Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — Investor Presentation (November 2020)
48 slides from Oceanfirst Financial's investor presentation, Nov 3, 2020
Slide 1: OceanFirst Financial Corp. Investor Presentation November 2020
Exhibit 99.1 . . . OceanFirst Financial Corp. Investor Presentation November 2020
Slide 2: Forward Looking Statements
INVESTOR PRESENTATION . . . 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, str
Slide 3: OceanFirst Financial Corp.
INVESTOR PRESENTATION . . . OceanFirst Financial Corp. • NASDAQ: OCFC • Market Cap: $904M 1 • Bank Holding Company with National Bank Subsidiary • Founded in 1902 • Total Assets of $11.7B 2 • 62 Full-Service Branches in New Jersey and Metropolitan New York City Headquarters OceanFirst Bank Branches
Slide 4: Investment Thesis – Well Positioned for the Post-COVID-19 Environment
INVESTOR PRESENTATION . . . Investment Thesis – Well Positioned for the Post-COVID-19 Environment • Strength of Assets • Balance sheet de-risked in Q3 with loan sales, reserve build, and conservative risk rating changes • Organic Growth Including Low-Cost and Durable Deposit Base • Cost of deposits
Slide 5: Third Quarter 2020 Results
INVESTOR PRESENTATION . . . Third Quarter 2020 Results Financial Results Strategic and Operational Focus • Net interest margin of 2.97% • COVID-19 on-going initiatives for • Loan pipeline of $377M at September employees, customers, and 30, 2020 community • YTD deposit growth (exclusive of • Recommit
Slide 6: Reserves for Loan Losses
INVESTOR PRESENTATION . . . Reserves for Loan Losses The Allowance for Credit Losses (ACL) on loans of $56.4M plus the unamortized credit mark of $31.6M provides 110bps of coverage to loan portfolio . . . NOVEMBER | 2020 6
Slide 7: Reserve Trends
INVESTOR PRESENTATION . . . Reserve Trends Loan ACL Trends Under CECL ACL Build Reflects Credit Migration in 3Q20 and Ongoing COVID Uncertainty 60.0 56.4 1.20% 50.0 1.00% 38.5 40.0 0.80% 29.6 30.0 0.60% $ Million $ 20.8 20.0 0.40% 10.0 0.20% 0.0 0.00% 1/1/2020 3/31/2020 6/30/2020 9/30/2020 Quantitat
Slide 8: SBA Paycheck Protection Program Update
INVESTOR PRESENTATION . . . SBA Paycheck Protection Program Update Total PPP Portfolio: $480.6M Held for Sale: $298.1M Retained PPP Portfolio: $182.5M Submitted In Underwriting to SBA 8% (Pending Decision) 45% Applications to be Reviewed Retained by Bank 21% 38% Forgiveness Application Submitted to
Slide 9: Net Interest Margin
INVESTOR PRESENTATION . . . Net Interest Margin Operational Highlights Net Interest Margin 2 • Non-interest bearing deposits 4.50 are 24% of average balance of 4.00 total deposits 1 3.50 3.38* 3.25 3.00 • Balanced interest rate risk 3.18** position 2.50 2.00 Percentage • An extraordinary surplus of
Slide 10: Deposit Growth with Branch Consolidation
INVESTOR PRESENTATION . . . Deposit Growth with Branch Consolidation Total Deposits Per Branch 1 10,000 150 Average Deposits Per Branch($ Millions) 9,000 125 Strength and Durability of Low- 8,000 Cost Deposit Position 7,000 100 • $150M average branch size as of 6,000 September 30, 2020, doubling in
Slide 11: Loan Composition Emphasizes Commercial
INVESTOR PRESENTATION . . . Loan Composition Emphasizes Commercial1 Total Loans Outstanding Loans by Customer Segment – 2020 2015 2016 35% 2017 2018 65% 2019 2020 Commercial Consumer Consumer Commercial $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 (in millions) Residential Home
Slide 12: Generating Consistent & Attractive Returns
INVESTOR PRESENTATION . . . Generating Consistent & Attractive Returns 16.0% 1.50% 2020 returns adversely 1.35% 14.0% impacted by COVID-19. De- risking of Q3 balance sheet 1.20% 12.0% positions the Bank for improved returns in 2021 1.05% 10.0% Return on Assets 0.90% 8.0% 0.75% 0.60% 6.0% 0.45% 4.0%
Slide 13: Credit Metrics Reflect Conservative Culture
