OceanFirst Financial Corp. Announces Third Quarter Financial Results

RED BANK, N.J., Oct. 19, 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 $19.7 million, or $0.33 per diluted share, for the three months ended September 30, 2023, as compared to $37.6 million, or $0.64 per diluted share, for the corresponding prior year period, and $26.8 million, or $0.45 per diluted share, for the prior linked quarter. For the nine months ended September 30, 2023, the Company reported net income available to common stockholders of $73.3 million, or $1.24 per diluted share, as compared to $90.3 million, or $1.53 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 Nine Months Ended,
Performance Ratios (Annualized):
September 30, June 30, September 30, September 30, September 30,
 2023  2023  2022  2023  2022 
Return on average assets0.57% 0.80% 1.19% 0.73% 0.99%
Return on average stockholders’ equity4.75  6.61  9.68  6.03  7.87 
Return on average tangible stockholders’ equity(a)6.93  9.70  14.62  8.85  11.91 
Return on average tangible common equity(a)7.29  10.21  15.47  9.31  12.60 
Efficiency ratio63.37  62.28  53.10  62.15  57.90 
Net interest margin2.91  3.02  3.36  3.09  3.28 

(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 nine months ended September 30, 2023 were $18.6 million and $78.4 million, respectively, or $0.32 and $1.33 per diluted share, representing a decrease from $35.0 million and $98.4 million, or $0.60 and $1.67 per diluted share, for the corresponding prior year periods, and a decrease from $27.2 million, or $0.46 per diluted share, for the prior linked quarter.

Core earnings PTPP1 for the three and nine months ended September 30, 2023 were $35.0 million and $118.7 million, respectively, or $0.59 and $2.01 per diluted share, as compared to $47.5 million and $134.2 million, or $0.81 and $2.28 per diluted share, for the corresponding prior year periods, and $37.6 million, or $0.64 per diluted share, for the prior linked quarter. Selected performance metrics are as follows:

 For the Three Months Ended, For the Nine Months Ended,
 September 30, June 30, September 30, September 30, September 30,
Core Ratios1(Annualized): 2023   2023   2022   2023   2022 
Return on average assets 0.54%  0.81%  1.11%  0.78%  1.08%
Return on average tangible stockholders’ equity 6.54   9.84   13.62   9.46   12.98 
Return on average tangible common equity 6.88   10.36   14.40   9.96   13.73 
Efficiency ratio 64.29   61.94   54.80   60.79   55.51 
Core diluted earnings per share$0.32  $0.46  $0.60  $1.33  $1.67 
Core PTPP diluted earnings per share 0.59   0.64   0.81   2.01   2.28 

Key developments for the recent quarter are described below:

  • Deposit Growth: Total deposits increased $375.6 million, or 4%, as compared to the prior linked quarter. The current quarter includes a reduction in brokered time deposits of $425.7 million and a loan-to-deposit ratio of 96.10%. The Company’s non-interest-bearing deposits declined modestly and represented 17% of the total deposits.
  • Asset Quality: Asset quality metrics remains strong, despite the impact of a charge-off related to a single credit relationship announced on September 14, 2023. Criticized and classified loans, and non-performing loans both as a percent of total loans were 1.30% and 0.20%, respectively, at September 30, 2023.
  • Strong Capital: The Company’s estimated common equity tier 1 capital ratio remained above “well-capitalized” levels, at 10.36% at September 30, 2023. Book value and tangible book value per share were $27.56 and $17.932, respectively, increasing $0.19 and $0.21 from the prior linked quarter.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased to report continued growth in deposits, a reduction on brokered deposits, and strengthened capital position. While our margin compressed, we remain focused on high quality growth and prudent management of the balance sheet for long-term market conditions.” Mr. Maher added, “Additionally, thank you to our exemplary employees who volunteered over 2,900 hours across 90 projects serving our communities during our second annual CommUNITYFirst day.”

The Company’s Board of Directors declared its 107th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on November 17, 2023 to common stockholders of record on November 6, 2023. 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 November 15, 2023 to preferred stockholders of record on October 31, 2023.

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 (benefit), 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 Tangible book value 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 margin were adversely impacted by a continued mix-shift and repricing to higher cost deposits that outpaced the repricing and increase in yields on interest-earning assets. Deposit betas increased modestly to 35%, from 29%3. Additionally, the current quarter results were impacted by an increase in non-performing loans due to a single commercial real estate credit relationship totaling $17 million, which was written down to an estimated realizable value of $8.8 million4. The credit was originated in June 2019 and is secured by an office building in Midtown Manhattan, New York City. The credit was also included in total delinquent loans 30 to 89 days at September 30, 2023. Lastly, the Company recognized one-time compensation and benefits expenses of $2.4 million attributable to severance and other program costs relating to the Company's performance improvement initiatives.

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).
4 Refer to the previously filed Current Report on Form 8-K filed September 14, 2023 for additional information.

Net Interest Income and Margin

Three months ended September 30, 2023 vs. September 30, 2022

Net interest income decreased to $91.0 million, from $96.0 million, primarily reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 2.91%, from 3.36%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.06% and 0.08% for the respective three months, net interest margin decreased to 2.85%, from 3.28%. Net interest margin decreased primarily due to the increase in cost of funds outpacing the increase in yield on average interest earning assets in the current interest rate environment and elevated levels of on-balance sheet cash.

Average interest-earning assets increased by $1.06 billion, primarily driven by increases of $414.2 million in commercial loans and $405.2 million in deposits and short-term investments. The average yield for interest-earning assets increased to 5.08%, from 3.88%.

