UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.     )

 

 

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☐		Preliminary Proxy Statement
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☒		Definitive Proxy Statement
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☐		Soliciting Material Pursuant to § 240.14a-12

Partners Bancorp

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Prospectus		Proxy Statement

MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT

Dear Partners Stockholders:

On November 4, 2021, OceanFirst Financial Corp., a Delaware corporation (which we refer to as “OceanFirst”), the parent company of OceanFirst Bank, National Association (which we refer to as “OceanFirst Bank”), entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”) with Partners Bancorp, a Maryland corporation (which we refer to as “Partners”), and Coastal Merger Sub Corp., a Maryland corporation and wholly-owned subsidiary of OceanFirst (which we refer to as “merger sub”). Pursuant to the terms and subject to the conditions set forth in the merger agreement, merger sub will merge with and into Partners (which we refer to as the “first-step merger”), with Partners as the surviving corporation in the first-step merger and as a wholly-owned subsidiary of OceanFirst, and immediately following the effective time of the first-step merger, Partners will merge with and into OceanFirst, with OceanFirst as the surviving corporation (which, together with the first-step merger, we refer to as the “integrated mergers”). Immediately following the consummation of the integrated mergers, The Bank of Delmarva, a Delaware chartered member bank (which we refer to as “Delmarva Bank”), will merge with and into OceanFirst Bank, with OceanFirst Bank as the surviving bank (which we refer to as the “Delmarva Bank merger”), and immediately following the effective time of the Delmarva Bank merger, Virginia Partners Bank, a Virginia chartered member bank (which we refer to as “Virginia Partners Bank”), will merge with and into OceanFirst Bank, with OceanFirst Bank as the surviving bank (which, together with the Delmarva Bank merger, we refer to as the “bank mergers” and the bank mergers, together with the integrated mergers, which we refer to as the “mergers”).

At the effective time of the first-step merger, each share of Partners common stock, par value $0.01 per share (which we refer to as “Partners common stock”), that is issued and outstanding immediately prior to the effective time of the first-step merger, except for shares of Partners common stock owned by Partners as treasury shares, or by OceanFirst or any subsidiary of Partners or OceanFirst (other than any such shares held in employee benefit plans or related trust account, managed accounts, mutual funds, or otherwise held in a fiduciary capacity or as a result of debt previously contracted) (which we refer to as the “exception shares”), will be converted into the right to receive either (a) 0.4512 shares (such number being referred to as the “exchange ratio” and such shares being referred to as the “stock consideration”) of common stock, par value $0.01 per share, of OceanFirst (which we refer to as “OceanFirst common stock”) or (b) $10.00 in cash (which we refer to as the “cash consideration” and together with the stock consideration, we refer to as the “merger consideration”), in each case, at the election of the holder of Partners common stock, subject to (x) a maximum of forty percent (40%) of the shares of Partners common stock being convertible into cash and (y) the allocation and proration provisions of the merger agreement. No fractional shares, if any, of OceanFirst common stock will be issued in connection with the first-step merger, and any holder of Partners common stock that would be entitled to fractional shares of OceanFirst common stock shall receive cash in lieu of such fractional shares.

Although the exchange ratio in respect of the stock consideration and the cash consideration are fixed, the value of the stock consideration (and, therefore, the aggregate value of the merger consideration) will fluctuate with the market price of OceanFirst common stock and will not be known at the time Partners stockholders vote on the first-step merger. Based on the $23.21 closing price of OceanFirst common stock on the NASDAQ Global Select Market (which we refer to as the “Nasdaq”) on November 3, 2021, the last full trading day before the public announcement of the mergers, the value of stock consideration was equal to $10.47. Based on the $23.81 closing price of OceanFirst common stock on the Nasdaq on January 13, 2022 the latest practicable trading day before the printing of the accompanying proxy statement/prospectus, the value of stock consideration was equal to $10.74. Based on the exchange ratio and the number of shares of Partners common stock outstanding as of

December 29, 2021, the record date, the maximum number of shares of OceanFirst common stock estimated to be issuable at the effective time is 8,094,614. We urge you to obtain current market quotations for OceanFirst (trading symbol “OCFC”) and Partners (trading symbol “PTRS”).

Partners will hold a special meeting of its stockholders in connection with the mergers. At the Partners special meeting, Partners stockholders will be asked to vote to approve the merger agreement, and the transactions contemplated thereby, and related matters as described in the accompanying proxy statement/prospectus. Under Maryland law, approval of the merger agreement requires the affirmative vote of at least two-thirds of all of the votes entitled to be cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting.

The special meeting will be completely virtual and held online via live webcast at 10:00 a.m. Eastern Time, on March 9, 2022. No physical meeting will be held.

The board of directors of Partners unanimously recommends that Partners stockholders vote “FOR” the approval of the merger agreement and the transactions contemplated thereby, including the first-step merger, and “FOR” the other proposals to be considered at the special meeting.

The accompanying proxy statement/prospectus describes the special meeting, the mergers, the documents related to the mergers and other related matters. Please carefully read the entire accompanying proxy statement/prospectus, including “Risk Factors,” beginning on page 19, for a discussion of the risks relating to the mergers. You also can obtain information about OceanFirst from documents that it has filed with the Securities and Exchange Commission.

 

 

/s/ Christopher D. Maher Christopher D. Maher President and Chief Executive Officer OceanFirst Financial Corp.		/s/ Lloyd B. Harrison Lloyd B. Harrison Chief Executive Officer Partners Bancorp

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the first-step merger or passed upon the adequacy or accuracy of the accompanying proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The securities to be issued in the first-step merger are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either OceanFirst or Partners, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of the accompanying proxy statement/prospectus is January 14, 2022 and it is first being mailed or otherwise delivered to Partners stockholders on or about January 19, 2022.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Partners Stockholders:

A virtual special meeting of the stockholders of Partners Bancorp, or Partners, is scheduled to be held online via live webcast at 10:00 a.m. Eastern Time, on March 9, 2022 to consider and vote upon the following proposals:

 

1.

A proposal to approve the Agreement and Plan of Merger, dated as of November 4, 2021, by and among OceanFirst, merger sub and Partners, and the transactions contemplated by that agreement, pursuant to which merger sub will merge with and into Partners, as more fully described in the accompanying proxy statement/prospectus (we refer to proposal 1 as the “merger proposal”);

 

2.

A proposal to approve, on an advisory (non-binding) basis, the compensation that certain executive officers of Partners may receive in connection with the mergers pursuant to existing agreements or arrangements with Partners (we refer to proposal 2 as the “compensation proposal”); and

 

3.

A proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal (we refer to proposal 3 as the “adjournment proposal”).

We have fixed the close of business on December 29, 2021 as the record date for the special meeting. Only Partners stockholders of record as of this record date are entitled to notice of, and to vote at, the special meeting, or any adjournment of the special meeting. Under Maryland law, approval of the merger proposal requires the affirmative vote of at least two-thirds of the votes entitled to be cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting. Approval of the compensation proposal requires the affirmative vote of at least a majority of the votes cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting. The adjournment proposal will be approved if the majority of the votes cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting vote in favor of such proposal.

Our board of directors has approved the Agreement and Plan of Merger, has determined that such agreement and the transactions contemplated by such agreement, including the first-step merger, are advisable, fair to and in the best interests of Partners and its stockholders, and unanimously recommends that stockholders vote “FOR” the merger proposal, “FOR” the compensation proposal and “FOR” the adjournment proposal.

Your vote is very important. We cannot complete the first-step merger unless the Partners stockholders approve the merger proposal.

Our priority remains the safety of our stockholders, employees and community. In response to the public health concerns regarding the continuing COVID-19 pandemic, the special meeting will be a virtual meeting held on the Internet. There will be no physical location for the special meeting. Partners stockholders will be able to attend the special meeting online, and, with a control number, vote shares electronically and submit questions during the special meeting by visiting meetnow.global/MJ794ML at the meeting date and time. If you plan to attend the special meeting online, please see the instructions on page 26 of this proxy statement/prospectus under the heading “The Partners Special Meeting.”

Regardless of whether you plan to attend the virtual special meeting, please vote as soon as possible. If you hold shares of Partners common stock in your name as a stockholder of record of Partners, please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid return envelope. You may also vote by telephone or through the Internet by following the instructions on the proxy card. If you hold your shares of Partners common stock in “street name” through a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by the record holder.

The accompanying proxy statement/prospectus provides a detailed description of the special meeting, the mergers, the documents related to the mergers and other related matters. We urge you to read the proxy statement/prospectus, including any documents incorporated in the proxy statement/prospectus by reference, and its annexes carefully and in their entirety.

BY ORDER OF THE BOARD OF DIRECTORS,

/s/ Betsy J. Eicher,

Betsy J. Eicher, CPA

Corporate Secretary

Partners Bancorp

REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about OceanFirst and Partners from documents filed with the Securities and Exchange Commission (which we refer to as the “SEC”) that are not included in or delivered with this proxy statement/prospectus. You can obtain any of the documents filed with or furnished to the SEC by OceanFirst and/or Partners at no cost from the SEC’s website at http://www.sec.gov. You may also request copies of these documents, including documents incorporated by reference in this proxy statement/prospectus, at no cost by contacting the applicable company at the following address:

 

OceanFirst Financial Corp. 110 West Front Street Red Bank, New Jersey 07701 (732) 240-4500		Partners Bancorp 2245 Northwood Drive Salisbury, Maryland 21801 (410) 548-1100

You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, you must request them no later than five business days before the date of the special meeting. This means that Partners stockholders requesting documents must do so by March 2, 2022 in order to receive them before the special meeting.

You should rely only on the information contained in, or incorporated by reference into, this document. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated January 14, 2022 and you should assume that the information in this document is accurate only as of such date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document, and neither the mailing of this document to Partners stockholders nor the issuance by OceanFirst of shares of OceanFirst common stock in connection with the first-step merger will create any implication to the contrary.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this document regarding (i) Partners has been provided by Partners and (ii) OceanFirst has been provided by OceanFirst.

See “Where You Can Find More Information” beginning on page 115 for more details.

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS			1
SUMMARY			9
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF OCEANFIRST			17
RISK FACTORS			19
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			25
THE PARTNERS SPECIAL MEETING			26
Date, Time and Place of the Special Meeting			26
Matters to Be Considered			26
Recommendation of the Partners Board			26
Required Vote; Treatment of Abstentions, Broker Non-Votes and Failure to Vote			27
Shares Held by Officers and Directors			27
Voting of Proxies; Incomplete Proxies			28
Shares Held in “Street Name”			28
Revocability of Proxies and Changes to a Partners Stockholder’s Vote			29
Solicitation of Proxies			29
Attending and Participating in the Special Meeting			29
Registration for the Special Meeting			30
Questions			30
Technical Support			30
Assistance			31
PARTNERS PROPOSALS			32
Proposal No. 1 – The Merger Proposal			32
Proposal No. 2 – The Compensation Proposal			32
Proposal No. 3 – The Adjournment Proposal			33
INFORMATION ABOUT OCEANFIRST			34
INFORMATION ABOUT MERGER SUB			35
INFORMATION ABOUT PARTNERS			36
THE MERGERS			37
Structure of the Mergers			37
Background of the Mergers			37
Partners’ Reasons for the Mergers; Recommendation of the Partners Board			42
Opinion of Partners’ Financial Advisor			45
OceanFirst’s Reasons for the Mergers			56

 

i

Interests of Partners’ Directors and Executive Officers in the Mergers			57
Trading Markets			65
Dividend Policy			65
No Dissenters’ Rights			65
Regulatory Approvals Required for the Mergers			65
THE MERGER AGREEMENT			67
Structure of the Mergers			67
Merger Consideration			67
Fractional Shares			67
Governing Documents; Directors and Officers			67
Governance Matters			68
Treatment of Partners Equity-Based Awards			68
Closing and Effective Time			68
Conversion of Shares; Exchange of Certificates			68
Representations and Warranties			70
Covenants and Agreements			73
Partners Stockholder Meeting and Recommendation of the Partners Board			79
Agreement Not to Solicit Other Offers			80
Conditions to Complete the Integrated Mergers			82
Termination of the Merger Agreement			83
Effect of Termination			84
Termination Fee			84
Expenses and Fees			85
Amendment, Waiver and Extension of the Merger Agreement			85
Partners Voting and Support Agreements			85
ACCOUNTING TREATMENT			86
U.S. FEDERAL INCOME TAX CONSIDERATIONS			87
DESCRIPTION OF CAPITAL STOCK OF OCEANFIRST			90
Authorized Capital Stock			90
Common Stock			90
Preferred Stock			91
Depositary Shares			98
COMPARISON OF STOCKHOLDERS’ RIGHTS			100
COMPARATIVE MARKET PRICES AND DIVIDENDS			111

 

ii

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF PARTNERS			112
LEGAL MATTERS			113
EXPERTS			113
DEADLINES FOR SUBMITTING STOCKHOLDER PROPOSALS			114
WHERE YOU CAN FIND MORE INFORMATION			115

ANNEXES

 

A.		Agreement and Plan of Merger, dated as of November 4, 2021, by and among OceanFirst Financial Corp., Coastal Merger Sub Corp. and Partners Bancorp		A-1
B.		Form of Voting and Support Agreement by and among OceanFirst Financial Corp. and directors and officers of Partners Bancorp		B-1
C.		Opinion of Piper Sandler & Co., dated as of November 3, 2021, to the Board of Directors of Partners Bancorp		C-1

 

iii

QUESTIONS AND ANSWERS

The following are some questions that you, as a Partners stockholder, may have about the mergers or the special meeting and brief answers to those questions. We urge you to read carefully all of this proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the mergers or the special meeting. For details about where you can find additional important information, please see the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 115.

Unless the context otherwise requires, references in this proxy statement/prospectus to (i) “OceanFirst” refer to OceanFirst Financial Corp., a Delaware corporation, and its subsidiaries, (ii) “OceanFirst Bank” refer to OceanFirst Bank, National Association, (iii) “merger sub” refer to Coastal Merger Sub Corp., a Maryland corporation, (iv) “Partners” refer to Partners Bancorp, a Maryland corporation, and its subsidiaries, (v) “Delmarva Bank” refer to The Bank of Delmarva, a Delaware chartered member bank, and (vi) “Virginia Partners Bank” refer to Virginia Partners Bank, a Virginia chartered member bank.

Q: What are the mergers?

A: On November 4, 2021, OceanFirst, the parent company of OceanFirst Bank, entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”) with Partners, the parent company of Delmarva Bank and Virginia Partners Bank, and merger sub, which, among other things, provides for the strategic acquisition by OceanFirst of Partners.

Pursuant to the terms and subject to the conditions set forth in the merger agreement:

 

•

Merger sub will merge with and into Partners (which we refer to as the “first-step merger”), with Partners as the surviving corporation in the first-step merger and as a wholly-owned subsidiary of OceanFirst;

 

•

Immediately following the effective time of the first-step merger, Partners will merge with and into OceanFirst, with OceanFirst as the surviving corporation (which, together with the first-step merger, we refer to as the “integrated mergers”);

 

•

Immediately following the consummation of the integrated mergers, Delmarva Bank will merge with and into OceanFirst Bank, with OceanFirst Bank as the surviving bank (which we refer to as the “Delmarva Bank merger”); and

 

•

Immediately following the effective time of the Delmarva Bank merger, Virginia Partners Bank will merge with and into OceanFirst Bank, with OceanFirst Bank as the surviving bank (which we refer to as the “Virginia Partners Bank merger” and the Virginia Partners Bank merger, together with the Delmarva Bank merger, we refer to as the “bank mergers” and the bank mergers, together with the integrated mergers, which we refer to as the “mergers”).

A copy of the merger agreement is included in this proxy statement/prospectus as Annex A.

The mergers cannot be completed unless, among other things, the holders of shares of common stock, par value $0.01 per share, of Partners (which we refer to as the “Partners common stock” and the holders of which we refer to as “Partners stockholders”) approve the merger agreement and the transactions contemplated by the merger agreement, including the first-step merger, by an affirmative vote of at least two-thirds of all of the votes entitled to be cast at the special meeting of Partners stockholders (which we refer to as the “special meeting”) by the holders of shares of Partners common stock entitled to vote at the special meeting.

The completion of the mergers is subject to the satisfaction or waiver of additional customary conditions, which are discussed in the section of this proxy statement/prospectus entitled “The Merger Agreement — Conditions to Complete the Integrated Mergers” beginning on page 82.

 

1

Q: Why am I receiving this proxy statement/prospectus?

A: We are delivering this document to you because it is a proxy statement being used by the Partners board of directors (which we refer to as the “Partners board”) to solicit proxies from Partners stockholders in connection with approval of the merger agreement, and the transactions contemplated by the merger agreement, including the first-step merger, and related matters as described in this proxy statement/prospectus.

In order to approve the merger agreement and the transactions contemplated by the merger agreement, including the first-step merger, Partners has called a special meeting of Partners stockholders (which we refer to as the “special meeting”). This document also serves as a notice of the special meeting and describes the proposals to be presented at the special meeting.

This document is also a prospectus of OceanFirst that is being delivered to Partners stockholders because OceanFirst is offering portions of shares of the common stock, par value $0.01 per share, of OceanFirst (which we refer to as the “OceanFirst common stock”) to Partners stockholders as consideration in the first-step merger.

This proxy statement/prospectus contains important information about the mergers and the proposals being voted on at the special meeting. You should read this document carefully and in its entirety. The enclosed materials allow you to have your shares of Partners common stock voted by proxy without attending the special meeting. Your vote is important. We encourage you to submit your proxy as soon as possible.

Q: In addition to the approval of the merger agreement and the transactions contemplated by the merger agreement, including the first-step merger, what else are Partners stockholders being asked to vote on at the special meeting?

A: In addition to the proposal to approve the merger agreement and the transactions contemplated by the merger agreement, including the first-step merger (which we refer to as the “merger proposal”), Partners is soliciting proxies from its stockholders with respect to (i) a proposal to approve, on an advisory (non-binding) basis, the compensation that certain executive officers of Partners may receive in connection with the first-step merger pursuant to agreements or arrangements with Partners (which we refer to as the “compensation proposal”) and (ii) a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal (which we refer to as the “adjournment proposal”). Completion of the mergers is not conditioned upon approval of the compensation proposal or the adjournment proposal.

Q: What will Partners stockholders be entitled to receive in the first-step merger?

A: If the first-step merger is completed, each share of Partners common stock that is issued and outstanding immediately prior to the effective time of the first-step merger (which we refer to as the “effective time”), except for shares of Partners common stock owned by Partners as treasury shares, or by OceanFirst or any subsidiary of Partners or OceanFirst (other than any such shares held in employee benefit plans or related trust account, managed accounts, mutual funds, or otherwise held in a fiduciary capacity or as a result of debt previously contracted) (which we refer to as the “exception shares”), will be converted into the right to receive either:

 

(i)

0.4512 shares of OceanFirst common stock (such number being referred to as the “exchange ratio” and such shares being referred to as “stock consideration); or

 

(ii)

$10.00 in cash (which we refer to as the “cash consideration” and together with the stock consideration, the “merger consideration”).

Holders of Partners common stock will have the right to elect to receive the cash consideration or the stock consideration, subject to a maximum of forty percent (40%) of the shares of Partners common stock being convertible into cash. No fractional shares, if any, of OceanFirst common stock will be issued in connection with the first-step merger. Any Partners stockholders who would otherwise be entitled to receive a fractional share of

 

2

OceanFirst common stock upon the completion of the first-step merger will instead be entitled to receive an amount in cash (rounded to the nearest cent) determined by multiplying the fraction of a share (rounded to the nearest thousandth when expressed as a decimal form) of OceanFirst common stock to which the holder would otherwise be entitled by the volume-weighted average trading price (which we refer to as “VWAP”) per share of OceanFirst common stock on the NASDAQ Global Select Market (which we refer to as the “Nasdaq”) (as reported by The Wall Street Journal) for the five full trading days ending on the last trading day preceding the closing of the mergers.

