Bay Street News

OceanFirst Financial Corp. Announces Second Quarter Financial Results

RED BANK, N.J., July 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 $23.4 million, or $0.40 per diluted share, for the three months ended June 30, 2024, a decrease from $26.8 million, or $0.45 per diluted share, for the corresponding prior year period, and $27.7 million, or $0.47 per diluted share, for the prior linked quarter. For the six months ended June 30, 2024, the Company reported net income available to common stockholders of $51.0 million, or $0.87 per diluted share, a decrease from $53.7 million, or $0.91 per diluted share, for the corresponding prior year period. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information):

  For the Three Months Ended,   For the Six Months Ended,
Performance Ratios (Annualized): June 30,   March 31,   June 30,   June 30,   June 30,
2024   2024   2023   2024   2023
Return on average assets 0.70 %   0.82 %   0.80 %   0.76 %   0.81 %
Return on average stockholders’ equity 5.61     6.65     6.61     6.13     6.69  
Return on average tangible stockholders’ equity (a) 8.10     9.61     9.70     8.86     9.84  
Return on average tangible common equity (a) 8.51     10.09     10.21     9.30     10.37  
Efficiency ratio 62.86     59.56     62.28     61.17     61.53  
Net interest margin 2.71     2.81     3.02     2.76     3.17  

(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,” “Selected Quarterly Financial Data” and “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

Core earnings1 for the three and six months ended June 30, 2024 were $22.7 million and $48.3 million, respectively, or $0.39 and $0.83 per diluted share, a decrease from $27.2 million and $59.9 million, or $0.46 and $1.01 per diluted share, for the corresponding prior year periods, and a decrease from $25.6 million, or $0.44 per diluted share, for the prior linked quarter.

Core earnings PTPP1 for the three and six months ended June 30, 2024 was $32.7 million and $68.9 million, respectively, or $0.56 and $1.18 per diluted share, as compared to $37.6 million and $83.7 million, or $0.64 and $1.42 per diluted share, for the corresponding prior year periods, and $36.2 million, or $0.62 per diluted share, for the prior linked quarter. Selected performance metrics are as follows:

  For the Three Months Ended,   For the Six Months Ended,
  June 30,   March 31,   June 30,   June 30,   June 30,
Core Ratios1(Annualized):   2024       2024       2023       2024       2023  
Return on average assets   0.68 %     0.76 %     0.81 %     0.72 %     0.90 %
Return on average tangible stockholders’ equity   7.86       8.91       9.84       8.38       10.98  
Return on average tangible common equity   8.26       9.36       10.36       8.81       11.56  
Efficiency ratio   63.47       61.05       61.94       62.24       59.13  
Core diluted earnings per share $ 0.39     $ 0.44     $ 0.46     $ 0.83     $ 1.01  
Core PTPP diluted earnings per share   0.56       0.62       0.64       1.18       1.42  
                                       

Key developments for the recent quarter are described below:

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “Our current quarter results reflected prudent balance sheet management and expense discipline. As rates are elevated and the yield curve remains inverted, net interest margin compressed during the quarter, but the pace of margin compression is slowing. Additionally, our credit quality continues to remain robust, we grew capital, and continued share repurchases during the quarter.” Mr. Maher added, “The Company is well positioned to bolster shareholder value through growth in the second half of the year.”

The Company’s Board of Directors declared its 110th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on August 16, 2024 to common stockholders of record on August 5, 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 August 15, 2024 to preferred stockholders of record on July 31, 2024.

1Core 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”, “Selected Quarterly Financial Data” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

Estimated.
3 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 net interest income and margin were impacted by a mix-shift to and repricing of higher cost funding. Deposit betas increased modestly to 42%, from 40% in the prior linked quarter.4 Additionally, the current quarter provision for credit losses includes the impact of an additional $1.6 million charge-off on the single commercial real estate relationship that was previously moved to non-accrual and partially charged-off in 2023. The collateral related to the noted credit is currently under an agreement to sell, which is expected to occur during the third quarter.

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

Net Interest Income and Margin

Three months ended June 30, 2024 vs. June 30, 2023

Net interest income decreased to $82.3 million, from $92.1 million, primarily reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 2.71%, from 3.02%, which included the impact of purchase accounting accretion and prepayment fees of 0.04% and 0.05%, respectively. 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 decreased by $46.3 million due to balance sheet contraction while the average yield for interest-earning assets increased to 5.25%, from 4.91%.

The cost of average interest-bearing liabilities increased to 3.14%, from 2.39%, primarily due to higher cost of deposits. The total cost of deposits (including non-interest bearing deposits) increased to 2.37%, from 1.52%. Average interest-bearing liabilities increased by $149.6 million, primarily due to an increase in total deposits, partly offset by a decrease in total borrowings.

Six months ended June 30, 2024 vs. June 30, 2023

Net interest income decreased to $168.5 million, from $190.9 million, reflecting the net impact of the higher interest rate environment. Net interest margin decreased to 2.76%, from 3.17%, which included the impact of purchase accounting accretion and prepayment fees of 0.04% for both periods.

Average interest-earning assets increased by $146.4 million, primarily driven by securities growth of $135.4 million, while the average yield increased to 5.25%, from 4.80%.

The cost of average interest-bearing liabilities increased to 3.09%, from 2.08%. The total cost of deposits (including non-interest bearing deposits) increased to 2.34%, from 1.21%. Average interest-bearing liabilities increased by $392.0 million. The drivers for the three month periods, described above, were also the drivers for the six month periods.

Three months ended June 30, 2024 vs. March 31, 2024

Net interest income decreased by $4.0 million, primarily due to an increase in cost of funds and lower average-interest earning assets. Net interest margin decreased to 2.71%, from 2.81%, which included the impact of purchase accounting accretion and prepayment fees of 0.04% for both periods.

Average interest-earning assets decreased by $146.6 million, primarily due to a decrease in loans. The yield on average interest-earning assets decreased to 5.25%, from 5.26%.