INVESTOR PRESENTATION . . . Credit Metrics Reflect Conservative Culture Non-Performing Loans by Source (Percent of Loans Receivable) NET CHARGE-OFFS 0.05% 0.15% 0.10% 0.05% 0.02% 0.27% 1.00% Excluding net charge-offs of $15.2M 0.91% related to higher risk commercial loans 0.90% held-for-sale and the
Slide 14: Asset Growth Supplemented by Strategic M&A
INVESTOR PRESENTATION . . . Asset Growth Supplemented by Strategic M&A Opportunistic Acquisitions of Local Community Banks Target Closing Date Transaction Value Total Assets Colonial American Bank July31,2015 ~$12million $142million Cape Bancorp May 2, 2016 ~$196 million $1,518 million Ocean Shore H
Slide 15: New Jersey Expansion Opportunities
INVESTOR PRESENTATION . . . New Jersey Expansion Opportunities • New Jersey is an attractive market 1 • Statewide Total Population of 8.9M • Most densely populated state • 11th most populous state • Median household income of $72,000 • Significant opportunities for acquisitions to build customer bas
Slide 16: Regional Opportunities for M&A
INVESTOR PRESENTATION . . . Regional Opportunities for M&A 10% of the total population of the United States resides within a 2-hour drive of Headquarters Philadelphia Area New York City Metro Area • 5 Banks with Assets Between $400M and $1B • 4 Banks with Assets Between $400M and $1B • 10 Banks with
Slide 17: Digital Culture – Years of Transformation
INVESTOR PRESENTATION . . . Digital Culture – 5 Years of Transformation Continuous Investment In Talent and Technologies Artificial Intelligence Digital Banking • Funded from ongoing earnings and branch consolidations Team Team Digital Strategy & Customer First FinTech Equity Project Digital Custome
Slide 18: Digital Capabilities & Customer Ratings
INVESTOR PRESENTATION . . . Digital Capabilities & Customer Ratings Mobile Capabilities Survey Mobile App Customer Ratings (# of features, out of 18 1) (Apple & Google 2) OceanFirst 12 OceanFirst 4.8 # Ratings = 5,938 National / 4.4 National / Regional 10 Regional Large MidAtlantic 4.5 FinTechs / 10
Slide 19: Digital Customer Acquisition
INVESTOR PRESENTATION . . . Digital Customer Acquisition Attaining Scale… … And Attracting Valuable Customers • 180% increase YoY in opened Customer Usage Statistics* Online Branch online Retail Checking Accounts. Digital Usage 86.2% 68.8% • Online Account Opening is up Mobile Usage 68.6% 52.2% 144%
Slide 20: Treasury Management Services
INVESTOR PRESENTATION . . . Treasury Management Services Treasury Management Solutions: Accounts1 Balances1 Over 39,000 Over $3.5B • ACH Origination, Receipts, Addenda Reporting and Debit Blocking • Digital Account Opening Early Adopter • Accept Multiple Forms of Payment Introduced Cash Management S
Slide 21: Protecting Our Clients with Cyber Security
INVESTOR PRESENTATION . . . Protecting Our Clients with Cyber Security • Remains current with evolving industry-wide standards • Real-time analytical tools in place for fraud protection and firewall security • Use of top tier, neural-based, real-time debit card fraud analytics • Qualified, certified
Slide 22: Strategic Capital Allocation Generates Shareholder Returns
INVESTOR PRESENTATION . . . Strategic Capital Allocation Generates Shareholder Returns Returned Capital to $65 Shareholders $60 $55 $50 • Stable & competitive dividend $45 th $40 • 95 consecutive quarter $35 • Historical Payout Ratio of 30% to $30 40% $25 $20 $15 • Repurchased 648,851 shares YTD Ann
Slide 23: An Experienced Management Team
INVESTOR PRESENTATION . . . An Experienced Management Team Years at Executive Title OceanFirst Selected Experience 1 Chairman, President, Patriot National Bancorp Christopher D. Maher 7 Chief Executive Officer Dime Community Bancshares Executive Vice President, Wachovia Bank N.A. Joseph J. Lebel III
Slide 24: OceanFirst Foundation: Serving Our Communities
