Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — Q1 2023 Earnings Presentation
24 slides from Oceanfirst Financial's earnings presentation, Apr 20, 2023
Slide 1: 1Q 2023 Earnings Release Supplement
. . . 1 The 1Q 2023 Earnings Release Supplement should be read in conjunction with the Earnings Release furnished as Exhibit 99.1 to Form 8-K filed with the SEC on April 20, 2023. Exhibit 99.2 OceanFirst Financial Corp. 1Q 2023 Earnings Release Supplement1 April 2023
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, strateg
Slide 3: Q1-23 Financial Highlights
. . .Q1-23 Financial Highlights 3 (1) Core metrics exclude merger related expenses, net branch consolidation expenses (benefit), net loss/gain on equity investments, net loss on sale of investments, and the income tax effect of these items (collectively referred to as “non-core” items). TBV (tangibl
Slide 4: OCFC Is Well Positioned for the Current Environment
. . .OCFC Is Well Positioned for the Current Environment The Bank maintains diverse sources of funding, including on-balance sheet liquidity and funding capacity that represent 192% of adjusted uninsured deposits Liquidity position enhanced by short duration, high quality, and low risk investment po
Slide 5: Liquidity Sources are Robust and Diverse
. . .Liquidity Sources are Robust and Diverse 5 Key actions taken by management during Q1-23: Promoted our Insured Cash Sweep program to proactively support customers, driving an increase to more than $100 million. Restructured large deposit accounts to meet FDIC insurance requirements. Liquidit
Slide 6: High Quality and Low Risk Investment Portfolio
. . .High Quality and Low Risk Investment Portfolio 6 If the entire portfolio were sold at March 31, 2023 valuations, the impact would reduce CET1 by 50 bps. Portfolio remains high quality and investment grade with 81% rated AAA or AA. Total duration on the investment portfolio totaled 4 years
Slide 7: Deposit Trends
. . .Deposit Trends 7 (1) Deposit beta is calculated as the increase in rate paid on total deposits per quarter divided by the incremental increase in the fed funds rate since January 1, 2022. Deposits grew by 3% QoQ; excluding brokered deposits, seasonally decreased by $46 million (less than 1%).
Slide 8: +80% of Total Deposits Are Insured and Population Remains Granular
. . .+80% of Total Deposits Are Insured and Population Remains Granular 8 OCFC’s deposit composition is extremely granular with 98% of all deposit accounts having less than $250K. OCFC customers have long tenured relationships with an average age of 10 years. The median age of a deposit relation
Slide 9: OCFC's Customer Base Values Operational Support
. . .OCFC’s Customer Base Values Operational Support OCFC’s deposit base is highly operational and values individualized service and support. OCFC customers initiated over 43 million total transactions in 2022 for over $101 billion, turning over our March 31, 2023 deposit balance more than 10 times
Slide 10: Track Record of Strong Credit Performance
. . . COVID-19 Pandemic Track Record of Strong Credit Performance 10 From 2006 to 2022, inclusive of the global financial crisis and COVID-19, OCFC’s CRE net charge-offs to average CRE loans totaled 6 bps per year compared to 81 bps for all commercial banks between $10 - $50 billion in assets. P
Slide 11: Credit Quality Historically Top Quartile and Well Positioned
. . .Credit Quality Historically Top Quartile and Well Positioned Underlying collateral is diversified: The underlying collateral for the CRE Investor Owned (“Investor”) portfolio is highly diversified and focused in low risk collateral types. Central business district loans comprise <1.0% of to
Slide 12: Leading TBV Growth Supported by Prudent Liquidity Management
