Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — Investor Presentation (May 2017)
42 slides from Oceanfirst Financial's investor presentation, May 4, 2017
Slide 1: Investor Presentation May 2017
Investor Presentation May 2017 OceanFirst Financial Corp. Exhibit 99.1
Slide 2: Forward-Looking Statements
OceanFirst Financial Corp. Forward-Looking Statements In addition to historical information, the Form 10-K 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 Milestones – 115 Years of Growth
OceanFirst Milestones – 115 Years of Growth 3
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 • $5.2 billion in assets • Branches located in 7 counties • Market Cap $908 million • Average Daily Share Volume of 146,000 OceanFirst Headquarters OceanFirst Retail Bran
Slide 5: Atlantic City is 1.16% of the OceanFirst Loan Portfolio
5 Atlantic City is 1.16% of the OceanFirst Loan portfolio OceanFirst Loan Portfolio Diversification by Geography Least Concentrated Most Concentrated
Slide 6: Experienced Leadership
Experienced Leadership Name Position # of Years at OCFC # of Years In Banking Previous Experience Christopher D. Maher Chairman, President, Chief Executive Officer 4 29 Patriot National Bancorp; Dime Community Bancshares Michael J. Fitzpatrick Executive Vice President, Chief Financial Officer 24 35
Slide 7: Deep Bench of Experienced Executives
Deep Bench of Experienced Executives Name Position # of Years at OCFC # of Years In Banking Previous Experience Gary S. Hett First Senior Vice President, Director of Human Resources 3 43 Patriot National Bancorp; Dime Community Bancshares David R. Howard First Senior Vice President, Direct Banking 3
Slide 8: Strategic Focus
Strategic Focus 8 I. Organic Commercial Loan and Core Deposit Growth • Grew commercial loans (excluding acquired loans) from $533 million at December 31, 2012 to $945 million at March 31, 2017, 14% CAGR • Grew low cost core deposits (excluding acquired deposits) from $1,493 million (0.15% cost) at D
Slide 9: Strategic Focus (Continued): Conservative Risk Management
Strategic Focus (Continued) 9 III. Conservative Risk Management • Credit Risk Reduced non-performing loans from $43.4 million (2.8% of loans) at December 31, 2012 to $21.7 million (0.56% of loans) at March 31, 2017 Strong credit culture – experienced and independent credit administration, result
Slide 10: Strategic Focus (Continued): Direct Banking Initiative
Strategic Focus (Continued) 10 IV. Direct Banking Initiative • Current suite of digital offerings is at top of market for community banks Website Apple Pay Finance Works Online Banking Platform U Choose Rewards Online Account Opening Mobile Application Pop Money Biometric ID Verification Bill Pay Te
Slide 11: Strategic Focus (Continued): Transition of Branch Service Area Model
Strategic Focus (Continued) 11 V. Transition of Branch Service Area Model • Currently 61 branches with an average branch size of < $70MM • Approved consolidations in 2017 – 15 branches Results in 46 branches with an average size of >$90MM • Target average branch size >$100MM • Will continue to pla
Slide 12: Highlights – 2017 First Quarter
Highlights – 2017 12 First Quarter • Core EPS of $0.40(1), a 25% increase from $0.32(1) in Q1 2016 12.56% ROTE(1)(2) & 1.02% ROA(1)(2) Net interest margin was 3.56% in Q1 2017, an increase from 3.34% in Q1 2016 • Strong deposit funding with a loan to deposit ratio of 91.1% and a cost of deposits
Slide 13: Favorable Competitive Position
Favorable Competitive Position Competing Favorably Against Banking Behemoths and Local Community Banks Source: FDIC Summary of Deposits, June 30, 2016 Note: Market area is defined as counties in Central and Southern New Jersey Institution # of Branches Dep. In Mkt. ($000) TD Bank (Canada) 132 18,749
Slide 14: Strategic Deposit Composition Transition
Strategic Deposit Composition Transition Non- Interest Checking Non- Interest Checking Interest Checking Interest Checking WAR 0.19% MMDA & Savings MMDA & Savings MMDA & Savings WAR 0.15% Time Deposits Time Deposits Time Deposits WAR 1.12% 0 350 700 1,050 1,400 1,750 2,100 2,450 2,800 3,150 3,500 3,