INVESTOR PRESENTATION . . . OceanFirst Foundation: Serving Our Communities • Over $42M has been granted to organizations serving OceanFirst’s market • Provided $250,000 in grants dedicated to assisting the non-profit organizations helping our neighbors during the coronavirus pandemic • First foundat
Slide 25: Investment Thesis – Well Positioned for the Post-COVID-19 Environment
INVESTOR PRESENTATION . . . Investment Thesis – Well Positioned for the Post-COVID-19 Environment • Strength of Assets • Balance sheet de-risked in Q3 with loan sales, reserve build, and conservative risk rating changes • Organic Growth Including Low-Cost and Durable Deposit Base • Cost of deposits
Slide 26: Investor Relations Inquiries
. . . Investor Relations Inquiries Jill A. Hewitt Senior Vice President, Director of Investor Relations & Corporate Communications jhewitt@oceanfirst.com (732) 240-4500, ext. 7513 26
Slide 27: Appendix
. . . Appendix 27
Slide 28: Favorable Competitive Position
INVESTOR PRESENTATION . . . Favorable Competitive Position Community Banks serving OceanFirst Bank Mega Banks Central & Southern NJ # of Dep. In Mkt. Dep. In Branches ($000) Dep. In # of # of Institution Mkt. Institution Mkt. Branches Branches ($000) 60 8,173,938 ($000) TD Bank (Canada) 151 33,278,9
Slide 29: Credit Metrics – At A Glance
INVESTOR PRESENTATION . . . Credit Metrics – At A Glance Current Forbearances (October 23, 2020) Commercial (Full1) $88M 1.1% of portfolio Consumer $122M 1.5% of portfolio Total $210M 2.6% of portfolio The forbearance portfolios are expected to be negligible as of December 31, 2020. Going forward, c
Slide 30: Commercial Forbearance Portfolio
INVESTOR PRESENTATION . . . Commercial Forbearance Portfolio $894M in forbearances cured from peak of $1.1B Commercial forbearances at October 23, 2020 total $206M of which only $88M is full payment forbearance Commercial full payment forbearance projected to reduce to $20M by November 30, 2020 By D
Slide 31: Commercial Loans Currently in Forbearance
INVESTOR PRESENTATION . . . Commercial Loans Currently in Forbearance Category Current Forbearance Type $206M $206M Full Interest Only – (in millions) Interest Only Forbearance Prefunded* Total commercial CRE: Investor Owned $53 $68 $4 forbearances have CRE: Owner Occupied $15 $14 $30 CRE: Construct
Slide 32: Commercial Loans Currently in Full Forbearance
INVESTOR PRESENTATION . . . Commercial Loans Currently in Full Forbearance $88M $88M $88M $88M . . . NOVEMBER | 2020 32 Forbearance data as of October 23, 2020
Slide 33: Commercial Loans in Full Forbearance – Loan to Value (CRE)
INVESTOR PRESENTATION . . . Commercial Loans in Full Forbearance – Loan to Value (CRE) *WA LTV: 56.1% . . . *WA DSCR: 1.43X NOVEMBER | 2020 Forbearance data as of October 23, 2020 33 *WA LTV and WA DSCR as of most recent financial review
Slide 34: Commercial Loans Currently in Interest Only Forbearance
INVESTOR PRESENTATION . . . Commercial Loans Currently in Interest Only Forbearance $118M $118M $118M $118M . . . NOVEMBER | 2020 34 Forbearance data as of October 23, 2020
Slide 35: Commercial Loan Interest Only Forbearance – Loan to Value (CRE)
INVESTOR PRESENTATION . . . Commercial Loan Interest Only Forbearance – Loan to Value (CRE) *WA LTV: 48.3% *WA DSCR: 1.80X . . . NOVEMBER | 2020 Forbearance Data as of October 23, 2020 35 *WA LTV and WA DSCR as of most recent financial review
Slide 36: Consumer Forbearance Portfolio
INVESTOR PRESENTATION . . . Consumer Forbearance Portfolio 1st Forbearance Peak $329M 2nd Forbearance Peak $187M Consumer forbearances (1st and 2nd) at October 26, 2020 total $122M, down 63% from peak of $329M . . . The second 90-day forbearance period began in early June NOVEMBER | 2020 Data based
Slide 37: Consumer Loan Forbearance Profile
INVESTOR PRESENTATION . . . Consumer Loan Forbearance Profile Consumer forbearances peaked at $329M on June 13, 2020 Consumer Portfolio 90 Day Forbearance 180 Day Forbearance Portfolio Portfolio Total Outstanding Balance: $2.9B Total Outstanding Balance: $9M Total Outstanding Balance: WA LTV: 65% WA
