• Oceanfirst Financial Corp. Announces Second Quarter Financial Results

    المصدر: Nasdaq GlobeNewswire / 20 يوليو 2023 16:15:05   America/New_York

    RED BANK, N.J., July 20, 2023 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:OCFC) (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), announced net income available to common stockholders of $26.8 million, or $0.45 per diluted share, for the three months ended June 30, 2023, as compared to $28.0 million, or $0.47 per diluted share, for the corresponding prior year period, and $26.9 million, or $0.46 per diluted share, for the prior linked quarter. For the six months ended June 30, 2023, the Company reported net income available to common stockholders of $53.7 million, or $0.91 per diluted share, as compared to $52.7 million, or $0.89 per diluted share, for the corresponding prior year period. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information):

     For the Three Months Ended, For the Six Months Ended,
    Performance Ratios (Annualized):

    June 30, March 31, June 30, June 30, June 30,
    2023  2023  2022  2023  2022 
    Return on average assets0.80% 0.82% 0.92% 0.81% 0.88%
    Return on average stockholders’ equity6.61  6.77  7.31  6.69  6.94 
    Return on average tangible stockholders’ equity (a)9.70  10.00  11.08  9.84  10.52 
    Return on average tangible common equity (a)10.21  10.53  11.72  10.37  11.13 
    Efficiency ratio62.28  60.78  59.65  61.53  60.68 
    Net interest margin3.02  3.34  3.29  3.17  3.24 

    (a) Return on average tangible stockholders’ equity and return on average tangible common equity (“ROTCE”), which are non-GAAP (“generally accepted accounting principles”) financial measures, exclude the impact of intangible assets and goodwill from both assets and stockholders’ equity. ROTCE also excludes preferred stock from stockholders’ equity. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

    Core earnings1 for the three and six months ended June 30, 2023 were $27.2 million and $59.9 million, respectively, or $0.46 and $1.01 per diluted share, representing a decrease from $34.6 million and $63.4 million, or $0.59 and $1.08 per diluted share, for the corresponding prior year periods, and a decrease from $32.7 million, or $0.55 per diluted share, for the prior linked quarter.

    Core earnings PTPP1 for the three and six months ended June 30, 2023 were $37.6 million and $83.7 million, respectively, or $0.64 and $1.42 per diluted share, as compared to $47.0 million and $86.7 million, or $0.80 and $1.47 per diluted share, for the corresponding prior year periods, and $46.1 million, or $0.78 per diluted share, for the prior linked quarter. Selected performance metrics are as follows:

     For the Three Months Ended, For the Six Months Ended,
     June 30, March 31, June 30, June 30, June 30,
    Core Ratios1 (Annualized): 2023   2023   2022   2023   2022 
    Return on average assets 0.81%  1.00%  1.13%  0.90%  1.06%
    Return on average tangible stockholders’ equity 9.84   12.15   13.73   10.98   12.65 
    Return on average tangible common equity 10.36   12.80   14.53   11.56   13.38 
    Efficiency ratio 61.94   56.49   54.43   59.13   55.89 
    Core diluted earnings per share$0.46  $0.55  $0.59  $1.01  $1.08 
    Core PTPP diluted earnings per share 0.64   0.78   0.80   1.42   1.47 


    Key developments for the recent quarter are described below:

    • Excess Liquidity: The Company maintained elevated levels of on-balance sheet cash and funding availability, which represented 260% of adjusted uninsured deposits2 at June 30, 2023. Deposits increased $165.2 million during the quarter, which included a shift from non-maturity deposits to time deposits.
    • Asset Quality: Continued strong asset quality as criticized assets, non-performing loans, and loans 30 to 89 days past due as a percent of total loans receivable were 1.18%, 0.23%, and 0.03%, respectively, at June 30, 2023. Net charge-off activity continues to remain at zero percent of total average loans on an annualized basis.
    • Strong Capital: Capital ratios remained above “well-capitalized” levels, including the Company’s common equity tier 1 capital, which increased 19 bps from the prior quarter, to 10.21% at June 30, 2023. Book value and tangible book value per share were $27.37 and $17.723, respectively, both up $0.30 from the prior quarter.

    Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “Our current quarter results were impacted by continued prudent balance sheet measures to increase liquidity, preserve our deposits, and continue supporting our existing banking relationships. We are optimistic that the pace of margin compression is behind us, but the outlook is uncertain should rates and competition remain elevated for longer. Although profitability decreased, our credit quality remains stellar, we grew capital, and remain well positioned to manage through any market uncertainty.” Mr. Maher added, “Our strong balance sheet will serve as a catalyst for our strategic initiatives and investments to improve our operating expenses. These initiatives are anticipated to improve performance as early as the fourth quarter and should enhance returns in future periods.”

    The Company’s Board of Directors declared its 106th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on August 18, 2023 to common stockholders of record on August 7, 2023. The Board declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock. This dividend will be paid on August 15, 2023 to preferred stockholders of record on July 31, 2023.

    Core earnings and core earnings before income taxes and provision for credit losses (“PTPP or Pre-Tax-Pre-Provision”), and ratios derived therefrom, are non-GAAP financial measures. For the periods presented, core earnings exclude merger related expenses, net branch consolidation (benefit) expense, net loss (gain) on equity investments, net loss on sale of investments, and the income tax effect of these items, (collectively referred to as “non-core” operations). PTPP excludes the aforementioned pre-tax “non-core” items along with income tax expense (benefit) and provision for credit losses (benefit). Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

    2 For additional information, refer to Earnings Release Supplement furnished as Exhibit 99.2 to Form 8-K filed with the SEC on July 20, 2023.

    3 Tangible book value per common share (also referred to as “tangible common equity per common share”) and tangible common equity to tangible assets, non-GAAP financial measures, exclude the impact of intangible assets, goodwill, and preferred equity from both stockholders’ equity and total assets. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

    Results of Operations

    The current quarter results were impacted by the following matters. Net interest income and cost of funds were adversely impacted by shifts to higher cost time deposits, repricing of government deposits, and maintaining excess liquidity on balance sheet, which outpaced the increase in interest-earning assets, driving an increase in deposit betas to 29%4. Total operating expenses included $580,000 of real estate charges on assets held for sale and $400,000 of talent acquisition retainers, which are not expected to reoccur.

    4 Deposit beta measures the change in the interest rates paid for interest-bearing deposit accounts versus the change in the federal funds target rate. Represents the deposit beta for total deposits (interest-bearing and non-interest bearing) for the current rate cycle (since December 31, 2021).

