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OceanFirst Financial Corp. Announces Quarterly and Annual Financial Results

RED BANK, N.J., Jan. 27, 2020 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:”OCFC”), (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), today announced that net income was $23.5 million, or $0.47 per diluted share, for the quarter ended December 31, 2019, as compared to $26.7 million, or $0.55 per diluted share, for the corresponding prior year quarter. For the year ended December 31, 2019, net income was $88.6 million, or $1.75 per diluted share, as compared to $71.9 million, or $1.51 per diluted share, for the corresponding prior year period.

The results of operations for the quarter ended December 31, 2019 included merger related expenses, branch consolidation expenses, non-recurring professional fees, and reduction in income tax expense from the revaluation of state deferred tax assets as a result of a change in the New Jersey tax code, which decreased net income, net of tax benefit, by $2.3 million. The results of operations for the year ended December 31, 2019 included merger related expenses, branch consolidation expenses, non-recurring professional fees, compensation expense due to the retirement of an executive officer, and reduction in income tax expense from the revaluation of state deferred tax assets as a result of a change in the New Jersey tax code, which decreased net income, net of tax benefit, by $16.3 million. Excluding these items, core earnings for the quarter and year ended December 31, 2019 were $25.7 million, or $0.51 per diluted share, and $104.8 million, or $2.07 per diluted share, respectively.  (Please refer to the Non-GAAP Reconciliation table at the end of this document for further details).

Highlights for the quarter are described below:

  • Loan and deposit growth were both strong. Record loan originations of $504.4 million provided total loan growth of $124.5 million while deposits increased $107.9 million. The Company has a solid loan pipeline of $327.7 million at December 31, 2019, with strong contributions from the New York and Philadelphia markets.
  • On January 1, 2020, the Company completed its acquisitions of Two River Bancorp (“Two River”) and Country Bank Holding Company, Inc. (“Country Bank”). Two River added $1.1 billion to assets, $938 million to loans, and $942 million to deposits. Country Bank added $798 million to assets, $616 million to loans, and $654 million to deposits.
  • As a result of the Two River and Country Bank acquisitions on January 1, 2020, consolidated assets were $10.2 billion, loans were $7.8 billion, and deposits were $7.9 billion.
  • The Company anticipates full integration of operations and the elimination of eight duplicate branches in Two River’s market areas in May 2020, resulting in cost savings in future periods, and full integration of operations of Country Bank later in the year. The Bank also expects to consolidate an additional five branches independent of the acquisitions; bringing the total number of branches consolidated to 53 over the past four years.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “The Company delivered strong results for the year with continued growth in core earnings per share and the achievement of record annual core earnings of $104.8 million. With a solid loan pipeline, our prospects for continued organic loan growth in 2020 are bright.” Mr. Maher added, “With the addition of Two River and Country Bank on January 1, 2020, we welcome their stockholders, employees, and customers into the growing OceanFirst family.”

The Company also announced that the Company’s Board of Directors declared its ninety-second consecutive quarterly cash dividend on common stock.  The dividend, for the quarter ended December 31, 2019, of $0.17 per share will be paid on February 19, 2020 to stockholders of record on February 5, 2020.

Results of Operations

On January 31, 2018, the Company completed its acquisition of Sun Bancorp Inc. (“Sun”) and its results of operations are included in the consolidated results for the quarter and year ended December 31, 2019, but are excluded from the results of operations for the period from January 1, 2018 to January 31, 2018.

On January 31, 2019, the Company completed its acquisition of Capital Bank of New Jersey (“Capital Bank”) and its results of operations from February 1, 2019 through December 31, 2019 are included in the consolidated results for the quarter and year ended December 31, 2019, but are excluded from the results of operations for the corresponding prior year periods.

