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OceanFirst Financial Corp. Announces Third Quarter Financial Results

RED BANK, N.J., Oct. 17, 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 $24.1 million, or $0.42 per diluted share, for the three months ended September 30, 2024, an increase from $19.7 million, or $0.33 per diluted share, for the corresponding prior year period, and $23.4 million, or $0.40 per diluted share, for the prior linked quarter. For the nine months ended September 30, 2024, the Company reported net income available to common stockholders of $75.1 million, or $1.29 per diluted share, an increase from $73.3 million, or $1.24 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,
2024  2024  2023  2024  2023 
Return on average assets0.71% 0.70% 0.57% 0.74% 0.73%
Return on average stockholders’ equity5.68  5.61  4.75  5.98  6.03 
Return on average tangible stockholders’ equity (a)8.16  8.10  6.93  8.62  8.85 
Return on average tangible common equity (a)8.57  8.51  7.29  9.05  9.31 
Efficiency ratio65.77  62.86  63.37  62.71  62.15 
Net interest margin2.67  2.71  2.91  2.73  3.09 

(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 nine months ended September 30, 2024 were $23.2 million and $71.5 million, respectively, or $0.39 and $1.22 per diluted share, an increase from $18.6 million or $0.32 per diluted share and a decrease from $78.4 million or $1.33 per diluted share, for the corresponding prior year periods, and an increase from $22.7 million, or $0.39 per diluted share, for the prior linked quarter.

Core earnings PTPP1 for the three and nine months ended September 30, 2024 was $30.9 million and $99.8 million, respectively, or $0.53 and $1.71 per diluted share, as compared to $35.0 million and $118.7 million, or $0.59 and $2.01 per diluted share, for the corresponding prior year periods, and $32.7 million, or $0.56 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): 2024   2024   2023   2024   2023 
Return on average assets 0.69%  0.68%  0.54%  0.71%  0.78%
Return on average tangible stockholders’ equity 7.85   7.86   6.54   8.20   9.46 
Return on average tangible common equity 8.24   8.26   6.88   8.61   9.96 
Efficiency ratio 66.00   63.47   64.29   63.49   60.79 
Core diluted earnings per share$0.39  $0.39  $0.32  $1.22  $1.33 
Core PTPP diluted earnings per share 0.53   0.56   0.59   1.71   2.01 

Key developments for the recent quarter are described below:

  • Net Interest Income Stabilization: Net interest income of $82.2 million for the quarter as compared to $82.3 million in the prior linked quarter.
  • Deposits: Total deposits increased by $122.2 million to $10.1 billion from $10.0 billion and the loan-to-deposit ratio was 99% at September 30, 2024.
  • Strategic Investments: The results include $3.3 million of expenses, of which $1.7 million related to merger and acquisition costs, for the talent acquisition of Garden State Home Loans, Inc. and acquisition of Spring Garden Capital Group, LLC.2 These are expected to improve future operating performance by expanding fee revenue and specialty finance offerings.
  • Asset Quality: Asset quality metrics remain strong as non-performing loans and loans 30 to 89 days past due as a percentage of total loans receivable were 0.28% and 0.15%, respectively. Non-performing loans decreased by $5.3 million, to $28.1 million, and the Company recorded net loan recoveries of $88,000 for the quarter.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased to present our current quarter results, which builds on the existing strength of our balance sheet, including robust capital and asset quality, coupled with stabilization of net interest income and margin. The quarter includes additional investments in mortgage banking activities, which will expand our digital channels and fee revenue and, in October, we completed an acquisition of a specialty finance company expanding our product offerings.” Mr. Maher added, “Additionally, the Company hosted its third annual CommUNITYFirst Day. Thank you to our incredible employees and community partners for a successful event involving over 700 employees and nearly 3,000 hours across our communities.”

The Company’s Board of Directors declared its 111th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on November 15, 2024 to common stockholders of record on November 4, 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 November 15, 2024 to preferred stockholders of record on October 31, 2024.

1 Core earnings and core earnings before income taxes and provision for credit losses (“PTPP” or “Pre-Tax-Pre-Provision”), and ratios derived therefrom, are non-GAAP financial measures. For the periods presented, core earnings exclude merger related expenses, net branch consolidation expense, net (gain) loss on equity investments, net loss on sale of investments, net gain on sale of trust business, the 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.

2 The talent acquisition of Garden State Home Loans, Inc. was effective August 3, 2024. Additionally, the acquisition of Spring Garden Capital Group, LLC was effective October 1, 2024.

 

Results of Operations
The current quarter was impacted by a continued mix-shift and repricing of funding costs. Further, the results were impacted by the following non-recurring events: $1.7 million of merger related expenses, a $1.4 million gain on sale of a portion of the Company’s trust business, a $855,000 gain on sale of assets held for sale, and the resolution, via sale of collateral, of a single commercial real estate relationship of $7.2 million that was moved to non-accrual and partially charged-off in prior periods.

Net Interest Income and Margin

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

Net interest income decreased to $82.2 million, from $91.0 million, primarily reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 2.67%, from 2.91%, which included the impact of purchase accounting accretion of 0.02% and 0.06%, 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 $152.1 million due to balance sheet contraction while the average yield for interest-earning assets increased to 5.26%, from 5.08%.

The cost of average interest-bearing liabilities increased to 3.20%, from 2.71%, primarily due to higher cost of deposits. The total cost of deposits (including non-interest bearing deposits) increased to 2.44%, from 1.99%. Average interest-bearing liabilities decreased by $5.8 million, primarily due to a decrease in total deposits, largely offset by an increase in total borrowings.

Nine months ended September 30, 2024 vs. September 30, 2023

Net interest income decreased to $250.7 million, from $281.9 million, reflecting the net impact of the higher interest rate environment. Net interest margin decreased to 2.73%, from 3.09%, which included the impact of purchase accounting accretion and prepayment fees of 0.04% and 0.05% for the respective periods.