    Net Interest Income and Margin

    Three Months Ended June 30, 2023 vs. June 30, 2022

    Net interest income increased to $92.1 million, from $90.8 million, reflecting a net impact of higher interest rates and to a lesser extent, an increase in average interest-earning assets.

    Net interest margin decreased to 3.02% from 3.29%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.17% for the respective three months, net interest margin decreased to 2.97% from 3.12%. Net interest margin decreased primarily due to the increase in cost of funds outpacing that of average interest earning assets in the current interest rate environment.

    Average interest-earning assets increased by $1.17 billion for the three months, primarily driven by organic commercial loan growth, which increased $634.2 million. The average yield for interest-earning assets increased to 4.91% from 3.60%.

    The cost of average interest-bearing liabilities increased to 2.41%, from 0.42% due to higher cost of deposits noted above and higher cost Federal Home Loan Bank (“FHLB”) advances. The total cost of deposits (including non-interest bearing deposits) increased to 1.52% from 0.18%.

    Six months ended June 30, 2023 vs. June 30, 2022

    Net interest income increased to $190.9 million, from $175.0 million, reflecting a net impact of higher interest rates and to a lesser extent, an increase in average interest-earning assets.

    Net interest margin decreased to 3.17% from 3.24%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.04% and 0.15% for the respective six months, net interest margin increased to 3.13% from 3.09%.

    Average interest-earning assets increased by $1.22 billion. The cost of average interest-bearing liabilities increased to 2.10% from 0.39%. The total cost of deposits (including non-interest bearing deposits) increased to 1.21% from 0.17%.

    Three Months Ended June 30, 2023 vs. March 31, 2023

    Net interest income decreased by $6.7 million, reflecting a decrease in net interest margin to 3.02%, from 3.34%, as the increase in cost of funds outpaced the increase of average interest earning assets. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.04% for the respective three months, net interest margin decreased to 2.97%, from 3.30%. The compression in net interest margin was primarily attributable to higher cost of deposits noted above, a mix-shift to higher cost time deposits, and the impact of excess on-balance sheet liquidity built in the prior quarter.

    Average interest-earning assets increased by $240.0 million, primarily due to maintaining excess liquidity during the quarter and, to a lesser extent, commercial loan growth. The yield on average interest-earning assets increased to 4.91%, from 4.68%. The total cost of average interest-bearing liabilities increased to 2.41%, from 1.76%, and the total cost of deposits (including non-interest bearing deposits) increased to 1.52% from 0.88%, primarily due to higher cost of deposits and a mix-shift to higher cost time deposits.

    Provision for Credit Losses

    Provision for credit losses for the three and six months ended June 30, 2023 was $1.2 million and $4.2 million, respectively, as compared to $1.3 million and $3.1 million for the corresponding prior year periods, and $3.0 million in the prior linked quarter. The provision for credit losses for the current quarter reflected an increase to the allowance for loan credit losses, primarily related to commercial real estate, which was driven by sustained macroeconomic headwinds.

    Net loan charge-offs were $123,000 and $76,000 for the three and six months ended June 30, 2023, respectively. Net loan charge-offs were $9,000 and net loan recoveries were $83,000 for the three and six months ended June 30, 2022, respectively. Net loan recoveries were $47,000 in the prior linked quarter. Refer to “Asset Quality” section for further discussion.

    Non-interest Income

    Three Months Ended June 30, 2023 vs. June 30, 2022

    Other income increased to $8.9 million, as compared to $7.5 million. Other income was adversely impacted by non-core operations of $559,000 and $8.1 million, for the respective quarters, primarily related to net losses on preferred stock equity investments.

    Excluding non-core operations, other income decreased $6.1 million. The primary drivers were decreases in commercial loan swap income of $2.3 million and fees and service charges of $2.0 million, which were adversely impacted by the current interest rate environment resulting in lower swap volume and mortgage activity. Bankcard services revenue decreased $1.8 million due to the Durbin amendment, which became effective for the Company on July 1, 2022.

    Six months ended June 30, 2023 vs. June 30, 2022

    Other income decreased to $11.0 million, as compared to $16.4 million. Other income was adversely impacted by non-core operations of $8.1 million and $10.9 million, for the respective periods, primarily related to net losses on preferred stock equity investments. The current year’s non-core operations also included $5.3 million of losses related to the sale of investments in the first quarter.

    Excluding non-core operations, other income decreased $8.2 million. The primary drivers were decreases in commercial loan swap income on lower volume of $4.4 million, bankcard services revenue of $3.4 million, and income from bank owned life insurance of $1.1 million on lower claims.

    Three Months Ended June 30, 2023 vs. March 31, 2023

    Other income in the prior linked quarter included non-core operations of $7.5 million primarily related to net losses on preferred stock equity investments. Excluding non-core operations, other income decreased by $84,000.

    Non-interest Expense

    Three Months Ended June 30, 2023 vs. June 30, 2022

    Operating expenses increased to $62.9 million, as compared to $58.7 million. Operating expenses were adversely impacted by $742,000 of non-core operations in the prior year period.

    Excluding non-core operations, operating expenses increased by $5.0 million. This was due to increases in professional fees of $2.6 million related to the ongoing investments to improve profitability and operational efficiencies, and compensation and benefits expense of $1.1 million primarily related to inflation, annual merit-related compensation increases and higher medical costs. The current quarter also included increases to federal deposit insurance and regulatory assessments of $677,000 due to new assessment rates that went into effect on January 1, 2023, and real estate charges on assets held for sale of $580,000.

    Six months ended June 30, 2023 vs. June 30, 2022

    Operating expenses increased to $124.2 million, as compared to $116.2 million. Operating expenses for the periods were adversely impacted by $92,000 and $3.1 million of non-core operations, respectively.

    Excluding non-core operations, operating expenses increased by $11.1 million. This was due to increases in professional fees of $4.4 million and compensation and benefits expense of $4.3 million. The drivers of expenses for the three months ended were also the drivers for the six months ended. Additionally, other operating expenses included higher expenses of $580,000 and $427,000 related to real estate charges on assets held for sale and title search fees, respectively.

    Three Months Ended June 30, 2023 vs. March 31, 2023

    Excluding non-core operations of $92,000 in the prior linked quarter, operating expenses increased $1.7 million primarily due to increases in other operating expense of $898,000, related to real estate charges of $580,000, and federal deposit insurance and regulatory assessments of $716,000, primarily due to the one-time recovery of $661,000 for historical overpayments which was recognized in the prior linked quarter.