Q: Will the Partners stockholders receive the form of consideration they elect?

A: If a Partners stockholder elects to receive the cash consideration in respect of any shares of Partners common stock held by such Partners stockholder, then such Partners stockholder may not receive the form of consideration that such Partners stockholder elects in the first-step merger for all the shares of Partners common for which a cash election was made. The allocation and proration provisions of the merger agreement will result, regardless of the elections made, in no greater than forty percent (40%) of the shares of Partners common stock being convertible into cash. Pursuant to the allocation and proration provisions of the merger agreement, if the number of shares of Partners common stock for which a cash election has been made exceeds the cash conversion number, a pro rata portion of all those shares for which a cash election has been made will instead be converted into the right to receive the stock consideration. The allocation of the consideration payable to the Partners stockholders in the first-step merger will not be known until the results of the merger consideration elections made by the Partners stockholders are tallied, which will not occur until near or after the closing of the mergers. See the section of this proxy statement/prospectus entitled “The Merger Agreement—Merger Consideration” beginning on page 67.

Q: How will Partners stockholders make their elections to receive either the cash consideration or the stock consideration in the first-step merger?

A: An election form will be mailed to each holder of record of Partners common stock as of the business day immediately preceding the date on which the election forms are mailed. The mailing will occur at least twenty (20) business days prior to the anticipated election deadline, which is expected to be 5:00 p.m. local time (determined as the city in which the principal office of the exchange agent is located) on the date OceanFirst and Partners agree is as near as practicable to two (2) business days before the closing date. OceanFirst will also make an election form available to each Partners stockholder who, following the date on which the election forms are initially mailed but prior to the election deadline, requests such election form. Each Partners stockholder should complete and return the election form, along with any Partners stock certificate(s) (or a properly completed notice of guaranteed delivery), according to the instructions included with the form. The election form will be provided to Partners stockholders under separate cover and is not being provided with this document.

If you own shares of Partners common stock in “street name” through a bank, broker or other nominee and you wish to make an election, you should seek instructions from the bank, broker or other nominee holding your shares concerning how to make an election. If you do not send in the election form with your stock certificate(s) by the election deadline, you will be treated as though you had not made an election.

Q: What happens if a Partners stockholder does not make a valid election to receive either the cash consideration or the stock consideration?

A: If a Partners stockholder does not return a properly completed election form by the election deadline specified in the election form, such shares of Partners common stock for which no election was properly made will be (i) considered “non-election” shares and (ii) converted into the right to receive the cash consideration, subject to (x) a maximum of forty percent (40%) of the shares of Partners common stock being convertible into cash and (y) the allocation and proration provisions of the merger agreement.

 

3

Q: How will the first-step merger affect Partners equity awards?

A: Partners equity awards will be affected as follows:

Stock Options: At the effective time, each outstanding and unexercised option to purchase shares of Partners common stock granted under the Partners equity plan, whether vested or unvested (which we refer to as “stock options”), will be canceled, extinguished and exchanged into the right to receive an amount of cash (without interest) equal to the product of (a) the aggregate number of shares of Partners common stock issuable upon exercise of such stock option and (b) the excess, if any, of (i) $10.00 over (ii) the per share exercise price of such stock option.

Restricted Stock: At the effective time, each share of restricted stock of Partners granted under Partners’ equity plans or otherwise will be canceled, extinguished and exchanged into the right to receive an amount of cash (without interest) equal to the product of (a) the aggregate number of shares of Partners common stock subject to such restricted stock multiplied by (b) $10.00. In addition, with respect to shares of restricted stock of Partners that vested on an accelerated basis during 2021 in connection with the merger agreement, the holders of such shares have agreed to submit a cash election with respect to these shares.

Q: Will the value of the merger consideration change between the date of this proxy statement/prospectus and the time that the first-step merger is completed (which we refer to as the “closing date”)?

A: Yes. Although the exchange ratio in respect of the stock consideration and the cash consideration are fixed, the value of the stock consideration (and, therefore, the aggregate value of the merger consideration) will fluctuate between the date of this proxy statement/prospectus and the effective time with fluctuations in the market price of OceanFirst common stock and will not be known at the time Partners stockholders vote on the first-step merger.

Q: How does the Partners board recommend that I vote at the special meeting?

A: The Partners board unanimously recommends that you vote “FOR” the merger proposal, “FOR” the compensation proposal and “FOR” the adjournment proposal.

Q: When and where is the special meeting?

A: A virtual special meeting of Partners stockholders is scheduled to be held online via live webcast at 10:00 a.m. Eastern Time, on March 9, 2022. No physical meeting will be held.

Q: What do I need to do now?

A: After you have carefully read this entire proxy statement/prospectus and decided how you wish to vote your shares of Partners common stock, please vote your shares of Partners common stock promptly so that your shares of Partners common stock are represented and voted at the special meeting. If you hold your shares of Partners common stock in your name as a stockholder of record, you must complete, sign, date and mail your proxy card in the enclosed postage-paid return envelope as soon as possible. Alternatively, you may vote by telephone or through the Internet. Information and applicable deadlines for voting shares of Partners common stock by telephone or through the Internet are set forth in the enclosed proxy card instructions. If you hold your shares of Partners common stock in “street name” through a bank, broker or other nominee, you must direct your bank, broker or other nominee how to vote in accordance with the instructions you have received from your bank, broker or other nominee. “Street name” Partners stockholders who wish to vote in person at the special meeting will need to obtain a legal proxy from the institution or record holder that holds their shares.

Q: What constitutes a quorum for the special meeting?

A: The presence at the special meeting, in person or by proxy, of Partners stockholders entitled to cast a majority of the votes at the special meeting will constitute a quorum for the transaction of business at the special meeting.

 

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Virtual attendance at the special meeting constitutes “in person” attendance for purposes of establishing a quorum. Once a share of Partners common stock is represented for any purpose at the special meeting, it is deemed present for quorum purposes for the remainder of the special meeting or any adjournment of the special meeting.

Abstentions, if any, will be included in determining the number of shares of Partners common stock present at the meeting for the purpose of determining the presence of a quorum. Broker non-votes, if any, will not be included in determining the number of shares of Partners common stock present at the meeting for the purpose of determining the presence of a quorum because it is expected that all proposals to be voted on at the special meeting will be “non-routine” matters (i.e., matters with respect to which banks, brokers or other nominees do not have discretion to vote shares of Partners common stock, as discussed in more detail below under the question “What is a broker non-vote?”).

Q: What is the vote required to approve each proposal at the special meeting?

A: The merger proposal:

 

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Standard: Approval of the merger proposal requires the affirmative vote of at least two-thirds of all of the votes entitled to be cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting.

 

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Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the special meeting, or fail to instruct your bank, broker or other nominee how to vote with respect to the merger proposal, it will have the same effect as a vote “AGAINST” the merger proposal.

The compensation proposal:

 

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Standard: Approval of the compensation proposal requires the affirmative vote of at least a majority of the votes cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting.

 

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Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the special meeting, or fail to instruct your bank, broker or other nominee how to vote with respect to the compensation proposal, it will have no effect on the vote with respect to the compensation proposal.

The adjournment proposal:

 

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Standard: The adjournment proposal will be approved if a majority of the votes cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting vote in favor of such proposal.

 

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Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the special meeting, or fail to instruct your bank, broker or other nominee how to vote with respect to the adjournment proposal, it will have no effect on the vote with respect to the adjournment proposal.

Q: Why is my vote important?

A: If you do not vote, or fail to instruct your bank, broker or other nominee how to vote, it will be more difficult for Partners to obtain (i) the necessary quorum to hold the special meeting and (ii) the vote to approve the merger proposal. If you are a Partners stockholder, your failure to submit a proxy or vote in person, or failure to instruct your bank, broker or other nominee how to vote, or your abstention with respect to the merger proposal, will have the same effect as a vote “AGAINST” the merger proposal. Approval of the merger proposal requires the

 

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affirmative vote of at least two-thirds of all of the votes entitled to be cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting. The Partners board unanimously recommends that Partners stockholders vote “FOR” the merger proposal, “FOR” the compensation proposal and “FOR” the adjournment proposal.

Q: What is a broker non-vote?

A: A broker non-vote occurs when a bank, broker or other nominee is not permitted to vote without instructions from the beneficial owner of the shares and the beneficial owner fails to provide the bank, broker or other nominee with such instructions. Banks, brokers and other nominees may use their discretion to vote “uninstructed” shares (i.e., shares of record held by banks, brokers or other nominees, but with respect to which the beneficial owner of such shares has not provided instructions on how to vote on a particular proposal) with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters.

All of the proposals currently scheduled for consideration at the special meeting are “non-routine” matters. If your bank, broker or other nominee holds your shares of Partners common stock in “street name,” such entity will vote your shares of Partners common stock only if you provide instructions on how to vote by complying with the voter instruction form sent to you by your bank, broker or other nominee with this proxy statement/prospectus.

Q: If my shares of Partners common stock are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote my shares for me?

A: No. Your bank, broker or other nominee cannot vote your shares without instructions from you. You must instruct your bank, broker or other nominee how to vote your shares in accordance with the instructions provided to you if you want your bank, broker or other nominee to vote your shares. Please check the voting form used by your bank, broker or other nominee.

Q: Can I attend the special meeting and vote my shares of Partners common stock in person?

A: Yes. All Partners stockholders, including stockholders of record and stockholders who hold their shares in “street name” through banks, brokers or other nominees, are invited to attend the special meeting. Partners stockholders of record can vote in person at the special meeting. If you are not a Partners stockholder of record, you must obtain a proxy, executed in your favor, from the record holder of your shares of Partners common stock, such as a broker, bank or other nominee, to be able to vote in person at the special meeting.

Q: Can I change my vote?

A: Yes. If you are a holder of record of Partners common stock, you may change your vote or revoke any proxy at any time before it is voted at the special meeting by any of the following methods: (i) signing and returning a proxy with a later date, (ii) delivering a written revocation notice to Partners’ corporate secretary or (iii) casting a later vote by telephone or through the Internet. Attendance at the virtual special meeting (by itself) will not automatically revoke your proxy. A revocation or later-dated proxy received by Partners after the vote will not affect the vote. Partners’ corporate secretary’s mailing address is: Betsy J. Eicher, Corporate Secretary, Partners Bancorp, 2245 Northwood Drive, Salisbury, Maryland 21801.

If you hold your shares of Partners common stock in “street name” through a bank, broker or other nominee, you must contact your bank, broker or other nominee to change your vote or revoke your proxy.

Q: What are the U.S. federal income tax consequences of the integrated mergers to Partners stockholders?

A: The parties expect the integrated mergers to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (which we refer to as the “Code”), and the

 

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obligation of each of OceanFirst and Partners to complete the integrated mergers is conditioned upon the receipt of an opinion of its counsel to that effect. Neither OceanFirst nor Partners currently intends to waive these conditions. Assuming that the integrated mergers qualify as a reorganization within the meaning of Section 368(a) of the Code, the U.S. federal income tax consequences of the integrated mergers to each Partners stockholder will vary depending on whether such Partners stockholder receives cash, shares of OceanFirst common stock or a combination thereof in exchange for such Partners stockholder’s shares of Partners common stock pursuant to the terms of the merger agreement.

The U.S. federal income tax consequences described above may not apply to all Partners stockholders. You should read the section of this proxy statement/prospectus entitled “U.S. Federal Income Tax Considerations” beginning on page 87 for a more detailed discussion of the U.S. federal income tax considerations relating to the integrated mergers. Tax matters can be complicated and the tax consequences of the integrated mergers to you will depend on your particular tax situation. You should consult your tax advisor to determine the tax consequences of the integrated mergers to you.

Q: Are Partners stockholders entitled to dissenters’ rights?

A: No. Partners stockholders are not entitled to exercise dissenters’ rights in connection with the first-step merger. For further information, see the section of this proxy statement/prospectus entitled “The Mergers — No Dissenters’ Rights” beginning on page 65.

Q: If I am a Partners stockholder, should I send in my Partners stock certificates now?

A: No. Please do not send in your Partners stock certificates with your proxy. Promptly following the completion of the first-step merger, an exchange agent will send you instructions for exchanging Partners stock certificates for the applicable merger consideration. See the section of this proxy statement/prospectus entitled “The Merger Agreement — Conversion of Shares; Exchange of Certificates” beginning on page 68.

Q: What should I do if I hold my shares of Partners common stock in book-entry form?

A: You are not required to take any special additional actions if your shares of Partners common stock are held in book-entry form. Promptly following the completion of the first-step merger, an exchange agent will send you instructions for exchanging Partners common stock held in book-entry form for the applicable merger consideration.

Q: What happens if the first-step merger is not completed?

A: If the first-step merger is not completed, Partners stockholders will not receive any consideration for their shares of Partners common stock in connection with the first-step merger. Instead, Partners will remain an independent company and Partners common stock will continue to be listed on the Nasdaq under the symbol “PTRS”. In addition, if the merger agreement is terminated under certain circumstances, Partners may be required to pay OceanFirst a termination fee. For a more detailed discussion of the circumstances under which the termination fee will be required to be paid, please see the section of this proxy statement/prospectus entitled “The Merger Agreement — Termination Fee” beginning on page 84.

Q: What happens if I sell my shares of Partners common stock after the record date but before the special meeting?

A: The record date of the special meeting is earlier than both the date of the special meeting and the date that the first-step merger is expected to be completed. If you sell or otherwise transfer your shares of Partners common stock after the record date for the special meeting but before the date of the special meeting, you will retain your right to vote at the special meeting, but you will not have the right to receive the merger consideration to be

 

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received by Partners stockholders in the first-step merger. In order to receive the merger consideration, a Partners stockholder must hold his, her or its shares of Partners common stock through completion of the first-step merger and comply with the transmittal procedures discussed elsewhere in this proxy statement/prospectus.

Q: Whom may I contact if I cannot locate my Partners stock certificate(s)?

A: If you are unable to locate your original Partners stock certificate(s) prior to closing, you should contact Partners’ transfer agent, Computershare, at (800) 368-5948.

Q: What should I do if I receive more than one set of voting materials?

A: Partners stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold shares of Partners common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares of Partners common stock. If you are a holder of record of Partners common stock and your shares of Partners common stock are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this proxy statement/prospectus to ensure that you vote every share of Partners common stock that you own.

Q: When do you expect to complete the mergers?

A: OceanFirst and Partners currently expect to complete the mergers in the first half of 2022. However, neither OceanFirst nor Partners can assure you of when, or if, the mergers will be completed. The completion of the mergers is subject to the satisfaction or waiver of customary closing conditions, including the receipt of the requisite vote of the Partners stockholders in respect of the merger proposal and the receipt of the requisite regulatory approvals.

Q: Whom should I call with questions?

A: Partners stockholders who (i) have questions concerning the merger agreement, the mergers or this proxy statement/prospectus, (ii) would like additional copies of this proxy statement/prospectus or (iii) need help voting their shares of Partners common stock, should contact Partners’ proxy solicitor, Regan & Associates, at (212) 587-3005..

 

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RISK FACTORS

In addition to general investment risks and the other information contained in or incorporated by reference into this proxy statement/prospectus, including the matters addressed under the section “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 25, you should carefully consider the following risk factors in deciding how to vote for the proposals presented in this proxy statement/prospectus. You should also consider the other information in this proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus. See the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 115.

Because the market value for OceanFirst common stock may fluctuate, Partners stockholders cannot be certain of the precise value of the stock consideration they will be entitled to receive.

At the effective time of the first-step merger, each share of Partners common stock that is issued and outstanding immediately prior to the effective time of the first-step merger, other than exception shares (as defined in the merger agreement), will be converted into the right to receive either (a) 0.4512 shares of OceanFirst common stock or (b) $10.00 in cash, in each case, at the election of the holder of Partners common stock, subject to (x) a maximum of forty percent (40%) of the shares of Partners common stock being convertible into cash and (y) the allocation and proration provisions of the merger agreement. No fractional shares of OceanFirst common stock, if any, will be issued in connection with the first-step merger.

There will be a lapse of time between each of (i) the date of this proxy statement/prospectus, (ii) the date of the special meeting, (iii) the election deadline by which Partners stockholders may elect to receive the stock consideration or the cash consideration in exchange for each share of Partners common stock held by such Partners stockholder and (iv) the date on which Partners stockholders entitled to receive the merger consideration actually receive the merger consideration. Although the exchange ratio in respect of the stock consideration is fixed, the value of the stock consideration (and, therefore, the aggregate value of the merger consideration) will fluctuate during these periods as a result of a variety of factors, which may include general market and economic conditions, changes in OceanFirst’s businesses, operations and prospects and regulatory considerations. Many of these factors are outside of the control of OceanFirst and Partners. Consequently, the market price of OceanFirst common stock will not be known at the time Partners stockholders vote on the first-step merger. Although the value of the cash consideration is fixed at $10.00 per share of Partners common stock, the value of the stock consideration will depend on the market value of shares of OceanFirst common stock on the date the merger consideration is received and thereafter. This value will not be known at the time of the special meeting and may be more or less than the current market value for OceanFirst common stock or the market value for OceanFirst common stock at the time of the special meeting.

The market value for OceanFirst common stock after the first-step merger is completed may be affected by factors different from those currently affecting the market value for Partners common stock or OceanFirst common stock.

Upon completion of the first-step merger, Partners stockholders who receive any portion of the stock consideration will become OceanFirst stockholders. OceanFirst’s business differs in important respects from that of Partners, and, accordingly, the results of operations of the combined company and the market price for OceanFirst common stock after the completion of the mergers may be affected by factors different from those currently affecting the independent results of operations of each of OceanFirst and Partners. For a discussion of the business of OceanFirst and of some important factors to consider in connection with that business, see the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 115.

 

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Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the mergers.

Before the mergers can be completed, OceanFirst and OceanFirst Bank must obtain approvals or waivers from, among others, the FRB and the OCC. Other approvals, waivers or consents from regulators may also be required. In determining whether to grant these approvals, waivers and consents, the regulators consider a variety of factors, including the regulatory standing of each party and the factors described under the section of this proxy statement/prospectus entitled “The Mergers — Regulatory Approvals Required for the Mergers” beginning on page 65. An adverse development in either party’s regulatory standing or these factors could result in an inability to obtain approval or a delay in their receipt. These regulators may impose conditions on the completion of the mergers or require changes to the terms of the mergers. Such conditions or changes could have the effect of delaying or preventing completion of the mergers or imposing additional costs on or limiting the revenues of the combined company following the completion of the mergers, any of which might have an adverse effect on the combined company following the completion of the mergers. However, under the terms of the merger agreement, neither party is required to take any action, or commit to take any action, or agree to any condition or restriction, in connection with obtaining the permits, consents, approvals and authorizations of regulators that, individually or in the aggregate, would have, or would reasonably be expected to have, a material adverse effect (i) on the surviving corporation and its subsidiaries (measured as a whole, after giving effect to the integrated mergers) or (ii) in the case of any actions, conditions, or restrictions caused by or arising solely out of the business or operations of Partners or its subsidiaries or OceanFirst’s acquisition of the Partners and its subsidiaries, on the surviving corporation and its subsidiaries (measured as though the surviving corporation were the size of Partners, on a pre-closing basis) (which we refer to as a “materially burdensome regulatory condition”). For more information, see the section of this proxy statement/prospectus entitled “The Mergers — Regulatory Approvals Required for the Mergers” beginning on page 65.

Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the mergers may not be realized.

OceanFirst and Partners have operated and, until the completion of the mergers, will continue to operate, independently. The success of the mergers, including anticipated benefits and cost savings, will depend, in part, on OceanFirst’s ability to successfully combine and integrate the businesses of OceanFirst and Partners in a manner that permits growth opportunities and does not materially disrupt the existing customer relations nor result in decreased revenues due to loss of customers. It is possible that the integration process could result in the loss of key employees, the disruption of either company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors, employees and other constituents or to achieve the anticipated benefits and cost savings of the mergers. The loss of key employees could adversely affect OceanFirst’s ability to successfully conduct its business, which could have an adverse effect on OceanFirst’s financial results and the value of OceanFirst common stock. If OceanFirst experiences difficulties with the integration process, the anticipated benefits of the mergers may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that cause OceanFirst and/or Partners to lose customers or cause customers to remove their accounts from OceanFirst and/or Partners and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Partners and OceanFirst during this transition period and for an undetermined period after completion of the mergers on the combined company. In addition, the actual cost savings realized as a result of the mergers could be less than anticipated.

