OCFC 8-K
Oceanfirst Financial Corp (OCFC)
8-K
2022-04-28
For: 2022-04-28
View Original
Added on
April 08, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 28, 2022
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (Commission File No.) | (IRS Employer Identification No.) | ||||||||||||
(Address of principal executive offices, including zip code)
(732 )240-4500
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol | Name of each exchange in which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 28, 2022, OceanFirst Financial Corp. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2022. That press release is attached to this Report as Exhibit 99.1.
ITEM 7.01 REGULATION FD DISCLOSURE
The Company is scheduled to make presentations to current and prospective investors after April 28, 2022. Attached as Exhibit 99.2 of this Form 8-K is a copy of the presentation which OceanFirst Financial Corp. will make available at these presentations and will post on its website at www.oceanfirst.com. This report is being furnished to the SEC and shall not be deemed “filed” for any purpose.
ITEM 8.01OTHER EVENTS
In the press release described in Item 2.02, the Company announced that the Board of Directors declared a regular quarterly cash dividend on the Company’s outstanding common stock. The cash dividend will be in the amount of $0.17 per share and will be payable on May 20, 2022 to the stockholders of record at the close of business on May 9, 2022.
ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS
| (d) | EXHIBITS | |||||||
| Press Release dated | April 28, 2022 | |||||||
Text of written presentation which OceanFirst Financial Corp. intends to provide to current and prospective investors after April 28, 2022. | ||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| OCEANFIRST FINANCIAL CORP. | ||||||||
| Dated: | April 28, 2022 | /s/ Michael J. Fitzpatrick | ||||||
| Michael J. Fitzpatrick | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
 | Press Release | |||||||
Exhibit 99.1
Company Contact:
Michael J. Fitzpatrick
Chief Financial Officer
OceanFirst Financial Corp.
Tel: (732) 240-4500, ext. 7506
Email: [email protected]
FOR IMMEDIATE RELEASE
OCEANFIRST FINANCIAL CORP.
ANNOUNCES FIRST QUARTER
FINANCIAL RESULTS
RED BANK, NEW JERSEY, April 28, 2022 - 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 $24.8 million, or $0.42 per diluted share, for the quarter ended March 31, 2022, as compared to $31.7 million, or $0.53 per diluted share, for the corresponding prior year period. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information):
| For the Three Months Ended, | |||||||||||||||||
| Performance Ratios (Annualized): | March 31, | December 31, | March 31, | ||||||||||||||
| 2022 | 2021 | 2021 | |||||||||||||||
| Return on average assets | 0.84 | % | 0.72 | % | 1.12 | % | |||||||||||
| Return on average stockholders’ equity | 6.57 | 5.65 | 8.59 | ||||||||||||||
Return on average tangible stockholders’ equity (a) | 9.94 | 8.59 | 13.22 | ||||||||||||||
| Efficiency ratio | 61.77 | 72.04 | 54.73 | ||||||||||||||
| Net interest margin | 3.18 | 2.99 | 2.93 | ||||||||||||||
(a) Return on average tangible stockholders’ equity, a non-GAAP (“generally accepted accounting principles”) financial measure, excludes the impact of intangible assets and goodwill from both assets and stockholders’ equity. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.
Core earnings1 for the quarter ended March 31, 2022 amounted to $28.8 million, or $0.49 per diluted share. Non-core operations had an adverse impact of $4.0 million, net of tax, for the quarter ended March 31, 2022. Core earnings before income taxes and credit loss provision (“PTPP”) was $39.7 million, or $0.67 per diluted share for the quarter ended March 31, 2022.
| For the Three Months Ended, | |||||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||||
Core Ratios1 (Annualized): | 2022 | 2021 | 2021 | ||||||||||||||
| Return on average assets | 0.98 | % | 0.95 | % | 0.94 | % | |||||||||||
| Return on average tangible stockholders’ equity | 11.55 | 11.30 | 11.04 | ||||||||||||||
| Efficiency ratio | 57.51 | 62.57 | 58.37 | ||||||||||||||
| Core diluted earnings per share | $ | 0.49 | $ | 0.48 | $ | 0.44 | |||||||||||
| Core PTPP diluted earnings per share | 0.67 | 0.56 | 0.58 | ||||||||||||||
Key developments for the recent quarter are described below:
•Loan and Deposit Growth: Loan growth for the quarter was $486.1 million, reflecting record loan originations of $1.02 billion and the purchase of residential loan pools of $161.7 million. The committed loan pipeline remains strong at $515.4 million. In addition, deposits increased $323.4 million during the first quarter, while cost of deposits decreased four basis points to 0.16%, from 0.20%, in the prior linked quarter. The loans-to-deposits ratio increased to 90.60%, from 88.60%, in the prior linked quarter.
•Strengthening Net Interest Income and Margin: Net interest income increased by $3.6 million to $84.2 million, from $80.6 million, in the prior linked quarter. Net interest margin increased to 3.18%, as compared to 2.99% in the prior linked quarter, largely driven by the deployment of excess liquidity to fund interest earning assets.
1 Core earnings and core earnings before income taxes and credit loss provision (“PTPP”), and ratios derived from them, are non-GAAP financial measures. For the periods presented, core earnings exclude merger related expenses, net branch consolidation expenses, net loss (gain) on equity investments, and the income tax effect of these items, (collectively referred to as “non-core” operations). PTPP excludes the aforementioned pre-tax “non-core” items along with income tax expense (benefit) and credit loss provision (benefit). Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding our non-GAAP financial measures.
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•Expense Management: Total operating expenses decreased to $57.5 million, from $64.8 million in the prior linked quarter, and operating expenses excluding non-core operations decreased to $55.1 million from $57.1 million, for the same periods, reflecting improving trends in the Bank’s cost reduction initiatives. These efforts improved the efficiency ratio to 61.77%, from 72.04%, in the prior linked quarter, and core efficiency ratio improved to 57.51%, from 62.57%, in the prior linked quarter.
•Branch Consolidations: The Company completed its consolidation of 10 branches during the first quarter for a total of 77 branches consolidated since 2013. Average deposits per branch totaled $264.6 million as of March 31, 2022.
Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased to report strong first quarter results, including record loan originations of over $1 billion, a material expansion in net interest margin, and decreased operating expenses. The exceptional loan growth, along with increased deposits, resulted in an increased loan to deposit ratio of 90.60%. Although deposits grew, our cost of deposits decreased to 16 basis points reflecting our continued commitment to building a high quality funding base.” Mr. Maher added, “As interest rates have begun to increase, our discipline regarding rate positions has protected our shareholders’ tangible book value position and set the stage for continued earnings growth.”
The Company’s Board of Directors declared its 101st consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.17 per share will be paid on May 20, 2022 to common stockholders of record on May 9, 2022. The Board previously declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock. This dividend will be paid on May 16, 2022 to preferred stockholders of record on April 29, 2022.
The Company completed its acquisition of a majority interest in Trident Abstract Title Agency, LLC on April 1, 2022.
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Results of Operations
Net income for the quarter ended March 31, 2022 was adversely impacted by non-core operations of $4.0 million, net of tax, while net income for the quarter ended March 31, 2021 was favorably impacted by non-core operations of $5.2 million, net of tax. Core earnings for the quarter ended March 31, 2022 was $28.8 million, or $0.49 per diluted share, an increase from core earnings of $26.5 million, or $0.44 per diluted share, for the corresponding prior year period. Core earnings for the quarter ended March 31, 2022 increased from $28.5 million, or $0.48 per diluted share, for the prior linked quarter, which was adversely impacted by non-core operations of $6.8 million, net of tax.
Net Interest Income and Margin
Net interest income for the quarter ended March 31, 2022 increased to $84.2 million, as compared to $73.6 million for the corresponding prior year period, reflecting an increase in net interest margin. Average interest-earning assets increased by $551.7 million for the quarter ended March 31, 2022, as compared to the same prior year period, primarily due to loan and securities growth, which was primarily funded by the redeployment of excess cash. Average loans receivable, net of allowance for loan credit losses, increased by $1.07 billion for the quarter ended March 31, 2022, as compared to the same prior year period.
Net interest margin for the quarter ended March 31, 2022 increased to 3.18% from 2.93% for the same prior year period. Excluding the impact of purchase accounting accretion and prepayment fees of 0.12% and 0.18% for the quarters ended March 31, 2022 and 2021, respectively, net interest margin increased to 3.06% from 2.75%. Net interest margin expansion was primarily attributable to the decrease in excess balance sheet liquidity used to fund loan and securities growth. In addition, for the quarter ended March 31, 2022, the cost of average interest-bearing liabilities decreased to 0.35% from 0.60% for the corresponding prior year period, as a result of the downward repricing of deposits. The
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total cost of deposits (including non-interest bearing deposits) was 0.16% for the quarter ended March 31, 2022, as compared to 0.37% for the same prior year period.
Net interest income for the quarter ended March 31, 2022 increased by $3.6 million, as compared to the prior linked quarter, and net interest margin increased to 3.18%, as compared to 2.99% for the prior linked quarter. Excluding the impact of purchase accounting accretion and prepayment fees of 0.12% and 0.18% for the quarter ended March 31, 2022 and December 31, 2021, respectively, net interest margin increased to 3.06% from 2.81%. The net interest margin expansion was primarily attributable to the decrease in excess balance sheet liquidity used to fund loan and securities growth. The yield on average interest-earning assets increased to 3.43% from 3.28% in the prior linked quarter. The total cost of average interest-bearing liabilities was 0.35% for the quarter ended March 31, 2022, as compared to 0.40% in the prior linked quarter, partly due to a decrease in higher-costing time deposits.
