Oceanfirst Financial Corp. Announces Second Quarter Financial Results

OceanFirst Financial Corp.

RED BANK, N.J., July 20, 2023 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:OCFC) (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), announced net income available to common stockholders of $26.8 million, or $0.45 per diluted share, for the three months ended June 30, 2023, as compared to $28.0 million, or $0.47 per diluted share, for the corresponding prior year period, and $26.9 million, or $0.46 per diluted share, for the prior linked quarter. For the six months ended June 30, 2023, the Company reported net income available to common stockholders of $53.7 million, or $0.91 per diluted share, as compared to $52.7 million, or $0.89 per diluted share, for the corresponding prior year period. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information):

	For the Three Months Ended,									For the Six Months Ended,
Performance Ratios (Annualized):	June 30,			March 31,			June 30,			June 30,			June 30,
	2023			2023			2022			2023			2022
Return on average assets	0.80	%		0.82	%		0.92	%		0.81	%		0.88	%
Return on average stockholders’ equity	6.61			6.77			7.31			6.69			6.94
Return on average tangible stockholders’ equity (a)	9.70			10.00			11.08			9.84			10.52
Return on average tangible common equity (a)	10.21			10.53			11.72			10.37			11.13
Efficiency ratio	62.28			60.78			59.65			61.53			60.68
Net interest margin	3.02			3.34			3.29			3.17			3.24

^(a) _{Return on average tangible stockholders’ equity and return on average tangible common equity (“ROTCE”), which are non-GAAP (“generally accepted accounting principles”) financial measures, exclude the impact of intangible assets and goodwill from both assets and stockholders’ equity. ROTCE also excludes preferred stock from stockholders’ equity. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.}

Core earnings¹ for the three and six months ended June 30, 2023 were $27.2 million and $59.9 million, respectively, or $0.46 and $1.01 per diluted share, representing a decrease from $34.6 million and $63.4 million, or $0.59 and $1.08 per diluted share, for the corresponding prior year periods, and a decrease from $32.7 million, or $0.55 per diluted share, for the prior linked quarter.

Core earnings PTPP¹ for the three and six months ended June 30, 2023 were $37.6 million and $83.7 million, respectively, or $0.64 and $1.42 per diluted share, as compared to $47.0 million and $86.7 million, or $0.80 and $1.47 per diluted share, for the corresponding prior year periods, and $46.1 million, or $0.78 per diluted share, for the prior linked quarter. Selected performance metrics are as follows:

	For the Three Months Ended,												For the Six Months Ended,
	June 30,				March 31,				June 30,				June 30,				June 30,
Core Ratios1 (Annualized):		2023				2023				2022				2023				2022
Return on average assets		0.81	%			1.00	%			1.13	%			0.90	%			1.06	%
Return on average tangible stockholders’ equity		9.84				12.15				13.73				10.98				12.65
Return on average tangible common equity		10.36				12.80				14.53				11.56				13.38
Efficiency ratio		61.94				56.49				54.43				59.13				55.89
Core diluted earnings per share	$	0.46			$	0.55			$	0.59			$	1.01			$	1.08
Core PTPP diluted earnings per share		0.64				0.78				0.80				1.42				1.47

Key developments for the recent quarter are described below:

• Excess Liquidity: The Company maintained elevated levels of on-balance sheet cash and funding availability, which represented 260% of adjusted uninsured deposits² at June 30, 2023. Deposits increased $165.2 million during the quarter, which included a shift from non-maturity deposits to time deposits.

• Asset Quality: Continued strong asset quality as criticized assets, non-performing loans, and loans 30 to 89 days past due as a percent of total loans receivable were 1.18%, 0.23%, and 0.03%, respectively, at June 30, 2023. Net charge-off activity continues to remain at zero percent of total average loans on an annualized basis.

• Strong Capital: Capital ratios remained above “well-capitalized” levels, including the Company’s common equity tier 1 capital, which increased 19 bps from the prior quarter, to 10.21% at June 30, 2023. Book value and tangible book value per share were $27.37 and $17.72³, respectively, both up $0.30 from the prior quarter.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “Our current quarter results were impacted by continued prudent balance sheet measures to increase liquidity, preserve our deposits, and continue supporting our existing banking relationships. We are optimistic that the pace of margin compression is behind us, but the outlook is uncertain should rates and competition remain elevated for longer. Although profitability decreased, our credit quality remains stellar, we grew capital, and remain well positioned to manage through any market uncertainty.” Mr. Maher added, “Our strong balance sheet will serve as a catalyst for our strategic initiatives and investments to improve our operating expenses. These initiatives are anticipated to improve performance as early as the fourth quarter and should enhance returns in future periods.”

The Company’s Board of Directors declared its 106th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on August 18, 2023 to common stockholders of record on August 7, 2023. The Board declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock. This dividend will be paid on August 15, 2023 to preferred stockholders of record on July 31, 2023.

¹ _{Core earnings and core earnings before income taxes and provision for credit losses (“PTPP or Pre-Tax-Pre-Provision”), and ratios derived therefrom, are non-GAAP financial measures. For the periods presented, core earnings exclude merger related expenses, net branch consolidation (benefit) expense, net loss (gain) on equity investments, net loss on sale of investments, and the income tax effect of these items, (collectively referred to as “non-core” operations). PTPP excludes the aforementioned pre-tax “non-core” items along with income tax expense (benefit) and provision for credit losses (benefit). Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.}

² _{For additional information, refer to Earnings Release Supplement furnished as Exhibit 99.2 to Form 8-K filed with the SEC on July 20, 2023.}

³ _{Tangible book value per common share (also referred to as “tangible common equity per common share”) and tangible common equity to tangible assets, non-GAAP financial measures, exclude the impact of intangible assets, goodwill, and preferred equity from both stockholders’ equity and total assets. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.}

Results of Operations

The current quarter results were impacted by the following matters. Net interest income and cost of funds were adversely impacted by shifts to higher cost time deposits, repricing of government deposits, and maintaining excess liquidity on balance sheet, which outpaced the increase in interest-earning assets, driving an increase in deposit betas to 29%⁴. Total operating expenses included $580,000 of real estate charges on assets held for sale and $400,000 of talent acquisition retainers, which are not expected to reoccur.