The total cost of average interest-bearing liabilities increased to 3.14%, from 3.03%, primarily due to higher cost of deposits. Total cost of deposits (including non-interest bearing deposits) increased to 2.37%, from 2.31%. Average interest-bearing liabilities decreased by $129.4 million, primarily due to decreases in brokered time deposits and high yield savings accounts, partly offset by an increase in borrowings.

Provision for Credit Losses

Provision for credit losses for the three and six months ended June 30, 2024 was $3.1 million and $3.7 million, respectively, as compared to $1.2 million and $4.2 million for the corresponding prior year periods, and $591,000 in the prior linked quarter. The current quarter provision was driven by the additional charge-off previously noted and changes in the external macro-economic forecasts, partly offset by lower loan balances.

Net loan charge-offs were $1.5 million and $1.8 million for the three and six months ended June 30, 2024, respectively, as compared to net loan charge-offs of $123,000 and $76,000 for the three and six months ended June 30, 2023. The current quarter includes the impact of an additional $1.6 million charge-off related to a single commercial real estate relationship, as previously noted. Net loan charge-offs were $349,000 in the prior linked quarter. Refer to “Asset Quality” section for further discussion.

Non-interest Income

Three months ended June 30, 2024 vs. June 30, 2023

Other income increased to $11.0 million, as compared to $8.9 million. Other income was favorably impacted by non-core operations related to net gains/losses on equity investments of $887,000 for the current quarter, and adversely impacted by non-core operations of $559,000 for the prior year quarter.

Excluding non-core operations, other income increased by $611,000, primarily driven by increases in the cash surrender value of bank owned life insurance of $544,000 and net gain on sale of loans of $387,000, partially offset by a decrease in fees and service charges of $587,000 on lower title activity and retail deposit fees.

Six months ended June 30, 2024 vs. June 30, 2023

Other income increased to $23.3 million, as compared to $11.0 million. The current period was favorably impacted by non-core operations of $4.0 million related to net gains on equity investments and sale of a portion of the Company’s trust business. The prior year was adversely impacted by non-core operations of $8.1 million, primarily related to losses on sale of investments.

Excluding non-core operations, other income increased by $241,000, primarily driven by increases in the cash surrender value of bank owned life insurance of $1.1 million, which included one-time death benefits in the current period, and net gain on sale of loans of $724,000. This was partially offset by a decrease in fees and service charges of $1.3 million, which was driven by the same factors as noted above.

Three months ended June 30, 2024 vs. March 31, 2024

Other income in the prior linked quarter was $12.3 million and was favorably impacted by non-core operations of $3.1 million related to net gains on equity investments and sale of a portion of the Company’s trust business. Excluding non-core operations, other income increased by $897,000, primarily due to an increase in fees and service charges of $542,000, which was driven by higher title activity.

Non-interest Expense

Three months ended June 30, 2024 vs. June 30, 2023

Operating expenses decreased $4.3 million to $58.6 million, from $62.9 million. The primary drivers were decreases in professional fees of $2.9 million and compensation and employee benefits expenses of $1.1 million, which reflect the net realization of the Company’s performance improvements initiatives and strategic investments made over the past year.

Six months ended June 30, 2024 vs. June 30, 2023

Operating expenses decreased to $117.3 million, as compared to $124.2 million. Operating expenses were adversely impacted by an FDIC special assessment in the current year of $418,000, and merger related and net branch consolidation expenses of $92,000 in the prior year period.

Excluding non-core operations, operating expenses decreased by $7.3 million. The primary drivers were decreases in professional fees of $5.3 million and compensation and employee benefits expenses of $2.2 million, which reflect the net realization of the Company’s performance improvements initiatives and strategic investments made over the past year.

Three months ended June 30, 2024 vs. March 31, 2024

Operating expenses in the prior linked quarter were $58.7 million and included non-core operations of $418,000, related to an FDIC special assessment. Excluding non-core operations, operating expenses increased by $366,000.

Income Tax Expense

The provision for income taxes was $7.1 million and $17.7 million for the three and six months ended June 30, 2024, respectively, as compared to $9.0 million and $17.7 million for the same prior year periods, and $10.6 million for the prior linked quarter. The effective tax rate was 22.5% and 25.0% for the three and six months ended June 30, 2024, respectively, as compared to 24.4% and 24.0% for the same prior year periods, and 27.1% for the prior linked quarter. The prior linked quarter and current year’s effective tax rates were negatively impacted by 3.0% and 1.6%, respectively, due to a non-recurring write-off of a deferred tax asset of $1.2 million.

Financial Condition

June 30, 2024 vs. December 31, 2023

Total assets decreased by $216.5 million to $13.32 billion, from $13.54 billion, primarily due to decreases in loans and debt securities. Total loans decreased by $175.3 million to $10.02 billion, from $10.19 billion, primarily due to a decrease in the total commercial portfolio of $165.3 million driven by loan payoffs and lower loan originations. The loan pipeline increased by $76.1 million to $259.1 million from $183.0 million. Held-to-maturity debt securities decreased by $53.9 million to $1.11 billion, from $1.16 billion, primarily due to principal repayments. Debt securities available-for-sale decreased $32.4 million to $721.5 million, from $753.9 million, primarily due to principal reductions and maturities. Other assets increased by $23.3 million to $203.0 million, from $179.7 million, primarily due to an increase in the market values of derivatives associated with customer interest rate swap programs.

