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OceanFirst Financial Corp. Announces First Quarter Financial Results

RED BANK, N.J., April 18, 2024 (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 $27.7 million, or $0.47 per diluted share, for the quarter ended March 31, 2024, an increase from $26.9 million, or $0.46 per diluted share, for the corresponding prior year period, and $26.7 million, or $0.46 per diluted share, for the prior linked quarter. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information):

 For the Three Months Ended,
Performance Ratios (Annualized):
March 31, December 31, March 31,
2024  2023  2023 
Return on average assets0.82% 0.78% 0.82%
Return on average stockholders’ equity6.65  6.41  6.77 
Return on average tangible stockholders’ equity (a)9.61  9.33  10.00 
Return on average tangible common equity (a)10.09  9.81  10.53 
Efficiency ratio59.56  60.38  60.78 
Net interest margin2.81  2.82  3.34 

(a) Return on average tangible stockholders’ equity and return on average tangible common equity (“ROTCE”) are non-GAAP (“generally accepted accounting principles”) financial measures and 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 quarter ended March 31, 2024 was $25.6 million, or $0.44 per diluted share, a decrease from $32.7 million, or $0.55 per diluted share, for the corresponding prior year period, and a decrease from $26.3 million, or $0.45 per diluted share, for the prior linked quarter.

Core earnings PTPP1 for the quarter ended March 31, 2024 was $36.2 million, or $0.62 per diluted share, as compared to $46.1 million, or $0.78 per diluted share, for the corresponding prior year period, and $37.9 million, or $0.65 per diluted share, for the prior linked quarter. Selected performance metrics are as follows:

 For the Three Months Ended,
 March 31, December 31, March 31,
Core Ratios1 (Annualized): 2024   2023   2023 
Return on average assets 0.76%  0.77%  1.00%
Return on average tangible stockholders’ equity 8.91   9.20   12.15 
Return on average tangible common equity 9.36   9.67   12.80 
Efficiency ratio 61.05   60.02   56.49 
Core diluted earnings per share$0.44  $0.45  $0.55 
Core PTPP diluted earnings per share 0.62   0.65   0.78 


Key developments for the recent quarter are described below:

  • Net Interest Margin Stabilization: Net interest margin of 2.81% decreased slightly from the prior linked quarter of 2.82%.
  • Capital Accretion: The Company continued to build capital, while also resuming share repurchases. The Company’s estimated common equity tier 1 capital ratio, book value and tangible book value per share were 11.0%, $28.32 and $18.63, respectively, and increased approximately 15 basis points, $0.36 and $0.28 from the prior linked quarter.2 The Company repurchased 957,827 shares totaling $15.1 million.
  • Expense Management: The Company continued to exercise disciplined expense control. Excluding the FDIC special assessment charge of $418,000 in the current quarter and $1.7 million in the prior linked quarter, non-interest expense decreased slightly to $58.3 million, from $58.5 million.
  • Asset Quality: Asset quality metrics remain strong as criticized and classified assets, non-performing loans, and loans 30 to 89 days past due as a percentage of total loans receivable were 1.65%, 0.35%, and 0.17%, respectively. These metrics continue to reflect strong credit performance and remain low compared to pre-pandemic levels.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased to report on our first quarter results, which reflected a stable net interest margin, prudent balance sheet management, and expense discipline. Additionally, we continued to build capital while also resuming share repurchases during the quarter.” Mr. Maher added, “The Company is well positioned to bolster shareholder value through a variety of different economic and industry outlooks.”

The Company’s Board of Directors declared its 109th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on May 17, 2024 to common stockholders of record on May 6, 2024. The Company’s Board of Directors also 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 May 15, 2024 to preferred stockholders of record on April 30, 2024.

1 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 expense, net (gain) loss on equity investments, net loss on sale of investments, net gain on sale of trust business, Federal Deposit Insurance Corporation (“FDIC”) special assessment, 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. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.
2 Tangible book value per common share and tangible common equity to tangible assets are non-GAAP financial measures and 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 margin were modestly impacted by a continued mix-shift to and repricing of higher cost funding that offset the increase in yields on interest-earning assets. Deposit betas increased modestly to 40%, from 38% in the prior linked quarter3. Additionally, the results included several non-recurring matters, which included a $1.2 million gain on sale of a portion of the Company’s trust business, a $1.2 million write-off in income tax expense, $418,000 in FDIC special assessments, and $345,000 in bank owned life insurance death benefits.

3 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

March 31, 2024 vs. March 31, 2023

Net interest income decreased to $86.2 million, from $98.8 million, primarily reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 2.81%, from 3.34%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.04% for both quarters, net interest margin decreased to 2.77%, from 3.30%. Net interest margin decreased primarily due to the increase in cost of funds outpacing the increase in yield on average interest-earning assets.

Average interest-earning assets increased by $340.3 million, primarily driven by growth of $163.9 million in total loans and $143.0 million in securities. The average yield for interest-earning assets increased to 5.26%, from 4.68%.