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

Net Interest Income and Margin

Three Months Ended June 30, 2023 vs. June 30, 2022

Net interest income increased to $92.1 million, from $90.8 million, reflecting a net impact of higher interest rates and to a lesser extent, an increase in average interest-earning assets.

Net interest margin decreased to 3.02% from 3.29%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.17% for the respective three months, net interest margin decreased to 2.97% from 3.12%. Net interest margin decreased primarily due to the increase in cost of funds outpacing that of average interest earning assets in the current interest rate environment.

Average interest-earning assets increased by $1.17 billion for the three months, primarily driven by organic commercial loan growth, which increased $634.2 million. The average yield for interest-earning assets increased to 4.91% from 3.60%.

The cost of average interest-bearing liabilities increased to 2.41%, from 0.42% due to higher cost of deposits noted above and higher cost Federal Home Loan Bank (“FHLB”) advances. The total cost of deposits (including non-interest bearing deposits) increased to 1.52% from 0.18%.

Six months ended June 30, 2023 vs. June 30, 2022

Net interest income increased to $190.9 million, from $175.0 million, reflecting a net impact of higher interest rates and to a lesser extent, an increase in average interest-earning assets.

Net interest margin decreased to 3.17% from 3.24%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.04% and 0.15% for the respective six months, net interest margin increased to 3.13% from 3.09%.

Average interest-earning assets increased by $1.22 billion. The cost of average interest-bearing liabilities increased to 2.10% from 0.39%. The total cost of deposits (including non-interest bearing deposits) increased to 1.21% from 0.17%.

Three Months Ended June 30, 2023 vs. March 31, 2023

Net interest income decreased by $6.7 million, reflecting a decrease in net interest margin to 3.02%, from 3.34%, as the increase in cost of funds outpaced the increase of average interest earning assets. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.04% for the respective three months, net interest margin decreased to 2.97%, from 3.30%. The compression in net interest margin was primarily attributable to higher cost of deposits noted above, a mix-shift to higher cost time deposits, and the impact of excess on-balance sheet liquidity built in the prior quarter.

Average interest-earning assets increased by $240.0 million, primarily due to maintaining excess liquidity during the quarter and, to a lesser extent, commercial loan growth. The yield on average interest-earning assets increased to 4.91%, from 4.68%. The total cost of average interest-bearing liabilities increased to 2.41%, from 1.76%, and the total cost of deposits (including non-interest bearing deposits) increased to 1.52% from 0.88%, primarily due to higher cost of deposits and a mix-shift to higher cost time deposits.

Provision for Credit Losses

Provision for credit losses for the three and six months ended June 30, 2023 was $1.2 million and $4.2 million, respectively, as compared to $1.3 million and $3.1 million for the corresponding prior year periods, and $3.0 million in the prior linked quarter. The provision for credit losses for the current quarter reflected an increase to the allowance for loan credit losses, primarily related to commercial real estate, which was driven by sustained macroeconomic headwinds.

Net loan charge-offs were $123,000 and $76,000 for the three and six months ended June 30, 2023, respectively. Net loan charge-offs were $9,000 and net loan recoveries were $83,000 for the three and six months ended June 30, 2022, respectively. Net loan recoveries were $47,000 in the prior linked quarter. Refer to “Asset Quality” section for further discussion.

Non-interest Income

Three Months Ended June 30, 2023 vs. June 30, 2022

Other income increased to $8.9 million, as compared to $7.5 million. Other income was adversely impacted by non-core operations of $559,000 and $8.1 million, for the respective quarters, primarily related to net losses on preferred stock equity investments.

Excluding non-core operations, other income decreased $6.1 million. The primary drivers were decreases in commercial loan swap income of $2.3 million and fees and service charges of $2.0 million, which were adversely impacted by the current interest rate environment resulting in lower swap volume and mortgage activity. Bankcard services revenue decreased $1.8 million due to the Durbin amendment, which became effective for the Company on July 1, 2022.

Six months ended June 30, 2023 vs. June 30, 2022

Other income decreased to $11.0 million, as compared to $16.4 million. Other income was adversely impacted by non-core operations of $8.1 million and $10.9 million, for the respective periods, primarily related to net losses on preferred stock equity investments. The current year’s non-core operations also included $5.3 million of losses related to the sale of investments in the first quarter.

Excluding non-core operations, other income decreased $8.2 million. The primary drivers were decreases in commercial loan swap income on lower volume of $4.4 million, bankcard services revenue of $3.4 million, and income from bank owned life insurance of $1.1 million on lower claims.

Three Months Ended June 30, 2023 vs. March 31, 2023

Other income in the prior linked quarter included non-core operations of $7.5 million primarily related to net losses on preferred stock equity investments. Excluding non-core operations, other income decreased by $84,000.

Non-interest Expense

Three Months Ended June 30, 2023 vs. June 30, 2022

Operating expenses increased to $62.9 million, as compared to $58.7 million. Operating expenses were adversely impacted by $742,000 of non-core operations in the prior year period.

Excluding non-core operations, operating expenses increased by $5.0 million. This was due to increases in professional fees of $2.6 million related to the ongoing investments to improve profitability and operational efficiencies, and compensation and benefits expense of $1.1 million primarily related to inflation, annual merit-related compensation increases and higher medical costs. The current quarter also included increases to federal deposit insurance and regulatory assessments of $677,000 due to new assessment rates that went into effect on January 1, 2023, and real estate charges on assets held for sale of $580,000.

Six months ended June 30, 2023 vs. June 30, 2022

Operating expenses increased to $124.2 million, as compared to $116.2 million. Operating expenses for the periods were adversely impacted by $92,000 and $3.1 million of non-core operations, respectively.

Excluding non-core operations, operating expenses increased by $11.1 million. This was due to increases in professional fees of $4.4 million and compensation and benefits expense of $4.3 million. The drivers of expenses for the three months ended were also the drivers for the six months ended. Additionally, other operating expenses included higher expenses of $580,000 and $427,000 related to real estate charges on assets held for sale and title search fees, respectively.

Three Months Ended June 30, 2023 vs. March 31, 2023

Excluding non-core operations of $92,000 in the prior linked quarter, operating expenses increased $1.7 million primarily due to increases in other operating expense of $898,000, related to real estate charges of $580,000, and federal deposit insurance and regulatory assessments of $716,000, primarily due to the one-time recovery of $661,000 for historical overpayments which was recognized in the prior linked quarter.