Total liabilities decreased by $231.2 million to $11.65 billion, from $11.88 billion primarily related to lower deposits and a funding mix shift. Deposits decreased by $440.9 million to $9.99 billion, from $10.43 billion, primarily due to decreases in high-yield savings accounts of $283.1 million and interest bearing deposits of $243.9 million. Time deposits decreased to $2.37 billion, from $2.45 billion, representing 23.7% and 23.4% of total deposits, respectively, which was primarily related to planned runoff of brokered time deposits which decreased by $229.9 million, offset by increases in retail time deposits of $161.7 million. The loan-to-deposit ratio was 100.3%, as compared to 97.7%. Federal Home Loan Bank (“FHLB”) advances decreased by $59.3 million to $789.3 million, from $848.6 million due to a mix shift in funding sources to other borrowings, which increased by $228.0 million to $424.5 million, from $196.5 million, as a result of lower cost funding availability.

Other liabilities increased by $31.4 million to $332.1 million, from $300.7 million, primarily due to an increase in the market values of derivatives 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 June 30, 2024, including the Company’s estimated common equity tier one capital ratio which increased to 11.2%, up approximately 35 basis points from December 31, 2023.

Total stockholders’ equity increased to $1.68 billion, as compared to $1.66 billion, primarily reflecting net income, partially offset by capital returns comprising of share repurchases and dividends. For the six months ended June 30, 2024, the Company repurchased 1,295,914 shares totaling $20.1 million representing a weighted average cost of $15.35. The Company had 1,638,524 shares available for repurchase under the authorized repurchase program. Additionally, accumulated other comprehensive loss decreased by $3.7 million primarily due to increases in fair market value of available-for-sale debt securities, net of tax.

The Company actively monitors its goodwill as the challenging economic environment persists and continues to pressure the Company’s stock price and industry valuations. The Company customarily performs its annual goodwill impairment assessment during the third quarter.

The Company’s tangible common equity3 increased by $11.6 million to $1.11 billion. The Company’s stockholders’ equity to assets ratio was 12.59% at June 30, 2024, and tangible common equity to tangible assets ratio increased by 26 basis points during the quarter to 8.64%, primarily due to the drivers described above.

Book value per common share increased to $28.67, as compared to $27.96. Tangible book value per common share3 increased to $18.93, as compared to $18.35.

Asset Quality

June 30, 2024 vs. December 31, 2023

Overall asset quality metrics remained stable. The Company’s non-performing loans increased to $33.4 million from $29.5 million and represented 0.33% and 0.29% of total loans, respectively. The allowance for loan credit losses as a percentage of total non-performing loans was 205.97%, as compared to 227.21%. The level of 30 to 89 days delinquent loans decreased to $9.7 million, from $19.2 million. Criticized and classified assets decreased to $142.6 million, from $146.9 million. The Company’s allowance for loan credit losses was 0.69% of total loans, as compared to 0.66%. 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 $30.6 million, from $26.4 million. The allowance for loan credit losses as a percentage of total non-performing loans was 225.10%, as compared to 254.64%. The level of 30 to 89 days delinquent loans, excluding non-performing loans, decreased to $8.5 million, from $17.7 million. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $75.0 million, or 0.75% 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.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, July 19, 2024 at 11:00 a.m. Eastern Time. The direct dial number for the call is (833) 470-1428, using the access code 619002. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (866) 813-9403, access code 217614, from one hour after the end of the call until August 16, 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 $13.3 billion regional bank providing financial services throughout New Jersey and in the major metropolitan areas between Massachusetts and Virginia. 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, and 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)
                 
    June 30,   March 31,   December 31,   June 30,
    2024   2024   2023   2023
    (Unaudited)   (Unaudited)       (Unaudited)
Assets                
Cash and due from banks   $ 181,198   $ 130,422   $ 153,718   $ 457,747
Debt securities available-for-sale, at estimated fair value     721,484     744,944     753,892     452,016
Debt securities held-to-maturity, net of allowance for securities credit losses of $958 at June 30, 2024, $1,058 at March 31, 2024, $1,133 at December 31, 2023 and $964 at June 30, 2023 (estimated fair value of $1,003,850 at June 30, 2024, $1,029,965 at March 31, 2024, $1,068,438 at December 31, 2023 and $1,109,756 at June 30, 2023)     1,105,843     1,128,666     1,159,735     1,222,507
Equity investments     104,132     103,201     100,163     96,452
Restricted equity investments, at cost     92,679     85,689     93,766     105,305
Loans receivable, net of allowance for loan credit losses of $68,839 at June 30, 2024, $67,173 at March 31, 2024, $67,137 at December 31, 2023 and $61,791 at June 30, 2023     9,961,117     10,068,209     10,136,721     10,030,106
Loans held-for-sale     2,062     4,702     5,166     4,200
Interest and dividends receivable     50,976     52,502     51,874     47,933
Premises and equipment, net     117,392     119,211     121,372     124,139
Bank owned life insurance     267,867     266,615     266,498     263,836
Assets held for sale     28     28     28     3,608
Goodwill     506,146     506,146     506,146     506,146
Core deposit intangible     7,859     8,669     9,513     11,476
Other assets     202,972     199,974     179,661     213,432
Total assets   $ 13,321,755   $ 13,418,978   $ 13,538,253   $ 13,538,903
Liabilities and Stockholders’ Equity                
Deposits   $ 9,994,017   $ 10,236,851   $ 10,434,949   $ 10,158,337
Federal Home Loan Bank advances     789,337     658,436     848,636     1,091,666
Securities sold under agreements to repurchase with customers     80,000     66,798     73,148     74,452
Other borrowings     424,490     425,722     196,456     195,925
Advances by borrowers for taxes and insurance     25,168     28,187     22,407     27,839
Other liabilities     332,074     337,147     300,712     364,401
Total liabilities     11,645,086     11,753,141     11,876,308     11,912,620
Stockholders’ equity:                
OceanFirst Financial Corp. stockholders’ equity     1,675,885     1,665,112     1,661,163     1,625,435
Non-controlling interest     784     725     782     848
Total stockholders’ equity     1,676,669     1,665,837     1,661,945     1,626,283
Total liabilities and stockholders’ equity   $ 13,321,755   $ 13,418,978   $ 13,538,253   $ 13,538,903
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
 
