Oceanfirst Financial Corp. · NASDAQ:OCFC

Oceanfirst Financial — Q1 2023 Earnings Presentation

32 slides from Oceanfirst Financial's earnings presentation, Apr 21, 2023

  1. Slide 1: OceanFirst Financial Corp. Investor Presentation

    Exhibit 99.1 ... 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.

  2. 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, strategi

  3. Slide 3: Overview of OceanFirst

    Overview ... of OceanFirst Corporate Overview Corporate Overviewand Market & Market Data Data Tailored Footprint Across Key Markets 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

  4. 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 inves

  5. Slide 5: Historical Net Interest Income and Loan Growth

    Proven . . .Historical Net Interest Income and Loan Growth Peer Leading Net Interest Income Growth ($’000) 3.71% 3.62% 3.46% 3.52% 25.6% 3.37% 3.34% 3.25% 3.16% 2.93% 301,895 Net Interest 377,477 312,951 305,338 Income CAGR 240,502 255,971 169,218 120,262 98,802 76,829 2015 2016 2017 2018 2019 2020

  6. Slide 6: Successful Commercial Loan Growth and Geographic Diversification

    Successful ... Commercial Loan Growth and Geographic Diversification Commercial Loans by Geography as of Q1-23 Emphasis on Commercial (Commercial % of Loan Portfolio) 52% of commercial Increase of $5.9B loans originated in in commercial Boston & Baltimore Philadelphia and NY loans since 2015 6% +20%

  7. Slide 7: Balanced Approach to Deposit Pricing and Growth

    Balanced . . . Approach to Deposit Pricing and Growth Deposit Composition ($’millions) 9,733 9,675 9,993 9,428 1,984 2,133 2,412 2,101 6,329 Deposit Stratification 5,815 3,697 1,377 3,647 3,830 4,343 1,151 4,202 4,188 783 757 2,539 616 2,350 784 714 736 1,309 1,917 1,627 1,954 1,488 570 578 1,491 33

  8. Slide 8: Conservative Credit Risk Profile

    Conservative ... Credit Risk Profile Non-performing Loans by Type as % of Loans1 Continued Focus on Credit Risk1 0.54% 0.52% 0.01% 0.47% 0.52 0.02% 0.47 0.45% 0.35% 0.01% 0.36% 0.31% 0.08% 0.03% 0.29% 0.00% 0.30% 0.35 0.32% 0.05% 0.10% 0.22% 0.31 0.12% 0.00% 0.19 0.00% 0.18 0.00% 0.29 0.05% 0.12% 0.

  9. Slide 9: Operational Efficiency

    Operational ... Efficiency Operating Efficiency ($’millions) Deposits per Branch ($’millions) Assets per Branch Assets per FTE 3.7x 263 255 207 345 357 152 13 250 13 14 113 12 94 99 9 9 185 71 69 8 147 7 7 127 118 96 85 2015 2016 2017 2018 2019 2020 2021 2022 Q1-23 2015 2016 2017 2018 2019 2020 2021

  10. Slide 10: Business Model Strength Driving Significant Capital Return

    Business ... Model Strength Driving Significant Capital Return Growth Since 2013 Tangible Book Value per Share Total Capital Return per Share 1 41.3% 112.1% $26.15 The growth in TBV per common share $25.61 (TBVPCS1) is attributed to: $2.98 $23.60 $2.98  Minimally dilutive and strategic $21.36 $2.86

  11. Slide 11: Liquidity, Investment Portfolio, and Credit Update

    INVESTOR PRESENTATION ... Liquidity, Investment Portfolio, and Credit Update 11

  12. 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

  13. Slide 13: Liquidity Sources are Robust and Diverse

    Liquidity . . . Sources are Robust and Diverse Key actions taken by management during Q1-23: 3,587 192%  Promoted our Insured Cash Sweep program to proactively support customers, driving an increase 855 to more than $100 million.  Restructured large deposit accounts to meet FDIC 492 insurance requ

  14. Slide 14: High Quality and Low Risk Investment Portfolio

    High Quality ... and Low Risk Investment Portfolio Investment Portfolio Composition Portfolio Trends and Yield (1) Other US Government & Agency 1,955 Corporate Debt 1,846 1,812 6% 3% 1,749 1,765 3% Rate Exposure: Asset-Backed • 21% floating 16% • 79% fixed 3.40% 2.83% Total: 2.27% 1.86% 1.90% $1.8B

  15. Slide 15: Deposit Trends

    Deposit . . . Trends  Deposits grew by 3% QoQ; excluding brokered deposits, seasonally Shift in Deposit Mix to Drive Retention ($’millions) decreased by $46 million (less than 1%). 10,056 9,831 9,959 9,993 9,675  Mix shift in Q1-23 towards time deposits is driven by an increase in 2,445 2,312 2,32

  16. Slide 16: Total Deposits Are Insured and Population Remains Granular

    +81.4% . . of . Total Deposits Are Insured and Population Remains Granular Total Deposits 10,056 9,831 9,959 9,675 9,993  OCFC’s deposit composition is extremely granular with 98% of all deposit accounts having less than $250K. 22.7% 22.5% 21.3% 18.6% 27.8%  OCFC customers have long tenured relati