Income Tax Expense

The provision for income taxes was $9.0 million and $17.7 million for the three and six months ended June 30, 2023, respectively, as compared to $8.9 million and $16.9 million for the same prior year periods, and $8.7 million for the prior linked quarter. The effective tax rate was 24.4% and 24.0% for the three and six months ended June 30, 2023, respectively, as compared to 23.3% and 23.4% for the same prior year periods, and 23.7% for the prior linked quarter.

Financial Condition

June 30, 2023 vs. December 31, 2022

Total assets increased by $435.0 million to $13.54 billion, from $13.10 billion, due to higher cash and due from banks and loans. Cash and due from banks increased $289.8 million to $457.7 million, from $167.9 million as the Company maintained excess liquidity on balance sheet. Total loans increased by $165.6 million to $10.08 billion, from $9.92 billion, due to loan originations.

Total liabilities increased by $394.2 million to $11.91 billion, from $11.52 billion. Deposits increased by $483.1 million to $10.16 billion, from $9.68 billion. Time deposits increased to $2.77 billion from $1.54 billion, or 27.2% and 15.9% of total deposits, respectively. Brokered time deposits increased $547.9 million and retail time deposits increased $674.9 million. The loans-to-deposit ratio was 99.3%, as compared to 102.50%. FHLB advances decreased by $119.5 million to $1.09 billion, from $1.21 billion.

Total stockholders’ equity increased to $1.63 billion, as compared to $1.59 billion, reflecting net income for the six months ended June 30, 2023 and a net increase in the fair market value of available-for-sale debt securities, net of tax, which decreased accumulated other comprehensive loss by $5.6 million.

For the six months ended June 30, 2023, the Company did not repurchase shares under its stock repurchase program. There were 2,934,438 shares available for repurchase at June 30, 2023 under the existing repurchase program. Stockholders’ equity per common share⁵ increased to $27.37, as compared to $26.81. Tangible common equity per common share³ increased to $17.72, as compared to $17.08.

⁵ _{Also referred to as “book value per common share.”}

Asset Quality

June 30, 2023 vs. December 31, 2022

The Company's asset quality remained strong, as evidenced by the following credit metrics. The Company’s non-performing loans decreased to $22.8 million from $23.3 million. The allowance for loan credit losses as a percentage of total non-performing loans was 271.51%, as compared to 244.25%. The level of 30 to 89 days delinquent loans decreased to $3.1 million, from $14.1 million, partly due to the number of days in each period. The Company’s allowance for loan credit losses was 0.61% of total loans, as compared to 0.57%. Refer to “Provision for Credit Losses” section for further discussion on the allowance.

The Company’s asset quality excluding purchased with credit deterioration (“PCD”) loans were as follows. Non-performing loans increased to $19.6 million, from $19.3 million. The allowance for loan credit losses as a percentage of total non-performing loans was 315.47%, as compared to 294.10%. The level of 30 to 89 days delinquent loans decreased to $1.2 million, from $10.5 million, partly due to the number of days in each period. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $71.5 million, or 0.71% of total loans, as compared to $68.2 million, or 0.69% of total loans.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding non-core operations and in some instances excluding income taxes and provision for credit losses, and reporting equity and asset amounts excluding intangible assets, goodwill or preferred stock, which can vary from period to period, provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, July 21, 2023 at 11:00 a.m. Eastern Time. The direct dial number for the call is (833) 470-1428, using the access code 845952. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (866) 813-9403, access code 307056, from one hour after the end of the call until August 18, 2023. The conference call, as well as the replay, are also available (listen-only) by internet webcast at www.oceanfirst.com in the Investor Relations section.

OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank N.A., founded in 1902, is a $13.5 billion regional bank providing financial services throughout New Jersey and in the major metropolitan markets of Philadelphia, New York, Baltimore, and Boston. OceanFirst Bank delivers commercial and residential financing, treasury management, trust and asset management, and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey. To learn more about OceanFirst, go to www.oceanfirst.com.

Forward-Looking Statements
        
In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: changes in interest rates, inflation, general economic conditions, potential recessionary conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters, potential increases to flood insurance premiums, the current or anticipated impact of military conflict, terrorism or other geopolitical events, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, changes in liquidity, including the size and composition of the Company’s deposit portfolio, including the percentage of uninsured deposits in the portfolio, competition, demand for financial services in the Company’s market area, changes in consumer spending, borrowing and saving habits, changes in accounting principles, a failure in or breach of the Company’s operational or security systems or infrastructure, including cyberattacks, the failure to maintain current technologies, failure to retain or attract employees, the impact of the COVID-19 pandemic or any other pandemic on our operations and financial results and those of our customers and the Bank’s ability to successfully integrate acquired operations. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, under Item 1A - Risk Factors and elsewhere, and subsequent securities filings and should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

