Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — Investor Presentation (November 2016)
41 slides from Oceanfirst Financial's investor presentation, Nov 16, 2016
Slide 1: OceanFirst Financial Corp. Investor Presentation
Exhibit 99.1 OceanFirst Financial Corp. Investor Presentation November 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 OceanFirst Announced Merger Founded, Foundation Exceeds Cape Bancorp Agreement with Point Pleasant, $25 Million In Acquired Ocean Shore NJ Cumulative Grants Holding Co.* IPO To Created OceanFirst Colonial American Mutual Foundation Bank Acquired Depositors
Slide 4: Serving Central and Southern New Jersey Markets
Serving Central and Southern New Jersey Markets • OceanFirst is the largest Bank headquartered in Central and Southern New Jersey • $4.2 billion in assets • 50 branch offices • Market Cap $530 million • Average Daily Share Volume of 80,000 30 million people, or approximately 10% of the total U.S. po
Slide 5: OceanFirst Loan Portfolio Diversification by Geography
OceanFirst Loan Portfolio Diversification by Geography Least Highest Concentration Concentration Atlantic City is 1.2% of the OceanFirst loan portfolio 5
Slide 6: Experienced Leadership
Experienced Leadership • Substantial insider ownership of 19.4% – aligned with shareholders’ interests OceanFirst Bank ESOP 6.2% Directors & Senior Executive Officers 8.0% Director and Proxy Officer Stock Ownership Guidelines OceanFirst Foundation 5.2% From April 26, 2016 Proxy Statement, adjusted f
Slide 7: Deep Bench of Experienced Executives
Deep Bench of Experienced Executives # of Years # of Years Previous Name Position at OCFC In Banking Experience Thacher Proffit & Steven J. Tsimbinos Executive Vice President, General Counsel 6 22 Wood; Lowenstein Sandler PC Guggenheim David R. Howard First Senior Vice President, Chief Risk Officer
Slide 8: Strategic Focus
Strategic Focus I. Organic Commercial Loan and Core Deposit Growth • Grew commercial loans (excluding acquired loans) from $533 million at December 31, 2012 to $922 million at September 30, 2016, 15.7% CAGR • Grew low cost core deposits (excluding acquired deposits) from $1,493 million (0.15% cost)
Slide 9: Strategic Focus (Continued)
Strategic Focus (Continued) III. Conservative Risk Management • Credit Risk Reduced non-performing loans from $43.4 million (2.8% of loans) at December 31, 2012 to $16.5 million (0.54% of loans) at September 30, 2016 Strong credit culture – no non-performing commercial loans originated in the past f
Slide 10: Highlights – 2016
Highlights – 2016 • Completed the acquisition of Cape Bancorp on May 2, 2016, which added $1.5 billion to assets, $1.2 billion to loans, and $1.2 billion to deposits Added highly experienced banking executive as Southern Division President to maintain local decision-making and strong oversight • Ann
Slide 11: Overview of Ocean Shore Holding Co. Acquisition
Overview of Ocean Shore Holding Co. Acquisition 1 Branch Map Transaction Summary • Valued at $146 million – 80% stock, 20% cash Price/TBV – 132% Core deposit premium – 4.9% • Regulatory approvals received October 27, 2016 • Financially compelling: Over 5% accretive to EPS in 2018 in addition to doub
Slide 12: Favorable Competitive Position
Favorable Competitive Position Competing Favorably Against Banking Behemoths and Local Community Banks Mega Banks OceanFirst Bank Community Banks Dep. In Dep. In Mkt. Dep. In # of Mkt. # of ($000) # of Mkt. Institution Branches ($000) Branches Institution Branches ($000) 50 3,222,405 TD Bank (Canada
Slide 13: Strategic Deposit Composition Transition
Strategic Deposit Composition Transition Non- Time Sept 2016 Interest Interest Checking MMDA & Savings Deposits Total Checking WAR 0.16% WAR 0.13% WAR 1.15% Cost of Deposits 0.27% September 30, 2016 Deposits by Customer Segment Non- MMDA & Time Dec 2010 Interest Checking Interest Checking Savings De
Slide 14: Strategic Focus on Commercial Lending Drives Business Deposits
Strategic Focus on Commercial Lending Drives Business Deposits $800 14,000 $700 13,000 $600 12,000 $500 11,000 $400 10,000 $300 9,000 $200 8,000 $100 7,000 $- 6,000 Balances (000s) # Accounts Note: Amounts include repurchase agreements classified as borrowings but offered to local business relations
Slide 15: Full Suite of Technology and Delivery Systems
