Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — FIG Partners 21st Bank CEO Forum (January 2018)
34 slides from Oceanfirst Financial's conference presentation, Jan 31, 2018
Slide 1: OceanFirst Financial Corp. Investor Presentation
. . . OceanFirst Financial Corp. Investor Presentation FIG Partners 21st Bank CEO Forum January 31, 2018 – February 1, 2018 J A N U A R Y 3 1 , 2 0 1 8
Slide 2: Forward Looking Statements
. . . Forward Looking Statements In addition to historical information, this presentation 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, strategies and expectatio
Slide 3: About OceanFirst Financial Corp.
. . . About OceanFirst Financial Corp. 3 J A N U A R Y 3 1 , 2 0 1 8
Slide 4: OceanFirst Financial Corp.
. . . OceanFirst Financial Corp. • NASDAQ: OCFC • Market Cap: $874.2 million1 • Founded in 1902 • Asset Value of $5.4 billion2 • 46 Branches in Central and Southern New Jersey2 I N V E S T O R P R E S E N T A T I O N 4 1 As of January 25, 2018 2 As of December 31, 2017 J A N U A R Y 3 1 , 2 0 1 8 He
Slide 5: Investment Thesis
. . . Investment Thesis • Low-Cost and Durable Deposit Base • Cost of deposits is one of the lowest in the state of New Jersey at 32 basis points, increasing slowly in response to rising rate environment • Strength of Assets • Strong balance sheet underpins flexibility to grow and diversify the busi
Slide 6: Commitment to Execution
. . . Commitment to Execution Our Recent Accomplishments... • Four Acquisitions in Two Years • Building a “Digital Culture” Throughout the Bank • Commercial Loan Growth • Strong Total Shareholder Return I N V E S T O R P R E S E N T A T I O N 6 …Lead to Our Path Forward • Local to Regional Scale • I
Slide 7: Our Business
. . . Our Business 7 J A N U A R Y 3 1 , 2 0 1 8
Slide 8: Fourth Quarter and Annual Highlights
. . . I N V E S T O R P R E S E N T A T I O N 8 Fourth Quarter and Annual Highlights Financial Highlights (4th Quarter) • Core Net Income of $14.9 million • Up 41% y/y • Core Diluted EPS of $0.45 • Up 18% y/y • Net Interest Income of $42.5 million • Up 19% y/y • Core Efficiency Ratio of 53.7% • Down
Slide 9: Net Interest Margin
. . . I N V E S T O R P R E S E N T A T I O N 9 Net Interest Margin Operational Highlights • Cost of deposits increased only 4 bps from 2016 to 2017 • Non-interest bearing deposits are 17% of total deposits • Balanced interest rate risk position (1) Source: Bank Reg Data 3.00 3.10 3.20 3.30 3.40 3.5
Slide 10: Deposit Growth with Branch Consolidation
. . . I N V E S T O R P R E S E N T A T I O N 10 Deposit Growth with Branch Consolidation Strength and Durability of Low-Cost Deposit Position • Target average branch size above $100 million • Consolidated 15 branches in 2017 • Expect to consolidate 17 branches in 2018 • 16 as a result of Sun Bancor
Slide 11: Loan Composition Shifting Toward Commercial
. . . I N V E S T O R P R E S E N T A T I O N 11 Loan Composition Shifting Toward Commercial As of December 31, $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2017 2016 2015 2014 Total Loans Outstanding – Mix Residential Home Equity & Consumer Investor CRE Owner Occupied CRE C&I Loans • Tr
Slide 12: Conservative CRE Portfolio Reflects Strategic Execution
. . . 0 100 200 300 400 500 600 700 800 900 1000 1100 Peer 1 Peer 2 Peer 3 Peer 4 OceanFirst Bank Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer Group Average Peer 11 Peer 12 Peer 13 Peer 14 Peer 15 Peer 16 Peer 17 Peer 18 CRE to Total Risk Based Capital 9/30/2017 I N V E S T O R P R E S E N T A T
Slide 13: Generating Consistent Attractive Returns
. . . I N V E S T O R P R E S E N T A T I O N 13 Generating Consistent Attractive Returns • Continued focus on improving efficiencies through acquisition synergies and branch consolidations 0.70% 0.75% 0.80% 0.85% 0.90% 0.95% 1.00% 1.05% 1.10% 2014 2015 2016 2017 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.
