 NASDAQ: OCFC
1
OceanFirst Financial Corp.
OceanFirst Financial Corp.
John
John
R.
R.
Garbarino
Garbarino
–
–
Chairman,
Chairman,
CEO
CEO
Michael
Michael
J.
J.
Fitzpatrick
Fitzpatrick
–
–
Executive
Executive
Vice
Vice
President,
President,
CFO
CFO
STERNE AGEE
STERNE AGEE
FINANCIAL INSTITUTIONS INVESTOR CONFERENCE
FINANCIAL INSTITUTIONS INVESTOR CONFERENCE
FEBRUARY 11-13, 2013
FEBRUARY 11-13, 2013
Exhibit 99.1 |
 NASDAQ: OCFC
2
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
the
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,
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, 2011 and its 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.
|
 NASDAQ: OCFC
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110 Years of Growth and Capital Management
110 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 through the Great Recession with
retained earnings and completion of a follow-on common stock
offering in November 2009. OceanFirst issued stock for the first time in 1996
and over the ensuing ten years generated value for our shareholders,
largely through the successful implementation and execution of our community
bank model, and the strategic repurchase of 62.4% of original IPO shares.
Began the redeployment of the excess capital rebuilt since 2008 with an October 2011
5% share repurchase plan, followed by a similar plan in November 2012.
As of December 31, 2012, 834,784 shares remain available for repurchase
under the current authorization. |
 NASDAQ: OCFC
4
Community Bank serving the
Central
Jersey
Shore
-
$2.3
billion
in assets and 24 branch offices
Market Cap $257.4 million (as of
February 6, 2013)
Core
deposit
funded
–
86.8%
of
total deposits
Locally originated loan portfolio
with no brokered loans
Residential and commercial
mortgages
Consumer equity loans and
lines
C&I loans and lines
Corporate Profile
Corporate Profile
Note: See Appendix 1 for Market Demographic information.
|
 NASDAQ: OCFC
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Experienced Executive Management Team
Experienced Executive Management Team
Executive search initiated in August for the position of President/COO
Expected to be successfully concluded 1Q ‘13
Insider ownership of 25.7% is
substantial –
aligned with shareholders’
interest
OceanFirst Bank ESOP 10.2%
Directors & Current Senior Executive Officers 8.5% (CEO 5.1%)
Director and Proxy Officer Stock Ownership Guidelines
OceanFirst Foundation 7.0%
As
of
the
March
15,
2012
proxy
record
date.
Name
Position
# of Years in
Banking
# of Years
at OCFC
John R. Garbarino
Chairman, Chief Executive Officer
41
41
Michael J. Fitzpatrick
Executive Vice President, Chief Financial Officer
31
20 |
 NASDAQ: OCFC
6
Our Strategy
Our Strategy
Positioned as the leading Community Bank in attractive Central
Jersey
Shore
market
–
growing
revenue
and
creating
additional
value for our shareholders
Offering a full range of consumer and commercial banking products
generating diversified income streams
Guarding
credit
quality
in
ALL
business
cycles
Transitioning the balance sheet with emphasis on core deposit
funding and commercial lending growth
On the watch for roll-up opportunities presented by in-market
“regulatory fatigued”
competitors |
 NASDAQ: OCFC
7
Earnings per share was $1.21 (excluding the adverse impact of severance
expense and superstorm Sandy), a 6.1% increase over the prior year.
Reported earnings per share was $1.12
Return on average stockholders’
equity was 9.2%
Tangible book value continues to grow, increasing 5.8% to $12.28
Strong capital position –
tangible common equity of 9.7% of assets
Renewed 5% Stock Repurchase Plan in November 2012
Credit quality stabilized with NPL’s decreasing $634,000
Grew core deposits (i.e. all deposits excluding time deposits)
$56.3 million,
now comprising 86.8% of total deposits
Highlights –
Highlights –
2012
2012 |
 NASDAQ: OCFC
8
Substantial Primary Market Deposit Share
Substantial Primary Market Deposit Share
June 30, 2012
# of
Dep. In Mkt.
Mkt. Shr.
