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| 8-K - FORM 8-K - OCEANFIRST FINANCIAL CORP | d870151d8k.htm |
 Investor Presentation
February 2015
OceanFirst Financial Corp.
OceanFirst Financial Corp.
Exhibit 99.1 |
 OceanFirst Financial Corp.
2
Forward Looking Statements:
This
presentation
contains
certain
forward-looking
statements
within
the
meaning
of
the
Private
Securities
Reform
Act
of
1995
which
are
based
on
certain
assumptions
and
describe
future
plans,
strategies
and
expectations
of
the
Company.
These
forward-looking
statements
are
generally
identified
by
use
of
the
words
"believe,"
"expect,"
"intend,"
"anticipate,"
"estimate,"
"project,"
"will,"
"should,"
"may,"
"view,"
"opportunity,"
"potential,"
or
similar
expressions
or
expressions
of
confidence.
The
Company's
ability
to
predict
results
or
the
actual
effect
of
future
plans
or
strategies
is
inherently
uncertain.
Factors
which
could
have
a
material
adverse
effect
on
the
operations
of
the
Company
and
its
subsidiaries
include,
but
are
not
limited
to,
changes
in
interest
rates,
general
economic
conditions,
levels
of
unemployment
in
the
Bank’s
lending
area,
real
estate
market
values
in
the
Bank’s
lending
area,
future
natural
disasters
and
increases
to
flood
insurance
premiums,
the
level
of
prepayments
on
loans
and
mortgage-backed
securities,
legislative/
regulatory
changes,
monetary
and
fiscal
policies
of
the
U.S.
Government
including
policies
of
the
U.S.
Treasury
and
the
Board
of
Governors
of
the
Federal
Reserve
System,
the
quality
or
composition
of
the
loan
or
investment
portfolios,
demand
for
loan
products,
deposit
flows,
competition,
demand
for
financial
services
in
the
Company's
market
area
and
accounting
principles
and
guidelines.
These
risks
and
uncertainties
are
further
discussed
in
the
Company’s
Annual
Report
on
Form
10-K
for
the
year
ended
December
31,
2013
and
subsequent
securities
filings
and
should
be
considered
in
evaluating forward-
looking
statements
and
undue
reliance
should
not
be
placed
on
such
statements.
The
Company
does
not
undertake,
and
specifically
disclaims
any
obligation,
to
publicly
release
the
result
of
any
revisions
which
may
be
made
to
any
forward-looking
statements
to
reflect
events
or
circumstances
after
the
date
of
such
statements
or
to
reflect
the
occurrence
of
anticipated
or
unanticipated
events. |
 OceanFirst Bank Milestones
3
Founded,
Point Pleasant,
NJ
Branch Expansion
Into
Middlesex County
IPO To
Mutual
Depositors
Created OceanFirst
Foundation
Established
Commercial
Lending
Branch Expansion
Into
Monmouth County
Repurchased
62%
Of
Original IPO Shares
Established
Trust
and
Asset Management
Rebuilt Capital
To 9.5% Through
Secondary
Stock Offering
Resumed Share
Repurchases –
Current Authorization:
618,398 Shares
OceanFirst
Foundation Passes
$25 Million In
Cumulative Grants
Open LPO In Mercer
County To Serve
The Broader Central
Jersey Market |
 Serving Central New Jersey Market
•
Community Bank serving the
Central Jersey market -
$2.4 billion
in assets and 23 branch offices
•
Targeting growth opportunities in
Monmouth, Mercer and Middlesex
Counties
•
Market Cap $280.4 million