 

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Certain of Partners’ directors and executive officers may have interests in the mergers that may differ from the interests of Partners stockholders.

Partners’ directors and executive officers have interests in the mergers that may be different from, or in addition to, the interests of Partners stockholders generally. The material interests considered by the Partners board were as follows:

 

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At the effective time, each outstanding and unexercised stock option granted by Partners to certain of its directors and executive officers under the Partners equity plans, whether vested or unvested, will be canceled, extinguished and automatically exchanged into the right to receive a cash payment (without interest) equal to the product of (a) the aggregate number of shares of Partners common stock issuable upon exercise of such stock option and (b) the excess, if any, of (i) $10.00 over (ii) the per-share exercise price of such stock option, less applicable tax withholdings.

 

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Certain executive officers of Partners have entered into agreements with OceanFirst Bank that will be effective at the effective time and will supersede such executive officers’ current employment agreements with Partners or its subsidiaries and affiliates (as applicable). These employment agreements provide, respectively, that: (i) Lloyd Harrison’s employment with Partners and its subsidiaries and affiliates will terminate at the effective time and Mr. Harrison will serve as a consultant to OceanFirst and its subsidiaries; (ii) John Breda will be employed as Regional President of OceanFirst Bank; (iii) Adam Sothen will be employed as Divisional Controller of OceanFirst Bank; and (iv) Betsy J. Eicher will be employed as Divisional Controller of OceanFirst Bank.

 

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Messrs. Harrison, Breda and Sothen and Ms. Eicher, as executive officers of Partners, will or may receive payments and benefits in connection with the integrated mergers pursuant to agreements that each has entered into with OceanFirst Bank that will replace their respective current employment agreements with Partners and that will be effective at the effective time.

 

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In connection with Virginia Partners Bank’s Northern Virginia operations, certain individuals who currently serve in executive roles with Virginia Partners Bank (but do not serve as executive officers of Partners) have been granted incentive awards by the compensation committee of the Partners board comprised of shares of restricted stock and of cash. In addition, the compensation committee of the Partners board recommended, and the Partners board has approved, an award comprised of shares of restricted stock and of cash to Michael W. Clarke, a director of Partners and Virginia Partners Bank, for his service to Partners with regard to the Northern Virginia operations of Virginia Partners Bank.

The Partners board was aware of these interests and considered them, among other matters, in approving the merger agreement and the mergers and in determining to recommend to Partners stockholders that they vote to approve the merger proposal. These interests are described in more detail under the section of this proxy statement/prospectus entitled “The Mergers — Interests of Partners’ Directors and Executive Officers in the Mergers” beginning on page 57.

The merger agreement may be terminated in accordance with its terms, and the mergers may not be completed.

The merger agreement is subject to a number of customary closing conditions that must be satisfied or, where legally permissible, waived in order to complete the integrated mergers, including the receipt of the requisite approval of Partners stockholders and the requisite regulatory approvals. These conditions to the closing of the integrated mergers may not be satisfied or waived in a timely manner or at all, and, accordingly, the integrated mergers may be delayed or may not be completed. In addition, OceanFirst and Partners may elect to terminate the merger agreement in certain other circumstances and, in certain circumstances, Partners may be required to pay OceanFirst the termination fee of $7,400,000.

 

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Termination of the merger agreement, or failure to complete the mergers, could negatively impact Partners or OceanFirst.

If the merger agreement is terminated, there may be various consequences. For example, Partners’ or OceanFirst’s businesses may be impacted adversely by the failure to pursue other opportunities due to management’s focus on the mergers, without realizing any of the anticipated benefits of completing the mergers. Additionally, if the merger agreement is terminated, the market value for Partners common stock or OceanFirst common stock could decline to the extent that the current market value reflect a market assumption that the mergers will be completed. If the merger agreement is terminated under certain circumstances, Partners may be required to pay to OceanFirst the termination fee of $7,400,000.

Furthermore, each of OceanFirst and Partners has incurred and will incur substantial expenses in connection with the completion of the mergers, as well as the costs and expenses of filing, printing and mailing this proxy statement/prospectus and all filing and other fees paid to the SEC in connection with the mergers. If the mergers are not completed, OceanFirst and Partners will incur these expenses without realizing the expected benefits of the mergers.

In addition, if the mergers are not completed, Partners may experience negative reactions from the financial markets and from its stockholders, customers and employees. Also, Partners may not be able to successfully resume independent operations, or enter into an agreement with another party with respect to a business combination transaction involving a sale of Partners. If it is able to enter into another agreement with respect to a business combination transaction involving a sale of Partners, it may be at a lower price. If the mergers are not completed, Partners cannot assure Partners stockholders that the risks described above will not materialize and will not materially affect the business and financial results of Partners or the market value for Partners common stock.

Partners and OceanFirst will be subject to business uncertainties and contractual restrictions while the mergers are pending.

Uncertainty about the effect of the mergers on employees and customers may have an adverse effect on Partners or OceanFirst. These uncertainties may impair Partners’ or OceanFirst’s ability to attract, retain and motivate key personnel until the mergers are completed, and could cause customers and others that deal with Partners or OceanFirst to seek to change existing business relationships with Partners or OceanFirst. Retention of certain employees by Partners or OceanFirst may be challenging while the mergers are pending, as certain employees may experience uncertainty about their future roles with OceanFirst. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Partners or OceanFirst, Partners’ business or OceanFirst’s business could be harmed. In addition, subject to certain exceptions, Partners has agreed to operate its business in the ordinary course prior to closing, and each of Partners and OceanFirst has agreed to certain restrictive covenants. See the section of this proxy statement/prospectus entitled “The Merger Agreement — Covenants and Agreements” beginning on page 73 for a description of the restrictive covenants applicable to Partners and OceanFirst.

The merger agreement limits Partners’ ability to pursue acquisition proposals and requires Partners to pay OceanFirst a termination fee of $7,400,000 under certain circumstances, including certain circumstances relating to competing acquisition proposals for Partners.

The merger agreement prohibits Partners from, directly or indirectly, initiating, soliciting, knowingly encouraging or knowingly facilitating any inquiries or proposals with respect to any acquisition proposal. For more information, see the section of this proxy statement/prospectus entitled “The Merger Agreement —Agreement Not to Solicit Other Offers” beginning on page 80. In addition, unless the merger agreement has been terminated in accordance with its terms, Partners has an unqualified obligation to submit the merger proposal to a vote by Partners stockholders even if Partners receives a proposal that the Partners board believes is superior to

 

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the mergers. For more information, see the section of this proxy statement/prospectus entitled “The Merger Agreement — Partners Stockholder Meeting and Recommendation of the Partners Board” beginning on page 79. The merger agreement also provides that Partners must pay OceanFirst a termination fee in the amount of $7,400,000 in the event that the merger agreement is terminated under certain circumstances, including Partners’ failure to abide by certain obligations not to solicit acquisition proposals or Partners’ failure to recommend that Partners stockholders approve the merger proposal. See the section of this proxy statement/prospectus entitled “The Merger Agreement — Termination Fee” beginning on page 84. These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of Partners from considering or proposing such an acquisition. Each director and executive officer of Partners, solely in his or her capacity as a Partners stockholder, has entered into a separate support agreement with OceanFirst, pursuant to which each such director and executive officer has agreed to vote in favor of the merger proposal and certain related matters and against alternative mergers and has agreed to abide by certain restrictions with respect to the transfer of such Partners stockholder’s shares of Partners common stock prior to the earliest of approval of the merger proposal by the Partners stockholders, the effective time or the date of termination of the merger agreement in accordance with its terms. As of the record date, the Partners directors that are party to these support agreements were entitled to vote in the aggregate approximately 44.67% of the outstanding shares of Partners common stock. For more information see the section of this proxy statement/prospectus entitled “The Merger Agreement — Partners Voting and Support Agreements” beginning on page 85.

The shares of OceanFirst common stock to be received by Partners stockholders as a result of the first-step merger will have different rights from the shares of Partners common stock.

The rights of Partners stockholders are currently governed by the MGCL, Partners’ articles of incorporation and Partners’ bylaws. Upon completion of the first-step merger, Partners stockholders who elect to receive the stock consideration will become OceanFirst stockholders and their rights as stockholders will then be governed by the Delaware General Corporation Law (which we refer to as the “DGCL”), OceanFirst’s certificate of incorporation and OceanFirst’s bylaws. The rights associated with Partners common stock are different from the rights associated with OceanFirst common stock. See the section of this proxy statement/prospectus entitled “Comparison of Stockholders’ Rights” beginning on page 100 for a discussion of the different rights associated with OceanFirst common stock.

Holders of Partners common stock will have a reduced ownership and voting interest after the first-step merger and will exercise less influence over management.

Partners stockholders currently have the right to vote in the election of directors of the Partners board and on other matters affecting Partners. Upon the completion of the first-step merger, each share of OceanFirst common stock that a Partners stockholder is entitled to receive in the first-step merger will represent a smaller percentage ownership of OceanFirst than the percentage ownership of Partners represented by the shares of Partners common stock held by the Partners stockholder prior to the effective time. It is currently expected that the former Partners stockholders as a group will be entitled to receive shares of OceanFirst common stock in the first-step merger constituting approximately 12% of the outstanding shares of OceanFirst common stock immediately after the first-step merger. As a result of such share issuances, the shares of OceanFirst common stock outstanding immediately prior to the effective time will represent, immediately after the effective time, approximately 88% of the outstanding shares of OceanFirst common stock immediately after the first-step merger. Because of this reduced ownership percentage, Partners stockholders will have less influence on the management and policies of OceanFirst than they now have on the management and policies of Partners.

Partners stockholders do not have dissenters’ or appraisal rights in the first-step merger.

Dissenters’ rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value of their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in

 

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connection with the extraordinary transaction. Partners stockholders are not entitled to exercise dissenters’ rights in connection with the first-step merger. For further information, see the section of this proxy statement/prospectus entitled “The Mergers — No Dissenters’ Rights” beginning on page 65.

Litigation against OceanFirst or Partners or their respective boards of directors could prevent or delay the completion of the mergers or result in the payment of damages following the completion of the mergers.

While OceanFirst and Partners believe that any claims that may be asserted by purported stockholder plaintiffs related to the mergers would be without merit, the results of any such potential legal proceedings are difficult to predict and could delay or prevent the mergers from becoming effective in a timely manner. The existence of litigation related to the mergers could affect the likelihood of obtaining the required approval of the merger proposal. Moreover, any litigation could be time consuming and expensive, could divert OceanFirst management or Partners management’s attention away from their regular business and, if any lawsuit is adversely resolved against OceanFirst, Partners or their respective board of directors, it could have a material adverse effect on the financial condition of OceanFirst, Partners or the surviving corporation in the mergers.

One of the conditions to the consummation of the integrated mergers is the absence of any order, injunction, decree, legal restraint or prohibition by any court or agency of competent jurisdiction preventing the consummation of any of the integrated mergers or any of the other transactions contemplated by the merger agreement, as described in more detail in the section “The Merger Agreement — Conditions to Complete the Integrated Mergers” beginning on page 82. Consequently, if a settlement or other resolution is not reached in any lawsuit that is filed and a claimant secures injunctive or other relief prohibiting, delaying or otherwise adversely affecting OceanFirst or Partners’ ability to complete the integrated mergers, then such injunctive or other relief may prevent the mergers from becoming effective in a timely manner or at all.

The opinion received by the Partners board from its financial advisor prior to execution of the merger agreement does not reflect changes in circumstances subsequent to the date of the fairness opinion.

Piper Sandler, Partners’ financial advisor in connection with the mergers, delivered to the Partners board its opinion, dated as of November 3, 2021, to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered and qualifications and limitations set forth in the opinion, the merger consideration in the integrated mergers was fair, from a financial point of view, to holders of Partners’ common stock. The opinion speaks only as of the date of such opinion. The opinion does not reflect changes that may occur or may have occurred after the date of the opinion, including changes to the operations and prospects of OceanFirst or Partners, changes in general market and economic conditions or regulatory or other factors. Any such changes may materially alter or affect the relative values of OceanFirst and Partners.

Estimates as to the future value of the combined company are inherently uncertain. You should not rely on such estimates without considering all of the information contained in or incorporated by reference into this proxy statement/prospectus.

Any estimates as to the future value of the combined company, including estimates regarding the earnings per share of the combined company, are inherently uncertain. The future value of the combined company will depend upon, among other factors, the combined company’s ability to achieve projected revenue and earnings expectations and to realize the anticipated synergies, all of which are subject to the risks and uncertainties, including the risks and uncertainties described in these risk factors. Accordingly, you should not rely upon any estimates as to the future value of the combined company, whether made before or after the date of this proxy statement/prospectus by OceanFirst’s and Partners’ respective management teams or others, without considering all of the information contained in or incorporated by reference into this proxy statement/prospectus.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (which we refer to as the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934 (which we refer to as the “Exchange Act”). These forward-looking statements may include: management plans relating to the mergers; the expected timing of the completion of the mergers; the ability to complete the mergers; the ability to obtain any required regulatory, stockholder or other approvals; any statements of the plans and objectives of management for future operations, products or services, including the execution of integration plans relating to the mergers; any statements of expectation or belief; projections related to certain financial metrics; and any statements of assumptions underlying any of the foregoing. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “seek,” “plan,” “will,” “would,” “could,” “target,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions or negatives of these words. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time and are beyond our control. Forward-looking statements speak only as of the date they are made. Neither OceanFirst nor Partners assumes any duty or undertaking to update or supplement any forward-looking statements. Because forward-looking statements are by their nature, to different degrees, uncertain and subject to assumptions, actual results or future events or circumstances could differ, possibly materially, from those that OceanFirst or Partners anticipated in its forward-looking statements, and future results could differ materially from historical performance. Factors that could cause or contribute to such differences include, but are not limited to, those included under the section of this proxy statement/prospectus entitled “Risk Factors” beginning on page 19 and under Item 1A “Risk Factors” in OceanFirst’s Annual Report on Form 10-K, Item 1A “Risk Factors” in Partners’ Annual Report on Form 10-K and those disclosed in OceanFirst’s and Partners’ other periodic reports filed with the SEC, as well as the possibility that expected benefits of the mergers may not materialize in the timeframe expected or at all, or may be more costly to achieve; that the mergers may not be timely completed, if at all; that prior to the completion of the mergers or thereafter, OceanFirst’s and Partners’ respective businesses may not perform as expected due to transaction-related uncertainty or other factors; that the parties are unable to successfully implement integration strategies related to the mergers; that, with respect to the mergers, required regulatory, stockholder or other approvals are not obtained or other customary closing conditions are not satisfied in a timely manner or at all; reputational risks and the reaction of the companies’ stockholders, customers, employees and other constituents to the mergers, and diversion of management time as result of matters related to the mergers. For any forward-looking statements made in this proxy statement/prospectus or in any documents, OceanFirst and Partners and claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Annualized, pro forma, projected and estimated numbers are used for illustrative purposes only, are not forecasts and may not reflect actual results.

 

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THE PARTNERS SPECIAL MEETING

This section contains information for Partners stockholders about the special meeting that Partners has called to allow its stockholders to consider and vote on the merger proposal, the compensation proposal and the adjournment proposal. Partners is mailing this proxy statement/prospectus to you, as a Partners stockholder, on or about January 19, 2022. This proxy statement/prospectus is accompanied by a notice of the special meeting and a form of proxy card that the Partners board is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting. References to “you” and “your” in this section are to Partners stockholders.

Date, Time and Place of the Special Meeting

A virtual special meeting of the stockholders of Partners is scheduled to be held online via live webcast at 10:00 a.m. Eastern Time, on March 9, 2022. No physical meeting will be held. On or about January 19, 2022, Partners will commence mailing this proxy statement/prospectus and the enclosed form of proxy card to its stockholders entitled to vote at the special meeting.

Our priority remains the safety of our stockholders, employees and community. In response to the public health concerns regarding the continuing COVID-19 pandemic, the special meeting will be a virtual meeting held on the Internet. There will be no physical location for the special meeting. Stockholders will be able to attend the special meeting online, and, with a control number, vote shares electronically and submit questions during the special meeting by visiting meetnow.global/MJ794ML at the meeting date and time.

Matters to Be Considered

At the special meeting, you, as a Partners stockholder, will be asked to consider and vote upon the following matters:

 

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the merger proposal;

 

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the compensation proposal; and

 

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the adjournment proposal.

Recommendation of the Partners Board

The Partners board has determined that the merger agreement and the transactions contemplated thereby, including the first-step merger, are advisable, fair to and in the best interests of Partners and its stockholders, has approved the merger agreement and the first-step merger and unanimously recommends that the Partners stockholders vote “FOR” the merger proposal, “FOR” the compensation proposal and “FOR” the adjournment proposal. See the section of this proxy statement/prospectus entitled “The Mergers — Partners’ Reasons for the Mergers; Recommendation of the Partners Board” beginning on page 26 for a more detailed discussion of the Partners board’s recommendation.

Record Date and Quorum

The Partners board has fixed the close of business on December 29, 2022 as the record date for determining its stockholders entitled to receive notice of, and to vote at, the special meeting.

As of the record date, there were 17,940,190 common stock outstanding and entitled to notice of, and to vote at, the special meeting held by 579 holders of record. Each share of Partners common stock entitles the holder to one vote at the special meeting on each proposal to be considered at the special meeting.

The presence at the special meeting of the holders of shares of Partners common stock entitled to cast a majority of the votes at a meeting of stockholders will constitute a quorum at the meeting for the transaction of business at

 

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the special meeting. Abstentions, if any, will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum. Virtual attendance at the special meeting constitutes “in person” attendance for purposes of establishing a quorum. Once a share is represented for any purpose at the special meeting, it is deemed present for quorum purposes for the remainder of the special meeting or any adjournment of the special meeting.

Broker non-votes, if any, will not be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum because it is expected that all proposals to be voted on at the special meeting will be “non-routine” matters (i.e., matters with respect to which banks, brokers and other nominees do not have discretion to vote shares of Partners common stock).

Required Vote; Treatment of Abstentions, Broker Non-Votes and Failure to Vote

The merger proposal:

 

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Standard: Approval of the merger proposal requires the affirmative vote of at least two-thirds of all of the votes entitled to be cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting.

 

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Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy, fail to vote by telephone or the internet, or fail to vote in person at the special meeting, or fail to instruct your bank, broker or other nominee how to vote with respect to the merger proposal, it will have the same effect as a vote “AGAINST” the merger proposal.

The compensation proposal:

 

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Standard: Approval of the compensation proposal requires the affirmative vote of a majority of the votes cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting.

 

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Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy, fail to vote by telephone or the internet, or fail to vote in person at the special meeting, or fail to instruct your bank, broker or other nominee how to vote with respect to the compensation proposal, it will have no effect on the vote with respect to the compensation proposal.

The adjournment proposal:

 

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Standard: The adjournment proposal will be approved if a majority of the votes cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting vote in favor of such proposal.

 

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Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy, fail to vote by telephone or the internet, or fail to vote in person at the special meeting, or fail to instruct your bank, broker or other nominee how to vote with respect to the adjournment proposal, it will have no effect on the vote with respect to the adjournment proposal.

Shares Held by Officers and Directors

As of the close of business on the record date, Partners’ directors and executive officers and their affiliates were entitled to vote an aggregate of 8,047,503 shares of Partners common stock at the special meeting, which represents approximately 44.86% of the issued and outstanding shares of Partners common stock entitled to vote at the special meeting. In addition, as described in the section of this proxy statement/prospectus entitled “Security Ownership of Certain Beneficial Owners and Management of Partners,” as of the close of business on the record date, Partners’ directors and executive officers and their affiliates beneficially owned an aggregate of 8,082,547 shares of Partners common stock.