Full Suite of Technology and Delivery Systems Corporate Cash Management ATM & Interactive Teller (ITM) Mobile Banking Added Remote Deposit Capture Fleet of intelligent ATM terminals provide Consistently adopting mobile- (RDC) in 2007. In 2015, 297 clients technology for continually growing self- cen
Slide 16: Strategic Loan Composition Transition
Strategic Loan Composition Transition Owner- Sept 2016 Investment C&I Consumer Residential Occupied (Home CRE(A) Equity) Real Estate CRE September 30, 2016 Loans by Customer Segment Dec 2010 Investment Owner- Occupied Consumer C&I (Home Residential CRE(A) CRE Equity) Real Estate 44% 56% Residential
Slide 17: Credit Underwriting Remains Conservative: Commercial Loan Production 2015 and 2016
Credit Underwriting Remains Conservative: Commercial Loan Production 2015 and 2016 Commercial Loan Originations Year Nine Months Commercial Loan Ended Ended Portfolio at (Dollars in thousands) December 31, 2015 September 30, 2016 September 30, 2016 Amount $264,385 $180,858 $1,693,489 Weighted averag
Slide 18: OceanFirst Maintains Conservative CRE Portfolio Relative to Peers
OceanFirst Maintains Conservative CRE Portfolio Relative to Peers CRE to Total Risk Based Capital (%) September 30, 2016 0 200 400 600 800 1,000 1,200 Peer 1 Peer 2 Peer 3 Peer 4 OceanFirst Bank 254 Peer 5 Peer 6 Peer 7 Peer Group Average 391 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12 Peer 13 1012 9/30/2
Slide 19: Highlights – Risk Management 2016
Highlights – Risk Management 2016 • Interest Rate Risk Management $65 million increase in non-interest bearing deposits (excluding the addition of Cape deposits) which represent 15.4% of total deposits Core deposits (1) are 85.8% of total deposits, a significant hedge against a rising rate environme
Slide 20: Effective Interest Rate Risk Management
Effective Interest Rate Risk Management Duration All asset categories managed with limited duration Rate Characteristics At September 30, 2016 20
Slide 21: Term Borrowings Extended as Interest Rate Hedge
Term Borrowings Extended as Interest Rate Hedge 90.00 TOTAL $251.0MM 80.00 1.75% AVG. COST 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 2016 2017 2018 2019 2020 2021 Maturity Periods At September 30, 2016 21
Slide 22: Credit Metrics Reflect Conservative Culture
Credit Metrics Reflect Conservative Culture 3.50% 1.00% 2.77% 2.80% 2.88% 1.06% 0.91% 0.54% 3.00% No non-performing 0.80% commercial loans 2.50% were originated within the past 5 years 0.60% 2.00% Half of the net 1.50% charge-offs relate to the sale of three 0.40% high risk loan pools 1.00% 0.20% 0.
Slide 23: OceanFirst Average Charge-Offs Since 2011 Are 14% Below Peer Average
OceanFirst Average Charge-Offs Since 2011 Are 14% Below Peer Average Charge-Offs / Average Loans Outstanding YE 2011 – 3Q16 Peer 1 Peer 2 Average Peer 3 Maximum Peer 4 Peer 5 Peer 6 Peer 7 OceanFirst Bank 0.31% 0.48% Peer 8 Peer Group Average 0.36% 3.93% Peer 9 Peer 10 Peer 11 Peer 12 Peer 13 0.0% 0
Slide 24: Net Interest Margin
Net Interest Margin Expanded Net Interest Margin to Outperform both Historical Level and Peer Group OceanFirst Bank: 6 consecutive quarters of expansion Peers: 9 consecutive quarters of decline prior to 9/30/16 3.65 3.56 3.55 OceanFirst Bank Q3 consolidated 3.45 NIM at 3.56% 3.35 3.28 includes 17 BP
Slide 25: Diversified Streams of Non-Interest Income
Diversified Streams of Non-Interest Income 0.80% 0.70% $19.9M 0.60% Targeted 0.50% Growth Areas 0.40% 0.30% $2.5M 0.20% 0.10% 0.00% 1996 9/30/16 (Annualized) Fees and Service Charges Gain on Sale of Loans BOLI BankCard Services Wealth Management/Investment Services Other Non-Interest Income excludes
Slide 26: Generating Consistent Attractive Returns
Generating Consistent Attractive Returns 13.0% 1.10% Q3 2016 Core(2) ROA – 1.00% 12.0% ROTE – 11.90% 1.00% 11.0% 10.6% 0.94% 10.0% 0.90% 9.0% 0.80% 8.0% 7.0% 0.70% (1) (2) 2009 2010 2011 2012 2013 2014 2015 9/30/16 Annualized (2) Return on Tangible Equity Return on Assets (1) For 2013, excludes afte
Slide 27: Accelerating EPS Growth
Accelerating EPS Growth 2016 (2) (Annualized) (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 merger related expenses. For 2016, also excludes Federal Home Loan Bank pr
Slide 28: Prudently Managing Excess Capital in Near Term
Prudently Managing Excess Capital in Near Term Increased Quarterly Dividend by 15%, from $0.13 per share to $0.15 per share Notes: Stock Repurchases – $15.32 Average Cost per Share. In Q4 2015 and 2016, stock repurchases suspended as capital was allocated to Cape Bancorp acquisition. 28
Slide 29: Why OCFC…?
