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OceanFirst Financial Corp. Announces Record Quarterly and Annual Earnings and Financial Results

RED BANK, N.J., Jan. 19, 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 $52.3 million, or $0.89 per diluted share, for the quarter ended December 31, 2022, as compared to $37.6 million, or $0.64 per diluted share, for the prior linked quarter, and $21.7 million, or $0.37 per diluted share, for the corresponding prior year period. For the year ended December 31, 2022, the Company reported net income available to common stockholders of $142.6 million, or $2.42 per diluted share, as compared to $106.1 million, or $1.78 per diluted share, for the prior year. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information):

 For the Three Months Ended, For the Year Ended,
Performance Ratios (Quarterly Ratios Annualized):
December 31, September 30, December 31, December 31, December 31,
2022 2022 2021 2022 2021
Return on average assets1.62% 1.19% 0.72% 1.15% 0.91%
Return on average stockholders’ equity13.25  9.68  5.65  9.24  7.02 
Return on average tangible stockholders’ equity (a)19.85  14.62  8.59  13.96  10.73 
Return on average tangible common equity (a)20.97  15.47  9.09  14.76  11.37 
Efficiency ratio44.56  53.10  72.04  53.80  63.50 
Net interest margin3.64  3.36  2.99  3.37  2.93 

(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 quarter and year ended December 31, 2022 amounted to $39.5 million and $138.0 million, respectively, or $0.67 and $2.34 per diluted share, an increase from core earnings of $28.5 million and $111.2 million, or $0.48 and $1.86 per diluted share, for the corresponding prior year periods. Non-core operations, net of tax, had a favorable impact of $12.7 million and $4.6 million for the quarter and year ended December 31, 2022, respectively. Non-core operations, net of tax, had an adverse impact of $6.8 million and $5.1 million for the quarter and year ended December 31, 2021, respectively.

Core earnings for the quarter ended December 31, 2022 increased $4.5 million from $35.0 million, or $0.60 per diluted share, for the prior linked quarter. Non-core operations, net of tax, had a favorable impact of $2.6 million for the prior linked quarter.

Core earnings PTPP for the quarter and year ended December 31, 2022 were $56.5 million and $190.7 million, respectively, or $0.96 and $3.24 per diluted share, as compared to $33.1 million and $133.1 million, or $0.56 and $2.23 per diluted share for the corresponding prior year periods. Selected performance metrics are as follows:

 For the Three Months Ended, For the Year Ended,
 December 31, September 30, December 31, December 31, December 31,
Core Ratios1 (Quarterly Ratios Annualized):2022 2022 2021 2022 2021
Return on average assets 1.22%  1.11%  0.95%  1.11%  0.95%
Return on average tangible stockholders’ equity 15.01   13.62   11.30   13.50   11.25 
Return on average tangible common equity 15.86   14.40   11.96   14.28   11.92 
Efficiency ratio 50.78   54.80   62.57   54.21   60.84 
Core diluted earnings per share$0.67  $0.60  $0.48  $2.34  $1.86 
Core PTPP diluted earnings per share 0.96   0.81   0.56   3.24   2.23 


Key developments for the recent quarter are described below:

  • Net Interest Income and Margin Expansion: Net interest income increased by $10.5 million to $106.5 million, from $96.0 million in the prior linked quarter. Net interest margin increased to 3.64%, from 3.36% in the prior linked quarter, largely driven by the impact of the rising rate environment on interest earning assets and loan growth, partly offset by an increased cost of funds.
  • Loan Growth: Loan growth for the quarter was $199.3 million, reflecting loan originations of $684.1 million, while loan growth for the year was $1.30 billion, reflecting record loan originations of $3.09 billion for the year ended December 31, 2022.
  • Stockholders’ Equity per Common Share Growth: Stockholders’ equity per common share increased to $26.81, from $26.04 in the prior linked quarter. Tangible common equity per common share increased to $17.08, from $16.30 in the prior linked quarter, reflecting capital accretion from earnings growth and stable other comprehensive income.

1 Core earnings and core earnings before income taxes and credit loss provision (“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, and the income tax effect of these items, (collectively referred to as “non-core” operations). PTPP excludes the aforementioned pre-tax “non-core” items along with income tax expense (benefit) and credit loss provision (benefit). Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased to report exceptional financial performance for the fourth quarter and for the year driven by record net income and net interest income, net interest margin expansion, and continued loan growth. Throughout the challenging economic environment in 2022, OceanFirst has produced some of the strongest results in the history of our Company.” Mr. Maher added, “I am very proud of the entire team who worked tirelessly to serve our customers, to drive these results, and position OceanFirst to continue to deliver for our stockholders in 2023.”

As previously announced, in November 2022, the Company made an additional minority, non-controlling equity investment in Auxilior Capital Partners, Inc. (“Auxilior”), of $2.8 million as part of a new round of financing by the Company and other investors, in addition to the original $10.0 million investment the Company made in 2021. The new round of financing resulted in an unrealized gain of $17.5 million on the prior investments, which is included in other income for the quarter and year ended December 31, 2022.

The Company’s Board of Directors declared its 104th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on February 17, 2023 to common stockholders of record on February 6, 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 February 15, 2023 to preferred stockholders of record on January 31, 2023.