 

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Each director and executive officer of Partners, solely in his or her capacity as a Partners stockholder, has entered into a support agreement with OceanFirst, pursuant to which each such stockholder has agreed to vote in favor of the merger proposal and certain related matters and against alternative transactions. As of the record date, the Partners stockholders that are party to the support agreements were entitled to vote in the aggregate approximately 44.67% of the outstanding shares of Partners common stock. For more information regarding the support agreements, see the section of this proxy statement/prospectus entitled “The Merger Agreement — Partners Voting and Support Agreement” beginning on page 85.

As of the record date, OceanFirst beneficially held no shares of Partners common stock.

Voting of Proxies; Incomplete Proxies

Any Partners stockholder may vote by proxy or in person at the special meeting. If you hold your shares of Partners common stock in your name as a stockholder of record, to submit a proxy you, as a Partners stockholder, may use one of the following methods:

 

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Through the Internet by visiting the website indicated on your proxy card and following the instructions.

 

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By telephone by following the instructions on your proxy card.

 

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Complete and return the proxy card in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.

Partners requests that its stockholders vote by telephone or over the Internet prior to midnight on March 8, 2022 or by completing and signing the accompanying proxy card and returning it to Partners as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy card is returned properly executed, the shares of Partners common stock represented by it will be voted at the special meeting in accordance with the instructions contained on the proxy card. If any proxy card is returned signed but without indication as to how to vote, the shares of Partners common stock represented by the proxy card will be voted as recommended by the Partners board.

Every Partners stockholder’s vote is important. Accordingly, each stockholder should sign, date and return the enclosed proxy card, or, prior to midnight Eastern Time on March 8, 2022, vote by telephone or via the Internet, whether or not the stockholder plans to attend the special meeting in person. Sending in your proxy card or voting by telephone or on the Internet will not prevent you from voting your shares personally at the virtual special meeting, since you may revoke your proxy at any time before it is voted.

Shares Held in “Street Name”

If you are a Partners stockholder and your shares are held in “street name” through a bank, broker or other nominee, you must provide the record holder of your shares with instructions on how to vote the shares. Please follow the voting instructions provided by the bank, broker or other nominee. Stockholders should check the voting form used by that firm to determine whether you may vote by telephone or the Internet. You may not vote shares held in street name by returning a proxy card directly to Partners or by voting in person at the special meeting unless you obtain a “legal proxy” from your broker, bank or other nominee.

Furthermore, brokers, banks or other nominees who hold shares of Partners common stock on behalf of their customers will not vote your shares of Partners common stock or give a proxy to Partners to vote those shares with respect to any of the proposals (including the merger proposal) being considered at the special meeting without specific instructions from you because brokers, banks and other nominees do not have discretionary voting power on such proposals. A broker non-vote occurs when the broker holder of record is unable to vote on a proposal because the proposal is non-routine and the beneficial owner does not provide any instructions. All of the proposals currently scheduled for consideration at the special meeting are “non-routine” matters.

 

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Revocability of Proxies and Changes to a Partners Stockholder’s Vote

You have the power to change your vote at any time before your shares of Partners common stock are voted at the special meeting by:

 

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voting again by telephone or through the Internet or completing a new proxy card with a later date — your latest vote will be counted; or

 

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filing with the Secretary of Partners written notice of such revocation.

Attendance at the special meeting will not in and of itself constitute a revocation of a proxy.

If you choose to send a completed proxy card bearing a later date than your original proxy card, the new proxy card must be received before the beginning of the special meeting.

If you have instructed a bank, broker or other nominee to vote your shares of Partners common stock, you must follow the directions you receive from your bank, broker or other nominee in order to change or revoke your vote.

Solicitation of Proxies

Partners will pay for the solicitation of proxies from the Partners stockholders. In addition to soliciting proxies by mail, Regan & Associates, Partners’ proxy solicitor, will assist Partners in soliciting proxies from its stockholders. Partners has agreed to pay $20,000 plus out of pocket expenses for these services. Partners will, upon request, reimburse banks, brokers and other nominees for their expenses in sending proxy materials to their customers who are beneficial owners and obtaining their voting instructions. Additionally, directors, officers and employees of Partners may solicit proxies personally and by telephone. None of these persons will receive additional or special compensation for soliciting proxies.

Attending and Participating in the Special Meeting

The special meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively online by webcast. You are entitled to attend the special meeting only if you were a Partners stockholder as of the close of business on December 29, 2021, the record date, or if you hold a valid proxy for the special meeting. No physical meeting will be held.

All Partners stockholders, including holders of record and stockholders who hold their shares through banks, brokers or other nominees, are invited to attend the special meeting. If you are not a Partners stockholder of record, you must obtain a proxy executed in your favor from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the special meeting.

You will be able to attend the special meeting online by webcast and submit your questions during the meeting by visiting meetnow.global/MJ794ML. You also will be able to vote your shares online by attending the special meeting by webcast.

To attend the special meeting and be able to submit questions and to vote, you will need to review the information, including the control number, included on your proxy card or on the instructions that accompany your proxy materials. If you hold your shares through an intermediary, such as a bank or broker, you must register in advance using the instructions provided in accompanying proxy materials. If you do not have your control number, you may attend the special meeting as a guest (non-stockholder), but you will not have the ability to vote your shares or submit questions during the special meeting.

The special meeting will begin promptly at 10:00 a.m. Eastern Time, on March 9, 2022. We encourage you to access the meeting 10-15 minutes prior to the start time to leave ample time for the check in.

 

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Registration for the Special Meeting

Registered Stockholders. If you are a registered stockholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the special meeting online by webcast. However, you will need your control number located on your proxy card. Please follow the instructions on your proxy card and accompanying proxy materials that you received.

Other Stockholders. If you hold your shares through an intermediary, such as a bank, broker or other nominee, then that organization is considered the stockholder of record and the shares are considered held in “street name.” If you hold your shares in street name and you wish to attend the special meeting online, you must register in advance to attend the meeting online and to vote during the meeting.

To register to attend the special meeting online by webcast you must submit proof of your proxy power (i.e., legal proxy or broker’s proxy card) reflecting your holdings of shares of Partners common stock, along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and directed to Computershare by one of the following methods:

Mail: Send a copy of your legal proxy, along with your name and email address, to

Computershare

Attention: Partners Bancorp Legal Proxy

P.O. Box 43001

Providence, RI 02940-3001

Email: Forward the email from your bank, broker or other nominee, or attach an image of your legal proxy, to legalproxy@computershare.com, and include your name and email address. Requests for registration must include the subject line “Legal Proxy.”

Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m. Eastern Time, on March 4, 2022. You will receive a confirmation email from Computershare of your registration and a control number that you can use to vote during the special meeting.

Questions

Stockholders may submit questions either before or during the special meeting by logging into the webcast using their control number and following the instructions to submit a question. Questions pertinent to the special meeting proposals will be answered during the meeting after voting is completed, subject to time constraints. A Partners’ representative will facilitate the process by posing questions to our management team. Questions or comments that relate to proposals that are not properly before the special meeting, relate to matters that are not proper subject for action by stockholders, are irrelevant to Partners’ business, relate to material non-public information of Partners, relate to personal concerns or grievances, are derogatory to individuals or that are otherwise in bad taste, are in substance repetitious of a question or comment made by another stockholder, or are not otherwise suitable for the conduct of the special meeting as determined in the sole discretion of Partners, will not be answered. Questions relevant to special meeting matters that Partners does not have time to answer during the special meeting will be posted to Partners’ website following the special meeting.

Technical Support

Support will be available to assist with any technical difficulties you may have in accessing the virtual special meeting. If you encounter any difficulties, you can utilize the link available on the log-in webpage for the special meeting at meetnow.global/MJ794ML or you may call (888) 724-2416 (local) or +1(781) 575-2748 (international) beginning at 9:00 a.m. Eastern Time on March 9, 2022.

If there are any technical issues in convening or hosting the special meeting, we will promptly post information to Partners’ website, www.partnersbancorp.com, under the heading “Special Meeting and Proxy Statement/Prospectus,” including information on when the special meeting will be reconvened.

 

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Assistance

If you need assistance in completing your proxy card, have questions regarding the special meeting or would like additional copies of this proxy statement/prospectus, please contact Partners’ proxy solicitor, Regan & Associates, at the following address: 505 Eighth Avenue, Suite 800, New York, New York 10018, or by telephone at (212) 587-3005.

 

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PARTNERS PROPOSALS

Proposal No. 1 — The Merger Proposal

Partners is asking its stockholders to approve the merger agreement and the transactions contemplated thereby, including the first-step merger. Partners stockholders should read this proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the first-step merger and the terms and conditions thereof. A copy of the merger agreement is attached to this proxy statement/prospectus as Annex A.

After careful consideration, the Partners board approved the merger agreement and the transactions contemplated thereby, including the first-step merger, having determined that the merger agreement and the transactions contemplated thereby, including the first-step merger, were advisable, fair to and in the best interests of Partners and its stockholders. See the section of this proxy statement/prospectus entitled “The Mergers — Partners’ Reasons for the Mergers; Recommendation of the Partners Board” beginning on page 42 for a more detailed discussion of the Partners board’s recommendation.

Required Vote. Approval of the merger proposal requires the affirmative vote of at least two-thirds of all of the votes entitled to be cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting. If you mark “ABSTAIN” for the merger proposal on your proxy card, fail either to submit a proxy card or vote by telephone or the internet, or fail to vote in person at the special meeting, it will have the same effect as a vote “AGAINST” the merger proposal.

The Partners board unanimously recommends a vote “FOR” the merger proposal.

Proposal No. 2 — The Compensation Proposal

In accordance with Section 14A of the Exchange Act, Partners is providing its stockholders with the opportunity to vote to approve, on an advisory, non-binding basis, the merger-related compensation that will or may become payable to its named executive officers as described in “The Mergers — Interests of Partners’ Directors and Executive Officers in the Mergers” beginning on page 42.

Partners stockholders are being asked to approve the following resolution on an advisory (non-binding) basis:

“RESOLVED, that the compensation that may be paid or become payable to Partners’ named executive officers in connection with the first-step merger, and the agreement or understandings pursuant to which such compensation may be paid or become payable, in each case, as disclosed pursuant to Item 402(t) of Regulation S-K in the section of the proxy statement/prospectus entitled “Interests of Partners’ Directors and Executive Officers in the Mergers” is hereby APPROVED.”

Approval of this separate advisory (non-binding) proposal is not a condition to completion of the mergers. The vote is an advisory vote and will not be binding on Partners or the surviving corporation in the mergers. If the integrated mergers are completed, the merger-related compensation may be paid to Partners’ named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements and the outcome of this advisory (non-binding) vote will not affect Partners’ or OceanFirst’s obligations to make these payments even if Partners stockholders do not approve, by advisory (non-binding) vote, this proposal.

The vote on the merger-related named executive officer compensation is separate from the vote to approve the merger agreement. You may vote “against” the merger-related named executive officer compensation and “for” approval of the merger agreement and vice versa. You also may abstain from this proposal and vote on the merger agreement proposal and vice versa.

 

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Required Vote. Approval of the compensation proposal requires the affirmative vote of a majority of the votes cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting. If you mark “ABSTAIN” for the merger proposal on your proxy card, fail either to submit a proxy card or vote by telephone or the internet, or fail to vote in person at the special meeting, it will have no effect on the vote with respect to the compensation proposal.

The Partners board unanimously recommends a vote “FOR” the compensation proposal.

Proposal No. 3 — The Adjournment Proposal

The special meeting may be adjourned to another time or place, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger proposal.

If, at the special meeting, the number of shares of Partners common stock present or represented by proxy and voting in favor of the merger proposal is insufficient to approve the merger proposal, Partners intends to move to adjourn the special meeting in order to enable the Partners board to solicit additional proxies for approval of the merger proposal. In that event, Partners will ask its stockholders to vote upon the adjournment proposal, but not the merger proposal or the compensation proposal.

In this proposal, Partners is asking its stockholders to authorize the holder of any proxy solicited by the Partners board on a discretionary basis to vote in favor of adjourning the special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from Partners stockholders who have previously voted. If the date of the adjournment is not announced at the special meeting or a new record date is fixed for the adjourned meeting, a new notice of the adjourned meeting will be given to each Partners stockholder of record entitled to vote at the adjourned meeting, unless the meeting has been adjourned for less than a total of 120 days, in which case no notice of the adjourned meeting is required to be given to stockholders.

Required Vote. Approval of the adjournment proposal requires the affirmative vote of a majority of the votes cast at the special meeting by the holders of shares of Partners common stock entitled to vote at the special meeting. If you mark “ABSTAIN” for the merger proposal on your proxy card, fail either to submit a proxy card or vote by telephone or the internet, or fail to vote in person at the special meeting, it will have no effect on the vote with respect to the adjournment proposal.

The Partners board unanimously recommends a vote “FOR” the adjournment proposal.

Other Matters to Come Before the Special Meeting

As of the date of this proxy statement/prospectus, the Partners board is not aware of any matters that will be presented for consideration at the special meeting other than described in this proxy statement/prospectus. If, however, the Partners board properly brings any other matters before the special meeting, the persons named in the proxy will vote the shares represented thereby in accordance with the recommendation of the Partners board on any such matter (unless the Partners stockholder checks the box on the proxy card to withhold discretionary voting authority).

 

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INFORMATION ABOUT OCEANFIRST

OceanFirst is incorporated under Delaware law and serves as the holding company for OceanFirst Bank. OceanFirst common stock is listed on the Nasdaq under the symbol “OCFC.” OceanFirst Bank, founded in 1902, is a $11.8 billion regional bank operating throughout New Jersey and in the major metropolitan markets of Philadelphia, New York, Baltimore, Washington D.C., and Boston. OceanFirst Bank delivers commercial and residential financing, treasury management, trust and asset management, and deposit services, and is one of the largest and oldest community-based financial institutions headquartered in New Jersey.

On May 2, 2016, OceanFirst completed the Cape Bancorp, Inc. acquisition. Total consideration paid for the Cape Bancorp, Inc. acquisition was $196.4 million. On November 30, 2016, OceanFirst completed the Ocean Shore Holding Co. acquisition. Total consideration paid for the Ocean Shore Holding Co. acquisition was $180.7 million. On January 31, 2018, OceanFirst completed the Sun Bancorp, Inc. acquisition. Total consideration paid for the Sun Bancorp, Inc. acquisition was $ 474.9 million. On January 31, 2019, OceanFirst completed the Capital Bank of New Jersey acquisition. Total consideration paid for the Capital Bank of New Jersey acquisition was $76.96 million. On January 1, 2020, OceanFirst completed the Two River Bancorp acquisition. Total consideration paid for the Two River Bancorp acquisition was $197.0 million. On January 2, 2020, OceanFirst completed the Country Bank Holding Company, Inc. acquisition. Total consideration paid for the Country Bank Holding Company, Inc. acquisition was $112.8 million.

OceanFirst’s principal executive office is located at 110 West Front Street, Red Bank, New Jersey 07701 and its telephone number at that location is (732) 240-4500. OceanFirst’s website is www.oceanfirst.com. Additional information about OceanFirst and its subsidiaries is included in documents incorporated by reference in this proxy statement/prospectus. See the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 115.

 

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INFORMATION ABOUT MERGER SUB

Merger sub is a Maryland corporation and a wholly-owned subsidiary of OceanFirst. Merger sub was formed by OceanFirst for the sole purpose of consummating the first-step merger.

 

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INFORMATION ABOUT PARTNERS

Partners is a Maryland corporation and multi-bank holding company for Delmarva Bank, a Delaware chartered state member bank, which is headquartered in Seaford, Delaware, and Virginia Partners Bank, a Virginia chartered state member bank, which is headquartered in Fredericksburg, Virginia. Partners was incorporated on January 6, 1988 under the general corporation law of Maryland for the purpose of becoming a bank holding company for Delmarva Bank. Partners acquired Virginia Partners Bank on November 15, 2019.

Delmarva Bank currently operates 15 full service banking offices, located in Delmar, Salisbury and Ocean City, Maryland and Laurel, Dagsboro, and Rehoboth, Delaware, and Cherry Hill, Evesham and Moorestown, New Jersey. Delmarva Bank’s branches in Cherry Hill, Evesham, and Moorestown, New Jersey are operated under the name “Liberty Bell Bank, a Division of The Bank of Delmarva.” Delmarva Bank’s main office is located at 910 Norman Eskridge Highway, Seaford, Delaware 19973.

Virginia Partners Bank has three full service banking offices in Fredericksburg, Virginia and one full service branch and commercial banking office in Reston, Virginia. In Maryland, Virginia Partners Bank trades under the name “Maryland Partners Bank (a division of Virginia Partners Bank),” and operates a full service branch and commercial banking office in La Plata, Maryland and a loan production office in Annapolis, Maryland. Virginia Partners Bank’s main office is located at 410 William Street, Fredericksburg, Virginia 22401.

Partners common stock is listed on the Nasdaq Capital Market under the symbol “PTRS.”

Partners principal executive offices are located at 2245 Northwood Drive, Salisbury, Maryland 21801 and its telephone number at that location is (410) 548-1100. Partners’ website is https://www.partnersbancorp.com/. Additional information about Partners and its subsidiaries is included in documents incorporated by reference in this proxy statement/prospectus. See the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 115.

 

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THE MERGERS

The following discussion contains certain information about the mergers. The discussion is subject, and qualified in its entirety by reference, to the merger agreement attached as Annex A to this proxy statement/prospectus and incorporated herein by reference. We urge you to read carefully this entire proxy statement/prospectus, including the merger agreement attached as Annex A, for a more complete understanding of the mergers.

Structure of the Mergers

Each of the OceanFirst board and the Partners board has approved the merger agreement. The merger agreement provides that (i) merger sub will merge with and into Partners, with Partners as the surviving corporation in the first-step merger and as a wholly-owned subsidiary of OceanFirst, (ii) immediately following the effective time of the first-step merger, Partners will merge with and into OceanFirst, with OceanFirst as the surviving corporation, (iii) immediately following the consummation of the integrated mergers, Delmarva Bank will merge with and into OceanFirst Bank, with OceanFirst Bank as the surviving bank, and (iv) immediately following the effective time of the Delmarva Bank merger, Virginia Partners Bank will merge with and into OceanFirst Bank, with OceanFirst Bank as the surviving bank.

At the effective time of the first-step merger, each outstanding share of Partners common stock that is issued and outstanding immediately prior to the effective time of the first-step merger, except for exception shares, will be converted into the right to receive either (a) 0.4512 shares of OceanFirst common stock or (b) $10.00 in cash, in each case, at the election of the holder of Partners common stock, subject to (x) a maximum of forty percent (40%) of the shares of Partners common stock being convertible into cash and (y) the allocation and proration provisions of the merger agreement. No fractional shares, if any, of OceanFirst common stock will be issued in connection with the first-step merger.

Partners stockholders are being asked to approve the merger agreement and transactions contemplated thereby, including the first-step merger. See the section of this proxy statement/prospectus entitled “The Merger Agreement” beginning on page 67 for additional and more detailed information regarding the legal documents that govern the mergers, including information about the conditions to the completion of the mergers and the provisions for terminating or amending the merger agreement.

Background of the Mergers

As part of the ongoing oversight and management of their respective companies, each of the OceanFirst and Partners boards and executive management teams regularly review and assess their respective companies’ long-term strategic goals and opportunities and their respective companies’ performance and prospects in light of competitive and other relevant developments, all with the goal of enhancing stockholder value. For each company, these reviews have included periodic discussions regarding potential transactions that could further their strategic objectives and the potential benefits and risks of any such transactions, and at certain points in the past, have resulted in completed strategic transactions.

