Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — Q4 2023 Earnings Presentation
28 slides from Oceanfirst Financial's earnings presentation, Jan 19, 2024
Slide 1: OceanFirst Financial Corp. Investor Presentation
Exhibit 99.1 ... OceanFirst Financial Corp. Investor Presentation1 January 2024 1 The 4Q 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 January 18, 2024.
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
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 39 branches and 6 commercial banking centers Core Markets New Jersey, New York City, Greater Philadelphia Expansion
Slide 4: Our Shareholder Value Proposition
Our Shareholder ... Value Proposition Strong balance sheet – Strategically planned balance sheet provides opportunity to grow loan portfolio at attractive returns while realizing reduced costs of funding for an improved profitability profile. Continued expense management and discipline – Identified
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% 3.37% 22% 3.25% 3.16% 2.93% 3.02% 377,477 369,731 Net Interest 255,971 312,951 305,338 Income CAGR 240,502 169,218 120,262 76,829 2015 2016 2017 2018 2019 2020 2021 202
Slide 6: Successful Commercial Loan Growth and Geographic Diversification
Successful ... Commercial Loan Growth and Geographic Diversification Commercial Loans by Geography as of Q4-23 Emphasis on Commercial (Commercial % of Loan Portfolio) Increase of $6.0B in commercial Boston & Baltimore loans since 2015 7% +19% Philadelphia 23% New Jersey 41% Total: 68% $7.0B 49% 29%
Slide 7: Balanced Approach to Deposit Pricing and Growth
Balanced . . . Approach to Deposit Pricing and Growth Deposit Composition ($’millions) 10,435 9,428 9,733 9,675 1,657 2,133 2,412 2,101 6,329 Deposit Stratification 3,912 5,815 1,377 3,647 3,830 4,343 1,151 4,202 4,188 757 1,022 783 2,350 2,539 784 714 1,399 1,917 1,627 1,954 736 570 578 1,491 1,488
Slide 8: Conservative Credit Risk Profile
Conservative ... Credit Risk Profile Non-performing Loans by Type as % of Loans1 Continued Focus on Credit Risk1 In Q3-23, the Bank charged-off $8 0.89 0.52% million on a single CRE credit 0.85 0.85 0.01% relationship. The remaining exposure of $9 million is included in 0.47% the non-performing loan
Slide 9: Operational Efficiency
Operational ... Efficiency Operating Efficiency ($’millions) Deposits per Branch ($’millions) (2) 3.8x 268 255 (2) Assets per Branch 400 20 Assets per FTE 207 350 18 16 300 14 152 250 12 113 200 10 94 99 345 347 150 8 13 250 13 14 71 69 12 6 100 185 8 9 9 4 7 7 127 147 50 118 96 85 2 0 0 2015 2015 2
Slide 10: Business Model Strength Driving Significant Capital Return
Business ... Model Strength Driving Significant Capital Return $27.68 1 Growth Since 2013 The growth in TBV per common share Tangible Book Value per Share 48.8% $25.61 $2.98 Total Capital Return per Share 124.5% (TBVPCS1) is attributed to: $23.60 $2.98 ▪ Minimally dilutive and strategic $2.86 $21.36
Slide 11: Quarterly Earnings Update
INVESTOR PRESENTATION ... Quarterly Earnings Update 11
Slide 12: Q4-23 Financial Highlights
Q4-23. .Financial . Highlights Financial Highlights $0.45 $88 million 0.77% Core Diluted EPS 1 Net Interest Income Core ROAA 1 9.67% $0.65 10.9% Core ROTCE 1 Core PTPP Diluted EPS 1 CET1 Ratio 2 ▪ Total deposits, excluding time deposits, increased by 1% from prior linked quarter. Net deposit growth
Slide 13: Loan Portfolio Trends
Loan Portfolio ... Trends Moderated Loan Growth in the Portfolio ($’millions) 5.30% 5.40% ▪ Loan growth has moderated prudently, with 5.17% 4.96% the expectation of mid single-digit 4.76% annualized growth in 2024. ▪ Loan yields continue to improve. 10,040 10,084 10,124 10,195 9,918 251 264 253 255
Slide 14: Credit Quality Historically Top Quartile and Well Positioned
Credit. .Quality . Historically Top Quartile and Well Positioned CRE Investor Owned - Collateral Details ▪ Underlying collateral is diversified: The underlying collateral for the CRE $'millions CRE: Investor Owned % of Total WA LTV WA DSCR Investor Owned (“Investor”) portfolio is highly diversified
Slide 15: Quarterly Credit Trends (1 of 2)
Quarterly . . . Credit Trends (1 of 2) Strong asset quality trends driven by prudent loan growth and credit decisioning. Non-Performing Loans and Assets ($’000)1 Special Mention and Substandard Loans ($’000) In Q3-23, the Bank charged-off $8 million on a 0.27% Criticized loans as a % of total loans
Slide 16: Quarterly Credit Trends (2 of 2)
Quarterly . . . Credit Trends (2 of 2) Loan Allowance for Credit Losses (ACL) Plus PCD & General NCOs / (Recoveries) and Provision for Credit Loss Credit Marks / Total Loans Expense ($’000) 10,283 0.72% 0.73% Driven by a charge-off on a single 0.70% 0.71% 0.69% 0.07% commercial real estate credit 0.