Average interest-earning assets increased by $45.8 million, primarily driven by an increase in securities growth of $153.9 million, which was funded through the decrease of $135.4 million of interest-earning deposits and short-term investments. The average yield increased to 5.25%, from 4.90%.

The total cost of average interest-bearing liabilities increased to 3.12%, from 2.29%. The total cost of deposits (including non-interest bearing deposits) increased to 2.37%, from 1.48%. Average interest-bearing liabilities increased by $258.0 million, primarily due to an increase in total deposits, partly offset by a decrease in total borrowings.

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

Net interest income decreased by $44,000, as the increase in cost of deposits slightly outpaced the decrease in Federal Home Loan Bank (“FHLB”) advance costs and the yield of average interest earning assets. Net interest margin decreased to 2.67%, from 2.71%, which included the impact of purchase accounting accretion of 0.02% and 0.04% for the respective periods.

Average interest-earning assets increased by $28.9 million, primarily due to an increase in interest-earning deposits and short-term investments, partly offset by a decrease in loans. The yield on average interest-earning assets increased to 5.26%, from 5.25%.

The total cost of average interest-bearing liabilities increased to 3.20%, from 3.14%, primarily due to higher cost of deposits. Total cost of deposits (including non-interest bearing deposits) increased to 2.44%, from 2.37%. Average interest-bearing liabilities increased by $1.8 million, primarily due to an increase in FHLB advances, partly offset by a decrease in deposits and other borrowings.

Provision for Credit Losses
Provision for credit losses for the three and nine months ended September 30, 2024 was $517,000 and $4.2 million, respectively, as compared to $10.3 million and $14.5 million for the corresponding prior year periods, and $3.1 million in the prior linked quarter. The lower provision for the current quarter was a result of flat loan growth, net loan recoveries, and the net effect of shifts in the Company’s loan portfolio and external macro economic forecasts.

Net loan recoveries were $88,000 and net loan charge-offs were $1.7 million for the three and nine months ended September 30, 2024, respectively, as compared to net loan charge-offs of $8.3 million for both the three and nine months ended September 30, 2023. Net loan charge-offs were $1.5 million in the prior linked quarter. The prior year periods and prior linked quarter included partial charge-offs of $8.4 million and $1.6 million, respectively, for the single commercial real estate relationship disclosed previously. Refer to “Results of Operations” section for further discussion.

Non-interest Income

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

Other income increased to $14.7 million, as compared to $10.8 million. Other income was favorably impacted by non-core operations related to net gains on equity investments of $1.4 million and $1.5 million, for the respective quarters, and a $1.4 million gain on sale of a portion of the Company’s trust business in the current quarter.

Excluding non-core operations, other income increased by $2.5 million, primarily driven by increases in fees and service charges of $918,000 related to treasury management fees, a non-recurring gain on sale of assets held for sale of $855,000, and net gain on sale of loans of $439,000.

Nine months ended September 30, 2024 vs. September 30, 2023

Other income increased to $38.0 million, as compared to $21.8 million. The current period was favorably impacted by non-core operations related to net gains on equity investments of $4.2 million and a $2.6 million gain on sale of a portion of the Company’s trust business. The prior year was adversely impacted by non-core operations of $6.6 million, primarily related to losses on sale of investments.

Excluding non-core operations, other income increased by $2.8 million, primarily driven by increases in the cash surrender value of bank owned life insurance of $1.5 million, which included one-time death benefits in the current period, net gain on sale of loans of $1.2 million, and gain on sale of assets held for sale of $855,000. This was partially offset by a decrease in trust and asset management revenue of $590,000, related to the sale of a portion of the Company’s trust business.

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

Other income in the prior linked quarter was $11.0 million and was favorably impacted by non-core operations of $887,000 related to net gains on equity investments. Excluding non-core operations, other income increased by $1.7 million, primarily due increases in fees and service charges of $1.1 million related to treasury management fees, and the gain on sale of assets held for sale of $855,000, as noted above.

Non-interest Expense

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

Operating expenses decreased to $63.7 million, as compared to $64.5 million. Operating expenses were adversely impacted by non-core operations related to merger related expenses of $1.7 million in the current quarter.

Excluding non-core operations, operating expenses decreased by $2.4 million. The primary driver was a decrease in professional fees of $3.3 million as the Company realized benefits from the performance improvement initiatives and investments made in the prior periods. This was partially offset by an increase in other operating expense of $1.1 million, which was partly due to additional loan servicing expenses.

Nine months ended September 30, 2024 vs. September 30, 2023

Operating expenses decreased to $181.0 million, as compared to $188.7 million. Operating expenses were adversely impacted by $2.1 million in the current year of non-core operations related to merger related expenses and a FDIC special assessment, and by $92,000 in the prior year for merger related and net branch consolidation expenses.

Excluding non-core operations, operating expenses decreased by $9.7 million. The primary drivers were decreases in professional fees of $8.6 million and compensation and employee benefits expenses of $1.9 million, which were due to the same initiatives discussed in the three-month periods above. This was partially offset by an increase in other operating expenses of $1.3 million, which was partly due to additional loan servicing expenses.

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

Excluding non-core operations, operating expenses increased by $3.4 million. The primary drivers were increases in compensation and benefits of $2.7 million, related to additional personnel in connection with the expansion of fee revenue noted above, and other operating expense of $854,000, which was partly due to additional loan servicing expenses.