The cost of average interest-bearing liabilities increased to 3.03%, from 1.74%, primarily due to higher cost of deposits. The total cost of deposits (including non-interest bearing deposits) increased to 2.31%, from 0.88%. Average interest-bearing liabilities increased by $636.4 million, primarily due to an increase in total deposits, partly offset by a decrease in Federal Home Loan Bank (“FHLB”) advances, which reflect a shift in funding sources.

March 31, 2024 vs. December 31, 2023

Net interest income decreased by $1.6 million, reflecting a slight decrease in net interest margin to 2.81%, from 2.82%, as the increase in cost of funds was offset by yields of average interest earning assets. Excluding the impact of purchase accounting accretion and prepayment fees of 0.04% and 0.05% for the respective quarters, net interest margin remained flat at 2.77% for both periods.

Average interest-earning assets increased by $1.2 million, and the yield on average interest-earning assets increased to 5.26%, from 5.16% primarily due to securities purchased at the end of the prior linked quarter.

The total cost of average interest-bearing liabilities increased to 3.03%, from 2.91%, primarily due to higher cost of deposits and increased other borrowings. Total cost of deposits (including non-interest bearing deposits) increased to 2.31%, from 2.22%. Average interest-bearing liabilities increased by $91.2 million, primarily due to a mix shift from deposits to other borrowings.

Provision for Credit Losses

Provision for credit losses for the quarter ended March 31, 2024 was $591,000, as compared to $3.0 million and $3.2 million for the corresponding prior year period and prior linked quarter, respectively. The current quarter provision was driven by the net effect of continued uncertainty impacting the banking industry and improvements in macro-economic forecasts.

Net loan charge-offs were $349,000 for the quarter ended March 31, 2024 primarily related to a single consumer borrower, as compared to net loan recoveries of $47,000 for the corresponding prior year period. Net loan charge-offs were $35,000 in the prior linked quarter. Refer to “Asset Quality” section for further discussion.

Non-interest Income

March 31, 2024 vs. March 31, 2023

Other income increased to $12.3 million, as compared to $2.1 million. The current quarter’s other income was favorably impacted by non-core operations of $3.1 million related to net gains on equity investments and a gain on sale of a portion of its trust business. The prior year period’s other income was adversely impacted by non-core operations of $7.5 million, primarily related to losses on sale of investments.

Excluding non-core operations, other income decreased by $370,000, primarily driven by a decrease in fees and service charges of $686,000 on lower retail deposit fees and title activity.

March 31, 2024 vs. December 31, 2023

Other income in the prior linked quarter was $11.9 million and included non-core operations of $2.2 million related to net gains on equity investments. Excluding non-core operations, other income decreased by $484,000, primarily due to a decrease in fees and service charges of $842,000, which was driven by the same factors as noted above.

Non-interest Expense

March 31, 2024 vs. March 31, 2023

Operating expenses decreased to $58.7 million, as compared to $61.3 million. Operating expenses were adversely impacted by non-core items of $418,000, from an FDIC special assessment in the current year, and $92,000 from merger related and net branch consolidation expenses in the prior year.

Excluding non-core operations, operating expenses decreased $3.0 million. The primary drivers were decreases in professional fees of $2.4 million and compensation and employee benefits expenses of $1.2 million, which reflect the net realization of the Company’s performance improvements initiatives and strategic investments made over the past year.

March 31, 2024 vs. December 31, 2023

Operating expenses in the prior linked quarter was $60.2 million and included non-core operations of $1.7 million, related to an FDIC special assessment. Excluding non-core operations, operating expenses decreased by $272,000.

Income Tax Expense

The provision for income taxes was $10.6 million for the quarter ended March 31, 2024, as compared to $8.7 million for the same prior year period, and $8.6 million for the prior linked quarter. The effective tax rate was 27.1% for the quarter ended March 31, 2024, as compared to 23.7% for the same prior year period, and 23.6% for the prior linked quarter. The current quarter's effective tax rate was negatively impacted by 3.0% due to a one-time write-off of a deferred tax asset of $1.2 million.

Financial Condition

March 31, 2024 vs. December 31, 2023

Total assets decreased by $119.3 million to $13.42 billion, from $13.54 billion, primarily due to decreases in loans and debt securities. Total loans decreased by $68.9 million to $10.13 billion, from $10.19 billion, due to loan payoffs and lower loan originations. Held-to-maturity debt securities decreased by $31.1 million to $1.13 billion, from $1.16 billion, primarily due to principal repayments. Other assets increased by $20.3 million to $200.0 million, from $179.7 million, primarily due to increase in market values associated with customer interest rate swap programs.