Slide 14: Credit Metrics Reflect Conservative Culture
. . . I N V E S T O R P R E S E N T A T I O N 14 Credit Metrics Reflect Conservative Culture N on -P er fo rm in g Lo an s as P er ce nt o f T ot al L oa ns R ec ei va bl e 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 2014 2015 2016 2017 Non-Performing Loans By Source Residential Consumer Commercial Re
Slide 15: Our Strategy
. . . Our Strategy 15 J A N U A R Y 3 1 , 2 0 1 8
Slide 16: Asset Growth Supplemented by Strategic M&A
. . . I N V E S T O R P R E S E N T A T I O N 16 Asset Growth Supplemented by Strategic M&A J A N U A R Y 3 1 , 2 0 1 8 Opportunistic Acquisitions of Local Community Banks Target Closing Date Transaction Value Total Assets Colonial American Bank July 31, 2015 $ 12 million $ 142 million Cape Bancorp
Slide 17: New Jersey Expansion Opportunities
. . . I N V E S T O R P R E S E N T A T I O N 17 New Jersey Expansion Opportunities • New Jersey is a strong market (1) • Population of 8.9 million • Most densely populated state • 11th most populous state • Median household income of $72,000 • Significant opportunities for acquisitions to build cus
Slide 18: Regional Opportunities for M&A
. . . I N V E S T O R P R E S E N T A T I O N 18 Regional Opportunities for M&A Regional banking data as of September 30, 2017 Source: FDIC New York City Metro Area • 9 Banks with Assets Between $400M and $1B • 12 Banks with Assets Between $1B and $10B J A N U A R Y 3 1 , 2 0 1 8 Philadelphia Area •
Slide 19: Data Driven Digital Strategy
. . . I N V E S T O R P R E S E N T A T I O N 19 Data Driven Digital Strategy • Delivering results that are measurable, repeatable, and scalable, which: • Increase customer retention • Increase share of wallet • Reduce cost to serve • Anticipate and support evolving customer needs Digital Offerings
Slide 20: Protecting Our Clients with Cyber Security
. . . I N V E S T O R P R E S E N T A T I O N 20 Protecting Our Clients with Cyber Security • Remains current with evolving industry-wide standards • Real-time analytical tools in place for fraud protection and firewall security • Use of top tier, neural-based, real-time debit card fraud analytics •
Slide 21: Strategic Capital Allocation Generates Shareholder Returns
. . . I N V E S T O R P R E S E N T A T I O N 21 Strategic Capital Allocation Generates Shareholder Returns • Stable & competitive dividend • 84th consecutive quarter • Historical Payout Ratio of 30% to 40% • 1.8 million shares available for repurchase • Strategic acquisitions in critical new market
Slide 22: An Experienced Management Team
. . . I N V E S T O R P R E S E N T A T I O N 22 An Experienced Management Team Executive Title Years at OceanFirst Selected Experience Christopher D. Maher Chairman, President, Chief Executive Officer 4 Patriot National Bancorp Dime Community Bancshares Michael J. Fitzpatrick Executive Vice Preside
Slide 23: OceanFirst Foundation: Serving Our Communities
. . . I N V E S T O R P R E S E N T A T I O N 23 OceanFirst Foundation: Serving Our Communities • Over $34.8 million has been granted to organizations serving OceanFirst’s market • Provided $500,000 in grants dedicated to assisting our neighbors after Superstorm Sandy hit the Jersey Shore in 2012 •
Slide 24: Investment Thesis
