Growing Scale And An Attractive Franchise Should Drive Gains From OceanFirst Financial

Although overshadowed by markets like Texas, there is still money to be made providing banking services in the New York City-Pennsylvania corridor. With a community bank approach that emphasizes quick decisions and deep customer relationships, OceanFirst Financial (OCFC) looks well-placed to leverage fast-growing operating scale and attractive funding costs in some relatively attractive markets.

OceanFirst looks about 10% to 20% undervalued on the basis of adjusted earnings growth of around 9% to 12% over the next five years. Those estimates don't include additional M&A beyond the announced Sun Bancorp deal, but I would expect management to look for additional deals to bring it closer to the $10 billion regulatory threshold. Although 2018 will be a busy year with the integration of Sun, back-office expense reduction efforts, and ongoing loan repositioning, a return to organic lending growth toward the end of 2018 and more meaningful expense leverage in 2019 should start driving attractive organic earnings growth numbers.

Continue here:
Growing Scale And An Attractive Franchise Should Drive Gains From OceanFirst Financial