    Income Tax Expense

    The provision for income taxes was $9.0 million and $17.7 million for the three and six months ended June 30, 2023, respectively, as compared to $8.9 million and $16.9 million for the same prior year periods, and $8.7 million for the prior linked quarter. The effective tax rate was 24.4% and 24.0% for the three and six months ended June 30, 2023, respectively, as compared to 23.3% and 23.4% for the same prior year periods, and 23.7% for the prior linked quarter.

    Financial Condition

    June 30, 2023 vs. December 31, 2022

    Total assets increased by $435.0 million to $13.54 billion, from $13.10 billion, due to higher cash and due from banks and loans. Cash and due from banks increased $289.8 million to $457.7 million, from $167.9 million as the Company maintained excess liquidity on balance sheet. Total loans increased by $165.6 million to $10.08 billion, from $9.92 billion, due to loan originations.

    Total liabilities increased by $394.2 million to $11.91 billion, from $11.52 billion. Deposits increased by $483.1 million to $10.16 billion, from $9.68 billion. Time deposits increased to $2.77 billion from $1.54 billion, or 27.2% and 15.9% of total deposits, respectively. Brokered time deposits increased $547.9 million and retail time deposits increased $674.9 million. The loans-to-deposit ratio was 99.3%, as compared to 102.50%. FHLB advances decreased by $119.5 million to $1.09 billion, from $1.21 billion.

    Total stockholders’ equity increased to $1.63 billion, as compared to $1.59 billion, reflecting net income for the six months ended June 30, 2023 and a net increase in the fair market value of available-for-sale debt securities, net of tax, which decreased accumulated other comprehensive loss by $5.6 million.

    For the six months ended June 30, 2023, the Company did not repurchase shares under its stock repurchase program. There were 2,934,438 shares available for repurchase at June 30, 2023 under the existing repurchase program. Stockholders’ equity per common share5 increased to $27.37, as compared to $26.81. Tangible common equity per common share3 increased to $17.72, as compared to $17.08.

    5 Also referred to as “book value per common share.”

    Asset Quality

    June 30, 2023 vs. December 31, 2022

    The Company's asset quality remained strong, as evidenced by the following credit metrics. The Company’s non-performing loans decreased to $22.8 million from $23.3 million. The allowance for loan credit losses as a percentage of total non-performing loans was 271.51%, as compared to 244.25%. The level of 30 to 89 days delinquent loans decreased to $3.1 million, from $14.1 million, partly due to the number of days in each period. The Company’s allowance for loan credit losses was 0.61% of total loans, as compared to 0.57%. Refer to “Provision for Credit Losses” section for further discussion on the allowance.

    The Company’s asset quality excluding purchased with credit deterioration (“PCD”) loans were as follows. Non-performing loans increased to $19.6 million, from $19.3 million. The allowance for loan credit losses as a percentage of total non-performing loans was 315.47%, as compared to 294.10%. The level of 30 to 89 days delinquent loans decreased to $1.2 million, from $10.5 million, partly due to the number of days in each period. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $71.5 million, or 0.71% of total loans, as compared to $68.2 million, or 0.69% of total loans.

    Explanation of Non-GAAP Financial Measures

    Reported amounts are presented in accordance with GAAP. The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding non-core operations and in some instances excluding income taxes and provision for credit losses, and reporting equity and asset amounts excluding intangible assets, goodwill or preferred stock, which can vary from period to period, provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.

    Conference Call

    As previously announced, the Company will host an earnings conference call on Friday, July 21, 2023 at 11:00 a.m. Eastern Time. The direct dial number for the call is (833) 470-1428, using the access code 845952. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (866) 813-9403, access code 307056, from one hour after the end of the call until August 18, 2023. The conference call, as well as the replay, are also available (listen-only) by internet webcast at www.oceanfirst.com in the Investor Relations section.

    OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank N.A., founded in 1902, is a $13.5 billion regional bank providing financial services throughout New Jersey and in the major metropolitan markets of Philadelphia, New York, Baltimore, 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. To learn more about OceanFirst, go to www.oceanfirst.com

    Forward-Looking Statements
            
    In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: changes in interest rates, inflation, general economic conditions, potential recessionary conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters, potential increases to flood insurance premiums, the current or anticipated impact of military conflict, terrorism or other geopolitical events, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, changes in liquidity, including the size and composition of the Company’s deposit portfolio, including the percentage of uninsured deposits in the portfolio, competition, demand for financial services in the Company’s market area, changes in consumer spending, borrowing and saving habits, changes in accounting principles, a failure in or breach of the Company’s operational or security systems or infrastructure, including cyberattacks, the failure to maintain current technologies, failure to retain or attract employees, the impact of the COVID-19 pandemic or any other pandemic on our operations and financial results and those of our customers and the Bank’s ability to successfully integrate acquired operations. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, under Item 1A - Risk Factors and elsewhere, and subsequent securities filings and should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

     
    OceanFirst Financial Corp.
    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
    (dollars in thousands)
     
      June 30, March 31, December 31, June 30,
       2023  2023  2022  2022
      (Unaudited) (Unaudited)   (Unaudited)
    Assets        
    Cash and due from banks $457,747 $496,193 $167,946 $189,019
    Debt securities available-for-sale, at estimated fair value  452,016  452,195  457,648  507,276
    Debt securities held-to-maturity, net of allowance for securities credit losses of $964 at June 30, 2023, $1,043 at March 31, 2023, $1,128 at December 31, 2022, and $1,293 at June 30, 2022 (estimated fair value of $1,109,756 at June 30, 2023, $1,149,673 at March 31, 2023, $1,110,041 at December 31, 2022 and $987,532 at June 30, 2022)  1,222,507  1,245,424  1,221,138  1,068,034
    Equity investments  96,452  101,007  102,037  75,269
    Restricted equity investments, at cost  105,305  115,750  109,278  76,047
    Loans receivable, net of allowance for loan credit losses of $61,791 at June 30, 2023, $60,195 at March 31, 2023, $56,824 at December 31, 2022 and $52,061 at June 30, 2022  10,030,106  9,986,949  9,868,718  9,380,688
    Loans held-for-sale  4,200  1,885  690  
    Interest and dividends receivable  47,933  47,342  44,704  34,184
    Premises and equipment, net  124,139  126,019  126,705  128,118
    Bank owned life insurance  263,836  262,654  261,603  260,230
    Assets held for sale  3,608  2,719  2,719  4,263
    Goodwill  506,146  506,146  506,146  506,146
    Core deposit intangible  11,476  12,470  13,497  15,827
    Other assets  213,432  198,422  221,067  193,552
    Total assets $13,538,903 $13,555,175 $13,103,896 $12,438,653
    Liabilities and Stockholders’ Equity        
    Deposits $10,158,337 $9,993,095 $9,675,206 $9,831,484
    Federal Home Loan Bank advances  1,091,666  1,346,566  1,211,166  488,750
    Securities sold under agreements to repurchase with customers  74,452  70,938  69,097  105,495
    Other borrowings  195,925  195,663  195,403  194,654
    Advances by borrowers for taxes and insurance  27,839  31,198  21,405  23,640
    Other liabilities  364,401  307,344  346,155  273,198
    Total liabilities  11,912,620  11,944,804  11,518,432  10,917,221
    Stockholders’ equity:        
    OceanFirst Financial Corp. stockholders’ equity  1,625,435  1,609,553  1,584,662  1,520,488
    Non-controlling interest  848  818  802  944
    Total stockholders’ equity  1,626,283  1,610,371  1,585,464  1,521,432
    Total liabilities and stockholders’ equity $13,538,903 $13,555,175 $13,103,896 $12,438,653