Slide 17: Track Record of Strong Credit Performance
Track . Record .. of Strong Credit Performance Global Financial Hurricane COVID-19 Crisis Sandy Pandemic Cumulative CRE charge-offs for OCFC between 2006 and Q4-23 were minimal, totaling $35 million. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Q1-23 Q2-23 Q3-
Slide 18: Deposit Trends
Deposit . . . Trends Shift in Deposit Mix to Drive Retention ($’millions) 9,993 10,158 10,534 10,435 ▪ Non-maturity deposits increased by $109 million (or 1%) 9,675 1,854 1,827 1,657 from the linked quarter. 1,984 2,101 ▪ High yield savings grew by $42 million from the previous 3,538 3,709 3,912 3,6
Slide 19: Net Interest Income and Net Interest Margin Trends
Net Interest ... Income and Net Interest Margin Trends Net Interest Income ($’000) NIM Bridge 106,488 2.91% 98,802 -0.08 92,109 90,996 87,824 -0.01 2.82% Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Net Interest Income Q3-23 NIM Rate environment, Quarter-specific impacts Q4-23 NIM change in balances and (PA accret
Slide 20: Expense Discipline and Focused Investment
Expense . . . Discipline and Focused Investment Core Non-Interest Expense1 ($’000) Core Efficiency Ratio1 64.29% 64,484 61.94% 62,930 60.02% 61,217 59,341 58,526 56.49% 50.78% 1.88% 1.87% 1.87% 1.88% 34,222 35,534 33,920 33,943 32,126 1.71% Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 6,638 Core Efficiency Ratio C
Slide 21: Generating Consistent Returns
Generating ... Consistent Returns Book Value and Tangible Book Value per Common Share ($)1, 2 Core ROAA1, ROTE1, and ROTCE1 27.56 27.96 15.86% 26.81 27.07 27.37 12.80% 10.9 15.01% 10.36% 9.67% 10.4 10.2 12.15% 6.88% 10.0 9.84% 9.9 9.20% 1.22% 1.00% 6.54% 0.81% 0.77% 17.08 17.42 17.72 17.93 18.35 0.5
Slide 22: Management 2024 Outlook
Management ... 2024 Outlook Guidance Key Assumptions / Commentary • Continued focus on credit risk management, anchored by our diversified CRE Mid single-digit portfolio that has performed well in market downturns. Loans growth for the year. • Growth is expected to be lower in the first half of the
Slide 23: Appendix
INVESTOR PRESENTATION ... Appendix 23
Slide 24: CBD Office Concentration Exposure Is Moderate
CBD Office ... Concentration Exposure Is Moderate CRE Investor Owned: Office (All Geographies) Book Balance % of Total WA LTV WA DSCR CBD Proportion of Total Assets $'millions Office 533 48.2% 51.8 1.78 CBD Medical 346 31.3% 57.8 1.92 1% Central business district Credit Tenant 228 20.6% 64.6 1.62 (C
Slide 25: Northeast Outperforms Through Credit Cycles
Northeast . . . Outperforms Through Credit Cycles… Global Financial Hurricane GFC Peak NCOs COVID-19 Crisis Sandy 1.43% Pandemic 0.80% 0.63% 0.40% 0.32% 0.24% Northeast Southwest Mid Midwest Southeast West Atlantic Multiple of 1.3x 1.7x 2.6x 3.4x 6.0x Northeast 2006 2007 2008 2009 2010 2011 2012 201
Slide 26: With a Similar Story in Commercial Real Estate Portfolios
…With .a. .Similar Story in Commercial Real Estate Portfolios Global Financial Hurricane GFC Peak CRE NCOs COVID-19 Crisis Sandy 0.16% Pandemic 0.11% 0.09% 0.04% 0.04% 0.03% Northeast Southwest Mid Southeast Midwest West Atlantic Multiple of 1.4x 1.7x 3.3x 4.2x 6.2x Northeast 2006 2007 2008 2009 201
Slide 27: Non-GAAP Reconciliations (1 of 2)
Non-GAAP ... Reconciliations (1 of 2) Non-GAAP Reconciliation For the Three Months Ended December 31, September 30, June 30, March 31, December 31, $'000 2023 2023 2023 2023 2022 Core Earnings: Net income available to common stockholders (GAAP) 26,678 19,663 26,793 26,879 52,268 Add (less) non-recur
Slide 28: Non-GAAP Reconciliations (2 of 2)
Non-GAAP ... Reconciliations (2 of 2) Non-GAAP Reconciliation December 31, September 30, June 30, March 31, December 31, $'000 2023 2023 2023 2023 2022 Tangible Equity Total stockholders' equity 1,661,945 1,637,604 1,626,283 1,610,371 1,585,464 Less: Goodwill 506,146 506,146 506,146 506,146 506,146