022 0.00% 0.10% 0.02% 0.06% Q1-23 0.35% 0.52% 0.31% 0.29% 0.47% 0.22% 0.01% 0.0
Slide 9: Operational Efficiency
. . . 71 69 94 99 113 152 207 255 263 Operational Efficiency 9 Deposits per Branch ($’millions) (52) bps2.39% 1.87% 2015 Q1-23 Annualized Core Non-interest Expense1 to Total Avg. Assets 2015 2016 2017 2018 2019 2020 2021 2022 Q1-23 3.7x Operating Efficiency ($’millions) 96 85 118 127 147 185 250 345
Slide 10: Business Model Strength Driving Significant Capital Return
. . .Business Model Strength Driving Significant Capital Return 10 $0.49 $5.55 $0.55 $13.67 2015 $12.94 2016 $13.58 2017 $14.26 2018 $15.13 2019 $14.98 2020 $15.93 2021 $17.08 2022 Q1-23 $12.33 $13.95 $15.62 $15.53 $16.82 $18.42 $20.55 $21.36 $23.60 $25.61 $26.15 $17.42 $12.33 2013 $12.91 $0.94 $1.0
Slide 11: Liquidity, Investment Portfolio, and Credit Update
. . . I N V E S T O R P R E S E N T A T I O N 11 Liquidity, Investment Portfolio, and Credit Update
Slide 12: OCFC Is Well Positioned for the Current Environment
. . .OCFC Is Well Positioned for the Current Environment The Bank maintains diverse sources of funding, including on-balance sheet liquidity and funding capacity that represent 192% of adjusted uninsured deposits Liquidity position enhanced by short duration, high quality, and low risk investment po
Slide 13: Liquidity Sources are Robust and Diverse
. . .Liquidity Sources are Robust and Diverse 13 Key actions taken by management during Q1-23: Promoted our Insured Cash Sweep program to proactively support customers, driving an increase to more than $100 million. Restructured large deposit accounts to meet FDIC insurance requirements. Liquidi
Slide 14: High Quality and Low Risk Investment Portfolio
. . .High Quality and Low Risk Investment Portfolio 14 If the entire portfolio were sold at March 31, 2023 valuations, the impact would reduce CET1 by 50 bps. Portfolio remains high quality and investment grade with 81% rated AAA or AA. Duration on the investment portfolio totaled 4 years. Inv
Slide 15: Deposit Trends
. . .Deposit Trends 15 (1) Deposit beta is calculated as the increase in rate paid on total deposits per quarter divided by the incremental increase in the effective fed funds rate since January 1, 2022. Deposits grew by 3% QoQ; excluding brokered deposits, seasonally decreased by $46 million (les
Slide 16: 81.4% of Total Deposits Are Insured and Population Remains Granular
. . .+81.4% of Total Deposits Are Insured and Population Remains Granular 16 OCFC’s deposit composition is extremely granular with 98% of all deposit accounts having less than $250K. OCFC customers have long tenured relationships with an average age of 10 years. The median age of a deposit relat
Slide 17: OCFC's Customer Base Values Operational Support
. . .OCFC’s Customer Base Values Operational Support OCFC’s deposit base is highly operational and values individualized service and support. OCFC customers initiated over 43 million total transactions in 2022 for over $101 billion, turning over our March 31, 2023 deposit balance more than 10 times
Slide 18: Track Record of Strong Credit Performance
. . . COVID-19 Pandemic Track Record of Strong Credit Performance 18 From 2006 to 2022, inclusive of the global financial crisis and COVID-19, OCFC’s CRE net charge-offs to average CRE loans totaled 6 bps per year compared to 81 bps for all commercial banks between $10 - $50 billion in assets. P
Slide 19: Credit Quality Historically Top Quartile and Well Positioned
. . .Credit Quality Historically Top Quartile and Well Positioned Underlying collateral is diversified: The underlying collateral for the CRE Investor Owned (“Investor”) portfolio is highly diversified and focused in low risk collateral types. Central business district loans comprise <1.0% of to
Slide 20: Leading TBV Growth Supported by Prudent Liquidity Management