Income Tax Expense
The provision for income taxes was $7.5 million and $25.2 million for the three and nine months ended September 30, 2024, respectively, as compared to $6.5 million and $24.1 million for the same prior year periods, and $7.1 million for the prior linked quarter. The effective tax rate was 22.9% and 24.4% for the three and nine months ended September 30, 2024, respectively, as compared to 23.9% and 24.0% for the same prior year periods, and 22.5% for the prior linked quarter. The Company’s current quarter effective tax rate was positively impacted by geographic mix as compared to the same prior year period and the nine months ended September 30, 2024 was adversely impacted by the non-recurring write-off of a deferred tax asset of $1.2 million net of other state effects. The prior linked quarter’s effective tax rate was positively impacted by the net effect of state law changes.

Financial Condition

September 30, 2024 vs. December 31, 2023

Total assets decreased by $49.8 million to $13.49 billion, from $13.54 billion, primarily due to decreases in loans, partly offset by net increase in total debt securities. Total loans decreased by $172.4 million to $10.02 billion, from $10.19 billion, primarily due to a decrease in the total commercial portfolio of $188.4 million driven by loan payoffs. The loan pipeline increased by $168.6 million to $351.6 million, from $183.0 million. Held-to-maturity debt securities decreased by $84.6 million to $1.08 billion, from $1.16 billion, primarily due to principal repayments. Debt securities available-for-sale increased $157.9 million to $911.8 million, from $753.9 million, primarily due to new purchases. Other assets decreased by $20.3 million to $159.3 million, from $179.7 million, primarily due to a decrease in market values associated with customer interest rate swap programs.

Total liabilities decreased by $82.3 million to $11.79 billion, from $11.88 billion primarily related to lower deposits and a funding mix shift. Deposits decreased by $318.8 million to $10.12 billion, from $10.43 billion, primarily due to decreases in high-yield savings accounts of $326.9 million and time deposits of $224.6 million, offset by increases in money market accounts of $266.8 million. Time deposits decreased to $2.22 billion, from $2.45 billion, representing 22.0% and 23.4% of total deposits, respectively, which was primarily related to planned runoff of brokered time deposits, which decreased by $430.4 million, offset by increases in retail time deposits of $221.4 million. The loan-to-deposit ratio was 99.1%, as compared to 97.7%. FHLB advances increased by $43.2 million to $891.9 million, from $848.6 million and other borrowings increased by $223.5 million to $419.9 million, from $196.5 million, as a result of lower cost funding availability.   

Other liabilities decreased by $43.1 million to $257.6 million, from $300.7 million, primarily due to a decrease 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 September 30, 2024, including the Company’s estimated common equity tier one capital ratio which increased to 11.3%, up approximately 40 basis points from December 31, 2023.

Total stockholders’ equity increased to $1.69 billion, as compared to $1.66 billion, primarily reflecting net income, partially offset by capital returns comprising of dividends and share repurchases. For the nine months ended September 30, 2024, the Company repurchased 1,383,238 shares totaling $21.5 million representing a weighted average cost of $15.38. The Company had 1,551,200 shares available for repurchase under the authorized repurchase program. Additionally, accumulated other comprehensive loss decreased by $8.7 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, 2024. 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.

The Company’s tangible common equity3 increased by $35.0 million to $1.13 billion. The Company’s stockholders’ equity to assets ratio was 12.56% at September 30, 2024, and tangible common equity to tangible assets ratio increased by 30 basis points during the quarter to 8.68%, primarily due to the drivers described above.

Book value per common share increased to $29.02, as compared to $27.96. Tangible book value per common share3 increased to $19.28, as compared to $18.35.

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.

Asset Quality

September 30, 2024 vs. December 31, 2023

Overall asset quality metrics remained stable. The Company’s non-performing loans decreased to $28.1 million from $29.5 million and represented 0.28% and 0.29% of total loans, respectively. The allowance for loan credit losses as a percentage of total non-performing loans was 245.45%, as compared to 227.21%. The level of 30 to 89 days delinquent loans decreased to $15.5 million, from $19.2 million. Criticized and classified assets increased to $189.1 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 decreased to $25.3 million, from $26.4 million. The allowance for loan credit losses as a percentage of total non-performing loans was 273.51%, as compared to 254.64%. The level of 30 to 89 days delinquent loans, excluding non-performing loans, decreased to $14.2 million, from $17.7 million. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $74.8 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, October 18, 2024 at 11:00 a.m. Eastern Time. The direct dial number for the call is (833) 470-1428, using the access code 257920. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (866) 813-9403, access code 120573, from one hour after the end of the call until November 15, 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 $13.5 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)

  September 30, June 30, December 31, September 30,
   2024  2024  2023  2023
  (Unaudited) (Unaudited)   (Unaudited)
Assets        
Cash and due from banks $214,171 $181,198 $153,718 $408,882
Debt securities available-for-sale, at estimated fair value  911,753  721,484  753,892  453,208
Debt securities held-to-maturity, net of allowance for securities credit losses of $902 at September 30, 2024, $958 at June 30, 2024, $1,133 at December 31, 2023 and $932 at September 30, 2023 (estimated fair value of $1,007,781 at September 30, 2024, $1,003,850 at June 30, 2024, $1,068,438 at December 31, 2023 and $1,047,342 at September 30, 2023)  1,075,131  1,105,843  1,159,735  1,189,339
Equity investments  95,688  104,132  100,163  97,908
Restricted equity investments, at cost  98,545  92,679  93,766  82,484
Loans receivable, net of allowance for loan credit losses of $69,066 at September 30, 2024, $68,839 at June 30, 2024, $67,137 at December 31, 2023 and $63,877 at September 30, 2023  9,963,598  9,961,117  10,136,721  10,068,156
Loans held-for-sale  23,036  2,062  5,166  
Interest and dividends receivable  48,821  50,976  51,874  50,030
Premises and equipment, net  116,087  117,392  121,372  122,646
Bank owned life insurance  269,138  267,867  266,498  265,071
Assets held for sale    28  28  3,004
Goodwill  506,146  506,146  506,146  506,146
Core deposit intangible  7,056  7,859  9,513  10,489
Other assets  159,313  202,972  179,661  240,820
Total assets $13,488,483 $13,321,755 $13,538,253 $13,498,183
Liabilities and Stockholders’ Equity        
Deposits $10,116,167 $9,994,017 $10,434,949 $10,533,929
Federal Home Loan Bank advances  891,860  789,337  848,636  606,056
Securities sold under agreements to repurchase with customers  81,163  80,000  73,148  82,981
Other borrowings  419,927  424,490  196,456  196,183
Advances by borrowers for taxes and insurance  27,282  25,168  22,407  29,696
Other liabilities  257,576  332,074  300,712  411,734
Total liabilities  11,793,975  11,645,086  11,876,308  11,860,579
Stockholders’ equity:        
OceanFirst Financial Corp. stockholders’ equity  1,693,654  1,675,885  1,661,163  1,636,891
Non-controlling interest  854  784  782  713
Total stockholders’ equity  1,694,508  1,676,669  1,661,945  1,637,604
Total liabilities and stockholders’ equity $13,488,483 $13,321,755 $13,538,253 $13,498,183
 