Provision/Benefit for Credit Losses
For the quarter ended March 31, 2022, the credit loss expense was $1.9 million, as compared to a credit loss benefit of $620,000 for the corresponding prior year period and a credit loss benefit of $1.6 million in the prior linked quarter. The credit loss expense for the quarter ended March 31, 2022 was influenced by slowing prepayment rate assumptions primarily impacting the residential real estate portfolio, strong loan portfolio growth, and macro-economic forecast uncertainty related to the Russia-Ukraine war, partly offset by positive trends in the Bank’s criticized and classified assets and favorable employment outlook.
Net loan recoveries were $92,000 for the quarter ended March 31, 2022, as compared to $280,000 for the corresponding prior year period and $19,000 in the prior linked quarter. Refer to “Asset Quality” section for further discussion.
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Non-interest Income
For the quarter ended March 31, 2022, other income decreased to $8.9 million, as compared to $20.8 million for the corresponding prior year period. Other income for the quarters ended March 31, 2022 and 2021 included net losses of $2.8 million and net gains of $8.3 million, respectively, related to the net loss/gain on equity investments, which are considered non-core operations.
Excluding non-core operations, the decrease in other income of $910,000 for the quarter ended March 31, 2022, as compared to the corresponding prior year period, was primarily due to decreases in net gain on sales of loans of $1.7 million and Paycheck Protection Program (“PPP”) loan origination referral fees of $662,000 in the prior year, partly offset by an increase in commercial loan swap income of $1.7 million.
Excluding non-core operations of $1.3 million in the prior linked quarter, other income for the quarter ended March 31, 2022 increased $976,000, primarily due to an increase in commercial loan swap income of $1.5 million.
Non-interest Expense
Operating expenses increased to $57.5 million for the quarter ended March 31, 2022, as compared to $51.7 million in the same prior year period. Operating expenses for the quarters ended March 31, 2022 and 2021 included $2.4 million and $1.4 million, respectively, of net expenses related to non-core operations.
Excluding non-core operations, the $4.8 million increase in operating expenses for the quarter ended March 31, 2022, as compared to the corresponding prior year period, was primarily due to increases in compensation and benefits expense of $2.3 million, relating to the commercial banking strategy and the commercial banking hires in expansion markets of Boston and Baltimore as well as additional hires in New Jersey, New York and Philadelphia, data processing expense of $1.7 million, as a result of the migration to a new core banking system, and occupancy expense of $683,000.
Excluding non-core operations of $7.7 million in the prior linked quarter, operating expenses for
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the quarter ended March 31, 2022, decreased $2.0 million, primarily due to a decrease in data processing expense of $2.0 million.
Income Tax Expense
The provision for income taxes was $8.0 million for the quarter ended March 31, 2022, as compared to $10.7 million for the same prior year period, and $4.1 million for the prior linked quarter. The effective tax rate was 23.6% for the quarter ended March 31, 2022, as compared to 24.6% for the same prior year period and 15.3% for the prior linked quarter. The lower effective tax rate in the prior linked quarter was primarily due to the allocation of more taxable income to jurisdictions other than New Jersey with lower income tax rates and other tax optimization efforts.
Financial Condition
Total assets increased by $425.3 million to $12.16 billion at March 31, 2022, from $11.74 billion at December 31, 2021. Total loans, excluding PPP loans of $15.0 million and $22.9 million at March 31, 2022 and December 31, 2021, respectively, increased by $494.0 million, to $9.09 billion at March 31, 2022, from $8.60 billion at December 31, 2021, primarily due to loan originations and purchases of $161.7 million of residential real estate loan pools. Total debt securities decreased by $61.5 million at March 31, 2022, as compared to December 31, 2021.
Deposits increased by $323.4 million to $10.06 billion at March 31, 2022, from $9.73 billion at December 31, 2021. Total deposits excluding time deposits increased by $211.1 million to $9.17 billion at March 31, 2022, from $8.96 billion at December 31, 2021, due to organic growth in all deposit categories. Time deposits increased to $887.3 million at March 31, 2022, from $775.0 million at December 31, 2021 primarily due to an increase in brokered time deposits, which were less costly than comparable term Federal Home Loan Bank (“FHLB”) advances. The loans-to-deposit ratio at March 31, 2022 was 90.6%, as compared to 88.6% at December 31, 2021. FHLB advances increased to $75.0 million at March 31, 2022 from $0 at December 31, 2021 to fund loan growth. Other borrowings
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decreased by $34.7 million to $194.4 million at March 31, 2022, from $229.1 million at December 31, 2021, primarily due to the extinguishment of $35.0 million of subordinated debt.
Stockholders’ equity was $1.52 billion at March 31, 2022 and December 31, 2021. Accumulated other comprehensive loss increased by $12.3 million to $15.2 million at March 31, 2022 from $2.8 million at December 31, 2021, primarily due to unrealized losses on debt securities available-for-sale which were impacted by higher interest rates. For the quarter ended March 31, 2022, the Company repurchased 100,444 shares under its stock repurchase programs at a weighted average cost of $21.35 and there were 3,207,217 shares available for repurchase at March 31, 2022 under the existing repurchase programs. Stockholders’ equity per common share decreased to $25.58 at March 31, 2022, as compared to $25.63 at December 31, 2021. Tangible common equity per common share increased to $15.94 at March 31, 2022, as compared to $15.93 at December 31, 2021.
Asset Quality
The Company’s non-performing loans increased to $26.9 million at March 31, 2022, as compared to $25.5 million at December 31, 2021. The Company’s non-performing loans, excluding $3.7 million and $6.5 million of non-performing purchased with credit deterioration (“PCD”) loans from prior bank acquisitions at March 31, 2022 and December 31, 2021, increased to $23.2 million at March 31, 2022, as compared to $18.9 million at December 31, 2021, primarily due to one commercial relationship of $3.2 million, which moved to non-performing loans. The allowance for loan credit losses as a percentage of total non-performing loans was 187.9% at March 31, 2022, as compared to 191.6% at December 31, 2021. The allowance for loan credit losses as a percentage of total non-performing loans, excluding PCD loans, was 218.3% at March 31, 2022, as compared to 257.8% at December 31, 2021. The level of 30 to 89 days delinquent loans expanded to $18.7 million at March 31, 2022, from $14.5 million at December 31, 2021. The level of 30 to 89 days delinquent loans, excluding non-performing and PCD loans, expanded to $15.9 million at March 31, 2022, from $13.5 million at December 31, 2021.
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The Company’s allowance for loan credit losses was 0.56% of total loans at March 31, 2022, as compared to 0.57% at December 31, 2021. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $67.5 million, or 0.74% of total loans, at March 31, 2022.
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 credit loss provision, and reporting equity and asset amounts excluding intangible assets and goodwill, which can vary from period to period, provides a better comparison of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.
Annual Meeting
The Annual Meeting of Stockholders will be held on Wednesday, May 25, 2022 at 9:00 a.m. Eastern Time, as previously announced. The meeting will be held in a virtual format only. Stockholders of record are invited to participate in the live webcast of the meeting, which will offer the same rights and opportunities to participate as at an in-person meeting, using online tools to ensure access and participation. The record date for stockholders to vote at the Annual Meeting was April 6, 2022. Voting before the meeting is encouraged, even for stockholders planning to participate in the live virtual broadcast. Votes may be submitted by telephone or online according to the instructions on the proxy card or by mail. A link to the live webcast, and a replay of the event, is available by visiting
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oceanfirst.com - Investor Relations. Access will begin at 8:45 a.m. Eastern Time to allow time for stockholders to log-in with the control number provided on the proxy card prior to the 9:00 a.m. Eastern Time scheduled start. Eligible stockholders may also vote during the live meeting online at www.virtualshareholdermeeting.com/OCFC2022 by entering the 16-digit control number included on the proxy card or notice. Whether or not stockholders plan to attend the virtual Annual Meeting, the Company encourages all eligible stockholders to vote using proxy card materials included in the meeting materials distributed beginning April 26, 2022. As a reminder, participating in the meeting is not required to vote.
Conference Call
As previously announced, the Company will host an earnings conference call on Friday, April 29, 2022 at 11:00 a.m. Eastern Time. The direct dial number for the call is (844) 200-6205, using the access code 956037. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (866) 813-9403, access code 401866, from one hour after the end of the call until July 29, 2022. 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 $12.2 billion regional bank providing financial services throughout New Jersey and in the major metropolitan markets of Philadelphia, New York, Baltimore, Washington D.C., and Boston. OceanFirst Bank delivers commercial and residential financing, treasury management, trust and asset management, and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey. To learn more about OceanFirst, go to www.oceanfirst.com.
Forward-Looking Statements
In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence.
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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: the impact of the COVID-19 or any other pandemic on our operations and financial results and those of our customers, changes in interest rates, inflation, general economic conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters and 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, competition, demand for financial services in the Company’s market area, accounting principles and guidelines 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, 2021, 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.