Net income for the quarter ended December 31, 2019, was $23.5 million, or $0.47 per diluted share, as compared to $26.7 million, or $0.55 per diluted share, for the corresponding prior year period. Net income for the year ended December 31, 2019, was $88.6 million, or $1.75 per diluted share, as compared to $71.9 million, or $1.51 per diluted share, for the corresponding prior year period.  Net income for the quarter ended December 31, 2019 included merger related expenses, branch consolidation expenses, non-recurring professional fees, and reduction in income tax expense from the revaluation of state deferred tax assets as a result of a change in the New Jersey tax code, which decreased net income, net of tax benefit, by $2.3 million. Net income for the year ended December 31, 2019 included merger related expenses, branch consolidation expenses, non-recurring professional fees, compensation expense due to the retirement of an executive officer, and reduction in income tax expense from the revaluation of state deferred tax assets as a result of a change in the New Jersey tax code, which decreased net income, net of tax benefit, by $16.3 million. Net income for the quarter and year ended December 31, 2018 included merger related expenses, branch consolidation expenses, and reduction of income tax expense from the revaluation of deferred tax assets as a result of the Tax Cuts and Jobs Act (“Tax Reform”), which increased net income, net of tax benefit, by $696,000 for the quarter and decreased net income, net of tax benefit, by $22.2 million for the year. Excluding these items, net income for the quarter ended December 31, 2019 decreased over the prior year period, while net income for the year ended December 31, 2019 increased over the prior year period.

Net interest income for the quarter and year ended December 31, 2019 increased to $63.4 million and $256.0 million, respectively, as compared to $61.8 million and $240.5 million, respectively, for the same prior year periods, reflecting an increase in interest-earning assets.  Average interest-earning assets increased by $601.0 million and $595.9 million for the quarter and year ended December 31, 2019, respectively, as compared to the same prior year periods. The averages for the quarter and year ended December 31, 2019, were favorably impacted by $332.1 million and $341.9 million, respectively, of interest-earning assets acquired from Capital Bank. The remaining increase in average interest-earning assets was due to organic growth. Average loans receivable, net, increased by $639.1 million and $612.5 million for the quarter and year ended December 31, 2019, respectively, as compared to the same prior year periods. The increases attributable to the acquisition of Capital Bank were $248.4 million and $250.3 million, respectively. The remaining increase in average loans receivable, net, of $390.7 million and $362.2 million, respectively, was due to organic loan growth. The net interest margin for the quarter and year ended December 31, 2019 decreased to 3.48% and 3.62%, respectively, from 3.71% for the same prior year periods. For the quarter and the year ended December 31, 2019, the cost of average interest-bearing liabilities increased to 0.98% and 0.96%, respectively, from 0.80% and 0.70%, respectively, in the corresponding prior year periods. The total cost of deposits (including non-interest bearing deposits) was 0.64% and 0.61% for the quarter and year ended December 31, 2019, respectively, as compared to 0.48% and 0.39%, respectively, in the same prior year periods.

Net interest income for the quarter ended December 31, 2019, decreased by $38,000, as compared to the prior linked quarter. The net interest margin decreased to 3.48% for the quarter ended December 31, 2019, as compared to 3.55% for the prior linked quarter, while average interest-earning assets increased by $125.9 million. The total cost of deposits (including non-interest bearing deposits) was 0.64% for the quarter ended December 31, 2019, as compared to 0.62% for the quarter ended September 30, 2019.

For the quarter and year ended December 31, 2019, the provision for loan losses was $355,000 and $1.6 million, respectively, as compared to $506,000 and $3.5 million, respectively, for the corresponding prior year periods, and $305,000 in the prior linked quarter.  Net loan charge-offs were $139,000 and $1.4 million for the quarter and year ended December 31, 2019, respectively, as compared to net loan charge-offs of $750,000 and $2.6 million, respectively, in the corresponding prior year periods, and net loan recoveries of $196,000 in the prior linked quarter. Non-performing loans totaled $17.8 million at December 31, 2019, as compared to $17.5 million at September 30, 2019, and $17.4 million at December 31, 2018.