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,
   2024  2024  2023   2024  2023 
  |---------------------- (Unaudited) ----------------------| |---------- (Unaudited) -----------|
Interest income:          
Loans $136,635 $136,049 $133,931  $409,805 $384,755 
Debt securities  19,449  19,039  15,223   58,349  43,829 
Equity investments and other  5,441  4,338  9,256   14,399  18,956 
Total interest income  161,525  159,426  158,410   482,553  447,540 
Interest expense:          
Deposits  62,318  60,071  53,287   182,244  112,551 
Borrowed funds  16,988  17,092  14,127   49,603  53,082 
Total interest expense  79,306  77,163  67,414   231,847  165,633 
Net interest income  82,219  82,263  90,996   250,706  281,907 
Provision for credit losses  517  3,114  10,283   4,222  14,525 
Net interest income after provision for credit losses  81,702  79,149  80,713   246,484  267,382 
Other income:          
Bankcard services revenue  1,615  1,571  1,507   4,602  4,381 
Trust and asset management revenue  384  419  662   1,329  1,919 
Fees and service charges  6,096  5,015  5,178   15,584  15,939 
Net gain on sales of loans  505  420  66   1,282  119 
Net gain (loss) on equity investments  1,420  887  1,452   4,230  (5,908)
Income from bank owned life insurance  1,779  1,726  1,390   5,367  3,853 
Commercial loan swap income  414  241  11   793  712 
Other  2,471  706  496   4,768  748 
Total other income  14,684  10,985  10,762   37,955  21,763 
Operating expenses:          
Compensation and employee benefits  35,844  33,136  35,534   101,739  103,676 
Occupancy  5,157  5,175  5,466   15,531  15,970 
Equipment  1,026  1,068  1,172   3,224  3,478 
Marketing  1,385  1,175  1,183   3,550  3,126 
Federal deposit insurance and regulatory assessments  2,618  2,685  2,557   8,438  6,771 
Data processing  5,940  6,018  6,086   17,914  18,405 
Check card processing  1,153  1,075  1,154   3,278  3,649 
Professional fees  1,970  2,161  5,258   6,863  15,439 
Amortization of core deposit intangible  803  810  987   2,457  3,008 
Branch consolidation expense, net           70 
Merger related expenses  1,669       1,669  22 
Other operating expense  6,171  5,317  5,087   16,365  15,109 
Total operating expenses  63,736  58,620  64,484   181,028  188,723 
Income before provision for income taxes  32,650  31,514  26,991   103,411  100,422 
Provision for income taxes  7,464  7,082  6,459   25,183  24,109 
Net income  25,186  24,432  20,532   78,228  76,313 
Net income (loss) attributable to non-controlling interest  70  59  (135)  72  (34)
Net income attributable to OceanFirst Financial Corp.  25,116  24,373  20,667   78,156  76,347 
Dividends on preferred shares  1,004  1,004  1,004   3,012  3,012 
Net income available to common stockholders $24,112 $23,369 $19,663  $75,144 $73,335 
Basic earnings per share $0.42 $0.40 $0.33  $1.29 $1.24 
Diluted earnings per share $0.42 $0.40 $0.33  $1.29 $1.24 
Average basic shares outstanding  58,065  58,356  59,104   58,405  59,037 
Average diluted shares outstanding  58,068  58,357  59,111   58,407  59,068 
                  

OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)

LOANS RECEIVABLE  At
   September 30, June 30, March 31, December 31, September 30,
    2024   2024   2024   2023   2023 
Commercial:           
Commercial real estate - investor  $5,273,159  $5,324,994  $5,322,755  $5,353,974  $5,334,279 
Commercial real estate - owner-occupied  841,930   857,710   914,582   943,891   957,216 
Commercial and industrial   660,879   616,400   677,176   666,532   652,119 
Total commercial   6,775,968   6,799,104   6,914,513   6,964,397   6,943,614 
Consumer:           
Residential real estate   3,003,213   2,977,698   2,965,276   2,979,534   2,928,259 
Home equity loans and lines and other consumer ("other consumer")    242,975   242,526   245,859   250,664   251,698 
Total consumer   3,246,188   3,220,224   3,211,135   3,230,198   3,179,957 
Total loans   10,022,156   10,019,328   10,125,648   10,194,595   10,123,571 
Deferred origination costs (fees), net  10,508   10,628   9,734   9,263   8,462 
Allowance for loan credit losses   (69,066)  (68,839)  (67,173)  (67,137)  (63,877)
Loans receivable, net  $9,963,598  $9,961,117  $10,068,209  $10,136,721  $10,068,156 
Mortgage loans serviced for others $142,394  $104,136  $89,555  $68,217  $52,796 
 At September 30, 2024 Average Yield          
Loan pipeline (1):           
Commercial8.28% $199,818  $166,206  $66,167  $124,707  $50,756 
Residential real estate6.09   137,978   80,330   57,340   49,499   66,682 
Other consumer8.94   13,788   12,586   13,030   8,819   13,795 
Total7.45% $351,584  $259,122  $136,537  $183,025  $131,233 