•
Core deposits –
88.0% of total
deposits
•
Locally
originated
loan
portfolio
-
no
SNCs
C&I loans and lines
Residential and commercial
real estate mortgages
Consumer equity loans and lines
4
30 million people, or approximately
10% of the total U.S. population,
reside within a 2-hour drive*
*Includes New York –
Newark NY-NJ-PA-CT CSA and
Philadelphia –
Reading –
Camden CSA. |
 Experienced Leadership
5
Name
Position
# of Years in
Banking
# of Years
at OCFC
Christopher D. Maher
President, Chief Executive Officer
27
2
Michael J. Fitzpatrick
Executive Vice President, Chief Financial Officer
33
22
Joseph R. Iantosca
Executive Vice President, Chief Administrative Officer
37
11
Joseph J. Lebel III
Executive Vice President, Chief Lending Officer
31
9
•
Substantial insider ownership of 27.4% –
aligned with shareholders’
interests
OceanFirst Bank ESOP 10.5%
Directors & Senior Executive Officers 9.8% (Chairman 5.7%)
Director and Proxy Officer Stock Ownership Guidelines
OceanFirst Foundation 7.1% |
 Our Strategy
•
Positioned as the leading Community Bank in attractive Central Jersey
market –
developing the franchise, growing revenue and creating additional
value for shareholders
•
Strategically focused on revenue growth in commercial lending, wealth
management, and bankcard services
•
Guarding credit quality in ALL business cycles
•
Growing diversified streams of non-interest income to decrease reliance on
Net Interest Margin (NIM)
•
Creating attractive profile to encourage roll-up opportunities presented by
local community banks lacking the scale or desire to remain
independent 6 |
 Significant Primary Market Deposit Share
7
Competing Favorably Against Banking Behemoths
# of
Dep. In Mkt.
Mkt. Shr.
Rank
Institution
Branches
($000)
(%)
Ocean County, NJ
1
TD Bank, National Association (Canada)
22
2,541,705
17.45
2
Hudson City Bancorp Inc. (NJ)
(1)
14
2,212,695
15.19
3
Wells Fargo Bank NA (CA)
26
2,203,005
15.13
4
OceanFirst Financial Corp. (NJ)
19
1,480,885
10.17
5
Banco Santander S.A. (Spain)
21
1,368,640
9.40
6
Bank of America Corp. (NC)
17
1,267,176
8.70
Total For Institutions In Market
188
14,563,013
(1)
Pending acquisition by M&T Bank (NY)
Source:
FDIC
Summary
of
Deposits,
June
30,
2014 |
 Strategic Deposit Composition Transition
8
*Time deposit duration of 19 months |
 Technology and Delivery Systems
Mobile Banking
Added mobile deposit capture
in 2013. More than 14,000
depositors use mobile, text or
smart phone apps monthly.
9
Online Banking & Bill Pay
In 2014, 42% of depositors used
online banking and over 34,000
bills were paid with online bill pay
service.
Check Card
Over 6 million transactions
processed in 2014, a 10.7%
increase from 2013. Rewards
program promotes usage.
ATM & Interactive Teller (ITM)
Invested
$900,000
to
upgrade
ATM
fleet
to
intelligent
terminals
in
2014;
self-service
deposits
more
than
doubled.
First
ITM
deployed
in
April
2014.
Corporate Cash Management
Added Remote Deposit Capture
(RDC) in 2007. In 2014, 88 clients
processed over 600,000 checks
using RDC. |
 Strategic Loan Composition Transition
10
(1)
Commercial loan (CRE and C&I) duration of 2.75 years.