Total liabilities decreased by $123.2 million to $11.75 billion, from $11.88 billion primarily related to lower deposits and a funding mix shift. Deposits decreased by $198.1 million to $10.24 billion, from $10.43 billion. Time deposits decreased to $2.32 billion, from $2.45 billion, or 22.7% and 23.4% of total deposits, respectively, which was primarily related to planned runoff of brokered time deposits which decreased by $88.1 million. The loan-to-deposit ratio was 98.9%, as compared to 97.7%. FHLB advances decreased by $190.2 million to $658.4 million, from $848.6 million due to mix shift in funding sources to other borrowings, which increased by $229.3 million to $425.7 million, from $196.5 million, as a result of lower cost funding availability.

Other liabilities increased by $36.4 million to $337.1 million, from $300.7 million, primarily due to an increase in the market values associated with customer interest rate swaps and related collateral received from counterparties.

Capital levels remain strong and in excess of “well-capitalized” regulatory levels at March 31, 2024 including the Company’s common equity tier one capital ratio which increased to 11.0%, up approximately 15 basis points from December 31, 2023.

Total stockholders’ equity increased to $1.67 billion, as compared to $1.66 billion, primarily reflecting net income, partially offset by capital returns comprising of share repurchases and dividends. For the quarter ended March 31, 2024, the Company repurchased 957,827 shares totaling $15.1 million representing a weighted average cost of $15.64. The Company had 1,976,611 shares available for repurchase under the repurchase program authorized. Additionally, accumulated other comprehensive loss decreased by $1.4 million primarily due to increases in fair market value of available-for-sale debt securities, net of tax.

The Company’s tangible common equity2 increased by $4.7 million to $1.10 billion. The Company’s stockholders’ equity to assets ratio was 12.41% at March 31, 2024, and tangible common equity to tangible assets ratio increased by 11 basis points during the quarter to 8.49%, primarily due to the drivers described above.

Book value per common share increased to $28.32, as compared to $27.96. Tangible book value per common share2 increased to $18.63, as compared to $18.35.

Asset Quality

March 31, 2024 vs. December 31, 2023

Overall asset quality metrics remained stable for the quarter. The Company’s non-performing loans increased to $35.0 million from $29.5 million and represented 0.35% and 0.29% of total loans, respectively. The allowance for loan credit losses as a percentage of total non-performing loans was 191.86%, as compared to 227.21%. The level of 30 to 89 days delinquent loans decreased to $17.5 million, from $19.2 million. The Company’s allowance for loan credit losses was 0.66% of total loans for each period. Refer to “Provision for Credit Losses” section for further discussion.

The Company’s asset quality, excluding purchased with credit deterioration (“PCD”) loans, was as follows. Non-performing loans increased to $31.5 million, from $26.4 million. The allowance for loan credit losses as a percentage of total non-performing loans was 213.34%, as compared to 254.64%. The level of 30 to 89 days delinquent loans, excluding non-performing loans, decreased to $15.4 million, from $17.7 million. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $74.2 million, or 0.73% of total loans, as compared to $74.7 million, or 0.73% 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, all of 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.

Annual Meeting

The Annual Meeting of Stockholders will be held on Tuesday, May 21, 2024 at 8:00 a.m. Eastern Time, as previously announced. The meeting will be held virtually through a live webcast. Stockholders as of the record date of March 25, 2024 are invited to participate in the live event. Voting before the meeting is encouraged, even for stockholders planning to participate in the virtual webcast. Votes may be submitted by telephone or online according to the instructions on the proxy card or by mail. A link to the live webcast is available by visiting oceanfirst.com - Investor Relations. Access will begin at 7:45 a.m. Eastern Time to allow time for stockholders to log-in with the control number provided on the proxy card prior to the 8:00 a.m. Eastern Time scheduled start. Eligible stockholders may also vote during the live meeting online at www.virtualshareholdermeeting.com/OCFC2024 by entering the 16-digit control number included on the proxy card or notice. As a reminder, participants of the meeting are not required to vote.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, April 19, 2024 at 11:00 a.m. Eastern Time. The direct dial number for the call is (833) 470-1428, using the access code 606038. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (866) 813-9403, access code 203920, from one hour after the end of the call until May 17, 2024. 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 $13.4 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 Company’s lending area, real estate market values in the Company’s lending area, potential goodwill impairment, 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, the availability of low-cost funding, changes in liquidity, including the size and composition of the Company’s deposit portfolio, including the percentage of uninsured deposits in the portfolio, changes in capital management and balance sheet strategies and the ability to successfully implement such strategies, 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 effect of the Company’s rating under the Community Reinvestment Act, the impact of pandemics 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, 2023, 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)