     
    OceanFirst Financial Corp.
    CONSOLIDATED STATEMENTS OF INCOME
    (in thousands, except per share amounts)
     
      For the Three Months Ended, For the Six Months Ended,
      June 30, March 31, June 30, June 30, June 30,
       2023   2023   2022   2023   2022 
      |---------------------- (Unaudited) ----------------------| |---------- (Unaudited) -----------|
    Interest income:          
    Loans $129,104  $121,720  $90,731  $250,824  $173,199 
    Debt securities  14,320   14,286   7,473   28,606   14,977 
    Equity investments and other  6,672   3,028   1,212   9,700   2,223 
    Total interest income  150,096   139,034   99,416   289,130   190,399 
    Interest expense:          
    Deposits  37,934   21,330   4,317   59,264   8,358 
    Borrowed funds  20,053   18,902   4,302   38,955   7,017 
    Total interest expense  57,987   40,232   8,619   98,219   15,375 
    Net interest income  92,109   98,802   90,797   190,911   175,024 
    Provision for credit losses  1,229   3,013   1,254   4,242   3,105 
    Net interest income after provision for credit losses  90,880   95,789   89,543   186,669   171,919 
    Other income:          
    Bankcard services revenue  1,544   1,330   3,310   2,874   6,273 
    Trust and asset management revenue  645   612   658   1,257   1,267 
    Fees and service charges  5,602   5,159   7,646   10,761   10,706 
    Net gain on sales of loans  33   20   3   53   180 
    Net loss on equity investments  (559)  (6,801)  (8,078)  (7,360)  (10,864)
    Net gain from other real estate operations        50      48 
    Income from bank owned life insurance  1,182   1,281   1,422   2,463   3,525 
    Commercial loan swap income     701   2,294   701   5,075 
    Other  481   (229)  236   252   183 
    Total other income  8,928   2,073   7,541   11,001   16,393 
    Operating expenses:          
    Compensation and employee benefits  34,222   33,920   33,153   68,142   63,848 
    Occupancy  5,265   5,239   4,758   10,504   10,502 
    Equipment  1,101   1,205   1,336   2,306   2,706 
    Marketing  961   982   971   1,943   1,587 
    Federal deposit insurance and regulatory assessments  2,465   1,749   1,788   4,214   3,678 
    Data processing  6,165   6,154   6,170   12,319   11,906 
    Check card processing  1,214   1,281   1,515   2,495   2,497 
    Professional fees  5,083   5,098   2,472   10,181   5,794 
    Amortization of core deposit intangible  994   1,027   1,178   2,021   2,388 
    Branch consolidation expense, net     70   546   70   948 
    Merger related expenses     22   196   22   2,161 
    Other operating expense  5,460   4,562   4,578   10,022   8,141 
    Total operating expenses  62,930   61,309   58,661   124,239   116,156 
    Income before provision for income taxes  36,878   36,553   38,423   73,431   72,156 
    Provision for income taxes  8,996   8,654   8,940   17,650   16,914 
    Net income  27,882   27,899   29,483   55,781   55,242 
    Net income attributable to non-controlling interest  85   16   522   101   522 
    Net income attributable to OceanFirst Financial Corp.  27,797   27,883   28,961   55,680   54,720 
    Dividends on preferred shares  1,004   1,004   1,004   2,008   2,008 
    Net income available to common stockholders $26,793  $26,879  $27,957  $53,672  $52,712 
    Basic earnings per share $0.45  $0.46  $0.48  $0.91  $0.90 
    Diluted earnings per share $0.45  $0.46  $0.47  $0.91  $0.89 
    Average basic shares outstanding  59,147   58,774   58,894   58,988   58,823 
    Average diluted shares outstanding  59,153   58,918   58,995   59,038   58,975 


     
    OceanFirst Financial Corp.
    SELECTED LOAN AND DEPOSIT DATA
    (dollars in thousands)
     
    LOANS RECEIVABLE  At
       June 30, March 31, December 31, September 30, June 30,
        2023   2023   2022   2022   2022 
    Commercial:           
    Commercial real estate - investor  $5,319,686  $5,296,661  $5,171,952  $5,007,637  $4,808,965 
    Commercial real estate - owner-occupied  981,618   986,366   997,367   983,784   1,020,873 
    Commercial and industrial   620,284   622,201   622,372   652,620   584,464 
    Total commercial   6,921,588   6,905,228   6,791,691   6,644,041   6,414,302 
    Consumer:           
    Residential real estate   2,906,556   2,881,811   2,861,991   2,813,209   2,758,269 
    Home equity loans and lines and other consumer ("other consumer")  255,486   252,773   264,372   261,510   252,314 
    Total consumer   3,162,042   3,134,584   3,126,363   3,074,719   3,010,583 
    Total loans   10,083,630   10,039,812   9,918,054   9,718,760   9,424,885 
    Deferred origination costs (fees), net  8,267   7,332   7,488   7,249   7,864 
    Allowance for loan credit losses   (61,791)  (60,195)  (56,824)  (53,521)  (52,061)
    Loans receivable, net  $10,030,106  $9,986,949  $9,868,718  $9,672,488  $9,380,688 
    Mortgage loans serviced for others $50,820  $50,421  $51,736  $53,869  $56,045 
     At June 30, 2023 Average Yield          
    Loan pipeline (1):           
    Commercial7.71% $39,164  $236,550  $114,232  $339,487  $273,843 
    Residential real estate6.82   58,022   61,258   36,958   80,591   104,920 
    Other consumer7.51   18,621   20,589   14,890   19,395   6,278 
    Total7.23% $115,807  $318,397  $166,080  $439,473  $385,041 