For the quarter and year ended December 31, 2019, other income increased to $11.2 million and $42.2 million, respectively, as compared to $8.7 million and $34.8 million, respectively, for the corresponding prior year periods. The increases were partly due to the impact of the Capital Bank acquisition, which added $465,000 and $1.5 million to other income for the quarter and year ended December 31, 2019, respectively, as compared to the same prior year periods. Excluding the Capital Bank acquisition, the increase in other income for the quarter ended December 31, 2019 was primarily due to an increase in derivative fee income of $2.1 million, as compared to the corresponding prior year period. Excluding the Capital Bank acquisition, the increase in other income for the year ended December 31, 2019 was primarily due to an increase in derivative fee income of $4.6 million and a decrease in the loss from real estate operations of $3.5 million, partially offset by decreases in fees and service charges of $1.3 million, rental income of $810,000 received primarily for January and February 2018 on the Company’s executive office, and decrease in the gain on sales of loans of $653,000, mostly related to the sale of one non-performing commercial loan relationship during the first quarter of 2018.

Operating expenses increased to $47.6 million and $189.1 million for the quarter and year ended December 31, 2019, respectively, as compared to $39.1 million and $186.3 million, respectively, in the same prior year periods. Operating expenses for the quarter ended December 31, 2019 included $5.3 million of merger related expenses, branch consolidation expenses, and non-recurring professional fees, while operating expenses for the year ended December 31, 2019 included $22.8 million of merger related expenses, branch consolidation expenses, non-recurring professional fees, and compensation expense due to the retirement of an executive officer. This compares to $1.3 million and $30.1 million, respectively, of merger related and branch consolidation expenses, in the same prior year periods. Excluding the impact of merger related expenses, branch consolidation expenses, non-recurring professional fees, and compensation expense due to the retirement of an executive officer, the change in operating expenses over the prior year was due to the Capital Bank acquisition, which added $1.4 million and $6.3 million for the quarter and year ended December 31, 2019, respectively. Excluding the Capital Bank acquisition, the remaining increase in operating expenses for the quarter ended December 31, 2019 over the prior year period was primarily due to increases in compensation and employee benefits expense of $2.6 million, professional fees of $1.2 million, partially offset by decrease in Federal Deposit Insurance Company (“FDIC”) expense of $559,000, primarily as a result of assessment credits awarded by the FDIC. Excluding the Capital Bank acquisition, the remaining increase in operating expenses, for the year ended December 31, 2019 from the prior year period, was primarily due to increases in professional fees of $2.3 million, check card processing of $1.6 million, compensation and employee benefits expense of $1.3 million, and data processing of $1.0 million, partially offset by decreases in FDIC expense of $1.6 million, and occupancy of $1.1 million.

For the quarter ended December 31, 2019, operating expenses, excluding merger related expenses, branch consolidation expenses, and non-recurring professional fees, increased $2.2 million, as compared to the prior linked quarter. The increase was primarily due to increases in compensation and employee benefits expense of $1.2 million, data processing of $680,000, and professional fees of $538,000.

For the quarter ended December 31, 2019, operating expenses included $1.3 million of non-recurring professional fees associated with the restructuring of the Company’s retail online and mobile banking vendor contract. The restructured contractual terms are expected to result in an annual cost savings of 48%, or approximately $1.6 million annually, beginning in January 2020, and the earnback on the contract restructuring charge is anticipated to occur over the next ten months.

The provision for income taxes was $3.2 million and $18.8 million for the quarter and year ended December 31, 2019, respectively, as compared to $4.3 million and $13.6 million, respectively, for the same prior year periods. The effective tax rate was 11.9% and 17.5% for the quarter and year ended December 31, 2019, respectively, as compared to 13.8% and 15.9%, respectively, for the same prior year periods. The lower effective tax rate in the current year periods is primarily due to reduction in income tax expense of $2.2 million from the revaluation of state deferred tax assets as a result of a change in the New Jersey tax code. Excluding the impact of the New Jersey tax code change, the effective tax rate for the quarter and year ended December 31, 2019 was  20.2% and 19.6%. The lower effective tax rate in the prior year periods was primarily due to Tax Reform which required the Company to revalue its deferred tax asset, resulting in a tax benefit of $1.9 million, for the quarter and year ended December 31, 2018. The remaining variance is due to larger tax benefits from employee stock option exercises in the prior year periods.