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 15 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 $- $100 $200 $300 $400 $500 $600 $
Slide 16: Full Suite of Technology and Delivery Systems
Online Banking & Bill Pay The 12-month average as of March 2017, 41% of deposit customers used online banking and an average of 40,000 bills were paid with online bill pay service each month. Check Card Rewards program promotes usage driving over $300 million of card transactions in 2016. Fee income
Slide 17: Strategic Loan Composition Transition
Strategic Loan Composition Transition Investment CRE(A) Owner- Occupied CRE Owner- Occupied CRE C&I C&I Consumer (Home Equity) Consumer (Home Equity) Residential Real Estate Residential Real Estate Residential Real Estate 0 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700 3,000 3,300 3,600 3,900 Dec
Slide 18: Credit Underwriting Remains Conservative: Commercial Loan Production
Credit Underwriting Remains Conservative: Commercial Loan Production 2016 and 2017 (Dollars in thousands) Commercial Loan Originations Year Three Months Ended Ended December 31, 2016 March 31, 2017 Commercial Loan Portfolio at March 31, 2017 Amount $261,301 $104,809 $1,852,736 Weighted average rate
Slide 19: OceanFirst Maintains Conservative CRE Portfolio Relative to Peers
19 OceanFirst Maintains Conservative CRE Portfolio Relative to Peers 0 200 400 600 800 1,000 1,200 Peer 1 Peer 2 OceanFirst Bank Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer Group Average Peer 12 Peer 13 Peer 14 Peer 15 (%) CRE to Total Risk Based Capital December 31, 2016 1
Slide 20: Highlights – Risk Management 2016 and 2017
Highlights – Risk Management 2016 and 2017 • Interest Rate Risk Management Core deposits(1) are 84.9% of total deposits, a significant hedge against a rising rate environment Approximately $150 million of excess liquidity in interest-bearing deposits at March 31, 2017; available for investment i
Slide 21: Effective Interest Rate Risk Management
Effective Interest Rate Risk Management 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% Mortgage Loans Consumer Loans Commercial Loans (CRE & C&I) Securities Total Assets (Weighted Average) Borrowings Deposits Adjustable/Floating Fixed Core Deposits, Administered Duration Rate Characteristics 0.0 1.0 2.0 3.0 4.
Slide 22: Term Borrowings Extended as Interest Rate Hedge
Term Borrowings Extended as Interest Rate Hedge 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 2017 2018 2019 2020 2021 M il li o n s o f D o ll a rs Maturity Periods TOTAL $250.0MM 1.75% AVG. COST At March 31, 2017 22
Slide 23: Credit Metrics Reflect Conservative Culture
0.00% 0.20% 0.40% 0.60% 0.80% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 2011 2012 2013 2014 2015 2016 3/31/2017 N e t lo an ch arge -o ffs as p erce n t o f average lo an s N o n -p erf o rm ing lo an s as p erc ent o f to ta l l o an s r ece iv abl e Residential Consumer Commercial Real Estate Comm
Slide 24: OceanFirst Average Charge-Offs Since 2011 Below Peer Average
OceanFirst Average Charge-Offs Since 2011 Below Peer Average 24 0.31% 0.30% 0.56% 0.48% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Peer 15 Peer 14 Peer 13 Peer 12 Peer 11 Peer 10 Peer Group Average OceanFirst Bank Peer 9 Peer 8 Peer 7 Peer 6 Peer 5 Peer 4 Peer 3 Peer 2 Peer 1 Charge-Offs / Average Loans Out
Slide 25: Net Interest Margin
Net Interest Margin Expanded Net Interest Margin to Outperform both Historical Level and Peer Group 2.00% 2.20% 2.40% 2.60% 2.80% 3.00% 3.20% 3.40% 3.60% 3.80% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 2017 Historical Average (1996 – 2016) Net Interest Margin (3.29%) Q1 2017 consolidated
Slide 26: Diversified Streams of Non-Interest Income
Diversified Streams of Non-Interest Income 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 1996 3/31/17 (Annualized) Pe rc en t o f A ve ra ge A ss et s Fees and Service Charges Gain on Sale of Loans BOLI BankCard Services Wealth Management/Investment Services Other $2.5M $26.9M Targeted Growt
Slide 27: Generating Consistent Attractive Returns
