NASDAQ: OCFC 1 OceanFirst Financial Corp. John R. Garbarino, Chairman, President & CEO Michael J. Fitzpatrick, Executive Vice President & CFO INVESTOR PRESENTATION NOVEMBER 2006 Exhibit 99.1 |
NASDAQ: OCFC 2 OceanFirst Financial Corp. This presentation contains certain forward-looking statements 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”, or similar expressions. 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 the subsidiaries include, but are not limited to, changes in interest rates, general economic conditions, 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 product, deposit flows, competition, demand for financial services in the Company’s market area and accounting principles and guidelines. These risks and uncertainties 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. |
NASDAQ: OCFC 3 OceanFirst Financial Today $2.1 Billion in Assets – 19 19 OceanFirst Bank branches within a tightly defined market area and 2 satellite loan production offices Columbia Home Loans, LLC. (CHL) – wholly owned mortgage banking subsidiary headquartered in Westchester County, New York with offices in the greater NYC metropolitan area Transitioning the Bank’s balance sheet to reduce a historical over- reliance on CD funding and residential mortgage portfolio lending Growing revenue and non-interest income through balance sheet expansion and composition change, maturity of new business lines and continual product line expansion Responding to the Economic Environment, Governance, Compliance & Risk Management challenges of the day Holding Company for the 104 year old financial services firm serving the community banking needs of the attractive Central New Jersey Shore growth market between the major metropolitan areas of New York City and Philadelphia |
NASDAQ: OCFC 4 Attractive Market Area Attractive Market Area |
NASDAQ: OCFC 5 Ocean County – Ocean County – Fastest Growing County in NJ Fastest Growing County in NJ 558,000 people in Ocean County in 2005 558,000 people in Ocean County in 2005 • • 9.3% increase since 2000 9.3% increase since 2000 • • Outpacing NJ (3.6% increase) Outpacing NJ (3.6% increase) • • Outpacing US (5.3% increase) Outpacing US (5.3% increase) $52,065 Ocean County median household income in 2005 $52,065 Ocean County median household income in 2005 • • 12.1% increase since 2000 12.1% increase since 2000 83% Home Ownership in Ocean County 83% Home Ownership in Ocean County • • Outpacing NJ (65%) Outpacing NJ (65%) • • Outpacing US (66%) Outpacing US (66%) 15 OceanFirst branches currently serving Ocean County 15 OceanFirst branches currently serving Ocean County • • 39,507 OceanFirst customer households with average 39,507 OceanFirst customer households with average deposit balances of $28,279 deposit balances of $28,279 Source: US Census Bureau OceanFirst Market Wiz |
NASDAQ: OCFC 6 Ocean County Deposit Market Share Ocean County Deposit Market Share Total Total Average Average # of # of Deposits Deposits Branch Branch Market Market Bank Bank Branches Branches (000) (000) Size (000) Size (000) Share % Share % Commerce Commerce 17 17 $1,607,426 $1,607,426 $ 94,554 $ 94,554 14.5 14.5 Wachovia Wachovia 31 31 $1,544,740 $1,544,740 $ 49,830 $ 49,830 13.9 13.9 Hudson City Savings Hudson City Savings 14 14 $1,482,195 $1,482,195 $105,871 $105,871 13.4 13.4 OceanFirst OceanFirst 15 15 $1,166,196 $1,166,196 $ 77,746 $ 77,746 10.5 10.5 Bank of America Bank of America 41 41 $1,140,420 $1,140,420 $ 27,815 $ 27,815 10.3 10.3 Sovereign Sovereign 28 28 $1,092,357 $1,092,357 $ 39,013 $ 39,013 9.9 9.9 Source: Sheshunoff – data as of June 30, 2005 |
NASDAQ: OCFC 7 Growth Opportunities in Market Growth Opportunities in Market 3 New Branches Committed Little Egg Harbor Freehold (2) Wall (2) Many More Opportunities Ahead e.g. Jackson Area (2) • 100 Square miles • Population 42,816 • 10 Year Population Growth = 28.8% • Median Household Income = $65,218 • 10 Year Median Income Increase = 45.9% • Median Age 35 vs. 40 in Ocean County Source: US Census Bureau - 2000 |