. . .Leading TBV Growth Supported by Prudent Liquidity Management 12 Tangible Book Value per Share Growth (Q4-21 to Q4-22)(1) Note: Source: S&P Global (1) Peers include those companies defined in OCFC DEF 14A filed 4/26/22. Peers include: AUB, BHLB, BRKL, CBU, CNOB, CUBI, EGBN, FFIC, FULT, INDB, LBA
Slide 13: Investor Presentation Quarterly
. . . I N V E S T O R P R E S E N T A T I O N 13 Quarterly Earnings Update
Slide 14: Loan Portfolio Trends
. . .Loan Portfolio Trends 14 Moderated Loan Growth in the Portfolio ($’millions) Loan growth has moderated prudently, with the expectation of low growth for the remainder of the year. Diversified portfolio with a focus on CRE Investor Owned and Residential loans. Attractive and improving loan
Slide 15: Net Interest Income and Net Interest Margin Trends
. . .Net Interest Income and Net Interest Margin Trends 15 Average loan balances increased by $156 million from the linked quarter with a loan pipeline of $318 million at March 31, 2023. We expect modest compression in Q2-23, absent significant balance sheet volatility. Competitive market envi
Slide 16: Expense Discipline and Focused Investment
. . . Core Efficiency Ratio1 Expense Discipline and Focused Investment 16 Core Non-Interest Expense1 ($’000) 42,802 41,721 42,331 45,711 45,981 12,326 12,992 13,937 11,111 13,108 2,1282,519 Q3-22Q1-22 Q2-22 Q1-23 3,206 Q4-22 2,77755,128 57,919 59,045 59,341 61,217 Trident Technology Expense Other Co
Slide 17: Quarterly Credit Trends (1 of 2)
. . . Strong asset quality trends driven by prudent loan growth and credit decisioning. Quarterly Credit Trends (1 of 2) 17 Non-Performing Loans and Assets ($’000)1 Special Mention and Substandard Loans ($’000) Note: Of the $24.0 million in Special Mention loans and $86.8 million of Substandard loan
Slide 18: Quarterly Credit Trends (2 of 2)
. . .Quarterly Credit Trends (2 of 2) 18 Loan Allowance for Credit Losses (ACL) Plus PCD & General Credit Marks / Total Loans NCOs / (Recoveries) and Provision for Credit Loss Expense ($’000) 0.18% 0.56% Q1-22 0.17% 0.55% Q2-22 0.14% 0.55% Q3-22 0.12% 0.57% Q4-22 0.10% 0.60% Q1-23 0.74% 0.72% 0.69%
Slide 19: Generating Consistent and Attractive Returns
. . .Generating Consistent and Attractive Returns 19 Book Value and Tangible Book Value per Common Share ($)1 Core ROAA, ROTE1, and ROTCE1 • Book value per share increased by $0.26 (or 1.0%) per share compared to the linked quarter. • Tangible book value per common share increased by $0.34 (or 2.0%)
Slide 20: OCFC Is Well Positioned for the Current Environment
. . .OCFC Is Well Positioned for the Current Environment The Bank maintains diverse sources of funding, including on-balance sheet liquidity and funding capacity that represent 192% of adjusted uninsured deposits Liquidity position enhanced by short duration, high quality, and low risk investment po
Slide 21: Investor Presentation Appendix
. . . I N V E S T O R P R E S E N T A T I O N 21 Appendix
Slide 22: Adjusted Uninsured Deposit Bridge Detail
. . .Adjusted Uninsured Deposit Bridge Detail 22 Note #1: Uninsured deposits are reported at the consolidated Bank level per the Call Report. (1) The State of NJ requires collateralization on municipal deposits and administers a backstop to protect these deposits. (2) Gross exclusions relate to inte
Slide 23: Non-GAAP Reconciliations (1 of 2)
. . .Non-GAAP Reconciliations (1 of 2) (1) The sale of specific positions in two financial institutions impacted both equity investments and debt securities. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on
Slide 24: Non-GAAP Reconciliations (2 of 2)
. . .Non-GAAP Reconciliations (2 of 2) Non-GAAP Reconciliation $'000 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Tangible Equity Total stockholders' equity 1,610,371 1,585,464 1,540,216 1,521,432 1,519,334 Less: Goodw ill 506,146 506,146 506,146 506,146 500,319 C