Financial Condition

Total assets increased by $730.0 million to $8.246 billion at December 31, 2019, from $7.516 billion at December 31, 2018, primarily as a result of the acquisition of Capital Bank, which added $494.7 million to total assets. Loans receivable, net, increased by $628.5 million, to $6.208 billion at December 31, 2019, from $5.579 billion at December 31, 2018, primarily due to acquired loans of $307.8 million. As part of the acquisition of Capital Bank, the Company’s goodwill balance increased to $374.6 million at December 31, 2019, from $338.4 million at December 31, 2018. Other assets increased by $95.4 million to $119.5 million at December 31, 2019, from $24.1 million at December 31, 2018, primarily due to consideration held in escrow in advance of the acquisition closings on January 1, 2020, of $47.0 million. The core deposit intangible decreased to $15.6 million at December 31, 2019, from $17.0 million at December 31, 2018 due to amortization of core deposit intangible, partially offset by the increase from the acquisition of Capital Bank.

Deposits increased by $514.2 million, to $6.329 billion at December 31, 2019, from $5.815 billion at December 31, 2018, primarily due to acquired deposits of $449.0 million. The loan-to-deposit ratio at December 31, 2019 was 98.1%, as compared to 96.0% at December 31, 2018.

Stockholders’ equity increased to $1.153 billion at December 31, 2019, as compared to $1.039 billion at December 31, 2018. The acquisition of Capital Bank added $76.4 million to stockholders’ equity. On December 18, 2019, the Company announced the authorization of the Board of Directors of the 2019 Stock Repurchase Program to repurchase approximately 5% of the Company’s outstanding common stock up to an additional 2.5 million shares. This amount is in addition to the remaining 167,996 shares available under the existing 2017 Repurchase Program. During the year ended December 31, 2019, the Company repurchased 1.1 million shares under these repurchase programs at a weighted average cost of $23.12. Tangible stockholders’ equity per common share increased to $15.13 at December 31, 2019, as compared to $14.26 at December 31, 2018.

Asset Quality

The Company’s non-performing loans increased to $17.8 million at December 31, 2019, as compared to $17.4 million at December 31, 2018. Non-performing loans do not include $13.3 million of purchased credit-impaired (“PCI”) loans acquired in the Capital Bank, Sun, Ocean Shore Holding Co. (“Ocean Shore”), Cape Bancorp, Inc. (“Cape”), and Colonial American Bank (“Colonial American”) acquisitions (“Acquisition Transactions”). The Company’s other real estate owned totaled $264,000 at December 31, 2019, as compared to $1.4 million at December 31, 2018.

At December 31, 2019, the Company’s allowance for loan losses was 0.27% of total loans, a decrease from 0.30% at December 31, 2018. These ratios exclude existing fair value credit marks of $30.3 million at December 31, 2019 on loans acquired from the Acquisition Transactions, and $31.6 million at December 31, 2018 on loans acquired from Sun, Ocean Shore, Cape and Colonial American. These loans were acquired at fair value with no related allowance for loan losses. The allowance for loan losses as a percent of total non-performing loans was 94.41% at December 31, 2019, as compared to 95.19% at December 31, 2018.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with generally accepted accounting principles in the United States (“GAAP”).  The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding merger related expenses, branch consolidation expenses, non-recurring professional fees, compensation expense due to the retirement of an executive officer, the impact to income tax expense related to the revaluation of deferred tax assets as required under Tax Reform, and reduction in income tax expense from the revaluation of state deferred tax assets as a result of a change in the New Jersey tax code, 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.  Please refer to Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.