    For the Three Months Ended,   For the Six Months Ended,
    June 30,   March 31,   June 30,   June 30,   June 30,
    2024     2024       2023     2024     2023  
    |———————- (Unaudited) ———————-|   |———- (Unaudited) ———–|
Interest income:                    
Loans   $ 136,049   $ 137,121     $ 129,104     $ 273,170   $ 250,824  
Debt securities     19,039     19,861       14,320       38,900     28,606  
Equity investments and other     4,338     4,620       6,672       8,958     9,700  
Total interest income     159,426     161,602       150,096       321,028     289,130  
Interest expense:                    
Deposits     60,071     59,855       37,934       119,926     59,264  
Borrowed funds     17,092     15,523       20,053       32,615     38,955  
Total interest expense     77,163     75,378       57,987       152,541     98,219  
Net interest income     82,263     86,224       92,109       168,487     190,911  
Provision for credit losses     3,114     591       1,229       3,705     4,242  
Net interest income after provision for credit losses     79,149     85,633       90,880       164,782     186,669  
Other income:                    
Bankcard services revenue     1,571     1,416       1,544       2,987     2,874  
Trust and asset management revenue     419     526       645       945     1,257  
Fees and service charges     5,015     4,473       5,602       9,488     10,761  
Net gain on sales of loans     420     357       33       777     53  
Net gain (loss) on equity investments     887     1,923       (559 )     2,810     (7,360 )
Income from bank owned life insurance     1,726     1,862       1,182       3,588     2,463  
Commercial loan swap income     241     138             379     701  
Other     706     1,591       481       2,297     252  
Total other income     10,985     12,286       8,928       23,271     11,001  
Operating expenses:                    
Compensation and employee benefits     33,136     32,759       34,222       65,895     68,142  
Occupancy     5,175     5,199       5,265       10,374     10,504  
Equipment     1,068     1,130       1,101       2,198     2,306  
Marketing     1,175     990       961       2,165     1,943  
Federal deposit insurance and regulatory assessments     2,685     3,135       2,465       5,820     4,214  
Data processing     6,018     5,956       6,165       11,974     12,319  
Check card processing     1,075     1,050       1,214       2,125     2,495  
Professional fees     2,161     2,732       5,083       4,893     10,181  
Amortization of core deposit intangible     810     844       994       1,654     2,021  
Branch consolidation expense, net                         70  
Merger related expenses                         22  
Other operating expense     5,317     4,877       5,460       10,194     10,022  
Total operating expenses     58,620     58,672       62,930       117,292     124,239  
Income before provision for income taxes     31,514     39,247       36,878       70,761     73,431  
Provision for income taxes     7,082     10,637       8,996       17,719     17,650  
Net income     24,432     28,610       27,882       53,042     55,781  
Net income (loss) attributable to non-controlling interest     59     (57 )     85       2     101  
Net income attributable to OceanFirst Financial Corp.     24,373     28,667       27,797       53,040     55,680  
Dividends on preferred shares     1,004     1,004       1,004       2,008     2,008  
Net income available to common stockholders   $ 23,369   $ 27,663     $ 26,793     $ 51,032   $ 53,672  
Basic earnings per share   $ 0.40   $ 0.47     $ 0.45     $ 0.87   $ 0.91  
Diluted earnings per share   $ 0.40   $ 0.47     $ 0.45     $ 0.87   $ 0.91  
Average basic shares outstanding     58,356     58,789       59,147       58,489     58,988  
Average diluted shares outstanding     58,357     58,791       59,153       58,490     59,038  
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
 
LOANS RECEIVABLE     At
      June 30,   March 31,   December 31,   September 30,   June 30,
        2024       2024       2023       2023       2023  
Commercial:                      
Commercial real estate – investor     $ 5,324,994     $ 5,322,755     $ 5,353,974     $ 5,334,279     $ 5,319,686  
Commercial real estate – owner-occupied     857,710       914,582       943,891       957,216       981,618  
Commercial and industrial       616,400       677,176       666,532       652,119       620,284  
Total commercial       6,799,104       6,914,513       6,964,397       6,943,614       6,921,588  
Consumer:                      
Residential real estate       2,977,698       2,965,276       2,979,534       2,928,259       2,906,556  
Home equity loans and lines and other consumer (“other consumer”)     242,526       245,859       250,664       251,698       255,486  
Total consumer       3,220,224       3,211,135       3,230,198       3,179,957       3,162,042  
Total loans       10,019,328       10,125,648       10,194,595       10,123,571       10,083,630  
Deferred origination costs (fees), net     10,628       9,734       9,263       8,462       8,267  
Allowance for loan credit losses       (68,839 )     (67,173 )     (67,137 )     (63,877 )     (61,791 )
Loans receivable, net     $ 9,961,117     $ 10,068,209     $ 10,136,721     $ 10,068,156     $ 10,030,106  
Mortgage loans serviced for others   $ 104,136     $ 89,555     $ 68,217     $ 52,796     $ 50,820  
  At June 30, 2024 Average Yield                    
Loan pipeline (1):                      
Commercial 7.88 %   $ 166,206     $ 66,167     $ 124,707     $ 50,756     $ 39,164  
Residential real estate 6.96       80,330       57,340       49,499       66,682       58,022  
Other consumer 8.81       12,586       13,030       8,819       13,795       18,621  
Total 7.64 %   $ 259,122     $ 136,537     $ 183,025     $ 131,233     $ 115,807  
  For the Three Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,
  2024   2024   2023   2023   2023
  Average Yield                    
Loan originations:                      
Commercial 7.98 %   $ 56,053   $ 123,010   $ 94,294   $ 90,263   $ 197,732
Residential real estate 6.74       121,388     78,270     113,227     92,299     100,542
Other consumer 8.99       16,970     11,405     16,971     17,019     22,487
Total 7.29 %   $ 194,411   $ 212,685   $ 224,492   $ 199,581   $ 320,761
Loans sold     $ 45,045   $ 29,965   $ 20,138   $ 15,404   $ 18,664