. . .Leading TBV Growth Supported by Prudent Liquidity Management 20 Tangible Book Value per Share Growth (Q1-22 to Q1-23)(1) (1) Peers include those companies defined in OCFC DEF 14A filed 4/21/23. Excludes Investors Bancorp due to the sale to Citizens Financial Group. -20% -10% 0% 10% -30% -25% -1
Slide 21: Quarterly
. . . I N V E S T O R P R E S E N T A T I O N 21 Quarterly Earnings Update
Slide 22: Loan Portfolio Trends
. . .Loan Portfolio Trends 22 Moderated Loan Growth in the Portfolio ($’millions) Loan growth has moderated prudently, with the expectation of low growth for the remainder of the year. Diversified portfolio with emphasis on transition to growth in C&I portfolio and moderating CRE and residential
Slide 23: Net Interest Income and Net Interest Margin Trends
. . .Net Interest Income and Net Interest Margin Trends 23 (1) Core NIM excludes purchase accounting and prepayment fee income. Refer to the Earnings Release for additional information. Core NIM1 vs NIM NIM Bridge Q4-22 NIM -0.20 Ordinary course rate impacts -0.09 Quarter-specific impacts (payoffs,
Slide 24: Expense Discipline and Focused Investment
. . . Core Efficiency Ratio1 Expense Discipline and Focused Investment 24 Core Non-Interest Expense1 ($’000) 42,802 41,721 42,331 45,711 45,981 12,326 12,992 13,937 11,111 13,108 2,1282,519 Q3-22Q1-22 Q2-22 Q1-23 3,206 Q4-22 2,77755,128 57,919 59,045 59,341 61,217 Trident Technology Expense Other Co
Slide 25: Quarterly Credit Trends (1 of 2)
. . . Strong asset quality trends driven by prudent loan growth and credit decisioning. Quarterly Credit Trends (1 of 2) 25 Non-Performing Loans and Assets ($’000)1 Special Mention and Substandard Loans ($’000) Note: Of the $24.0 million in Special Mention loans and $86.8 million of Substandard loan
Slide 26: Quarterly Credit Trends (2 of 2)
. . .Quarterly Credit Trends (2 of 2) 26 Loan Allowance for Credit Losses (ACL) Plus PCD & General Credit Marks / Total Loans NCOs / (Recoveries) and Provision for Credit Loss Expense ($’000) 0.18% 0.56% Q1-22 0.17% 0.55% Q2-22 0.14% 0.55% Q3-22 0.12% 0.57% Q4-22 0.10% 0.60% Q1-23 0.74% 0.72% 0.69%
Slide 27: Generating Consistent and Attractive Returns
. . .Generating Consistent and Attractive Returns 27 Book Value and Tangible Book Value per Common Share ($)1 Core ROAA, ROTE, and ROTCE1 • Book value per share increased by $0.26 (or 1.0%) per share compared to the linked quarter. • Tangible book value per common share increased by $0.34 (or 2.0%)
Slide 28: Management 2023 Outlook – Mid-Quarter Update
. . .Management 2023 Outlook – Mid-Quarter Update 28 Loans Deposits Operating Expenses Net Interest Margin Capital • Continued focus on credit risk management, anchored by our diversified CRE portfolio that has performed well in market downturns • Maintain LTD ratio ~100% for remainder of the year •
Slide 29: Appendix
. . . I N V E S T O R P R E S E N T A T I O N 29 Appendix
Slide 30: Adjusted Uninsured Deposit Bridge Detail
. . .Adjusted Uninsured Deposit Bridge Detail 30 Note #1: Uninsured deposits are reported at the consolidated Bank level per the Call Report. (1) The State of NJ requires collateralization on municipal deposits and administers a backstop to protect these deposits. (2) Gross exclusions relate to inte
Slide 31: Non-GAAP Reconciliations (1 of 2)
. . .Non-GAAP Reconciliations (1 of 2) (1) The sale of specific positions in two financial institutions impacted both equity investments and debt securities. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on
Slide 32: Non-GAAP Reconciliations (2 of 2)
. . .Non-GAAP Reconciliations (2 of 2) Non-GAAP Reconciliation $'000 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Tangible Equity Total stockholders' equity 1,610,371 1,585,464 1,540,216 1,521,432 1,519,334 Less: Goodw ill 506,146 506,146 506,146 506,146 500,319 C
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