Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — Q4 2019 Earnings Presentation
43 slides from Oceanfirst Financial's earnings presentation, Jan 29, 2020
Slide 1: OceanFirst Financial Corp. Investor Presentation January 2020
. . . Exhibit 99.2 OceanFirst Financial Corp. Investor Presentation January 2020
Slide 2: Forward Looking Statements
INVESTOR PRESENTATION . . . 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, str
Slide 3: About OceanFirst Financial Corp.
. . . About OceanFirst Financial Corp. 3
Slide 4: OceanFirst Financial Corp.
INVESTOR PRESENTATION . . . OceanFirst Financial Corp. • NASDAQ: OCFC • Market Cap: $1.5 billion1 • Bank Holding Company with National Bank Subsidiary • Founded in 1902 • Total Assets of $10.2 billion2 • 75 Full-Service Branches in New Jersey and Metropolitan New York City2 Headquarters OceanFirst B
Slide 5: Investment Thesis
INVESTOR PRESENTATION . . . Investment Thesis • Organic Growth Including Low-Cost and Durable Deposit Base • Cost of deposits is one of the lowest in the state of New Jersey at 64 basis points • Strength of Assets • Strong and diversified balance sheet underpins flexibility to grow the business • Di
Slide 6: Commitment to Execution
INVESTOR PRESENTATION . . . Commitment to Execution Our Recent Accomplishments... …Lead to Our Path Forward • Seven Acquisitions Closed in Less Than • Local to Regional Scale Five Years, Including Two River Bancorp (NASDAQ: TRCB) & Country Bank • Increased Investment in Digital Banking Holding Compa
Slide 7: Estimated CECL Impact to 12/31/19 Balance Sheet
INVESTOR PRESENTATION . . . Estimated CECL Impact to 12/31/19 Balance Sheet1 $60 Unamortized credit mark on acquired loans remains and $50 accreted over the remaining life $40 $23.0 $30 $10.0 ($ Millions) ($ $20 $7.3 $7.3 CECL Model $34.2 $24.2 $10 $16.9 $16.9 $0 12/31/19 Reported 12/31/19 CECL ALLL
Slide 8: Our Business
. . . Our Business 8
Slide 9: Fourth Quarter 2019 Highlights
INVESTOR PRESENTATION . . . Fourth Quarter 2019 Highlights Financial Highlights 2019 Operational Highlights • Core Net Income of $25.7 • Acquisition of Capital Bank of New • Core Diluted EPS of $0.51 Jersey (Capital Bank) completed on • Net Interest Margin of 3.48% January 31, 2019 with full integra
Slide 10: Net Interest Margin
INVESTOR PRESENTATION . . . Net Interest Margin Operational Highlights Net Interest Margin 2 4.50 • Non-interest bearing deposits 4.00 are 22% of average balance of 3.64 total deposits 1 3.50 3.41 3.00 • Balanced interest rate risk 2.50 1.90 position 2.00 Percentage 1.50 1.00 0.50 0.00 2014 2015 201
Slide 11: Effective Interest Rate Risk Management
INVESTOR PRESENTATION . . . Effective Interest Rate Risk Management Duration 5.0 All asset categories managed with limited duration 4.0 3.0 Years 2.0 1.0 0.0 Securities Mortgage Loans Consumer Loans Commercial Loans Total Assets FHLB Term Time Deposits (Weighted Average) Borrowings Rate Characterist
Slide 12: Deposit Growth with Branch Consolidation
INVESTOR PRESENTATION . . . Deposit Growth with Branch Consolidation Total Deposits Per Branch 7,000 (at December 31) 125 Average Deposits Per Branch ($ Millions) ($ Branch Deposits Per Average 6,000 100 Strength and Durability of Low-Cost 5,000 Deposit Position 75 4,000 • Target average branch size
Slide 13: Loan Composition Emphasizes Commercial
INVESTOR PRESENTATION . . . Loan Composition Emphasizes Commercial1 Total Loans Outstanding Loans by Customer Segment – 2019* 2015* 2016* 44% 2017* 56% 2018* 2019** Commercial Consumer Consumer Commercial $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 (in millions) Residential Home Equity & Con
Slide 14: Diversifying Loan Portfolio – Commercial
INVESTOR PRESENTATION . . . Diversifying Loan Portfolio – Commercial1 14 1Estimated as of December 31, 2019. Includes Two River and Country Bank, acquired on January 1, 2020.
Slide 15: Diversifying Loan Portfolio – Total Loans
INVESTOR PRESENTATION . . . Diversifying Loan Portfolio – Total Loans1 15 1Estimated as of December 31, 2019. Includes Two River and Country Bank, acquired on January 1, 2020.