Rank
Institution
Branches
($000)
(%)
Ocean County, NJ
1
Hudson City Bancorp Inc. (NJ)
14
2,610,613
18.65
2
Wells Fargo Bank NA (CA)
26
2,360,712
16.87
3
TD Bank, National Association (Canada)
21
2,149,131
15.36
4
OceanFirst Financial Corp. (NJ)
19
1,477,780
10.56
5
Banco Santander S.A. (Spain)
25
1,321,262
9.44
6
Bank of America Corp. (NC)
22
1,161,899
8.30
7
Investors Bancorp Inc. (MHC) (NJ)
8
654,369
4.68
8
PNC Financial Services Group (PA)
14
436,177
3.12
9
Manasquan Savings Bank (NJ)
3
252,922
1.81
10
JPMorgan Chase Bank, National Association (OH)
10
230,732
1.65
Total For Institutions In Market
200
13,996,221
Source: FDIC |
 NASDAQ: OCFC
9
Interest
Bearing
Demand
Deposits,
35.4%
Non-Interest
Bearing
Demand
Deposits,
8.1%
Jumbo Time
Deposits(1),
7.7%
Retail Time
Deposits,
27.7%
MMDA &
Savings,
21.1%
Strategic Deposit Composition Transition
Strategic Deposit Composition Transition
Interest
Bearing
Demand
Deposits,
7.6%
Non-Interest
Bearing
Demand
Deposits,
0.7%
Jumbo Time
Deposits(1),
4.7%
Retail Time
Deposits,
61.4%
MMDA &
Savings,
25.6%
Interest
Bearing
Demand
Deposits,
54.7%
Non-Interest
Bearing
Demand
Deposits,
10.4%
Jumbo Time
Deposits(1),
3.3%
Retail Time
Deposits, 9.8%
MMDA &
Savings,
21.8%
(1) Jumbo CDs have a balance of $100,000 or greater.
December 31, 2007
December 31, 2012
December 31, 1996 |
 NASDAQ: OCFC
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Residential
R.E., 52.8%
Consumer &
Other(1),
12.8%
Commercial
R.E., 30.7%
Commercial
& Industrial,
3.7%
Strategic Loan Composition Transition
Strategic Loan Composition Transition
Commercial
& Industrial,
0.4%
Commercial
R.E., 4.3%
Consumer &
Other(1),
5.7%
Residential
R.E., 89.6%
Commercial
& Industrial,
3.2%
Commercial
R.E., 19.3%
Consumer &
Other(1),
12.6%
Residential
R.E., 64.9%
(1)
Consumer and other loans primarily consist of home equity lines and loans.
Note:
See Appendix 2 for specific portfolio metrics and commercial portfolio
segmentation. December 31, 2007
December 31, 2012
December 31, 1996 |
 NASDAQ: OCFC
11
Stabilized NPL’s in a Diversified Portfolio
Stabilized NPL’s in a Diversified Portfolio
Non-performing loan (“NPL”).
Data as of December 31.
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2008
2009
2010
2011
2012
Residential - Primary Bank delivery channel
Consumer
Commercial Real Estate and Construction
Commercial
Exposure Concentrated in Lower Risk One-to-Four Family
NPL’s
originated by
alternative
Bank delivery
channels. |
 NASDAQ: OCFC
12
Prudently Provisioning for Credit Costs
Prudently Provisioning for Credit Costs
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
Total Recoveries
Charge-Offs - One-to-Four Family
Charge-Offs - Consumer
Charge-Offs - Commercial Real Estate
Charge-Offs - Commercial
Provision for Loan Losses
Provision for Loan Losses relating to superstorm Sandy
12/31/08
12/31/09
12/31/10
12/31/11
(1)
(1)
Increase in charge-offs was primarily due to a change in the Company’s
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 was previously specifically reserved for by the
Company. 12/31/12 |
 NASDAQ: OCFC
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Effective Disaster Contingency Plan minimized office closures
32% operating the day after the storm
100% operational within 7 days
Leadership presence in market –
meeting customer needs ASAP
OceanFirst Foundation Relief and Recovery Program
Pledged
$500,000
in
grants
through
local
partner
non-profit
agencies
targeting human needs
Traditional Risk Management mitigates exposure to credit loss
Prudent underwriting in markets we have understood for 110 years
Federal flood insurance, private coverage, business interruption
Assessing exposure on a loan-by-loan basis, as a community bank
should Additional year-end provision of $1.8 million viewed as
adequate Sandy in the Rearview Mirror
Sandy in the Rearview Mirror
Refer to Appendix 3 for a more detailed analysis of the impact from Sandy.