Results of Operations
On April 1, 2022, the Company completed its acquisition of a majority interest in Trident Abstract Title Agency, LLC (“Trident”) and its results of operations are included in the consolidated results for the quarter and year ended December 31, 2022, but do not impact the results of operations for the period from January 1, 2021 to March 31, 2022. Refer to “Supplemental Information on Trident” for the impact of Trident on the Company’s consolidated results.

Net Interest Income and Margin
Net interest income for the quarter and year ended December 31, 2022 increased to $106.5 million and $377.5 million, respectively, as compared to $80.6 million and $305.3 million for the corresponding prior year periods, reflecting an increase in average interest-earning assets and net interest margin.

Net interest margin for the quarter and year ended December 31, 2022 increased to 3.64% and 3.37%, respectively, from 2.99% and 2.93% for the same prior year periods. Excluding the impact of purchase accounting accretion and prepayment fees of 0.10% and 0.18% for the quarter ended December 31, 2022 and 2021, respectively, net interest margin increased to 3.54% from 2.81%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.11% and 0.17% for the year ended December 31, 2022 and 2021, respectively, net interest margin increased to 3.26% from 2.76%. Net interest margin for both the quarter and year ended December 31, 2022 were enhanced by the impact of the rising rate environment on interest earning assets and the redeployment of excess cash into loans, partly offset by an increased cost of funds and the growth of interest-bearing liabilities.

Average interest-earning assets increased by $899.7 million and $779.9 million for the quarter and year ended December 31, 2022, respectively, as compared to the corresponding prior year periods, primarily due to loan growth and, to a lesser extent securities growth, funded by the redeployment of excess cash and increased Federal Home Loan Bank ("FHLB") advances. Average loans receivable, net of allowance for loan credit losses, increased by $1.47 billion and $1.40 billion, primarily in commercial loans, for the quarter and year ended December 31, 2022, respectively, as compared to the same prior year periods.

For the quarter and year ended December 31, 2022, the cost of average interest-bearing liabilities increased to 1.09% and 0.65%, respectively, from 0.40% and 0.49% for the corresponding prior year periods, as a result of higher costs associated with FHLB advances and interest-bearing deposits, including time deposits issued in an elevated rate environment in 2022. The total cost of deposits (including non-interest bearing deposits) was 0.53% and 0.31% for the quarter and year ended December 31, 2022, respectively, as compared to 0.20% and 0.26% for the same prior year periods. While costs of deposits have increased, deposit betas remain under 10% and are a fraction of the Company’s historical experience in the last rising interest rate cycle.

Net interest income for the quarter ended December 31, 2022 increased by $10.5 million, as compared to the prior linked quarter, reflecting an increase in net interest margin to 3.64%, as compared to 3.36% for the prior linked quarter. Excluding the impact of purchase accounting accretion and prepayment fees of 0.10% and 0.08% for the quarter ended December 31, 2022 and September 30, 2022, respectively, net interest margin increased to 3.54% from 3.28%. The expansion in net interest margin was primarily attributable to the impact of the rising rate environment on interest earning assets, loan growth and, to a lesser extent, loan payoffs impacting interest income. This was partly offset by an increased cost of funds and the expansion in FHLB advances to fund loan growth. Average interest-earning assets increased by $279.1 million for the quarter ended December 31, 2022, as compared to the prior linked quarter, primarily due to loan growth. The yield on average interest-earning assets increased to 4.46% for the quarter ended December 31, 2022, from 3.88% in the prior linked quarter, primarily due to the impact of the rising rate environment on interest earning assets. The total cost of average interest-bearing liabilities increased to 1.09% for the quarter ended December 31, 2022, as compared to 0.69% in the prior linked quarter, primarily due to higher costs associated with interest-bearing deposits and higher costs and balances of FHLB advances.

Credit Loss Expense (Benefit)
Credit loss expense for the quarter and year ended December 31, 2022, was $3.6 million and $7.8 million, respectively, as compared to credit loss benefit of $1.6 million and $11.8 million for the corresponding prior year periods, and a credit loss expense of $1.0 million in the prior linked quarter. The credit loss expense for the quarter and year ended December 31, 2022 was primarily influenced by loan growth, slowing prepayment assumptions, and increasingly uncertain macro-economic forecasts due to persistent inflation, interest rate increases, and global economic headwinds, partly offset by positive trends in the Company’s criticized and classified assets. The Company’s credit loss expense for the quarter ended December 31, 2022 increased from the prior linked quarter due to the heightened levels of uncertainty in macro-environment projections, despite the strength in the Company’s borrower performance and overall asset quality.

Net loan recoveries were $5,000 and $340,000 for the quarter and year ended December 31, 2022, respectively. Net loan recoveries were $19,000 and $461,000 for the quarter and year ended December 31, 2021, respectively. Net loan recoveries were $252,000 in the prior linked quarter. Refer to “Asset Quality” section for further discussion.

Non-interest Income
For the quarter and year ended December 31, 2022, other income increased to $27.6 million and $59.1 million, respectively, as compared to $9.4 million and $51.9 million for the corresponding prior year periods.