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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
| March 31, | December 31, | March 31, | ||||||||||||||||||
| 2022 | 2021 | 2021 | ||||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and due from banks | $ | 210,919 | $ | 204,949 | $ | 1,173,665 | ||||||||||||||
| Debt securities available-for-sale, at estimated fair value | 546,470 | 568,255 | 268,511 | |||||||||||||||||
Debt securities held-to-maturity, net of allowance for securities credit losses of $1,380 at March 31, 2022, $1,467 at December 31, 2021, and $1,717 at March 31, 2021 (estimated fair value of $1,050,892 at March 31, 2022, $1,152,744 at December 31, 2021 and $1,099,745 at March 31, 2021) | 1,099,514 | 1,139,193 | 1,082,326 | |||||||||||||||||
| Equity investments | 93,888 | 101,155 | 50,159 | |||||||||||||||||
| Restricted equity investments, at cost | 56,704 | 53,195 | 52,199 | |||||||||||||||||
Loans receivable, net of allowance for loan credit losses of $50,598 at March 31, 2022, $48,850 at December 31, 2021 and $59,976 at March 31, 2021 | 9,065,679 | 8,583,352 | 7,820,590 | |||||||||||||||||
| Loans held-for-sale | — | — | 43,175 | |||||||||||||||||
| Interest and dividends receivable | 33,353 | 32,606 | 32,819 | |||||||||||||||||
| Other real estate owned | 106 | 106 | 106 | |||||||||||||||||
| Premises and equipment, net | 126,767 | 125,828 | 110,093 | |||||||||||||||||
| Bank owned life insurance | 259,121 | 259,207 | 264,548 | |||||||||||||||||
| Assets held for sale | 5,676 | 6,229 | 5,340 | |||||||||||||||||
| Goodwill | 500,319 | 500,319 | 500,319 | |||||||||||||||||
| Core deposit intangible | 17,005 | 18,215 | 22,273 | |||||||||||||||||
| Other assets | 149,424 | 147,007 | 151,349 | |||||||||||||||||
| Total assets | $ | 12,164,945 | $ | 11,739,616 | $ | 11,577,472 | ||||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||
| Deposits | $ | 10,056,233 | $ | 9,732,816 | $ | 9,502,812 | ||||||||||||||
| Federal Home Loan Bank advances | 75,002 | — | — | |||||||||||||||||
Securities sold under agreements to repurchase with retail customers | 117,782 | 118,769 | 134,465 | |||||||||||||||||
| Other borrowings | 194,396 | 229,141 | 228,176 | |||||||||||||||||
| Advances by borrowers for taxes and insurance | 25,398 | 20,305 | 20,980 | |||||||||||||||||
| Other liabilities | 176,800 | 122,032 | 192,320 | |||||||||||||||||
| Total liabilities | 10,645,611 | 10,223,063 | 10,078,753 | |||||||||||||||||
| Total stockholders’ equity | 1,519,334 | 1,516,553 | 1,498,719 | |||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 12,164,945 | $ | 11,739,616 | $ | 11,577,472 | ||||||||||||||
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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
| For the Three Months Ended, | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| 2022 | 2021 | 2021 | ||||||||||||||||||
| |---------------------- (Unaudited) ----------------------| | ||||||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans | $ | 82,468 | $ | 81,392 | $ | 77,908 | ||||||||||||||
| Debt securities | 7,504 | 5,654 | 5,355 | |||||||||||||||||
| Equity investments and other | 1,011 | 1,411 | 1,611 | |||||||||||||||||
| Total interest income | 90,983 | 88,457 | 84,874 | |||||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Deposits | 4,041 | 5,010 | 8,496 | |||||||||||||||||
| Borrowed funds | 2,715 | 2,861 | 2,774 | |||||||||||||||||
| Total interest expense | 6,756 | 7,871 | 11,270 | |||||||||||||||||
| Net interest income | 84,227 | 80,586 | 73,604 | |||||||||||||||||
| Credit loss expense (benefit) | 1,851 | (1,573) | (620) | |||||||||||||||||
| Net interest income after credit loss expense (benefit) | 82,376 | 82,159 | 74,224 | |||||||||||||||||
| Other income: | ||||||||||||||||||||
| Bankcard services revenue | 2,963 | 3,308 | 3,052 | |||||||||||||||||
| Trust and asset management revenue | 609 | 562 | 599 | |||||||||||||||||
| Fees and service charges | 3,060 | 3,314 | 3,737 | |||||||||||||||||
| Net gain on sales of loans | 177 | 6 | 1,916 | |||||||||||||||||
| Net (loss) gain on equity investments | (2,786) | (1,252) | 8,287 | |||||||||||||||||
| Net loss from other real estate operations | (2) | (3) | (8) | |||||||||||||||||
| Income from bank owned life insurance | 2,103 | 2,061 | 1,415 | |||||||||||||||||
| Commercial loan swap income | 2,781 | 1,323 | 1,111 | |||||||||||||||||
| Other | (53) | 91 | 726 | |||||||||||||||||
| Total other income | 8,852 | 9,410 | 20,835 | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Compensation and employee benefits | 30,695 | 31,006 | 28,366 | |||||||||||||||||
| Occupancy | 5,744 | 5,101 | 5,061 | |||||||||||||||||
| Equipment | 1,370 | 1,435 | 1,578 | |||||||||||||||||
| Marketing | 616 | 614 | 434 | |||||||||||||||||
| Federal deposit insurance and regulatory assessments | 1,890 | 1,733 | 1,864 | |||||||||||||||||
| Data processing | 5,736 | 7,774 | 4,031 | |||||||||||||||||
| Check card processing | 982 | 1,170 | 1,372 | |||||||||||||||||
| Professional fees | 3,322 | 2,726 | 2,837 | |||||||||||||||||
| Amortization of core deposit intangible | 1,210 | 1,343 | 1,395 | |||||||||||||||||
| Branch consolidation expense, net | 402 | 7,286 | 1,011 | |||||||||||||||||
| Merger related expenses | 1,965 | 451 | 381 | |||||||||||||||||
| Other operating expense | 3,563 | 4,195 | 3,353 | |||||||||||||||||
| Total operating expenses | 57,495 | 64,834 | 51,683 | |||||||||||||||||
| Income before provision for income taxes | 33,733 | 26,735 | 43,376 | |||||||||||||||||
| Provision for income taxes | 7,974 | 4,078 | 10,679 | |||||||||||||||||
| Net income | 25,759 | 22,657 | 32,697 | |||||||||||||||||
| Dividends on preferred shares | 1,004 | 1,004 | 1,004 | |||||||||||||||||
| Net income available to common stockholders | $ | 24,755 | $ | 21,653 | $ | 31,693 | ||||||||||||||
| Basic earnings per share | $ | 0.42 | $ | 0.37 | $ | 0.53 | ||||||||||||||
| Diluted earnings per share | $ | 0.42 | $ | 0.37 | $ | 0.53 | ||||||||||||||
| Average basic shares outstanding | 58,739 | 58,801 | 59,840 | |||||||||||||||||
| Average diluted shares outstanding | 58,943 | 59,044 | 60,101 | |||||||||||||||||
13
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
| LOANS RECEIVABLE | At | ||||||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | |||||||||||||||||||||||||||||||
| Commercial: | |||||||||||||||||||||||||||||||||||
| Commercial real estate - investor | $ | 4,607,880 | $ | 4,378,061 | $ | 3,922,983 | $ | 3,836,230 | $ | 3,804,351 | |||||||||||||||||||||||||
| Commercial real estate - owner-occupied | 1,057,246 | 1,055,065 | 1,123,973 | 1,045,514 | 1,066,351 | ||||||||||||||||||||||||||||||
| Commercial and industrial | 502,739 | 449,224 | 457,674 | 474,919 | 498,245 | ||||||||||||||||||||||||||||||
| Total commercial | 6,167,865 | 5,882,350 | 5,504,630 | 5,356,663 | 5,368,947 | ||||||||||||||||||||||||||||||
| Consumer: | |||||||||||||||||||||||||||||||||||
| Residential real estate | 2,687,927 | 2,479,701 | 2,401,240 | 2,168,545 | 2,189,348 | ||||||||||||||||||||||||||||||
| Home equity loans and lines and other consumer ("other consumer") | 253,184 | 260,819 | 275,962 | 295,582 | 314,242 | ||||||||||||||||||||||||||||||
| Total consumer | 2,941,111 | 2,740,520 | 2,677,202 | 2,464,127 | 2,503,590 | ||||||||||||||||||||||||||||||
| Total loans | 9,108,976 | 8,622,870 | 8,181,832 | 7,820,790 | 7,872,537 | ||||||||||||||||||||||||||||||
| Deferred origination costs (fees), net | 7,301 | 9,332 | 8,282 | 7,437 | 8,029 | ||||||||||||||||||||||||||||||
| Allowance for loan credit losses | (50,598) | (48,850) | (50,153) | (53,876) | (59,976) | ||||||||||||||||||||||||||||||
| Loans receivable, net | $ | 9,065,679 | $ | 8,583,352 | $ | 8,139,961 | $ | 7,774,351 | $ | 7,820,590 | |||||||||||||||||||||||||
| Mortgage loans serviced for others | $ | 58,089 | $ | 60,447 | $ | 64,840 | $ | 68,778 | $ | 74,037 | |||||||||||||||||||||||||
| At March 31, 2022 Average Yield | |||||||||||||||||||||||||||||||||||
Loan pipeline (1): | |||||||||||||||||||||||||||||||||||
| Commercial | 4.07 | % | $ | 385,986 | $ | 539,426 | $ | 482,942 | $ | 463,388 | $ | 154,946 | |||||||||||||||||||||||
| Residential real estate | 3.45 | 116,554 | 123,211 | 160,070 | 153,798 | 178,352 | |||||||||||||||||||||||||||||
| Other consumer | 4.48 | 12,814 | 8,381 | 8,420 | 11,369 | 11,031 | |||||||||||||||||||||||||||||
| Total | 3.94 | % | $ | 515,354 | $ | 671,018 | $ | 651,432 | $ | 628,555 | $ | 344,329 | |||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||||||||||||||||||||||||||
| Average Yield | ||||||||||||||||||||||||||||||||||||||
| Loan originations: | ||||||||||||||||||||||||||||||||||||||
| Commercial | 3.66 | % | $ | 816,517 | $ | 780,464 | $ | 585,667 | $ | 259,163 | (2) | $ | 547,591 | (2) | ||||||||||||||||||||||||
| Residential real estate | 3.08 | 192,721 | (3) | 195,942 | (3) | 174,365 | (3) | 173,354 | 189,942 | |||||||||||||||||||||||||||||
| Other consumer | 4.35 | 12,718 | 12,552 | 11,782 | 14,870 | 10,278 | ||||||||||||||||||||||||||||||||
| Total | 3.56 | % | $ | 1,021,956 | $ | 988,958 | $ | 771,814 | $ | 447,387 | $ | 747,811 | ||||||||||||||||||||||||||
| Loans sold | $ | 703 | (4) | $ | 649 | $ | 1,756 | $ | 29,556 | $ | 67,500 | |||||||||||||||||||||||||||
(1)Loan pipeline includes loans approved but not funded.