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

DEPOSITS At
  June 30,   March 31,   December 31,   September 30,   June 30,
  2024   2024   2023   2023   2023
Type of Account                  
Non-interest-bearing $ 1,632,521   $ 1,639,828   $ 1,657,119   $ 1,827,381   $ 1,854,136
Interest-bearing checking   3,667,837     3,865,699     3,911,766     3,708,874     3,537,834
Money market   1,210,312     1,150,979     1,021,805     860,025     770,440
Savings   1,115,688     1,260,309     1,398,837     1,484,000     1,229,897
Time deposits (1)   2,367,659     2,320,036     2,445,422     2,653,649     2,766,030
Total deposits $ 9,994,017   $ 10,236,851   $ 10,434,949   $ 10,533,929   $ 10,158,337
(1)  Includes brokered time deposits of $401.6 million, $543.4 million, $631.5 million, $995.5 million, and $1.42 billion at June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023, respectively.
OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
 
ASSET QUALITY (1) June 30,   March 31,   December 31,   September 30,   June 30,
  2024       2024       2023       2023       2023  
Non-performing loans:                  
Commercial real estate – investor $ 19,761     $ 21,507     $ 20,820     $ 20,723     $ 13,000  
Commercial real estate – owner-occupied   4,081       3,355       351       240       565  
Commercial and industrial   434       567       304       1,120       199  
Residential real estate   7,213       7,181       5,542       5,624       6,174  
Other consumer   1,933       2,401       2,531       2,391       2,820  
Total non-performing loans $ 33,422     $ 35,011     $ 29,548     $ 30,098     $ 22,758  
Delinquent loans 30 to 89 days $ 9,655     $ 17,534     $ 19,202     $ 20,591     $ 3,136  
Modifications to borrowers experiencing financial difficulty (2)                  
Non-performing (included in total non-performing loans above) $ 8,677     $ 9,075     $ 6,420     $ 6,679     $ 6,882  
Performing   27,184       15,619       15,361       7,645       7,516  
Total modifications to borrowers experiencing financial difficulty (2) $ 35,861     $ 24,694     $ 21,781     $ 14,324     $ 14,398  
Allowance for loan credit losses $ 68,839     $ 67,173     $ 67,137     $ 63,877     $ 61,791  
Allowance for loan credit losses as a percent of total loans receivable (3)   0.69 %     0.66 %     0.66 %     0.63 %     0.61 %
Allowance for loan credit losses as a percent of total non-performing loans (3)   205.97       191.86       227.21       212.23       271.51  
Non-performing loans as a percent of total loans receivable   0.33       0.35       0.29       0.30       0.23  
Non-performing assets as a percent of total assets   0.25       0.26       0.22       0.22       0.17  
Supplemental PCD and non-performing loans                  
PCD loans, net of allowance for loan credit losses $ 16,058     $ 16,700     $ 16,122     $ 18,640     $ 18,872  
Non-performing PCD loans   2,841       3,525       3,183       3,177       3,171  
Delinquent PCD and non-performing loans 30 to 89 days   1,188       2,088       1,516       13,007       1,976  
PCD modifications to borrowers experiencing financial difficulty (2)   759       764       771       750       755  
Asset quality, excluding PCD loans (4)                  
Non-performing loans   30,581       31,486       26,365       26,921       19,587  
Delinquent loans 30 to 89 days (excludes non-performing loans)   8,467       15,446       17,686       7,584       1,160  
Modifications to borrowers experiencing financial difficulty (2)   35,102       23,930       21,010       13,574       13,643  
Allowance for loan credit losses as a percent of total non-performing loans (3)   225.10 %     213.34 %     254.64 %     237.28 %     315.47 %
Non-performing loans as a percent of total loans receivable   0.31       0.31       0.26       0.27       0.19  
Non-performing assets as a percent of total assets   0.23       0.23       0.19       0.20       0.14  
(1) At June 30, 2024, non-performing loans included the remaining exposure of $7.2 million on the single commercial real estate relationship discussed in “Results of Operations”.
(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 $6.1 million, $7.0 million, $7.5 million, $8.8 million and $9.8 million at June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023 and June 30, 2023, respectively.
(4) All balances and ratios exclude PCD loans.
NET LOAN CHARGE-OFFS For the Three Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,
    2024       2024       2023       2023       2023  
Net loan charge-offs:                  
Loan charge-offs (1) $ (1,600 )   $ (441 )   $ (98 )   $ (8,379 )   $ (206 )
Recoveries on loans   148       92       63       108       83  
Net loan charge-offs $ (1,452 )   $ (349 )   $ (35 )   $ (8,271 )   $ (123 )
Net loan charge-offs to average total loans (annualized)   0.06 %     0.01 %     %     0.33 %     %
Net loan charge-offs detail:                  
Commercial $ (1,576 )   $ (35 )   $ 9     $ (8,332 )   $ (117 )
Residential real estate   87       66       9       17       9  
Other consumer   37       (380 )     (53 )     44       (15 )
Net loan charge-offs $ (1,452 )   $ (349 )   $ (35 )   $ (8,271 )   $ (123 )

(1)The three months ended June 30, 2024 and September 30, 2023 includes charge-offs related to a single commercial real estate relationship of $1.6 million and $8.4 million, respectively.

OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
   
  For the Three Months Ended
  June 30, 2024   March 31, 2024   June 30, 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 $ 132,574     $ 1,770   5.37 %   $ 163,192     $ 2,226   5.49 %   $ 308,238     $ 4,283   5.57 %
Securities (2)   2,058,711       21,607   4.22       2,098,421       22,255   4.27       1,931,032       16,709   3.47  
Loans receivable, net (3)                                  
Commercial   6,845,988       102,620   6.03       6,925,048       104,421   6.06       6,912,698       99,350   5.76  
Residential real estate   2,978,749       29,072   3.90       2,974,468       28,596   3.85       2,895,629       25,936   3.58  
Other consumer   246,024       4,357   7.12       248,396       4,104   6.65       255,785       3,818   5.99  
Allowance for loan credit losses, net of deferred loan costs and fees   (58,270 )             (59,141 )             (53,327 )        
Loans receivable, net   10,012,491       136,049   5.46       10,088,771       137,121   5.46       10,010,785       129,104   5.17  
Total interest-earning assets   12,203,776       159,426   5.25       12,350,384       161,602   5.26       12,250,055       150,096   4.91  
Non-interest-earning assets   1,237,442               1,206,336               1,217,666          
Total assets $ 13,441,218             $ 13,556,720             $ 13,467,721          
Liabilities and Stockholders’ Equity:                                  
Interest-bearing liabilities:                                  
Interest-bearing checking $ 3,862,060       21,043   2.19 %   $ 3,925,965       20,795   2.13 %   $ 3,718,289       11,964   1.29 %
Money market   1,183,429       10,482   3.56       1,092,003       9,172   3.38       694,311       3,678   2.12  
Savings   1,164,203       2,604   0.90       1,355,718       4,462   1.32       1,248,312       389   0.12  
Time deposits   2,337,458       25,942   4.46       2,414,063       25,426   4.24       2,458,872       21,903   3.57  
Total   8,547,150       60,071   2.83       8,787,749       59,855   2.74       8,119,784       37,934   1.87  
FHLB Advances   711,801       8,746   4.94       644,818       7,771   4.85       1,246,914       15,406   4.96  
Securities sold under agreements to repurchase   72,305       478   2.66       68,500       411   2.41       71,752       192   1.07  
Other borrowings (4)   541,266       7,868   5.85       500,901       7,341   5.89       284,460       4,455   6.28  
Total borrowings   1,325,372       17,092   5.19       1,214,219       15,523   5.14       1,603,126       20,053   5.02  
Total interest-bearing liabilities   9,872,522       77,163   3.14       10,001,968       75,378   3.03       9,722,910       57,987   2.39  
Non-interest-bearing deposits   1,626,165               1,634,583               1,873,226          
Non-interest-bearing liabilities(4)   268,078               247,129               244,892          
Total liabilities   11,766,765               11,883,680               11,841,028          
Stockholders’ equity   1,674,453               1,673,040               1,626,693          
Total liabilities and equity $ 13,441,218             $ 13,556,720             $ 13,467,721          
Net interest income     $ 82,263           $ 86,224           $ 92,109    
Net interest rate spread (5)         2.11 %           2.23 %           2.52 %
Net interest margin (6)         2.71 %           2.81 %           3.02 %
Total cost of deposits (including non-interest-bearing deposits)         2.37 %           2.31 %           1.52 %
  For the Six Months Ended June 30,
    2024       2023  
(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 $ 147,883     $ 3,995   5.43 %   $ 219,482     $ 5,221   4.80 %
Securities (2)   2,078,566       43,863   4.24       1,943,148       33,085   3.43  
Loans receivable, net (3)                      
Commercial   6,885,518       207,041   6.05       6,876,553       192,130   5.63  
Residential real estate   2,976,608       57,668   3.87       2,883,904       51,097   3.54  
Other consumer   247,210       8,461   6.88       259,573       7,597   5.90  
Allowance for loan credit losses, net of deferred loan costs and fees   (58,705 )             (51,948 )        
Loans receivable, net   10,050,631       273,170   5.46       9,968,082       250,824   5.07  
Total interest-earning assets   12,277,080       321,028   5.25       12,130,712       289,130   4.80  
Non-interest-earning assets   1,221,889               1,226,061          
Total assets $ 13,498,969             $ 13,356,773          
Liabilities and Stockholders’ Equity:                      
Interest-bearing liabilities:                      
Interest-bearing checking $ 3,894,013       41,838   2.16 %   $ 3,790,413       18,234   0.97 %
Money market   1,137,716       19,653   3.47       699,940       5,437   1.57  
Savings   1,259,960       7,066   1.13       1,308,381       723   0.11  
Time deposits   2,375,760       51,369   4.35       2,144,514       34,870   3.28  
Total   8,667,449       119,926   2.78       7,943,248       59,264   1.50  
FHLB Advances   678,309       16,517   4.90       1,234,919       29,824   4.87  
Securities sold under agreements to repurchase   70,403       889   2.54       71,825       282   0.79  
Other borrowings (4)   521,084       15,209   5.87       295,248       8,849   6.04  
Total borrowings   1,269,796       32,615   5.17       1,601,992       38,955   4.90  
Total interest-bearing liabilities   9,937,245       152,541   3.09       9,545,240       98,219   2.08  
Non-interest-bearing deposits   1,630,374               1,950,437          
Non-interest-bearing liabilities (4)   257,603               242,864          
Total liabilities   11,825,222               11,738,541          
Stockholders’ equity   1,673,747               1,618,232          
Total liabilities and equity $ 13,498,969             $ 13,356,773          
Net interest income     $ 168,487           $ 190,911    
Net interest rate spread (5)         2.16 %           2.72 %
Net interest margin (6)         2.76 %           3.17 %
Total cost of deposits (including non-interest-bearing deposits)         2.34 %           1.21 %
(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 and six months ended June 30, 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)
 
