OceanFirst Financial Corp. INVESTOR PRESENTATION JULY 2014 Exhibit 99.2 NASDAQ: OCFC 1 |
OceanFirst Financial Corp. OceanFirst Financial Corp. 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 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 2 |
NASDAQ: OCFC 3 112 Years of Growth and Capital Management 112 Years of Growth and Capital Management Founded in Point Pleasant, NJ, in 1902, OceanFirst has grown from a small one-town savings and loan to a full-service community bank serving the Central New Jersey Shore. Rebuilt capital from 6.05% to 9.27% through the Great Recession with retained earnings and completion of a follow-on common stock offering in November 2009. Demutualized in 1996 and over the ensuing 11 years generated value for shareholders, largely through the successful implementation and execution of our community bank model, and the strategic repurchase of 62.4% of original IPO shares. Since late 2011, the Company has utilized share repurchases to again strategically redeploy surplus capital until growth prospects improved. Current repurchase authorization for 867,923 shares in place until growth initiatives mature. |
Community Bank serving the Central Jersey Shore - $2.3 billion in assets and 23 branch offices Market Cap $275 million Core deposits – 87.4% of total deposits Locally originated loan portfolio - no SNCs Residential and commercial real estate mortgages C&I loans and lines Consumer equity loans and lines Corporate Profile Corporate Profile Note: See Appendix 1 for Market Demographic information. Philadelphia New York Morris Sussex Warren Hunterdon Bergen Somerset Passaic Essex Union Hudson Ocean Burlington Atlantic Salem Monmouth Cumberland Mercer Middlesex Gloucester Camden Cape May NASDAQ: OCFC 4 |
Experienced Executive Management Team Experienced Executive Management Team Substantial insider ownership of 27.4% – aligned with shareholders’ interests OceanFirst Bank ESOP 10.5% Directors & Senior Executive Officers 9.8% (CEO 5.7%) Director and Proxy Officer Stock Ownership Guidelines OceanFirst Foundation 7.1% As of the March 11, 2014 proxy record date. Name Position # of Years in Banking # of Years at OCFC John R. Garbarino Chairman, Chief Executive Officer 43 43 Christopher D. Maher President, Chief Operating Officer 26 1 Michael J. Fitzpatrick Executive Vice President, Chief Financial Officer 32 21 Joseph R. Iantosca Executive Vice President, Chief Administrative Officer 36 10 Joseph J. Lebel III Executive Vice President, Chief Lending Officer 30 8 Succession planning affirmed – Christopher D. Maher named as successor CEO effective January 1, 2015 NASDAQ: OCFC 5 |
Our Strategy Our Strategy Positioned as the leading Community Bank in attractive Central Jersey Shore 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) On the watch for roll-up opportunities presented by local community banks lacking the scale or desire to remain independent NASDAQ: OCFC 6 |
NASDAQ: OCFC 7 Significant Significant Primary Market Deposit Share Primary Market Deposit Share Competing Favorably Against Banking Behemoths # of Dep. In Mkt. Mkt. Shr. Rank Institution Branches ($000) (%) Ocean County, NJ 1 TD Bank, National Association (Canada) 21 2,460,349 16.88 2 Hudson City Bancorp Inc. (NJ) (1) 14 2,415,792 16.57 3 Wells Fargo Bank NA (CA) 26 2,315,657 15.89 4 OceanFirst Financial Corp. (NJ) 20 1,488,197 10.21 5 Banco Santander S.A. (Spain) 23 1,438,132 9.87 6 Bank of America Corp. (NC) 17 1,292,963 8.87 Total For Institutions In Market 192 14,577,615 Source: FDIC Summary of Deposits, June 30, 2013 (1) Pending acquisition by M&T Bank (NY) |
Strategic Deposit Composition Transition Strategic Deposit Composition Transition Time Deposits 0% 20% 40% 60% 80% 100% Dec 1996 Dec 2008 June 2014 Time Deposits Time Deposits MMDA & Savings MMDA & Savings MMDA & Savings Interest Checking Interest Checking Interest Checking Interest Checking Non Interest Checking Non- - NASDAQ: OCFC 8 |
Strategic Loan Composition Transition Strategic Loan Composition Transition C&I NASDAQ: OCFC 9 0% 20% 40% 60% 80% 100% Dec 1996 Dec 2008 June 2014 Residential R.E. Residential R.E. Residential R.E. Investment CRE Investment CRE Investment CRE Consumer & Other Consumer & Other Consumer & Other C&I Owner- Occupied CRE Owner- Occupied CRE |