Other income for the quarter and year ended December 31, 2022 was impacted by non-core operations of $17.2 million and $9.7 million, respectively, related to net gains on equity investments, which included a $17.5 million unrealized gain on the Auxilior investment. The year ended December 31, 2022 included $8.9 million of net unrealized losses, mostly on preferred stock equity investments, primarily due to the impact of the rising interest rate environment. The preferred stock equity investments carried a weighted average yield of 5.1% and an amortized cost of $73.0 million at December 31, 2022. Other income for the quarter and year ended December 31, 2021 included net losses on equity investments of $1.3 million and net gains on equity investments of $7.1 million, respectively, which are considered non-core operations.

Excluding non-core operations noted above, other income decreased $298,000 for the quarter ended December 31, 2022, as compared to the corresponding prior year period. This decrease was primarily due to decreases in bankcard services of $1.9 million, primarily as a result of the Durbin amendment, which became effective for the Company on July 1, 2022, and commercial loan swap income of $804,000. These decreases were partly offset by the acquisition of a majority interest in Trident, which added $2.6 million primarily due to title-related fees and service charges.

Excluding non-core operations noted above, other income increased by $4.6 million for the year ended December 31, 2022, as compared to the prior year. The increase was primarily due to the impact of Trident, which added $10.4 million, mostly due to title-related fees and services charges, and an increase in commercial loan swap income of $3.0 million. These increases were partly offset by decreases in bankcard services of $4.1 million, primarily as a result of the Durbin amendment, net gain on sale of loans of $2.8 million, fees and service charges (excluding Trident) of $814,000, and Paycheck Protection Program loan origination referral fees of $800,000 recognized in the prior year.

Excluding non-core operations of $3.4 million related to net gain on equity investments in the prior linked quarter, other income for the quarter ended December 31, 2022 decreased by $1.4 million, primarily due to a decrease in commercial loan swap income of $952,000.

Non-interest Expense
Operating expenses decreased to $59.7 million and increased to $234.9 million for the quarter and year ended December 31, 2022, respectively, as compared to $64.8 million and $226.9 million, for the same prior year periods. Operating expenses for the quarter and year ended December 31, 2022 were adversely impacted by $387,000 and $3.4 million of non-core operations, respectively. Operating expenses for the quarter and year ended December 31, 2021 were adversely impacted by non-core operations of $7.7 million and $13.8 million, respectively.

Excluding non-core operations, operating expenses increased by $2.2 million for the quarter ended December 31, 2022, as compared to the corresponding prior year period. This increase was partly due to the acquisition of a majority interest in Trident, which added $2.5 million of expenses for the quarter ended December 31, 2022. Other increases, excluding Trident, included professional fees of $2.0 million and compensation and benefits of $1.3 million, partly offset by a decrease in data processing expense of $3.2 million.

Excluding non-core operations, operating expenses increased by $18.4 million for the year ended December 31, 2022, as compared to the prior year. This increase was partly due to the impact of Trident, which added $8.5 million of expenses. Other increases, excluding Trident, included compensation and benefits expense of $6.6 million, primarily related to higher compensation and incentive costs, professional fees of $1.9 million, data processing expense of $1.5 million, and federal deposit insurance and regulatory assessments of $1.2 million, partly offset by a decrease in amortization of core deposit intangible of $734,000.

Excluding non-core operations of $48,000, which favorably impacted operating expenses in the prior linked quarter, operating expenses for the quarter ended December 31, 2022 increased by $296,000 primarily due to an increase in professional fees of $2.2 million, partly offset by a decrease in data processing expense of $1.9 million.

Income Tax Expense
The provision for income taxes was $17.4 million and $46.6 million for the quarter and year ended December 31, 2022, respectively, as compared to $4.1 million and $32.2 million, for the same prior year periods, and $12.3 million for the prior linked quarter. The effective tax rate was 24.6% and 24.0% for the quarter and year ended December 31, 2022, respectively, as compared to 15.3% and 22.6% for the same prior year periods, and 24.1% for the prior linked quarter. The lower effective tax rate for the quarter ended December 31, 2021, as compared to the current year periods and prior linked quarter, was primarily due to allocation of taxable income to jurisdictions other than New Jersey, which was tied to our commercial banking strategy, and other tax optimization efforts.

Financial Condition
Total assets increased by $1.36 billion to $13.10 billion at December 31, 2022, from $11.74 billion at December 31, 2021. Total loans increased by $1.30 billion to $9.92 billion at December 31, 2022, from $8.62 billion at December 31, 2021, due to strong loan originations and to a lesser extent, residential loan pool purchases. Total debt securities decreased by $28.7 million at December 31, 2022, as compared to December 31, 2021, primarily due to principal repayments and maturities, and to a lesser extent, an increase in unrealized losses driven by the rising rate environment. This was partly offset by purchases in the second half of the year, which included approximately $227 million of fixed rate bonds at amortized cost, with a weighted average life of 8.5 years and a weighted average yield of 5.1%, to provide stability to the Company’s net interest income position. Other assets increased by $74.1 million to $221.1 million at December 31, 2022 from $147.0 million at December 31, 2021, primarily due to an increase in market values associated with customer interest rate swap programs.