The cost of average interest-bearing liabilities increased to 2.71%, from 0.69%, due to higher cost of deposits and higher costs of Federal Home Loan Bank (“FHLB”) advances. The total cost of deposits (including non-interest bearing deposits) increased to 1.99%, from 0.36%.

Nine months ended September 30, 2023 vs. September 30, 2022

Net interest income increased to $281.9 million, from $271.0 million, reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 3.09%, from 3.28%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.13% for the respective nine months, net interest margin decreased to 3.04%, from 3.15%.

Average interest-earning assets increased by $1.17 billion, primarily driven by loan growth of $819.7 million. The cost of average interest-bearing liabilities increased to 2.29%, from 0.49%. The total cost of deposits (including non-interest bearing deposits) increased to 1.48%, from 0.24%. The yield on average interest earning assets increased to 4.90% from 3.64%. The drivers for the three months ended were also the drivers for the nine months ended September 30, 2023.

Three months ended September 30, 2023 vs. June 30, 2023

Net interest income decreased by $1.1 million, reflecting a decrease in net interest margin to 2.91%, from 3.02%, as the increase in cost of funds outpaced the increase in yield of average interest earning assets. Excluding the impact of purchase accounting accretion and prepayment fees of 0.06% and 0.05% for the respective three months, net interest margin decreased to 2.85%, from 2.97%. The compression in net interest margin was primarily attributable to higher cost of deposits and the impact of excess cash held.

Average interest-earning assets increased by $134.7 million, primarily due to elevated levels of cash held. The yield on average interest-earning assets increased to 5.08%, from 4.91%.

The total cost of average interest-bearing liabilities increased to 2.71%, from 2.39%, and the total cost of deposits (including non-interest bearing deposits) increased to 1.99%, from 1.52%. Average interest-bearing liabilities increased $157.2 million, which included a mix-shift from FHLB advances to time deposits.

Provision for Credit Losses
Provision for credit losses for the three and nine months ended September 30, 2023 was $10.3 million and $14.5 million, respectively, as compared to $1.0 million and $4.1 million for the corresponding prior year periods, and $1.2 million in the prior linked quarter. The current quarter provision included the net impact of the $8.4 million charge-off noted above and, to a lesser extent, elevated risks and uncertainty in macro-economic conditions in a downside forecast scenario.

Net loan charge-offs were $8.3 million for both the three and nine months ended September 30, 2023, respectively, as compared to net loan recoveries of $252,000 and $335,000 for the three and nine months ended September 30, 2022, respectively. Net loan charge-offs were $123,000 in the prior linked quarter. Refer to “Asset Quality” section for further discussion.

Non-interest Income

Three months ended September 30, 2023 vs. September 30, 2022        

Other income decreased to $10.8 million, as compared to $15.2 million. Other income was favorably impacted by non-core operations of $1.5 million and $3.4 million, for the respective quarters, primarily related to net gains on equity investments.

Excluding non-core operations, other income decreased $2.5 million. The primary drivers were decreases in commercial loan swap income of $1.5 million and fees and service charges of $1.1 million, which were adversely impacted by the current interest rate environment resulting in lower swap volume and mortgage activity.

Nine months ended September 30, 2023 vs. September 30, 2022

Other income decreased to $21.8 million, as compared to $31.5 million. Other income was adversely impacted by non-core operations of $6.6 million and $7.5 million, for the respective periods, primarily related to net losses on 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 $10.7 million. The primary drivers were decreases in commercial loan swap income on lower volume of $5.8 million, fees and service charges of $1.1 million on lower title activity, and income from bank owned life insurance of $1.0 million on non-recurring death benefits recognized in the prior year. Additionally, bankcard services revenue decreased $3.4 million, due to the Durbin Amendment which became effective for the Company on July 1, 2022.

Three months ended September 30, 2023 vs. June 30, 2023

Other income in the prior linked quarter was $8.9 million and included non-core operations of $559,000 primarily related to net losses on preferred stock equity investments. Excluding non-core operations, other income decreased by $177,000.

Non-interest Expense

Three months ended September 30, 2023 vs. September 30, 2022

Operating expenses increased by $5.4 million from $59.0 million to $64.5 million. This was due to increases in professional fees of $2.8 million and $2.4 million in compensation and employee benefits expenses related to the Company’s ongoing investments to improve profitability and operational efficiencies, and one-time related severance and other program costs. The increase in compensation and benefits expense were partly offset by decreased employee medical benefit claims. The current quarter also included increases to federal deposit insurance and regulatory assessments of $800,000 primarily due to new assessment rates that went into effect on January 1, 2023.

Nine months ended September 30, 2023 vs. September 30, 2022

Operating expenses increased to $188.7 million, as compared to $175.2 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 $16.5 million. This was due to increases in professional fees of $7.1 million and federal deposit insurance and regulatory assessments of $1.3 million that were driven by the same factors for the three months ended. The increase in compensation and benefits expense of $5.7 million was due to the $2.4 million increase noted above and merit-related increases.

Three months ended September 30, 2023 vs. June 30, 2023

Operating expenses increased $1.6 million primarily due to an increase in compensation and benefits expense of $1.3 million.

Income Tax Expense
The provision for income taxes was $6.5 million and $24.1 million for the three and nine months ended September 30, 2023, respectively, as compared to $12.3 million and $29.2 million for the same prior year periods, and $9.0 million for the prior linked quarter. The effective tax rate was 23.9% and 24.0% for the three and nine months ended September 30, 2023, respectively, as compared to 24.1% and 23.7% for the same prior year periods, and 24.4% for the prior linked quarter.