OceanFirst Financial Corp. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (dollars in thousands)
		June 30,			March 31,			December 31,			June 30,
			2023			2023			2022			2022
		(Unaudited)			(Unaudited)						(Unaudited)
Assets
Cash and due from banks		$	457,747		$	496,193		$	167,946		$	189,019
Debt securities available-for-sale, at estimated fair value			452,016			452,195			457,648			507,276
Debt securities held-to-maturity, net of allowance for securities credit losses of $964 at June 30, 2023, $1,043 at March 31, 2023, $1,128 at December 31, 2022, and $1,293 at June 30, 2022 (estimated fair value of $1,109,756 at June 30, 2023, $1,149,673 at March 31, 2023, $1,110,041 at December 31, 2022 and $987,532 at June 30, 2022)			1,222,507			1,245,424			1,221,138			1,068,034
Equity investments			96,452			101,007			102,037			75,269
Restricted equity investments, at cost			105,305			115,750			109,278			76,047
Loans receivable, net of allowance for loan credit losses of $61,791 at June 30, 2023, $60,195 at March 31, 2023, $56,824 at December 31, 2022 and $52,061 at June 30, 2022			10,030,106			9,986,949			9,868,718			9,380,688
Loans held-for-sale			4,200			1,885			690			—
Interest and dividends receivable			47,933			47,342			44,704			34,184
Premises and equipment, net			124,139			126,019			126,705			128,118
Bank owned life insurance			263,836			262,654			261,603			260,230
Assets held for sale			3,608			2,719			2,719			4,263
Goodwill			506,146			506,146			506,146			506,146
Core deposit intangible			11,476			12,470			13,497			15,827
Other assets			213,432			198,422			221,067			193,552
Total assets		$	13,538,903		$	13,555,175		$	13,103,896		$	12,438,653
Liabilities and Stockholders’ Equity
Deposits		$	10,158,337		$	9,993,095		$	9,675,206		$	9,831,484
Federal Home Loan Bank advances			1,091,666			1,346,566			1,211,166			488,750
Securities sold under agreements to repurchase with customers			74,452			70,938			69,097			105,495
Other borrowings			195,925			195,663			195,403			194,654
Advances by borrowers for taxes and insurance			27,839			31,198			21,405			23,640
Other liabilities			364,401			307,344			346,155			273,198
Total liabilities			11,912,620			11,944,804			11,518,432			10,917,221
Stockholders’ equity:
OceanFirst Financial Corp. stockholders’ equity			1,625,435			1,609,553			1,584,662			1,520,488
Non-controlling interest			848			818			802			944
Total stockholders’ equity			1,626,283			1,610,371			1,585,464			1,521,432
Total liabilities and stockholders’ equity		$	13,538,903		$	13,555,175		$	13,103,896		$	12,438,653

OceanFirst Financial Corp. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts)
		For the Three Months Ended,												For the Six Months Ended,
		June 30,				March 31,				June 30,				June 30,				June 30,
			2023				2023				2022				2023				2022
		|---------------------- (Unaudited) ----------------------|												|---------- (Unaudited) -----------|
Interest income:
Loans		$	129,104			$	121,720			$	90,731			$	250,824			$	173,199
Debt securities			14,320				14,286				7,473				28,606				14,977
Equity investments and other			6,672				3,028				1,212				9,700				2,223
Total interest income			150,096				139,034				99,416				289,130				190,399
Interest expense:
Deposits			37,934				21,330				4,317				59,264				8,358
Borrowed funds			20,053				18,902				4,302				38,955				7,017
Total interest expense			57,987				40,232				8,619				98,219				15,375
Net interest income			92,109				98,802				90,797				190,911				175,024
Provision for credit losses			1,229				3,013				1,254				4,242				3,105
Net interest income after provision for credit losses			90,880				95,789				89,543				186,669				171,919
Other income:
Bankcard services revenue			1,544				1,330				3,310				2,874				6,273
Trust and asset management revenue			645				612				658				1,257				1,267
Fees and service charges			5,602				5,159				7,646				10,761				10,706
Net gain on sales of loans			33				20				3				53				180
Net loss on equity investments			(559	)			(6,801	)			(8,078	)			(7,360	)			(10,864	)
Net gain from other real estate operations			—				—				50				—				48
Income from bank owned life insurance			1,182				1,281				1,422				2,463				3,525
Commercial loan swap income			—				701				2,294				701				5,075
Other			481				(229	)			236				252				183
Total other income			8,928				2,073				7,541				11,001				16,393
Operating expenses:
Compensation and employee benefits			34,222				33,920				33,153				68,142				63,848
Occupancy			5,265				5,239				4,758				10,504				10,502
Equipment			1,101				1,205				1,336				2,306				2,706
Marketing			961				982				971				1,943				1,587
Federal deposit insurance and regulatory assessments			2,465				1,749				1,788				4,214				3,678
Data processing			6,165				6,154				6,170				12,319				11,906
Check card processing			1,214				1,281				1,515				2,495				2,497
Professional fees			5,083				5,098				2,472				10,181				5,794
Amortization of core deposit intangible			994				1,027				1,178				2,021				2,388
Branch consolidation expense, net			—				70				546				70				948
Merger related expenses			—				22				196				22				2,161
Other operating expense			5,460				4,562				4,578				10,022				8,141
Total operating expenses			62,930				61,309				58,661				124,239				116,156
Income before provision for income taxes			36,878				36,553				38,423				73,431				72,156
Provision for income taxes			8,996				8,654				8,940				17,650				16,914
Net income			27,882				27,899				29,483				55,781				55,242
Net income attributable to non-controlling interest			85				16				522				101				522
Net income attributable to OceanFirst Financial Corp.			27,797				27,883				28,961				55,680				54,720
Dividends on preferred shares			1,004				1,004				1,004				2,008				2,008
Net income available to common stockholders		$	26,793			$	26,879			$	27,957			$	53,672			$	52,712
Basic earnings per share		$	0.45			$	0.46			$	0.48			$	0.91			$	0.90
Diluted earnings per share		$	0.45			$	0.46			$	0.47			$	0.91			$	0.89
Average basic shares outstanding			59,147		...		58,774				58,894				58,988				58,823
Average diluted shares outstanding			59,153				58,918				58,995				59,038				58,975

OceanFirst Financial Corp. SELECTED LOAN AND DEPOSIT DATA (dollars in thousands)
LOANS RECEIVABLE				At
				June 30,				March 31,				December 31,				September 30,				June 30,
					2023				2023				2022				2022				2022
Commercial:
Commercial real estate - investor				$	5,319,686			$	5,296,661			$	5,171,952			$	5,007,637			$	4,808,965
Commercial real estate - owner-occupied					981,618				986,366				997,367				983,784				1,020,873
Commercial and industrial					620,284				622,201				622,372				652,620				584,464
Total commercial					6,921,588				6,905,228				6,791,691				6,644,041				6,414,302
Consumer:
Residential real estate					2,906,556				2,881,811				2,861,991				2,813,209				2,758,269
Home equity loans and lines and other consumer ("other consumer")					255,486				252,773				264,372				261,510				252,314
Total consumer					3,162,042				3,134,584				3,126,363				3,074,719				3,010,583
Total loans					10,083,630				10,039,812				9,918,054				9,718,760				9,424,885
Deferred origination costs (fees), net					8,267				7,332				7,488				7,249				7,864
Allowance for loan credit losses					(61,791	)			(60,195	)			(56,824	)			(53,521	)			(52,061	)
Loans receivable, net				$	10,030,106			$	9,986,949			$	9,868,718			$	9,672,488			$	9,380,688
Mortgage loans serviced for others				$	50,820			$	50,421			$	51,736			$	53,869			$	56,045
	At June 30, 2023 Average Yield
Loan pipeline (1):
Commercial	7.71	%		$	39,164			$	236,550			$	114,232			$	339,487			$	273,843
Residential real estate	6.82				58,022				61,258				36,958				80,591				104,920
Other consumer	7.51				18,621				20,589				14,890				19,395				6,278
Total	7.23	%		$	115,807			$	318,397			$	166,080			$	439,473			$	385,041