Why OCFC…? • Fundamental franchise value • Preeminent community bank in Central and Southern New Jersey • Superior deposit profile • Significant commercial loan growth since December 2012; current focus on recent portfolio integrations • Conservative credit culture • Solid financial performance • Co
Slide 30: Attractive Valuation Metrics
Attractive Valuation Metrics OCFC Peers (1) Valuation Price / Tang. Book Value 163% 183% Price / LQA EPS 15.6x 17.2x Price / Estimated 2016 EPS 15.0x 16.8x Price / 2017 Estimated EPS 13.5x 14.9x Core Deposit Premium 7.0% 11.1% Cash Dividend Yield 2.7% 2.6% 1) Peers include: AROW, BMTC, DCOM, FFIC, F
Slide 31: Appendix
Appendix (9 OcEANFiRST 31
Slide 32: OceanFirst Financial Corp. – Analyst Coverage
APPENDIX 1 OceanFirst Financial Corp. – Analyst Coverage Price Company Analyst Recommendation Target Keefe Bruyette & Woods Collyn Gilbert Outperform $23.00 Sandler O’Neill & Partners Frank Schiraldi Buy $22.00 Piper Jaffray Matt Breese Overweight $22.00 FIG Partners David Bishop Outperform $23.00 I
Slide 33: Market Demographics
APPENDIX 2 Market Demographics Central Southern Philadelphia New Jersey(1) New Jersey(2) Metro (3) Total Bank Offices in Market 864 508 848 Total Bank Deposits in Market $87.3 billion $38.0 billion $93.7 billion Number of OceanFirst Offices 28 22 Expansion % of OceanFirstDeposits 62 38 opportunity M
Slide 34: Commercial Portfolio Metrics
APPENDIX 3 Commercial Portfolio Metrics Commercial Real Estate (CRE) Owner-Occupied $ 493.2 million Investor 1,014.7 million Total $1,507.9 million % of Total Loan Portfolio 49.6% Average Size of CRE Loans $764,000 Largest CRE Loan $16.6 million Pipeline as of September 30, 2016 $42.4 million Weight
Slide 35: Commercial Portfolio Segmentation
APPENDIX 3 (Cont’d) Commercial Portfolio Segmentation Total Commercial Loan Exposure Real Estate Investment by Property Classification by Industry Classification Miscellaneous, 8.7% Office, 23.6% Miscellaneous, 6.1% Motel, 6.9% Public Administration, 1.7% Educational Services, 2.7% Multi-Family, 12.
Slide 36: Residential Portfolio Metrics
APPENDIX 4 Residential Portfolio Metrics Residential Real Estate Total Portfolio $1,096.5 million % of Total Loan Portfolio 36.1% Average size of mortgage loans $198,000 % of loans for second homes 12.2% Portfolio weighted average loan-to-value ratio (using original or most recent appraisal) 55% - L
Slide 37: Colonial American Bank Acquisition
APPENDIX 5 Colonial American Bank Acquisition • 100% Stock deal, valued at $11.9 million • In-Market acquisition supports growth objective Supports in towns of Middletown and Shrewsbury, NJ Retail Expansion in • Favorable financial terms (adjusted for DTA High Value realization of $2.3 million) Comm
Slide 38: Cape Bancorp Acquisition
APPENDIX 6 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 139% • Price/Core Deposit Premium
Slide 39: Atlantic City Exposure
APPENDIX 7 Atlantic City Exposure OceanFirst Bank (including Cape Bank) October 31, 2016 Number of Amount Percent of Loans (000’s) Total Assets Atlantic City 93 $ 36,529 0.9% Atlantic County 1,134 238,620 5.7% 39
Slide 40: Serving Our Communities
APPENDIX 8 Serving Our Communities • Recovering from Superstorm Sandy – Construction Financing 2013 – 2015 funded 287 loans = $117.2 million • OceanFirst Foundation As of September 30, 2016, over $30.6 million has been granted to organizations serving the Bank’s market Provided $500,000 in grants de
Slide 41: Client Comments
APPENDIX 9 Client Comments CHEFS INTERNATIONAL NATIONWIDE IMAGING ROBEN MFG. CO., INC. WOODHAVEN LUMBER INC. SERVICES INC. Gary R. Huhn – Chief & MILLWORK INC. Robert Cooper – Robert Manetta–CEO Operating Officer and Alan Robinson & President “OceanFirst understands President DavidRobinson – Owners
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