Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — Q3 2024 Earnings Presentation
27 slides from Oceanfirst Financial's earnings presentation, Nov 6, 2024
Slide 1: OceanFirst Financial Corp. Investor Presentation November 2024
. . . 1 The 3Q 2024 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 October 17, 2024 and the Quarterly Report on Form 10-Q filed with the SEC on October 31, 2024. Exhibit 99.1 OceanFirst Financial Corp. Investo
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 39 branches; 8 commercial banking centers Core Markets New Jersey, New York City, Greater Philadelphia Expansion Markets Boston and Baltimore Balan
Slide 4: Proven Historical Net Interest Income and Loan Growth
. . .Proven Historical Net Interest Income and Loan Growth 4 76,829 120,262 169,218 240,502 255,971 312,951 305,338 377,477 369,731 250,706 3.25% 2015 3.46% 2016 3.52% 2017 3.71% 2018 3.62% 2019 3.16% 2020 2.93% 2021 3.37% 2022 3.02% 2023 2.73% YTD Sep-24 Net Interest Margin YTD Sept-24 Annualized N
Slide 5: Successful Commercial Loan Growth and Geographic Diversification
. . .Successful Commercial Loan Growth and Geographic Diversification 5 49% 68% 2015 Q3-24 +19% (Commercial % of Loan Portfolio) Commercial Loans by Geography1 as of Q3-24 Emphasis on Commercial Increase of $5.8B in commercial loans since 2015 38% 30% 24% 8% New Jersey New York Philadelphia Boston &
Slide 6: Balanced Approach to Deposit Pricing and Growth
. . .Balanced Approach to Deposit Pricing and Growth 6 Deposit Composition ($’millions) 256 646 867 937 1,373 775 1,542 2,445 2,221 311 673 661 877 898 1,491 1,608 1,488 1,399 1,072 153 784 736 714 1,022 1,289 860 1,627 1,954 2,350 2,539 3,647 4,202 3,830 3,912 3,896 337 783 757 1,151 1,377 2,133 2,
Slide 7: Conservative Credit Risk Profile
. . .Conservative Credit Risk Profile 7 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% 0.19% 0.02% 0.05% 2023 0.00% 0.14% 0.02% 0.09% Q3-24 0.35% 0.52% 0.31
Slide 8: Operational Efficiency
. . . 96 85 118 127 147 185 250 345 347 346 7 7 8 9 9 12 13 13 14 14 0 2 4 6 8 10 12 14 16 18 20 0 50 100 150 200 250 300 350 400 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q3-24 Assets per Branch Assets per FTE Operational Efficiency 8 Deposits per Branch ($’millions) (55) bps2.39% 1.79% 2015 Q3-
Slide 9: Business Model Strength Driving Significant Capital Return
. . .Business Model Strength Driving Significant Capital Return 9 $12.33 $0.49 $0.55 $1.01 $13.67 2015 $1.04 $1.55 $12.94 2016 $1.09 $2.15 $13.58 2017 $1.39 $2.77 $14.26 2018 $1.97 $3.45 $15.13 2019 $2.25 $4.13 $14.98 2020 $2.86 $4.81 $15.93 2021 $2.98 $5.55 $17.08 2022 $2.98 $6.35 $18.35 2023 $3.35
Slide 10: Investor Presentation Quarterly
. . . I N V E S T O R P R E S E N T A T I O N 10 Quarterly Earnings Update
Slide 11: Q3-24 Financial Highlights
. . .Q3-24 Financial Highlights 11 (1) For non-GAAP financial measures, please refer to the ‘Non-GAAP Reconciliations’ in the Appendices for a reconciliation to GAAP financial information. (2) PCD loans are not included in these metrics. Refer to Asset Quality section in the Earnings Release for add
Slide 12: Loan Portfolio Trends
. . .Loan Portfolio Trends 12 Moderated Loan Growth in the Portfolio ($’millions) ▪ Loan growth has moderated with the expectation of low to mid-single digit annualized growth by Q4-24. ▪ Loan yields plateaued for Q3-24 and may contract slightly as our existing portfolio reprices with rate cuts. 5,3
Slide 13: Diversified CRE Portfolio with Conservative Risk Profile
. . .Diversified CRE Portfolio with Conservative Risk Profile ▪ Underlying collateral is diversified. ▪ Low concentration in the Multi-Family portfolio, which represents 7% of total assets. ▪ Maturity wall is modest and has a minimal impact: Our CRE investor owned maturity wall, totaling $820 millio
Slide 14: Quarterly Credit Trends (1 of 2)
. . . Strong asset quality trends driven by prudent loan growth and credit decisioning. Quarterly Credit Trends (1 of 2) 14 Non-Performing Loans and Assets ($’000)(1) Special Mention and Substandard Loans ($’000) Note #1: At September 30, 2024, of the Special Mention loans and Substandard loans repr
Slide 15: Quarterly Credit Trends (2 of 2)