 For the Three Months Ended
 September 30, June 30, March 31, December 31, September 30,
 2024  2024  2024  2023  2023
 Average Yield          
Loan originations:           
Commercial7.99% $245,886 $56,053 $123,010 $94,294 $90,263
Residential real estate6.51   169,273  121,388  78,270  113,227  92,299
Other consumer8.98   15,760  16,970  11,405  16,971  17,019
Total7.44% $430,919 $194,411 $212,685 $224,492 $199,581
Loans sold  $65,296 $45,045 $29,965 $20,138 $15,404
(1) Loan pipeline includes loans approved but not funded.

   

DEPOSITSAt
 September 30, June 30, March 31, December 31, September 30,
  2024  2024  2024  2023  2023
Type of Account         
Non-interest-bearing$1,638,447 $1,632,521 $1,639,828 $1,657,119 $1,827,381
Interest-bearing checking 3,896,348  3,667,837  3,865,699  3,911,766  3,708,874
Money market 1,288,555  1,210,312  1,150,979  1,021,805  860,025
Savings 1,071,946  1,115,688  1,260,309  1,398,837  1,484,000
Time deposits (1) 2,220,871  2,367,659  2,320,036  2,445,422  2,653,649
Total deposits$10,116,167 $9,994,017 $10,236,851 $10,434,949 $10,533,929


(1)  Includes brokered time deposits of $201.0 million, $401.6 million, $543.4 million, $631.5 million, and $995.5 million at September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and September 30, 2023, respectively.


OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)

ASSET QUALITY (1)

September 30, June 30, March 31, December 31, September 30,
 2024   2024   2024   2023   2023 
Non-performing loans:         
Commercial real estate - investor$12,478  $19,761  $21,507  $20,820  $20,723 
Commercial real estate - owner-occupied 4,368   4,081   3,355   351   240 
Commercial and industrial 122   434   567   304   1,120 
Residential real estate 9,108   7,213   7,181   5,542   5,624 
Other consumer 2,063   1,933   2,401   2,531   2,391 
Total non-performing loans$28,139  $33,422  $35,011  $29,548  $30,098 
Delinquent loans 30 to 89 days$15,458  $9,655  $17,534  $19,202  $20,591 
Modifications to borrowers experiencing financial difficulty (2)         
Non-performing (included in total non-performing loans above)$8,409  $8,677  $9,075  $6,420  $6,679 
Performing 26,655   27,184   15,619   15,361   7,645 
Total modifications to borrowers experiencing financial difficulty (2)$35,064  $35,861  $24,694  $21,781  $14,324 
Allowance for loan credit losses$69,066  $68,839  $67,173  $67,137  $63,877 
Allowance for loan credit losses as a percent of total loans receivable (3) 0.69%  0.69%  0.66%  0.66%  0.63%
Allowance for loan credit losses as a percent of total non-performing loans (3) 245.45   205.97   191.86   227.21   212.23 
Non-performing loans as a percent of total loans receivable 0.28   0.33   0.35   0.29   0.30 
Non-performing assets as a percent of total assets 0.21   0.25   0.26   0.22   0.22 
Supplemental PCD and non-performing loans         
PCD loans, net of allowance for loan credit losses$15,323  $16,058  $16,700  $16,122  $18,640 
Non-performing PCD loans 2,887   2,841   3,525   3,183   3,177 
Delinquent PCD and non-performing loans 30 to 89 days 1,279   1,188   2,088   1,516   13,007 
PCD modifications to borrowers experiencing financial difficulty (2) 760   759   764   771   750 
Asset quality, excluding PCD loans (4)         
Non-performing loans 25,252   30,581   31,486   26,365   26,921 
Delinquent loans 30 to 89 days (excludes non-performing loans)   14,179   8,467   15,446   17,686   7,584 
Modifications to borrowers experiencing financial difficulty (2) 34,304   35,102   23,930   21,010   13,574 
Allowance for loan credit losses as a percent of total non-performing loans (3) 273.51%  225.10%  213.34%  254.64%  237.28%
Non-performing loans as a percent of total loans receivable 0.25   0.31   0.31   0.26   0.27 
Non-performing assets as a percent of total assets 0.19   0.23   0.23   0.19   0.20 


(1) The quarters ended September 30, 2023 and 2024 include the addition and subsequent resolution of a single commercial relationship exposure of $7.2 million, which had life-to-date charge-offs of $10.0 million.
(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 $5.7 million, $6.1 million, $7.0 million, $7.5 million and $8.8 million at September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and September 30, 2023, respectively.
(4) All balances and ratios exclude PCD loans.
   

  

NET LOAN RECOVERIES (CHARGE-OFFS)For the Three Months Ended
 September 30, June 30, March 31, December 31, September 30,
  2024   2024   2024   2023   2023 
Net loan recoveries (charge-offs):         
Loan charge-offs (1)$(124) $(1,600) $(441) $(98) $(8,379)
Recoveries on loans 212   148   92   63   108 
Net loan recoveries (charge-offs)$88  $(1,452) $(349) $(35) $(8,271)
Net loan recoveries (charge-offs) to average total loans (annualized)NM*  0.06%  0.01%  %  0.33%
Net loan recoveries (charge-offs) detail:         
Commercial$129  $(1,576) $(35) $9  $(8,332)
Residential real estate (6)  87   66   9   17 
Other consumer (35)  37   (380)  (53)  44 
Net loan recoveries (charge-offs)$88  $(1,452) $(349) $(35) $(8,271)


(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.
  * Not meaningful as amounts are net loan recoveries.


