Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — Investor Presentation (May 2016)
40 slides from Oceanfirst Financial's investor presentation, May 18, 2016
Slide 1: Investor Presentation May 2016
OceanFirst Financial Corp. Exhibit 99.1 Investor Presentation May 2016
Slide 2: Forward-Looking Statements
OceanFirst Financial Corp. 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, stra
Slide 3: OceanFirst Milestones – 114 Years of Growth
OceanFirst Milestones – 114 Years of Growth 3
Slide 4: Serving Central and Southern New Jersey Market
Serving Central and Southern New Jersey Market OceanFirst is the largest Bank headquartered in Central and Southern New Jersey $4.2 billion in assets 50 branch offices Market Cap $456 million OceanFirst Headquarters OceanFirst Retail Branches, Commercial Loan Production Offices, and Wealth Managemen
Slide 5: OceanFirst Loan Portfolio Diversification by Geography
OceanFirst Loan Portfolio Diversification by Geography Atlantic City is 1.3% of the OceanFirst loan portfolio Least Concentration Highest Concentration *Includes Cape Bank loans As of March 31, 2016
Slide 6: Management Team and Insider Ownership
Name Position # of Years at OCFC # of Years In Banking Previous Experience Christopher D. Maher President, Chief Executive Officer 3 28 Patriot National Bancorp; Dime Community Bancshares Michael J. Fitzpatrick Executive Vice President, Chief Financial Officer 23 34 KPMG Joseph R. Iantosca Executive
Slide 7: Deep Bench of Experienced Executives
Name Position # of Years at OCFC # of Years In Banking Previous Experience Craig C. Spengeman Executive Vice President, Director of Wealth Management 2 38 PGB Trust and Investments (Division of Peapack-Gladstone Bank) Margaret Lanning First Senior Vice President, Chief Credit Officer 1 37 Wells Farg
Slide 8: Our Strategy: Grow Commercial Loans
Grow commercial loans Annual investment in commercial lending operating expense Increased lending teams from 1 to 4 Upgraded to state-of-the-art commercial loan operating system Guard credit quality through strong credit risk culture Added highly experienced Chief Credit Officer Weighted Average Fac
Slide 9: Grow Low Cost Core Deposits
Grow low cost core deposits Opened three de novo branches Capitalize on disruption created by out-of-market acquirers; leverage commercial lending success to grow business deposits Opportunistic acquisition of local community banks lacking the scale or desire to remain independent On May 2, 2016, ac
Slide 10: Strategy Impact on Valuation
Strategy Result (2012 – 2015) Grow Commercial loans from $533 million to $963 million, 21.8% CAGR Reduce non-performing loans from $43.4 million, 2.8% of loans, to $18.3 million, 0.91% of loans Grow low cost core deposits from $1.493 million (0.32% cost) to $1.661 million (0.26% cost) Opportunistic
Slide 11: Highlights – 2016
Highlights – 2016 Completed the acquisition of Cape Bancorp on May 2, 2016, which added $1.6 billion to assets, $1.2 billion to loans, and $1.1 billion to deposits Added highly experienced banking executive as Southern Division President to maintain local decision-making and strong oversight First Q
Slide 12: Overview of Cape Bancorp Acquisition
Branch Map ¹ Financial data as of or for the period ending March 31, 2016; Dollars in Millions. - Cape Bank Branches Metro Philadelphia 1 Loans: 38.7% Deposits: 9.6% West New Jersey 1 Loans: 18.4% Deposits: 36.1% Jersey Shore 1 Loans: 42.9% Deposits: 54.3% Valued at $195 million – 85% stock, 15% cas
Slide 13: Competing Favorably Against Banking Behemoths and Local Community Banks
Competing Favorably Against Banking Behemoths and Local Community Banks Source: FDIC Summary of Deposits, June 30, 2015 Note: Market area is defined as counties in Central and Southern New Jersey Data for OceanFirst includes Cape Bank Institution # of Branches Dep. In Mkt. ($000) TD Bank (Canada) 13