     For the Three Months Ended
     June 30, March 31, December 31, September 30, June 30,
     2023  2023   2022   2022   2022 
     Average Yield          
    Loan originations:           
    Commercial7.60% $197,732  $200,504  $539,949  $356,726  $645,863 
    Residential real estate6.40   100,542   65,580   101,530(2)  129,808   173,365 
    Other consumer7.21   22,487   15,927   42,624   57,254   16,253 
    Total7.20% $320,761  $282,011  $684,103  $543,788  $835,481 
    Loans sold  $18,664  $3,861  $2,340  $9,425 (3)$ 


    (1) Loan pipeline includes loans approved but not funded.
    (2) Excludes residential real estate loan pool purchases of $9.9 million for the three months ended December 31, 2022.
    (3) Excludes the sale of a small business administration loan of $1.2 million for the three months ended September 30, 2022.   

      

    DEPOSITSAt
     June 30, March 31, December 31, September 30, June 30,
      2023  2023  2022  2022  2022
    Type of Account         
    Non-interest-bearing$1,854,136 $1,984,197 $2,101,308 $2,325,547 $2,312,126
    Interest-bearing checking 3,537,834  3,697,223  3,829,683  3,909,864  3,696,067
    Money market 770,440  615,993  714,386  749,229  716,782
    Savings 1,229,897  1,308,715  1,487,809  1,570,472  1,606,534
    Time deposits 2,766,030  2,386,967  1,542,020  1,404,357  1,499,975
    Total deposits$10,158,337 $9,993,095 $9,675,206 $9,959,469 $9,831,484


     
    OceanFirst Financial Corp.
    ASSET QUALITY
    (dollars in thousands)
     
    ASSET QUALITY

    June 30, March 31, December 31, September 30, June 30,
     2023   2023   2022   2022   2022 
    Non-performing loans:         
    Commercial real estate - investor$13,000  $13,643  $10,483  $9,866  $2,609 
    Commercial real estate - owner-occupied 565   251   4,025   1,976   8,233 
    Commercial and industrial 199   162   331   321   364 
    Residential real estate 6,174   5,650   5,969   5,958   5,846 
    Other consumer 2,820   2,731   2,457   3,377   3,701 
    Total non-performing loans$22,758  $22,437  $23,265  $21,498  $20,753 
    Delinquent loans 30 to 89 days$3,136  $11,232  $14,148  $11,846  $9,558 
    Modifications to borrowers experiencing financial difficulty (1)         
    Non-performing (included in total non-performing loans above)$6,882  $6,556  $6,361  $10,047  $10,493 
    Performing 7,516   7,619   7,530   6,065   6,946 
    Total modifications to borrowers experiencing financial difficulty (1)$14,398  $14,175  $13,891  $16,112  $17,439 
    Allowance for loan credit losses$61,791  $60,195  $56,824  $53,521  $52,061 
    Allowance for loan credit losses as a percent of total loans receivable (2) 0.61%  0.60%  0.57%  0.55%  0.55%
    Allowance for loan credit losses as a percent of total non-performing loans (2) 271.51   268.28   244.25   248.96   250.86 
    Non-performing loans as a percent of total loans receivable 0.23   0.22   0.23   0.22   0.22 
    Non-performing assets as a percent of total assets 0.17   0.17   0.18   0.17   0.17 
    Supplemental PCD and non-performing loans         
    PCD loans, net of allowance for loan credit losses$18,872  $20,513  $27,129  $29,249  $35,227 
    Non-performing PCD loans 3,171   3,929   3,944   3,043   3,529 
    Delinquent PCD and non-performing loans 30 to 89 days 1,976   2,248   3,657   1,434   1,381 
    PCD modifications to borrowers experiencing financial difficulty (1) 755   758   765   715   997 
    Asset quality, excluding PCD loans (3)         
    Non-performing loans 19,587   18,508   19,321   18,455   17,224 
    Delinquent loans 30 to 89 days (excludes non-performing loans) 1,160   8,984   10,491   10,412   8,177 
    Modifications to borrowers experiencing financial difficulty(1) 13,643   13,417   13,126   15,397   16,442 
    Allowance for loan credit losses as a percent of total non-performing loans (2) 315.47%  325.24%  294.10%  290.01%  302.26%
    Non-performing loans as a percent of total loans receivable 0.19   0.18   0.19   0.19   0.18 
    Non-performing assets as a percent of total assets 0.14   0.14   0.15   0.15   0.14 


    (1)For periods in 2023, balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings. For periods in 2022, the balances only include troubled debt restructurings.
    (2)Loans acquired from prior bank acquisitions were recorded at fair value. The net unamortized credit and PCD marks on these loans, not reflected in the allowance for loan credit losses, was $9.8 million, $10.5 million, $11.4 million, $13.6 million and $15.5 million at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively.
    (3)All balances and ratios exclude PCD loans.


    NET LOAN (CHARGE-OFFS) RECOVERIESFor the Three Months Ended
     June 30, March 31, December 31, September 30, June 30,
      2023   2023   2022   2022   2022 
    Net loan (charge-offs) recoveries:         
    Loan charge-offs$(206) $(10) $(138) $(5) $(287)
    Recoveries on loans 83   57   143   257   278 
    Net loan (charge-offs) recoveries$(123) $47  $5  $252  $(9)
    Net loan (charge-offs) recoveries to average total loans (annualized) % NM* NM* NM*  %
    Net loan (charge-offs) recoveries detail:         
    Commercial$(117) $  $(46) $117  $154 
    Residential real estate 9   8   9   44   (47)
    Other consumer (15)  39   42   91   (116)
    Net loan (charge-offs) recoveries$(123) $47  $5  $252  $(9)

    * Not meaningful as amounts are net loan recoveries.