Total liabilities increased by $1.30 billion to $11.52 billion at December 31, 2022, from $10.22 billion at December 31, 2021. FHLB advances increased to $1.21 billion at December 31, 2022 from $0 at December 31, 2021 to fund liquidity needs, as deposits decreased by $57.6 million during this period from $9.73 billion to $9.68 billion. Total deposits, excluding time deposits, decreased by $824.6 million to $8.13 billion at December 31, 2022, from $8.96 billion at December 31, 2021, due to the net runoff of non-interest-bearing and interest-bearing checking balances. Time deposits increased to $1.54 billion, or 15.9% of total deposits, at December 31, 2022, from $775.0 million, or 8.0% of total deposits, at December 31, 2021, primarily due to an increase in brokered time deposits. The loans-to-deposit ratio at December 31, 2022 was 102.5%, as compared to 88.6% at December 31, 2021. Other borrowings also decreased by $33.7 million to $195.4 million at December 31, 2022, from $229.1 million at December 31, 2021, primarily due to the extinguishment of $35.0 million of subordinated debt in March 2022.

Other liabilities increased by $224.1 million to $346.2 million at December 31, 2022, from $122.0 million at December 31, 2021, primarily due to an increase in the market values associated with customer interest rate swap programs and related collateral received from counterparties.

Stockholders’ equity increased to $1.59 billion at December 31, 2022, as compared to $1.52 billion at December 31, 2021. Accumulated other comprehensive loss increased by $33.2 million to $36.0 million at December 31, 2022 from $2.8 million at December 31, 2021, primarily due to unrealized losses on debt securities available-for-sale, which were adversely impacted by the rising interest rate environment. For the year ended December 31, 2022, the Company repurchased 373,223 shares totaling $7.4 million under its stock repurchase program at a weighted average cost of $19.82. There were 2,934,438 shares available for repurchase at December 31, 2022 under the existing repurchase program. Stockholders’ equity per common share increased to $26.81 at December 31, 2022, as compared to $25.63 at December 31, 2021. Tangible common equity per common share2 increased to $17.08 at December 31, 2022, as compared to $15.93 at December 31, 2021.

2 Tangible common equity per common share, a non-GAAP financial measure, excludes the impact of intangible assets, goodwill, and preferred equity 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.

Asset Quality
The Company’s non-performing loans decreased to $23.3 million at December 31, 2022, as compared to $25.5 million at December 31, 2021. The Company’s non-performing loans, excluding $3.9 million and $6.5 million of non-performing purchased with credit deterioration (“PCD”) loans from prior bank acquisitions at December 31, 2022 and 2021, respectively, increased to $19.3 million at December 31, 2022, as compared to $18.9 million at December 31, 2021. The allowance for loan credit losses as a percentage of total non-performing loans was 244.25% at December 31, 2022, as compared to 191.61% at December 31, 2021. The allowance for loan credit losses as a percentage of total non-performing loans, excluding PCD loans, was 294.10% at December 31, 2022, as compared to 257.81% at December 31, 2021. The level of 30 to 89 days delinquent loans improved to $14.1 million at December 31, 2022, from $14.5 million at December 31, 2021. The level of 30 to 89 days delinquent loans, excluding non-performing and PCD loans, improved to $10.5 million at December 31, 2022, from $13.5 million at December 31, 2021.

The Company’s allowance for loan credit losses was 0.57% of total loans at both December 31, 2022 and 2021. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $68.2 million, or 0.69% of total loans, at December 31, 2022, as compared to $67.8 million, or 0.79% of total loans at December 31, 2021.

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

Annual Meeting
The Company also announced today that its Annual Meeting of Stockholders will be held on Tuesday, May 23, 2023 at 8:00 a.m. Eastern Time. The record date for stockholders to vote at the Annual Meeting is Tuesday, April 4, 2023. Additional information regarding virtual access to the meeting will be distributed prior to the meeting.

Conference Call
As previously announced, the Company will host an earnings conference call on Friday, January 20, 2023 at 11:00 a.m. Eastern Time. The direct dial number for the call is 1-844-200-6205, toll free, using the access code 433036. For those unable to participate in the conference call, a replay will be available. To access the replay, dial 1-866-813-9403, access code 427414, from one hour after the end of the call until April 20, 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 $13.1 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: implications arising from the termination of the proposed merger with Partners Bancorp, including reputational risks and potential adverse effects on the ability to attract other merger partners; the impact of the COVID-19 pandemic or any other pandemic on our operations and financial results and those of our customers, 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, competition, demand for financial services in the Company’s market area, changes in consumer spending, borrowing and savings 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 and the Bank’s ability to successfully integrate acquired operations. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, under Item 1A - Risk Factors and elsewhere, and subsequent securities filings and should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)

