Ocean Shore — Merger or Acquisition (August 2016)
41 slides from Ocean Shore's merger presentation, Aug 1, 2016
Slide 1: OceanFirst Financial Corp. Investor Presentation August 2016
OceanFirst Financial Corp. Exhibit 99.1 Investor Presentation August 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
Slide 4: Serving Central and Southern New Jersey Market
Serving Central and Southern New Jersey Market OceanFirst is the largest Bank headquartered in Central and Southern New Jersey $4.0 billion in assets 50 branch offices Market Cap $483 million Average Daily Share Volume of 165,000 OceanFirst Headquarters OceanFirst Retail Branches, Commercial Loan Pr
Slide 5: Loan Portfolio Diversification by Geography
OceanFirst Loan Portfolio Diversification by Geography Atlantic City is 1.3% of the OceanFirst loan portfolio Least Concentration Highest Concentration
Slide 6: Management Team and Insider Ownership
Name Position # of Years at OCFC # of Years In Banking Previous Experience Christopher D. Maher President, Chief Executive Officer 3 28 Patriot National Bancorp; Dime Community Bancshares Michael J. Fitzpatrick Executive Vice President, Chief Financial Officer 23 34 KPMG Joseph R. Iantosca Executive
Slide 7: Deep Bench of Experienced Executives
Deep Bench of Experienced Executives Name Position # of Years at OCFC # of Years In Banking Previous Experience Craig C. Spengeman Executive Vice President, Director of Wealth Management 2 38 PGB Trust and Investments (Division of Peapack-Gladstone Bank) Steven J. Tsimbinos Executive Vice President,
Slide 8: Our Strategy
Our Strategy Grow commercial loans (organic) Annual investment in commercial lending operating expense Increased lending teams from 1 to 4 Upgraded to state-of-the-art commercial loan operating system Guard credit quality through strong credit risk culture Added highly experienced Chief Credit Offic
Slide 9: Our Strategy (Continued)
Our Strategy (Continued) Organically grow low cost deposits (exclude time deposits) Opened three de novo branches Capitalize on disruption created by out-of-market acquirers; leverage commercial lending success to grow business deposits Opportunistic acquisition of local community banks Colonial Ame
Slide 10: Strategy Impact on Valuation
Strategy Impact on Valuation Strategy Result (2012 – 6/30/2016) Grew Commercial loans from $533 million to $993 million, 19.3% CAGR Reduced non-performing loans from $43.4 million, 2.8% of loans, to $15.3 million, 0.48% of loans Grew low cost core deposits from $1,493 million (0.15% cost) to $1,746
Slide 11: 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 $1.2 billion to deposits Added highly experienced banking executive as Southern Division President to maintain local decision-making and strong oversight Announc
Slide 12: Overview of Ocean Shore Holding Co. Acquisition
Branch Map Source: SNL Financial ¹ Deposit market share data as of June 30, 2015. 2 Financial highlights as of or for the quarter ended March 31, 2016. Overview of Ocean Shore Holding Co. Acquisition Transaction Summary Financial Highlights2 Total Assets ($M) $1,052 ROAA 0.67% Gross Loans ($M) $796
Slide 13: Competing Favorably Against Banking Behemoths and Local Community Banks
Competing Favorably Against Banking Behemoths and Local Community Banks Source: FDIC Summary of Deposits, June 30, 2015 Note: Market area is defined as counties in Central and Southern New Jersey Institution # of Branches Dep. In Mkt. ($000) TD Bank (Canada) 138 17,773,374 Wells Fargo (CA) 144 15,91
Slide 14: Strategic Deposit Composition Transition
Strategic Deposit Composition Transition Consumer Commercial Total Cost of Deposits 0.27%
Slide 15: Strategic Focus on Commercial Lending Drives Business Deposits
Strategic Focus on Commercial Lending Drives Business Deposits Note: Amounts include repurchase agreements classified as borrowings but offered to local business relationships Legacy