    June 30,   March 31,   December 31,   September 30,   June 30,
     2024    2024    2023    2023    2023
Selected Financial Condition Data:                    
Total assets   $ 13,321,755   $ 13,418,978   $ 13,538,253   $ 13,498,183   $ 13,538,903
Debt securities available-for-sale, at estimated fair value     721,484     744,944     753,892     453,208     452,016
Debt securities held-to-maturity, net of allowance for securities credit losses     1,105,843     1,128,666     1,159,735     1,189,339     1,222,507
Equity investments     104,132     103,201     100,163     97,908     96,452
Restricted equity investments, at cost     92,679     85,689     93,766     82,484     105,305
Loans receivable, net of allowance for loan credit losses     9,961,117     10,068,209     10,136,721     10,068,156     10,030,106
Deposits     9,994,017     10,236,851     10,434,949     10,533,929     10,158,337
Federal Home Loan Bank advances     789,337     658,436     848,636     606,056     1,091,666
Securities sold under agreements to repurchase and other borrowings     504,490     492,520     269,604     279,164     270,377
Total stockholders’ equity     1,676,669     1,665,837     1,661,945     1,637,604     1,626,283
    For the Three Months Ended,
    June 30,   March 31,   December 31,   September 30,   June 30,
    2024     2024     2023     2023       2023  
Selected Operating Data:                    
Interest income   $ 159,426   $ 161,602     $ 160,434   $ 158,410     $ 150,096  
Interest expense     77,163     75,378       72,610     67,414       57,987  
Net interest income     82,263     86,224       87,824     90,996       92,109  
Provision for credit losses     3,114     591       3,153     10,283       1,229  
Net interest income after provision for credit losses     79,149     85,633       84,671     80,713       90,880  
Other income (excluding activity related to debt and equity investments and sale of trust business)     10,098     9,201       9,685     9,310       9,487  
Net gain (loss) on equity investments     887     1,923       2,176     1,452       (559 )
Net gain on sale of trust business         1,162                  
Operating expenses (excluding FDIC special assessment)     58,620     58,254       58,526     64,484       62,930  
FDIC special assessment         418       1,663            
Income before provision for income taxes     31,514     39,247       36,343     26,991       36,878  
Provision for income taxes     7,082     10,637       8,591     6,459       8,996  
Net income     24,432     28,610       27,752     20,532       27,882  
Net income (loss) attributable to non-controlling interest     59     (57 )     70     (135 )     85  
Net income attributable to OceanFirst Financial Corp.   $ 24,373   $ 28,667     $ 27,682   $ 20,667     $ 27,797  
Net income available to common stockholders   $ 23,369   $ 27,663     $ 26,678   $ 19,663     $ 26,793  
Diluted earnings per share   $ 0.40   $ 0.47     $ 0.46   $ 0.33     $ 0.45  
Net accretion/amortization of purchase accounting adjustments included in net interest income   $ 1,086   $ 921     $ 1,604   $ 1,745     $ 1,152  
    At or For the Three Months Ended
    June 30,   March 31,   December 31,   September 30,   June 30,
    2024   2024   2023   2023   2023
Selected Financial Ratios and Other Data(1) (2):                    
Performance Ratios (Annualized):                    
Return on average assets (3)   0.70 %   0.82 %   0.78 %   0.57 %   0.80 %
Return on average tangible assets (3) (4)   0.73     0.85     0.81     0.59     0.83  
Return on average stockholders’ equity (3)   5.61     6.65     6.41     4.75     6.61  
Return on average tangible stockholders’ equity (3) (4)   8.10     9.61     9.33     6.93     9.70  
Return on average tangible common equity (3) (4)   8.51     10.09     9.81     7.29     10.21  
Stockholders’ equity to total assets   12.59     12.41     12.28     12.13     12.01  
Tangible stockholders’ equity to tangible assets (4)   9.08     8.92     8.80     8.64     8.51  
Tangible common equity to tangible assets (4)   8.64     8.49     8.38     8.21     8.09  
Net interest rate spread   2.11     2.23     2.25     2.37     2.52  
Net interest margin   2.71     2.81     2.82     2.91     3.02  
Operating expenses to average assets   1.75     1.74     1.76     1.88     1.87  
Efficiency ratio (5)   62.86     59.56     60.38     63.37     62.28  
Loan-to-deposit ratio   100.30     98.90     97.70     96.10     99.30  
    For the Six Months Ended June 30,
    2024   2023
Performance Ratios (Annualized):        
Return on average assets (3)   0.76 %   0.81 %
Return on average tangible assets (3) (4)   0.79     0.84  
Return on average stockholders’ equity (3)   6.13     6.69  
Return on average tangible stockholders’ equity (3) (4)   8.86     9.84  
Return on average tangible common equity (3) (4)   9.30     10.37  
Net interest rate spread   2.16     2.70  
Net interest margin   2.76     3.17  
Operating expenses to average assets   1.75     1.88  
Efficiency ratio (5)   61.17     61.53  
    At or For the Three Months Ended
    June 30,   March 31,   December 31,   September 30,   June 30,
      2024       2024       2023       2023       2023  
Trust and Asset Management:                    
Wealth assets under administration and management (“AUA/M”)   $ 150,519     $ 236,891     $ 335,769     $ 336,913     $ 339,890  
Nest Egg AUA/M     403,647       407,478       401,420       385,317       397,927  
Total AUA/M     554,166       644,369       737,189       722,230       737,817  
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     28.67       28.32       27.96       27.56       27.37  
Tangible book value per common share at end of period (4)     18.93       18.63       18.35       17.93       17.72  
Common shares outstanding at end of period     58,481,418       58,812,498       59,447,684       59,421,498       59,420,859  
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       39       38       38  
Quarterly Average Balances                    
Total securities   $ 2,058,711     $ 2,098,421     $ 1,863,136     $ 1,873,450     $ 1,931,032  
Loans receivable, net     10,012,491       10,088,771       10,089,161       10,040,522       10,010,785  
Total interest-earning assets     12,203,776       12,350,384       12,349,140       12,384,797       12,250,055  
Total goodwill and core deposit intangible     514,535       515,356       516,289       517,282       518,265  
Total assets     13,441,218       13,556,720       13,593,107       13,637,213       13,467,721  
Time deposits     2,337,458       2,414,063       2,596,706       2,867,921       2,458,872  
Total deposits (including non-interest-bearing deposits)     10,173,315       10,422,332       10,633,516       10,626,159       9,993,010  
Total borrowings     1,325,372       1,214,219       1,016,722       1,095,173       1,603,126  
Total interest-bearing liabilities     9,872,522       10,001,968       9,910,739       9,880,134       9,722,910  
Non-interest bearing deposits     1,626,165       1,634,583       1,739,499       1,841,198       1,873,226  
Stockholders’ equity     1,674,453       1,673,040       1,650,699       1,642,899       1,626,693  
Tangible stockholders’ equity (4)     1,159,918       1,157,684       1,134,410       1,125,617       1,108,428  
                     