 December 31, 2022 September 30, 2022 December 31, 2021
 (Unaudited) (Unaudited)  
Assets     
Cash and due from banks$167,946 $170,668 $204,949
Debt securities available-for-sale, at estimated fair value 457,648  470,300  568,255
Debt securities held-to-maturity, net of allowance for securities credit losses of $1,128 at December 31, 2022, $1,234 at September 30, 2022, and $1,467 at December 31, 2021 (estimated fair value of $1,110,041 at December 31, 2022, $905,426 at September 30, 2022, and $1,152,744 at December 31, 2021) 1,221,138  1,027,712  1,139,193
Equity investments 102,037  81,722  101,155
Restricted equity investments, at cost 109,278  77,556  53,195
Loans receivable, net of allowance for loan credit losses of $56,824 at December 31, 2022, $53,521 at September 30, 2022, and $48,850 at December 31, 2021 9,868,718  9,672,488  8,583,352
Loans held-for-sale 690  3,549  
Interest and dividends receivable 44,704  38,388  32,606
Other real estate owned     106
Premises and equipment, net 126,705  127,868  125,828
Bank owned life insurance 261,603  261,118  259,207
Assets held for sale 2,719  3,216  6,229
Goodwill 506,146  506,146  500,319
Core deposit intangible 13,497  14,656  18,215
Other assets 221,067  228,066  147,007
Total assets$13,103,896 $12,683,453 $11,739,616
Liabilities and Stockholders’ Equity     
Deposits$9,675,206 $9,959,469 $9,732,816
Federal Home Loan Bank advances 1,211,166  514,200  
Securities sold under agreements to repurchase with customers 69,097  96,289  118,769
Other borrowings 195,403  194,914  229,141
Advances by borrowers for taxes and insurance 21,405  25,457  20,305
Other liabilities 346,155  352,908  122,032
Total liabilities 11,518,432  11,143,237  10,223,063
Stockholders’ equity:     
OceanFirst Financial Corp. stockholders’ equity 1,584,662  1,539,253  1,516,553
Non-controlling interest 802  963  
Total stockholders’ equity 1,585,464  1,540,216  1,516,553
Total liabilities and stockholders’ equity$13,103,896 $12,683,453 $11,739,616

    

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,
 2022 2022 2021 2022 2021
 |--------------------- (Unaudited) ---------------------| (Unaudited)  
Interest income:         
Loans$117,046 $100,141  $81,392  $390,386 $315,237 
Debt securities 10,951  8,479   5,654   34,407  22,033 
Equity investments and other 2,280  1,879   1,411   6,382  4,822 
Total interest income 130,277  110,499   88,457   431,175  342,092 
Interest expense:         
Deposits 13,425  9,238   5,010   31,021  25,210 
Borrowed funds 10,364  5,296   2,861   22,677  11,544 
Total interest expense 23,789  14,534   7,871   53,698  36,754 
Net interest income 106,488  95,965   80,586   377,477  305,338 
Credit loss expense (benefit) 3,647  1,016   (1,573)  7,768  (11,832)
Net interest income after credit loss expense (benefit) 102,841  94,949   82,159   369,709  317,170 
Other income:         
Bankcard services revenue 1,437  1,509   3,308   9,219  13,360 
Trust and asset management revenue 551  568   562   2,386  2,336 
Fees and service charges 5,776  6,320   3,314   22,802  13,833 
Net gain on sales of loans 10  168   6   358  3,186 
Net gain (loss) on equity investments 17,187  3,362   (1,252)  9,685  7,145 
Net (loss) gain from other real estate operations      (3)  48  (15)
Income from bank owned life insurance 1,697  1,356   2,061   6,578  6,832 
Commercial loan swap income 519  1,471   1,323   7,065  4,095 
Other 374  396   91   953  1,159 
Total other income 27,551  15,150   9,410   59,094  51,931 
Operating expenses:         
Compensation and employee benefits 33,943  34,124   31,006   131,915  120,014 
Occupancy 5,027  5,288   5,101   20,817  20,481 
Equipment 1,131  1,150   1,435   4,987  5,443 
Marketing 705  655   614   2,947  2,169 
Federal deposit insurance and regulatory assessments 1,924  1,757   1,733   7,359  6,155 
Data processing 4,629  6,560   7,774   23,095  21,570 
Check card processing 1,243  1,231   1,170   4,971  5,182 
Professional fees 4,697  2,502   2,726   12,993  11,043 
Amortization of core deposit intangible 1,159  1,171   1,343   4,718  5,453 
Branch consolidation expense (benefit), net 111  (346)  7,286   713  12,337 
Merger related expenses 276  298   451   2,735  1,503 
Other operating expense 4,883  4,607   4,195   17,631  15,510 
Total operating expenses 59,728  58,997   64,834   234,881  226,860 
Income before provision for income taxes 70,664  51,102   26,735   193,922  142,241 
Provision for income taxes 17,353  12,298   4,078   46,565  32,165 
Net income 53,311  38,804   22,657   147,357  110,076 
Net income attributable to non-controlling interest 39  193      754   
Net income attributable to OceanFirst Financial Corp. 53,272  38,611   22,657   146,603  110,076 
Dividends on preferred shares 1,004  1,004   1,004   4,016  4,016 
Net income available to common stockholders$52,268 $37,607  $21,653  $142,587 $106,060 
Basic earnings per share$0.89 $0.64  $0.37  $2.43 $1.79 
Diluted earnings per share$0.89 $0.64  $0.37  $2.42 $1.78 
Average basic shares outstanding 58,584  58,681   58,801   58,730  59,406 
Average diluted shares outstanding 58,751  58,801   59,044   58,878  59,649 


