Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — Q4 2021 Earnings Presentation
33 slides from Oceanfirst Financial's earnings presentation, Jan 27, 2022
Slide 1: OceanFirst Financial Corp. 4Q 2021 Investor Presentation
. . . 1 The 4Q 2021 Investor Presentation is for the purpose and use in conjunction with the Earnings Release furnished as Exhibit 99.2 to Form 8-K on January 27, 2022. Exhibit 99.2 OceanFirst Financial Corp. 4Q 2021 Investor Presentation1 January 2022
Slide 2: Legal Disclaimer
. . .Legal Disclaimer 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, strategi
Slide 3: OceanFirst Financial Corp. Overview
. . .OceanFirst Financial Corp. Overview 3 Founded: 1902 NASDAQ: OCFC Market Capitalization: $1.34 billion1 Branches: 47 Full-Service Branches in New Jersey, Philadelphia, and Metropolitan New York City2 Guiding Principles: Nimble, Certainty of Execution, and Access to Leadership (1) Marke
Slide 4: Investment Thesis
. . .Investment Thesis 4 Record loan growth and originations from the deployment of excess capital, with a strong funding base for continued production. Strength of Balance Sheet Cost of deposits remained low at 20 basis points (bps) at December 31, 2021 Low-Cost and Durable Deposit Base Digital pro
Slide 5: Quarterly Update
. . . I N V E S T O R P R E S E N T A T I O N 5 Quarterly Update
Slide 6: Fourth Quarter 2021 Financial Highlights
. . . $671.0MM $989.0MM Loan Pipeline Loan Originations Fourth Quarter 2021 Financial Highlights 6 Key Financial Metrics Strategic and Operational Focus $28.5MM Core Earnings1 $0.37 $0.48 Diluted EPS Core EPS1 0.95% 11.30% Core ROAA1 Core ROATE1 2.99% 62.57% NIM Core Efficiency Ratio1 $15.93 $10.1MM
Slide 7: Net Interest Margin – Quarter over Quarter
. . .Net Interest Margin – Quarter over Quarter 7 Competitive market environment as peers with similar levels of liquidity compete on rate for quality credit. Average loan growth in the prior two quarters was ~$400MM while the loan pipeline of $671MM remains at record levels. Loan-to-deposit p
Slide 8: Credit Quality (1 of 3)
. . .Credit Quality (1 of 3) 8 Loan Allowance for Credit Losses (ACL) Plus PCD Marks / Total Loans Net Charge-offs (NCOs) / (Recoveries) and Credit Loss Expense (Benefit) ($’000) Q1-21 0.36% 0.61% Q4-20 0.26% 0.78% 0.33% 0.76% 0.30% 0.69% Q2-21 Q3-21 0.22% 1.14% 0.57% Q4-21 1.09% 0.99% 0.87% 0.79% P
Slide 9: Credit Quality (2 of 3)
. . . Stabilizing asset quality trends align with improving economic outlook. Credit Quality (2 of 3) 9 Non-Performing Loans and Assets ($’000) Special Mention and Substandard Loans ($’000) Note: Of the $91.6 million in Special Mention loans and $148.5 million of Substandard loans, $88.9 million (or
Slide 10: Credit Quality (3 of 3)
. . .Credit Quality (3 of 3) 10 Commercial vs Consumer ($’million)Loans by Payment Structure ($’million) ~ 99.6% of total loans comply with pre-COVID terms as of 12/31/21. 96.0% 99.0% 97.0% 96.5% 97.5% 50.0% 98.5% 50.5% 100.0% 51.0% 51.5% 98.0% 99.5% 9 Q2-21 8,072 2 Q3-21 32 15 8,573 51 7,669 7 7,53
Slide 11: Expense Discipline and Focused Investment
. . . Core Efficiency Ratio1 Expense Discipline and Focused Investment 11 Q4-21 expenses were elevated due to additional costs relating to the: (i) core conversion; (ii) a year-end adjustment to the incentive plan; and (iii) expenses associated with the contribution of additional shares to the ESO
Slide 12: Generating Consistent and Attractive Returns