	For the Three Months Ended
	June 30,							March 31,				December 31,				September 30,				June 30,
	2023								2023				2022				2022				2022
	Average Yield
Loan originations:
Commercial	7.60	%		$	197,732			$	200,504			$	539,949			$	356,726			$	645,863
Residential real estate	6.40				100,542				65,580				101,530	(2)			129,808				173,365
Other consumer	7.21				22,487				15,927				42,624				57,254				16,253
Total	7.20	%		$	320,761			$	282,011			$	684,103			$	543,788			$	835,481
Loans sold				$	18,664			$	3,861			$	2,340			$	9,425		(3)	$	—

(1)	Loan pipeline includes loans approved but not funded.
(2)	Excludes residential real estate loan pool purchases of $9.9 million for the three months ended December 31, 2022.
(3)	Excludes the sale of a small business administration loan of $1.2 million for the three months ended September 30, 2022.

  

DEPOSITS	At
	June 30,			March 31,			December 31,			September 30,			June 30,
		2023			2023			2022			2022			2022
Type of Account
Non-interest-bearing	$	1,854,136		$	1,984,197		$	2,101,308		$	2,325,547		$	2,312,126
Interest-bearing checking		3,537,834			3,697,223			3,829,683			3,909,864			3,696,067
Money market		770,440			615,993			714,386			749,229			716,782
Savings		1,229,897			1,308,715			1,487,809			1,570,472			1,606,534
Time deposits		2,766,030			2,386,967			1,542,020			1,404,357			1,499,975
Total deposits	$	10,158,337		$	9,993,095		$	9,675,206		$	9,959,469		$	9,831,484

OceanFirst Financial Corp. ASSET QUALITY (dollars in thousands)
ASSET QUALITY	June 30,				March 31,				December 31,				September 30,				June 30,
		2023				2023				2022				2022				2022
Non-performing loans:
Commercial real estate - investor	$	13,000			$	13,643			$	10,483			$	9,866			$	2,609
Commercial real estate - owner-occupied		565				251				4,025				1,976				8,233
Commercial and industrial		199				162				331				321				364
Residential real estate		6,174				5,650				5,969				5,958				5,846
Other consumer		2,820				2,731				2,457				3,377				3,701
Total non-performing loans	$	22,758			$	22,437			$	23,265			$	21,498			$	20,753
Delinquent loans 30 to 89 days	$	3,136			$	11,232			$	14,148			$	11,846			$	9,558
Modifications to borrowers experiencing financial difficulty (1)
Non-performing (included in total non-performing loans above)	$	6,882			$	6,556			$	6,361			$	10,047			$	10,493
Performing		7,516				7,619				7,530				6,065				6,946
Total modifications to borrowers experiencing financial difficulty (1)	$	14,398			$	14,175			$	13,891			$	16,112			$	17,439
Allowance for loan credit losses	$	61,791			$	60,195			$	56,824			$	53,521			$	52,061
Allowance for loan credit losses as a percent of total loans receivable (2)		0.61	%			0.60	%			0.57	%			0.55	%			0.55	%
Allowance for loan credit losses as a percent of total non-performing loans (2)		271.51				268.28				244.25				248.96				250.86
Non-performing loans as a percent of total loans receivable		0.23				0.22				0.23				0.22				0.22
Non-performing assets as a percent of total assets		0.17				0.17				0.18				0.17				0.17
Supplemental PCD and non-performing loans
PCD loans, net of allowance for loan credit losses	$	18,872			$	20,513			$	27,129			$	29,249			$	35,227
Non-performing PCD loans		3,171				3,929				3,944				3,043				3,529
Delinquent PCD and non-performing loans 30 to 89 days		1,976				2,248				3,657				1,434				1,381
PCD modifications to borrowers experiencing financial difficulty (1)		755				758				765				715				997
Asset quality, excluding PCD loans (3)
Non-performing loans		19,587				18,508				19,321				18,455				17,224
Delinquent loans 30 to 89 days (excludes non-performing loans)		1,160				8,984				10,491				10,412				8,177
Modifications to borrowers experiencing financial difficulty(1)		13,643				13,417				13,126				15,397				16,442
Allowance for loan credit losses as a percent of total non-performing loans (2)		315.47	%			325.24	%			294.10	%			290.01	%			302.26	%
Non-performing loans as a percent of total loans receivable		0.19				0.18				0.19				0.19				0.18
Non-performing assets as a percent of total assets		0.14				0.14				0.15				0.15				0.14

(1)	For periods in 2023, balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings. For periods in 2022, the balances only include troubled debt restructurings.
(2)	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 $9.8 million, $10.5 million, $11.4 million, $13.6 million and $15.5 million at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively.
(3)	All balances and ratios exclude PCD loans.

NET LOAN (CHARGE-OFFS) RECOVERIES	For the Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
		2023				2023				2022				2022				2022
Net loan (charge-offs) recoveries:
Loan charge-offs	$	(206	)		$	(10	)		$	(138	)		$	(5	)		$	(287	)
Recoveries on loans		83				57				143				257				278
Net loan (charge-offs) recoveries	$	(123	)		$	47			$	5			$	252			$	(9	)
Net loan (charge-offs) recoveries to average total loans (annualized)		—	%		NM*				NM*				NM*					—	%
Net loan (charge-offs) recoveries detail:
Commercial	$	(117	)		$	—			$	(46	)		$	117			$	154
Residential real estate		9				8				9				44				(47	)
Other consumer		(15	)			39				42				91				(116	)
Net loan (charge-offs) recoveries	$	(123	)		$	47			$	5			$	252			$	(9	)