|
 NASDAQ: OCFC
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Net Interest Margin
Net Interest Margin
Remaining Under Pressure in Low Interest Rate Environment
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
2008
2009
2010
2011
2012 |
 NASDAQ: OCFC
15
Diversified Streams of Non-Interest Income
Diversified Streams of Non-Interest Income
2011
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.80%
1996
2012
Fees and Service Charges
Gain on Sale of Loans
BOLI
Other
BankCard Services
Investment Services
Trust
Non-Interest Income excludes loss from other real estate operations and gain
on sale of equity securities. |
 NASDAQ: OCFC
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Maintaining Attractive ROE’s and ROA’s
Maintaining Attractive ROE’s and ROA’s
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
2008
2009
2010
2011
2012
Return on Equity
Return on Assets
(1) Secondary capital raise restrained ROE
(1)
0.0%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40% |
 NASDAQ: OCFC
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Challenge Today is to Grow Revenue
Challenge Today is to Grow Revenue
Build Shareholder Value
Build Shareholder Value
Target growth within existing footprint –
building market share
Thirteen
de
novo
branches
since
2000
have
performed
well
–
still
present
opportunity for additional growth
Expanding presence in Monmouth County with a full service Financial
Solutions Center in Red Bank to open in Spring 2013
Opportunity
to
meet
extraordinary
loan
demand
–
Sandy
recovery
Non-interest income streams have been diversified, ever more important
as margin remains under pressure
Assessing opportunistic roll-up of community banks in market
Share repurchases safely deploy excess capital in the short term
Financial performance to Plan builds value and preserves the right to
remain independent |
 NASDAQ: OCFC
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Note:
Financial data as of the most recent period available; market data as of February
6, 2013. Source: Sandler O’Neill.
Attractive Valuation Metrics
Attractive Valuation Metrics
OCFC
Peers
(1)
Valuation
Price / Tang. Book Value
117%
129%
Price / Estimated EPS
12.5x
13.2x
Cash Dividend Yield
3.3%
3.1%
(1)
Peers include: DCOM, FFIC, FLIC, HVB, LBAI, ORIT, PBNY, PGC, RCKB, SNBC, STL,
SUBK, UVSP and WSFS |
 NASDAQ: OCFC
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Why OCFC…?
Why OCFC…?
Fundamental
franchise
value
–
superior
market
demographics
Crisis tested management team
Sandy response and experience
Substantial
insider
ownership
–
aligned
with
shareholders
Attractive deposit mix and market share
Conservative credit culture and profile
Solid
financial
performance
–
developing
shareholder
value
Strong balance sheet and capital base
Attractive current valuations |
 NASDAQ: OCFC
20
THANK YOU
THANK YOU
FOR YOUR INTEREST IN
FOR YOUR INTEREST IN
OCEANFIRST FINANCIAL CORP.
OCEANFIRST FINANCIAL CORP. |
 NASDAQ: OCFC
21
Market Demographics
Market Demographics
APPENDIX 1
Ocean
Monmouth
Middlesex
New Jersey
National
Number of Offices
19
4
1
% of OceanFirst Deposits
85.7
11.1
3.2
Market Rank
4
18
34
Market Share (%)
10.6
1.0
0.2
Population
578,728
649,429
794,605
Projected 2010-2015
Population Growth (%)
4.0
2.0
1.8
1.2
3.8
Median Household Income ($)
60,936
82,974
78,561
72,519
54,442
Projected 2010-2015 Median
Household Income Growth (%)
15.5
14.3
17.5
14.7
12.4
Deposit data as of June 30, 2012.
Demographic data as of June 30, 2010.