     
    OceanFirst Financial Corp.
    ANALYSIS OF NET INTEREST INCOME
     
     For the Three Months Ended
     June 30, March 31, June 30,
      2023   2023   2022 
    (dollars in thousands)Average
    Balance
     Interest Average
    Yield/
    Cost (1)
     Average
    Balance
     Interest Average
    Yield/
    Cost (1)
     Average
    Balance
     Interest Average
    Yield/
    Cost (1)
    Assets:                 
    Interest-earning assets:                 
    Interest-earning deposits and short-term investments$308,238  $4,283 5.57% $129,740  $938 2.93% $67,440  $100 0.59%
    Securities (2) 1,931,032   16,709 3.47   1,955,399   16,376 3.40   1,811,869   8,585 1.90 
    Loans receivable, net (3)                 
    Commercial 6,912,698   99,350 5.76   6,840,006   92,780 5.50   6,278,465   65,390 4.18 
    Residential real estate 2,895,629   25,936 3.58   2,872,049   25,161 3.50   2,718,787   22,742 3.35 
    Other consumer 255,785   3,818 5.99   263,404   3,779 5.82   251,014   2,599 4.15 
    Allowance for loan credit losses, net of deferred loan costs and fees (53,327)      (50,554)      (43,683)    
    Loans receivable, net 10,010,785   129,104 5.17   9,924,905   121,720 4.96   9,204,583   90,731 3.95 
    Total interest-earning assets 12,250,055   150,096 4.91   12,010,044   139,034 4.68   11,083,892   99,416 3.60 
    Non-interest-earning assets 1,217,666       1,234,549       1,168,093     
    Total assets$13,467,721      $13,244,593      $12,251,985     
    Liabilities and Stockholders’ Equity:                 
    Interest-bearing liabilities:                 
    Interest-bearing checking$3,718,289   11,964 1.29% $3,863,338   6,269 0.66% $4,020,474   1,612 0.16%
    Money market 694,311   3,678 2.12   705,631   1,759 1.01   739,647   279 0.15 
    Savings 1,248,312   389 0.12   1,369,118   334 0.10   1,639,568   161 0.04 
    Time deposits 2,458,872   21,903 3.57   1,826,662   12,968 2.88   937,387   2,265 0.97 
    Total 8,119,784   37,934 1.87   7,764,749   21,330 1.11   7,337,076   4,317 0.24 
    FHLB Advances 1,246,914   15,406 4.96   1,222,791   14,614 4.85   538,754   1,647 1.23 
    Securities sold under agreements to repurchase 71,752   192 1.07   71,898   90 0.51   103,929   41 0.16 
    Other borrowings 195,754   4,455 9.13   212,159   4,198 8.02   194,481   2,614 5.39 
    Total borrowings 1,514,420   20,053 5.31   1,506,848   18,902 5.09   837,164   4,302 2.06 
    Total interest-bearing liabilities 9,634,204   57,987 2.41   9,271,597   40,232 1.76   8,174,240   8,619 0.42 
    Non-interest-bearing deposits 1,873,226       2,028,507       2,328,124     
    Non-interest-bearing liabilities 333,598       334,812       214,900     
    Total liabilities 11,841,028       11,634,916       10,717,264     
    Stockholders’ equity 1,626,693       1,609,677       1,534,721     
    Total liabilities and equity$13,467,721      $13,244,593      $12,251,985     
    Net interest income  $92,109     $98,802     $90,797  
    Net interest rate spread (4)    2.50%     2.92%     3.18%
    Net interest margin (5)    3.02%     3.34%     3.29%
    Total cost of deposits (including non-interest-bearing deposits)    1.52%     0.88%     0.18%


     

     For the Six Months Ended June 30,
      2023   2022 
    (dollars in thousands)Average
    Balance
     Interest Average
    Yield/
    Cost (1)
     Average
    Balance
     Interest Average
    Yield/
    Cost (1)
    Assets:           
    Interest-earning assets:           
    Interest-earning deposits and short-term investments$219,482  $5,221 4.80% $78,074  $136 0.35%
    Securities (2) 1,943,148   33,085 3.43   1,829,065   17,064 1.88 
    Loans receivable, net (3)           
    Commercial 6,876,553   192,130 5.63   6,157,060   123,745 4.05 
    Residential real estate 2,883,904   51,097 3.54   2,631,208   44,081 3.35 
    Other consumer 259,573   7,597 5.90   254,002   5,373 4.27 
    Allowance for loan credit losses, net of deferred loan costs and fees (51,948)      (42,080)    
    Loans receivable, net 9,968,082   250,824 5.07   9,000,190   173,199 3.87 
    Total interest-earning assets 12,130,712   289,130 4.80   10,907,329   190,399 3.51 
    Non-interest-earning assets 1,226,061       1,191,453     
    Total assets$13,356,773      $12,098,782     
    Liabilities and Stockholders’ Equity:           
    Interest-bearing liabilities:           
    Interest-bearing checking$3,790,413   18,234 0.97% $4,197,935   3,762 0.18%
    Money market 699,940   5,437 1.57   763,721   596 0.16 
    Savings 1,308,381   723 0.11   1,624,575   286 0.04 
    Time deposits 2,144,514   34,870 3.28   853,017   3,714 0.88 
    Total 7,943,248   59,264 1.50   7,439,248   8,358 0.23 
    FHLB Advances 1,234,919   29,824 4.87   285,501   1,682 1.19 
    Securities sold under agreements to repurchase 71,825   282 0.79   110,738   83 0.15 
    Other borrowings 203,911   8,849 8.75   211,407   5,252 5.01 
    Total borrowings 1,510,655   38,955 5.20   607,646   7,017 2.33 
    Total interest-bearing liabilities 9,453,903   98,219 2.10   8,046,894   15,375 0.39 
    Non-interest-bearing deposits 1,950,437       2,364,757     
    Non-interest-bearing liabilities 334,201       155,832     
    Total liabilities 11,738,541       10,567,483     
    Stockholders’ equity 1,618,232       1,531,299     
    Total liabilities and equity$13,356,773      $12,098,782     
    Net interest income  $190,911     $175,024  
    Net interest rate spread (4)    2.70%     3.12%
    Net interest margin (5)    3.17%     3.24%
    Total cost of deposits (including non-interest-bearing deposits)    1.21%     0.17%







    (1)Average yields and costs are annualized.
    (2)Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost, net of allowance for securities credit losses.
    (3)Amount is net of deferred loan costs and fees, undisbursed loan funds, discounts and premiums and allowance for loan credit losses, and includes loans held for sale and non-performing loans.
    (4)Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
    (5)Net interest margin represents net interest income divided by average interest-earning assets. 