  March 31, December 31, March 31,
   2024  2023  2023
  (Unaudited)   (Unaudited)
Assets      
Cash and due from banks $130,422 $153,718 $496,193
Debt securities available-for-sale, at estimated fair value  744,944  753,892  452,195
Debt securities held-to-maturity, net of allowance for securities credit losses of $1,058 at March 31, 2024, $1,133 at December 31, 2023 and $1,043 at March 31, 2023 (estimated fair value of $1,029,965 at March 31, 2024, $1,068,438 at December 31, 2023 and $1,149,673 at March 31, 2023)  1,128,666  1,159,735  1,245,424
Equity investments  103,201  100,163  101,007
Restricted equity investments, at cost  85,689  93,766  115,750
Loans receivable, net of allowance for loan credit losses of $67,173 at March 31, 2024, $67,137 at December 31, 2023 and $60,195 at March 31, 2023  10,068,209  10,136,721  9,986,949
Loans held-for-sale  4,702  5,166  1,885
Interest and dividends receivable  52,502  51,874  47,342
Premises and equipment, net  119,211  121,372  126,019
Bank owned life insurance  266,615  266,498  262,654
Assets held for sale  28  28  2,719
Goodwill  506,146  506,146  506,146
Core deposit intangible  8,669  9,513  12,470
Other assets  199,974  179,661  198,422
          Total assets $13,418,978 $13,538,253 $13,555,175
Liabilities and Stockholders’ Equity      
Deposits $10,236,851 $10,434,949 $9,993,095
Federal Home Loan Bank advances  658,436  848,636  1,346,566
Securities sold under agreements to repurchase with customers  66,798  73,148  70,938
Other borrowings  425,722  196,456  195,663
Advances by borrowers for taxes and insurance  28,187  22,407  31,198
Other liabilities  337,147  300,712  307,344
          Total liabilities  11,753,141  11,876,308  11,944,804
Stockholders’ equity:      
OceanFirst Financial Corp. stockholders’ equity  1,665,112  1,661,163  1,609,553
Non-controlling interest  725  782  818
Total stockholders’ equity  1,665,837  1,661,945  1,610,371
          Total liabilities and stockholders’ equity $13,418,978 $13,538,253 $13,555,175



OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

  For the Three Months Ended,
  March 31, December 31, March 31,
   2024   2023  2023 
  |-------------------- (Unaudited) -------------------- |
Interest income:      
Loans $137,121  $137,110 $121,720 
Debt securities  19,861   15,444  14,286 
Equity investments and other  4,620   7,880  3,028 
     Total interest income  161,602   160,434  139,034 
Interest expense:      
Deposits  59,855   59,467  21,330 
Borrowed funds  15,523   13,143  18,902 
     Total interest expense  75,378   72,610  40,232 
     Net interest income  86,224   87,824  98,802 
Provision for credit losses  591   3,153  3,013 
     Net interest income after provision for credit losses  85,633   84,671  95,789 
Other income:      
Bankcard services revenue  1,416   1,531  1,330 
Trust and asset management revenue  526   610  612 
Fees and service charges  4,473   5,315  5,159 
Net gain on sales of loans  357   309  20 
Net gain (loss) on equity investments  1,923   2,176  (6,801)
Income from bank owned life insurance  1,862   1,427  1,281 
Commercial loan swap income  138   29  701 
Other  1,591   464  (229)
     Total other income  12,286   11,861  2,073 
Operating expenses:      
Compensation and employee benefits  32,759   32,126  33,920 
Occupancy  5,199   5,218  5,239 
Equipment  1,130   1,172  1,205 
Marketing  990   1,112  982 
Federal deposit insurance and regulatory assessments  3,135   4,386  1,749 
Data processing  5,956   6,430  6,154 
Check card processing  1,050   991  1,281 
Professional fees  2,732   2,858  5,098 
Amortization of core deposit intangible  844   976  1,027 
Branch consolidation expense, net       70 
Merger related expenses       22 
Other operating expense  4,877   4,920  4,562 
     Total operating expenses  58,672   60,189  61,309 
     Income before provision for income taxes  39,247   36,343  36,553 
Provision for income taxes  10,637   8,591  8,654 
     Net income  28,610   27,752  27,899 
Net (loss) income attributable to non-controlling interest  (57)  70  16 
     Net income attributable to OceanFirst Financial Corp.  28,667   27,682  27,883 
Dividends on preferred shares  1,004   1,004  1,004 
     Net income available to common stockholders $27,663  $26,678 $26,879 
Basic earnings per share $0.47  $0.46 $0.46 
Diluted earnings per share $0.47  $0.46 $0.46 
Average basic shares outstanding  58,789   59,120  58,774 
Average diluted shares outstanding  58,791   59,123  58,918 



OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
 
LOANS RECEIVABLE  At
   March 31, December 31, September 30, June 30, March 31,
    2024   2023   2023   2023   2023 
Commercial:           
Commercial real estate - investor  $5,322,755  $5,353,974  $5,334,279  $5,319,686  $5,296,661 
Commercial real estate - owner-occupied  914,582   943,891   957,216   981,618   986,366 
Commercial and industrial   677,176   666,532   652,119   620,284   622,201 
     Total commercial   6,914,513   6,964,397   6,943,614   6,921,588   6,905,228 
Consumer:           
Residential real estate   2,965,276   2,979,534   2,928,259   2,906,556   2,881,811 
Home equity loans and lines and other consumer ("other consumer")  245,859   250,664   251,698   255,486   252,773 
     Total consumer   3,211,135   3,230,198   3,179,957   3,162,042   3,134,584 
     Total loans   10,125,648   10,194,595   10,123,571   10,083,630   10,039,812 
Deferred origination costs (fees), net  9,734   9,263   8,462   8,267   7,332 
Allowance for loan credit losses   (67,173)  (67,137)  (63,877)  (61,791)  (60,195)
     Loans receivable, net  $10,068,209  $10,136,721  $10,068,156  $10,030,106  $9,986,949 
Mortgage loans serviced for others $89,555  $68,217  $52,796  $50,820  $50,421 
 At March 31, 2024 Average Yield          
Loan pipeline (1):           
Commercial8.18% $66,167  $124,707  $50,756  $39,164  $236,550 
Residential real estate6.91   57,340   49,499   66,682   58,022   61,258 
Other consumer8.82   13,030   8,819   13,795   18,621   20,589 
     Total7.71% $136,537  $183,025  $131,233  $115,807  $318,397 


 For the Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
 2024  2023  2023  2023  2023
 Average Yield          
Loan originations:           
Commercial7.99% $123,010 $94,294 $90,263 $197,732 $200,504
Residential real estate6.78   78,270  113,227  92,299  100,542  65,580
Other consumer8.94   11,405  16,971  17,019  22,487  15,927
     Total7.60% $212,685 $224,492 $199,581 $320,761 $282,011
Loans sold  $29,965 $20,138 $15,404 $18,664 $3,861


(1)Loan pipeline includes loans approved but not funded.


DEPOSITSAt
 March 31, December 31, September 30, June 30, March 31,
  2024  2023  2023  2023  2023
Type of Account         
Non-interest-bearing$1,639,828 $1,657,119 $1,827,381 $1,854,136 $1,984,197
Interest-bearing checking 3,865,699  3,911,766  3,708,874  3,537,834  3,697,223
Money market 1,150,979  1,021,805  860,025  770,440  615,993
Savings 1,260,309  1,398,837  1,484,000  1,229,897  1,308,715
Time deposits (1) 2,320,036  2,445,422  2,653,649  2,766,030  2,386,967
     Total deposits$10,236,851 $10,434,949 $10,533,929 $10,158,337 $9,993,095


(1)Includes brokered time deposits of $543.4 million, $631.5 million, $995.5 million, $1.42 billion, and $1.24 billion at March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, respectively.



OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)

ASSET QUALITY (1)

March 31, December 31, September 30, June 30, March 31,
 2024   2023   2023   2023   2023 
Non-performing loans:         
Commercial real estate - investor$21,507  $20,820  $20,723  $13,000  $13,643 
Commercial real estate - owner-occupied 3,355   351   240   565   251 
Commercial and industrial 567   304   1,120   199   162 
Residential real estate 7,181   5,542   5,624   6,174   5,650 
Other consumer 2,401   2,531   2,391   2,820   2,731 
Total non-performing loans$35,011  $29,548  $30,098  $22,758  $22,437 
Delinquent loans 30 to 89 days$17,534  $19,202  $20,591  $3,136  $11,232 
Modifications to borrowers experiencing financial difficulty (2)         
Non-performing (included in total non-performing loans above)$9,075  $6,420  $6,679  $6,882  $6,556 
Performing 15,619   15,361   7,645   7,516   7,619 
Total modifications to borrowers experiencing financial difficulty (2)$24,694  $21,781  $14,324  $14,398  $14,175 
Allowance for loan credit losses$67,173  $67,137  $63,877  $61,791  $60,195 
Allowance for loan credit losses as a percent of total loans receivable (3) 0.66%  0.66%  0.63%  0.61%  0.60%
Allowance for loan credit losses as a percent of total non-performing loans (3) 191.86   227.21   212.23   271.51   268.28 
Non-performing loans as a percent of total loans receivable 0.35   0.29   0.30   0.23   0.22 
Non-performing assets as a percent of total assets 0.26   0.22   0.22   0.17   0.17 
Supplemental PCD and non-performing loans         
PCD loans, net of allowance for loan credit losses$16,700  $16,122  $18,640  $18,872  $20,513 
Non-performing PCD loans 3,525   3,183   3,177   3,171   3,929 
Delinquent PCD and non-performing loans 30 to 89 days 2,088   1,516   13,007   1,976   2,248 
PCD modifications to borrowers experiencing financial difficulty (2) 764   771   750   755   758 
Asset quality, excluding PCD loans (4)         
Non-performing loans 31,486   26,365   26,921   19,587   18,508 
Delinquent loans 30 to 89 days (excludes non-performing loans) 15,446   17,686   7,584   1,160   8,984 
Modifications to borrowers experiencing financial difficulty (2) 23,930   21,010   13,574   13,643   13,417 
Allowance for loan credit losses as a percent of total non-performing loans (3) 213.34%  254.64%  237.28%  315.47%  325.24%
Non-performing loans as a percent of total loans receivable 0.31   0.26   0.27   0.19   0.18 
Non-performing assets as a percent of total assets 0.23   0.19   0.20   0.14   0.14 


(1)Since September 30, 2023, non-performing loans included the remaining exposure of $8.8 million on a commercial real estate relationship that was partially charged-off during the quarter ended September 30, 2023.
(2)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.
(3)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 $7.0 million, $7.5 million, $8.8 million, $9.8 million and $10.5 million at March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, respectively.
(4)All balances and ratios exclude PCD loans.