Slide 38: Consumer Loan Forbearance Credit Metrics
INVESTOR PRESENTATION . . . Consumer Loan Forbearance Credit Metrics Each forbearance period is 90 days, or a total of up to 180 days 90 90 Day Initial Forbearance 180 Day . . . NOVEMBER | 2020 Continuing Forbearance 38 Forbearance data as of October 26, 2020
Slide 39: Consumer Loan Forbearance Credit Metrics
INVESTOR PRESENTATION . . . Consumer Loan Forbearance Credit Metrics Total Portfolio Forbearance Portfolio LTV <= 80% LTV > 80% LTV <= 80% LTV > 80% $2.7B (92%) $217M (8%) $109M (89%) $13M (11%) Only $3M of loans exhibit an LTV > 80% and a current FICO < 650; FICO < 650 FICO >= 650 FICO < 650 FICO >
Slide 40: Consumer Loan Forbearance by County
INVESTOR PRESENTATION . . . Consumer Loan Forbearance by County $2.1B Sharply increasing real estate values should protect against credit losses Annual County Median Price Increase* Monmouth 14% Ocean 12% Atlantic 10% Cape May 20% . . . NOVEMBER | 2020 Forbearance data as of October 26, 2020 40 *201
Slide 41: Loan Portfolio Activity
INVESTOR PRESENTATION . . . Loan Portfolio Activity 418 57 8,400 371 8,390 ($'millions) June 30, 2020 Loan Originations Loan Sales Payoffs / Paydowns September 30, 2020 . . . NOVEMBER | 2020 41 Loan balances include loans held for sale.
Slide 42: Q3-20 NIM Contraction
INVESTOR PRESENTATION . . . Q3-20 NIM Contraction 3.24% 0.13% 0.06% 0.06% 0.02% 2.97% (%) Q2-20 NIM Excess balance sheet Lower rate Purchase accounting Prepayment fee Q3-20 NIM liquidity environment impact impact Headwinds Tailwinds • The sale of PPP loans will increase short-term • Further opportun
Slide 43: Credit Costs Consistently Lower than Peer Group
INVESTOR PRESENTATION . . . Credit Costs Consistently Lower than Peer Group Strong credit performance yields low net charge offs through the cycle. . . . NOVEMBER | 2020 Source: S&P Global Market Intelligence; FFIEC UBPR Peer Group Average Report. Call Report data available through 6/30/20. 43 Note:
Slide 44: 2007 to 2020 Cumulative Credit Losses Also Outperform
INVESTOR PRESENTATION . . . 2007 to 2020 Cumulative Credit Losses Also Outperform Cumulative OCFC losses are 45% lower than proxy peers and 70% lower than UBPR peers . . . NOVEMBER | 2020 Source: S&P Global Market Intelligence; FFIEC UBPR Peer Group Average Report. Call Report data available through
Slide 45: Largest Segments Drive Long Term Performance
INVESTOR PRESENTATION . . . Largest Segments Drive Long Term Performance . . . Source: S&P Global Market Intelligence; FFIEC UBPR Peer Group Average Report. Call Report data available through 6/30/20. Note1: Peer Group 2 - Commercial Banks between $10BN and $100BN in assets; Peer Group 3 - Commercia
Slide 46: 2007 to 2020 Cumulative Losses By Segment
INVESTOR PRESENTATION . . . 2007 to 2020 Cumulative Losses By Segment Cumulative OCFC losses are 26% lower than UBPR peers. 2 Cumulative OCFC losses are 72% lower than UBPR peers. Cumulative OCFC losses are 44% lower than UBPR peers. Cumulative OCFC losses are 48% lower than UBPR peers. . . . Source
Slide 47: Effective Interest Rate Risk Management
INVESTOR PRESENTATION . . . Effective Interest Rate Risk Management Duration 5.0 All asset categories managed with limited duration 4.0 3.0 Years 2.0 1.0 0.0 Securities Mortgage Loans Consumer Loans Commercial Loans Total Assets FHLB Term Time Deposits (Weighted Average) Borrowings Rate Characterist
Slide 48: OceanFirst Milestones – Years of Growth
INVESTOR PRESENTATION . . . OceanFirst Milestones – 118 Years of Growth Crossed $10B IPO to Mutual Depositors threshold Created Two River Colonial American Adopted National OceanFirst Bancorp Bank Acquired Bank Charter Foundation Acquired Founded, Established Established Commercial LPO Country Bank
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