Annual Meeting

The Company also announced today that its Annual Meeting of Stockholders will be held on Wednesday, May 20, 2020 at 9:00 a.m. Eastern time, at the OceanFirst Bank Administrative Offices located at 110 West Front Street, Red Bank, New Jersey. The record date for stockholders to vote at the Annual Meeting is April 3, 2020.

Conference Call

As previously announced, the Company will host an earnings conference call on Tuesday, January 28, 2020 at 11:00 a.m. Eastern Time.  The direct dial number for the call is (888) 338-7143.  For those unable to participate in the conference call, a replay will be available.  To access the replay, dial (877) 344-7529, Replay Conference Number 10137684 from one hour after the end of the call until April 28, 2020.  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 $10.2 billion regional bank operating throughout New Jersey, metropolitan Philadelphia and metropolitan New York City. OceanFirst Bank delivers commercial and residential financing solutions, wealth management and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey.

OceanFirst Financial Corp.’s press releases are available by visiting us at 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, 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 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, 2018, 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)

    December 31, 2019   September 30, 2019   December 31, 2018
    (Unaudited)   (Unaudited)    
Assets            
Cash and due from banks   $ 120,544     $ 140,901     $ 120,792  
Debt securities available-for-sale, at estimated fair value   150,960     127,308     100,717  
Debt securities held-to-maturity, net (estimated fair value of $777,290 at December 31, 2019, $826,964 at September 30, 2019, and $832,815 at December 31, 2018)   768,873     819,253     846,810  
Equity investments, at estimated fair value   10,136     10,145     9,655  
Restricted equity investments, at cost   62,356     62,095     56,784  
Loans receivable, net   6,207,680     6,081,938     5,579,222  
Loans held-for-sale       110      
Interest and dividends receivable   21,674     21,739     19,689  
Other real estate owned   264     294     1,381  
Premises and equipment, net   102,691     103,721     111,209  
Bank Owned Life Insurance   237,411     236,190     222,482  
Deferred tax asset   50,067     66,148     63,377  
Assets held for sale   3,785     5,156     4,522  
Other assets   119,465     69,033     24,101  
Core deposit intangible   15,607     16,605     16,971  
Goodwill   374,632     374,537     338,442  
Total assets   $ 8,246,145     $ 8,135,173     $ 7,516,154  
Liabilities and Stockholders’ Equity            
Deposits   $ 6,328,777     $ 6,220,855     $ 5,814,569  
Federal Home Loan Bank advances   519,260     512,149     449,383  
Securities sold under agreements to repurchase with retail customers   71,739     65,067     61,760  
Other borrowings   96,801     96,667     99,530  
Advances by borrowers for taxes and insurance   13,884     16,230     14,066  
Other liabilities   62,565     79,677     37,488  
Total liabilities   7,093,026     6,990,645     6,476,796  
Total stockholders’ equity   1,153,119     1,144,528     1,039,358  
Total liabilities and stockholders’ equity   $ 8,246,145     $ 8,135,173     $ 7,516,154  
                         