_{* Not meaningful as amounts are net loan recoveries.}

OceanFirst Financial Corp. ANALYSIS OF NET INTEREST INCOME
	For the Three Months Ended
	June 30,										March 31,										June 30,
		2023										2023										2022
(dollars in thousands)	Average Balance				Interest			Average Yield/ Cost (1)			Average Balance				Interest			Average Yield/ Cost (1)			Average Balance				Interest			Average Yield/ Cost (1)
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments	$	308,238			$	4,283		5.57	%		$	129,740			$	938		2.93	%		$	67,440			$	100		0.59	%
Securities (2)		1,931,032				16,709		3.47				1,955,399				16,376		3.40				1,811,869				8,585		1.90
Loans receivable, net (3)
Commercial		6,912,698				99,350		5.76				6,840,006				92,780		5.50				6,278,465				65,390		4.18
Residential real estate		2,895,629				25,936		3.58				2,872,049				25,161		3.50				2,718,787				22,742		3.35
Other consumer		255,785				3,818		5.99				263,404				3,779		5.82				251,014				2,599		4.15
Allowance for loan credit losses, net of deferred loan costs and fees		(53,327	)			—		—				(50,554	)			—		—				(43,683	)			—		—
Loans receivable, net		10,010,785				129,104		5.17				9,924,905				121,720		4.96				9,204,583				90,731		3.95
Total interest-earning assets		12,250,055				150,096		4.91				12,010,044				139,034		4.68				11,083,892				99,416		3.60
Non-interest-earning assets		1,217,666										1,234,549										1,168,093
Total assets	$	13,467,721									$	13,244,593									$	12,251,985
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking	$	3,718,289				11,964		1.29	%		$	3,863,338				6,269		0.66	%		$	4,020,474				1,612		0.16	%
Money market		694,311				3,678		2.12				705,631				1,759		1.01				739,647				279		0.15
Savings		1,248,312				389		0.12				1,369,118				334		0.10				1,639,568				161		0.04
Time deposits		2,458,872				21,903		3.57				1,826,662				12,968		2.88				937,387				2,265		0.97
Total		8,119,784				37,934		1.87				7,764,749				21,330		1.11				7,337,076				4,317		0.24
FHLB Advances		1,246,914				15,406		4.96				1,222,791				14,614		4.85				538,754				1,647		1.23
Securities sold under agreements to repurchase		71,752				192		1.07				71,898				90		0.51				103,929				41		0.16
Other borrowings		195,754				4,455		9.13				212,159				4,198		8.02				194,481				2,614		5.39
Total borrowings		1,514,420				20,053		5.31				1,506,848				18,902		5.09				837,164				4,302		2.06
Total interest-bearing liabilities		9,634,204				57,987		2.41				9,271,597				40,232		1.76				8,174,240				8,619		0.42
Non-interest-bearing deposits		1,873,226										2,028,507										2,328,124
Non-interest-bearing liabilities		333,598										334,812										214,900
Total liabilities		11,841,028										11,634,916										10,717,264
Stockholders’ equity		1,626,693										1,609,677										1,534,721
Total liabilities and equity	$	13,467,721									$	13,244,593									$	12,251,985
Net interest income					$	92,109									$	98,802									$	90,797
Net interest rate spread (4)								2.50	%									2.92	%									3.18	%
Net interest margin (5)								3.02	%									3.34	%									3.29	%
Total cost of deposits (including non-interest-bearing deposits)								1.52	%									0.88	%									0.18	%

	For the Six Months Ended June 30,
		2023										2022
(dollars in thousands)	Average Balance				Interest			Average Yield/ Cost (1)			Average Balance				Interest			Average Yield/ Cost (1)
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments	$	219,482			$	5,221		4.80	%		$	78,074			$	136		0.35	%
Securities (2)		1,943,148				33,085		3.43				1,829,065				17,064		1.88
Loans receivable, net (3)
Commercial		6,876,553				192,130		5.63				6,157,060				123,745		4.05
Residential real estate		2,883,904				51,097		3.54				2,631,208				44,081		3.35
Other consumer		259,573				7,597		5.90				254,002				5,373		4.27
Allowance for loan credit losses, net of deferred loan costs and fees		(51,948	)			—		—				(42,080	)			—		—
Loans receivable, net		9,968,082				250,824		5.07				9,000,190				173,199		3.87
Total interest-earning assets		12,130,712				289,130		4.80				10,907,329				190,399		3.51
Non-interest-earning assets		1,226,061										1,191,453
Total assets	$	13,356,773									$	12,098,782
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking	$	3,790,413				18,234		0.97	%		$	4,197,935				3,762		0.18	%
Money market		699,940				5,437		1.57				763,721				596		0.16
Savings		1,308,381				723		0.11				1,624,575				286		0.04
Time deposits		2,144,514				34,870		3.28				853,017				3,714		0.88
Total		7,943,248				59,264		1.50				7,439,248				8,358		0.23
FHLB Advances		1,234,919				29,824		4.87				285,501				1,682		1.19
Securities sold under agreements to repurchase		71,825				282		0.79				110,738				83		0.15
Other borrowings		203,911				8,849		8.75				211,407				5,252		5.01
Total borrowings		1,510,655				38,955		5.20				607,646				7,017		2.33
Total interest-bearing liabilities		9,453,903				98,219		2.10				8,046,894				15,375		0.39
Non-interest-bearing deposits		1,950,437										2,364,757
Non-interest-bearing liabilities		334,201										155,832
Total liabilities		11,738,541										10,567,483
Stockholders’ equity		1,618,232										1,531,299
Total liabilities and equity	$	13,356,773									$	12,098,782
Net interest income					$	190,911									$	175,024
Net interest rate spread (4)								2.70	%									3.12	%
Net interest margin (5)								3.17	%									3.24	%
Total cost of deposits (including non-interest-bearing deposits)								1.21	%									0.17	%