. . .Generating Consistent and Attractive Returns 12 Book Value and Tangible Book Value per Common Share1 Core ROAA and ROTE1 • Strengthened balance sheet and increased tangible book value per common share by 1.0% versus linked quarter and 6.3% (or $0.95 per share) versus Q4-20. • Repurchased 1.7 mi
Slide 13: Investor Presentation
. . . I N V E S T O R P R E S E N T A T I O N 13 Investor Presentation
Slide 14: Investment Thesis
. . .Investment Thesis 14 Record loan growth and originations from the deployment of excess capital, with a strong funding base for continued production. Strength of Balance Sheet Cost of deposits remained low at 20 basis points (bps) at December 31, 2021 Low-Cost and Durable Deposit Base Digital pr
Slide 15: Significant Growth in Commercial Loan Portfolio
. . .Significant Growth in Commercial Loan Portfolio ($ in millions) 15 Investor CRE CAGR 43.0% Owner Occupied CRE / C&I CAGR 22.1% Strength of Balance Sheet 511 1,135 1,187 2,023 2,296 3,492 4,378 308 534 570 741 793 1,145 1,055 305 396 471 449 831 1,704 1,749 2,045 2,321 2,309 2,480 291 281 475 40
Slide 16: Successful Commercial Loan Growth
. . .Successful Commercial Loan Growth 16 2015 2021 48% 68% +20% (Commercial % of Loan Portfolio) Commercial Loans by Geography as of 20211 51% of Commercial Loans Originated in Philadelphia and NY Emphasis on Commercial Increase of $4.9B in Commercial Loans since 2015 Strength of Balance Sheet (1)
Slide 17: OCFC's Strong History of Credit Discipline
. . .OCFC’s Strong History of Credit Discipline 17 Global Financial Crisis Net Charge Offs (NCOs) / Avg. Loans (%) Hurricane Sandy (1) Source: S&P Global (2) Proxy and US Bank industry reporting is on a one quarter lag (3) Peer group in OCFC’s DEF-14 Proxy Statement. This excludes UBNK due to the sa
Slide 18: Conservative Credit Risk Profile
. . .Conservative Credit Risk Profile 18 2016 0.07% 0.05% 0.11% 0.01% 0.54% 0.28% 2019 0.08% 0.12% 2015 0.11% 0.01% 0.03% 0.36% 0.08% 2018 0.21% 0.47% 0.52% 0.01% 0.05% 0.35% 2017 0.12% 0.03% 0.10% 0.05% 0.13% 0.31% 0.00% 0.04% 0.12% 0.02% 0.30% 2020 0.00% 0.02% 2021 0.91% 0.29% 0.22% ResidentialCom
Slide 19: Strategic Capital Allocation Generates Shareholder Returns
. . .Strategic Capital Allocation Generates Shareholder Returns 19 Strength of Balance Sheet Stable & competitive dividend 100th consecutive quarter Historical Payout Ratio of 30% to 40% Repurchased 1.7 million shares in 2021; 3.3 million shares remain available for repurchase Strategic ac
Slide 20: Business Model Strength Driving Significant Capital Return
. . .Business Model Strength Driving Significant Capital Return 20 $12.33 $12.91 $13.67 $12.94 $13.58 $14.26 $15.13 $14.98 $15.93 $0.49 $1.01 $1.55 $2.15 $2.77 $3.45 $4.13 $4.81 $0.55 $0.94 $1.04 $1.09 $1.39 $1.97 $2.25 $2.86 20172013 2014 20162015 2019 $21.36 2018 2020 2021 $12.33 $13.95 $15.62 $15
Slide 21: Continued Focus on Growing Core Deposits
. . .Continued Focus on Growing Core Deposits1 21 2021 18% 2015 25% +7% Growth in Non-Interest BearingShift Toward Non-Interest Bearing Deposits Non-Interest Bearing CAGR 38.8% Low-Cost Deposit Base 647 607 866 936 1,373 775 673 661 877 898 1,491 1,608459 364 570 578 784 736 860 1,627 1,954 2,350 2,
Slide 22: Deposit Growth with Branch Optimization Strategy
. . .Deposit Growth with Branch Optimization Strategy 22 1 (1) Closed 2 additional branches in 2013. 2 branches sold and 9 branches consolidated in Q4-21. (2) Reflects 9 branch consolidations and the sale of 2 branches in Q4-21 and 10 additional consolidations in Q1-22, further improving average bra
Slide 23: Treasury Management Services