NET LOAN (CHARGE-OFFS) RECOVERIESFor the Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
  2024   2023   2023   2023   2023 
Net loan (charge-offs) recoveries:         
Loan charge-offs$(441) $(98) $(8,379) $(206) $(10)
Recoveries on loans 92   63   108   83   57 
Net loan (charge-offs) recoveries$(349) $(35) $(8,271) $(123) $47 
Net loan (charge-offs) recoveries to average total loans (annualized) 0.01%  %  0.33%  % NM*
Net loan (charge-offs) recoveries detail:         
Commercial$(35) $9  $(8,332) $(117) $ 
Residential real estate 66   9   17   9   8 
Other consumer (380)  (53)  44   (15)  39 
Net loan (charge-offs) recoveries$(349) $(35) $(8,271) $(123) $47 

* Not meaningful as amounts are net loan recoveries.



OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME

 For the Three Months Ended
 March 31, 2024 December 31, 2023 March 31, 2023
(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$163,192  $2,226 5.49% $396,843  $5,423 5.42% $129,740  $938 2.93%
Securities (2) 2,098,421   22,255 4.27   1,863,136   17,901 3.81   1,955,399   16,376 3.40 
Loans receivable, net (3)                 
Commercial 6,925,048   104,421 6.06   6,937,191   105,260 6.02   6,840,006   92,780 5.50 
Residential real estate 2,974,468   28,596 3.85   2,957,671   27,934 3.78   2,872,049   25,161 3.50 
Other consumer 248,396   4,104 6.65   250,300   3,916 6.21   263,404   3,779 5.82 
Allowance for loan credit losses, net of deferred loan costs and fees (59,141)      (56,001)      (50,554)    
Loans receivable, net 10,088,771   137,121 5.46   10,089,161   137,110 5.40   9,924,905   121,720 4.96 
Total interest-earning assets 12,350,384   161,602 5.26   12,349,140   160,434 5.16   12,010,044   139,034 4.68 
Non-interest-earning assets 1,206,336       1,243,967       1,234,549     
     Total assets$13,556,720      $13,593,107      $13,244,593     
Liabilities and Stockholders’ Equity:                 
Interest-bearing liabilities:                 
Interest-bearing checking$3,925,965   20,795 2.13% $3,908,517   19,728 2.00% $3,863,338   6,269 0.66%
Money market 1,092,003   9,172 3.38   941,859   7,520 3.17   705,631   1,759 1.01 
Savings 1,355,718   4,462 1.32   1,446,935   5,193 1.42   1,369,118   334 0.10 
Time deposits 2,414,063   25,426 4.24   2,596,706   27,026 4.13   1,826,662   12,968 2.88 
     Total 8,787,749   59,855 2.74   8,894,017   59,467 2.65   7,764,749   21,330 1.11 
FHLB Advances 644,818   7,771 4.85   615,172   7,470 4.82   1,222,791   14,614 4.85 
Securities sold under agreements to repurchase 68,500   411 2.41   80,181   387 1.91   71,898   90 0.51 
Other borrowings (4) 500,901   7,341 5.89   321,369   5,286 6.53   306,156   4,198 5.56 
Total borrowings 1,214,219   15,523 5.14   1,016,722   13,143 5.13   1,600,845   18,902 4.79 
Total interest-bearing liabilities 10,001,968   75,378 3.03   9,910,739   72,610 2.91   9,365,594   40,232 1.74 
Non-interest-bearing deposits 1,634,583       1,739,499       2,028,507     
Non-interest-bearing liabilities(4) 247,129       292,170       240,815     
     Total liabilities 11,883,680       11,942,408       11,634,916     
Stockholders’ equity 1,673,040       1,650,699       1,609,677     
     Total liabilities and equity$13,556,720      $13,593,107      $13,244,593     
Net interest income  $86,224     $87,824     $98,802  
Net interest rate spread (5)    2.23%     2.25%     2.94%
Net interest margin (6)    2.81%     2.82%     3.34%
Total cost of deposits (including non-interest-bearing deposits)    2.31%     2.22%     0.88%


(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)For the three months ended March 31, 2023, includes reclassifications to conform with current period presentation.
(5)Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(6)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)
          