The Partners board has regularly reviewed and discussed Partners’ business strategy, performance and prospects in the context of the national and local economic environment, developments in the competitive landscape, and also in the context of the share exchange transaction that resulted in the combination of Virginia Partners Bank and Delmar Bancorp (which survived and was renamed Partners Bancorp) in 2019. Among other things, these reviews and discussions have included possible strategic transactions available to Partners, such as potential acquisitions of, and business combinations with, other financial institutions. Certain of these reviews and discussions included analyses of the mergers and acquisitions environment, including multiples and premiums being paid, and an assessment of potential partners for Partners. In connection with the evaluation of these strategic alternatives, members of the Partners executive management team and certain directors of Partners, including Lloyd B. Harrison, III, Chief Executive Officer of Partners, Director Michael W. Clarke, and Director Kenneth R. Lehman, have had informal discussions with representatives of other financial institutions.

 

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During Spring 2021, the Partners board and Partners’ executive management engaged in a series of discussions during executive sessions of regularly scheduled meetings of the Partners board regarding Partners’ corporate strategy, including the then-planned transition of executive leadership from Mr. Harrison to Mr. John W. Breda, President and Chief Operating Officer of Partners, Partners’ strategy as an independent financial institution, and potential strategic transactions.

In March and April 2021, Mr. Clarke had a series of conversations with representatives of a bank (which we refer to as “Bank 1”) that expressed interest in combining with Partners through a strategic transaction. After Mr. Clarke updated the Partners board and executive management team, Partners and Bank 1 executed mutual nondisclosure agreements. During April 2021, Mr. Harrison, Mr. Jeffrey F. Turner, Chairman of the Partners board, and Mr. Clarke met with the chairman and the chief executive officer of Bank 1 to discuss each company, their respective businesses, strategies and financial performance, and the potential benefits of a strategic combination. Partners and Bank 1 continued preliminary financial, operational and social analyses related to a potential strategic combination into early May 2021, at which time Bank 1 and Partners mutually agreed to cease discussions regarding a potential transaction and to terminate the nondisclosure agreements.

During late May and early June 2021, Mr. Harrison engaged in a series of discussions with Chairman Turner, Mr. George P. Snead, Vice Chairman of the Partners board, Mr. Lehman and Mr. Clarke regarding Partners, its current operations and strategy, and its strategic alternatives. Following these discussions, Mr. Harrison discussed these topics with a representative of Piper Sandler and, with the support of Chairman Turner, Vice Chairman Snead, Mr. Lehman and Mr. Clarke, requested that Piper Sandler begin to undertake an analysis of strategic alternatives available to Partners, including conducting a “market check” with respect to a potential strategic merger or a sale of the company.

During June 2021, representatives of Piper Sandler began preparing a confidential information package for possible distribution to potential counterparties. In early June, conversations between Bank 1 and Partners resumed and representatives of each company agreed to reinstate the original nondisclosure agreement between the parties, after which representatives of Piper Sandler met, on behalf of Partners, with representatives of an investment banking firm representing Bank 1 to discuss a potential strategic transaction. Also in June 2021, Mr. Harrison, Mr. Breda, Chairman Turner, Vice Chairman Snead, Mr. Lehman, Mr. Clarke, Mr. Adam Sothen, Chief Financial Officer of Partners, and Ms. Betsy J. Eicher, Chief Accounting Officer of Partners, met multiple times to discuss the review of strategic alternatives, and Messrs. Harrison, Breda, Snead and Turner held individual meetings with Partners directors regarding these discussions.

On July 28, 2021, representatives of Piper Sandler made a presentation to the Partners board regarding strategic alternatives potentially available to Partners, as well as a proposed “market check” process to identify potential merger or acquisition partners. The Partners board authorized Piper Sandler to proceed with the “market check” process and, between July 28, 2021 and late August 2021, representatives of Piper Sandler discussed a potential strategic transaction involving Partners with 31 potential counterparties, 14 of which executed nondisclosure agreements and 3 of which, including Bank 1, submitted preliminary non-binding indications of interest (each of which we refer to as an “IOI”) by the end of August, 2021.

On July 30, 2021, OceanFirst was approached by representatives of Piper Sandler and received a teaser presentation regarding Partners’ business. On August 18, 2021, OceanFirst executed a mutual nondisclosure agreement with Partners and received a confidential information package from representatives of Piper Sandler. OceanFirst reviewed the confidential information package and engaged in internal discussions over the following week, and, on or about August 26, 2021, OceanFirst’s management began preparing an IOI to communicate to Partners its interest in acquiring Partners.

On September 2, 2021, at a special meeting of the Partners board, representatives of Piper Sandler presented the results of the “market check” process to the Partners board. Representatives of Piper Sandler also presented to the Partners board (a) an analysis of Partners’ stand-alone business operations and financial projections, and (b) an

 

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analysis of market trends and dynamics in financial institutions mergers and acquisitions. On or around August 27, 2021, Bank 1 submitted an IOI with respect to a reverse merger transaction, which would have paid Partners stockholders per share consideration of approximately $9.25 (based on then-current market prices) comprised of shares of Bank 1 stock and cash of $1.43 per share. On or around August 27, 2021, another financial institution (which we refer to as “Bank 2”) submitted an IOI to acquire Partners, which would have paid Partners stockholder per share consideration of approximately $10.14 comprised only of shares of Bank 2 (based on then-current market prices).

On or around August 27, 2021, OceanFirst submitted an initial IOI to acquire Partners. OceanFirst’s initial IOI contemplated, among other things, an indicative purchase price of $10.00 per Partners common stock in the form of an election for Partners stockholders to receive either (i) 0.4737 shares of OceanFirst common stock or (ii) $10.00 in cash for each share of Partners common stock, subject to proration and allocation so that seventy percent (70%) of the shares of Partners common stock would receive stock consideration and thirty percent (30%) of the shares of Partners common stock would receive cash consideration. After discussion of the IOI with representatives of Piper Sandler, Partners requested that OceanFirst revise the IOI to provide that the form of consideration for each share of Partners common stock to be one hundred percent (100%) OceanFirst common stock with an option for Partners stockholders to elect to receive cash for up to forty percent (40%) of the outstanding shares of Partners common stock.

On or around September 2, 2021, OceanFirst submitted a revised IOI to acquire Partners, which contemplated, among other things, an indicative purchase price of $10.00 per Partners common stock in the form of an election for Partners stockholders to receive either (i) 0.4737 shares of OceanFirst common stock or (ii) $10.00 in cash for each share of Partners common stock, subject to no more than forty percent (40%) of Partners common stock being entitled to receive the cash consideration. OceanFirst’s IOI also proposed an exclusivity period of 45 days during which the parties would conduct customary due diligence, engage in discussions about the value of combining their companies and negotiate transaction documents. Representatives of Piper Sandler discussed each received IOI in detail with the Partners board and, after significant deliberation, the Partners board instructed Piper Sandler to request that OceanFirst increase the percentage of merger consideration that would be paid to Partners’ stockholders in shares of OceanFirst common stock, with the intent that an increase in the percentage of stock would increase in merger consideration payable to Partners stockholders.

On September 7, 2021, at a special meeting of the Partners board, Christopher D. Maher, President and Chief Executive Officer of OceanFirst, met via video conference with the Partners board to discuss OceanFirst, its operations and strategy, its corporate culture, and how OceanFirst proposes to capitalize on a potential acquisition of Partners. On September 8, 2021, the Partners board convened a special meeting to discuss the strategic alternatives available to Partners and the three IOIs that had been received, and at such meeting representatives of Troutman Pepper discussed with the Partners board each director’s fiduciary duties and the applicable standard of director conduct under Maryland law.

On September 13, 2021, the Partners board held a special meeting to discuss the IOIs that had been received, the financial characteristics of a strategic transaction with the interested potential counterparties, and the other strategic alternatives available to Partners. The Partners board discussed strategic alternatives related to, among other things, organic growth by Partners on a stand-alone basis, one or more acquisitions of smaller or similarly-sized financial institutions, or a sale of Partners which could follow the process initiated by Piper Sandler at Partners’ request. During this meeting, the Partners board discussed OceanFirst’s attributes as a potential acquiror of Partners, including the strategic fit between the companies, the growth and financial performance potential of the combined financial institution, and the benefit of shareholders having the option to elect to receive a significant portion of their merger consideration in cash as provided in OceanFirst’s IOI. After considering the strategic alternatives available to Partners, the Partners board unanimously determined that it would be in the best interests of Partners and its stockholders to execute the OceanFirst IOI in the form received on September 2, 2021. Partners and OceanFirst exchanged the executed IOI on the evening of September 13, 2021. Pursuant to this IOI, OceanFirst and Partners agreed to a limited period of exclusivity through October 28, 2021 to negotiate a transaction.

 

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Beginning on September 14, 2021, the executive management teams of Partners and OceanFirst began due diligence and reverse due diligence reviews in connection with the proposed merger. During September 2021 and October 2021, the management teams of Partners and OceanFirst engaged in multiple meetings to discuss key diligence topics including but not limited to financial performance, employee matters, the loan portfolios and asset quality, key markets, and integration matters. Also during September and October 2021, OceanFirst reviewed detailed information regarding Partners, including but not limited to Partners’ loan and securities portfolios, credit quality, and employee benefits, which information was made available via a virtual data room. On September 22, 2021, Raymond James, OceanFirst’s financial advisor, made a presentation to OceanFirst’s board regarding the potential transaction with Partners based on the due diligence reviews to date.

During September and October 2021, Partners’ executive management team, with assistance of representatives of Piper Sandler and Troutman Pepper, analyzed the impact of a potential strategic transaction on a team of commercial bankers that was recently hired by Partners, and on Mr. Clarke who had made and continued to make extraordinary contributions to this recently-hired team on behalf of Partners’ leadership. During September and October 2021, with significant assistance of Partners’ legal and financial advisors, Partners designed and discussed with OceanFirst a program of cash and stock bonuses to reward these individuals’ contributions and encourage these individuals to remain with the combined company, and recognize extensive discussions that occurred during the first nine months of 2021 regarding equity awards between Partners and these individuals to incentivize performance with respect to the Northern Virginia operations of Virginia Partners Bank.

On October 13, 2021, representatives of Skadden, OceanFirst’s legal counsel, provided representatives of Troutman Pepper, Partners’ legal counsel, a draft merger agreement.

On October 15, 2021, members of the respective OceanFirst and Partners management teams convened an in-person meeting in Baltimore, Maryland to discuss the proposed transaction, information about each company and, in the case of Partners, each of Virginia Partners Bank and The Bank of Delmarva, and strategic planning considerations.

On October 18, 2021, Mr. Maher and Mr. Harrison met telephonically to discuss the progress of due diligence and reverse due diligence, and discussed the favorable review to-date of Partners’ credit quality. Mr. Maher and Mr. Harrison discussed the transaction’s timeline as well as potential employment arrangements for certain key officers of Partners that OceanFirst viewed as important to the transaction’s success.

On October 20, 2021, OceanFirst’s senior management discussed the potential transaction in detail during its management offsite.

On October 20, 2021, representatives of Troutman Pepper provided representatives of Skadden with an updated version of the merger agreement. From the period beginning October 24, 2021 through November 4, 2021, representatives of Skadden and Troutman Pepper exchanged several additional drafts of the merger agreement and related transaction documents.

On October 25, 2021, Mr. Maher and Mr. Harrison met telephonically to discuss matters related to OceanFirst’s due diligence review and post-merger employment of key executives of Partners. During this meeting, Mr. Maher proposed to reduce the exchange ratio for the stock consideration from 0.4737 to a preliminary range of 0.44 to 0.45, largely due to OceanFirst’s due diligence review and updated cost projections. Mr. Harrison communicated OceanFirst’s requested reduction to the exchange ratio to Mr. Breda, Mr. Turner and Mr. Snead, while Mr. Maher communicated the same to Mr. Lehman.

On October 26, 2021, members of Partners’ executive management team and the Partners board participated in multiple meetings and discussions with representatives of Piper Sandler and Troutman Pepper regarding the requested revision to the exchange ratio. Following these meetings, representatives of Piper Sandler prepared updated financial models to compare the value of the merger consideration, based on both the original and revised exchange ratios, and in light of recent increases in the price of OceanFirst common stock.

 

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On October 27, 2021, at a regularly scheduled meeting of the Partners board, the Partners board reviewed in detail the updated financial analysis prepared by Piper Sandler. During this meeting, the Partners board discussed the updated exchange ratio proposed by OceanFirst and, after deliberation and advice from Partners’ financial and legal advisors, instructed representatives of Piper Sandler to request an exchange ratio of 0.4512. Also at this meeting of the Partners board, representatives of Troutman Pepper presented a detailed summary of the terms of the merger agreement and related transaction documents, including the voting and support agreements, and an update on the negotiations of select key transaction terms with OceanFirst and its legal counsel. Representatives of Troutman Pepper also discussed with the Partners board the fiduciary duties that each Partners director owes to Partners stockholders in the context of the proposed mergers. Partners’ senior management team and representatives of Troutman Pepper discussed with the Partners board the results of the due diligence and reverse due diligence reviews performed by OceanFirst and Partners, respectively, with respect to the proposed mergers.

In the morning of October 27, 2021, the OceanFirst board convened a special meeting to discuss the proposed mergers and review the terms of the proposed merger agreement and the first-step merger with Partners. Members of the OceanFirst senior management team were in attendance and representatives of Raymond James also participated in the meeting. At this meeting, representatives from Raymond James reviewed the financial aspects of the proposed transactions, and the members of the OceanFirst senior management team also presented a due diligence memorandum and a transaction risk assessment document. Thereafter, the OceanFirst board temporarily adjourned the Company meeting to discuss the proposed mergers.

Also on October 27, 2021, in light of continuing discussions regarding the exchange ratio, and OceanFirst’s agreement to increase the exchange ratio to 0.4512, OceanFirst and Partners agreed to extend the exclusivity period under the letter of intent from October 28, 2021 to November 5, 2021.

From October 27, 2021 to November 3, 2021, OceanFirst and Partners, with the assistance of their respective legal and financial advisors, continued to negotiate the outstanding terms of the merger agreement and related transaction documents, including the voting and support agreements. During this period the parties exchanged several additional drafts of the merger agreement and related transaction documents, including the voting and support agreements and the disclosure schedules.

The OceanFirst board reconvened its special meeting to discuss the proposed mergers on November 3, 2021. Representatives of Raymond James reviewed the financial aspects of the proposed transactions, including the financial impact of the updated exchange ratio of 0.4512 and rendered to the OceanFirst board an opinion to the effect that, as of the date and subject to the procedures followed, assumptions made and matters considered, and qualifications and limitations on the review undertaken by Raymond James, the proposed mergers were fair, from a financial point of view, to OceanFirst stockholders. After an extensive discussion regarding the proposed mergers and the proposed merger agreement, including a consideration of factors described in the section of this proxy statement/prospectus entitled “The Mergers — OceanFirst’s Reasons for the Mergers,” the OceanFirst board determined that the merger agreement the mergers and the other transactions contemplated thereby were in the best interest of OceanFirst and its stockholders, and the OceanFirst board approved and adopted the merger agreement, the mergers and the other transactions contemplated thereby.

In the morning of November 3, 2021, the Partners board convened a special meeting to discuss the proposed mergers and review the terms of the proposed merger agreement and the first-step merger with OceanFirst. Members of the Partners senior management team were in attendance and representatives of Piper Sandler and Troutman Pepper also participated in the meeting. The Partners board were provided with copies of the merger agreement, the plan of merger, the merger agreements for the bank mergers, the voting and support agreements, summary materials regarding certain aspects of the mergers prepared by Troutman Pepper, and amendments to the employment agreements of Mr. Harrison and Mr. Breda. At this meeting, representatives of Piper Sandler reviewed the financial aspects of the proposed transaction and rendered to the Partners board an opinion (which was initially rendered verbally and then confirmed in a written opinion, dated November 3, 2021, a copy of which is attached to this proxy statement/prospectus as Annex C) to the effect that, as of that date and subject to

 

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the procedures followed, assumptions made and matters considered, and qualifications and limitations on the review undertaken by Piper Sandler as set forth in such opinion, the merger consideration was fair, from a financial point of view, to the holders of Partners common stock. Representatives of Troutman Pepper discussed the terms of the merger agreement, the merger agreements for the bank mergers, the voting and support agreements and related transaction documents with the Partners board, and updated the Partners board with respect to negotiations on the terms of the merger and the board’s compliance with fiduciary duties and the standard of director conduct under Maryland law. Members of Partners’ senior management team reviewed with the Partners board the results of the due diligence investigation of OceanFirst and the strategic benefits of the proposed acquisition by Ocean First.

After considering the proposed terms of the merger agreement and the mergers and the related transaction documents, and taking into consideration the matters discussed during that meeting and prior meetings of the Partners board, including the factors described under the section of this proxy statement/prospectus entitled “The Mergers — Partners’ Reasons for the Mergers and Recommendation of the Partners Board,” the Partners board determined that the merger agreement, including the mergers and the other transactions contemplated thereby, was in the best interests of Partners and its stockholders, and the Partners board approved and adopted the merger agreement and the mergers and the other transactions contemplated thereby. Following this approval, Mr. Clarke briefly recused himself from the Partners board meeting, and the other members of the Partners board in attendance approved the program of cash and stock bonuses to reward the contributions of certain individuals, including Mr. Clarke, related to a newly-hired team of commercial bankers.

Following the meetings of the OceanFirst and Partners boards on November 3, 2021, OceanFirst and Partners and their respective legal advisors finalized the merger agreement and, on the morning of November 4, 2021, OceanFirst and Partners executed the merger agreement and OceanFirst and each director of Partners executed a voting and support agreement. Also on the morning of November 4, 2021, OceanFirst and Partners issued a joint press release announcing execution of the merger agreement.

Partners’ Reasons for the Mergers; Recommendation of the Partners Board

After careful consideration, at a meeting held on November 3, 2021, the Partners board determined that the merger agreement and the transactions contemplated thereby, including the first-step merger, is in the best interests of Partners and its stockholders. Accordingly, the Partners board approved and adopted the merger agreement and unanimously recommends that the Partners stockholders vote “FOR” the merger proposal.

In reaching its decision to approve and adopt the merger agreement and recommend that the Partners stockholders vote “FOR” the merger proposal, the Partners board consulted with the senior management of Partners, as well as Partners’ financial and legal advisors, and considered a number of factors, including, without limitation, the following factors which are not presented in order of priority:

 

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Partners’ belief that the mergers will accelerate achievement of its financial performance goals for its stockholders;

 

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Partners’ financial condition, earnings, business, operations, asset quality and prospects for enhancing stockholder value, both as an independent organization and as part of a combined company with OceanFirst;

 

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OceanFirst’s financial condition, earnings, business, operations, asset quality and prospects for enhancing stockholder value, taking into account the results of Partners’ due diligence investigation of OceanFirst;

 

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the expanded possibilities, including organic growth and future acquisitions, that would be available to the combined company due to its larger size, asset base, capital, market capitalization and geographic footprint as compared to Partners as an independent organization;

 

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•

Partners’ and its financial advisors’ expectations and analyses of cost synergies, earnings accretion, tangible book value dilution and internal rate of return, among other metrics;

 

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the complementary branch networks of OceanFirst and Partners;

 

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the belief that the mergers will, on a post-merger basis, accelerate OceanFirst’s expansion in the attractive banking markets of the Washington, D.C. metropolitan area;

 

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Partners’ understanding of the current and prospective environment in which OceanFirst and Partners operate, including national, regional and local economic conditions, the competitive environment for financial institutions generally and the likely effect of these factors on Partners both with and without the mergers;

 

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the increasing importance of operational scale and financial resources in maintaining efficiency and remaining competitive over the long term and in being able to capitalize on technological developments that may impact industry competitive conditions;

 

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the strong capital positions maintained by OceanFirst and Partners prior to the mergers and the anticipated strong capital position for the combined company following the mergers;

 

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the market for alternative merger or acquisition transactions in the financial services industry and the likelihood and timing of other material strategic transactions;

 

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the regulatory and other approvals required in connection with the mergers and the expectation that the approvals will be received in a timely manner and without the imposition of unacceptable conditions;

 

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OceanFirst’s past record of timely receiving regulatory approvals for acquisition transactions, integrating acquisitions and realizing benefits of acquisitions;

 

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the expected receipt by Partners stockholders, after the effective time of the merger and to the extent that any such stockholder received the stock consideration, of dividends declared and paid by OceanFirst on shares of OceanFirst common stock consistent with historical levels and trends;

 

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the benefits to Partners and its customers of operating as a larger organization, including enhancements in products and services, higher lending limits, and greater financial resources;

 

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the financial and other terms of the transaction, including the fixed exchange ratio with respect to the stock consideration, the availability of the cash consideration for electing stockholders, deal protection and termination fee provisions, which the Partners board reviewed with Partners’ outside financial and legal advisors;

 

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the value of the merger consideration relative to the market value, book value and earnings of Partners;

 

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Partners’ understanding that the merger will constitute a “reorganization” under Section 368(a) of the Code and that, as a result, the Partners stockholders will not recognize gain or loss with respect to their receipt of the stock consideration; and

 

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the opinion of Piper Sandler delivered to the Partners board on November 3, 2021 to the effect that, as of that date, and subject to and based on the various assumptions, considerations, qualifications and limitations set forth in the opinion, the merger consideration was fair, from a financial point of view, to the holders of Partners common stock.