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

LOANS RECEIVABLE  At
   December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Commercial:           
Commercial real estate - investor $5,171,952  $5,007,637  $4,808,965  $4,607,880  $4,378,061 
Commercial real estate - owner-occupied  997,367   983,784   1,020,873   1,057,246   1,055,065 
Commercial and industrial   622,372   652,620   584,464   502,739   449,224 
Total commercial   6,791,691   6,644,041   6,414,302   6,167,865   5,882,350 
Consumer:           
Residential real estate   2,861,991   2,813,209   2,758,269   2,687,927   2,479,701 
Home equity loans and lines and other consumer (“other consumer”)  264,372   261,510   252,314   253,184   260,819 
Total consumer   3,126,363   3,074,719   3,010,583   2,941,111   2,740,520 
Total loans   9,918,054   9,718,760   9,424,885   9,108,976   8,622,870 
Deferred origination costs (fees), net  7,488   7,249   7,864   7,301   9,332 
Allowance for loan credit losses   (56,824)  (53,521)  (52,061)  (50,598)  (48,850)
Loans receivable, net  $9,868,718  $9,672,488  $9,380,688  $9,065,679  $8,583,352 
Mortgage loans serviced for others $51,736  $53,869  $56,045  $58,089  $60,447 
 At December 31, 2022
Average Yield
          
Loan pipeline (1):           
Commercial6.53% $114,232  $339,487  $273,843  $385,986  $539,426 
Residential real estate6.10   36,958   80,591   104,920   116,554   123,211 
Other consumer5.95   14,890   19,395   6,278   12,814   8,381 
Total6.38% $166,080  $439,473  $385,041  $515,354  $671,018 


 For the Three Months Ended 
 December 31, September 30, June 30, March 31, December 31, 
 2022 2022 2022 2022 2021 
 Average Yield           
Loan originations:            
Commercial6.32% $539,949 $356,726 $645,863 $816,517 $780,464 
Residential real estate5.48   101,530(2) 129,808  173,365  192,721(2) 195,942(2)
Other consumer5.28   42,624  57,254  16,253  12,718  12,552 
Total6.13% $684,103 $543,788 $835,481 $1,021,956 $988,958 
Loans sold  $2,340 $9,425(3)$ $703(4)$649 


(1)Loan pipeline includes loans approved but not funded.
(2)Excludes residential real estate loan pool purchases of $9.9 million, $161.7 million and $82.2 million for the three months ended December 31, 2022, March 31, 2022 and December 31, 2021, respectively.
(3)Excludes the sale of a small business administration loan of $1.2 million for the three months ended September 30, 2022.
(4)Excludes the sale of higher risk commercial loans of $12.0 million for the three months ended March 31, 2022.


DEPOSITSAt
 December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Type of Account         
Non-interest-bearing$2,101,308 $2,325,547 $2,312,126 $2,444,833 $2,412,056
Interest-bearing checking 3,829,683  3,909,864  3,696,067  4,287,745  4,201,736
Money market 714,386  749,229  716,782  811,588  736,090
Savings 1,487,809  1,570,472  1,606,534  1,624,751  1,607,933
Time deposits 1,542,020  1,404,357  1,499,975  887,316  775,001
Total deposits$9,675,206 $9,959,469 $9,831,484 $10,056,233 $9,732,816


OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)

ASSET QUALITYDecember 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Non-performing loans:         
Commercial real estate - investor$10,483  $9,866  $2,609  $3,575  $3,614 
Commercial real estate - owner-occupied 4,025   1,976   8,233   9,632   11,904 
Commercial and industrial 331   321   364   2,830   277 
Residential real estate 5,969   5,958   5,846   7,047   6,114 
Other consumer 2,457   3,377   3,701   3,841   3,585 
Total non-performing loans 23,265   21,498   20,753   26,925   25,494 
Other real estate owned          106   106 
Total non-performing assets$23,265  $21,498  $20,753  $27,031  $25,600 
Delinquent loans 30 to 89 days$14,148  $11,846  $9,558  $18,691  $14,546 
Troubled debt restructuring (“TDR”):         
Non-performing (included in total non-performing loans above)$6,361  $10,047  $10,493  $11,914  $11,311 
Performing 7,530   6,065   6,946   7,716   12,320 
Total TDRs$13,891  $16,112  $17,439  $19,630  $23,631 
Allowance for loan credit losses$56,824  $53,521  $52,061  $50,598  $48,850 
Allowance for loan credit losses as a percent of total loans receivable (1) 0.57%  0.55%  0.55%  0.56%  0.57%
Allowance for loan credit losses as a percent of total non-performing loans (1) 244.25   248.96   250.86   187.92   191.61 
Non-performing loans as a percent of total loans receivable 0.23   0.22   0.22   0.30   0.30 
Non-performing assets as a percent of total assets 0.18   0.17   0.17   0.22   0.22 
Supplemental PCD and non-performing loans         
PCD loans, net of allowance for loan credit losses$27,129  $29,249  $35,227  $37,032  $41,817 
Non-performing PCD loans 3,944   3,043   3,529   3,745   6,546 
Delinquent PCD and non-performing loans 30 to 89 days 3,657   1,434   1,381   2,749   1,000 
TDR PCD loans 765   715   997   1,033   337 
Asset quality, excluding PCD loans (2)         
Non-performing loans 19,321   18,455   17,224   23,180   18,948 
Non-performing assets 19,321   18,455   17,224   23,286   19,054 
Delinquent loans 30 to 89 days (excludes non-performing loans) 10,491   10,412   8,177   15,942   13,546 
TDRs 13,126   15,397   16,442   18,597   23,294 
Allowance for loan credit losses as a percent of total non-performing loans (1) 294.10%  290.01%  302.26%  218.28%  257.81%
Non-performing loans as a percent of total loans receivable 0.19   0.19   0.18   0.25   0.22 
Non-performing assets as a percent of total assets 0.15   0.15   0.14   0.19   0.16 