(2)Excludes loans originated through the PPP of $13 million and $60 million for the three months ended June 30, 2021 and March 31, 2021, respectively.
(3)Excludes residential real estate loan pool purchases of $161.7 million, $82.2 million and $219.7 million for the three months ended March 31, 2022, December 31, 2021 and September 30, 2021, respectively.
(4)Excludes the sale of higher risk commercial loans of $12.0 million for the three months ended March 31, 2022.
| DEPOSITS | At | ||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | |||||||||||||||||||||||||
| Type of Account | |||||||||||||||||||||||||||||
| Non-interest-bearing | $ | 2,444,833 | $ | 2,412,056 | $ | 2,467,952 | $ | 2,505,355 | $ | 2,417,935 | |||||||||||||||||||
| Interest-bearing checking | 4,287,745 | 4,201,736 | 4,013,565 | 3,628,741 | 3,623,132 | ||||||||||||||||||||||||
| Money market | 811,588 | 736,090 | 816,691 | 734,320 | 782,459 | ||||||||||||||||||||||||
| Savings | 1,624,751 | 1,607,933 | 1,620,447 | 1,590,441 | 1,568,528 | ||||||||||||||||||||||||
| Time deposits | 887,316 | 775,001 | 855,442 | 956,429 | 1,110,758 | ||||||||||||||||||||||||
| Total deposits | $ | 10,056,233 | $ | 9,732,816 | $ | 9,774,097 | $ | 9,415,286 | $ | 9,502,812 | |||||||||||||||||||
14
OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
| ASSET QUALITY | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | |||||||||||||||||||||||||
| Non-performing loans: | |||||||||||||||||||||||||||||
| Commercial real estate - investor | $ | 3,575 | $ | 3,614 | $ | 8,506 | $ | 15,211 | $ | 18,520 | |||||||||||||||||||
| Commercial real estate - owner-occupied | 9,632 | 11,904 | 12,524 | 12,100 | 12,345 | ||||||||||||||||||||||||
| Commercial and industrial | 2,830 | 277 | 418 | 1,635 | 1,689 | ||||||||||||||||||||||||
| Residential real estate | 7,047 | 6,114 | 5,505 | 6,137 | 6,422 | ||||||||||||||||||||||||
| Other consumer | 3,841 | 3,585 | 3,351 | 3,576 | 3,782 | ||||||||||||||||||||||||
| Total non-performing loans | 26,925 | 25,494 | 30,304 | 38,659 | 42,758 | ||||||||||||||||||||||||
| Other real estate owned | 106 | 106 | 106 | 106 | 106 | ||||||||||||||||||||||||
| Total non-performing assets | $ | 27,031 | $ | 25,600 | $ | 30,410 | $ | 38,765 | $ | 42,864 | |||||||||||||||||||
| Delinquent loans 30 to 89 days | $ | 18,691 | $ | 14,546 | $ | 7,840 | $ | 6,364 | $ | 18,421 | |||||||||||||||||||
| Troubled debt restructuring (“TDR”): | |||||||||||||||||||||||||||||
| Non-performing (included in total non-performing loans above) | $ | 11,914 | $ | 11,311 | $ | 9,962 | $ | 10,120 | $ | 5,107 | |||||||||||||||||||
| Performing | 7,716 | 12,320 | 9,661 | 10,311 | 11,466 | ||||||||||||||||||||||||
| Total TDRs | $ | 19,630 | $ | 23,631 | $ | 19,623 | $ | 20,431 | $ | 16,573 | |||||||||||||||||||
| Allowance for loan credit losses | $ | 50,598 | $ | 48,850 | $ | 50,153 | $ | 53,876 | $ | 59,976 | |||||||||||||||||||
Allowance for loan credit losses as a percent of total loans receivable (1) | 0.56 | % | 0.57 | % | 0.61 | % | 0.69 | % | 0.76 | % | |||||||||||||||||||
Allowance for loan credit losses as a percent of total non-performing loans (1) | 187.92 | 191.61 | 165.50 | 139.36 | 140.27 | ||||||||||||||||||||||||
| Non-performing loans as a percent of total loans receivable | 0.30 | 0.30 | 0.37 | 0.49 | 0.54 | ||||||||||||||||||||||||
| Non-performing assets as a percent of total assets | 0.22 | 0.22 | 0.26 | 0.34 | 0.37 | ||||||||||||||||||||||||
| PCD loans | |||||||||||||||||||||||||||||
| PCD loans | $ | 37,032 | $ | 41,817 | $ | 41,372 | $ | 40,064 | $ | 44,421 | |||||||||||||||||||
| Non-performing PCD loans | 3,745 | 6,546 | 6,960 | 6,979 | 8,630 | ||||||||||||||||||||||||
| Delinquent PCD loans 30 to 89 days | 2,749 | 1,000 | 1,193 | 1,051 | 1,944 | ||||||||||||||||||||||||
| TDR PCD loans | 1,033 | 337 | 345 | 317 | 322 | ||||||||||||||||||||||||
Asset quality, excluding PCD loans (2) | |||||||||||||||||||||||||||||
| Non-performing loans | 23,180 | 18,948 | 23,344 | 31,680 | 34,128 | ||||||||||||||||||||||||
| Non-performing assets | 23,286 | 19,054 | 23,450 | 31,786 | 34,234 | ||||||||||||||||||||||||
Delinquent loans 30 to 89 days | 15,942 | 13,546 | 6,647 | 5,313 | 16,477 | ||||||||||||||||||||||||
TDRs | 18,597 | 23,294 | 19,278 | 20,114 | 16,251 | ||||||||||||||||||||||||
Allowance for loan credit losses as a percent of total non-performing loans (1) | 218.28 | % | 257.81 | % | 214.84 | % | 170.06 | % | 175.74 | % | |||||||||||||||||||
Non-performing loans as a percent of total loans receivable | 0.25 | 0.22 | 0.29 | 0.41 | 0.43 | ||||||||||||||||||||||||
| Non-performing assets as a percent of total assets | 0.19 | 0.16 | 0.20 | 0.28 | 0.30 | ||||||||||||||||||||||||
(1)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 $16.9 million, $18.9 million, $21.3 million, $23.6 million and $25.7 million at March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, respectively.
(2)All balances and ratios below exclude PCD loans.
15
(continued)
| NET LOAN RECOVERIES (CHARGE-OFFS) | For the Three Months Ended | ||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | |||||||||||||||||||||||||
| Net loan recoveries (charge-offs): | |||||||||||||||||||||||||||||
| Loan charge-offs | $ | (143) | $ | (92) | $ | (163) | $ | (420) | $ | (356) | |||||||||||||||||||
| Recoveries on loans | 235 | 111 | 549 | 196 | 636 | ||||||||||||||||||||||||
| Net loan recoveries (charge-offs) | $ | 92 | $ | 19 | $ | 386 | $ | (224) | $ | 280 | |||||||||||||||||||
| Net loan recoveries (charge-offs) to average total loans (annualized) | NM* | NM* | NM* | 0.01 | % | NM* | |||||||||||||||||||||||
| Net loan recoveries (charge-offs) detail: | |||||||||||||||||||||||||||||
| Commercial | $ | 25 | $ | (24) | $ | (33) | $ | (304) | $ | 126 | |||||||||||||||||||
| Residential real estate | 94 | 21 | 280 | — | (203) | ||||||||||||||||||||||||
| Other consumer | (27) | 22 | 139 | 80 | 357 | ||||||||||||||||||||||||
| Net loan recoveries (charge-offs) | $ | 92 | $ | 19 | $ | 386 | $ | (224) | $ | 280 | |||||||||||||||||||
* Not meaningful
16
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (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 | $ | 88,826 | $ | 37 | 0.17 | % | $ | 698,652 | $ | 300 | 0.17 | % | $ | 1,138,911 | $ | 277 | 0.10 | % | |||||||||||||||||||||||||||||||||||
Securities (2) | 1,846,452 | 8,478 | 1.86 | 1,710,143 | 6,765 | 1.57 | 1,311,683 | 6,689 | 2.07 | ||||||||||||||||||||||||||||||||||||||||||||
Loans receivable, net (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | 6,037,639 | 58,355 | 3.92 | 5,635,642 | 57,829 | 4.07 | 5,127,940 | 53,670 | 4.24 | ||||||||||||||||||||||||||||||||||||||||||||
| Residential real estate | 2,542,655 | 21,339 | 3.36 | 2,430,635 | 20,454 | 3.37 | 2,327,838 | 20,069 | 3.45 | ||||||||||||||||||||||||||||||||||||||||||||
| Other consumer | 257,024 | 2,774 | 4.38 | 273,007 | 3,109 | 4.52 | 326,907 | 4,169 | 5.17 | ||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan credit losses, net of deferred loan costs and fees | (40,457) | — | — | (41,889) | — | — | (52,887) | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Loans receivable, net | 8,796,861 | 82,468 | 3.79 | 8,297,395 | 81,392 | 3.89 | 7,729,798 | 77,908 | 4.09 | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 10,732,139 | 90,983 | 3.43 | 10,706,190 | 88,457 | 3.28 | 10,180,392 | 84,874 | 3.38 | ||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-earning assets | 1,215,071 | 1,247,420 | 1,259,109 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 11,947,210 | $ | 11,953,610 | $ | 11,439,501 | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing checking | $ | 4,377,368 | 2,149 | 0.20 | % | $ | 4,249,001 | 2,851 | 0.27 | % | $ | 3,711,976 | 4,311 | 0.47 | % | ||||||||||||||||||||||||||||||||||||||
| Money market | 788,063 | 318 | 0.16 | 790,471 | 282 | 0.14 | 757,634 | 367 | 0.20 | ||||||||||||||||||||||||||||||||||||||||||||
| Savings | 1,609,415 | 125 | 0.03 | 1,611,522 | 141 | 0.03 | 1,522,603 | 179 | 0.05 | ||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | 767,709 | 1,449 | 0.77 | 819,025 | 1,736 | 0.84 | 1,221,123 | 3,639 | 1.21 | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 7,542,555 | 4,041 | 0.22 | 7,470,019 | 5,010 | 0.27 | 7,213,336 | 8,496 | 0.48 | ||||||||||||||||||||||||||||||||||||||||||||
| FHLB Advances | 29,433 | 35 | 0.48 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | 117,623 | 42 | 0.14 | 132,520 | 50 | 0.15 | 129,444 | 95 | 0.30 | ||||||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 228,522 | 2,638 | 4.68 | 228,980 | 2,811 | 4.87 | 228,368 | 2,679 | 4.76 | ||||||||||||||||||||||||||||||||||||||||||||
| Total borrowings | 375,578 | 2,715 | 2.93 | 361,500 | 2,861 | 3.14 | 357,812 | 2,774 | 3.14 | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 7,918,133 | 6,756 | 0.35 | 7,831,519 | 7,871 | 0.40 | 7,571,148 | 11,270 | 0.60 | ||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing deposits | 2,401,797 | 2,467,588 | 2,212,273 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing liabilities | 99,441 | 134,527 | 160,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 10,419,371 | 10,433,634 | 9,943,921 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 1,527,839 | 1,519,976 | 1,495,580 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 11,947,210 | $ | 11,953,610 | $ | 11,439,501 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 84,227 | $ | 80,586 | $ | 73,604 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest rate spread (4) | 3.08 | % | 2.88 | % | 2.78 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin (5) | 3.18 | % | 2.99 | % | 2.93 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Total cost of deposits (including non-interest-bearing deposits) | 0.16 | % | 0.20 | % | 0.37 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(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.