Financial Condition

September 30, 2023 vs. December 31, 2022

Total assets increased by $394.3 million to $13.50 billion, from $13.10 billion, primarily due to higher cash balances and loan growth. Cash and due from banks increased $240.9 million to $408.9 million, from $167.9 million as the Company maintained elevated levels of on-balance sheet cash from net deposit inflows. Total loans increased by $205.5 million to $10.12 billion, from $9.92 billion, due to loan originations.

Total liabilities increased by $342.1 million to $11.86 billion, from $11.52 billion. Deposits increased by $858.7 million to $10.53 billion, from $9.68 billion. Time deposits increased to $2.65 billion, from $1.54 billion, or 25.2% and 15.9% of total deposits, respectively. Brokered time deposits increased $122.1 million and retail time deposits increased $988.0 million. The loan-to-deposit ratio was 96.10%, as compared to 102.50%. FHLB advances decreased by $605.1 million to $606.1 million, from $1.21 billion.

Other liabilities increased by $65.6 million to $411.7 million, from $346.2 million, primarily due to an increase in the market values associated with customer interest rate swaps and related collateral received from counterparties.

Total stockholders’ equity increased to $1.64 billion, as compared to $1.59 billion, primarily reflecting net income net of dividends for the nine months ended September 30, 2023. Additionally, accumulated other comprehensive loss decreased by $7.2 million primarily due to increases in fair market value of available-for-sale debt securities, net of tax.

The Company completed its annual goodwill impairment test as of August 31, 2023. Based on a quantitative assessment, the Company concluded that goodwill was not impaired. However, the Company continues to monitor its goodwill as further and continued negative industry and economic trends and decline in the Company’s stock price may result in a re-evaluation before the next required annual test.

For the nine months ended September 30, 2023, the Company did not repurchase shares under its stock repurchase program. There were 2,934,438 shares available for repurchase at September 30, 2023 under the existing repurchase program. Book value per common share increased to $27.56, as compared to $26.81. Tangible book value per common share2 increased to $17.93, as compared to $17.08.

Asset Quality

September 30, 2023 vs. December 31, 2022

At September 30, 2023, non-performing loans and 30 to 89 days delinquent loans included the remaining exposure of $8.8 million on the commercial real estate relationship that was charged-off during the period.

The Company’s non-performing loans increased to $30.1 million from $23.3 million and represented 0.30% and 0.23% of total loans, respectively. The allowance for loan credit losses as a percentage of total non-performing loans was 212.23%, as compared to 244.25%. The level of 30 to 89 days delinquent loans increased to $20.6 million, from $14.1 million. The Company’s allowance for loan credit losses was 0.63% of total loans, as compared to 0.57%. Refer to “Provision for Credit Losses” section for further discussion.

The Company’s asset quality excluding purchased with credit deterioration (“PCD”) loans were as follows. Non-performing loans increased to $26.9 million, from $19.3 million. The allowance for loan credit losses as a percentage of total non-performing loans was 237.28%, as compared to 294.10%. The level of 30 to 89 days delinquent loans, excluding non-performing loans, decreased to $7.6 million, from $10.5 million. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $72.6 million, or 0.72% 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, October 20, 2023 at 11:00 a.m. Eastern Time. The direct dial number for the call is (833) 470-1428, using the access code 472846. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (808) 304-5227, access code 728904, from one hour after the end of the call until November 19, 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, potential goodwill impairment, 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)
 
  September 30, June 30, December 31, September 30,
   2023  2023  2022  2022
  (Unaudited) (Unaudited)   (Unaudited)
Assets        
Cash and due from banks $408,882 $457,747 $167,946 $170,668
Debt securities available-for-sale, at estimated fair value  453,208  452,016  457,648  470,300
Debt securities held-to-maturity, net of allowance for securities credit losses of $932 at September 30, 2023, $964 at June 30, 2023, $1,128 at December 31, 2022, and $1,234 at September 30, 2022 (estimated fair value of $1,047,342 at September 30, 2023, $1,109,756 at June 30, 2023, $1,110,041 at December 31, 2022, and $905,426 at September 30, 2022)  1,189,339  1,222,507  1,221,138  1,027,712
Equity investments  97,908  96,452  102,037  81,722
Restricted equity investments, at cost  82,484  105,305  109,278  77,556
Loans receivable, net of allowance for loan credit losses of $63,877 at September 30, 2023, $61,791 at June 30, 2023, $56,824 at December 31, 2022 and $53,521 at September 30, 2022  10,068,156  10,030,106  9,868,718  9,672,488
Loans held-for-sale    4,200  690  3,549
Interest and dividends receivable  50,030  47,933  44,704  38,388
Premises and equipment, net  122,646  124,139  126,705  127,868
Bank owned life insurance  265,071  263,836  261,603  261,118
Assets held for sale  3,004  3,608  2,719  3,216
Goodwill  506,146  506,146  506,146  506,146
Core deposit intangible  10,489  11,476  13,497  14,656
Other assets  240,820  213,432  221,067  228,066
Total assets $13,498,183 $13,538,903 $13,103,896 $12,683,453
Liabilities and Stockholders’ Equity        
Deposits $10,533,929 $10,158,337 $9,675,206 $9,959,469
Federal Home Loan Bank advances  606,056  1,091,666  1,211,166  514,200
Securities sold under agreements to repurchase with customers  82,981  74,452  69,097  96,289
Other borrowings  196,183  195,925  195,403  194,914
Advances by borrowers for taxes and insurance  29,696  27,839  21,405  25,457
Other liabilities  411,734  364,401  346,155  352,908
Total liabilities  11,860,579  11,912,620  11,518,432  11,143,237
Stockholders’ equity:        
OceanFirst Financial Corp. stockholders’ equity  1,636,891  1,625,435  1,584,662  1,539,253
Non-controlling interest  713  848  802  963
Total stockholders’ equity  1,637,604  1,626,283  1,585,464  1,540,216
Total liabilities and stockholders’ equity $13,498,183 $13,538,903 $13,103,896 $12,683,453


OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
 
  For the Three Months Ended, For the Nine Months Ended,
  September 30, June 30, September 30, September 30, September 30,
   2023   2023   2022   2023   2022 
     
  |---------------------- (Unaudited) ----------------------| |---------- (Unaudited) -----------|
Interest income:          
Loans $133,931  $129,104  $100,141  $384,755  $273,340 
Debt securities  15,223   14,320   8,479   43,829   23,456 
Equity investments and other  9,256   6,672   1,879   18,956   4,102 
Total interest income  158,410   150,096   110,499   447,540   300,898 
Interest expense:          
Deposits  53,287   37,934   9,238   112,551   17,596 
Borrowed funds  14,127   20,053   5,296   53,082   12,313 
Total interest expense  67,414   57,987   14,534   165,633   29,909 
Net interest income  90,996   92,109   95,965   281,907   270,989 
Provision for credit losses  10,283   1,229   1,016   14,525   4,121 
Net interest income after provision for credit losses  80,713   90,880   94,949   267,382   266,868 
Other income:          
Bankcard services revenue  1,507   1,544   1,509   4,381   7,782 
Trust and asset management revenue  662   645   568   1,919   1,835 
Fees and service charges  5,178   5,602   6,320   15,939   17,026 
Net gain on sales of loans  66   33   168   119   348 
Net gain (loss) on equity investments  1,452   (559)  3,362   (5,908)  (7,502)
Net gain from other real estate operations              48 
Income from bank owned life insurance  1,390   1,182   1,356   3,853   4,881 
Commercial loan swap income  11      1,471   712   6,546 
Other  496   481   396   748   579 
Total other income  10,762   8,928   15,150   21,763   31,543 
Operating expenses:          
Compensation and employee benefits  35,534   34,222   34,124   103,676   97,972 
Occupancy  5,466   5,265   5,288   15,970   15,790 
Equipment  1,172   1,101   1,150   3,478   3,856 
Marketing  1,183   961   655   3,126   2,242 
Federal deposit insurance and regulatory assessments  2,557   2,465   1,757   6,771   5,435 
Data processing  6,086   6,165   6,560   18,405   18,466 
Check card processing  1,154   1,214   1,231   3,649   3,728 
Professional fees  5,258   5,083   2,502   15,439   8,296 
Amortization of core deposit intangible  987   994   1,171   3,008   3,559 
Branch consolidation (benefit) expense, net        (346)  70   602 
Merger related expenses        298   22   2,459 
Other operating expense  5,087   5,460   4,607   15,109   12,748 
Total operating expenses  64,484   62,930   58,997   188,723   175,153 
Income before provision for income taxes  26,991   36,878   51,102   100,422   123,258 
Provision for income taxes  6,459   8,996   12,298   24,109   29,212 
Net income  20,532   27,882   38,804   76,313   94,046 
Net (loss) income attributable to non-controlling interest  (135)  85   193   (34)  715 
Net income attributable to OceanFirst Financial Corp.  20,667   27,797   38,611   76,347   93,331 
Dividends on preferred shares  1,004   1,004   1,004   3,012   3,012 
Net income available to common stockholders $19,663  $26,793  $37,607  $73,335  $90,319 
Basic earnings per share $0.33  $0.45  $0.64  $1.24  $1.54 
Diluted earnings per share $0.33  $0.45  $0.64  $1.24  $1.53 
Average basic shares outstanding  59,104   59,147   58,681   59,037   58,777 
Average diluted shares outstanding  59,111   59,153   58,801   59,068   58,918 


OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
 
LOANS RECEIVABLE  At
   September 30, June 30, March 31, December 31, September 30,
    2023   2023   2023   2022   2022 
Commercial:           
Commercial real estate - investor  $5,334,279  $5,319,686  $5,296,661  $5,171,952  $5,007,637 
Commercial real estate - owner-occupied  957,216   981,618   986,366   997,367   983,784 
Commercial and industrial   652,119   620,284   622,201   622,372   652,620 
Total commercial   6,943,614   6,921,588   6,905,228   6,791,691   6,644,041 
Consumer:           
Residential real estate   2,928,259   2,906,556   2,881,811   2,861,991   2,813,209 
Home equity loans and lines and other consumer ("other consumer")  251,698   255,486   252,773   264,372   261,510 
Total consumer   3,179,957   3,162,042   3,134,584   3,126,363   3,074,719 
Total loans   10,123,571   10,083,630   10,039,812   9,918,054   9,718,760 
Deferred origination costs (fees), net  8,462   8,267   7,332   7,488   7,249 
Allowance for loan credit losses   (63,877)  (61,791)  (60,195)  (56,824)  (53,521)
Loans receivable, net  $10,068,156  $10,030,106  $9,986,949  $9,868,718  $9,672,488 
Mortgage loans serviced for others $52,796  $50,820  $50,421  $51,736  $53,869 
 At September 30, 2023
Average Yield
          
Loan pipeline(1):           
Commercial7.85% $50,756  $39,164  $236,550  $114,232  $339,487 
Residential real estate7.11   66,682   58,022   61,258   36,958   80,591 
Other consumer7.87   13,795   18,621   20,589   14,890   19,395 
Total7.48% $131,233  $115,807  $318,397  $166,080  $439,473 