NASDAQ: OCFC 8 Ten Years Delivering Shareholder Value 9/30/2006 12/31/1996 CAGR Total Loans $1,714,760,000 $ 690,306,000 9.8% Core Deposits 825,158,000 317,070,000 10.3% Last 12 Months Year Ended Sept. 30, 2006 Dec. 31, 1997 CAGR EPS $1.58 $.59 11.9% Annual Dividend .80 .27 13.2% ROE 14.1% 6.0% 10.2% Fee and Service Charge Income $10,313,000 $1,376,000 25.8% Average Annual/Total Shareholder Return (1996 – 2006) 15.6% |
NASDAQ: OCFC 9 Current Plan Execution Challenges Current Plan Execution Challenges Flat to inverted yield curve Flat to inverted yield curve Aggressive CD pricing dominating consumer choice Aggressive CD pricing dominating consumer choice Margin pressure from deposit preference shift Margin pressure from deposit preference shift Mortgage banking encounters most difficult Mortgage banking encounters most difficult operating environment in last 10 years operating environment in last 10 years Market relaxation of lending standards at wrong time Market relaxation of lending standards at wrong time make growth difficult for those who persevere make growth difficult for those who persevere Consequently, EPS growth limited to single digits Consequently, EPS growth limited to single digits |
NASDAQ: OCFC 10 0 200 400 600 800 1000 1200 1400 1600 Core Deposits CD's Core Deposit Growth has Stalled - Core Deposit Growth has Stalled - 2006 2006 At December 31, unless otherwise indicated. Core deposits include all deposits other than certificates. |
NASDAQ: OCFC 11 Commercial Loans Have Grown – Commercial Loans Have Grown – Stabilized 2006 Stabilized 2006 At December 31 unless otherwise indicated. 0 200 400 600 800 1000 1200 1400 1600 1800 2000 Commercial Mortgage and Consumer |
NASDAQ: OCFC 12 Credit Risk Aided by Portfolio Characteristics Commercial Lending • Diversified, low risk $350 million portfolio Commercial real estate - 86% $598,000 average C & I - 14% $87,000 average Only 4 loans between $5 million and $10 million Limited exposure to residential construction lending • No large, speculative subdivisions Strong credit quality indicators through 3Q 06 • Non-performing loans represent 21 bps total loans receivable • Net charge-offs of only $150,000 • Net charge-offs averaged only 3 bps of net loans over past 9 years |
NASDAQ: OCFC 13 Business Plan Targets Need to Reset Business Plan Targets Need to Reset Commercial/Consumer Loans Mix Commercial/Consumer Loans Mix 30% 30% 38% 38% Revenue Mix (percent of total revenue) Revenue Mix (percent of total revenue) • • Mortgage Banking Mortgage Banking 14% 14% ? ? • • Fee and Service Charge Fee and Service Charge 13% 13% 17% 17% With Balance Sheet growth and transformation limited in this With Balance Sheet growth and transformation limited in this environment – environment – share repurchases continue to support EPS. share repurchases continue to support EPS. Target continues to be to restore double digit growth. Target continues to be to restore double digit growth. Current Current 2009 2009 Core Deposit Mix Core Deposit Mix 60% 60% 70% 70% |
NASDAQ: OCFC 14 Mortgage Mortgage Banking Banking – – 6 6 Year Year Cyclicality Cyclicality CHL Quarterly EPS Contribution -0.06 -0.04 -0.02 0.00 0.02 0.04 0.06 0.08 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 2001 2002 2003 2004 2005 2006 $ |
NASDAQ: OCFC 15 Other Non-Interest Income Initiatives Largest reverse mortgage originator headquartered in NJ, one of a handful of select, nationwide FNMA seller/servicers • Expected to contribute $1.0 million in fee income in 2006 and $1.2 million in 2007 Trust Service fees continue to grow, contribute to bottom line • $850,000 in 2006, $1,050,000 in 2007 Internalizing the sale of non-insured alternative investment products currently outsourced to third party provider • Income expected to increase from $1.0 million in 2006 to $1.3 million in 2007 Title insurance joint venture • Leveraging the Company’s loan production capability. Expected to provide annual net fee income to the Bank of $120,000 in 2006 and $175,000 in 2007 |
NASDAQ: OCFC 16 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 0 5 10 15 20 25 Cumulative Repurchases Capital Ratio Capital ratios are as of December 31 unless otherwise indicated. Share repurchases are for the year ended December 31 unless otherwise indicated. Share Repurchase Plans Share Repurchase Plans |