17
OceanFirst Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share amounts)
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||||||||||||||||||||
| Selected Financial Condition Data: | ||||||||||||||||||||||||||||||||
| Total assets | $ | 12,164,945 | $ | 11,739,616 | $ | 11,829,688 | $ | 11,483,901 | $ | 11,577,472 | ||||||||||||||||||||||
Debt securities available-for-sale, at estimated fair value | 546,470 | 568,255 | 314,620 | 249,330 | 268,511 | |||||||||||||||||||||||||||
| Debt securities held-to-maturity, net of allowance for securities credit losses | 1,099,514 | 1,139,193 | 1,125,382 | 1,146,735 | 1,082,326 | |||||||||||||||||||||||||||
| Equity investments | 93,888 | 101,155 | 101,314 | 90,917 | 50,159 | |||||||||||||||||||||||||||
| Restricted equity investments, at cost | 56,704 | 53,195 | 53,017 | 52,519 | 52,199 | |||||||||||||||||||||||||||
| Loans receivable, net of allowance for loan credit losses | 9,065,679 | 8,583,352 | 8,139,961 | 7,774,351 | 7,820,590 | |||||||||||||||||||||||||||
| Deposits | 10,056,233 | 9,732,816 | 9,774,097 | 9,415,286 | 9,502,812 | |||||||||||||||||||||||||||
| Federal Home Loan Bank advances | 75,002 | — | — | — | — | |||||||||||||||||||||||||||
| Securities sold under agreements to repurchase and other borrowings | 312,178 | 347,910 | 372,179 | 370,039 | 362,641 | |||||||||||||||||||||||||||
Stockholders’ equity | 1,519,334 | 1,516,553 | 1,513,249 | 1,508,789 | 1,498,719 | |||||||||||||||||||||||||||
| For the Three Months Ended, | ||||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||||||||||||||||||||
| Selected Operating Data: | ||||||||||||||||||||||||||||||||
| Interest income | $ | 90,983 | $ | 88,457 | $ | 85,420 | $ | 83,341 | $ | 84,874 | ||||||||||||||||||||||
| Interest expense | 6,756 | 7,871 | 8,288 | 9,325 | 11,270 | |||||||||||||||||||||||||||
| Net interest income | 84,227 | 80,586 | 77,132 | 74,016 | 73,604 | |||||||||||||||||||||||||||
| Credit loss expense (benefit) | 1,851 | (1,573) | (3,179) | (6,460) | (620) | |||||||||||||||||||||||||||
| Net interest income after credit loss expense (benefit) | 82,376 | 82,159 | 80,311 | 80,476 | 74,224 | |||||||||||||||||||||||||||
| Other income (excluding net (loss) gain on equity investments) | 11,638 | 10,662 | 10,349 | 11,227 | 12,548 | |||||||||||||||||||||||||||
| Net (loss) gain on equity investments | (2,786) | (1,252) | (466) | 576 | 8,287 | |||||||||||||||||||||||||||
| Operating expenses (excluding merger related and branch consolidation expenses, net) | 55,128 | 57,097 | 54,434 | 51,198 | 50,291 | |||||||||||||||||||||||||||
| Branch consolidation expense, net | 402 | 7,286 | 4,014 | 26 | 1,011 | |||||||||||||||||||||||||||
| Merger related expenses | 1,965 | 451 | 225 | 446 | 381 | |||||||||||||||||||||||||||
| Income before provision for income taxes | 33,733 | 26,735 | 31,521 | 40,609 | 43,376 | |||||||||||||||||||||||||||
| Provision for income taxes | 7,974 | 4,078 | 7,354 | 10,054 | 10,679 | |||||||||||||||||||||||||||
| Net income | $ | 25,759 | $ | 22,657 | $ | 24,167 | $ | 30,555 | $ | 32,697 | ||||||||||||||||||||||
| Net income available to common stockholders | $ | 24,755 | $ | 21,653 | $ | 23,163 | $ | 29,551 | $ | 31,693 | ||||||||||||||||||||||
| Diluted earnings per share | $ | 0.42 | $ | 0.37 | $ | 0.39 | $ | 0.49 | $ | 0.53 | ||||||||||||||||||||||
| Net accretion/amortization of purchase accounting adjustments included in net interest income | $ | 2,953 | $ | 3,610 | $ | 3,644 | $ | 2,835 | $ | 3,650 | ||||||||||||||||||||||
18
(continued)
| At or For the Three Months Ended | ||||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||||||||||||||||||||
Selected Financial Ratios and Other Data(1): | ||||||||||||||||||||||||||||||||
| Performance Ratios (Annualized): | ||||||||||||||||||||||||||||||||
Return on average assets (2) | 0.84 | % | 0.72 | % | 0.78 | % | 1.03 | % | 1.12 | % | ||||||||||||||||||||||
Return on average tangible assets (2) (3) | 0.88 | 0.75 | 0.82 | 1.08 | 1.18 | |||||||||||||||||||||||||||
Return on average stockholders’ equity (2) | 6.57 | 5.65 | 6.05 | 7.88 | 8.59 | |||||||||||||||||||||||||||
Return on average tangible stockholders’ equity (2) (3) | 9.94 | 8.59 | 9.20 | 12.07 | 13.22 | |||||||||||||||||||||||||||
| Stockholders’ equity to total assets | 12.49 | 12.92 | 12.79 | 13.14 | 12.95 | |||||||||||||||||||||||||||
Tangible stockholders’ equity to tangible assets (3) | 8.60 | 8.89 | 8.78 | 9.01 | 8.83 | |||||||||||||||||||||||||||
Tangible common equity to tangible assets (3) | 8.13 | 8.40 | 8.29 | 8.50 | 8.33 | |||||||||||||||||||||||||||
| Net interest rate spread | 3.08 | 2.88 | 2.80 | 2.75 | 2.78 | |||||||||||||||||||||||||||
| Net interest margin | 3.18 | 2.99 | 2.93 | 2.89 | 2.93 | |||||||||||||||||||||||||||
Operating expenses to average assets (2) | 1.95 | 2.15 | 1.98 | 1.80 | 1.83 | |||||||||||||||||||||||||||
Efficiency ratio (2) (4) | 61.77 | 72.04 | 67.43 | 60.21 | 54.73 | |||||||||||||||||||||||||||
| Loans-to-deposits | 90.60 | 88.60 | 83.71 | 83.06 | 82.84 | |||||||||||||||||||||||||||
19
(continued)
| At or For the Three Months Ended | ||||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||||||||||||||||||||
| Trust and Asset Management: | ||||||||||||||||||||||||||||||||
| Wealth assets under administration and management (“AUA/M”) | $ | 296,818 | $ | 287,404 | $ | 274,807 | $ | 278,785 | $ | 274,172 | ||||||||||||||||||||||
| Nest Egg AUA/M | 415,478 | 428,558 | 423,563 | 425,921 | 410,497 | |||||||||||||||||||||||||||
| Total AUA/M | 712,296 | 715,962 | 698,370 | 704,706 | 684,669 | |||||||||||||||||||||||||||
| Per Share Data: | ||||||||||||||||||||||||||||||||
| Cash dividends per common share | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.17 | ||||||||||||||||||||||
| Stockholders' equity per common share at end of period | 25.58 | 25.63 | 25.47 | 25.22 | 24.84 | |||||||||||||||||||||||||||
Tangible common equity per common share at end of period (3) | 15.94 | 15.93 | 15.78 | 15.58 | 15.26 | |||||||||||||||||||||||||||
| Common shares outstanding at end of period | 59,388,983 | 59,175,046 | 59,417,266 | 59,834,018 | 60,329,504 | |||||||||||||||||||||||||||
| Preferred shares outstanding at end of period | 57,370 | 57,370 | 57,370 | 57,370 | 57,370 | |||||||||||||||||||||||||||
| Number of full-service customer facilities: | 38 | 47 | 58 | 58 | 62 | |||||||||||||||||||||||||||
| Quarterly Average Balances | ||||||||||||||||||||||||||||||||
| Total securities | $ | 1,846,452 | $ | 1,710,143 | $ | 1,542,630 | $ | 1,501,484 | $ | 1,311,683 | ||||||||||||||||||||||
| Loans receivable, net | 8,796,861 | 8,297,395 | 7,864,720 | 7,788,919 | 7,729,798 | |||||||||||||||||||||||||||
| Total interest-earning assets | 10,732,139 | 10,706,190 | 10,461,147 | 10,282,888 | 10,180,392 | |||||||||||||||||||||||||||
| Total goodwill and core deposit intangible | 518,106 | 519,401 | 520,765 | 522,122 | 523,499 | |||||||||||||||||||||||||||
| Total assets | 11,947,210 | 11,953,610 | 11,738,037 | 11,539,732 | 11,439,501 | |||||||||||||||||||||||||||
| Time deposits | 767,709 | 819,025 | 904,384 | 1,002,086 | 1,221,123 | |||||||||||||||||||||||||||
| Total deposits (including non-interest-bearing deposits) | 9,944,352 | 9,937,607 | 9,699,033 | 9,507,392 | 9,425,609 | |||||||||||||||||||||||||||
| Total borrowed funds | 375,578 | 361,500 | 371,189 | 363,531 | 357,812 | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | 7,918,133 | 7,831,519 | 7,494,099 | 7,408,720 | 7,571,148 | |||||||||||||||||||||||||||
| Non-interest bearing deposits | 2,401,797 | 2,467,588 | 2,576,123 | 2,462,203 | 2,212,273 | |||||||||||||||||||||||||||
| Stockholders' equity | 1,527,839 | 1,519,976 | 1,519,488 | 1,504,035 | 1,495,580 | |||||||||||||||||||||||||||
| Tangible stockholders’ equity | 1,009,733 | 1,000,575 | 998,723 | 981,913 | 972,081 | |||||||||||||||||||||||||||
| Quarterly Yields | ||||||||||||||||||||||||||||||||
| Total securities | 1.86 | % | 1.57 | % | 1.57 | % | 1.62 | % | 2.07 | % | ||||||||||||||||||||||