 For the Three Months Ended 
 September 30, June 30, March 31,December 31, September 30, 
 2023  2023  2023 2022  2022 
 Average Yield          
Loan originations:           
Commercial8.11% $90,263 $197,732 $200,504$539,949 $356,726 
Residential real estate6.69   92,299  100,542  65,580 101,530(2) 129,808 
Other consumer7.96   17,019  22,487  15,927 42,624  57,254 
Total7.44% $199,581 $320,761 $282,011$684,103 $543,788 
Loans sold  $15,404 $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
 September 30, June 30, March 31, December 31, September 30,
  2023  2023  2023  2022  2022
Type of Account         
Non-interest-bearing$1,827,381 $1,854,136 $1,984,197 $2,101,308 $2,325,547
Interest-bearing checking 3,708,874  3,537,834  3,697,223  3,829,683  3,909,864
Money market 860,025  770,440  615,993  714,386  749,229
Savings 1,484,000  1,229,897  1,308,715  1,487,809  1,570,472
Time deposits(1) 2,653,649  2,766,030  2,386,967  1,542,020  1,404,357
Total deposits$10,533,929 $10,158,337 $9,993,095 $9,675,206 $9,959,469


(1)Includes brokered time deposits of $995.5 million, $1.42 billion, $1.24 billion, $873.4 million, and $828.7 million at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, respectively.


OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
          
ASSET QUALITY(1)
September 30, June 30, March 31, December 31, September 30,
  2023   2023   2023   2022   2022 
Non-performing loans:         
Commercial real estate - investor$20,723  $13,000  $13,643  $10,483  $9,866 
Commercial real estate - owner-occupied 240   565   251   4,025   1,976 
Commercial and industrial 1,120   199   162   331   321 
Residential real estate 5,624   6,174   5,650   5,969   5,958 
Other consumer 2,391   2,820   2,731   2,457   3,377 
Total non-performing loans$30,098  $22,758  $22,437  $23,265  $21,498 
Delinquent loans 30 to 89 days$20,591  $3,136  $11,232  $14,148  $11,846 
Modifications to borrowers experiencing financial difficulty(2)         
Non-performing (included in total non-performing loans above)$6,679  $6,882  $6,556  $6,361  $10,047 
Performing 7,645   7,516   7,619   7,530   6,065 
Total modifications to borrowers experiencing financial difficulty(2)$14,324  $14,398  $14,175  $13,891  $16,112 
Allowance for loan credit losses$63,877  $61,791  $60,195  $56,824  $53,521 
Allowance for loan credit losses as a percent of total loans receivable(3) 0.63%  0.61%  0.60%  0.57%  0.55%
Allowance for loan credit losses as a percent of total non-performing loans(3) 212.23   271.51   268.28   244.25   248.96 
Non-performing loans as a percent of total loans receivable 0.30   0.23   0.22   0.23   0.22 
Non-performing assets as a percent of total assets 0.22   0.17   0.17   0.18   0.17 
Supplemental PCD and non-performing loans         
PCD loans, net of allowance for loan credit losses$18,640  $18,872  $20,513  $27,129  $29,249 
Non-performing PCD loans 3,177   3,171   3,929   3,944   3,043 
Delinquent PCD and non-performing loans 30 to 89 days 13,007   1,976   2,248   3,657   1,434 
PCD modifications to borrowers experiencing financial difficulty(2) 750   755   758   765   715 
Asset quality, excluding PCD loans(4)         
Non-performing loans 26,921   19,587   18,508   19,321   18,455 
Delinquent loans 30 to 89 days (excludes non-performing loans) 7,584   1,160   8,984   10,491   10,412 
Modifications to borrowers experiencing financial difficulty(2) 13,574   13,643   13,417   13,126   15,397 
Allowance for loan credit losses as a percent of total non-performing loans(3) 237.28%  315.47%  325.24%  294.10%  290.01%
Non-performing loans as a percent of total loans receivable 0.27   0.19   0.18   0.19   0.19 
Non-performing assets as a percent of total assets 0.20   0.14   0.14   0.15   0.15 


(1)At September 30, 2023, non-performing loans and 30 to 89 days delinquent loans included the remaining exposure of $8.8 million on the commercial real estate relationship that was charged-off during the quarter ended September 30, 2023.
(2)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.
(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 $8.8 million, $9.8 million, $10.5 million, $11.4 million and $13.6 million at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, respectively.
(4)All balances and ratios exclude PCD loans.


NET LOAN (CHARGE-OFFS) RECOVERIESFor the Three Months Ended
 September 30, June 30, March 31, December 31, September 30,
  2023   2023   2023   2022   2022 
Net loan (charge-offs) recoveries:         
Loan charge-offs$(8,379) $(206) $(10) $(138) $(5)
Recoveries on loans 108   83   57   143   257 
Net loan (charge-offs) recoveries$(8,271) $(123) $47  $5  $252 
Net loan (charge-offs) recoveries to average total loans (annualized) 0.33%  % NM* NM* NM*
Net loan (charge-offs) recoveries detail:         
Commercial$(8,332) $(117) $  $(46) $117 
Residential real estate 17   9   8   9   44 
Other consumer 44   (15)  39   42   91 
Net loan (charge-offs) recoveries$(8,271) $(123) $47  $5  $252 

* Not meaningful as amounts are net loan recoveries.


OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
 
 For the Three Months Ended
 September 30, June 30, September 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$470,825  $6,440 5.43% $308,238  $4,283 5.57% $65,648  $336 2.03%
Securities(2) 1,873,450   18,039 3.82   1,931,032   16,709 3.47   1,748,687   10,022 2.27 
Loans receivable, net(3)                 
Commercial 6,923,743   103,069 5.91   6,912,698   99,350 5.76   6,509,515   74,309 4.53 
Residential real estate 2,918,612   26,765 3.67   2,895,629   25,936 3.58   2,791,067   22,818 3.27 
Other consumer 252,126   4,097 6.45   255,785   3,818 5.99   256,638   3,014 4.66 
Allowance for loan credit losses, net of deferred loan costs and fees (53,959)      (53,327)      (44,773)    
Loans receivable, net 10,040,522   133,931 5.30   10,010,785   129,104 5.17   9,512,447   100,141 4.18 
Total interest-earning assets 12,384,797   158,410 5.08   12,250,055   150,096 4.91   11,326,782   110,499 3.88 
Non-interest-earning assets 1,252,416       1,217,666       1,191,173     
Total assets$13,637,213      $13,467,721      $12,517,955     
Liabilities and Stockholders’ Equity:                 
Interest-bearing liabilities:                 
Interest-bearing checking$3,692,500   14,938 1.61% $3,718,289   11,964 1.29% $3,873,968   2,671 0.27%
Money market 832,729   5,698 2.71   694,311   3,678 2.12   793,230   721 0.36 
Savings 1,391,811   3,311 0.94   1,248,312   389 0.12   1,603,147   187 0.05 
Time deposits 2,867,921   29,340 4.06   2,458,872   21,903 3.57   1,467,297   5,659 1.53 
Total 8,784,961   53,287 2.41   8,119,784   37,934 1.87   7,737,642   9,238 0.47 
FHLB Advances 701,343   8,707 4.93   1,246,914   15,406 4.96   352,392   2,208 2.49 
Securities sold under agreements to repurchase 76,620   261 1.35   71,752   192 1.07   96,147   35 0.14 
Other borrowings(4) 317,210   5,159 6.45   284,460   4,455 6.28   194,755   3,053 6.22 
Total borrowings 1,095,173   14,127 5.12   1,603,126   20,053 5.02   643,294   5,296 3.27 
Total interest-bearing liabilities 9,880,134   67,414 2.71   9,722,910   57,987 2.39   8,380,936   14,534 0.69 
Non-interest-bearing deposits 1,841,198       1,873,226       2,328,700     
Non-interest-bearing liabilities(4) 272,982       244,892       266,564     
Total liabilities 11,994,314       11,841,028       10,976,200     
Stockholders’ equity 1,642,899       1,626,693       1,541,755     
Total liabilities and equity$13,637,213      $13,467,721      $12,517,955     
Net interest income  $90,996     $92,109     $95,965  
Net interest rate spread(5)    2.37%     2.52%     3.19%
Net interest margin(6)    2.91%     3.02%     3.36%
Total cost of deposits (including non-interest-bearing deposits)    1.99%     1.52%     0.36%


 For the Nine Months Ended September 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$304,184  $11,661 5.13% $73,886  $472 0.85%
Securities(2) 1,919,660   51,124 3.56   1,801,978   27,086 2.01 
Loans receivable, net(3)           
Commercial 6,892,456   295,199 5.73   6,275,836   198,054 4.22 
Residential real estate 2,895,601   77,862 3.59   2,685,080   66,899 3.32 
Other consumer 257,063   11,694 6.08   254,891   8,387 4.40 
Allowance for loan credit losses, net of deferred loan costs and fees (52,626)      (42,987)    
Loans receivable, net 9,992,494   384,755 5.15   9,172,820   273,340 3.98 
Total interest-earning assets 12,216,338   447,540 4.90   11,048,684   300,898 3.64 
Non-interest-earning assets 1,234,942       1,191,358     
Total assets$13,451,280      $12,240,042     
Liabilities and Stockholders’ Equity:           
Interest-bearing liabilities:           
Interest-bearing checking$3,757,417   33,171 1.18% $4,088,759   6,433 0.21%
Money market 744,689   11,136 2.00   773,666   1,317 0.23 
Savings 1,336,497   4,034 0.40   1,617,354   473 0.04 
Time deposits 2,388,299   64,210 3.59   1,060,027   9,373 1.18 
Total 8,226,902   112,551 1.83   7,539,806   17,596 0.31 
FHLB Advances 1,055,106   38,530 4.88   308,043   3,890 1.69 
Securities sold under agreements to repurchase 73,441   544 0.99   105,821   117 0.15 
Other borrowings(4) 302,649   14,008 6.19   205,796   8,306 5.40 
Total borrowings 1,431,196   53,082 4.96   619,660   12,313 2.66 
Total interest-bearing liabilities 9,658,098   165,633 2.29   8,159,466   29,909 0.49 
Non-interest-bearing deposits 1,913,624       2,352,606     
Non-interest-bearing liabilities(4) 253,014       193,147     
Total liabilities 11,824,736       10,705,219     
Stockholders’ equity 1,626,544       1,534,823     
Total liabilities and equity$13,451,280      $12,240,042     
Net interest income  $281,907     $270,989  
Net interest rate spread(5)    2.61%     3.15%
Net interest margin(6)    3.09%     3.28%
Total cost of deposits (including non-interest-bearing deposits)    1.48%     0.24%