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

    For the Three Months Ended,   For the Year Ended
    December 31,   September 30,   December 31,   December 31,
    2019   2019   2018   2019   2018
    |--------------------- (Unaudited) ---------------------|   (Unaudited)    
Interest income:                    
Loans   $ 70,298     $ 69,715     $ 65,320     $ 279,931     $ 249,549  
Mortgage-backed securities   3,552     3,761     3,947     15,300     16,034  
Debt securities, equity investments and other   3,225     3,411     3,091     13,563     11,071  
Total interest income   77,075     76,887     72,358     308,794     276,654  
Interest expense:                    
Deposits   10,214     9,817     7,068     38,432     22,578  
Borrowed funds   3,507     3,678     3,449     14,391     13,574  
Total interest expense   13,721     13,495     10,517     52,823     36,152  
Net interest income   63,354     63,392     61,841     255,971     240,502  
Provision for loan losses   355     305     506     1,636     3,490  
Net interest income after provision for loan losses   62,999     63,087     61,335     254,335     237,012  
Other income:                    
Bankcard services revenue   2,641     2,658     2,511     10,263     9,228  
Trust and asset management revenue   478     557     524     2,102     2,245  
Fees and services charges   4,710     4,679     4,910     18,500     19,461  
Net gain on sales of loans   1         14     16     668  
Net unrealized (loss) gain on equity investments   (63 )   89     83     267     (199 )
Net loss from other real estate operations   (95 )   (108 )   (837 )   (330 )   (3,812 )
Income from Bank Owned Life Insurance   1,375     1,431     1,292     5,420     5,105  
Other   2,184     2,237     251     5,927     2,131  
Total other income   11,231     11,543     8,748     42,165     34,827  
Operating expenses:                    
Compensation and employee benefits   22,518     21,276     18,946     89,912     83,135  
Occupancy   4,071     4,159     4,333     17,159     17,915  
Equipment   1,775     2,062     2,315     7,719     8,319  
Marketing   840     562     940     3,469     3,415  
Federal deposit insurance and regulatory assessments   296     297     856     2,227     3,713  
Data processing   4,078     3,398     3,318     14,814     13,286  
Check card processing   1,557     1,639     1,305     5,956     4,209  
Professional fees   3,641     2,580     1,217     9,338     4,963  
Other operating expense   3,815     3,902     3,581     14,968     13,509  
Amortization of core deposit intangible   998     1,009     983     4,027     3,811  
Branch consolidation expense   268     1,696     240     9,050     3,151  
Merger related expenses   3,742     777     1,048     10,503     26,911  
Total operating expenses   47,599     43,357     39,082     189,142     186,337  
Income before provision for income taxes   26,631     31,273     31,001     107,358     85,502  
Provision for income taxes   3,181     6,302     4,269     18,784     13,570  
Net income   $ 23,450     $ 24,971     $ 26,732     $ 88,574     $ 71,932  
Basic earnings per share   $ 0.47     $ 0.50     $ 0.56     $ 1.77     $ 1.54  
Diluted earnings per share   $ 0.47     $ 0.49     $ 0.55     $ 1.75     $ 1.51  
Average basic shares outstanding   49,890     50,491     47,709     50,166     46,773  
Average diluted shares outstanding   50,450     50,966     48,411     50,746     47,657  
                               


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

LOANS RECEIVABLE     At
      December 31,
 2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
Commercial:                     
Commercial and industrial    $ 396,434     $ 406,580     $ 392,336     $ 383,686     $ 304,996  
Commercial real estate - owner-occupied   792,653     787,752     771,640     802,229     740,893  
Commercial real estate - investor   2,296,410     2,232,159     2,143,093     2,161,451     2,023,131  
Total commercial    3,485,497     3,426,491     3,307,069     3,347,366     3,069,020  
Consumer:                     
Residential real estate   2,321,157     2,234,361     2,193,829     2,162,668     2,044,523  
Home equity loans and lines   318,576     330,446     341,972     351,303     353,609  
Other consumer   89,422     98,835     109,015     116,838     121,561  
Total consumer   2,729,155     2,663,642     2,644,816     2,630,809     2,519,693  
Total loans   6,214,652     6,090,133     5,951,885     5,978,175     5,588,713  
Deferred origination costs, net   9,880     8,441     8,180     7,360     7,086  
Allowance for loan losses   (16,852 )   (16,636 )   (16,135 )   (16,705 )   (16,577 )
Loans receivable, net   $ 6,207,680     $ 6,081,938     $ 5,943,930     $ 5,968,830     $ 5,579,222  
Mortgage loans serviced for others   $ 50,042     $ 54,457     $ 90,882     $ 92,274     $ 95,100  
  At
December 31,
2019
Average Yield
                   
Loan pipeline (1):                      
Commercial 4.20 %   $ 219,269     $ 126,578     $ 212,712     $ 122,325     $ 129,839  
Residential real estate 3.56     105,396     189,403     82,555     63,598     49,800  
Home equity loans and lines 5.35     3,049     3,757     2,550     4,688     6,571  
Total 4.00 %   $ 327,714     $ 319,738     $ 297,817     $ 190,611     $ 186,210  