Grew commercial loan portfolio $35.3 million, 22.9% annualized Earnings per share of $0.30, 9.5% ROE & 0.90% ROA Net interest margin stable at 3.35%, above historical average New 5% common stock repurchase plan put in place Tangible common equity of 9.3% of assets Highlights Highlights – – Second Quarter 2014 Second Quarter 2014 NASDAQ: OCFC 10 |
Highlights – Highlights – Risk Management Risk Management NASDAQ: OCFC 11 Interest Rate Risk Management Extended $110 million of FHLB advances into 3 – 5 year terms $64 million of retail checking migrated to non-interest bearing Retail and commercial checking growth replacing more price sensitive government deposits Asset Quality Improvements Non-performing loans decreased by 10% or $4.6 million to $40.7 million at June 30, 2014 Quarterly charge-offs decreased 48% from the linked quarter 92% of residential NPLs relate to loans originated before 2009 |
Stabilized NPL’s in a Diversified Portfolio Stabilized NPL’s in a Diversified Portfolio Data as of December 31, unless otherwise indicated. (1) Increase attributable to Superstorm Sandy. Exposure Primarily in Lower Risk Residential (1) 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 2009 2010 2011 2012 2013 6/30/2014 Residential Consumer Commercial Real Estate Commercial NASDAQ: OCFC 12 |
Prudently Provisioning for Credit Costs Prudently Provisioning for Credit Costs $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 Net Charge-Offs 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. (2) Increase attributable to Superstorm Sandy. 12/31/09 12/31/10 12/31/11 (1) 12/31/12 (2) 12/31/13 6/30/14 (Annualized) NASDAQ: OCFC 13 |
Net Net Interest Margin Interest Margin Stabilizing Close to Historical Levels Quarterly Trend Historical Average Net Interest Margin (3.28%) 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 1996 1998 2000 2002 2004 2006 2008 2010 2012 2013 Q1 2014 Q2 2014 NASDAQ: OCFC 14 |
Diversified Streams of Non-Interest Income Diversified Streams of Non-Interest Income 2011 Non-Interest Income excludes gain/loss from other real estate operations, gain on sale of securities and provision for repurchased loans. $2.5M $17.0M Targeted Growth Areas NASDAQ: OCFC 15 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 0.90% Fees and Service Charges Gain on Sale of Loans BOLI Other BankCard Services Investment Services Wealth Management 1996 6/30/14 (Annualized) |
Generating Consistent Attractive Returns Generating Consistent Attractive Returns 0.0% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% (1) (1) 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 2009 2010 2011 2012 2013 6/30/2014 (Annualized) Return on Equity Return on Assets NASDAQ: OCFC 16 Excludes after-tax impact of $3.1 million in non-recurring charges related to strategic advance restructuring and branch consolidation. |
Prudently Managing Excess Capital in Near Term Prudently Managing Excess Capital in Near Term Note: Stock Repurchases – $14.74 Average Cost per Share Cash Dividends Stock Repurchases $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 2011 2012 2013 2014 (Six Months) NASDAQ: OCFC 17 |
Target growth within existing market – increasing share Commercial loans increase at double digit growth rate for four consecutive quarters Superstorm Sandy recovery providing market opportunity* Continuing Strategic Execution FHLB Advances restructured in fourth quarter 2013 Rationalizing Branch Network and Residential Lending, reinvesting cost saves supporting growth Diversifying and strengthening non-interest income streams; reducing reliance on NIM Assessing opportunistic roll-up of local community banks Financial performance develops value proposition for shareholders and preserves the right to remain independent Challenge Today is to Grow Revenue Challenge Today is to Grow Revenue Build Shareholder Value Build Shareholder Value *Note: See Appendix 4. NASDAQ: OCFC 18 Consolidated two overlapping branches at the end of 2013 Reduced residential lending overhead to improve efficiency |
