OceanFirst Financial Corp. Announces Agreement to Acquire Ocean Shore Holding Co.; OceanFirst To Strengthen Franchise and Become Fourth Largest New Jersey Based Banking Institution by Deposit Market Share

TOMS RIVER, N.J. and OCEAN CITY, N.J., July 13, 2016 -- OceanFirst Financial Corp. (“OceanFirst”) (OCFC), headquartered in Toms River, New Jersey, and Ocean Shore Holding Co. (“Ocean Shore”) (OSHC), headquartered in Ocean City, New Jersey, jointly announced today that they have entered into a definitive agreement and plan of merger pursuant to which Ocean Shore, the holding company and parent of Ocean City Home Bank, will merge with and into OceanFirst, the holding company and parent of OceanFirst Bank. Ocean City Home Bank will also merge with and into OceanFirst Bank. The transaction is valued at approximately $22.47 per Ocean Shore common share or approximately $145.6 million in the aggregate.

With roots dating back to 1887, Ocean City Home Bank is one of Southern New Jersey’s oldest and largest community banks with approximately $1.1 billion in total assets, $818 million in total deposits and $796 million in gross loans. Ocean Shore operates 11 full-service banking centers in Atlantic and Cape May Counties. Following OceanFirst’s recently completed acquisition of Cape Bancorp, Inc., the proposed transaction will further enrich OceanFirst’s distribution, scale and core deposit funding base, as it presents an exceptionally rare opportunity to combine two well-established, like-minded New Jersey franchises.

 

OceanFirst will strengthen its position as the largest bank headquartered in Central and Southern New Jersey and rank as the fourth largest New Jersey based banking institution by deposit market share.  Based on financial information as of March 31, 2016, and pro forma for the Cape transaction, the combined institution would have approximately $5.3 billion in total assets, $4.0 billion in total deposits, $4.0 billion in gross loans and 61 full-service banking locations.

 

Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, upon completion of the merger, shareholders of Ocean Shore common stock will be entitled to receive $4.35 in cash and 0.9667 shares of OceanFirst common stock for each share of Ocean Shore common stock. The transaction is expected to close late fourth quarter of 2016 or early first quarter of 2017, subject to each company receiving the required approval of its shareholders, receipt of all required regulatory approvals and fulfillment of other customary closing conditions.

 

The purchase price equates to 132% of Ocean Shore’s March 31, 2016 tangible book value, 4.9% premium to core deposits, 20.1x Ocean Shore’s trailing twelve month earnings, and 9.3x Ocean Shore’s estimated 2017 (forward) earnings (assuming fully phased-in cost savings). Tangible book value per common share is expected to be diluted by approximately 3.1% at closing with a projected earnback period of approximately 3.7 years using the cross-over1 method.

 

The transaction includes strong earnings per share accretion of approximately 5.4% in 2018 (the first full year of combined operations and synergies) in addition to the projected double-digit earnings accretion from the Cape Bancorp, Inc. transaction. The combined company will be structured to support enhanced financial return targets of greater than 1.05% return on average assets and greater than 13.0% return on average tangible common equity along with remaining “well-capitalized” under regulatory guidelines.

 

OceanFirst expects to incur pre-tax merger and integration costs of approximately $19 million and to achieve cost savings of approximately 53% of Ocean Shore’s non-interest expenses or $12.4 million if 2017 cost savings were to be fully phased in. 

 

“We are excited to welcome Ocean City Home Bank customers and employees to the OceanFirst family. Our two institutions have developed our respective community banks with a consistent vision, effectively sharing similar histories.  With our mutual understanding of our community bank business models and local market focus, OceanFirst and Ocean Shore can leverage this synergy to create one of the most highly valued banking institutions in the Mid-Atlantic region,” said Christopher D. Maher, President and Chief Executive Officer of OceanFirst.

 

Mr. Maher further commented, “This transaction represents a unique opportunity for OceanFirst to capitalize on its recent entry into Southern New Jersey through the acquisition of an extremely valuable deposit franchise coupled with significant efficiencies and low execution risk. Ocean Shore’s residential focus creates strategic optionality for prudent commercial real estate growth with strong cash flows.  We look forward to continuing to provide extraordinary customer care to all OceanFirst and Ocean Shore customers, as well as providing enhanced value to our stockholders.”