 March 31, December 31, September 30, June 30, March 31,
  2024  2023  2023  2023  2023
Selected Financial Condition Data:         
Total assets$13,418,978 $13,538,253 $13,498,183 $13,538,903 $13,555,175
Debt securities available-for-sale, at estimated fair value 744,944  753,892  453,208  452,016  452,195
Debt securities held-to-maturity, net of allowance for securities credit losses 1,128,666  1,159,735  1,189,339  1,222,507  1,245,424
Equity investments 103,201  100,163  97,908  96,452  101,007
Restricted equity investments, at cost 85,689  93,766  82,484  105,305  115,750
Loans receivable, net of allowance for loan credit losses 10,068,209  10,136,721  10,068,156  10,030,106  9,986,949
Deposits 10,236,851  10,434,949  10,533,929  10,158,337  9,993,095
Federal Home Loan Bank advances 658,436  848,636  606,056  1,091,666  1,346,566
Securities sold under agreements to repurchase and other borrowings 492,520  269,604  279,164  270,377  266,601
Total stockholders’ equity 1,665,837  1,661,945  1,637,604  1,626,283  1,610,371



 For the Three Months Ended,
 March 31, December 31, September 30, June 30, March 31,
  2024   2023  2023   2023   2023 
Selected Operating Data:         
Interest income$161,602  $160,434 $158,410  $150,096  $139,034 
Interest expense 75,378   72,610  67,414   57,987   40,232 
Net interest income 86,224   87,824  90,996   92,109   98,802 
Provision for credit losses 591   3,153  10,283   1,229   3,013 
Net interest income after provision for credit losses 85,633   84,671  80,713   90,880   95,789 
Other income (excluding activity related to debt and equity investments and sale of trust business) 9,201   9,685  9,310   9,487   9,571 
Net gain (loss) on equity investments 1,923   2,176  1,452   (559)  (2,193)
Net loss on sale of investments            (5,305)
Net gain on sale of trust business 1,162            
Operating expenses (excluding FDIC special assessment, merger related and branch consolidation expense, net) 58,254   58,526  64,484   62,930   61,217 
FDIC special assessment 418   1,663         
Branch consolidation expense, net            70 
Merger related expenses            22 
Income before provision for income taxes 39,247   36,343  26,991   36,878   36,553 
Provision for income taxes 10,637   8,591  6,459   8,996   8,654 
Net income 28,610   27,752  20,532   27,882   27,899 
Net (loss) income attributable to non-controlling interest (57)  70  (135)  85   16 
Net income attributable to OceanFirst Financial Corp.$28,667  $27,682 $20,667  $27,797  $27,883 
Net income available to common stockholders$27,663  $26,678 $19,663  $26,793  $26,879 
Diluted earnings per share$0.47  $0.46 $0.33  $0.45  $0.46 
Net accretion/amortization of purchase accounting adjustments included in net interest income$921  $1,604 $1,745  $1,152  $1,237 



 At or For the Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
 2024 2023 2023 2023 2023
Selected Financial Ratios and Other Data(1) (2):         
Performance Ratios (Annualized):         
Return on average assets (3)0.82% 0.78% 0.57% 0.80% 0.82%
Return on average tangible assets (3) (4)0.85  0.81  0.59  0.83  0.86 
Return on average stockholders’ equity (3)6.65  6.41  4.75  6.61  6.77 
Return on average tangible stockholders’ equity (3) (4)9.61  9.33  6.93  9.70  10.00 
Return on average tangible common equity (3) (4)10.09  9.81  7.29  10.21  10.53 
Stockholders’ equity to total assets12.41  12.28  12.13  12.01  11.88 
Tangible stockholders’ equity to tangible assets (4) 8.92  8.80  8.64  8.51  8.37 
Tangible common equity to tangible assets (4) 8.49  8.38  8.21  8.09  7.95 
Net interest rate spread2.23  2.25  2.37  2.52  2.94 
Net interest margin2.81  2.82  2.91  3.02  3.34 
Operating expenses to average assets1.74  1.76  1.88  1.87  1.88 
Efficiency ratio (5)59.56  60.38  63.37  62.28  60.78 
Loan-to-deposit ratio98.90  97.70  96.10  99.30  100.50 



 At or For the Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
  2024   2023   2023   2023   2023 
Trust and Asset Management:         
Wealth assets under administration and management (“AUA/M”)$236,891  $335,769  $336,913  $339,890  $333,436 
Nest Egg AUA/M 407,478   401,420   385,317   397,927   400,227 
Total AUA/M 644,369   737,189   722,230   737,817   733,663 
Per Share Data:         
Cash dividends per common share$0.20  $0.20  $0.20  $0.20  $0.20 
Book value per common share at end of period 28.32   27.96   27.56   27.37   27.07 
Tangible book value per common share at end of period (4)  18.63   18.35   17.93   17.72   17.42 
Common shares outstanding at end of period 58,812,498   59,447,684   59,421,498   59,420,859   59,486,086 
Preferred shares outstanding at end of period 57,370   57,370   57,370   57,370   57,370 
Number of full-service customer facilities: 39   39   38   38   38 
Quarterly Average Balances         
Total securities$2,098,421  $1,863,136  $1,873,450  $1,931,032  $1,955,399 
Loans receivable, net 10,088,771   10,089,161   10,040,522   10,010,785   9,924,905 
Total interest-earning assets 12,350,384   12,349,140   12,384,797   12,250,055   12,010,044 
Total goodwill and core deposit intangible 515,356   516,289   517,282   518,265   519,282 
Total assets 13,556,720   13,593,107   13,637,213   13,467,721   13,244,593 
Time deposits 2,414,063   2,596,706   2,867,921   2,458,872   1,826,662 
Total deposits (including non-interest-bearing deposits) 10,422,332   10,633,516   10,626,159   9,993,010   9,793,256 
Total borrowings 1,214,219   1,016,722   1,095,173   1,603,126   1,600,845 
Total interest-bearing liabilities 10,001,968   9,910,739   9,880,134   9,722,910   9,365,594 
Non-interest bearing deposits 1,634,583   1,739,499   1,841,198   1,873,226   2,028,507 
Stockholders' equity 1,673,040   1,650,699   1,642,899   1,626,693   1,609,677 
Tangible stockholders’ equity (4) 1,157,684   1,134,410   1,125,617   1,108,428   1,090,395 
          