Generating Consistent Attractive Returns 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 2009 2010 2011 2012 2013 2014 2015 2016 3/31/17 Annualized 0.60% 0.70% 0.80% 0.90% 1.00% 1.10% Return on Tangible Equity Return on Assets (1)For 2013, excludes after-tax impact of $3.1 million in charges related to strat
Slide 28: Accelerating EPS Growth
Accelerating EPS Growth 28 $0.40 $0.80 $1.20 $1.60 $2.00 2011 2012 2013 2014 2015 2016 Q1 2017 (Annualized) Core Diluted EPS Reported Diluted EPS (2) (1)For 2013, excludes after-tax impact of $3.1 million in charges related to strategic advance restructuring and branch consolidation. (2)For 2015, 20
Slide 29: Prudently Managing Excess Capital in Near Term
Prudently Managing Excess Capital in Near Term $8.8 $8.6 $8.2 $8.2 $8.7 $12.6 $4.8 $2.1 $11.9 $8.1 $9.2 $6.5 $1.9 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 2011 2012 2013 2014 2015 2016 2017 An nu al Re tu rn o f C ap ita l ( Mi llio ns ) Cash Dividends Stock Repurchases Notes: Stock Repurchases – $15.52 Av
Slide 30: 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 31: Attractive Valuation Metrics
Attractive Valuation Metrics OCFC Peers(1) 31 Valuation Price / Tang. Book Value 213% 221% Price / 2017 Estimated EPS 16.5x 18.0x Price / 2018 Estimated EPS 14.7x 16.7x Core Deposit Premium(2) 12.2% 13.1% Cash Dividend Yield 2.2% 2.2% 1) Peers include: AROW, BMTC, DCOM, EGBN, FFIC, FISI, FLIC, LBAI,
Slide 32: Appendix
Appendix 32
Slide 33: Analyst Coverage and Investor Relations Contacts
OceanFirst Financial Corp. – Analyst Coverage APPENDIX 1 Investor Relations Contacts Christopher D. Maher President and Chief Executive Officer 732-240-4500 Ext. 7504 cmaher@oceanfirst.com Michael Fitzpatrick Executive Vice President and Chief Financial Officer 732-240-4500 Ext. 7506 mfitzpatrick@oc
Slide 34: Market Demographics
Market Demographics Central New Jersey(1) Southern New Jersey(2) Philadelphia 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 33 % of OceanFirst Deposits 50 50 Market Rank 11 6 Market Share (%)
Slide 35: Commercial Portfolio Metrics
Commercial Portfolio Metrics APPENDIX 3 Commercial Real Estate (CRE) Owner-Occupied Investor Total $ 533.1 million 1,114.0 million $1,647.1 million % of Total Loan Portfolio 42.7% Average Size of CRE Loans $790,000 Largest CRE Loan $16.4 million Pipeline as of March 31, 2017 $49.9 million Weighted A
Slide 36: Commercial Portfolio Segmentation
Commercial Portfolio Segmentation APPENDIX 3 (Cont’d) Total Commercial Loan Exposure by Industry Classification Arts/E ntertainment/ Recreation, 3.9% Real E state Investment, 53.1% Other S ervices, 3.0% Retail T rade, 4.9% P ublic Administration, 2.3% M iscellaneous, 5.1% M anufacturing, 2.5% E duca
Slide 37: Residential Portfolio Metrics
Residential Portfolio Metrics APPENDIX 4 Residential Real Estate Total Portfolio $1,639.6 million % of Total Loan Portfolio 42.5% Average size of mortgage loans $212,000 % of loans for second homes 27.4% Portfolio weighted average loan-to-value ratio (using original or most recent appraisal) - Loans
Slide 38: 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% o Transaction neutr
Slide 39: 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 $196 million • Favorable financial terms • Price/Tangible Book Value of 139% • Price/Core Deposit Premium of 4.4% •
Slide 40: Ocean Shore Holding Co. Acquisition
40 Ocean Shore Holding Co. Acquisition - OCFC Branches - OSHC Branches APPENDIX 7 • Reinforces OceanFirst as the preeminent New Jersey based community banking franchise operating throughout central and southern New Jersey • 80% stock and 20% cash, valued at $181 million • Favorable financial terms(1
Slide 41: Atlantic City Exposure
41 Atlantic City Exposure OceanFirst Bank March 31, 2017 # of Loans Amount (000’s) Percent of Total Assets Atlantic City 179 44,704 0.86% Atlantic County 3,108 506,419 9.75% APPENDIX 8
Slide 42: Serving Our Communities
Serving Our Communities • OceanFirst Foundation As of March 31, 2017, over $31.7 million has been granted to organizations serving the Bank’s market Provided $500,000 in grants dedicated to assisting our neighbors after Superstorm Sandy hit the Jersey Shore in 2012 First foundation established
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