Slide 16: Full Suite of Technology and Delivery Systems
Mobile Banking Consistently adopting mobile-centric options. In 2015, added TouchID, Apple Watch, and Apple Pay. Significantly increasing adoption of Apple Pay and mobile deposit capture. Online Banking & Bill Pay In 2015, 40% of depositors used online banking and an average of 30,000 bills were pai
Slide 17: Strategic Loan Composition Transition
Strategic Loan Composition Transition Note (A): Investment CRE as a percent of risk-based capital is 226% at March 31, 2016. Consumer Commercial
Slide 18: Credit Underwriting Remains Conservative: Commercial Loan Production
Credit Underwriting Remains Conservative: Commercial Loan Production 2015 and 2016 (Dollars in thousands) Commercial Loan Originations Year Six Months Ended Ended December 31, 2015 June 30, 2016 Commercial Loan Portfolio at June 30, 2016 Amount $264,385 $109,070 $1,757,371 Weighted average rate 4.16
Slide 19: Conservative CRE Portfolio Relative to Peers
OceanFirst Maintains Conservative CRE Portfolio Relative to Peers Domestic CRE Loans (Construction, Multifamily & Other Nonfarm Non-residential) to Total Risk Based Capital. Supervisory guideline is 300% of TRBC. Peers include: AROW, BMTC, DCOM, FFIC, FISI, FLIC, LBAI, NFBK, ORIT, PGC, SCNB, UVSP an
Slide 20: Highlights – Risk Management
Highlights – Risk Management During 2015 and First Half 2016: Interest Rate Risk Management Extended $100 million of FHLB advances into 4 – 5 year terms $100 million increase in non-interest bearing deposits (excluding the addition of Cape deposits) which now represent 17.3% of total deposits Core d
Slide 21: Effective Interest Rate Risk Management
Effective Interest Rate Risk Management Duration Rate Characteristics All asset categories managed with limited duration At June 30, 2016
Slide 22: Term Borrowings Extended as Interest Rate Hedge
Term Borrowings Extended as Interest Rate Hedge TOTAL $251.6MM 1.75% AVG. COST At June 30, 2016
Slide 23: Credit Metrics Reflect Conservative Culture
Credit Metrics Reflect Conservative Culture (1)Net charge-off ratio for 2014 excludes charge-off related to bulk sale of non-performing residential and consumer mortgage loans. Including this charge-off, the ratio is 0.45%. Ratio for 2016 is annualized. Two commercial loans account for 70% of the ne
Slide 24: OceanFirst Charge-Offs Are 20% Below Peers
Peers include: AROW, BMTC, DCOM, FFIC, FISI, FLIC, LBAI, NFBK, ORIT, PGC, SCNB, UVSP and WSFS. Source: BankRegData.com OceanFirst Charge-Offs Are 20% Below Peers
Slide 25: Net Interest Margin Stabilized and Now Expanding
Net Interest Margin Stabilized at Historical Levels but Now Expanding Historical Average (1996 – 2015) Net Interest Margin (3.28%) Q2 consolidated NIM at 3.55% includes 18 BP of net accretable yield from purchase accounting adjustments and prepayment fees OceanFirst Bank: 5 consecutive quarters of e
Slide 26: Diversified Streams of Non-Interest Income
Diversified Streams of Non-Interest Income $2.5M $18.0M Targeted Growth Areas Non-Interest Income excludes gain/loss from other real estate operations, gain on sale of securities and gain on sale of loan servicing. 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 1996 6/30/16 (Annualized) Perce
Slide 27: Generating Consistent Attractive Returns
Generating Consistent Attractive Returns (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 prepaym
Slide 28: Prudently Managing Excess Capital in Near Term
Prudently Managing Excess Capital in Near Term Notes: Stock Repurchases – $15.32 Average Cost per Share. Quarterly dividend rate increased by $0.01, or 8.3%, in October 2014. In Q4 2015 and 2016, stock repurchases suspended as capital was allocated to Cape Bancorp acquisition. (6 Months) $8.8 $8.6 $
Slide 29: Why OCFC…?