Quarterly Yields and Costs                    
Total securities     4.22 %     4.27 %     3.81 %     3.82 %     3.47 %
Loans receivable, net     5.46       5.46       5.40       5.30       5.17  
Total interest-earning assets     5.25       5.26       5.16       5.08       4.91  
Time deposits     4.46       4.24       4.13       4.06       3.57  
Total cost of deposits (including non-interest-bearing deposits)     2.37       2.31       2.22       1.99       1.52  
Total borrowed funds     5.19       5.14       5.13       5.12       5.02  
Total interest-bearing liabilities     3.14       3.03       2.91       2.71       2.39  
Net interest spread     2.11       2.23       2.25       2.37       2.52  
Net interest margin     2.71       2.81       2.82       2.91       3.02  
(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
    June 30,   March 31,   December 31,   September 30,   June 30,
      2024       2024       2023       2023       2023  
Core Earnings:                    
Net income available to common stockholders (GAAP)   $ 23,369     $ 27,663     $ 26,678     $ 19,663     $ 26,793  
(Less) add non-recurring and non-core items:                    
Net (gain) loss on equity investments     (887 )     (1,923 )     (2,176 )     (1,452 )     559  
Net gain on sale of trust business           (1,162 )                  
FDIC special assessment           418       1,663              
Income tax expense (benefit) on items     188       642       129       351       (162 )
Core earnings (Non-GAAP)   $ 22,670     $ 25,638     $ 26,294     $ 18,562     $ 27,190  
Income tax expense   $ 7,082     $ 10,637     $ 8,591     $ 6,459     $ 8,996  
Provision for credit losses     3,114       591       3,153       10,283       1,229  
Less: income tax expense (benefit) on non-core items     188       642       129       351       (162 )
Core earnings PTPP (Non-GAAP)   $ 32,678     $ 36,224     $ 37,909     $ 34,953     $ 37,577  
Core earnings diluted earnings per share   $ 0.39     $ 0.44     $ 0.45     $ 0.32     $ 0.46  
Core earnings PTPP diluted earnings per share   $ 0.56     $ 0.62     $ 0.65     $ 0.59     $ 0.64  
                     
Core Ratios (Annualized):                    
Return on average assets     0.68 %     0.76 %     0.77 %     0.54 %     0.81 %
Return on average tangible stockholders’ equity     7.86       8.91       9.20       6.54       9.84  
Return on average tangible common equity     8.26       9.36       9.67       6.88       10.36  
Efficiency ratio     63.47       61.05       60.02       64.29       61.94  
    For the Six Months Ended June 30,
      2024       2023  
Core Earnings:        
Net income available to common stockholders (GAAP)   $ 51,032     $ 53,672  
Add (less) non-recurring and non-core items:        
Net (gain) loss on equity investments(1)     (2,810 )     2,752  
Net loss on sale of investments(1)           5,305  
Net gain on sale of trust business     (1,162 )      
FDIC special assessment     418        
Merger related expenses           22  
Branch consolidation expense, net           70  
Income tax expense (benefit) on items     830       (1,959 )
Core earnings (Non-GAAP)   $ 48,308     $ 59,862  
Income tax expense   $ 17,719     $ 17,650  
Provision for credit losses     3,705       4,242  
Less: income tax expense (benefit) on non-core items     830       (1,959 )
Core earnings PTPP (Non-GAAP)   $ 68,902     $ 83,713  
Core diluted earnings per share   $ 0.83     $ 1.01  
Core earnings PTPP diluted earnings per share   $ 1.18     $ 1.42  
         
Core Ratios (Annualized):        
Return on average assets     0.72 %     0.90 %
Return on average tangible stockholders’ equity     8.38       10.98  
Return on average tangible common equity     8.81       11.56  
Efficiency ratio     62.24       59.13  
(1) The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on equity investments ($4.6 million) and other ($697,000), respectively, for the three months ended March 31, 2023.
    June 30,   March 31,   December 31,   September 30,   June 30,
      2024       2024       2023       2023       2023  
Tangible Equity:                    
Total stockholders’ equity   $ 1,676,669     $ 1,665,837     $ 1,661,945     $ 1,637,604     $ 1,626,283  
Less:                    
Goodwill     506,146       506,146       506,146       506,146       506,146  
Core deposit intangible     7,859       8,669       9,513       10,489       11,476  
Tangible stockholders’ equity     1,162,664       1,151,022       1,146,286       1,120,969       1,108,661  
Less:                    
Preferred stock     55,527       55,527       55,527       55,527       55,527  
Tangible common equity   $ 1,107,137     $ 1,095,495     $ 1,090,759     $ 1,065,442     $ 1,053,134  
                     
Tangible Assets:                    
Total assets   $ 13,321,755     $ 13,418,978     $ 13,538,253     $ 13,498,183     $ 13,538,903  
Less:                    
Goodwill     506,146       506,146       506,146       506,146       506,146  
Core deposit intangible     7,859       8,669       9,513       10,489       11,476  
Tangible assets   $ 12,807,750     $ 12,904,163     $ 13,022,594     $ 12,981,548     $ 13,021,281  
                     
Tangible stockholders’ equity to tangible assets     9.08 %     8.92 %     8.80 %     8.64 %     8.51 %
Tangible common equity to tangible assets     8.64 %     8.49 %     8.38 %     8.21 %     8.09 %


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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