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

OceanFirst Financial Corp. SELECTED QUARTERLY FINANCIAL DATA (in thousands, except per share amounts)
		June 30,				March 31,				December 31,				September 30,				June 30,
			2023				2023				2022				2022				2022
Selected Financial Condition Data:
Total assets		$	13,538,903			$	13,555,175			$	13,103,896			$	12,683,453			$	12,438,653
Debt securities available-for-sale, at estimated fair value			452,016				452,195				457,648				470,300				507,276
Debt securities held-to-maturity, net of allowance for securities credit losses			1,222,507				1,245,424				1,221,138				1,027,712				1,068,034
Equity investments			96,452				101,007				102,037				81,722				75,269
Restricted equity investments, at cost			105,305				115,750				109,278				77,556				76,047
Loans receivable, net of allowance for loan credit losses			10,030,106				9,986,949				9,868,718				9,672,488				9,380,688
Deposits			10,158,337				9,993,095				9,675,206				9,959,469				9,831,484
Federal Home Loan Bank advances			1,091,666				1,346,566				1,211,166				514,200				488,750
Securities sold under agreements to repurchase and other borrowings			270,377				266,601				264,500				291,203				300,149
Total stockholders’ equity			1,626,283				1,610,371				1,585,464				1,540,216				1,521,432

		For the Three Months Ended,
		June 30,				March 31,				December 31,			September 30,				June 30,
			2023				2023				2022			2022				2022
Selected Operating Data:
Interest income		$	150,096			$	139,034			$	130,277		$	110,499			$	99,416
Interest expense			57,987				40,232				23,789			14,534				8,619
Net interest income			92,109				98,802				106,488			95,965				90,797
Provision for credit losses			1,229				3,013				3,647			1,016				1,254
Net interest income after provision for credit losses			90,880				95,789				102,841			94,949				89,543
Other income (excluding activity related to debt and equity investments)			9,487				9,571				10,364			11,788				15,619
Net (loss) gain on equity investments			(559	)			(2,193	)			17,187			3,362				(8,078	)
Net loss on sale of investments			—				(5,305	)			—			—				—
Operating expenses (excluding merger related and branch consolidation expense (benefit), net)			62,930				61,217				59,341			59,045				57,919
Branch consolidation expense (benefit), net			—				70				111			(346	)			546
Merger related expenses			—				22				276			298				196
Income before provision for income taxes			36,878				36,553				70,664			51,102				38,423
Provision for income taxes			8,996				8,654				17,353			12,298				8,940
Net income			27,882				27,899				53,311			38,804				29,483
Net income attributable to non-controlling interest			85				16				39			193				522
Net income attributable to OceanFirst Financial Corp.		$	27,797			$	27,883			$	53,272		$	38,611			$	28,961
Net income available to common stockholders		$	26,793			$	26,879			$	52,268		$	37,607			$	27,957
Diluted earnings per share		$	0.45			$	0.46			$	0.89		$	0.64			$	0.47
Net accretion/amortization of purchase accounting adjustments included in net interest income		$	1,152			$	1,237			$	2,278		$	2,004			$	2,196

		At or For the Three Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
		2023			2023			2022			2022			2022
Selected Financial Ratios and Other Data(1) (2):
Performance Ratios (Annualized):
Return on average assets (3)		0.80	%		0.82	%		1.62	%		1.19	%		0.92	%
Return on average tangible assets (3) (4)		0.83			0.86			1.68			1.24			0.96
Return on average stockholders’ equity (3)		6.61			6.77			13.25			9.68			7.31
Return on average tangible stockholders’ equity (3) (4)		9.70			10.00			19.85			14.62			11.08
Return on average tangible common equity (3) (4)		10.21			10.53			20.97			15.47			11.72
Stockholders’ equity to total assets		12.01			11.88			12.10			12.14			12.23
Tangible stockholders’ equity to tangible assets (4)		8.51			8.37			8.47			8.38			8.39
Tangible common equity to tangible assets (4)		8.09			7.95			8.03			7.92			7.92
Net interest rate spread		2.50			2.92			3.37			3.19			3.18
Net interest margin		3.02			3.34			3.64			3.36			3.29
Operating expenses to average assets		1.87			1.88			1.85			1.87			1.92
Efficiency ratio (5)		62.28			60.78			44.56			53.10			59.65
Loans-to-deposits		99.30			100.50			102.50			97.60			95.90

		For the Six Months Ended June 30,
		2023			2022
Performance Ratios (Annualized):
Return on average assets (3)		0.81	%		0.88	%
Return on average tangible assets (3) (4)		0.84			0.92
Return on average stockholders’ equity (3)		6.69			6.94
Return on average tangible stockholders’ equity (3) (4)		9.84			10.52
Return on average tangible common equity (3) (4)		10.37			11.13
Net interest rate spread		2.70			3.12
Net interest margin		3.17			3.24
Operating expenses to average assets		1.88			1.94
Efficiency ratio (5)		61.53			60.68

		At or For the Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
			2023				2023				2022				2022				2022
Trust and Asset Management:
Wealth assets under administration and management (“AUA/M”)		$	339,890			$	333,436			$	324,066			$	273,815			$	279,222
Nest Egg AUA/M			397,927				400,227				403,538				402,256				398,344
Total AUA/M			737,817				733,663				727,604				676,071				677,566
Per Share Data:
Cash dividends per common share		$	0.20			$	0.20			$	0.20			$	0.20			$	0.17
Stockholders' equity per common share at end of period			27.37				27.07				26.81				26.04				25.73
Tangible common equity per common share at end of period (4)			17.72				17.42				17.08				16.30				15.96
Common shares outstanding at end of period			59,420,859				59,486,086				59,144,128				59,138,507				59,130,236
Preferred shares outstanding at end of period			57,370				57,370				57,370				57,370				57,370
Number of full-service customer facilities:			38				38				38				38				38
Quarterly Average Balances
Total securities		$	1,931,032			$	1,955,399			$	1,764,764			$	1,748,687			$	1,811,869
Loans receivable, net			10,010,785				9,924,905				9,771,104				9,512,447				9,204,583
Total interest-earning assets			12,250,055				12,010,044				11,605,891				11,326,782				11,083,892
Total goodwill and core deposit intangible			518,265				519,282				520,400				521,566				522,666
Total assets			13,467,721				13,244,593				12,834,411				12,517,955				12,251,985
Time deposits			2,458,872				1,826,662				1,486,410				1,467,297				937,387
Total deposits (including non-interest-bearing deposits)			9,993,010				9,793,256				9,975,509				10,066,342				9,665,200
Total borrowings			1,514,420				1,506,848				915,565				643,294				837,164
Total interest-bearing liabilities			9,634,204				9,271,597				8,669,190				8,380,936				8,174,240
Non-interest bearing deposits			1,873,226				2,028,507				2,221,884				2,328,700				2,328,124
Stockholders' equity			1,626,693				1,609,677				1,564,856				1,541,755				1,534,721
Tangible stockholders’ equity (4)			1,108,428				1,090,395				1,044,456				1,020,189				1,012,055
Quarterly Yields and Costs
Total securities			3.47	%			3.40	%			2.83	%			2.27	%			1.90	%
Loans receivable, net			5.17				4.96				4.76				4.18				3.95
Total interest-earning assets			4.91				4.68				4.46				3.88				3.60
Time deposits			3.57				2.88				1.95				1.53				0.97
Total cost of deposits (including non-interest-bearing deposits)			1.52				0.88				0.53				0.36				0.18
Total borrowed funds			5.31				5.09				4.49				3.27				2.06
Total interest-bearing liabilities			2.41				1.76				1.09				0.69				0.42
Net interest spread			2.50				2.92				3.37				3.19				3.18
Net interest margin			3.02				3.34				3.64				3.36				3.29