| Loans receivable, net | 3.79 | 3.89 | 3.98 | 3.97 | 4.09 | |||||||||||||||||||||||||||
| Total interest-earning assets | 3.43 | 3.28 | 3.24 | 3.25 | 3.38 | |||||||||||||||||||||||||||
| Time deposits | 0.77 | 0.84 | 0.94 | 1.03 | 1.21 | |||||||||||||||||||||||||||
| Total cost of deposits (including non-interest-bearing deposits) | 0.16 | 0.20 | 0.22 | 0.27 | 0.37 | |||||||||||||||||||||||||||
| Total borrowed funds | 2.93 | 3.14 | 3.11 | 3.31 | 3.14 | |||||||||||||||||||||||||||
| Total interest-bearing liabilities | 0.35 | 0.40 | 0.44 | 0.50 | 0.60 | |||||||||||||||||||||||||||
| Net interest spread | 3.08 | 2.88 | 2.80 | 2.75 | 2.78 | |||||||||||||||||||||||||||
| Net interest margin | 3.18 | 2.99 | 2.93 | 2.89 | 2.93 | |||||||||||||||||||||||||||
(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) Tangible stockholders’ equity and tangible assets exclude intangible assets related to goodwill and core deposit intangible. Tangible common equity excludes goodwill, core deposit intangible and preferred equity. Refer to “Non-GAAP Reconciliation.”
(4) Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.
20
OceanFirst Financial Corp.
OTHER ITEMS
(dollars in thousands, except per share amounts)
NON-GAAP RECONCILIATION
| For the Three Months Ended | ||||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||||||||||||||||||||
| Core Earnings: | ||||||||||||||||||||||||||||||||
Net income available to common stockholders (GAAP) | $ | 24,755 | $ | 21,653 | $ | 23,163 | $ | 29,551 | $ | 31,693 | ||||||||||||||||||||||
| Add (less) non-recurring and non-core items: | ||||||||||||||||||||||||||||||||
| Merger related expenses | 1,965 | 451 | 225 | 446 | 381 | |||||||||||||||||||||||||||
Branch consolidation expense, net (1) | 402 | 7,286 | 4,014 | 26 | 1,011 | |||||||||||||||||||||||||||
| Net loss (gain) on equity investments | 2,786 | 1,252 | 466 | (576) | (8,287) | |||||||||||||||||||||||||||
| Income tax (benefit) expense on items | (1,141) | (2,144) | (1,138) | 26 | 1,666 | |||||||||||||||||||||||||||
Core earnings (Non-GAAP) | $ | 28,767 | $ | 28,498 | $ | 26,730 | $ | 29,473 | $ | 26,464 | ||||||||||||||||||||||
| Income tax expense | 7,974 | 4,078 | 7,354 | 10,054 | 10,679 | |||||||||||||||||||||||||||
| Credit loss provision (benefit) | 1,851 | (1,573) | (3,179) | (6,460) | (620) | |||||||||||||||||||||||||||
| Income tax (benefit) expense on non-core items | (1,141) | (2,144) | (1,138) | 26 | 1,666 | |||||||||||||||||||||||||||
Core earnings PTPP (Non-GAAP) | $ | 39,733 | $ | 33,147 | $ | 32,043 | $ | 33,041 | $ | 34,857 | ||||||||||||||||||||||
| Core earnings diluted earnings per share | $ | 0.49 | $ | 0.48 | $ | 0.45 | $ | 0.49 | $ | 0.44 | ||||||||||||||||||||||
| Core earnings PTPP diluted earnings per share | $ | 0.67 | $ | 0.56 | $ | 0.54 | $ | 0.55 | $ | 0.58 | ||||||||||||||||||||||
| Core Ratios (Annualized): | ||||||||||||||||||||||||||||||||
| Return on average assets | 0.98 | % | 0.95 | % | 0.90 | % | 1.02 | % | 0.94 | % | ||||||||||||||||||||||
| Return on average tangible stockholders’ equity | 11.55 | 11.30 | 10.62 | 12.04 | 11.04 | |||||||||||||||||||||||||||
| Efficiency ratio | 57.51 | 62.57 | 62.22 | 60.06 | 58.37 | |||||||||||||||||||||||||||
(1) Includes $2.0 million of gains related to the sale of two branches for the three months ended December 31, 2021. | ||||||||||||||||||||||||||||||||
21
(continued)
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||||||||||||||||||||
| Tangible Equity: | ||||||||||||||||||||||||||||||||
| Total stockholders' equity | $ | 1,519,334 | $ | 1,516,553 | $ | 1,513,249 | $ | 1,508,789 | $ | 1,498,719 | ||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Goodwill | 500,319 | 500,319 | 500,319 | 500,319 | 500,319 | |||||||||||||||||||||||||||
| Core deposit intangible | 17,005 | 18,215 | 19,558 | 20,912 | 22,273 | |||||||||||||||||||||||||||
| Tangible stockholders' equity | 1,002,010 | 998,019 | 993,372 | 987,558 | 976,127 | |||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Preferred stock | 55,527 | 55,527 | 55,527 | 55,527 | 55,527 | |||||||||||||||||||||||||||
| Tangible common equity | $ | 946,483 | $ | 942,492 | $ | 937,845 | $ | 932,031 | $ | 920,600 | ||||||||||||||||||||||
| Tangible Assets: | ||||||||||||||||||||||||||||||||
| Total assets | $ | 12,164,945 | $ | 11,739,616 | $ | 11,829,688 | $ | 11,483,901 | $ | 11,577,472 | ||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||
| Goodwill | 500,319 | 500,319 | 500,319 | 500,319 | 500,319 | |||||||||||||||||||||||||||
| Core deposit intangible | 17,005 | 18,215 | 19,558 | 20,912 | 22,273 | |||||||||||||||||||||||||||
| Tangible assets | $ | 11,647,621 | $ | 11,221,082 | $ | 11,309,811 | $ | 10,962,670 | $ | 11,054,880 | ||||||||||||||||||||||
| Tangible stockholders' equity to tangible assets | 8.60 | % | 8.89 | % | 8.78 | % | 9.01 | % | 8.83 | % | ||||||||||||||||||||||
| Tangible common equity to tangible assets | 8.13 | % | 8.40 | % | 8.29 | % | 8.50 | % | 8.33 | % | ||||||||||||||||||||||
22
. . . 1 The 1Q 2022 Investor Presentation should be read in conjunction with the Earnings Release furnished as Exhibit 99.2 to Form 8-K filed with the SEC on April 28, 2022. Exhibit 99.2 OceanFirst Financial Corp. 1Q 2022 Investor Presentation1 April 2022
. . .Legal Disclaimer 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: the impact of the COVID-19 or any other pandemic on our operations and financial results and those of our customers, changes in interest rates, inflation, general economic conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters and 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, competition, demand for financial services in the Company’s market area, accounting principles and guidelines 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, 2021, 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. NON-GAAP FINANCIAL INFORMATION. This presentation contains certain non-GAAP (generally accepted accounting principles) measures. These non-GAAP measures, as calculated by the Company, are not necessarily comparable to similarly titled measures reported by other companies. Additionally, these non-GAAP measures are not measures of financial performance or liquidity under GAAP and should not be considered alternatives to the Company's other financial information determined under GAAP. See reconciliations of certain non-GAAP measures included in the Company’s Earnings Release furnished as Exhibit 99.2 to Form 8-K as filed with the SEC on April 28, 2022. MARKET AND INDUSTRY DATA. This presentation references certain market, industry and demographic data, forecasts and other statistical information. We have obtained this data, forecasts and information from various independent, third-party industry sources and publications. Nothing in the data, forecasts or information used or derived from third party sources should be construed as advice. Some data and other information are also based on our good faith estimates, which are derived from our review of industry publications and surveys and independent sources. We believe that these sources and estimates are reliable but have not independently verified them. Statements as to our market position are based on market data currently available to us. These estimates involve inherent risks and uncertainties and are based on assumptions that are subject to change. 2
. . .Strategic and Operational Focus 3 Outstanding and Proven Growth Efficiency Cost Model Focused on Investment in Technology Efficient Funding Base and Competitive Spreads Strategic Capital Utilization Significant top-line revenue growth driven by robust loan and deposit growth. Optimized branch network by refocusing spend on technology to enhance our customer experience and operational efficiency. NIM continues to trend upward with continued expansion spurred by loan growth, our asset-sensitive balance sheet, and low deposit funding. Significant stockholder capital returns, minimally dilutive acquisitions, maintaining strong regulatory capital thresholds.