  For the Three Months Ended  
  December 31,
 2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
 
  Average Yield                      
Loan originations:                        
Commercial 4.05 %   $ 264,938     $ 315,405     $ 123,882     $ 172,233     $ 151,851    
Residential real estate 3.49     226,492     156,308     120,771     75,530     92,776    
Home equity loans and lines 5.27     12,961     10,498     14,256     13,072     15,583    
Total 3.83 %   $ 504,391     $ 482,211     $ 258,909     $ 260,835   (2) $ 260,210   (3)
Loans sold     $ 110     $   (4) $ 403   (4) $ 495     $ 728   (4)

(1) Loan pipeline includes loans approved but not funded.
(2) Excludes purchased loans of $100.0 million for residential real estate.
(3) Excludes purchased loans of $49.5 million for other consumer and $753,000 for residential real estate.
(4) Excludes the sale of small business administration loans of $3.5 million, under-performing residential loans of $2.9 million, and under-performing commercial loans of $1.7 million for the three months ended September 30, 2019, June 30, 2019, and December 31, 2018, respectively.


DEPOSITS   At
    December 31,
 2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
Type of Account                    
Non-interest-bearing   $ 1,377,396     $ 1,406,194     $ 1,370,167     $ 1,352,520     $ 1,151,362  
Interest-bearing checking   2,539,428     2,400,331     2,342,913     2,400,192     2,350,106  
Money market deposit   578,147     593,457     642,985     666,067     569,680  
Savings   898,174     901,168     909,501     922,113     877,177  
Time deposits   935,632     919,705     921,921     949,593     866,244  
    $ 6,328,777     $ 6,220,855     $ 6,187,487     $ 6,290,485     $ 5,814,569  
                                         


OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)

ASSET QUALITY December 31,
 2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
Non-performing loans:                  
Commercial and industrial $ 207     $ 207     $ 207     $ 240     $ 1,587  
Commercial real estate - owner-occupied 4,811     4,537     4,818     4,565     501  
Commercial real estate - investor 2,917     4,073     4,050     4,115     5,024  
Residential real estate 7,181     5,953     5,747     8,611     7,389  
Home equity loans and lines 2,733     2,683     2,974     3,364     2,914  
Total non-performing loans 17,849     17,453     17,796     20,895     17,415  
Other real estate owned 264     294     865     1,594     1,381  
Total non-performing assets $ 18,113     $ 17,747     $ 18,661     $ 22,489     $ 18,796  
Purchased credit-impaired (“PCI”) loans $ 13,265     $ 13,281     $ 13,432     $ 16,306     $ 8,901  
Delinquent loans 30 to 89 days $ 14,798     $ 19,905     $ 20,029     $ 21,578     $ 25,686  
Troubled debt restructurings:                  
Non-performing (included in total non-performing loans above) $ 6,566     $ 6,152     $ 6,815     $ 6,484     $ 3,595  
Performing 18,042     18,977     19,314     19,690     22,877  
Total troubled debt restructurings $ 24,608     $ 25,129     $ 26,129     $ 26,174     $ 26,472  
Allowance for loan losses $ 16,852     $ 16,636     $ 16,135     $ 16,705     $ 16,577  
Allowance for loan losses as a percent of total loans receivable (1) 0.27 %   0.27 %   0.27 %   0.28 %   0.30 %
Allowance for loan losses as a percent of total non-performing
loans
94.41     95.32     90.67     79.95     95.19  
Non-performing loans as a percent of total loans receivable 0.29     0.29     0.30     0.35     0.31  
Non-performing assets as a percent of total assets 0.22     0.22     0.23     0.28     0.25  

(1) The loans acquired from Capital Bank, Sun, Ocean Shore, Cape, and Colonial American were recorded at fair value.  The net credit mark on these loans, not reflected in the allowance for loan losses, was $30,260, $32,768, $36,026, $35,204, and $31,647 at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively.