Slide 16: Conservative CRE Portfolio Reflects Strategic Execution
INVESTOR PRESENTATION . . . Conservative CRE Portfolio Reflects Strategic Execution CRE to Total Risk Based Capital 0 100 200 300 400 500 600 700 800 Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Capacity to grow Investor CRE Peer 6 by $316 million while Peer 7 remaining under 300% Peer 8 Peer 9 Peer 10 OCFC 2
Slide 17: Generating Consistent & Attractive Returns
INVESTOR PRESENTATION . . . Generating Consistent & Attractive Returns 16.0% 1.50% 1.35% 14.0% 1.20% 12.0% 1.05% Return on Assets on Return 10.0% 0.90% 8.0% 0.75% 0.60% 6.0% 0.45% 4.0% 0.30% ReturnTangibleon Equity Common 2.0% 0.15% 0.0% 0.00% 2015 20161 20171 2018 1 2019 1 Core Return on Tangible C
Slide 18: Credit Metrics Reflect Conservative Culture
INVESTOR PRESENTATION . . . Credit Metrics Reflect Conservative Culture Non-Performing Loans by Source (Percent of Loans Receivable) NET CHARGE-OFFS 0.07% 0.15% 0.10% 0.05% 0.02% 1.00% 0.91% 0.90% 0.80% 0.70% 0.60% 0.52% 0.50% 0.40% 0.35% 0.29% 0.31% 0.30% 0.20% 0.10% Non-Performing Non-Performing L
Slide 19: Our Strategy
. . . Our Strategy 19
Slide 20: Asset Growth Supplemented by Strategic M&A
INVESTOR PRESENTATION . . . Asset Growth Supplemented by Strategic M&A Opportunistic Acquisitions of Local Community Banks Target Closing Date Transaction Value Total Assets Colonial American Bank July31,2015 ~$12million $ 142million Cape Bancorp May2,2016 ~$196million $1,518million Ocean Shore Hold
Slide 21: New Jersey Expansion Opportunities
INVESTOR PRESENTATION . . . New Jersey Expansion Opportunities • New Jersey is an attractive market 1 • Statewide Total 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 custo
Slide 22: Regional Opportunities for M&A
INVESTOR PRESENTATION . . . Regional Opportunities for M&A Philadelphia Area New York City Metro Area • 7 Banks with Assets Between $400M and $1B • 7 Banks with Assets Between $400M and $1B • 9 Banks with Assets Between $1B and $10B • 6 Banks with Assets Between $1B and $10B New Jersey • 17 Banks wi
Slide 23: Digital Culture – Years of Transformation
INVESTOR PRESENTATION . . . Digital Culture – 5 Years of Transformation Continuous Investment In Talent and Technologies Artificial Intelligence • Funded from ongoing earnings and branch consolidations Team Digital Strategy & Customer Experience First FinTech Equity Project Management Data Science T
Slide 24: Digital Capabilities & Customer Ratings
INVESTOR PRESENTATION . . . Digital Capabilities & Customer Ratings Mobile Capabilities Survey Mobile App Customer Ratings (# of features, out of 18) (Apple & Google) 4.7 OceanFirst 12 OceanFirst # Ratings = 4,337 National / 4.6 National / Regional 10 Regional FinTechs / 4.6 Digital FinTechs / 10 Di
Slide 25: Digital Customer Acquisition
INVESTOR PRESENTATION . . . Digital Customer Acquisition Attaining Scale… … And Attracting Valuable Customers • Digital marketing campaign Customer Usage Statistics* Online Branch launched in December 2018 Digital Usage 95.4% 75.8% • Artificial Intelligence campaigns added in Mobile Usage 88.9% 64.7
Slide 26: Treasury Management Services
INVESTOR PRESENTATION . . . Treasury Management Services Treasury Management Solutions: • ACH Origination, Receipts, Addenda Accounts1 Balances1 Reporting and Debit Blocking • Accept Multiple Forms of Payment Over 33,0002 Over $2.6 billion • Account Analysis Statements • Business Online Banking • Co
Slide 27: Protecting Our Clients with Cyber Security
INVESTOR PRESENTATION . . . 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 • Qualified, certified
Slide 28: Strategic Capital Allocation Generates Shareholder Returns
INVESTOR PRESENTATION . . . Strategic Capital Allocation Generates Shareholder Returns Returned Capital to Shareholders $65 $60 $55 • Stable & competitive dividend $50 • 92nd consecutive quarter $45 • $40 Historical Payout Ratio of 30% to 40% $35 $30 • Repurchased 1.1 million shares YTD $25 2019; 2.