|
 11
Credit Underwriting Remains Conservative
Commercial Loan Production 2014
(Dollars in thousands)
2014 Total
Commercial
Loan Originations
Total
Portfolio
Amount
$243,858
$733,897
Weighted average rate
4.14%
4.49%
Weighted average debt service coverage
2.0X
2.0X
Weighted average loan-to-value
63%
53%
Weighted
average
risk
rating
(1)
4.3
4.6
Deposit contribution
$35,727
$172,012
Cash management
27%
(1)
Risk rating is on a scale from 1 (best) to 9 (worst). A rating of 4.6
represents an equivalent S&P rating of BBB. |
 Highlights –
Fourth Quarter 2014
12
•
Grew commercial loan portfolio $54.4 million, 32.0% annualized;
6
th
consecutive quarter of double digit percentage growth
•
Announced the addition of a new commercial lending team to be
located in Mercer County, New Jersey
•
Earnings per share of $0.30, 9.1% ROE & 0.84% ROA
•
Net interest margin stable at 3.27%
•
Tangible common equity of 9.3% of assets
•
Common stock repurchase plan in place to strategically manage
capital levels |
 Highlights –
Risk Management
13
For the year ended December 31, 2014:
•
Interest Rate Risk Management
Extended
$144
million
of
FHLB
advances
into
3
–
5
year
terms
$72 million of retail checking migrated to non-interest bearing
Core
deposits
(1)
are
88.0%
of
total
deposits,
a
significant
hedge
against
a
rising
rate environment
•
Asset Quality Improvements
Non-performing loans decreased by 60%, or $27.1 million, to $18.3 million at
December 31, 2014
Credit
metrics
improved
as
non-performing
loans
as
a
percent
of
total
loans
receivable
decreased
to
1.06%
from
2.88%,
and
Allowance
for
Loan
Losses
as
a percent
of
total
non-performing
loans
increased
to
89.13%
from
46.14%
(1)
Core
deposits
are
all
deposits
except
time
deposits. |
 Credit Metrics Reflect Conservative Culture
14
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2009
2010
2011
2012
2013
2014
Residential
Consumer
Commercial Real Estate
Commercial
Note: Atlantic County Loan Exposure totals $11.7 million, or 0.7%, of total
loan portfolio as of December 31, 2014. Data as of December 31, unless
otherwise indicated. (1)
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% 0.16%
0.18%
0.57%
0.36%
0.16%
0.14%
(1)
Net charge-
offs |
 Prudently Provisioning for Credit Costs
15
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
Net Charge-Offs
Net Charge-Offs Attributable to Bulk Sale of NPL's
Provision for Loan Losses
(1)
Spike in charge-offs was due to a change in charge-off policy to recognize
the charge-off when the loan is deemed uncollectible rather than when
the foreclosure process is complete. The additional charge-off relating to the
change
in
policy
through
2011
was
$5.7
million,
all
of
which
had
been
previously
specifically
reserved.
12/31/09
12/31/10
12/31/11
(1)
12/31/12
12/31/13
12/31/14 |
 Net Interest Margin
16
Stabilizing Close to Historical Levels
Historical Average Net Interest Margin (3.28%) |
 Diversified Streams of Non-Interest Income
17
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.80%
0.90%
1996
2014
Fees and Service Charges
Gain on Sale of Loans
BOLI
Other
BankCard Services
Investment Services
Wealth Management
$2.5M
$17.5M
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.
|
 Generating Consistent Attractive Returns
18
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
2009
2010
2011
2012
2013
2014
Return on Equity
Return on Assets
(1)
Excludes
after-tax
impact
of
$3.1
million
in
non-recurring
charges
related
to
strategic
advance
restructuring
and
branch
consolidation.
(1)
0.0%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40% |
 Prudently Managing Excess Capital in Near Term
19
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
2011
2012
2013
2014
Cash Dividends
Stock Repurchases
Notes: Stock Repurchases –
$14.97 Average Cost per Share.
Quarterly dividend rate increased by $0.01, or 8.3%, in October 2014.
|
 Challenge Today is to Grow Revenue
Build Shareholder Value
20
•
Target
growth
in
broader
central
New
Jersey
market
–
increasing
share
In early 2015, added new commercial lending team located in Mercer County
Commercial
loans
increase
at
double
digit
percentage
growth
rate
for
six
consecutive
quarters
Superstorm Sandy recovery providing market opportunity (see Appendix 4)
•
Continuing Strategic Execution
Sold most non-performing residential/consumer mortgage loans in third quarter
of 2014; $500,000 in annual cost savings
FHLB Advances restructured in fourth quarter 2013; duration extended to 39
months Rationalizing Branch Network and Residential Lending, reinvesting
cost saves supporting growth •
Control operating expenses while investing in revenue producing growth
opportunities •
Assessing opportunistic roll-up of local community banks
•
Financial performance develops value proposition for shareholders and preserves the
right to remain independent |
 21
Why OCFC…?