NET CHARGE-OFFS   For the Three Months Ended
    December 31,
 2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
 
Net Charge-offs:                      
Loan charge-offs   $ (445 )   $ (353 )   $ (1,138 )   $ (868 )   $ (1,133 )  
Recoveries on loans   306     549     212     376     383    
Net loan (charge-offs) recoveries   $ (139 )   $ 196     $ (926 ) (1) $ (492 )   $ (750 ) (1)
Net loan charge-offs to average total loans (annualized)   0.01 %   NM*     0.06 %   0.03 %   0.05 %  
Net charge-off detail - (loss) recovery:                      
Commercial   $ 163     $ 256     $ (58 )   $ (58 )   $ (871 )  
Residential mortgage and construction   (61 )   12     (728 )   (425 )   210    
Home equity loans and lines   (240 )   (10 )   (121 )   (4 )   (62 )  
Other consumer   (1 )   (62 )   (19 )   (5 )   (27 )  
Net loan (charge-offs) recoveries   $ (139 )   $ 196     $ (926 ) (1) $ (492 )   $ (750 ) (1)

(1) Included in net loan charge-offs for the three months ended June 30, 2019, and December 31, 2018 are $429 and $243, respectively, relating to under-performing loans sold.

*   Not Meaningful


OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME

...
  For the Three Months Ended
  December 31, 2019   September 30, 2019   December 31, 2018
(dollars in thousands) Average
Balance
  Interest   Average
Yield/
Cost
  Average
Balance
  Interest   Average
Yield/
Cost
  Average
Balance
  Interest   Average
Yield/
Cost
Assets:                                  
Interest-earning assets:                                  
Interest-earning deposits and short-term investments $ 43,495     $ 196     1.79 %   $ 40,932     $ 264     2.56 %   $ 53,023     $ 236     1.77 %
Securities (1) 1,008,461     6,581     2.59     1,039,560     6,908     2.64     1,037,039     6,802     2.60  
Loans receivable, net (2)                                  
Commercial 3,442,771     42,416     4.89     3,350,868     42,104     4.99     3,061,999     39,045     5.06  
Residential 2,309,741     22,469     3.89     2,225,837     21,527     3.87     2,036,024     20,688     4.06  
Home Equity 323,878     4,243     5.20     335,691     4,678     5.53     356,088     4,656     5.19  
Other 94,350     1,170     4.92     104,310     1,406     5.35     78,832     931     4.69  
Allowance for loan loss net of deferred loan fees (7,932 )           (8,381 )           (9,198 )        
Loans Receivable, net 6,162,808     70,298     4.53     6,008,325     69,715     4.60     5,523,745     65,320     4.69  
Total interest-earning assets 7,214,764     77,075     4.24     7,088,817     76,887     4.30     6,613,807     72,358     4.34  
Non-interest-earning assets 977,413             984,421             890,304          
Total assets $ 8,192,177             $ 8,073,238             $ 7,504,111          
Liabilities and Stockholders’ Equity:                                  
Interest-bearing liabilities:                                  
Interest-bearing checking $ 2,562,059     4,477     0.69 %   $ 2,467,879     4,311     0.69 %   $ 2,407,400     3,120     0.51 %
Money market 592,116     1,243     0.83     597,896     1,208     0.80     585,117     894     0.61  
Savings 899,051     308     0.14     905,605     300     0.13     878,617     263     0.12  
Time deposits 931,228     4,186     1.78     920,032     3,998     1.72     848,361     2,791     1.31  
Total 4,984,454     10,214     0.81     4,891,412     9,817     0.80     4,719,495     7,068     0.59  
FHLB Advances 412,073     2,075     2.00     394,124     2,208     2.22     354,296     1,930     2.16  
Securities sold under agreements to repurchase 68,257     85     0.49     62,296     73     0.46     60,901     43     0.28  
Other borrowings 96,712     1,347     5.53     96,578