(1)Loans acquired from prior bank acquisitions were recorded at fair value. The net unamortized credit and PCD marks on these loans, not reflected in the allowance for loan credit losses, was $11.4 million, $13.6 million, $15.5 million, $16.9 million, and $18.9 million at December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively.
(2)All balances and ratios exclude PCD loans.

   

NET LOAN RECOVERIES (CHARGE-OFFS)For the Three Months Ended
 December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Net loan recoveries (charge-offs):         
Loan charge-offs$(138) $(5) $(287) $(143) $(92)
Recoveries on loans 143   257   278   235   111 
Net loan recoveries (charge-offs)$5  $252  $(9) $92  $19 
Net loan recoveries (charge-offs) to average total loans (annualized)NM* NM*  % NM* NM*
Net loan recoveries (charge-offs) detail:         
Commercial$(46) $117  $154  $25  $(24)
Residential real estate 9   44   (47)  94   21 
Other consumer 42   91   (116)  (27)  22 
Net loan recoveries (charge-offs)$5  $252  $(9) $92  $19 

* Not meaningful as amounts are net loan recoveries.

OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME

 For the Three Months Ended
 December 31, 2022 September 30, 2022 December 31, 2021
(dollars in thousands)Average
Balance
 Interest Average
Yield/
Cost (1)
 Average
Balance
 Interest Average
Yield/
Cost (1)
 Average
Balance
 Interest Average
Yield/
Cost (1)
Assets:                 
Interest-earning assets:                 
Interest-earning deposits and short-term investments$70,023  $634 3.59% $65,648  $336 2.03% $698,652  $300 0.17%
Securities (2) 1,764,764   12,597 2.83   1,748,687   10,022 2.27   1,710,143   6,765 1.57 
Loans receivable, net (3)                 
Commercial 6,715,896   88,991 5.26   6,509,515   74,309 4.53   5,635,642   57,829 4.07 
Residential real estate 2,841,073   24,532 3.45   2,791,067   22,818 3.27   2,430,635   20,454 3.37 
Other consumer 262,911   3,523 5.32   256,638   3,014 4.66   273,007   3,109 4.52 
Allowance for loan credit losses, net of deferred loan costs and fees (48,776)      (44,773)      (41,889)    
Loans receivable, net 9,771,104   117,046 4.76   9,512,447   100,141 4.18   8,297,395   81,392 3.89 
Total interest-earning assets 11,605,891   130,277 4.46   11,326,782   110,499 3.88   10,706,190   88,457 3.28 
Non-interest-earning assets 1,228,520       1,191,173       1,247,420     
Total assets$12,834,411      $12,517,955      $11,953,610     
Liabilities and Stockholders' Equity:                 
Interest-bearing liabilities:                 
Interest-bearing checking$3,989,403   4,911 0.49% $3,873,968   2,671 0.27% $4,249,001   2,851 0.27%
Money market 738,637   917 0.49   793,230   721 0.36   790,471   282 0.14 
Savings 1,539,175   285 0.07   1,603,147   187 0.05   1,611,522   141 0.03 
Time deposits 1,486,410   7,312 1.95   1,467,297   5,659 1.53   819,025   1,736 0.84 
Total 7,753,625   13,425 0.69   7,737,642   9,238 0.47   7,470,019   5,010 0.27 
FHLB advances 632,207   6,475 4.06   352,392   2,208 2.49        
Securities sold under agreements to repurchase 88,191   41 0.18   96,147   35 0.14   132,520   50 0.15 
Other borrowings 195,167   3,848 7.82   194,755   3,053 6.22   228,980   2,811 4.87 
Total borrowings 915,565   10,364 4.49   643,294   5,296 3.27   361,500   2,861 3.14 
Total interest-bearing liabilities 8,669,190   23,789 1.09   8,380,936   14,534 0.69   7,831,519   7,871 0.40 
Non-interest-bearing deposits 2,221,884       2,328,700       2,467,588     
Non-interest-bearing liabilities 378,481       266,564       134,527     
Total liabilities 11,269,555       10,976,200       10,433,634     
Stockholders’ equity 1,564,856       1,541,755       1,519,976     
Total liabilities and equity$12,834,411      $12,517,955      $11,953,610     
Net interest income  $106,488     $95,965     $80,586  
Net interest rate spread (4)    3.37%     3.19%     2.88%
Net interest margin (5)    3.64%     3.36%     2.99%
Total cost of deposits (including non-interest-bearing deposits)    0.53%     0.36%     0.20%