. . .Quarterly Credit Trends (2 of 2) 15 Loan Allowance for Credit Losses (ACL) Plus PCD & General Credit Marks / Total Loans NCOs / (Recoveries) and Provision for Credit Loss Expense ($’000) 0.09% 0.63% Q3-23 0.07% 0.66% Q4-23 0.07% 0.66% Q1-24 0.06% 0.69% Q2-24 0.06% 0.69% Q3-24 0.72% 0.73% 0.73%
Slide 16: Track Record of Strong Credit Performance
. . . COVID-19 Pandemic Track Record of Strong Credit Performance 16 ▪ From 2006 to Q3-24, inclusive of the Global Financial Crisis, Hurricane Sandy, and the COVID-19 Pandemic, OCFC’s CRE NCO to average CRE loans totaled 7 bps per year compared to 70 bps for all commercial banks between $10 - $50 bi
Slide 17: Deposit Trends
. . .Deposit Trends 17 (1) Deposit beta is calculated as the increase in rate paid on total deposits per quarter divided by the incremental increase in the fed funds rate since January 1, 2022. ▪ Non-maturity deposits increased by $269 million (or 3.5%) from the prior quarter. ▪ High yield savings d
Slide 18: Net Interest Income and Net Interest Margin Trends
. . .Net Interest Income and Net Interest Margin Trends 18 (1) Core NIM excludes purchase accounting and prepayment fee income. Refer to the Earnings Release for additional information. Core NIM1 vs NIM NIM Bridge 2.91% 2.85% Q3-23 2.82% 2.77% Q4-23 2.81% 2.77% Q1-24 2.71% 2.67% Q2-24 2.67% 2.65% Q3
Slide 19: Expense Discipline and Focused Investment
. . . Core Efficiency Ratio1 Expense Discipline and Focused Investment 19 Core Non-Interest Expense (1) ($’000) 8,411 7,999 7,761 8,377 9,512 5,258 2,858 2,732 2,161 1,970 6,086 6,430 5,956 6,018 5,940 2,557 2,723 2,717 2,685 2,618 6,638 6,390 6,329 6,243 6,183 35,534 32,126 32,759 33,136 35,844 Q3-
Slide 20: Generating Consistent Returns
. . .Generating Consistent Returns 20 Book Value and Tangible Book Value per Common Share ($)1 Core ROAA1, ROTE1, and ROTCE1 • Tangible book value per common share increased by $1.35 (or 8%) compared to the same quarter last year. • Capital remains strong and above “well capitalized” levels. • Repur
Slide 21: Management 2024 Outlook
. . .Management 2024 Outlook 21 Loans Deposits Operating Expenses Net Interest Income Capital • We expect low to mid-single digit annualized growth in Q4-24. • Maintain loan-to-deposit ratio ~100% for the entire year. • Continued mix shift may pressure funding costs. Low to mid-single digit annualiz
Slide 22: Investor Presentation Appendix
. . . I N V E S T O R P R E S E N T A T I O N 22 Appendix
Slide 23: Conservative Risk Profile of CRE IO Office & Construction
. . .Conservative Risk Profile of CRE IO Office & Construction 23 Portfolio Highlights • 96% of Office & Construction loans are pass- rated (not classified or criticized). • 93% of Office & Construction loans are classified as non-Central Business District loans. • CBD loans comprise <1% of total as
Slide 24: Northeast Outperforms Through Credit Cycles
. . . Hurricane Sandy Global Financial Crisis COVID-19 Pandemic Northeast Outperforms Through Credit Cycles… 24 ▪ Historically, net charge-offs for Northeastern headquartered banks have greatly outperformed major exchange traded U.S. banks headquartered in other regions ▪ Median net charge-offs / av
Slide 25: With a Similar Story in Commercial Real Estate Portfolios
. . . Hurricane Sandy Global Financial Crisis COVID-19 Pandemic …With a Similar Story in Commercial Real Estate Portfolios 25 ▪ Northeastern banks’ CRE portfolio net charge-offs have also historically outperformed major exchange traded banks in other regions ▪ Median CRE net charge-offs / average as
Slide 26: Non-GAAP Reconciliations (1 of 2)
. . .Non-GAAP Reconciliations (1 of 2) Non-GAAP Reconciliation For the Three Months Ended $'000 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 Core Earnings: Net income available to common stockholders (GAAP) 24,112 23,369 27,663 26,678 19,663 Add (less) non-rec
Slide 27: Non-GAAP Reconciliations (2 of 2)
. . .Non-GAAP Reconciliations (2 of 2) Non-GAAP Reconciliation $'000 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 Tangible Equity Total stockholders' equity 1,694,508 1,676,669 1,665,837 1,661,945 1,637,604 Less: Goodwill 506,146 506,146 506,146 506,146 506,14