NASDAQ: OCFC 17 Repurchase Program Supporting EPS Growth Repurchase Program Supporting EPS Growth Repurchased 16.8 million shares in total; 62% of original issue Repurchased 16.8 million shares in total; 62% of original issue Thirteenth common stock repurchase program announced in July Thirteenth common stock repurchase program announced in July 2006 for an additional 5% (615,883) of outstanding shares 2006 for an additional 5% (615,883) of outstanding shares Currently accretive to EPS by 3% Currently accretive to EPS by 3% • • Pro-forma capital ratio declines to 6.2% at December 31, 2007 Pro-forma capital ratio declines to 6.2% at December 31, 2007 from 6.6% at September 30, 2006 from 6.6% at September 30, 2006 Current program funded through the issuance of Tier II Capital Current program funded through the issuance of Tier II Capital • • $5.0 million of subordinated debt issued in 2005 $5.0 million of subordinated debt issued in 2005 • • $12.5 million of trust preferred securities issued during 2006 $12.5 million of trust preferred securities issued during 2006 • • Issuance of an additional $12.5 million of Tier II Capital, as necessary Issuance of an additional $12.5 million of Tier II Capital, as necessary 2006 2006 EPS EPS Growth Growth Returns Returns – – albeit albeit at at modest modest rates rates |
NASDAQ: OCFC 18 In this Environment……Managing Carefully In this Environment……Managing Carefully Enterprise-wide Risk Management Enterprise-wide Risk Management Exercise discipline/restraint in growth initiatives Exercise discipline/restraint in growth initiatives Rationalize Mortgage Banking business line Rationalize Mortgage Banking business line Take what the market gives without forcing Take what the market gives without forcing Issue Tier II Capital to support share repurchases Issue Tier II Capital to support share repurchases Coming out of this Environment….. Coming out of this Environment….. Assuming Assuming the the Fed Fed is is done, done, and and the the yield yield curve curve reverts reverts |
NASDAQ: OCFC 19 Retail Deposit Funding Must First Be Restored Disciplined de novo branching and core deposit generation • Over 10 years, 11 branches were opened with an average core deposit mix of 68% Current branch activity in our growth market • Barnegat branch opened in May 2006 • Whiting branch was relocated to a more convenient, prominent location in July 2006 • New Little Egg Harbor branch opening in November 2006 • New additional branches in Wall and Freehold scheduled to open mid ‘07 19 Branches within a tightly defined footprint provide significant presence, market share |
NASDAQ: OCFC 20 Business Plan Imperatives Focus on disciplined de novo branch and core account development to support the margin, drive asset/revenue growth Target commercial lending as the focus of portfolio growth, improving the loan portfolio mix Grow non-interest income (with or without CHL) a key driver of top-line revenue through maturation of business initiatives Improve operating efficiency through both revenue enhancement and expense control Deliver all financial services within the Bank’s existing geographic market under the strong sales, service and credit cultures • Capitalizing on the unique advantage of being the local community service minded alternative to mega-banks A challenging return to double-digit EPS growth rates |
NASDAQ: OCFC 21 Building Additional Shareholder Value In the long run, we hope you agree the following In the long run, we hope you agree the following undoubtedly create value for the long term OCFC undoubtedly create value for the long term OCFC investor: investor: • Enterprise-wide Risk Management supports OceanFirst credibility to preserve and build value in this environment • Low Risk, uncomplicated business plan to deliver earnings growth in an improved economic environment • Attractive Cash Dividend and ongoing share repurchases proactively manage capital and support EPS • Franchise Value is enhanced in a most attractive Central New Jersey Shore Market • Strong Total Shareholder Returns are restored for the OCFC investor |
NASDAQ: OCFC 22 Thank you for your Thank you for your interest in interest in OceanFirst OceanFirst Financial Corp. Financial Corp. |