The Partners board also considered a number of potential risks and uncertainties associated with the merger agreement and the transactions contemplated thereby, including the first-step merger, in connection with its deliberations including, without limitation, the following which are not presented in order of priority:

 

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the risk that the value of the stock consideration to be paid to Partners stockholders in accordance with the merger agreement could be adversely affected by a decrease in the trading price of OceanFirst common stock before the effective time;

 

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•

the potential risk of diverting management attention and resources from the operation of Partners’ business and toward completion of the mergers;

 

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the fact that the merger agreement restricts the conduct of Partners’ business prior to the effective time which, subject to certain exceptions, could delay or prevent Partners from undertaking business opportunities that may arise or taking certain other actions that it would otherwise take to operate Partners’ business absent the pending mergers;

 

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the potential risks associated with achieving the anticipated synergies and cost savings and successfully integrating Partners’ business, operations and workforce with those of OceanFirst;

 

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the fact that the interests of Partners’ directors and executive officers may be different from, or in addition to, the interests of Partners’ other stockholders;

 

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the risk that, while Partners expects the mergers to be consummated, there can be no assurance that all conditions to the parties’ conditions to complete the mergers will be satisfied, including the risk that approval by Partners stockholders may not be obtained and, as a result, the mergers may not be consummated;

 

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the risk that necessary regulatory approvals may not be obtained in a timely manner or without the imposition of unacceptable conditions;

 

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the risk of employee attrition or other adverse effects on business and customer relationships as a result of the pending mergers;

 

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the effects of the COVID-19 pandemic on OceanFirst and Partners and the markets in which the companies operate, and how those effects could impact the success of the mergers and the combined company;

 

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certain anticipated merger-related costs;

 

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the fact that Partners is prohibited from soliciting or pursuing an alternative acquisition proposal after execution of the merger agreement, except in certain limited circumstances, that each director of Partners has agreed to vote his or her shares in favor of the merger proposal and against any alternative acquisition proposal, and that Partners would be obligated to pay OceanFirst a termination fee of $7,400,000 under certain circumstances, which may discourage other parties potentially interested in a strategic transaction with Partners from pursuing such a transaction;

 

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the challenges in absorbing the effect of any failure to complete the mergers, including potential payment of the termination fee, potential existence of a tail period for the termination fee, and market reactions;

 

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the possibility of litigation challenging the mergers, and the Partners board’s belief that any such litigation would be without merit; and

 

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the risks of the type and nature described under section of this proxy statement/prospectus entitled “Risk Factors” beginning on page 19.

The foregoing discussion of the information and factors considered by the Partners board is not intended to be exhaustive, but rather includes the material factors considered by the Partners board. In reaching its decision to approve and adopt the merger agreement, approve the mergers and recommend that Partners stockholders approve the merger proposal, the Partners board did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The Partners board considered all these factors as a whole, including discussions with and questioning of Partners’ senior management and financial and legal advisors, and overall considered the factors to be favorable to, and support, its determination to approve and adopt the merger agreement, approve the mergers and recommend that Partners stockholders approve the merger proposal.

 

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This explanation of the Partners board’s reasoning and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements.”

For the reasons set forth above, the Partners board approved and adopted the merger agreement, approved the mergers, and unanimously recommends that the Partners stockholders vote “FOR” the merger proposal, “FOR” the compensation proposal, and “FOR” the adjournment proposal.

Partners stockholders should be aware that directors and executive officers of Partners may have interests in the mergers that are different from, or in addition to, those of other Partners stockholders. See the section of this proxy statement/prospectus entitled “The Mergers — Interests of Partners’ Directors and Executive Officers in the Mergers” beginning on page 57.

Opinion of Partners’ Financial Advisor

Partners retained Piper Sandler to act as financial advisor to Partners’ board of directors in connection with Partners’ consideration of a possible business combination. Partners selected Piper Sandler to act as its financial advisor because Piper Sandler is a nationally recognized investment banking firm which specializes in financial institutions. In the ordinary course of its investment banking business, Piper Sandler is regularly engaged in the valuation of financial institutions and their securities in connection with mergers and acquisitions and other corporate transactions.

Piper Sandler acted as financial advisor to Partners’ board of directors in connection with the proposed merger and participated in certain of the negotiations leading to the execution of the merger agreement. At the November 3, 2021 meeting at which Partners’ board of directors considered the merger and the agreement and plan of merger, Piper Sandler delivered to the board of directors its oral opinion, which was subsequently confirmed in writing on November 3, 2021, to the effect that, as of such date, the merger consideration was fair to the holders of Partners’ common stock from a financial point of view. The full text of Piper Sandler’s opinion is attached as Annex C to this proxy statement/prospectus. The opinion outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Piper Sandler in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the full text of the opinion. Holders of Partners common stock are urged to read the entire opinion carefully in connection with their consideration of the proposed merger.

Piper Sandler’s opinion was directed to the board of directors of Partners in connection with its consideration of the integrated mergers and the merger agreement and does not constitute a recommendation to any stockholder of Partners as to how any such stockholder should vote at any meeting of stockholders called to consider and vote upon the approval of the merger proposal. Piper Sandler’s opinion was directed only to the fairness, from a financial point of view, of the merger consideration to the holders of Partners common stock and did not address the underlying business decision of Partners to engage in the integrated mergers, the form or structure of the integrated mergers or any other transactions contemplated in the merger agreement, the relative merits of the integrated mergers as compared to any other alternative transactions or business strategies that might exist for Partners or the effect of any other transaction in which Partners might engage. Piper Sandler also did not express any opinion as to the fairness of the amount or nature of the compensation to be received in the integrated mergers by any officer, director or employee of Partners or OceanFirst, or any class of such persons, if any, relative to the compensation to be received in the merger by any other stockholder. Piper Sandler’s opinion was approved by Piper Sandler’s fairness opinion committee.

In connection with its opinion, Piper Sandler reviewed and considered, among other things:

 

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a draft of the merger agreement, dated October 29, 2021;

 

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certain publicly available financial statements and other historical financial information of Partners that Piper Sandler deemed relevant;

 

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•

certain publicly available financial statements and other historical financial information of OceanFirst that Piper Sandler deemed relevant;

 

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certain internal financial projections for Partners for the years ending December 31, 2021 through December 31, 2025, as provided by the senior management of Partners;

 

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publicly available median analyst net income and dividends per share estimates for OceanFirst for the quarter ending December 31, 2021 and publicly available median analyst net income estimates for OceanFirst for the years ending December 31, 2022 and December 31, 2023, as well as estimated long-term annual earnings per share and balance sheet growth rates for the years ending December 31, 2024 and December 31, 2025 and estimated dividends per share for OceanFirst for the years ending December 31, 2022 through December 31, 2025, as provided by the senior management of OceanFirst;

 

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the pro forma financial impact of the merger on OceanFirst based on certain assumptions related to transaction expenses, cost savings, and purchase accounting adjustments, as provided by the senior managements of OceanFirst, as well as estimated net income for the Partners for the years ending December 31, 2021 through December 31, 2025, as provided by the Partners and approved for use in Piper Sandler’s analysis by the senior management of OceanFirst;

 

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the publicly reported historical price and trading activity for Partners common stock and OceanFirst common stock, including a comparison of certain stock trading information for Partners common stock and OceanFirst common stock and certain stock indices as well as similar publicly available information for certain other companies, the securities of which are publicly traded;

 

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a comparison of certain financial and market information for Partners and OceanFirst with similar financial institutions for which information is publicly available;

 

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the financial terms of certain recent business combinations in the bank and thrift industry (on nationwide basis), to the extent publicly available;

 

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the current market environment generally and the banking environment in particular; and

 

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such other information, financial studies, analyses, and investigations and financial, economic and market criteria as Piper Sandler considered relevant.

Piper Sandler also discussed with certain members of the senior management of Partners and its representatives the business, financial condition, results of operations and prospects of Partners and held similar discussions with certain members of the senior management of OceanFirst and its representatives regarding the business, financial condition, results of operations and prospects of OceanFirst.

In performing its review, Piper Sandler relied upon the accuracy and completeness of all of the financial and other information that was available to and reviewed by Piper Sandler from public sources, that was provided to Piper Sandler by Partners or OceanFirst or their respective representatives, or that was otherwise reviewed by Piper Sandler, and Piper Sandler assumed such accuracy and completeness for purposes of rendering its opinion without any independent verification or investigation. Piper Sandler relied on the assurances of the respective managements of Partners and OceanFirst that they were not aware of any facts or circumstances that would have made any of such information inaccurate or misleading. Piper Sandler was not asked to and did not undertake an independent verification of any of such information and Piper Sandler did not assume any responsibility or liability for the accuracy or completeness thereof. Piper Sandler did not make an independent evaluation or perform an appraisal of the specific assets, the collateral securing assets or the liabilities (contingent or otherwise) of Partners or OceanFirst, nor was Piper Sandler furnished with any such evaluations or appraisals. Piper Sandler rendered no opinion or evaluation on the collectability of any assets or the future performance of any loans of Partners or OceanFirst. Piper Sandler did not make an independent evaluation of the adequacy of the allowance for loan losses of Partners or OceanFirst, or of the combined entity after the integrated mergers, and Piper Sandler did not review any individual credit files relating to Partners or OceanFirst. Piper Sandler assumed, with Partners’ consent, that the respective allowances for loan losses for both Partners and OceanFirst were adequate to cover such losses and would be adequate on a pro forma basis for the combined entity.

 

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In preparing its analyses, Piper Sandler used certain internal financial projections for Partners for the years ending December 31, 2021 through December 31, 2025, as provided by the senior management of Partners. In addition, Piper Sandler used publicly available median analyst net income and dividends per share estimates for OceanFirst for the quarter ending December 31, 2021 and publicly available median analyst net income estimates for OceanFirst for the years ending December 31, 2022 and December 31, 2023, as well as estimated long-term annual earnings per share and balance sheet growth rates for the years ending December 31, 2024 and December 31, 2025 and estimated dividends per share for OceanFirst for the years ending December 31, 2022 through December 31, 2025, as provided by the senior management of OceanFirst. Piper Sandler also received and used in its pro forma analyses certain assumptions relating to the pro forma financial impact of the merger on OceanFirst based on certain assumptions related to transaction expenses, cost savings, and purchase accounting adjustments, as provided by the senior managements of OceanFirst as well as estimated net income for the Partners for the years ending December 31, 2021 through December 31, 2025, as provided by the Partners and approved for use in Piper Sandler’s analysis by the senior management of OceanFirst. With respect to the foregoing information, the respective senior managements of Partners and OceanFirst confirmed to Piper Sandler that such information reflected (or, in the case of the publicly available analyst estimates referred to above, were consistent with) the best currently available projections, estimates and judgments of those respective managements as to the future financial performance of Partners and OceanFirst, respectively, and the other matters covered thereby, and Piper Sandler assumed that the future financial performance reflected in such information would be achieved. Piper Sandler expressed no opinion as to such information, or the assumptions on which such information was based. Piper Sandler also assumed that there had been no material change in the respective assets, financial condition, results of operations, business or prospects of Partners or OceanFirst since the date of the most recent financial statements made available to Piper Sandler. Piper Sandler assumed in all respect’s material to its analyses that Partners and OceanFirst would remain as going concerns for all periods relevant to its analyses.

Piper Sandler also assumed, with Partners’ consent, that (i) each of the parties to the merger agreement would comply in all material respects with all material terms and conditions of the merger agreement and all related agreements, that all of the representations and warranties contained in such agreements were true and correct in all material respects, that each of the parties to such agreements would perform in all material respects all of the covenants and other obligations required to be performed by such party under such agreements and that the conditions precedent in such agreements were not and would not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the mergers, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on Partners, OceanFirst, the integrated mergers or any related transactions, and (iii) the integrated mergers and any related transactions would be consummated in accordance with the terms of the merger agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws and other requirements. Finally, with Partners’ consent, Piper Sandler relied upon the advice that Partners received from its legal, accounting and tax advisors as to all legal, accounting and tax matters relating to the integrated mergers and the other transactions contemplated by the merger agreement. Piper Sandler expressed no opinion as to any such matters.

Piper Sandler’s opinion was necessarily based on financial, economic, regulatory, market and other conditions as in effect on, and the information made available to Piper Sandler as of, the date thereof. Events occurring after the date thereof could materially affect Piper Sandler’s opinion. Piper Sandler has not undertaken to update, revise, reaffirm or withdraw its opinion or otherwise comment upon events occurring after the date thereof. Piper Sandler expressed no opinion as to the trading value of Partners common stock or OceanFirst common stock at any time or what the value of OceanFirst common stock would be once the shares are actually received by the holders of Partners common stock.

In rendering its opinion, Piper Sandler performed a variety of financial analyses. The summary below is not a complete description of all the analyses underlying Piper Sandler’s opinion or the presentation made by Piper Sandler to Partners’ board of directors, but is a summary of the material analyses performed and presented by

 

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Piper Sandler. The summary includes information presented in tabular format. In order to fully understand the financial analyses, these tables must be read together with the accompanying text. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Piper Sandler believes that its analyses must be considered as a whole and that selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Piper Sandler’s comparative analyses described below is identical to Partners or OceanFirst and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading values or transaction values, as the case may be, of Partners and OceanFirst and the companies to which they were compared. In arriving at its opinion, Piper Sandler did not attribute any particular weight to any analysis or factor that it considered. Rather, Piper Sandler made qualitative judgments as to the significance and relevance of each analysis and factor. Piper Sandler did not form an opinion as to whether any individual analysis or factor (positive or negative) considered in isolation supported or failed to support its opinion, rather, Piper Sandler made its determination as to the fairness of the merger consideration to the holders of Partners common stock from a financial point of view on the basis of its experience and professional judgment after considering the results of all its analyses taken as a whole.

In performing its analyses, Piper Sandler also made numerous assumptions with respect to industry performance, business and economic conditions and various other matters, many of which cannot be predicted and are beyond the control of Partners, OceanFirst, and Piper Sandler. The analyses performed by Piper Sandler are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Piper Sandler prepared its analyses solely for purposes of rendering its opinion and provided such analyses to Partners’ board of directors at its November 3, 2021 meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty and actual values may be materially different. Accordingly, Piper Sandler’s analyses do not necessarily reflect the value of Partners common stock or OceanFirst common stock or the prices at which Partners or OceanFirst common stock may be sold at any time. The analyses of Piper Sandler and its opinion were among a number of factors taken into consideration by Partners’ board of directors in making its determination to approve the merger agreement and the analyses described below should not be viewed as determinative of the decision of Partners’ board of directors with respect to the fairness of the merger consideration.

 

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Summary of Proposed Merger Consideration and Implied Transaction Metrics

Piper Sandler reviewed the financial terms of the proposed merger. Pursuant to the terms of the merger agreement, at the effective time of the first-step merger each share of Partners common stock issued and outstanding immediately prior to the effective time of the transaction, except for certain shares as set forth in the merger agreement, shall be converted into the right to receive, at the election of the holder thereof and subject to adjustment and proration, either (i) $10.00 in cash, or (ii) 0.4512 shares of OceanFirst common stock. Piper Sandler calculated an aggregate implied transaction value of approximately $184.9 million and an implied purchase price per share of $10.30 consisting of the implied value of 17,883,472 shares of Partners common stock and based on the closing price of OceanFirst common stock on November 1, 2021 as well as 194,233 options outstanding at an average exercise price of $6.14 as of October 25, 2021 and assuming a consideration mix consisting of 80% stock and 20% cash consideration. Based upon financial information for Partners as of or for the last twelve months (which we refer to as “LTM”) ended September 30, 2021 and the closing price of Partners’ common stock on November 1, 2021, Piper Sandler calculated the following implied transaction metrics:

 

Transaction Price / Tangible Book Value Per Share			145	%
Transaction Price / LTM Earnings Per Share			22.6x
Transaction Price / Estimated 2021 Earnings¹			21.9x
Tangible Book Premium / Core Deposits (CDs > $100K)2			5.0	%
Tangible Book Premium / Core Deposits (CDs > $250K)³			4.3	%
Market Premium as of November 1, 2021			16.6	%

 

1

Based on estimated net income as provided by Partners management

2

Core deposits equal to total deposits less CD’s greater than $100,000

3

Core deposits equal to total deposits less CD’s greater than $250,000

Stock Trading History

Piper Sandler reviewed the publicly available historical reported trading price of Partners common stock and OceanFirst common stock for the one-year and three-year periods ended November 1, 2021. Piper Sandler then compared the relationship between the movements in the price of Partners common stock and OceanFirst common stock, respectively, to movements in their respective peer groups (as described below) as well as certain stock indices.

Partners’ One-Year Stock Performance

 

		Beginning Value 11/1/20				Ending Value 11/1/2021
Partners			100	%			175.9	%
Partners Peer Group			100	%			152.2	%
S&P 500 Index			100	%			141.1	%
NASDAQ Bank Index			100	%			177.2	%

Partners’ Three-Year Stock Performance

 

		Beginning Value 11/1/2018				Ending Value 11/1/2021
Partners			100	%			111.8	%
Partners Peer Group			100	%			106.0	%
S&P 500 Index			100	%			167.4	%
NASDAQ Bank Index			100	%			138.2	%

 

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OceanFirst’s One-Year Stock Performance

 

		Beginning Value 11/1/2020				Ending Value 11/1/2021
OceanFirst			100	%			153.6	%
OceanFirst Peer Group			100	%			172.4	%
S&P 500 Index			100	%			141.1	%
NASDAQ Bank Index			100	%			177.2	%

OceanFirst’s Three-Year Stock Performance

 

		Beginning Value 11/1/2018				Ending Value 11/1/2021
OceanFirst			100	%			91.3	%
OceanFirst Peer Group			100	%			114.0	%
S&P 500 Index			100	%			167.4	%
NASDAQ Bank Index			100	%			138.2	%

Comparable Company Analyses

Piper Sandler used publicly available information to compare selected financial information for Partners with a group of financial institutions selected by Piper Sandler. The Partners peer group included banks and thrifts whose securities are publicly traded on a major exchange (NYSE, NYSEAM, NASDAQ), headquartered in the Mid-Atlantic region, excluding Puerto Rico and including Virginia, with total assets between $1.0 billion and $2.0 billion with last twelve months return on average assets greater than 0.0%, but excluded targets of announced merger transactions (which we refer to as the “Partners Peer Group”). The Partners Peer Group consisted of the following companies:

 

AmeriServ Financial, Inc.		National Bankshares, Inc.
Emclaire Financial Corp		Northeast Community Bancorp, Inc.
Esquire Financial Holdings, Inc.		Old Point Financial Corporation
ESSA Bancorp, Inc.		Pathfinder Bancorp, Inc.
First National Corporation		PCSB Financial Corporation
First United Corporation		Penns Woods Bancorp, Inc.
FNCB Bancorp, Inc.		Prudential Bancorp, Inc.
Franklin Financial Services Corporation		Severn Bancorp, Inc.
MainStreet Bancshares, Inc.		The Bank of Princeton
Malvern Bancorp, Inc.		Unity Bancorp, Inc.
Meridian Corporation		Virginia National Bankshares Corporation

The analysis compared publicly available financial information for Partners with corresponding data for the Partners Peer Group as of or for the year ended September 30, 2021 (unless otherwise noted) with pricing data as of November 1, 2021. The table below sets forth the data for Partners and the median, mean, low and high data for the Partners Peer Group.