(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 2023 periods, the average balances of derivative cash collateral have been reclassified from non-interest bearing liabilities to other borrowings.
(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)
  September 30, June 30, March 31, December 31, September 30,
   2023  2023  2023  2022  2022
Selected Financial Condition Data:          
Total assets $13,498,183 $13,538,903 $13,555,175 $13,103,896 $12,683,453
Debt securities available-for-sale, at estimated fair value  453,208  452,016  452,195  457,648  470,300
Debt securities held-to-maturity, net of allowance for securities credit losses  1,189,339  1,222,507  1,245,424  1,221,138  1,027,712
Equity investments  97,908  96,452  101,007  102,037  81,722
Restricted equity investments, at cost  82,484  105,305  115,750  109,278  77,556
Loans receivable, net of allowance for loan credit losses  10,068,156  10,030,106  9,986,949  9,868,718  9,672,488
Deposits  10,533,929  10,158,337  9,993,095  9,675,206  9,959,469
Federal Home Loan Bank advances  606,056  1,091,666  1,346,566  1,211,166  514,200
Securities sold under agreements to repurchase and other borrowings  279,164  270,377  266,601  264,500  291,203
Total stockholders’ equity  1,637,604  1,626,283  1,610,371  1,585,464  1,540,216


  For the Three Months Ended,
  September 30, June 30, March 31, December 31, September 30,
   2023   2023   2023   2022  2022 
Selected Operating Data:          
Interest income $158,410  $150,096  $139,034  $130,277 $110,499 
Interest expense  67,414   57,987   40,232   23,789  14,534 
Net interest income  90,996   92,109   98,802   106,488  95,965 
Provision for credit losses  10,283   1,229   3,013   3,647  1,016 
Net interest income after provision for credit losses  80,713   90,880   95,789   102,841  94,949 
Other income (excluding activity related to debt and equity investments)  9,310   9,487   9,571   10,364  11,788 
Net gain (loss) on equity investments  1,452   (559)  (2,193)  17,187  3,362 
Net loss on sale of investments        (5,305)     
Operating expenses (excluding merger related and branch consolidation expense (benefit), net)  64,484   62,930   61,217   59,341  59,045 
Branch consolidation expense (benefit), net        70   111  (346)
Merger related expenses        22   276  298 
Income before provision for income taxes  26,991   36,878   36,553   70,664  51,102 
Provision for income taxes  6,459   8,996   8,654   17,353  12,298 
Net income  20,532   27,882   27,899   53,311  38,804 
Net (loss) income attributable to non-controlling interest  (135)  85   16   39  193 
Net income attributable to OceanFirst Financial Corp. $20,667  $27,797  $27,883  $53,272 $38,611 
Net income available to common stockholders $19,663  $26,793  $26,879  $52,268 $37,607 
Diluted earnings per share $0.33  $0.45  $0.46  $0.89 $0.64 
Net accretion/amortization of purchase accounting adjustments included in net interest income $1,745  $1,152  $1,237  $2,278 $2,004 


  At or For the Three Months Ended
  September 30, June 30, March 31, December 31, September 30,
  2023  2022  2023  2022  2022 
Selected Financial Ratios and Other Data(1) (2):          
Performance Ratios (Annualized):          
Return on average assets(3) 0.57% 0.80% 0.82% 1.62% 1.19%
Return on average tangible assets(3) (4) 0.59  0.83  0.86  1.68  1.24 
Return on average stockholders’ equity(3) 4.75  6.61  6.77  13.25  9.68 
Return on average tangible stockholders’ equity(3) (4) 6.93  9.70  10.00  19.85  14.62 
Return on average tangible common equity(3) (4) 7.29  10.21  10.53  20.97  15.47 
Stockholders’ equity to total assets 12.13  12.01  11.88  12.10  12.14 
Tangible stockholders’ equity to tangible assets(4) 8.64  8.51  8.37  8.47  8.38 
Tangible common equity to tangible assets(4) 8.21  8.09  7.95  8.03  7.92 
Net interest rate spread 2.37  2.52  2.94  3.37  3.19 
Net interest margin 2.91  3.02  3.34  3.64  3.36 
Operating expenses to average assets 1.88  1.87  1.88  1.85  1.87 
Efficiency ratio(5) 63.37  62.28  60.78  44.56  53.10 
Loan-to-deposit ratio 96.10  99.30  100.50  102.50  97.60 


  For the Nine Months Ended September 30,
  2023  2022 
Performance Ratios (Annualized):    
Return on average assets(3) 0.73% 0.99%
Return on average tangible assets(3) (4) 0.76  1.03 
Return on average stockholders’ equity(3) 6.03  7.87 
Return on average tangible stockholders’ equity(3) (4) 8.85  11.91 
Return on average tangible common equity(3) (4) 9.31  12.60 
Net interest rate spread 2.61  3.15 
Net interest margin 3.09  3.28 
Operating expenses to average assets 1.88  1.91 
Efficiency ratio(5) 62.15  57.90 


  At or For the Three Months Ended
  September 30, June 30, March 31, December 31, September 30,
   2023   2023   2023   2022   2022 
Trust and Asset Management:          
Wealth assets under administration and management (“AUA/M”) $336,913  $339,890  $333,436  $324,066  $273,815 
Nest Egg AUA/M  385,317   397,927   400,227   403,538   402,256 
Total AUA/M  722,230   737,817   733,663   727,604   676,071 
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  27.56   27.37   27.07   26.81   26.04 
Tangible book value per common share at end of period(4)  17.93   17.72   17.42   17.08   16.30 
Common shares outstanding at end of period  59,421,498   59,420,859   59,486,086   59,144,128   59,138,507 
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 $1,873,450  $1,931,032  $1,955,399  $1,764,764  $1,748,687 
Loans receivable, net  10,040,522   10,010,785   9,924,905   9,771,104   9,512,447 
Total interest-earning assets  12,384,797   12,250,055   12,010,044   11,605,891   11,326,782 
Total goodwill and core deposit intangible  517,282   518,265   519,282   520,400   521,566 
Total assets  13,637,213   13,467,721   13,244,593   12,834,411   12,517,955 
Time deposits  2,867,921   2,458,872   1,826,662   1,486,410   1,467,297 
Total deposits (including non-interest-bearing deposits)  10,626,159   9,993,010   9,793,256   9,975,509   10,066,342 
Total borrowings  1,095,173   1,603,126   1,600,845   915,565   643,294 
Total interest-bearing liabilities  9,880,134   9,722,910   9,365,594   8,669,190   8,380,936 
Non-interest bearing deposits  1,841,198   1,873,226   2,028,507   2,221,884   2,328,700 
Stockholders' equity  1,642,899   1,626,693   1,609,677   1,564,856   1,541,755 
Tangible stockholders’ equity(4)  1,125,617   1,108,428   1,090,395   1,044,456   1,020,189 
           