     
    OceanFirst Financial Corp.
    SELECTED QUARTERLY FINANCIAL DATA
    (in thousands, except per share amounts)
     
      June 30, March 31, December 31, September 30, June 30,
       2023   2023   2022   2022   2022 
    Selected Financial Condition Data:          
    Total assets $13,538,903  $13,555,175  $13,103,896  $12,683,453  $12,438,653 
    Debt securities available-for-sale, at estimated fair value  452,016   452,195   457,648   470,300   507,276 
    Debt securities held-to-maturity, net of allowance for securities credit losses  1,222,507   1,245,424   1,221,138   1,027,712   1,068,034 
    Equity investments  96,452   101,007   102,037   81,722   75,269 
    Restricted equity investments, at cost  105,305   115,750   109,278   77,556   76,047 
    Loans receivable, net of allowance for loan credit losses  10,030,106   9,986,949   9,868,718   9,672,488   9,380,688 
    Deposits  10,158,337   9,993,095   9,675,206   9,959,469   9,831,484 
    Federal Home Loan Bank advances  1,091,666   1,346,566   1,211,166   514,200   488,750 
    Securities sold under agreements to repurchase and other borrowings  270,377   266,601   264,500   291,203   300,149 
    Total stockholders’ equity  1,626,283   1,610,371   1,585,464   1,540,216   1,521,432 


      For the Three Months Ended,
      June 30, March 31, December 31, September 30, June 30,
       2023   2023   2022  2022   2022 
    Selected Operating Data:          
    Interest income $150,096  $139,034  $130,277 $110,499  $99,416 
    Interest expense  57,987   40,232   23,789  14,534   8,619 
    Net interest income  92,109   98,802   106,488  95,965   90,797 
    Provision for credit losses  1,229   3,013   3,647  1,016   1,254 
    Net interest income after provision for credit losses  90,880   95,789   102,841  94,949   89,543 
    Other income (excluding activity related to debt and equity investments)  9,487   9,571   10,364  11,788   15,619 
    Net (loss) gain on equity investments  (559)  (2,193)  17,187  3,362   (8,078)
    Net loss on sale of investments     (5,305)        
    Operating expenses (excluding merger related and branch consolidation expense (benefit), net)  62,930   61,217   59,341  59,045   57,919 
    Branch consolidation expense (benefit), net     70   111  (346)  546 
    Merger related expenses     22   276  298   196 
    Income before provision for income taxes  36,878   36,553   70,664  51,102   38,423 
    Provision for income taxes  8,996   8,654   17,353  12,298   8,940 
    Net income  27,882   27,899   53,311  38,804   29,483 
    Net income attributable to non-controlling interest  85   16   39  193   522 
    Net income attributable to OceanFirst Financial Corp. $27,797  $27,883  $53,272 $38,611  $28,961 
    Net income available to common stockholders $26,793  $26,879  $52,268 $37,607  $27,957 
    Diluted earnings per share $0.45  $0.46  $0.89 $0.64  $0.47 
    Net accretion/amortization of purchase accounting adjustments included in net interest income $1,152  $1,237  $2,278 $2,004  $2,196 


     

      At or For the Three Months Ended
      June 30, March 31, December 31, September 30, June 30,
      2023  2023  2022  2022  2022 
    Selected Financial Ratios and Other Data(1) (2):          
    Performance Ratios (Annualized):          
    Return on average assets (3) 0.80% 0.82% 1.62% 1.19% 0.92%
    Return on average tangible assets (3) (4) 0.83  0.86  1.68  1.24  0.96 
    Return on average stockholders’ equity (3) 6.61  6.77  13.25  9.68  7.31 
    Return on average tangible stockholders’ equity (3) (4) 9.70  10.00  19.85  14.62  11.08 
    Return on average tangible common equity (3) (4) 10.21  10.53  20.97  15.47  11.72 
    Stockholders’ equity to total assets 12.01  11.88  12.10  12.14  12.23 
    Tangible stockholders’ equity to tangible assets (4)  8.51  8.37  8.47  8.38  8.39 
    Tangible common equity to tangible assets (4)  8.09  7.95  8.03  7.92  7.92 
    Net interest rate spread 2.50  2.92  3.37  3.19  3.18 
    Net interest margin 3.02  3.34  3.64  3.36  3.29 
    Operating expenses to average assets 1.87  1.88  1.85  1.87  1.92 
    Efficiency ratio (5) 62.28  60.78  44.56  53.10  59.65 
    Loans-to-deposits 99.30  100.50  102.50  97.60  95.90 


      For the Six Months Ended June 30,
      2023  2022 
    Performance Ratios (Annualized):    
    Return on average assets (3) 0.81% 0.88%
    Return on average tangible assets (3) (4) 0.84  0.92 
    Return on average stockholders’ equity (3)  6.69  6.94 
    Return on average tangible stockholders’ equity (3) (4)  9.84  10.52 
    Return on average tangible common equity (3) (4)  10.37  11.13 
    Net interest rate spread 2.70  3.12 
    Net interest margin 3.17  3.24 
    Operating expenses to average assets 1.88  1.94 
    Efficiency ratio (5) 61.53  60.68 


      At or For the Three Months Ended
      June 30, March 31, December 31, September 30, June 30,
       2023   2023   2022   2022   2022 
    Trust and Asset Management:          
    Wealth assets under administration and management (“AUA/M”) $339,890  $333,436  $324,066  $273,815  $279,222 
    Nest Egg AUA/M  397,927   400,227   403,538   402,256   398,344 
    Total AUA/M  737,817   733,663   727,604   676,071   677,566 
    Per Share Data:          
    Cash dividends per common share $0.20  $0.20  $0.20  $0.20  $0.17 
    Stockholders' equity per common share at end of period  27.37   27.07   26.81   26.04   25.73 
    Tangible common equity per common share at end of period (4)   17.72   17.42   17.08   16.30   15.96 
    Common shares outstanding at end of period  59,420,859   59,486,086   59,144,128   59,138,507   59,130,236 
    Preferred shares outstanding at end of period  57,370   57,370   57,370   57,370   57,370 
    Number of full-service customer facilities:  38   38   38   38   38 
    Quarterly Average Balances          
    Total securities $1,931,032  $1,955,399  $1,764,764  $1,748,687  $1,811,869 
    Loans receivable, net  10,010,785   9,924,905   9,771,104   9,512,447   9,204,583 
    Total interest-earning assets  12,250,055   12,010,044   11,605,891   11,326,782   11,083,892 
    Total goodwill and core deposit intangible  518,265   519,282   520,400   521,566   522,666 
    Total assets  13,467,721   13,244,593   12,834,411   12,517,955   12,251,985 
    Time deposits  2,458,872   1,826,662   1,486,410   1,467,297   937,387 
    Total deposits (including non-interest-bearing deposits)  9,993,010   9,793,256   9,975,509   10,066,342   9,665,200 
    Total borrowings  1,514,420   1,506,848   915,565   643,294   837,164 
    Total interest-bearing liabilities  9,634,204   9,271,597   8,669,190   8,380,936   8,174,240 
    Non-interest bearing deposits  1,873,226   2,028,507   2,221,884   2,328,700   2,328,124 
    Stockholders' equity  1,626,693   1,609,677   1,564,856   1,541,755   1,534,721 
    Tangible stockholders’ equity (4)  1,108,428   1,090,395   1,044,456   1,020,189   1,012,055 
               