OceanFirst
Financial Corp.
ANALYSIS OF NET INTEREST INCOME

 For the Three Months Ended
 September 30, 2024 June 30, 2024 September 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$210,245  $2,971 5.62% $132,574  $1,770 5.37% $470,825  $6,440 5.43%
Securities (2) 2,063,633   21,919 4.23   2,058,711   21,607 4.22   1,873,450   18,039 3.82 
Loans receivable, net (3)                 
Commercial 6,782,777   102,881 6.03   6,845,988   102,620 6.03   6,923,743   103,069 5.91 
Residential real estate 2,992,138   29,677 3.97   2,978,749   29,072 3.90   2,918,612   26,765 3.67 
Other consumer 242,942   4,077 6.68   246,024   4,357 7.12   252,126   4,097 6.45 
Allowance for loan credit losses, net of deferred loan costs and fees (59,063)      (58,270)      (53,959)    
Loans receivable, net 9,958,794   136,635 5.46   10,012,491   136,049 5.46   10,040,522   133,931 5.30 
Total interest-earning assets 12,232,672   161,525 5.26   12,203,776   159,426 5.25   12,384,797   158,410 5.08 
Non-interest-earning assets 1,206,024       1,237,442       1,252,416     
Total assets$13,438,696      $13,441,218      $13,637,213     
Liabilities and Stockholders’ Equity:                 
Interest-bearing liabilities:                 
Interest-bearing checking$3,856,281   21,731 2.24% $3,862,060   21,043 2.19% $3,692,500   14,938 1.61%
Money market 1,256,536   11,454 3.63   1,183,429   10,482 3.56   832,729   5,698 2.71 
Savings 1,088,926   2,218 0.81   1,164,203   2,604 0.90   1,391,811   3,311 0.94 
Time deposits 2,339,370   26,915 4.58   2,337,458   25,942 4.46   2,867,921   29,340 4.06 
Total 8,541,113   62,318 2.90   8,547,150   60,071 2.83   8,784,961   53,287 2.41 
FHLB Advances 757,535   9,140 4.80   711,801   8,746 4.94   701,343   8,707 4.93 
Securities sold under agreements to repurchase 75,871   491 2.57   72,305   478 2.66   76,620   261 1.35 
Other borrowings 499,839   7,357 5.86   541,266   7,868 5.85   317,210   5,159 6.45 
Total borrowings 1,333,245   16,988 5.07   1,325,372   17,092 5.19   1,095,173   14,127 5.12 
Total interest-bearing liabilities 9,874,358   79,306 3.20   9,872,522   77,163 3.14   9,880,134   67,414 2.71 
Non-interest-bearing deposits 1,634,743       1,626,165       1,841,198     
Non-interest-bearing liabilities 240,560       268,078       272,982     
Total liabilities 11,749,661       11,766,765       11,994,314     
Stockholders’ equity 1,689,035       1,674,453       1,642,899     
Total liabilities and equity$13,438,696      $13,441,218      $13,637,213     
Net interest income  $82,219     $82,263     $90,996  
Net interest rate spread (4)    2.06%     2.11%     2.37%
Net interest margin (5)    2.67%     2.71%     2.91%
Total cost of deposits (including non-interest-bearing deposits)    2.44%     2.37%     1.99%


 For the Nine Months Ended September 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$168,822  $6,966 5.51% $304,184  $11,661 5.13%
Securities (2) 2,073,552   65,782 4.24   1,919,660   51,124 3.56 
Loans receivable, net (3)           
Commercial 6,851,021   309,922 6.04   6,892,456   295,199 5.73 
Residential real estate 2,981,822   87,345 3.91   2,895,601   77,862 3.59 
Other consumer 245,777   12,538 6.81   257,063   11,694 6.08 
Allowance for loan credit losses, net of deferred loan costs and fees (58,825)      (52,626)    
Loans receivable, net 10,019,795   409,805 5.46   9,992,494   384,755 5.15 
Total interest-earning assets 12,262,169   482,553 5.25   12,216,338   447,540 4.90 
Non-interest-earning assets 1,216,562       1,234,942     
Total assets$13,478,731      $13,451,280     
Liabilities and Stockholders’ Equity:           
Interest-bearing liabilities:           
Interest-bearing checking$3,881,344   63,570 2.19% $3,757,417   33,171 1.18%
Money market 1,177,612   31,107 3.53   744,689   11,136 2.00 
Savings 1,202,533   9,284 1.03   1,336,497   4,034 0.40 
Time deposits 2,363,542   78,283 4.42   2,388,299   64,210 3.59 
Total 8,625,031   182,244 2.82   8,226,902   112,551 1.83 
FHLB Advances 704,911   25,657 4.86   1,055,106   38,530 4.88 
Securities sold under agreements to repurchase 72,239   1,380 2.55   73,441   544 0.99 
Other borrowings 513,951   22,566 5.86   302,649   14,008 6.19 
Total borrowings 1,291,101   49,603 5.13   1,431,196   53,082 4.96 
Total interest-bearing liabilities 9,916,132   231,847 3.12   9,658,098   165,633 2.29 
Non-interest-bearing deposits 1,631,841       1,913,624     
Non-interest-bearing liabilities 251,878       253,014     
Total liabilities 11,799,851       11,824,736     
Stockholders’ equity 1,678,880       1,626,544     
Total liabilities and equity$13,478,731      $13,451,280     
Net interest income  $250,706     $281,907  
Net interest rate spread (4)    2.13%     2.61%
Net interest margin (5)    2.73%     3.09%
Total cost of deposits (including non-interest-bearing deposits)    2.37%     1.48%