Slide 14: Strategic Deposit Composition Transition
Strategic Deposit Composition Transition Total Cost of Deposits 0.28% Consumer Commercial Mar 2016 Total Cost of Deposits 0.26%
Slide 15: Strategic Focus on Commercial Lending Drives Business Deposits
Strategic Focus on Commercial Lending Drives Business Deposits Note: Amounts include repurchase agreements classified as borrowings but offered to local business relationships 03/31/16
Slide 16: Full Suite of Technology and Delivery Systems
Mobile Banking Consistently adopting mobile-centric options. In 2015, added TouchID, Apple Watch, and Apple Pay. Significantly increasing adoption of Apple Pay and mobile deposit capture. Online Banking & Bill Pay In 2015, 40% of depositors used online banking and an average of 30,000 bills were pai
Slide 17: Strategic Loan Composition Transition
Strategic Loan Composition Transition Note (A): Investment CRE as a percent of risk-based capital is 226% for OceanFirst Bank and 241% on a pro-forma basis to include Cape Bancorp. Mar 2016 Consumer Commercial
Slide 18: Credit Underwriting Remains Conservative
Credit Underwriting Remains Conservative: Commercial Loan Production 2015 and 2016 (Dollars in thousands) Commercial Loan Originations Year Three Months Ended Ended December 31, 2015 March 31, 2016 Commercial Loan Portfolio at March 31, 2016 Amount $264,385 $58,005 $986,784 Weighted average rate 4.1
Slide 19: OceanFirst Maintains Conservative CRE Portfolio Relative to Peers
OceanFirst Maintains Conservative CRE Portfolio Relative to Peers Domestic CRE Loans (Construction, Multifamily & Other Nonfarm Non-residential) to Total Risk Based Capital. Supervisory guideline is 300% of TRBC. Peers include: AROW, BMTC, DCOM, FFIC, FISI, FLIC, LBAI, NFBK, ORIT, PGC, SCNB, UVSP an
Slide 20: Highlights – Risk Management
Highlights – Risk Management During 2015 and Q1 2016: Interest Rate Risk Management Extended $65 million of FHLB advances into 4 – 5 year terms $71.8 million total increase in non-interest bearing deposits which now represent 17.8% of total deposits Core deposits(1) are 86.4% of total deposits, a si
Slide 21: Effective Interest Rate Risk Management
Effective Interest Rate Risk Management Duration Rate Characteristics All asset categories managed with limited duration At March 31, 2016
Slide 22: Term Borrowings Extended as Interest Rate Hedge
Term Borrowings Extended as Interest Rate Hedge TOTAL $251.9MM 1.71% AVG. COST At March 31, 2016
Slide 23: Credit Metrics Reflect Conservative Culture
Credit Metrics Reflect Conservative Culture (1)Net charge-off ratio for 2014 excludes charge-off related to bulk sale of non-performing residential and consumer mortgage loans. Including this charge-off, the ratio is 0.45%. Ratio for 2016 is annualized. Two commercial loans account for 0.17% of the
Slide 24: OceanFirst Average Charge-Offs Are 20% Below Peer Average
Peers include: AROW, BMTC, DCOM, FFIC, FISI, FLIC, LBAI, NFBK, ORIT, PGC, SCNB, UVSP and WSFS. Source: BankRegData.com OceanFirst Average Charge-Offs Are 20% Below Peer Average
Slide 25: Net Interest Margin Stabilized at Historical Levels but Now Expanding
Net Interest Margin Stabilized at Historical Levels but Now Expanding Historical Average (1996 – 2015) Net Interest Margin (3.28%) Q1 NIM at 3.32% includes only 5 BP of net accretable yield from purchase accounting adjustments and prepayment fees OCFC: 4 consecutive quarters of expansion Peers: 9 co
Slide 26: Diversified Streams of Non-Interest Income
Diversified Streams of Non-Interest Income $2.5M $16.5M Targeted Growth Areas Non-Interest Income excludes gain/loss from other real estate operations, gain on sale of securities and gain on sale of loan servicing.