Quarterly Yields and Costs          
Total securities  3.82%  3.47%  3.40%  2.83%  2.27%
Loans receivable, net  5.30   5.17   4.96   4.76   4.18 
Total interest-earning assets  5.08   4.91   4.68   4.46   3.88 
Time deposits  4.06   3.57   2.88   1.95   1.53 
Total cost of deposits (including non-interest-bearing deposits)  1.99   1.52   0.88   0.53   0.36 
Total borrowed funds  5.12   5.02   4.79   4.49   3.27 
Total interest-bearing liabilities  2.71   2.39   1.74   1.09   0.69 
Net interest spread  2.37   2.52   2.94   3.37   3.19 
Net interest margin  2.91   3.02   3.34   3.64   3.36 


(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
  September 30, June 30, March 31, December 31, September 30,
   2023   2023   2023   2022   2022 
Core Earnings:          
Net income available to common stockholders (GAAP) $19,663  $26,793  $26,879  $52,268  $37,607 
(Less) add non-recurring and non-core items:          
Net (gain) loss on equity investments(1)  (1,452)  559   2,193   (17,187)  (3,362)
Net loss on sale of investments(1)        5,305       
Merger related expenses        22   276   298 
Branch consolidation expense (benefit), net        70   111   (346)
Income tax expense (benefit) on items  351   (162)  (1,797)  4,060   824 
Core earnings (Non-GAAP) $18,562  $27,190  $32,672  $39,528  $35,021 
Income tax expense $6,459  $8,996  $8,654  $17,353  $12,298 
Provision for credit losses  10,283   1,229   3,013   3,647   1,016 
Less: income tax expense (benefit) on non-core items  351   (162)  (1,797)  4,060   824 
Core earnings PTPP (Non-GAAP) $34,953  $37,577  $46,136  $56,468  $47,511 
Core earnings diluted earnings per share $0.32  $0.46  $0.55  $0.67  $0.60 
Core earnings PTPP diluted earnings per share $0.59  $0.64  $0.78  $0.96  $0.81 
           
Core Ratios (Annualized):          
Return on average assets  0.54%  0.81%  1.00%  1.22%  1.11%
Return on average tangible stockholders’ equity  6.54   9.84   12.15   15.01   13.62 
Return on average tangible common equity  6.88   10.36   12.80   15.86   14.40 
Efficiency ratio  64.29   61.94   56.49   50.78   54.80 


(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 Nine Months Ended September 30,
   2023   2022 
Core Earnings:    
Net income available to common stockholders (GAAP) $73,335  $90,319 
Add (less) non-recurring and non-core items:    
Net loss on equity investments(1)  1,300   7,502 
Net loss on sale of investments(1)  5,305    
Merger related expenses  22   2,459 
Branch consolidation expense, net  70   602 
Income tax benefit on items  (1,608)  (2,449)
Core earnings (Non-GAAP) $78,424  $98,433 
Income tax expense $24,109  $29,212 
Credit loss provision  14,525   4,121 
Less: income tax benefit on non-core items  (1,608)  (2,449)
Core earnings PTPP (Non-GAAP) $118,666  $134,215 
Core diluted earnings per share $1.33  $1.67 
Core earnings PTPP diluted earnings per share $2.01  $2.28 
     
Core Ratios (Annualized):    
Return on average assets  0.78%  1.08%
Return on average tangible stockholders’ equity  9.46   12.98 
Return on average tangible common equity  9.96   13.73 
Efficiency ratio  60.79   55.51 


(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.



  September 30, June 30, March 31, December 31, September 30,
   2023   2023   2023   2022   2022 
Tangible Equity:          
Total stockholders' equity $1,637,604  $1,626,283  $1,610,371  $1,585,464  $1,540,216 
Less:          
Goodwill  506,146   506,146   506,146   506,146   506,146 
Core deposit intangible  10,489   11,476   12,470   13,497   14,656 
Tangible stockholders' equity  1,120,969   1,108,661   1,091,755   1,065,821   1,019,414 
Less:          
Preferred stock  55,527   55,527   55,527   55,527   55,527 
Tangible common equity $1,065,442  $1,053,134  $1,036,228  $1,010,294  $963,887 
           
Tangible Assets:          
Total assets $13,498,183  $13,538,903  $13,555,175  $13,103,896  $12,683,453 
Less:          
Goodwill  506,146   506,146   506,146   506,146   506,146 
Core deposit intangible  10,489   11,476   12,470   13,497   14,656 
Tangible assets $12,981,548  $13,021,281  $13,036,559  $12,584,253  $12,162,651 
           
Tangible stockholders' equity to tangible assets  8.64%  8.51%  8.37%  8.47%  8.38%
Tangible common equity to tangible assets  8.21%  8.09%  7.95%  8.03%  7.92%


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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