•
Fundamental
franchise
value
–
superior
deposit
profile
and
consistent,
conservatively
underwritten,
commercial
loan
growth
•
Seasoned
and
effective
management
team
Substantial
insider
ownership
–
aligned
with
shareholders’
interests
Successful
CEO
transition
•
Conservative
credit
culture
and
profile
•
Solid
financial
performance
–
developing
shareholder
value
•
Strong
balance
sheet
and
capital
base |
 22
Attractive Valuation Metrics
Valuation
Price / Tang. Book Value
128%
145%
Price / LQA EPS
13.8x
14.9x
Price / Estimated EPS
12.9x
13.4x
Core Deposit Premium
3.7%
6.8%
Cash Dividend Yield
3.1%
3.1%
OCFC
Peers
(1)
1)
Peers
include:
DCOM,
FFIC,
FLIC,
LBAI,
ORIT,
PGC,
SNBC,
SUBK,
UVSP
and
WSFS
Note:
Financial
data
as
of
the
most
recent
period
available;
market
data
as
of
February
5,
2015.
Source:
Sandler
O’Neill |
 Appendix
Appendix
23 |
 24
Market Demographics
Ocean
Monmouth
Middlesex
Mercer
National
Number of Offices
19
4
1
% of OceanFirst Deposits
86.2
10.9
2.9
Market Rank
4
17
35
Market Share (%)
10.2
0.9
0.2
Population
583,000
628,000
831,000
369,000
Projected 2014-2019
Population Growth (%)
1.4
—
3.0
1.2
3.5
Median Household Income ($)
58,000
81,000
75,000
74,000
52,000
Projected 2014-2019 Median
Household Income Growth (%)
2.6
3.1
3.5
5.6
4.6
Deposit and demographic data as of June 30, 2014.
Source: SNL Financial
APPENDIX 1 |
 25
Commercial Portfolio Metrics
APPENDIX 2
Commercial Real Estate (CRE)
Total portfolio
(1)
$650.0 million
% of Total Loan Portfolio
37.7%
Average size of CRE loans
$871,000
Largest CRE loan
$15.5 million
Current Pipeline
$40.0 million
Weighted Average Yield
4.42%
Weighted Average Repricing Term
6.5 years
Commercial Loans
Total portfolio
(1)
$83.9 million
% of Total Loan Portfolio
4.9%
Average size of commercial loans
$312,000
Largest commercial loan
$10.0 million
Current Pipeline
$6.9 million
Weighted Average Yield
4.46%
Weighted Average Repricing Term
2.6 years
(1)
Combined commercial relationships (excluding small business) total 445.
As of December 31, 2014. |
 26
Commercial Portfolio Segmentation
APPENDIX 2
(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 December 31, 2014. |
 27
Residential Portfolio Metrics
APPENDIX 3
Residential Real Estate
Total Portfolio
$789.6 million
% of Total Loan Portfolio
45.8%
Average size of mortgage loans
$192,000
% of loans for second homes
9.9%
Portfolio weighted average loan-to-value ratio (using original or most
recent appraisal) -
Loans originated during 2014
56%
62%
Portfolio average FICO score
-
Loans originated during 2014
752
764
% of loans outside the New York/New Jersey market
3.4%
% of loans outside Ocean/Monmouth Counties
27.4%
% of loans exceeding agency conforming amounts
45.0%
Interest only loans (None originated since 2013)
-
% of total 1-4 family loans
-
Weighted average loan-to-value ratio (using original or most recent
appraisal) $17.6 million
2.2%
58%
Stated income loans (None originated since 2010)
-
% of total 1-4 family loans
$27.3 million
3.5%
As of December 31, 2014, unless otherwise noted. |
 28
Superstorm Sandy Recovery
APPENDIX 4
•
Multi-Year Recovery Horizon
6,234 homes demolished in Monmouth and Ocean in 2013/2014; 54%
of
New Jersey total
Toms River specifically
1,589 homes expected to be demolished (of 30,235 Single Family Homes)
718 permits for $105.6 million issued in 2014
•
Construction Lending*
$50.6 million in consumer originated/committed in 2014; $16.7 million cumulative
undrawn
$25.3 million in commercial originated/committed in 2014; $30.0 million cumulative
undrawn
$15.1 million pipeline
*Construction lending has been driven by owner-occupied projects resulting
from storm damage. |