  17. Slide 17: 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

  18. Slide 18: Track Record of Strong Credit Performance

    Track . Record .. of Strong Credit Performance Global Financial Hurricane COVID-19 Crisis Sandy Pandemic Cumulative NCO’s for OCFC between 2006 and 2022 were minimal, totaling $26.9 million. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 OCFC CRE NCO / Avg Asset

  19. Slide 19: Credit Quality Historically Top Quartile and Well Positioned

    Credit. .Quality . Historically Top Quartile and Well Positioned CRE Investor Ow ned - Collateral Details  Underlying collateral is diversified: The underlying collateral for the CRE $'m illions CRE: Investor Ow ned % of Total WA LTV WA DSCR Investor Owned (“Investor”) portfolio is highly diversifi

  20. Slide 20: TBV Growth Supported by Prudent Liquidity Management

    Leading . . . TBV Growth Supported by Prudent Liquidity Management Tangible Book Value per Share Growth (Q1-22 to Q1-23)(1) 10% 9.3% 5% 0% -5% -10% -15% -20% -25% -30% OCFC Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12 Peer 13 Peer 14 Peer 15 Peer 16 Peer 17

  21. Slide 21: Quarterly Earnings Update

    INVESTOR PRESENTATION ... Quarterly Earnings Update 21

  22. Slide 22: Loan Portfolio Trends

    Loan Portfolio ... Trends Moderated Loan Growth in the Portfolio ($’millions) 4.96%  Loan growth has moderated prudently, with 4.76% the expectation of low growth for the remainder of the year. 4.18% 3.95%  Diversified portfolio with emphasis on 3.79% transition to growth in C&I portfolio and 9,71

  23. Slide 23: Net Interest Income and Net Interest Margin Trends

    Net Interest ... Income and Net Interest Margin Trends Net Interest Income ($’000) NIM Bridge 106,488 3.64% 98,802 -0.20 95,965 90,797 -0.09 3.34% 84,227 -0.01 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q4-22 NIM Ordinary course Quarter-specific Liquidity build- Q1-23 NIM rate impacts impacts (payoffs, up impact

  24. Slide 24: Expense Discipline and Focused Investment

    Expense . . . Discipline and Focused Investment Core Non-Interest Expense1 ($’000)  Q1-23 core operating expenses, excluding Trident, 59,045 59,341 61,217 increased $2.3 million from the prior linked quarter and 57,919 2,128 55,128 3,206 2,777 2,519 totaled $59.1 million. 11,111 13,108 12,326 12,99

  25. Slide 25: Quarterly Credit Trends (1 of 2)

    Quarterly . . . Credit Trends (1 of 2) Strong asset quality trends driven by prudent loan growth and credit decisioning. Non-Performing Loans and Assets ($’000)1 Special Mention and Substandard Loans ($’000) 0.25% 106 205,641 0.19% 0 0.18% 0 0 164,106 0.19% 0 0.19% 91,611 151,683 0.18% 60,812 0.15%

  26. Slide 26: Quarterly Credit Trends (2 of 2)

    Quarterly . . . Credit Trends (2 of 2) Loan Allowance for Credit Losses (ACL) Plus PCD & General NCOs / (Recoveries) and Provision for Credit Loss Credit Marks / Total Loans Expense ($’000) 0.74% 0.72% 0.70% 0.69% 0.69% NCO / Average Loans were 0.18% 0.17% 0.12% 0.10% 0% for all periods presented. 0

  27. Slide 27: Generating Consistent and Attractive Returns

    Generating ... Consistent and Attractive Returns Book Value and Tangible Book Value per Common Share ($)1 Core ROAA, ROTE, and ROTCE1 27.07 26.81 15.86% 14.53% 14.40% 26.04 25.58 25.73 12.23% 12.80% 15.01% 13.73% 13.62% 11.55% 12.15% 17.08 17.42 1.22% 1.13% 1.11% 15.94 15.96 16.30 0.98% 1.00% Q1-22

  28. Slide 28: Management 2023 Outlook – Mid-Quarter Update

    Management ... 2023 Outlook – Mid-Quarter Update Guidance Key Assumptions / Commentary Low single-digit • Continued focus on credit risk management, anchored by our diversified CRE Loans growth for full year portfolio that has performed well in market downturns Low single-digit • Maintain LTD ratio

  29. Slide 29: Appendix

    INVESTOR PRESENTATION ... Appendix 29

  30. Slide 30: Uninsured Deposit Bridge Detail

    Adjusted . . . Uninsured Deposit Bridge Detail Adjusted Uninsured Deposit Bridge $'millions Schedule/Line March 31, 2023 Estimated Uninsured Deposits RC-O Line M.2 5,754 Less: Collateralized Municipal Deposits1 (2,234) Less: Gross Exclusion Deposits2 (1,649) Estimated Adjusted Uninsured Deposits, ne

  31. Slide 31: Non-GAAP Reconciliations (1 of 2)

    Non-GAAP ... Reconciliations (1 of 2) Non-GAAP Reconciliation For the Three Months Ended March 31, December 31, September 30, June 30, March 31, $'000 2023 2022 2022 2022 2022 Core Earnings: Net income available to common stockholders (GAAP) 26,879 52,268 37,607 27,957 24,755 Add (less) non-recurrin

  32. Slide 32: Non-GAAP Reconciliations (2 of 2)

    Non-GAAP ... Reconciliations (2 of 2) Non-GAAP Reconciliation March 31, Decem ber 31, Septem ber 30, June 30, March 31, $'000 2023 2022 2022 2022 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

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