Slide 27: Generating Consistent Attractive Returns
Generating Consistent Attractive Returns (1)For 2013, excludes after-tax impact of $3.1 million in non-recurring charges related to strategic advance restructuring and branch consolidation. (2)For 2015 and 2016, excludes non-recurring merger related expenses. (1) 0.0% 0.20% 0.40% 0.60% 0.80% 1.00% 1
Slide 28: Prudently Managing Excess Capital in Near Term
Prudently Managing Excess Capital in Near Term Notes: Stock Repurchases – $15.32 Average Cost per Share. Quarterly dividend rate increased by $0.01, or 8.3%, in October 2014. In Q4 2015 and Q1 2016, stock repurchases suspended as capital was reallocated to Cape Bancorp acquisition.
Slide 29: Why OCFC…?
Why OCFC…? Fundamental franchise value Consistent commercial loan growth Conservative credit culture Superior deposit profile Solid financial performance Consistent attractive returns Strong balance sheet and capital base Seasoned and effective management team Substantial insider ownership – aligned
Slide 30: Attractive Valuation Metrics
Attractive Valuation Metrics Valuation Price / Tang. Book Value 137% 143% Price / LQA EPS 17.8x 14.1x Price / Estimated EPS 13.7x 14.1x Core Deposit Premium 4.1% 6.9% Cash Dividend Yield 2.9% 2.9% OCFC Peers(1) 1) Peers include: AROW, BMTC, DCOM, FFIC, FISI, FLIC, LBAI, NFBK, ORIT, PGC, SCNB, UVSP a
Slide 31: Appendix
Appendix
Slide 32: Analyst Coverage
OceanFirst Financial Corp. – Analyst Coverage APPENDIX 1 Company Analyst Recommendation Price Target Keefe Bruyette & Woods Travis Lan Outperform $23.00 Sandler O’Neill & Partners Frank Schiraldi Buy $21.00 Piper Jaffray Matt Breese Overweight $22.00 FIG Partners David Bishop Outperform $24.00 Inves
Slide 33: Market Demographics
Market Demographics Central New Jersey(1) Southern New Jersey(2) Philadelphia Metro(3) Total Bank Offices in Market 877 516 876 Total Bank Deposits in Market $81.8 million $36.3 million $93.2 million Number of OceanFirst Offices 27 22 % of OceanFirst Deposits 60 40 Market Rank 10 7 Market Share (%)
Slide 34: Commercial Portfolio Metrics
Commercial Portfolio Metrics APPENDIX 3 Commercial Real Estate (CRE) Owner-Occupied Investor Total $308.7 million 536.8 million $845.5 million % of Total Loan Portfolio 41.7% Average Size of CRE Loans $845,000 Largest CRE Loan $16.7 million Current Pipeline $52.6 million Weighted Average Yield 4.27%
Slide 35: Commercial Portfolio Segmentation
Commercial Portfolio Segmentation APPENDIX 3 (Cont’d) Total Commercial Loan Exposure by Industry Classification Real Estate Investment by Property Classification Diversified portfolio provides protection against industry-specific credit events. As of March 31, 2016.
Slide 36: Residential Portfolio Metrics
Residential Portfolio Metrics APPENDIX 4 Residential Real Estate Total Portfolio $835.4 million % of Total Loan Portfolio 41.5% Average size of mortgage loans $203,000 % of loans for second homes 15.4% Portfolio weighted average loan-to-value ratio (using original or most recent appraisal) - Loans o
Slide 37: 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 neutral to OCFC
Slide 38: Cape Bancorp Acquisition
Cape Bancorp Acquisition Creates the preeminent New Jersey based community banking franchise operating throughout central and southern New Jersey 85% stock and 15% cash, valued at $195 million Favorable financial terms Price/Tangible Book Value of 136% Price/Core Deposit Premium of 4.4% Expected acc
Slide 39: Serving Our Communities
Serving Our Communities Recovering from Superstorm Sandy – Construction Financing 2013 – 2015 funded 287 loans = $117.2 million OceanFirst Foundation Cape Foundation expected to contribute $5.3 million As of March 31, 2016, over $27 million has been granted to organizations serving the Bank’s market
Slide 40: Client Comments
Client Comments APPENDIX 8 CHEFS INTERNATIONAL INC. Robert Cooper – President “The relationship with OceanFirst goes back before my tenure, and I was the true benefactor of that successful affiliation. Whether we request a simple letter of credit or a complicated loan, OceanFirst listens to our need
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