Slide 29: An Experienced Management Team
INVESTOR PRESENTATION . . . An Experienced Management Team Years at Executive Title Selected Experience OceanFirst1 Chairman, President, Patriot National Bancorp Christopher D. Maher 6 Chief Executive Officer Dime Community Bancshares Executive Vice President, Wachovia Bank N.A. Joseph J. Lebel III
Slide 30: OceanFirst Foundation: Serving Our Communities
INVESTOR PRESENTATION . . . OceanFirst Foundation: Serving Our Communities • Over $39 million has been granted to organizations serving OceanFirst’s market • First foundation established in the country during a mutual conversion to IPO (July 1996) • Major initiatives include over $2.6 million to mor
Slide 31: Investment Thesis
INVESTOR PRESENTATION . . . Investment Thesis • Organic Growth Including Low-Cost and Durable Deposit Base • Cost of deposits is one of the lowest in the state of New Jersey at 64 basis points • Strength of Assets • Strong and diversified balance sheet underpins flexibility to grow the business • Di
Slide 32: 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 32
Slide 33: Appendix
. . . Appendix 33
Slide 34: Colonial American Bank Acquisition
INVESTOR PRESENTATION . . . 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 Supports Retail • Favorable financial terms (adjusted for DTA realization Expansion in High of $2.3 mi
Slide 35: Cape Bancorp Acquisition
INVESTOR PRESENTATION . . . Cape Bancorp Acquisition • 85% stock and 15% cash, valued at $196 million • Favorable financial terms 1 • Price/Tangible Book Value of 139% • Price/Core Deposit Premium of 4.4% • Expected accretion to GAAP EPS of 17% in 2017 • Expected tangible book value dilution of 7.2%
Slide 36: Ocean Shore Holding Co. Acquisition
INVESTOR PRESENTATION . . . 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 20% cash, valued at $146 million • Favorable financial terms 1 • Price/Tangible Book
Slide 37: Sun Bancorp, Inc. Acquisition
INVESTOR PRESENTATION . . . Sun Bancorp, Inc. Acquisition • Strengthens and expands OceanFirst franchise into more demographically attractive Central New Jersey, Philadelphia and New York city metro markets • 85% stock and 15% cash, valued at $475 million • Favorable financial terms 1 • Price/Tangib
Slide 38: Capital Bank of New Jersey Acquisition
INVESTOR PRESENTATION . . . Capital Bank of New Jersey Acquisition • Deepens OceanFirst’s market position in Southern NJ and the greater metro Philadelphia area • 100% stock, valued at $77 million • Favorable financial terms 1 • Price/Tangible Book Value of 172% • Price/Core Deposit Premium of 8.1%
Slide 39: Country Bank Holding Company, Inc. Acquisition
INVESTOR PRESENTATION . . . Country Bank Holding Company, Inc. Acquisition • 100% Stock deal, valued at $113 million • Expands branch network to support NYC lending efforts • Favorable financial terms1 • Price/Tangible Book Value of 151% • Price/Core Deposit Premium of 7.5% • Effective execution • A
Slide 40: Two River Bancorp Acquisition
INVESTOR PRESENTATION . . . Two River Bancorp Acquisition • 75% stock and 25% cash, valued at $197 million • Strengthens presence in Monmouth County and expands market area into northern New Jersey • Favorable financial terms1 • Price/Tangible Book Value of 174% • Price/Core Deposit Premium of 9.5%
Slide 41: OceanFirst Milestones – Years of Growth
INVESTOR PRESENTATION . . . OceanFirst Milestones – 118 Years of Growth Crossed $10 billion IPO to Mutual threshold Depositors Created OceanFirst Colonial American Adopted National Two River Bancorp Foundation Bank Acquired Bank Charter Acquired Established Commercial LPO Country Bank Founded, Estab
Slide 42: Favorable Competitive Position
INVESTOR PRESENTATION . . . Favorable Competitive Position Community Banks serving Mega Banks OceanFirst Bank Central & Southern NJ # of Branches Dep. In Mkt. # of Dep. In Mkt. Dep. In Mkt. Institution ($000) Institution # of Branches Branches ($000) ($000) 61 6,216,001 TD Bank (Canada) 125 22,671,2
Slide 43: Commercial Portfolio Segmentation
INVESTOR PRESENTATION . . . Commercial Portfolio Segmentation Total Commercial Loan Exposure by Real Estate Investment by Industry Classification Property Classification Miscellaneous Office 13.0% 23.0% Miscellaneous 14.0% Motel 4.0% Other Services 3.0% Accommodations/ Food Services Industrial/ 7.0%