Quarterly Yields and Costs         
Total securities 4.27%  3.81%  3.82%  3.47%  3.40%
Loans receivable, net 5.46   5.40   5.30   5.17   4.96 
Total interest-earning assets 5.26   5.16   5.08   4.91   4.68 
Time deposits 4.24   4.13   4.06   3.57   2.88 
Total cost of deposits (including non-interest-bearing deposits) 2.31   2.22   1.99   1.52   0.88 
Total borrowed funds 5.14   5.13   5.12   5.02   4.79 
Total interest-bearing liabilities 3.03   2.91   2.71   2.39   1.74 
Net interest spread 2.23   2.25   2.37   2.52   2.94 
Net interest margin 2.81   2.82   2.91   3.02   3.34 


(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 (also referred to as “tangible book value”) 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
  March 31, December 31, September 30, June 30, March 31,
   2024   2023   2023   2023   2023 
Core Earnings:          
Net income available to common stockholders (GAAP) $27,663  $26,678  $19,663  $26,793  $26,879 
(Less) add non-recurring and non-core items:          
Net (gain) loss on equity investments(1)  (1,923)  (2,176)  (1,452)  559   2,193 
Net loss on sale of investments(1)              5,305 
Net gain on sale of trust business  (1,162)            
FDIC special assessment  418   1,663          
Merger related expenses              22 
Branch consolidation expense, net              70 
Income tax expense (benefit) on items  642   129   351   (162)  (1,797)
Core earnings (Non-GAAP) $25,638  $26,294  $18,562  $27,190  $32,672 
Income tax expense $10,637  $8,591  $6,459  $8,996  $8,654 
Provision for credit losses  591   3,153   10,283   1,229   3,013 
Less: income tax expense (benefit) on non-core items  642   129   351   (162)  (1,797)
Core earnings PTPP (Non-GAAP) $36,224  $37,909  $34,953  $37,577  $46,136 
Core earnings diluted earnings per share $0.44  $0.45  $0.32  $0.46  $0.55 
Core earnings PTPP diluted earnings per share $0.62  $0.65  $0.59  $0.64  $0.78 
           
Core Ratios (Annualized):          
Return on average assets  0.76%  0.77%  0.54%  0.81%  1.00%
Return on average tangible stockholders’ equity  8.91   9.20   6.54   9.84   12.15 
Return on average tangible common equity  9.36   9.67   6.88   10.36   12.80 
Efficiency ratio  61.05   60.02   64.29   61.94   56.49 

 

(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.

 


 March 31, December 31, September 30, June 30, March 31,
  2024   2023   2023   2023   2023 
Tangible Equity:         
Total stockholders' equity$1,665,837  $1,661,945  $1,637,604  $1,626,283  $1,610,371 
Less:         
Goodwill 506,146   506,146   506,146   506,146   506,146 
Core deposit intangible 8,669   9,513   10,489   11,476   12,470 
Tangible stockholders' equity 1,151,022   1,146,286   1,120,969   1,108,661   1,091,755 
Less:         
Preferred stock 55,527   55,527   55,527   55,527   55,527 
Tangible common equity$1,095,495  $1,090,759  $1,065,442  $1,053,134  $1,036,228 
          
Tangible Assets:          
Total assets$13,418,978  $13,538,253  $13,498,183  $13,538,903  $13,555,175 
Less:         
Goodwill 506,146   506,146   506,146   506,146   506,146 
Core deposit intangible 8,669   9,513   10,489   11,476   12,470 
Tangible assets$12,904,163  $13,022,594  $12,981,548  $13,021,281  $13,036,559 
          
Tangible stockholders' equity to tangible assets 8.92%  8.80%  8.64%  8.51%  8.37%
Tangible common equity to tangible assets 8.49%  8.38%  8.21%  8.09%  7.95%


Company Contact:

Patrick S. Barrett
Chief Financial Officer
OceanFirst Financial Corp.
Tel: (732) 240-4500, ext. 27507
Email: pbarrett@oceanfirst.com


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