    Quarterly Yields and Costs          
    Total securities  3.47%  3.40%  2.83%  2.27%  1.90%
    Loans receivable, net  5.17   4.96   4.76   4.18   3.95 
    Total interest-earning assets  4.91   4.68   4.46   3.88   3.60 
    Time deposits  3.57   2.88   1.95   1.53   0.97 
    Total cost of deposits (including non-interest-bearing deposits)  1.52   0.88   0.53   0.36   0.18 
    Total borrowed funds  5.31   5.09   4.49   3.27   2.06 
    Total interest-bearing liabilities  2.41   1.76   1.09   0.69   0.42 
    Net interest spread  2.50   2.92   3.37   3.19   3.18 
    Net interest margin  3.02   3.34   3.64   3.36   3.29 

     

    (1)With the exception of end of quarter ratios, all ratios are based on average daily balances.
    (2)Performance ratios for each period are presented on a GAAP basis and include non-core operations. Refer to “Non-GAAP Reconciliation.”
    (3)Ratios for each period are based on net income available to common stockholders.
    (4)Tangible stockholders’ equity and tangible assets exclude intangible assets related to goodwill and core deposit intangible. Tangible common equity excludes goodwill, core deposit intangible and preferred equity. Refer to “Non-GAAP Reconciliation.”
    (5)Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.


     
    OceanFirst Financial Corp.
    OTHER ITEMS
    (dollars in thousands, except per share amounts) 

    NON-GAAP RECONCILIATION
     
      For the Three Months Ended
      June 30, March 31, December 31, September 30, June 30,
       2023   2023   2022   2022   2022 
    Core Earnings:          
    Net income available to common stockholders (GAAP) $26,793  $26,879  $52,268  $37,607  $27,957 
    Add (less) non-recurring and non-core items:          
    Net loss (gain) on equity investments(1)  559   2,193   (17,187)  (3,362)  8,078 
    Net loss on sale of investments(1)     5,305          
    Merger related expenses     22   276   298   196 
    Branch consolidation expense (benefit), net     70   111   (346)  546 
    Income tax (benefit) expense on items  (162)  (1,797)  4,060   824   (2,132)
    Core earnings (Non-GAAP) $27,190  $32,672  $39,528  $35,021  $34,645 
    Income tax expense $8,996  $8,654  $17,353  $12,298  $8,940 
    Provision for credit losses  1,229   3,013   3,647   1,016   1,254 
    Less: income tax (benefit) expense on non-core items  (162)  (1,797)  4,060   824   (2,132)
    Core earnings PTPP (Non-GAAP) $37,577  $46,136  $56,468  $47,511  $46,971 
    Core earnings diluted earnings per share $0.46  $0.55  $0.67  $0.60  $0.59 
    Core earnings PTPP diluted earnings per share $0.64  $0.78  $0.96  $0.81  $0.80 
               
    Core Ratios (Annualized):          
    Return on average assets  0.81%  1.00%  1.22%  1.11%  1.13%
    Return on average tangible stockholders’ equity  9.84   12.15   15.01   13.62   13.73 
    Return on average tangible common equity  10.36   12.80   15.86   14.40   14.53 
    Efficiency ratio  61.94   56.49   50.78   54.80   54.43 

     

    (1)The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on equity investments ($4.6 million) and other ($697,000), respectively, for the three months ended March 31, 2023.


      For the Six Months Ended June 30,
       2023   2022 
    Core Earnings:    
    Net income available to common stockholders (GAAP) $53,672  $52,712 
    Add (less) non-recurring and non-core items:    
    Merger related expenses  22   2,161 
    Branch consolidation expense, net  70   948 
    Net loss on equity investments(1)  2,752   10,864 
    Net loss on sale of investments(1)  5,305    
    Income tax benefit on items  (1,959)  (3,273)
    Core earnings (Non-GAAP) $59,862  $63,412 
    Income tax expense $17,650  $16,914 
    Credit loss provision  4,242   3,105 
    Less: income tax benefit on non-core items  (1,959)  (3,273)
    Core earnings PTPP (Non-GAAP) $83,713  $86,704 
    Core diluted earnings per share $1.01  $1.08 
    Core earnings PTPP diluted earnings per share $1.42  $1.47 
         
    Core Ratios (Annualized):    
    Return on average assets  0.90%  1.06%
    Return on average tangible stockholders’ equity  10.98   12.65 
    Return on average tangible common equity  11.56   13.38 
    Efficiency ratio  59.13   55.89 


    (1)The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on equity investments ($4.6 million) and other ($697,000), respectively, for the three months ended March 31, 2023.


      June 30, March 31, December 31, September 30, June 30,
       2023   2023   2022   2022   2022 
    Tangible Equity:          
    Total stockholders' equity $1,626,283  $1,610,371  $1,585,464  $1,540,216  $1,521,432 
    Less:          
    Goodwill  506,146   506,146   506,146   506,146   506,146 
    Core deposit intangible  11,476   12,470   13,497   14,656   15,827 
    Tangible stockholders' equity  1,108,661   1,091,755   1,065,821   1,019,414   999,459 
    Less:          
    Preferred stock  55,527   55,527   55,527   55,527   55,527 
    Tangible common equity $1,053,134  $1,036,228  $1,010,294  $963,887  $943,932 
               
    Tangible Assets:           
    Total assets $13,538,903  $13,555,175  $13,103,896  $12,683,453  $12,438,653 
    Less:          
    Goodwill  506,146   506,146   506,146   506,146   506,146 
    Core deposit intangible  11,476   12,470   13,497   14,656   15,827 
    Tangible assets $13,021,281  $13,036,559  $12,584,253  $12,162,651  $11,916,680 
               
    Tangible stockholders' equity to tangible assets  8.51%  8.37%  8.47%  8.38%  8.39%
    Tangible common equity to tangible assets  8.09%  7.95%  8.03%  7.92%  7.92%


    Company Contact:                                                                                     

    Patrick S. Barrett
    Chief Financial Officer
    OceanFirst Financial Corp.
    Tel: (732) 240-4500, ext. 7507
    Email: pbarrett@oceanfirst.com


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