Why OCFC…? Fundamental franchise value Superior deposit profile Consistent commercial loan growth Conservative credit culture Solid financial performance Consistent attractive returns Strong balance sheet and capital base Seasoned and effective management team Substantial insider ownership – aligned
Slide 30: Attractive Valuation Metrics
Attractive Valuation Metrics Valuation Price / Tang. Book Value 143% 166% Price / LQA EPS 12.3x 14.8x Price / 2017 Estimated EPS 11.0x 14.8x Core Deposit Premium 5.3% 9.1% Cash Dividend Yield 2.8% 3.0% OCFC Peers(1) 1) Peers include: AROW, BMTC, DCOM, FFIC, FISI, FLIC, LBAI, NFBK, ORIT, PGC, SCNB, U
Slide 31: Appendix
Appendix r@) OcEANFIRST
Slide 32: Analyst Coverage
OceanFirst Financial Corp. – Analyst Coverage APPENDIX 1 Company Analyst Recommendation Price Target Keefe Bruyette & Woods Collyn Gilbert Outperform $22.00 Sandler O’Neill & Partners Frank Schiraldi Buy $21.00 Piper Jaffray Matt Breese Overweight $22.00 FIG Partners David Bishop Outperform $24.00 I
Slide 33: Market Demographics
Market Demographics Central New Jersey(1) Southern New Jersey(2) Philadelphia Metro(3) Total Bank Offices in Market 877 516 876 Total Bank Deposits in Market $81.8 billion $36.3 billion $93.2 billion Number of OceanFirst Offices 28 22 % of OceanFirst Deposits 60 40 Market Rank 10 7 Market Share (%)
Slide 34: Commercial Portfolio Metrics
Commercial Portfolio Metrics APPENDIX 3 Commercial Real Estate (CRE) Owner-Occupied Investor Total $ 523.7 million 1,011.4 million $1,535.1 million % of Total Loan Portfolio 48.5% Average Size of CRE Loans $766,000 Largest CRE Loan $16.7 million Current Pipeline $33.9 million Weighted Average Yield
Slide 35: Commercial Portfolio Segmentation
Commercial Portfolio Segmentation APPENDIX 3 (Cont’d) Total Commercial Loan Exposure by Industry Classification Real Estate Investment by Property Classification Diversified portfolio provides protection against industry-specific credit events. As of June 30, 2016. Arts/Entertainment/ Recreation, 4.
Slide 36: Residential Portfolio Metrics
Residential Portfolio Metrics APPENDIX 4 Residential Real Estate Total Portfolio $1,131.2 million % of Total Loan Portfolio 36.2% Average size of mortgage loans $198,000 % of loans for second homes 11.9% Portfolio weighted average loan-to-value ratio (using original or most recent appraisal) - Loans
Slide 37: Colonial American Bank Acquisition
Colonial American Bank Acquisition 100% Stock deal, valued at $11.9 million In-Market acquisition supports growth objective in towns of Middletown and Shrewsbury, NJ Favorable financial terms (adjusted for DTA realization of $2.3 million) Price/Tangible Book Value of 104% Transaction neutral to OCFC
Slide 38: Cape Bancorp Acquisition
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 of 4.4% Expected acc
Slide 39: Atlantic City Exposure
1 Pro forma OceanFirst and Ocean Shore as of March 31, 2016, and excludes purchase accounting adjustments. 2 Per OSHC March 31, 2016 Quarterly Report on Form 10-Q. 3 Includes loans made to borrowers who were employed at the time of origination at casinos/hotels that subsequently closed or declared b
Slide 40: Serving Our Communities
Serving Our Communities Recovering from Superstorm Sandy – Construction Financing 2013 – 2015 funded 287 loans = $117.2 million OceanFirst Foundation As of June 30, 2016, over $27.7 million has been granted to organizations serving the Bank’s market Provided $500,000 in grants dedicated to assisting
Slide 41: Client Comments
Client Comments APPENDIX 9 CHEFS INTERNATIONAL INC. Robert Cooper – President “The relationship with OceanFirst goes back before my tenure, and I was the true benefactor of that successful affiliation. Whether we request a simple letter of credit or a complicated loan, OceanFirst listens to our need
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