. . .First Quarter 2022 Financial Highlights 4 Performance Year-over-Year (1) Core metrics exclude merger related expenses, net branch consolidation expenses, net loss/gain on equity investments, and the income tax effect of these items, (collectively referred to as “non-core” items). TBV (tangible book value) per common share excludes goodwill, core deposit intangible, and preferred equity. Refer to the Non- GAAP reconciliation in the Earnings Release for additional information. (2) PTPP (Pre-tax Pre-provision) excludes the pre-tax “non-core” items along with income tax expense (benefit) and credit loss provision (benefit). Refer to the Non-GAAP reconciliation in the Earnings Release for additional information. (3) NIM (Net Interest Margin) +11.4% +15.5% Core Diluted EPS 1 Core Diluted PTPP per Share 1, 2 +8.7% +14.0% Core Earnings 1 Core PTPP 1, 2 +$486MM +22.5% Gross Loans Annualized Loan Growth +$323MM +13.3% Deposits Annualized Deposit Growth Performance Quarter-over-Quarter +4.5% +25bps TBV per Share 1 NIM 3
. . .Proven Historical Net Interest Income and Loan Growth 5 76,829 120,262 169,218 240,502 255,971 312,951 305,338 84,227 3.25% 2015 2016 3.18% 3.71% 3.46% 2019 3.52% 2017 2018 3.62% 341,587 3.16% 2020 2.92% 2021 Q1-22 Net Interest Margin Annualized Net Interest Income Peer Leading Net Interest Income Growth ($’000) Net Interest Income CAGR 23.8% 1,135 1,187 2,023 2,296 3,492 4,378 4,608 534 570 741 793 1,145 1,055 1,057 145 831 1,704 1,749 2,045 2,321 2,309 2,480 2,688 193 511 9,109 2015 6,214 291 7,756 2016 153 281 2020 188 475 305 2018 408 Q1-22 396 2019 339 471 449 2021 253 503 1,988 3,817 3,975 5,589 261 308 2017 8,623 C&I LoanHome Equity & Consumer Residential Investor CREOwner Occupied CRE Significant Growth in Commercial Loan Portfolio ($’millions) Investor CRE CAGR 42.2% Owner Occupied CRE / C&I CAGR 21.9%
. . .Successful Commercial Loan Growth 6 49% 2015 Q1-22 68% +19% (Commercial % of Loan Portfolio) Commercial Loans by Geography as of Q1-22 53% of Commercial Loans Originated in Philadelphia and NY Emphasis on Commercial Increase of $5.2B in Commercial Loans since 2015 44% 31% 22% 3% New Jersey New York Boston / Baltimore Philadelphia Total: $6.2B
. . .Continued Focus on Growing Core Deposits1 7 Shift Toward Non-Interest Bearing Deposits ($’millions) 1,661 3,542 3,736 4,948 5,393 8,055 8,958 9,169 647 607 866 936 1,373 775 887 202120192015 255 2020 10,056 1,916 2016 2017 9,733 2018 Q1-22 4,3434,189 5,814 6,329 9,428 Non-Core Core (1) Core deposits represent all deposits less time deposits. Organic Deposit Growth Bolstered by Acquisitions ($’millions) 10,056 2019 $2,123 $123 2015 $9,733 $449 20172016 $1,616 2018 $1,894 2020 2021 Q1-22 $1,916 $4,187 $4,343 $5,814 $6,329 $9,428 Acquired Deposits Organic Deposits 58% 42% Commercial Consumer Total: $10.1B Average Cost of Deposits Q1-22 Int. Bearing Checking 0.20% Money Market 0.16% Savings 0.03% Time Deposits 0.77% Total (incl. non-int bearing) 0.16%
. . . Core Efficiency Ratio1 Expense Discipline and Focused Investment 8 Core Non-Interest Expense1 ($’000) 40,838 40,752 43,222 43,126 42,802 9,453 10,446 11,212 13,971 12,326 Q1-21 50,291 Q3-21Q2-21 Q4-21 54,434 Q1-22 51,198 57,097 55,128 Technology Expense Other Core Non-Int Exp 1.87% Q2-21 58.37% Q1-21 60.06% 1.78% 62.22% Q3-21 62.57% Q4-21 57.51% Q1-22 1.78% 1.84% 1.90% Core Efficiency Ratio Core Non-Interest Expense to Average Assets (Annualized) (1) Core metrics exclude merger related expenses, net branch consolidation expenses, and net loss/gain on equity investments. Refer to the Non-GAAP reconciliation in the Earnings Release for additional information. Q1-22 expenses have moderated from the elevated levels in Q4-21 that were driven by (i) core conversion; (ii) a year-end adjustment to the incentive plan; and (iii) expenses associated with the contribution of additional shares to the ESOP. The branch optimization strategy has also contributed to the reduced level of expenses in Q1-22. Technology expense, which represents data processing, communications, and digitally focused departments, accounted for 22.4% of total core non- interest expense in Q1-22. For the full year 2021, these costs accounted for 21.1% of core non-interest expense.
. . .Operational Efficiency 9 Deposits per Branch ($’millions) (52) bps2.39% 1.87% 2015 Q1-22 Core Non-interest Expense 1 to Total Avg. Assets (Annualized) 71 69 94 99 113 152 207 265 20162015 2018 20192017 2020 2021 Q1-22 3.7x Operating Efficiency ($’millions) 7 7 8 9 9 12 13 13 96 85 118 127 147 185 250 320 Q1-2220192015 2016 2017 20212018 2020 Assets per FTE Assets per Branch Branch optimization fully completed by end of Q1-22 (1) Core metrics exclude merger related expenses, net branch consolidation expenses, and net loss/gain on equity investments. Refer to the Non-GAAP reconciliation in the Earnings Release for additional information.
. . .Growth in Net Interest Margin 10 Average loan growth since 3Q-21 was ~$460MM and the loan pipeline of $515MM remains strong at March 31, 2022. In addition, end of period loan balances are $269MM higher than average balances for the quarter. Loan-to-deposit position provides funding base for future loan growth. Asset-sensitive balance sheet well-positioned for rising interest rates. Competitive market environment as peers compete on rate for quality credit. (1) Core NIM excludes purchase accounting and prepayment fee income. Refer to the Earnings Release for additional information. Core NIM1 vs NIM Q1-22 NIM Bridge Headwinds Tailwinds 0.17% Q4-21 NIM 2.99% Q1-22 NIMReduction in excess liquidity (0.09)% Impact of prepayment fees, PPP fees, and purchase accounting accretion 0.11% Rate environment and other, net 3.18% Q2-21 2.73% 2.93% 2.75% Q1-21 2.89% 2.93% 2.75% Q3-21 2.99% 2.81% Q4-21 3.18% 3.06% Q1-22 NIM Core NIM
. . .Generating Consistent and Attractive Returns 11 Book Value and Tangible Book Value per Common Share1 Core ROAA and ROTE1 • Increase in tangible book value per common share versus linked quarter when many banks experienced a decline. In addition, tangible book value per common share increased by 4.5% (or $0.68 per share) versus Q1-21. • Repurchased 100,444 shares in Q1-22; 3.2 million shares remain available for repurchase. Capital Management ($’millions) 15.26 15.58 15.78 15.93 15.94 25.22 25.47 25.63 25.58 Q1-22Q2-21 Q3-21 24.84 Q1-21 Q4-21 Book Value per Share Tangible Book Value per Common Share 0.98% 12.04% Q3-21Q1-21 11.04% 1.02%0.94% Q2-21 10.62% 0.90% 11.30% 0.95% Q4-21 Q1-22 11.55% Core ROTE Core ROAA 10 10 10 10 10 10 11 10 5 2 Q3-21 8.83% Q2-21Q1-21 8.78% 9.01% Q1-22 8.89% 8.60% Q4-21 Tangible Stockholders Equity to Tangible Assets1 Share Repurchases QTD Cash Dividend QTD (1) Core metrics exclude merger related expenses, net branch consolidation expenses, net loss/gain on equity investments, and the income tax effect of these items. Tangible book value and tangible assets exclude goodwill, core deposit intangible, and preferred equity. Refer to the Non- GAAP reconciliation in the Earnings Release for additional information.