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


OceanFirst
Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share amounts)

  September 30, June 30, March 31, December 31, September 30,
   2024  2024  2024  2023  2023
Selected Financial Condition Data:          
Total assets $13,488,483 $13,321,755 $13,418,978 $13,538,253 $13,498,183
Debt securities available-for-sale, at estimated fair value  911,753  721,484  744,944  753,892  453,208
Debt securities held-to-maturity, net of allowance for securities credit losses  1,075,131  1,105,843  1,128,666  1,159,735  1,189,339
Equity investments  95,688  104,132  103,201  100,163  97,908
Restricted equity investments, at cost  98,545  92,679  85,689  93,766  82,484
Loans receivable, net of allowance for loan credit losses  9,963,598  9,961,117  10,068,209  10,136,721  10,068,156
Deposits  10,116,167  9,994,017  10,236,851  10,434,949  10,533,929
Federal Home Loan Bank advances  891,860  789,337  658,436  848,636  606,056
Securities sold under agreements to repurchase and other borrowings  501,090  504,490  492,520  269,604  279,164
Total stockholders’ equity  1,694,508  1,676,669  1,665,837  1,661,945  1,637,604


  For the Three Months Ended,
  September 30, June 30, March 31, December 31, September 30,
   2024  2024  2024  2023 2023 
Selected Operating Data:          
Interest income $161,525 $159,426 $161,602  $160,434 $158,410 
Interest expense  79,306  77,163  75,378   72,610  67,414 
Net interest income  82,219  82,263  86,224   87,824  90,996 
Provision for credit losses  517  3,114  591   3,153  10,283 
Net interest income after provision for credit losses  81,702  79,149  85,633   84,671  80,713 
Other income (excluding activity related to debt and equity investments and sale of trust business)  11,826  10,098  9,201   9,685  9,310 
Net gain on equity investments  1,420  887  1,923   2,176  1,452 
Net gain on sale of trust business  1,438    1,162      
Operating expenses (excluding FDIC special assessment and merger related expenses)  62,067  58,620  58,254   58,526  64,484 
FDIC special assessment      418   1,663   
Merger related expenses  1,669          
Income before provision for income taxes  32,650  31,514  39,247   36,343  26,991 
Provision for income taxes  7,464  7,082  10,637   8,591  6,459 
Net income  25,186  24,432  28,610   27,752  20,532 
Net income (loss) attributable to non-controlling interest  70  59  (57)  70  (135)
Net income attributable to OceanFirst Financial Corp. $25,116 $24,373 $28,667  $27,682 $20,667 
Net income available to common stockholders $24,112 $23,369 $27,663  $26,678 $19,663 
Diluted earnings per share $0.42 $0.40 $0.47  $0.46 $0.33 
Net accretion/amortization of purchase accounting adjustments included in net interest income $741 $1,086 $921  $1,604 $1,745 


  At or For the Three Months Ended
  September 30, June 30, March 31, December 31, September 30,
  2024  2024  2024  2023  2023 
Selected Financial Ratios and Other Data(1) (2):          
Performance Ratios (Annualized):          
Return on average assets (3) 0.71% 0.70% 0.82% 0.78% 0.57%
Return on average tangible assets (3) (4) 0.74  0.73  0.85  0.81  0.59 
Return on average stockholders’ equity (3) 5.68  5.61  6.65  6.41  4.75 
Return on average tangible stockholders’ equity (3) (4) 8.16  8.10  9.61  9.33  6.93 
Return on average tangible common equity (3) (4) 8.57  8.51  10.09  9.81  7.29 
Stockholders’ equity to total assets 12.56  12.59  12.41  12.28  12.13 
Tangible stockholders’ equity to tangible assets (4)  9.10  9.08  8.92  8.80  8.64 
Tangible common equity to tangible assets (4)  8.68  8.64  8.49  8.38  8.21 
Net interest rate spread 2.06  2.11  2.23  2.25  2.37 
Net interest margin 2.67  2.71  2.81  2.82  2.91 
Operating expenses to average assets 1.89  1.75  1.74  1.76  1.88 
Efficiency ratio (5) 65.77  62.86  59.56  60.38  63.37 
Loan-to-deposit ratio 99.10  100.30  98.90  97.70  96.10 


  For the Nine Months Ended September 30,
  2024  2023 
Performance Ratios (Annualized):    
Return on average assets (3) 0.74% 0.73%
Return on average tangible assets (3) (4) 0.77  0.76 
Return on average stockholders’ equity (3)  5.98  6.03 
Return on average tangible stockholders’ equity (3) (4)  8.62  8.85 
Return on average tangible common equity (3) (4)  9.05  9.31 
Net interest rate spread 2.13  2.61 
Net interest margin 2.73  3.09 
Operating expenses to average assets 1.79  1.88 
Efficiency ratio (5) 62.71  62.15 