 

(1)	With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2)	Performance ratios for each period are presented on a GAAP basis and include non-core operations. Refer to “Non-GAAP Reconciliation.”
(3)	Ratios for each period are based on net income available to common stockholders.
(4)	Tangible stockholders’ equity and tangible assets exclude intangible assets related to goodwill and core deposit intangible. Tangible common equity excludes goodwill, core deposit intangible and preferred equity. Refer to “Non-GAAP Reconciliation.”
(5)	Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.

OceanFirst Financial Corp. OTHER ITEMS (dollars in thousands, except per share amounts)
NON-GAAP RECONCILIATION
		For the Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
			2023				2023				2022				2022				2022
Core Earnings:
Net income available to common stockholders (GAAP)		$	26,793			$	26,879			$	52,268			$	37,607			$	27,957
Add (less) non-recurring and non-core items:
Net loss (gain) on equity investments(1)			559				2,193				(17,187	)			(3,362	)			8,078
Net loss on sale of investments(1)			—				5,305				—				—				—
Merger related expenses			—				22				276				298				196
Branch consolidation expense (benefit), net			—				70				111				(346	)			546
Income tax (benefit) expense on items			(162	)			(1,797	)			4,060				824				(2,132	)
Core earnings (Non-GAAP)		$	27,190			$	32,672			$	39,528			$	35,021			$	34,645
Income tax expense		$	8,996			$	8,654			$	17,353			$	12,298			$	8,940
Provision for credit losses			1,229				3,013				3,647				1,016				1,254
Less: income tax (benefit) expense on non-core items			(162	)			(1,797	)			4,060				824				(2,132	)
Core earnings PTPP (Non-GAAP)		$	37,577			$	46,136			$	56,468			$	47,511			$	46,971
Core earnings diluted earnings per share		$	0.46			$	0.55			$	0.67			$	0.60			$	0.59
Core earnings PTPP diluted earnings per share		$	0.64			$	0.78			$	0.96			$	0.81			$	0.80
Core Ratios (Annualized):
Return on average assets			0.81	%			1.00	%			1.22	%			1.11	%			1.13	%
Return on average tangible stockholders’ equity			9.84				12.15				15.01				13.62				13.73
Return on average tangible common equity			10.36				12.80				15.86				14.40				14.53
Efficiency ratio			61.94				56.49				50.78				54.80				54.43

(1)

The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on equity investments ($4.6 million) and other ($697,000), respectively, for the three months ended March 31, 2023.

		For the Six Months Ended June 30,
			2023				2022
Core Earnings:
Net income available to common stockholders (GAAP)		$	53,672			$	52,712
Add (less) non-recurring and non-core items:
Merger related expenses			22				2,161
Branch consolidation expense, net			70				948
Net loss on equity investments(1)			2,752				10,864
Net loss on sale of investments(1)			5,305				—
Income tax benefit on items			(1,959	)			(3,273	)
Core earnings (Non-GAAP)		$	59,862			$	63,412
Income tax expense		$	17,650			$	16,914
Credit loss provision			4,242				3,105
Less: income tax benefit on non-core items			(1,959	)			(3,273	)
Core earnings PTPP (Non-GAAP)		$	83,713			$	86,704
Core diluted earnings per share		$	1.01			$	1.08
Core earnings PTPP diluted earnings per share		$	1.42			$	1.47
Core Ratios (Annualized):
Return on average assets			0.90	%			1.06	%
Return on average tangible stockholders’ equity			10.98				12.65
Return on average tangible common equity			11.56				13.38
Efficiency ratio			59.13				55.89

(1)

The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on equity investments ($4.6 million) and other ($697,000), respectively, for the three months ended March 31, 2023.

		June 30,				March 31,				December 31,				September 30,				June 30,
			2023				2023				2022				2022				2022
Tangible Equity:
Total stockholders' equity		$	1,626,283			$	1,610,371			$	1,585,464			$	1,540,216			$	1,521,432
Less:
Goodwill			506,146				506,146				506,146				506,146				506,146
Core deposit intangible			11,476				12,470				13,497				14,656				15,827
Tangible stockholders' equity			1,108,661				1,091,755				1,065,821				1,019,414				999,459
Less:
Preferred stock			55,527				55,527				55,527				55,527				55,527
Tangible common equity		$	1,053,134			$	1,036,228			$	1,010,294			$	963,887			$	943,932
Tangible Assets:
Total assets		$	13,538,903			$	13,555,175			$	13,103,896			$	12,683,453			$	12,438,653
Less:
Goodwill			506,146				506,146				506,146				506,146				506,146
Core deposit intangible			11,476				12,470				13,497				14,656				15,827
Tangible assets		$	13,021,281			$	13,036,559			$	12,584,253			$	12,162,651			$	11,916,680
Tangible stockholders' equity to tangible assets			8.51	%			8.37	%			8.47	%			8.38	%			8.39	%
Tangible common equity to tangible assets			8.09	%			7.95	%			8.03	%			7.92	%			7.92	%

Company Contact:

Patrick S. Barrett
Chief Financial Officer
OceanFirst Financial Corp.
Tel: (732) 240-4500, ext. 7507
Email: pbarrett@oceanfirst.com