. . .Business Model Strength Driving Significant Capital Return 12 $0.49 $1.01 $1.55 $2.15 $2.77 $3.45 $4.13 $4.81 $4.98 $0.55 $0.94 $1.04 $1.09 $1.39 $1.97 $2.25 $2.86 $2.89 $15.93 2017 $12.33 20152013 $13.67 $15.62 $12.94 2016 $13.58 $14.26 2018 $23.81 2019 $14.98 2020 $12.91 $15.94 $12.33 $13.95 $15.53 2014 $16.82 $18.42 $20.55 $21.36 $23.60 2021 $15.13 Cumulative Share Repurchase/Share Cumulative Dividends/Share TBVPCS The growth in TBV per common share (TBVPCS) is attributed to: Minimally dilutive and strategic acquisitions in critical new markets. Stock buybacks Repurchased 100,444 shares in Q1-22 with 3.2 million available for repurchase. Stable & competitive dividend 101st consecutive quarter Historical Payout Ratio of 30% to 40%. (1) Tangible book value per common share excludes goodwill, core deposit intangible, and preferred equity. Refer to the Non-GAAP reconciliation in the Earnings Release for additional information. Q1-22 Growth Since 2013 Tangible Book Value per Common Share 1 29.3% Total Capital Return per Common Share 93.1%
. . . I N V E S T O R P R E S E N T A T I O N 13 Appendix
. . .OCFC’s Strong History of Credit Discipline 14 Global Financial Crisis Net Charge Offs (NCOs) / Avg. Loans (%) Hurricane Sandy (1) Source: S&P Global (2) Proxy and US Bank industry reporting is on a one quarter lag (3) Peer group disclosed in OCFC’s DEF-14A issued 4/20/21. This excludes UBNK due to the sale to People’s United and BPFH due to merger with SVB Financial Group. 1.00% -0.50 2.50% 1.50% 0.00% 2.00% 0.50% 3.00% 20102007 20112008 2009 2012 2013 2014 2015 20202016 2017 2018 2019 2021 OCFCUS Commercial Banks $10-50 bn 1, 2 Peer Group 1, 2, 3 OCFC’s 8 bps average NCO over the last four years is 77% lower than the 35 bps average NCO for US Commercial Banks $10-50 billion in size in the same period.
. . .Conservative Credit Risk Profile 15 2016 0.08% 0.01% 0.12% 0.05% 0.36% 0.05% 0.12% 0.21% 0.01% 0.11% 2017 0.03% 0.22% 0.00% 0.10% 0.05% 0.13% 2018 0.00% 0.04% 0.12% 0.12% 2019 0.07% 0.02% 0.30% 0.03% 0.11% 2020 2021 0.03% 0.02% 0.08% 0.35% 0.52% 0.31% 0.29% 0.47% 0.02% Q1-22 0.25% ResidentialCommercial & Industrial Commercial Real Estate Consumer (1) PCD loans are not included in the above metrics. Refer to Asset Quality section in the Earnings Release for additional information. (2) Source: S&P Global. (3) Peer group reporting is on a one quarter lag. Peer group disclosed in OCFC’s DEF-14A issued 4/20/21. This excludes UBNK due to the sale to People’s United and BPFH due to merger with SVB Financial Group. Q1-22 0.22% 0.22% 2018 0.45% 2016 0.54% 2017 0.25% 0.22% 2019 0.32% 2020 2021 Q4-21 Peer Group Average (0.47%)2,3 NPA/Assets Continued Focus on Credit Risk1Non-performing Loans by Type as % of Loans1
. . .Quarterly Credit Trends (1 of 2) 16 Loan Allowance for Credit Losses (ACL) Plus PCD & General Credit Marks / Total Loans Net Charge-offs (NCOs) / (Recoveries) and Credit Loss Expense (Benefit) ($’000) 0.61% 0.26% 0.33% 0.76% Q1-21 0.30% 0.69% Q2-21 Q3-21 0.22% 0.57% Q4-21 0.18% 0.56% Q1-22 1.09% 0.99% 0.87% 0.79% 0.74% PCD & General Credit Marks ACL (620) (19) (92) 0.01% Q2-21 (280) 0.00% Q1-21 (386) 0.00% 224 Q3-21 0.00% Q4-21 0.00% Q1-22 (6,460) (3,179) (1,573) 1,851 Credit Loss Expense / (Benefit) Net Charge-offs / (Recoveries) NCOs / Average loans
. . . Stabilizing asset quality trends align with improving economic outlook. Quarterly Credit Trends (2 of 2) 17 Non-Performing Loans and Assets ($’000)1 Special Mention and Substandard Loans ($’000) Note: Of the $91.6 million in Special Mention loans and $113.9 million of Substandard loans, $90.2 million (or 98.4%) and $99.5 million (or 87.4%) are current on payments, respectively. 106 0.30% 106 0.43% Q1-21 0.20% 0.41% 0.28% Q2-21 0.22% 0.29% 106 Q3-21 106 0.16% 106 Q4-21 0.25% 0.19% Q1-22 Non-performing loans to total loans Non-performing assets to total assets Non-performing loans OREO 34,128 31,680 23,344 18,948 23,180 188,981 182,926 158,469 148,451 120,045 150,221 129,955 98,687 91,607 91,611 Q1-21 Q3-21Q2-21 Q4-21 Q1-22 Special Mention Substandard (1) PCD loans are not included in these metrics. Refer to Asset Quality section in the Earnings Release for additional information.
. . .Asset Growth Supplemented by Strategic M&A 18 ($ in millions) Target Closing Date Transaction Value Total Assets Colonial American Bank July 31, 2015 ~$12 million $142 million Cape Bancorp May 2, 2016 ~$196 million $1,518 million Ocean Shore Holding Co. November 30, 2016 ~$146 million $1,097 million Sun Bancorp, Inc. January 31, 2018 ~$475 million $2,044 million Capital Bank of New Jersey January 31, 2019 ~$77 million $495 million Two River Bancorp January 1, 2020 ~$197 million $1,109 million Country Bank Holding Company Inc. January 1, 2020 ~$113 million $798 million Partners Bancorp2 TBD ~$186 million $1,640 million Weighted average1: Price/Tangible Book Value 158%; Core Deposit Premium 9.0% 2,615 20192016 $495 5,167 $2,593 2018 $142 $1,907 $5,416 2015 2017 $2,044 2020 2021 Q1-22 $7,516 $8,246 $11,448 $11,740 12,165 Acquired Assets Organic Assets (1) At time of announcement. (2) Partners Bancorp acquisition is pending.
. . .Northeast and Mid-Atlantic Expansion Opportunities1 19 • New Jersey is an attractive market. • Statewide total population of 9.3 million. • Most densely populated state. • 11th most populous state. • Median household income of $82,500. • Significant opportunities for acquisitions to build customer base. • Support expansion in Pennsylvania, Metropolitan New York, Boston, Baltimore, and Washington D.C. Northeast U.S., DE, MD + D.C. Metro provides access to ~20% of the U.S. population (1) Source: U.S. Census Bureau VA PA NY MA CT RI MD DC DE NJ NH ME VT New Jersey Region Greater Philadelphia Region New York Region Boston Region Baltimore / D.C. Region
. . .Experienced Management Team with Banking Expertise 20 Substantial insider ownership of 11%2, including Directors, Executive Officers, ESOP and OceanFirst Foundation. Executive Title Years Experience1 Select Experience Christopher D. Maher Chairman & Chief Executive Officer 9 • Director of the Federal Reserve Bank of Philadelphia • Former President and CEO of Patriot National Bancorp • Former EVP at Dime Community Bancshares, Inc. Joseph J. Lebel III President & Chief Operating Officer 16 • Wachovia Bank • Member of the Board for the New Jersey Chamber of Commerce Michael J. Fitzpatrick Executive Vice President & Chief Financial Officer 30 • KPMG Steven J. Tsimbinos Executive Vice President, General Counsel & Corporate Secretary 12 • Thacher Proffitt & Wood • Lowenstein Sandler PC Grace M. Vallacchi Executive Vice President & Chief Risk Officer 5 • Office of the Comptroller of the Currency • First Fidelity Michele Estep Executive Vice President & Chief Administrative Officer 14 • Sun National Bancorp • Key Bank Karthik Sridharan Executive Vice President & Chief Information Officer 3 • Citigroup • JP Morgan Chase • Bank of America (1) Represents years of experience at OceanFirst and includes years at acquired banks. (2) As of 12/31/21.
. . .Interest Rate Sensitivity (1 of 2) 21 OceanFirst Bank balance sheet is highly asset-sensitive. A measurable upward change in the rate environment could have a significant impact to our performance going forward. Economic Value of Equity (EVE)1 - % ChangeEarnings at Risk (EAR)1 - % Change -8 -6 -4 -2 0 2 4 6 +300 bps +100 bps+200 bps Base -100 bps 3.7%4.7% 5.0% -6.7% OceanFirst % Change -6 -4 -2 0 2 4 6 8 +100 bps 7.6% +200 bps+300 bps 5.3% 2.7% -4.2% Base -100 bps OceanFirst % Change Impact to Net Interest Income1 +$26.7MM +$18.4MM +$9.5MM -$14.7MM (1) Refer to the Quantitative and Qualitative Disclosures About Market Risk to be filed with the Form 10-Q for additional details.
. . .Interest Rate Sensitivity (2 of 2) 22 Rate Characteristics 78% 92% 55% 52% 66% 31% 91% 22% 45% 48% 34% 69% 9%8% Securities Consumer Loans BorrowingsTotal Assets (Weighted Avg) Mortgage Loans Commercial Loans (CRE & C&I) Deposits Core DepositsAdjustable/Floating Fixed Note: Data as of 3/31/22 3.3 4.3 3.0 2.5 3.1 1.1 Securities Total Assets (Weighted Avg) Commercial LoansMortgage Loans Consumer Loans Time Deposits Duration (Years) Asset and Liability Duration (Years)