. . . Investment Thesis • Low-Cost and Durable Deposit Base • Cost of deposits is one of the lowest in the state of New Jersey at 32 basis points, increasing slowly in response to rising rate environment • Strength of Assets • Strong balance sheet underpins flexibility to grow and diversify the busi
Slide 25: Investor Relations Inquiries
. . . Investor Relations Inquiries Jill A. Hewitt Senior Vice President, Director of Investor Relations & Corporate Communications jhewitt@oceanfirst.com (732) 240-4500, ext. 7513 25 J A N U A R Y 3 1 , 2 0 1 8
Slide 26: Appendix
. . . Appendix 26 J A N U A R Y 3 1 , 2 0 1 8
Slide 27: Colonial American Bank Acquisition
. . . Colonial American Bank Acquisition • 100% Stock deal, valued at $11.9 million • In-Market acquisition supports growth objective in towns of Middletown and Shrewsbury, NJ • Favorable financial terms (adjusted for DTA realization of $2.3 million) • Price/Tangible Book Value of 104% • Transaction
Slide 28: Cape Bancorp Acquisition
. . . Cape Bancorp Acquisition I N V E S T O R P R E S E N T A T I O N 28 • Creates the preeminent New Jersey based community banking franchise operating throughout central and southern New Jersey • 85% stock and 15% cash, valued at $196 million • Favorable financial terms • Price/Tangible Book Valu
Slide 29: Ocean Shore Holding Co. Acquisition
. . . Ocean Shore Holding Co. Acquisition • Reinforces OceanFirst as the preeminent New Jersey based community banking franchise operating throughout central and southern New Jersey • 80% stock and 20% cash, valued at $181 million • Favorable financial terms(1) • Price/Tangible Book Value of 132% •
Slide 30: Sun Bancorp, Inc. Acquisition
. . . Sun Bancorp, Inc. Acquisition • Valued at approximately $487 million – 85% stock, 15% cash • Price/Tangible Book Value of 169% • Price/Core deposit premium of 12.7% • Financially compelling • 2019E EPS accretion of 3.6% in addition to double digit accretion from Cape and Ocean Shore acquisitio
Slide 31: State & Local Tax Sensitivity
. . . I N V E S T O R P R E S E N T A T I O N 31 State & Local Tax Sensitivity • OceanFirst’s exposure to tax law changes is de minimis to overall portfolio size and financial position • Impacted Loans 83% CLTV < 70% 90% 7% 3% Direct Exposure No Exposure Home Equity Residential Mortgage % of total l
Slide 32: OceanFirst Milestones – Years of Growth
. . . OceanFirst Milestones – 116 Years of Growth J A N U A R Y | 2 0 1 8 I N V E S T O R P R E S E N T A T I O N 32 1902 1985 1996 1999 2000 2014 2015 2016 2017 Founded, Point Pleasant, NJ Established Commercial Lending Established Trust and Asset Management Commercial LPO Expansion into Mercer Cou
Slide 33: Favorable Competitive Position
. . . Favorable Competitive Position I N V E S T O R P R E S E N T A T I O N 33 J A N U A R Y 3 1 , 2 0 1 8 Institution # of Branches Dep. In Mkt. ($000) TD Bank (Canada) 127 19,832,103 PNC Bank (PA) 140 18,677,979 Wells Fargo (CA) 140 15,484,506 Bank of America (NC) 122 15,058,444 Santander Bank (S
Slide 34: Commercial Portfolio Segmentation
. . . Commercial Portfolio Segmentation I N V E S T O R P R E S E N T A T I O N 34 J A N U A R Y 3 1 , 2 0 1 8 As of December 31, 2017 • Diversified portfolio provides protection against industry-specific credit events Total Commercial Loan Exposure by Industry Classification Office 29.2% Industrial
Oceanfirst Financial — FIG Partners 21st Bank CEO Forum (January 2018) on 6ix