 

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Partners Comparable Company Analysis

 

		Partners				Partners Peer Group Median				Partners Peer Group Mean				Partners Peer Group Low				Partners Peer Group High
Total assets ($mm)			1,638				1,651				1,517				1,085				1,991
Loans / Deposits² (%)			77.4				82.0				81.1				55.7				111.4
Non-performing assets / Total assets³ (%)			0.49				0.50				0.75				0.00				4.37
Tangible common equity/Tangible assets4 (%)			7.79				9.56				10.19				6.56				22.40
Leverage Ratio5 (%)			7.90/8.81	¹			10.19				10.48				7.59				17.07
Tier 1 Ratio6, 7 (%)			11.55/11.66	¹			14.35				14.18				10.16				19.06
Total RBC Ratio7, 8 (%)			12.81/12.36	¹			15.56				15.50				10.97				19.86
LTM Return on average assets (%)			0.50				0.99				1.04				0.21				2.18
LTM Return on average equity (%)			5.7				9.4				10.3				1.8				27.2
LTM Net interest margin9 (%)			3.06				3.14				3.24				2.02				4.49
LTM Efficiency ratio (%)			72.3				63.5				62.9				47.3				82.1
Price/Tangible book value (%)			124				106				111				53				193
Price/LTM Earnings per share (x)			20.2				11.2				11.8				5.0				20.8
Current Dividend Yield (%)			1.2				2.3				2.3				0.0				5.4
Market value ($mm)			157				171				166				67				275

 

1)	Partners operates as a bank holding company with two distinct subsidiary banks. Consolidated capital ratios are not available therefore each bank’s capital ratios are presented

2)	Bank Level data shown as of or for the period ended September 30, 2021 for FRAF, ASRV

3)	Bank Level data shown as of or for the period ended September 30, 2021 for VABK, PWOD, PCSB, ESSA, FRAF, FUNC, BPRN, MNSB, ASRV, OPOF, ESQ, NECB, EMCF)

4)	Bank Level data shown as of or for the period ended September 30, 2021 for UNTY

5)	Bank Level data shown as of or for the period ended September 30, 2021 for PWOD, PCSB, FRAF, FNCB, MNSB, NKSH, FXNC, ASRV, OPOF, PBHC, SVBI, ESQ, NECB

6)	Bank Level data shown as of or for the period ended September 30, 2021 for VABK, PWOD, PCSB, ESSA, FRAF, FNCB, MNSB, NKSH, FXNC, ASRV, OPOF, PBHC, ESQ, NECB

7)	Financial data as of or for the period ended September 30, 2021 was not released at the holding company or bank level due to regulatory relief for UNTY, SVBI

8)	Bank Level data shown as of or for the period ended September 30, 2021 for PWOD, PCSB, ESSA, FRAF, FNCB, MNSB, NKSH, FXNC, OPOF, PBHC, ESQ, NECB

9)	Bank Level data shown as of or for the period ended September 30, 2021 for NECB

Note: Financial data as of or for the period ended September 30, 2021, excluding Pathfinder Bancorp, Inc., Malvern Bancorp,Inc., Severn Bancorp, Inc., and Prudential Bancorp, Inc. which presents data as of June 30, 2021

Piper Sandler used publicly available information to perform a similar analysis for OceanFirst by comparing selected financial information for OceanFirst with a group of financial institutions selected by Piper Sandler. The OceanFirst peer group included banks and thrifts whose securities are publicly traded on a major exchange (NYSE, NYSEAM, NASDAQ), headquartered in the Mid-Atlantic region, excluding Puerto Rico, with total assets between $7.5 billion and $15.0 billion, but excluded targets of announced merger transactions (the “OceanFirst Peer Group”). The OceanFirst Peer Group consisted of the following companies:

 

ConnectOne Bancorp, Inc.		NBT Bancorp Inc.
Dime Community Bancshares, Inc.		Northwest Bancshares, Inc.
Eagle Bancorp, Inc.		Provident Financial Services, Inc.
First Commonwealth Financial Corporation		S&T Bancorp, Inc.
Flushing Financial Corporation		Sandy Spring Bancorp, Inc.
Lakeland Bancorp, Inc.		Tompkins Financial Corporation

 

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The analysis compared publicly available financial information for OceanFirst with corresponding data for the OceanFirst Peer Group as of or for the year ended September 30, 2021 (unless otherwise noted) with pricing data as of November 1, 2021. The table below sets forth the data for OceanFirst and the median, mean, low and high data for the OceanFirst Peer Group.

OceanFirst Comparable Company Analysis

 

		OceanFirst				OceanFirst Peer Group Median				OceanFirst Peer Group Mean				OceanFirst Peer Group Low				OceanFirst Peer Group High
Total assets ($mm)			11,830				10,532				10,664				7,950				14,389
Loans / Deposits² (%)			83.8				85.9				85.3				69.3				102.8
Non-performing assets / Total assets³ (%)			0.28				0.43				0.64				0.19				1.47
Tangible common equity/Tangible assets4 (%)			8.29				8.92				8.89				7.54				10.64
Leverage Ratio5 (%)			9.12	¹			9.35				9.46				8.37				11.60
Tier 1 Ratio6 (%)			12.19	¹			12.44				12.61				10.89				15.33
Total RBC Ratio7 (%)			12.83	¹			14.87				14.63				11.55				16.59
LTM Return on average assets (%)			1.04				1.26				1.28				0.69				1.93
LTM Return on average equity (%)			8.0				11.8				11.7				7.1				16.5
LTM Net interest margin (%)			2.91				3.15				3.18				2.94				3.60
LTM Efficiency ratio (%)			62.3				54.2				52.8				38.5				65.1
Price/Tangible book value (%)			146				163				165				116				198
Price/LTM Earnings per share (x)			11.8				11.3				12.2				9.5				23.6
Price/2021E EPS			12.6				11.2				11.1				8.7				13.8
Price/2022E EPS			11.6				13.2				12.9				10.0				16.8
Current Dividend Yield (%)			3.1				3.0				3.2				1.5				5.8
Market value ($mm)			1,366				1,501				1,501				749				2,269

 

1)	Bank level data shown

2)	Bank Level data shown as of or for the period ended September 30, 2021 for TMP

3)	Bank Level data shown as of or for the period ended September 30, 2021 for PFS, DCOM, NBTB, EGBN, TMP

4)	Bank Level data shown as of or for the period ended September 30, 2021 for EGBN, STBA, FFIC

5)	Bank Level data shown as of or for the period ended September 30, 2021 for NWBI, PFS

6)	Bank Level data shown as of or for the period ended September 30, 2021 for NWBI, PFS, TMP

7)	Bank Level data shown as of or for the period ended September 30, 2021 for NWBI, PFS

Note: Financial data as of or for the period ended September 30, 2021

Analysis of Precedent Transactions

Piper Sandler reviewed a national group of merger and acquisition transactions. The nationwide group consisted of bank and thrift transactions announced between January 1, 2021 and November 1, 2021 where the target’s total assets were between $1.0 billion and $2.0 billion at announcement and LTM ROAA between 0.0% and 1.25%, excluding transactions with non-disclosed deal values and transactions with private investors, private equity buyers or Credit Union buyers (which we refer to as the “Nationwide Precedent Transactions”).

 

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The Nationwide Precedent Transactions group was composed of the following transactions:

 

Acquiror		Target
German American Bancorp Inc.		Citizens Union Bancorp
TriCo Bancshares		Valley Republic Bancorp
CVB Financial Corp.		Suncrest Bank 1st Constitution Bancorp
Lakeland Bancorp		Westchester Bank Holding Corp.
Valley National Bancorp		Bank of Commerce Holdings
Columbia Banking System Inc.		County Bancorp Inc.
Nicolet Bankshares Inc.		Landmark Community Bank
Simmons First National Corp.		Select Bancorp Inc.
First Bancorp		Pioneer Bancshares Inc.
FirstSun Capital Bancorp		Mackinac Financial Corp
Nicolet Bankshares Inc.		Premier Financial Bancorp Inc.
Peoples Bancorp Inc.		Pacific Mercantile Bancorp
Banc of California Inc.		Kentucky Bancshares Inc.
Stock Yards Bancorp Inc.		Cummins-American Corp.
First Busey Corp.

Using the latest publicly available information prior to the announcement of the relevant transaction, Piper Sandler reviewed the following transaction metrics: transaction price to last-twelve-months earnings per share, transaction price to tangible book value per share, core deposit premium, and 1-day market premium. Piper Sandler compared the indicated transaction metrics for the transaction to the median, mean, low and high metrics of Nationwide Precedent Transactions group.

 

		Nationwide Precedent Transactions
		OceanFirst/     Partners				Median				Mean				Low				High
Transaction Price / LTM Earnings Per Share (x)			22.6				15.6				16.5				10.9				29.2
Transaction Price / Tangible Book Value Per Share (%)			145				156				153				112				185
Tangible Book Value Premium to Core Deposits (%)			5.0¹ / 4.3²				6.9	¹			7.0	¹			1.3	¹			11.0	¹
1-Day Market Premium (%)			16.6				14.1				27.9				6.0				69.4

 

1)	Core deposits defined as total deposits less time deposits greater than $100,000

2)	Core deposits defined as total deposits less time deposits greater than $250,000

Net Present Value Analyses

Piper Sandler performed an analysis that estimated the net present value of a share of Partners common stock assuming Partners performed in accordance with certain internal financial projections for Partners for the years ending December 31, 2021 through December 31, 2025, as provided by the senior management of Partners. To approximate the terminal value of a share of Partners common stock at November 1, 2021, Piper Sandler applied price to 2025 earnings multiples ranging from 8.0x to 15.5x and multiples of 2025 tangible book value ranging from 90% to 140%. The terminal values were then discounted to present values using different discount rates ranging from 11% to 15%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of Partners common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of Partners common stock of $5.02 to $10.95 when applying multiples of earnings and $5.25 to $9.29 when applying multiples of tangible book value.

 

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Earnings Per Share Multiples

 

Discount Rate		8.0x				9.5x				11.0x				12.5x				14.0x				15.5x
11.0%		$	5.81			$	6.84			$	7.87			$	8.89			$	9.92			$	10.95
12.0%		$	5.60			$	6.59			$	7.58			$	8.57			$	9.56			$	10.55
13.0%		$	5.40			$	6.35			$	7.30			$	8.25			$	9.21			$	10.16
14.0%		$	5.20			$	6.12			$	7.04			$	7.96			$	8.87			$	9.79
15.0%		$	5.02			$	5.90			$	6.79			$	7.67			$	8.56			$	9.44

Tangible Book Value Per Share Multiples

 

Discount Rate		90%				100%				110%				120%				130%				140%
11.0%		$	6.09			$	6.73			$	7.37			$	8.01			$	8.65			$	9.29
12.0%		$	5.86			$	6.48			$	7.10			$	7.71			$	8.33			$	8.94
13.0%		$	5.65			$	6.24			$	6.84			$	7.43			$	8.02			$	8.62
14.0%		$	5.45			$	6.02			$	6.59			$	7.16			$	7.73			$	8.30
15.0%		$	5.25			$	5.80			$	6.36			$	6.91			$	7.46			$	8.01

Piper Sandler also considered and discussed with the Partners’ board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to earnings. To illustrate this impact, Piper Sandler performed a similar analysis, assuming Partners’ earnings varied from 10% above projections to 10% below projections. This analysis resulted in the following range of per share values for Partners’ common stock, applying the price to 2025 earnings multiples range of 8.0x to 15.5x referred to above and a discount rate of 12.84%.

Earnings Per Share Multiples

 

Annual Estimate Variance		8.0x				9.5x				11.0x				12.5x				14.0x				15.5x
(10.0%)		$	4.92			$	5.78			$	6.64			$	7.50			$	8.37			$	9.23
(5.0%)		$	5.17			$	6.08			$	6.99			$	7.90			$	8.82			$	9.73
0.0%		$	5.43			$	6.39			$	7.34			$	8.30			$	9.26			$	10.22
5.0%		$	5.68			$	6.69			$	7.70			$	8.70			$	9.71			$	10.72
10.0%		$	5.94			$	6.99			$	8.05			$	9.10			$	10.16			$	11.21

Piper Sandler also performed an analysis that estimated the net present value per share of OceanFirst’s common stock, assuming OceanFirst performed in accordance with publicly available median analyst net income and dividends per share estimates for OceanFirst for the quarter ending December 31, 2021 and publicly available median analyst net income estimates for OceanFirst for the years ending December 31, 2022 and December 31, 2023, as well as estimated long-term annual earnings per share and balance sheet growth rates for the years ending December 31, 2024 and December 31, 2025 and estimated dividends per share for OceanFirst for the years ending December 31, 2022 through December 31, 2025, as provided by the senior management of OceanFirst. To approximate the terminal value of a share of OceanFirst common stock at November 1, 2021, Piper Sandler applied price to 2025 earnings multiples ranging from 11.0x to 16.0x and multiples of 2025 tangible book value ranging from 140% to 190%. The terminal values were then discounted to present values using different discount rates ranging from 10.0% to 14.0%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of OceanFirst common stock. As illustrated in the following tables, the analysis indicated an imputed range of values per share of OceanFirst common stock of $17.44 to $28.27 when applying multiples of earnings and $20.21 to $30.91 when applying multiples of tangible book value.

 

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Earnings Per Share Multiples

 

Discount Rate		11.0x				12.0x				13.0x				14.0x				15.0x				16.0x
10.0%		$	20.14			$	21.77			$	23.39			$	25.02			$	26.64			$	28.27
11.0%		$	19.42			$	20.98			$	22.55			$	24.11			$	25.68			$	27.24
12.0%		$	18.73			$	20.23			$	21.74			$	23.24			$	24.75			$	26.26
13.0%		$	18.07			$	19.52			$	20.97			$	22.42			$	23.87			$	25.32
14.0%		$	17.44			$	18.83			$	20.23			$	21.63			$	23.02			$	24.42

Tangible Book Value Per Share Multiples

 

Discount Rate		140%				150%				160%				170%				180%				190%
10.0%		$	23.37			$	24.88			$	26.39			$	27.89			$	29.40			$	30.91
11.0%		$	22.52			$	23.98			$	25.43			$	26.88			$	28.33			$	29.78
12.0%		$	21.72			$	23.11			$	24.51			$	25.91			$	27.30			$	28.70
13.0%		$	20.95			$	22.29			$	23.64			$	24.98			$	26.32			$	27.67
14.0%		$	20.21			$	21.51			$	22.80			$	24.09			$	25.39			$	26.68

Piper Sandler also considered and discussed with Partners’ board of directors how this analysis would be affected by changes in the underlying assumptions, including variations with respect to earnings. To illustrate this impact, Piper Sandler performed a similar analysis assuming OceanFirst’s earnings varied from 10% above estimates to 10.0% below estimates. This analysis resulted in the following range of per share values for OceanFirst common stock, applying the price to 2025 earnings multiples range of 11.0x to 16.0x referred to above and a discount rate of 11.55%.

Earnings Per Share Multiples

 

Annual Estimate Variance		11.0x				12.0x				13.0x				14.0x				15.0x				16.0x
(10.0%)		$	17.35			$	18.73			$	20.11			$	21.49			$	22.86			$	24.24
(5.0%)		$	18.19			$	19.65			$	21.10			$	22.56			$	24.01			$	25.47
0.0%		$	19.04			$	20.57			$	22.10			$	23.63			$	25.16			$	26.69
5.0%		$	19.88			$	21.49			$	23.09			$	24.70			$	26.31			$	27.92
10.0%		$	20.72			$	22.40			$	24.09			$	25.77			$	27.46			$	29.14

Piper Sandler noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results.

Pro Forma Transaction Analysis

Piper Sandler analyzed certain potential pro forma effects of the merger on OceanFirst assuming the transaction closes on March 31, 2022. Piper Sandler also utilized certain assumptions relating to transaction expenses, cost savings and purchase accounting adjustments, as provided by the senior management of OceanFirst, as well as estimated net income for Partners for the years ending December 31, 2021 through December 31, 2025, as provided by Partners and approved for use in Piper Sandler’s analysis by the senior management of OceanFirst. The analysis indicated that the transaction could be accretive to OceanFirst’s estimated earnings per share (excluding one-time transaction costs and expenses) in the years ending 2022 through 2025 and dilutive to OceanFirst’s estimated tangible book value per share at close and dilutive at December 31, 2022, December 31, 2021, December 31, 2024 and accretive at December 31, 2025.

In connection with this analysis, Piper Sandler considered and discussed with the Partners’ board of directors how the analysis would be affected by changes in the underlying assumptions, including the impact of final

 

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purchase accounting adjustments determined at the closing of the transaction, and noted that the actual results achieved by the combined company may vary from projected results and the variations may be material.

Piper Sandler’s Relationship

Piper Sandler is acting as Partners’ financial advisor in connection with the transaction and will receive a fee for such services in an amount equal to approximately 1.35% of the aggregate purchase price, which advisory fee is contingent upon the closing of the integrated mergers. At the time of announcement of the transaction, Piper Sandler’s fee was approximately $2.5 million. Piper Sandler also received a $250,000 fee from Partners upon rendering its opinion, which opinion fee will be credited in full towards the advisory fee which will become payable to Piper Sandler upon closing of the transaction. Partners has also agreed to indemnify Piper Sandler against certain claims and liabilities arising out of Piper Sandler’s engagement and to reimburse Piper Sandler for certain of its out-of-pocket expenses incurred in connection with Piper Sandler’s engagement.

Piper Sandler did not provide any other investment banking services to Partners in the two years preceding the date of Piper Sandler’s opinion. In the two years preceding the date of Piper Sandler’s opinion, Piper Sandler and its affiliate, Piper Sandler Loan Strategies, LLC (which we refer to as “PSLS”), provided certain investment banking services to OceanFirst. In summary, (i) Piper Sandler acted as book manager in connection with OceanFirst’s offer and sale of equity and debt securities, which transactions occurred in May 2020 and for which Piper Sandler received approximately $2.3 million in fees and expense reimbursement, and (ii) PSLS acted as introducing broker to OceanFirst’s wholly-owned banking subsidiary, OceanFirst Bank, in connection with OceanFirst Bank’s sale of certain loans and/or assets, for which PSLS received approximately $490,000 in fees in December 2020. In the ordinary course of Piper Sandler’s business as a broker-dealer, Piper Sandler may purchase securities from and sell securities to Partners, OceanFirst and their respective affiliates. Piper Sandler may also actively trade the equity and debt securities of Partners, OceanFirst and their respective affiliates for Piper Sandler’s account and for the accounts of Piper Sandler’s customers.

OceanFirst’s Reasons for the Mergers

After careful consideration, the OceanFirst board, at a meeting held on November 3, 2021, unanimously approved the merger agreement and the transactions contemplated thereby.