. . .Treasury Management Services 23 Treasury Management Solutions: • ACH Origination, Receipts, Addenda Reporting and Debit Blocking • Digital Account Opening • Accept Multiple Forms of Payment • Account Analysis Statements • Business Online Banking • Coin & Currency Ordering • Commercial Card • In
Slide 24: Digital Transformation Has Been a Multi-Year Effort
. . . Tap & Pay Contactless Debit Cards Core Conversion Digital Transformation Has Been a Multi-Year Effort… 24 Continuous Investment in Talent and Technology • Funded from ongoing earnings and branch consolidations Nest Egg AUM/A: $429 million2 Paperless Residential Loan Applications (Blend) Best R
Slide 25: Preparing OceanFirst for 2022 and Beyond
. . .…And is Preparing OceanFirst for 2022 and Beyond 25 Digitally Agile Bank Google My Business Ownership Targeted Digital Marketing COVID Communications Certified Digital Banker 2.0 (LMS) CRM (CCC, TCS, OLB & OAO) Digital LMS (OFB University) Concur Invoice & Expense Mgmt. Microsoft Teams AIS Data
Slide 26: Positive Customer Response to our Digital Capabilities
. . .Positive Customer Response to our Digital Capabilities 26 Mobile Capabilities Survey1 Mobile App Customer Ratings2 11 11 12 14 Large MidAtlantic FinTechs / Digital National / Regional OceanFirst • A few notables include: • BofA 17 • Chase 16 • USAA 14 • TD 8 (# of Features, Out of 18) (Apple &
Slide 27: Digital Customer Acquisition
. . .Digital Customer Acquisition 27 Attaining Scale… … And Attracting Valuable Customers • Online application commenced1 rate of 42% vs our peers at 34%. • Retail Checking opened in 4Q 2021: • Online account openings (OAO) exceeded average branch openings by 3x (159 OAO vs 49 branch average). Custo
Slide 28: Asset Growth Supplemented by Strategic M&A
. . .Asset Growth Supplemented by Strategic M&A 28 ($ in millions) Strategic M&A Target Closing Date Transaction Value Total Assets Colonial American Bank July 31, 2015 ~$12 million $142 million Cape Bancorp May 2, 2016 ~$196 million $1,518 million Ocean Shore Holding Co. November 30, 2016 ~$146 mil
Slide 29: Northeast and Mid-Atlantic Expansion Opportunities
. . .Northeast and Mid-Atlantic Expansion Opportunities1 29 Strategic M&A • New Jersey is an attractive market • Statewide total population of 9.3 million • Most densely populated state • 11th most populous state • Median household income of $82,500 • Significant opportunities for acquisitions to bu
Slide 30: Experienced Management Team with Banking Expertise
. . .Experienced Management Team with Banking Expertise 30 Seasoned Leadership Substantial insider ownership of 9%, including Directors, Executive Officers, ESOP and OceanFirst Foundation. Executive Title Years Experience1 Select Experience Christopher D. Maher Chairman & Chief Executive Officer 9 •
Slide 31: Appendix
. . . I N V E S T O R P R E S E N T A T I O N 31 Appendix
Slide 32: Interest Rate Sensitivity (1 of 2)
. . .Interest Rate Sensitivity (1 of 2) 32 OceanFirst Bank balance sheet is highly asset-sensitive. A measurable upward change in the rate environment could have a significant impact to our performance going forward. Economic Value of Equity (EVE)1 - % ChangeEarnings at Risk (EAR)1 - % Change -20
Slide 33: Interest Rate Sensitivity (2 of 2)
. . .Interest Rate Sensitivity (2 of 2) 33 The Company’s one-year gap was a positive 14.2% as compared to a positive 18.1% at December 31, 2020. Change in Interest Rates in Basis Points (Rate Shock) December 31, 2021 Economic Value of Equity Net Interest Income $'000 Amount % Change EVE Ratio Amou