Fundamental franchise value – superior market demographics Seasoned and effective management team Sandy response and experience Substantial insider ownership – aligned with shareholders’ interests Succession planning affirmed – 2014 Attractive deposit mix and market share Conservative credit culture and profile Solid financial performance – developing shareholder value Strong balance sheet and capital base NASDAQ: OCFC 19 Why OCFC…? Why OCFC…? |
NASDAQ: OCFC 20 THANK YOU FOR YOUR INTEREST IN OCEANFIRST FINANCIAL CORP. |
Market Demographics Market Demographics APPENDIX 1 Ocean Monmouth Middlesex New Jersey National Number of Offices 20 5 1 % of OceanFirst Deposits 86.6 10.3 3.1 Market Rank 4 18 36 Market Share (%) 10.2 0.9 0.2 Population 577,000 635,000 816,000 Projected 2012-2017 Population Growth (%) 1.6 1.0 2.1 1.2 3.5 Median Household Income ($) 59,000 81,000 77,000 67,000 50,000 Projected 2012-2017 Median Household Income Growth (%) 22.6 14.0 13.1 18.9 13.4 Deposit data as of June 30, 2013. Demographic data as of December 31, 2012. Source: SNL Financial NASDAQ: OCFC 21 |
Residential Portfolio Metrics Residential Portfolio Metrics Total Portfolio $812.9 million % of Total Loan Portfolio 48.8% Average size of mortgage loans $191,000 Interest-only loans $22.2 million - % of total 1-4 family loans 2.8% - Weighted average loan-to-value ratio (using original or most recent appraisal) 59% Stated income loans $34.7 million - % of total 1-4 family loans 4.4% Portfolio weighted average loan-to-value ratio (using original or most recent appraisal) 56% - Loans originated during 2014 62% Portfolio average FICO score 748 - Loans originated during 2014 765 % of loans outside the New York/New Jersey market 3.8% % of loans outside Ocean/Monmouth Counties 30.1% % of loans exceeding agency conforming amounts 45.5% % of loans for second homes 8.5% APPENDIX 2 As of June 30, 2014, unless otherwise noted. NASDAQ: OCFC 22 Residential Real Estate |
APPENDIX 3 Commercial Portfolio Metrics Commercial Portfolio Metrics As of June 30, 2014. (1) Combined commercial relationships (excluding small business) total 420. Commercial Real Estate (CRE) Total portfolio (1) $577.1 million % of Total Loan Portfolio 34.6% Average size of CRE loans $841,000 Largest CRE loan $14.6 million (Secured by local university dormitory housing) Current Pipeline $59.1 million Weighted Average Yield 4.35% Weighted Average Repricing Term 5.5 years Commercial Loans Total portfolio (1) $75.2 million % of Total Loan Portfolio 4.5% Average size of commercial loan $286,000 Largest commercial loan $3.9 million Current Pipeline $10.5 million Weighted Average Yield 3.77% Weighted Average Repricing Term 1 month NASDAQ: OCFC 23 |
Commercial Portfolio Segmentation Commercial Portfolio Segmentation Total Commercial Loan Exposure by Industry Classification Real Estate Investment by Property Classification As of June 30, 2014. APPENDIX 3 (Cont’d) Diversified portfolio provides protection against industry- specific credit events. Real Estate Investment, 37.5% Construction, 7.3% Retail Trade, 3.2% Wholesale Trade, 5.6% Healthcare, 7.6% Accommodations/ Food Services, 7.1% Other Services, 3.2% Arts/Entertainment/ Recreation, 7.5% Manufacturing, 4.1% Educational Services, 3.7% Public Administration, 7.1% Miscellaneous, 6.1% Office, 36.0% Industrial/ Warehouse, 13.4% Residential Development, 5.1% Land, 1.8% Commercial Development, 10.2% Shopping Center, 10.2% Retail Store, 9.6% Multi-Family, 2.5% Miscellaneous, 11.2% NASDAQ: OCFC 24 |
Superstorm Sandy Recovery Superstorm Sandy Recovery * Construction lending has been driven by owner-occupied projects resulting from storm damage APPENDIX 4 NASDAQ: OCFC 25 Loan Portfolio Performed Well Net Charge-offs related to Superstorm Sandy total a modest $424,000 Damage Estimate ( FEMA 2012): 50,103 structures damaged were located in Monmouth and Ocean County 3,033 structures classified as major damage or totally destroyed Multi-Year Recovery Horizon 4,307 Homes demolished in Monmouth and Ocean in 2013; 59% of New Jersey total Toms River specifically $23.6 million in consumer originated/committed in first half of 2014; $16.4 million cumulative undrawn $6.9 million in commercial originated/committed in first half of 2014; $24.7 million cumulative undrawn $16.7 million pipeline 422 permits for $64.5 million issued in the first six months of 2014 1,108 homes demolished in 2013 (of 30,235 Single Family Homes) Construction Lending* |