Source: SNL Financial |
 NASDAQ: OCFC
22
Average size of mortgage loans
$183,000
Interest-only loans - Amount
$36.5 million
- % of total 1-4 family loans
4.4%
- Weighted average loan-to-value ratio
(using original or most recent appraisal) 63%
Stated income loans - Amount
$45.7 million
- % of total 1-4 family
loans 5.6%
Loans in flood hazard area
$226.2 million
- % of total loans
27.4%
- Weighted average loan-to-value ratio
(using latest appraisal) 42%
Portfolio weighted average loan-to-value ratio (using original or most recent appraisal)
56%
- Originated for the year ended December 31,
2011 61%
- Originated for the year ended December 31,
2012 59%
Average FICO score
748
- Loans originated for the year ended December
31, 2011 764
- Loans originated for the year ended December
31, 2012 767
% of loans outside the New York/New Jersey market
4.7%
% of loans outside Ocean/Monmouth Counties
36.5%
% of jumbo loans at time of origination
43.8%
% of loans for second homes
7.6%
Home equity loan and line balances in flood hazard area
$40.0 million
- % of total equity balances
19.9%
APPENDIX 2
Residential Portfolio Metrics
Residential Portfolio Metrics
As of December 31, 2012, unless
otherwise noted.
One-to-Four
Family
(1-4) |
 NASDAQ: OCFC
23
Commercial Real Estate (CRE)
Total portfolio
(1)
$475.2 million
Average size of CRE loans
$769,000
Largest CRE loan
$16.6 million
(Secured by local university dormitory housing)
Total exposure to CRE in flood hazard area
$101.6 million
- % Total CRE Portfolio
21.4%
- Weighted average loan-to-value ratio
(using latest appraisal) 54%
Commercial Loans
Total portfolio
(1)
$58.0 million
Average size of commercial loan
$235,000
Largest commercial loan
$4.9 million
(1)
Commercial portfolio relationships total 388, excluding small business loans.
APPENDIX 2
(Cont’d)
Commercial Portfolio Metrics
Commercial Portfolio Metrics
As of December 31, 2012. |
 NASDAQ: OCFC
24
Commercial Portfolio Segmentation
Commercial Portfolio Segmentation
Real Estate
Investment, 31.1%
Arts/Entertainment/
Recreation, 7.7%
Other Services, 3.8%
Retail Trade, 3.7%
Public
Administration, 6.5%
Miscellaneous, 6.8%
Manufacturing, 4.3%
Educational Services,
4.8%
Accommodations/
Food Services, 7.8%
Healthcare, 9.4%
Wholesale Trade,
6.4%
Construction, 7.7%
Total Commercial Loan Exposure
by Industry Concentration
Real Estate Investment by
Property Concentration
Office, 34.6%
Shopping Center, 9.3%
Retail Store, 8.1%
Multi-Family, 6.1%
Miscellaneous, 8.7%
Commercial
Development, 10.3%
Industrial/
Warehouse, 14.2%
Residential
Development, 8.7%
As of December 31, 2012.
APPENDIX 2
(Cont’d) |
 NASDAQ: OCFC
Impact of Superstorm Sandy
Impact of Superstorm Sandy
25
APPENDIX 3
Residential
borrowers
provided
with
initial
two-month
payment
delay
–
45-day
secondary
contact:
Borrowers (as of February 7, 2013)
123
Principal Balance
$29.3 million
Average Loan Size
$238,000
Weighted average loan-to-value ratio (using original or most recent
appraisal) 61%
Percent in flood zone
70%
Results of follow-up contacts (as of February 7, 2013):
Borrowers
Balance (000’s)
Loan was brought current
49
$ 9,460
Repayment
plan
agreed
to
–
loan
to
be
brought
current
within
four
months
45
11,335
Borrower indicated financial hardship; repayment plan not yet established;
Bank
will
consider
loan
modification
(1)
13
(1)
2,363
Total
107
$23,158
Remaining to be contacted
16
$ 6,183
(1)
For these borrowers, the range of loan-to-value ratios was 13% to 88% using
only an absolute minimal evaluation assumption of estimated land value and
anticipated flood insurance proceeds. Commercial loan borrowers:
Number of
Borrowers
Amount
Outstanding (000’s)
Loan-to-Value
Range
(2)
Borrowers
reporting
substantial
damage
–
all
paid
current
3
$3,555
6% to 25%
Borrowers requesting short-term payment relief
6
$5,007
23% to 88%
(2)
Based on original or most recent appraisal prior to the impact of Sandy.
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