  At or For the Three Months Ended
  September 30, June 30, March 31, December 31, September 30,
   2024   2024   2024   2023   2023 
Trust and Asset Management:          
Wealth assets under administration and management (“AUA/M”) $152,797  $150,519  $236,891  $335,769  $336,913 
Nest Egg AUA/M  430,413   403,647   407,478   401,420   385,317 
Total AUA/M  583,210   554,166   644,369   737,189   722,230 
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  29.02   28.67   28.32   27.96   27.56 
Tangible book value per common share at end of period (4)   19.28   18.93   18.63   18.35   17.93 
Common shares outstanding at end of period  58,397,094   58,481,418   58,812,498   59,447,684   59,421,498 
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   39   38 
Quarterly Average Balances          
Total securities $2,063,633  $2,058,711  $2,098,421  $1,863,136  $1,873,450 
Loans receivable, net  9,958,794   10,012,491   10,088,771   10,089,161   10,040,522 
Total interest-earning assets  12,232,672   12,203,776   12,350,384   12,349,140   12,384,797 
Total goodwill and core deposit intangible  513,731   514,535   515,356   516,289   517,282 
Total assets  13,438,696   13,441,218   13,556,720   13,593,107   13,637,213 
Time deposits  2,339,370   2,337,458   2,414,063   2,596,706   2,867,921 
Total deposits (including non-interest-bearing deposits)  10,175,856   10,173,315   10,422,332   10,633,516   10,626,159 
Total borrowings  1,333,245   1,325,372   1,214,219   1,016,722   1,095,173 
Total interest-bearing liabilities  9,874,358   9,872,522   10,001,968   9,910,739   9,880,134 
Non-interest bearing deposits  1,634,743   1,626,165   1,634,583   1,739,499   1,841,198 
Stockholders' equity  1,689,035   1,674,453   1,673,040   1,650,699   1,642,899 
Tangible stockholders’ equity (4)  1,175,304   1,159,918   1,157,684   1,134,410   1,125,617 
           
Quarterly Yields and Costs          
Total securities  4.23%  4.22%  4.27%  3.81%  3.82%
Loans receivable, net  5.46   5.46   5.46   5.40   5.30 
Total interest-earning assets  5.26   5.25   5.26   5.16   5.08 
Time deposits  4.58   4.46   4.24   4.13   4.06 
Total cost of deposits (including non-interest-bearing deposits)  2.44   2.37   2.31   2.22   1.99 
Total borrowed funds  5.07   5.19   5.14   5.13   5.12 
Total interest-bearing liabilities  3.20   3.14   3.03   2.91   2.71 
Net interest spread  2.06   2.11   2.23   2.25   2.37 
Net interest margin  2.67   2.71   2.81   2.82   2.91 


(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,
   2024   2024   2024   2023   2023 
Core Earnings:          
Net income available to common stockholders (GAAP) $24,112  $23,369  $27,663  $26,678  $19,663 
(Less) add non-recurring and non-core items:          
Net gain on equity investments  (1,420)  (887)  (1,923)  (2,176)  (1,452)
Net gain on sale of trust business  (1,438)     (1,162)      
FDIC special assessment        418   1,663    
Merger related expenses  1,669             
Income tax expense on items  270   188   642   129   351 
Core earnings (Non-GAAP) $23,193  $22,670  $25,638  $26,294  $18,562 
Income tax expense $7,464  $7,082  $10,637  $8,591  $6,459 
Provision for credit losses  517   3,114   591   3,153   10,283 
Less: income tax expense on non-core items  270   188   642   129   351 
Core earnings PTPP (Non-GAAP) $30,904  $32,678  $36,224  $37,909  $34,953 
Core earnings diluted earnings per share $0.39  $0.39  $0.44  $0.45  $0.32 
Core earnings PTPP diluted earnings per share $0.53  $0.56  $0.62  $0.65  $0.59 
           
Core Ratios (Annualized):          
Return on average assets  0.69%  0.68%  0.76%  0.77%  0.54%
Return on average tangible stockholders’ equity  7.85   7.86   8.91   9.20   6.54 
Return on average tangible common equity  8.24   8.26   9.36   9.67   6.88 
Efficiency ratio  66.00   63.47   61.05   60.02   64.29 


  For the Nine Months Ended September 30,
   2024   2023 
Core Earnings:    
Net income available to common stockholders (GAAP) $75,144  $73,335 
Add (less) non-recurring and non-core items:    
Net (gain) loss on equity investments(1)  (4,230)  1,300 
Net loss on sale of investments(1)     5,305 
Net gain on sale of trust business  (2,600)   
FDIC special assessment  418    
Merger related expenses  1,669   22 
Branch consolidation expense, net     70 
Income tax expense (benefit) on items  1,100   (1,608)
Core earnings (Non-GAAP) $71,501  $78,424 
Income tax expense $25,183  $24,109 
Provision for credit losses  4,222   14,525 
Less: income tax expense (benefit) on non-core items  1,100   (1,608)
Core earnings PTPP (Non-GAAP) $99,806  $118,666 
Core diluted earnings per share $1.22  $1.33 
Core earnings PTPP diluted earnings per share $1.71  $2.01 
     
Core Ratios (Annualized):    
Return on average assets  0.71%  0.78%
Return on average tangible stockholders’ equity  8.20   9.46 
Return on average tangible common equity  8.61   9.96 
Efficiency ratio  63.49   60.79 


(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,
   2024   2024   2024   2023   2023 
Tangible Equity:          
Total stockholders' equity $1,694,508  $1,676,669  $1,665,837  $1,661,945  $1,637,604 
Less:          
Goodwill  506,146   506,146   506,146   506,146   506,146 
Core deposit intangible  7,056   7,859   8,669   9,513   10,489 
Tangible stockholders' equity  1,181,306   1,162,664   1,151,022   1,146,286   1,120,969 
Less:          
Preferred stock  55,527   55,527   55,527   55,527   55,527 
Tangible common equity $1,125,779  $1,107,137  $1,095,495  $1,090,759  $1,065,442 
           
Tangible Assets:           
Total assets $13,488,483  $13,321,755  $13,418,978  $13,538,253  $13,498,183 
Less:          
Goodwill  506,146   506,146   506,146   506,146   506,146 
Core deposit intangible  7,056   7,859   8,669   9,513   10,489 
Tangible assets $12,975,281  $12,807,750  $12,904,163  $13,022,594  $12,981,548 
           
Tangible stockholders' equity to tangible assets  9.10%  9.08%  8.92%  8.80%  8.64%
Tangible common equity to tangible assets  8.68%  8.64%  8.49%  8.38%  8.21%


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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