In reaching its decision to approve the merger agreement, the integrated mergers and the other transactions contemplated by the merger agreement, the OceanFirst board evaluated the merger agreement and mergers in consultation with OceanFirst management, as well as OceanFirst’s legal counsel and financial advisor, and considered a number of factors in favor of the mergers, including the following material factors, which are not presented in order of priority:

 

•

the fact that the mergers are expected to expand OceanFirst’s footprint into Delaware, Maryland, Virginia and the Washington D.C. metro area;

 

•

there is potential for significant efficiencies to be accelerated as a result of the mergers through infrastructure optimization and branch consolidation;

 

•

each of OceanFirst’s and Partners’ businesses, operations, financial condition, asset quality, earnings and prospects, including the view of the OceanFirst board that Partners’ business and operations provide a complementary addition to OceanFirst’s existing operations and lines of business;

 

•

the fact that Partners’ expertise in serving small and medium sized businesses aligns with OceanFirst’s commitment to growing its commercial banking platform, and provides an opportunity to leverage OceanFirst’s broader product offering across Partners’ client base;

 

•

the common business philosophies and similarity in customer profiles;

 

•

the fact that the mergers are expected to result in earnings per share accretion for OceanFirst stockholders in 2022;

 

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•

the fact that the cost-savings for the mergers are estimated to be 40% of Partners’ non-interest expense base and that these cost savings are expected to be 50% phased-in in 2022 and 100% phased-in thereafter;

 

•

the current and prospective environment in which OceanFirst and Partners operate, including national, regional and local economic conditions, the competitive environment for financial institutions generally and the likely effect of these factors on OceanFirst both with and without the mergers;

 

•

the ability of OceanFirst to leverage its significant integration experience, having successfully integrated and met financial targets for seven whole bank acquisitions since 2015;

 

•

its review and discussions with OceanFirst’s management and its outside legal counsel and financial advisors concerning the due diligence investigation of Partners and the potential financial impact of the mergers on the combined company;

 

•

the terms of the merger agreement, including the deal protection and termination fee provisions, which it reviewed with OceanFirst’s outside legal and financial advisors; and

 

•

the regulatory and other approvals required in connection with the mergers and the expectation that such regulatory and other approvals will be received in a timely manner and without the imposition of unacceptable conditions.

The OceanFirst board also considered potential risks associated with the mergers in connection with its deliberations of the mergers, including: (i) the potential risk of diverting management attention and resources from the operation of OceanFirst’s business and towards the completion of the mergers; (ii) the potential risks associated with achieving anticipated cost synergies and savings and successfully integrating Partners’ business, operations and workforce with those of OceanFirst; and (iii) the other risks identified in the sections of this proxy statement/prospectus entitled “Risk Factors” beginning on page 19 and “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 25.

The foregoing discussion of the factors considered by the OceanFirst board is not intended to be exhaustive, but, rather, includes the material factors considered by the OceanFirst board. In reaching its decision to approve the merger agreement and the transactions contemplated by the merger agreement, the OceanFirst board did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The OceanFirst board considered all these factors as a whole and considered the factors to be favorable to, and to support, its determination. It should be noted that this explanation of the OceanFirst board’s reasoning and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the section of this proxy statement/prospectus entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 25.

Interests of Partners’ Directors and Executive Officers in the Mergers

In considering the recommendations of the Partners board, Partners stockholders should be aware that Partners’ directors and executive officers have interests in the mergers that may be different from, or in addition to, the interests of the Partners stockholders generally. These interests are described below. The Partners board was aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated by the merger agreement, including the mergers, and in determining to recommend that Partners stockholders vote to approve the integrated merger proposal.

The amounts shown below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, and do not reflect certain compensation actions that may be taken or that may occur before completion of the mergers.

 

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Treatment of Stock Options

Certain members of the Partners board and Partners’ executive officers hold outstanding options to purchase shares of Partners common stock granted under the Partners equity plans. The merger agreement provides that, at the effective time, each outstanding and unexercised stock option granted under the Partners equity plans, whether vested or unvested, will be canceled, extinguished and automatically exchanged into the right to receive a cash payment (without interest) equal to the product of (a) the aggregate number of shares of Partners common stock issuable upon exercise of such stock option and (b) the excess, if any, of (i) $10.00 over (ii) the per-share exercise price of such stock option, less applicable tax withholdings. The cash payments will be made as soon as practicable after the effective time.

The following table reflects the number of stock options held by each executive officer and director of Partners as of December 15, 2021 (which is the latest practicable date prior to this proxy statement/ prospectus). The estimated value of the stock options is based on (i) $10.00, net of the applicable per-share exercise price for the stock options, multiplied by (ii) the total number of shares subject to each stock option award.

 

		Partners Stock Options (#)				Weighted Average Exercise Price ($)				Aggregate Stock Option Value ($)
Executive Officers
Lloyd B. Harrison, III			—				—				—
John W. Breda			—				—				—
J. Adam Sothen			25,768			$	7.72			$	58,751
Elizabeth J. Eicher			—				—				—
Directors
Mona D. Albertine			4,638			$	5.83			$	19,340
Michael W. Clarke			—				—				—
Mark L. Granger			—				—				—
Kenneth R. Lehman			—				—				—
Steven R. Mote			—				—				—
George P. Snead			4,638			$	5.83			$	19,340
James A. Tamburro			—				—				—
Jeffrey F. Turner			—				—				—
Robert C. Wheatley			—				—				—

None of the executive officers and directors of Partners hold unvested restricted shares. For a discussion of the acceleration of Mr. Clarke’s restricted shares, see the section of this proxy statement/prospectus entitled “Bonus Payments related to Northern Virginia Expansion by Virginia Partners Bank” beginning on page 63.

Employment and Consulting Agreements

The executive officers of Partners have entered into agreements with OceanFirst Bank that will be effective at the effective time and will supersede such executive officers’ current employment agreements with Partners or its subsidiaries and affiliates (as applicable), and pursuant to which certain payments are expected to be made to the executive officers of Partners. The termination, change in control and severance provisions of each executive officer’s agreement with OceanFirst Bank are substantively consistent, with certain limited exceptions including as set forth below, with such officer’s current employment agreement with Partners. Pursuant to their respective agreements with OceanFirst Bank:

 

•

Pursuant to that certain consulting agreement, dated November 4, 2021, that will be effective at the effective time, Mr. Harrison’s employment with Partners and its subsidiaries and affiliates will terminate at the effective time and Mr. Harrison will serve as a consultant to OceanFirst and its subsidiaries for a period of 30 days following the closing date of the integrated mergers. Mr. Harrison will receive as compensation for such consulting services a payment equal to one month of his base

 

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salary at the rate in effect as of immediately prior to the “closing date” (as such term is defined in the consulting agreement).

Pursuant to such agreement, subject to Mr. Harrison signing (and not revoking) a release on or after the closing date, and consistent with the benefits provided by his current employment agreement with Partners and its subsidiaries and affiliates, in connection with Mr. Harrison’s termination of employment on the closing date of the integrated mergers, Mr. Harrison will receive his annual base salary as of the closing date for 12 months following the closing date. In addition, Mr. Harrison will receive a change in control benefit payable in 36 monthly installments in the aggregate amount equal to the sum of (i) three times his base salary as of the closing date, (ii) one times the average annual cash bonus compensation awarded to him during the preceding 24-month period, and (iii) the cost for 36 months of health, disability and term life insurance coverage equivalent to the premiums for health, disability and term life insurance coverage provided to him as of the closing date. OceanFirst Bank will transfer to Mr. Harrison the automobile currently provided by Partners to Mr. Harrison for nominal consideration.

The consulting agreement contains customary restrictive covenants, including confidentiality, cooperation, nondisclosure, prohibitions against competition with OceanFirst Bank and its predecessors and affiliates (“bank entities”) and solicitation of bank entities’ customers and employees, through the one year anniversary of the closing date of the integrated mergers.

 

•

Pursuant to that certain employment agreement, dated November 4, 2021, that will be effective at the effective time of the first-step merger, Mr. Breda will be employed as Regional President of OceanFirst Bank as of the effective time for an initial term of one year, with automatic renewals for additional one-year terms thereafter subject to written notice by either party not to renew at least 60 days prior to the expiration of any term. Mr. Breda will receive as compensation for such employment an annual base salary of $342,733, subject to increase (but not decrease) in the discretion of the OceanFirst Bank board of directors (based on the recommendation of the compensation committee). Mr. Breda will also be eligible to receive an annual cash bonus based on the achievement of performance goals established by the OceanFirst Bank board of directors, a $1.0 million life insurance policy, a vehicle allowance of $750 per month, and other vacation and leave, health, disability and other insurance policies as OceanFirst Bank may determine appropriate for all executive officers of OceanFirst Bank, and expense reimbursement benefits (including club membership fees).

Pursuant to such agreement, subject to Mr. Breda signing (and not revoking) a release on or after the closing date, and consistent with the benefits provided by his current employment agreement with Partners and Delmarva Bank, in connection with the closing of the integrated mergers, Mr. Breda will receive a change in control benefit payable in 36 monthly installments in the aggregate amount equal to the sum of (i) three times his base salary as of the closing date, (ii) one times the average annual cash bonus compensation awarded to him during the preceding 24-month period, and (iii) the cost for 36 months of health, disability and term life insurance coverage equivalent to the premiums for health, disability and term life insurance coverage provided to him as of the closing date. In connection with the closing, OceanFirst Bank will transfer to Mr. Breda the Partners-owned automobile currently provided by Partners to Mr. Breda for nominal consideration.

If, following the effective time, Mr. Breda terminates his employment with OceanFirst Bank for “good reason,” or OceanFirst Bank terminates Mr. Breda’s employment without “cause,” in each case as such term is defined in the employment agreement and during the term of the agreement, subject to Mr. Breda signing (and not revoking) a release, Mr. Breda would be entitled to receive, for 12 months, (x) continued salary as in effect as of the termination date, and (y) health insurance equivalent to the health insurance existing as of the termination date (or a comparable cash reimbursement). In addition, over the course of the same 12-month period, Mr. Breda would receive a payment equal to one times the average annual cash bonus compensation awarded to him over the preceding 24-month period. Such payments are consistent with severance benefits provided by Mr. Breda’s current employment agreement with Partners and Delmarva Bank.

 

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The employment agreement provides that the above payments, that are parachute payments under Code Section 280G(b)(2), will be reduced to the extent necessary such that the payments do not exceed an amount equal to one dollar less than the maximum amount OceanFirst Bank may pay without loss of the deduction under Code Section 280G(a); provided that, if Mr. Breda is terminated without cause during the term of the agreement, then a modified cutback provision applies, and such payments will be cutback only if Mr. Breda is not better off on an after-tax basis by paying the excise tax under Code Section 4999.

The employment agreement contains customary restrictive covenants, including perpetual confidentiality and nondisclosure requirements, as well as prohibitions against competition with Partners and solicitation of the bank entities’ customers and employees, both during the employment term and through the later of six months after the Mr. Breda’s termination date or one year after the closing date of the integrated mergers.

 

•

Pursuant to that certain employment agreement, dated November 4, 2021, that will be effective at the effective time, Mr. Sothen will be employed as Divisional Controller of OceanFirst Bank as of the effective time through the earlier of the four month anniversary of the closing date, or 30 days following the date of conversion or consolidation of the systems and business operations of the Partners and OceanFirst Bank (the “conversion date”). Mr. Sothen will receive as compensation for such employment (i) an annualized base salary of $206,000, paid in equal installments, subject to increase (but not decrease) in the discretion of the OceanFirst Bank board of directors, and (ii) a lump sum retention bonus of $50,000 (his “retention bonus”) if he remains employed by OceanFirst Bank through the conversion date. Mr. Sothen is also entitled to (a) participate in in any employee benefit plan maintained by OceanFirst Bank, (b) personal time off and (c) reimbursement for reasonable and customary business expenses.

Pursuant to such agreement, subject to Mr. Sothen signing (and not revoking) a release on or after the closing date, and consistent with the benefits provided by his current employment agreement with Partners, in connection with the closing of the integrated mergers, Mr. Sothen will receive a change in control benefit, payable in a lump sum within 60 days following the closing date of the integrated mergers, in an amount equal to the sum of (x) two times his annual base salary as in effect immediately preceding the closing date, (y) 18 months of the employer portion of premiums for all health care plans in which he or his spouse or any of his dependents were entitled to participate immediately prior to the closing date, and (z) his highest annual bonus earned for the three complete fiscal years immediately preceding the integrated mergers.

If, following the effective time but prior to the expiration of the term of his agreement, Mr. Sothen terminates his employment with OceanFirst Bank for “good reason,” or OceanFirst Bank terminates Mr. Sothen’s employment without “cause,” in each case as such term is defined in the employment agreement, subject to Mr. Sothen signing (and not revoking) a release, Mr. Sothen would be entitled to receive, for 12 months, (i) continued salary as in effect as of the termination date, and (ii) coverage under all health care plans in which he and his spouse and any dependents were participating immediately prior to termination, with OceanFirst Bank paying the employer portion of the premium (or a comparable cash reimbursement). In addition, Mr. Sothen would be entitled to receive accelerated vesting (if applicable, at maximum performance for any awards subject to an open performance period) of any outstanding OceanFirst equity-based awards held by him.

If Mr. Sothen is terminated by OceanFirst Bank without cause or resigns for good reason prior to the conversion date, OceanFirst Bank will pay his retention bonus in the next payroll period after his last day of employment.

In the event that payments and benefits under Mr. Sothen’s employment agreement, together with other payments and benefits he has received or may have the right to receive, on account of a change in control would subject him to the excise tax imposed under Section 4999 of the Code, then the payments and benefits will be reduced by OceanFirst Bank to the minimum extent necessary so that

 

60

none of the payments or benefits are subject to the excise tax, but in each case only if Mr. Sothen is not better off on an after-tax basis by paying such excise tax.

The employment agreement contains customary restrictive covenants, including confidentiality for a five-year period, as well as prohibitions against competition with the bank entities and solicitation of the bank entities’ customers and employees, during the employment term and through the later of six months after Mr. Sothen’s termination date or one year after the closing date of the integrated mergers.

 

•

Pursuant to that certain employment agreement, dated November 4, 2021, that will be effective at the effective time, Ms. Eicher will be employed as Divisional Controller of OceanFirst Bank as of the effective time through the earlier of the four month anniversary of the closing date, or 30 days following the conversion date. Ms. Eicher will receive as compensation for such employment an annualized base salary of $187,600, subject to increase (but not decrease) in the discretion of the OceanFirst Bank board of directors, and a lump sum retention bonus of $40,000 (her “retention bonus”) if she remains employed by OceanFirst Bank through the earlier of the four month anniversary of the closing date or the conversion date. Ms. Eicher is also entitled to (a) participate in in any employee benefit plan maintained by OceanFirst Bank, (b) personal time off and (c) receive reimbursement for reasonable and customary business expenses.

Pursuant to such agreement, subject to Ms. Eicher signing (and not revoking) a release on or after the closing date, and consistent with the benefits provided by her current employment agreement with Delmarva Bank, in connection with the closing of the integrated mergers, Ms. Eicher will receive a change in control benefit, payable in a lump sum within 60 days following the closing date of the integrated mergers, equal to the sum of (x) 1.5 times her base salary as in effect immediately preceding the closing date, (y) 18 months of the employer portion of premiums for all health care plans in which she or her spouse or any of her dependents were entitled to participate immediately prior to the closing date, and (z) her highest annual bonus for the three complete fiscal years immediately preceding the integrated mergers.

If, following the effective time but prior to the expiration of the term of her agreement, Ms. Eicher terminates her employment with OceanFirst Bank for “good reason” or OceanFirst Bank terminates Ms. Eicher’s employment without “cause,” in each case as such term is defined in the employment agreement, subject to Ms. Eicher signing (and not revoking) a release, Ms. Eicher would be entitled to receive, for 12 months, (i) continued salary as in effect as of the termination date, and (ii) coverage under all health care plans in which she and her spouse and dependents were participating immediately prior to termination, with OceanFirst Bank paying the employer portion of the premium (or a comparable cash reimbursement). In addition, Ms. Eicher would receive a lump sum cash payment, on the 60th day following her termination of employment, equal to her highest annual bonus for the three complete fiscal years immediately preceding the integrated mergers. Ms. Eicher would be entitled to receive accelerated vesting (if applicable, at maximum performance for any such awards subject to an open performance period) of any outstanding OceanFirst equity-based awards held by her.

If Ms. Eicher is terminated by OceanFirst Bank without cause or resigns for good reason prior to the four month anniversary of the closing date or the conversion date, OceanFirst Bank will pay her retention bonus in the next payroll period after his last day of employment.

In the event that payments and benefits under Ms. Eicher’s employment agreement, together with other payments and benefits she has received or may have the right to receive, on account of a change in control would subject her to the excise tax imposed under Section 4999 of the Code, then the payments and benefits will be reduced by OceanFirst Bank to the minimum extent necessary so that none of the payments or benefits are subject to the excise tax, but in each case only if Ms. Eicher is not better off on an after-tax basis by paying such excise tax.

The employment agreement contains customary restrictive covenants, including confidentiality for a five-year period, as well as prohibitions against competition with the bank entities and solicitation of the bank entities’ customers and employees during the employment term and through the later of six months after Ms. Eicher’s termination date or one year after the closing date of the integrated mergers.

 

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The payments described in this section will be subject to applicable tax withholdings. If the merger agreement is terminated prior to the effective time, the consulting agreement between OceanFirst and Mr. Harrison and the employment agreements between OceanFirst Bank and each of Mr. Breda, Mr. Sothen and Ms. Eicher will have no effect, and the terms of each executive’s current employment agreements with Partners or its affiliates shall remain in full force and effect.

OceanFirst and Partners have agreed that Partners will reimburse legal expenses of up to $100,000 in the aggregate incurred by certain employees of Partners, including the executive officers of Partners, in connection with the preparation and negotiation of agreements regarding employment or consulting services following the mergers.

Potential Payments and Benefits to Partners Named Executive Officers in Connection with a Change in Control

The information set forth in the following table is intended to comply with Item 402(t) of the SEC’s Regulation S-K, which requires disclosure of information about the payments and benefits that each of Partners’ named executive officers will or may receive in connection with the mergers, assuming: (i) that the effective time of the mergers is December 10, 2021, which is the latest practicable assumed date of the closing solely for purposes of the disclosure in this section; and (ii) that each of Mr. Harrison, Mr. Breda and Mr. Sothen are terminated either by OceanFirst Bank without “cause” or by the executive for “good reason” (as such terms are defined in the named executive officer’s new employment agreement) immediately following the assumed effective time on December 10, 2021. The amounts below do not include the value of benefits in which the named executive officers are vested without regard to the occurrence of a change in control, including the value of any compensation actions taken by Partners prior to December 10, 2021.

The amounts below are estimates based on multiple assumptions that may or may not actually occur and, as a result of the foregoing assumptions, the actual amounts, if any, to be received by a named executive officer of Partners may differ materially from the amounts shown below. The amounts set forth in the table below do not reflect certain compensation actions that may occur following the effective time of the integrated mergers, including but not limited to any payments made or benefits received under a named executive officer’s new employment agreement or consulting agreement with OceanFirst.

Golden Parachute Compensation

 

Named Executive Officer		Cash ($)(1)				Equity ($)(2)				Perquisites / Benefits ($)(3)				Tax Reimbursement($)				Total ($)(4)
Lloyd B. Harrison, III(5)		$	1,420,319				—			$	18,056				—			$	1,438,774
John W. Breda(6)		$	1,541,015				—			$	56,748				—			$	1,597.763
J. Adam Sothen(7)		$	712,441				—			$	8,250				—			$	720,691

 

(1)

Cash. The amounts in this column reflect cash change in control and severance payments to which the named executive officer would be entitled to receive in connection with the integrated mergers (subject to their execution and non-revocation of a release) under the named executive officer’s agreement described under “—Employment and Consulting Agreements,” based on the assumptions set forth above. The cash payable to the named executive officers consists of a combination of “single trigger” benefits in the case of the change in control payments, because these payments would be made upon the closing of a change in control transaction of OceanFirst Bank, and “double trigger” benefits in the case of the severance benefits, because these payments would be made upon a qualifying termination following a change in control transaction. The amounts in this column that are calculated by reference to average cash incentive bonuses do not include any cash incentive bonuses for 2021 performance, as such bonuses will not have been paid by the assumed effective time of the integrated mergers for purposes of this disclosure of December 10, 2021.

(2)	Equity. As of the date of this proxy statement/prospectus, none of the named executive officers of Partners have unvested stock options or restricted stock awards that will vest on an accelerated basis at the effective time of the integrated mergers.

 

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