 For the Year Ended
 December 31, 2022 December 31, 2021
(dollars in thousands)Average
Balance
 Interest Average
Yield/
Cost
 Average
Balance
 Interest Average
Yield/
Cost
Assets:           
Interest-earning assets:           
Interest-earning deposits and short-term investments$72,913  $1,106 1.52% $969,982  $1,258 0.13%
Securities (2) 1,792,598   39,683 2.21   1,517,649   25,597 1.69 
Loans receivable, net (3)           
Commercial 6,386,755   287,044 4.49   5,362,265   221,144 4.12 
Residential real estate 2,724,398   91,432 3.36   2,309,790   79,696 3.45 
Other consumer 256,912   11,910 4.64   298,193   14,397 4.83 
Allowance for loan credit losses, net of deferred loan costs and fees (44,446)      (48,637)    
Loans receivable, net 9,323,619   390,386 4.19   7,921,611   315,237 3.98 
Total interest-earning assets 11,189,130   431,175 3.85   10,409,242   342,092 3.29 
Non-interest-earning assets 1,200,725       1,260,079     
Total assets$12,389,855      $11,669,321     
Liabilities and Stockholders' Equity:           
Interest-bearing liabilities:           
Interest-bearing checking$4,063,716   11,344 0.28% $3,878,465   13,400 0.35%
Money market 764,837   2,234 0.29   769,157   1,105 0.14 
Savings 1,597,648   758 0.05   1,581,472   631 0.04 
Time deposits 1,167,499   16,685 1.43   985,328   10,074 1.02 
Total 7,593,700   31,021 0.41   7,214,422   25,210 0.35 
FHLB advances 389,750   10,365 2.66        
Securities sold under agreements to repurchase 101,377   159 0.16   134,939   253 0.19 
Other borrowings 203,117   12,153 5.98   228,600   11,291 4.94 
Total borrowings 694,244   22,677 3.27   363,539   11,544 3.18 
Total interest-bearing liabilities 8,287,944   53,698 0.65   7,577,961   36,754 0.49 
Non-interest-bearing deposits 2,319,657       2,429,547     
Non-interest-bearing liabilities 239,861       151,950     
Total liabilities 10,847,462       10,159,458     
Stockholders’ equity 1,542,393       1,509,863     
Total liabilities and equity$12,389,855      $11,669,321     
Net interest income  $377,477     $305,338  
Net interest rate spread (4)    3.20%     2.80%
Net interest margin (5)    3.37%     2.93%
Total cost of deposits (including non-interest-bearing deposits)    0.31%     0.26%


(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)

 December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Selected Financial Condition Data:         
Total assets$13,103,896 $12,683,453 $12,438,653 $12,164,945 $11,739,616
Debt securities available-for-sale, at estimated fair value 457,648  470,300  507,276  546,470  568,255
Debt securities held-to-maturity, net of allowance for securities credit losses 1,221,138  1,027,712  1,068,034  1,099,514  1,139,193
Equity investments 102,037  81,722  75,269  93,888  101,155
Restricted equity investments, at cost 109,278  77,556  76,047  56,704  53,195
Loans receivable, net of allowance for loan credit losses 9,868,718  9,672,488  9,380,688  9,065,679  8,583,352
Deposits 9,675,206  9,959,469  9,831,484  10,056,233  9,732,816
Federal Home Loan Bank advances 1,211,166  514,200  488,750  75,002  
Securities sold under agreements to repurchase and other borrowings 264,500  291,203  300,149  312,178  347,910
Total stockholders’ equity 1,585,464  1,540,216  1,521,432  1,519,334  1,516,553


 For the Three Months Ended
 December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Selected Operating Data:         
Interest income$130,277 $110,499  $99,416  $90,983  $88,457 
Interest expense 23,789  14,534   8,619   6,756   7,871 
Net interest income 106,488  95,965   90,797   84,227   80,586 
Credit loss expense (benefit) 3,647  1,016   1,254   1,851   (1,573)
Net interest income after credit loss expense (benefit) 102,841  94,949   89,543   82,376   82,159 
Other income (excluding net gain (loss) on equity investments) 10,364  11,788   15,619   11,638   10,662 
Net gain (loss) on equity investments 17,187  3,362   (8,078)  (2,786)  (1,252)
Operating expenses (excluding merger related and branch consolidation expense (benefit), net) 59,341  59,045   57,919   55,128   57,097 
Branch consolidation expense (benefit), net 111  (346)  546   402   7,286 
Merger related expenses 276  298   196   1,965   451 
Income before provision for income taxes 70,664  51,102   38,423   33,733   26,735 
Provision for income taxes 17,353  12,298   8,940   7,974   4,078 
Net income 53,311  38,804   29,483   25,759   22,657 
Net income attributable to non-controlling interest 39  193   522       
Net income attributable to OceanFirst Financial Corp.$53,272 $38,611  $28,961  $25,759  $22,657 
Net income available to common stockholders$52,268 $37,607  $27,957  $24,755  $21,653 
Diluted earnings per share$0.89 $0.64  $0.47  $0.42  $0.37 
Net accretion/amortization of purchase accounting adjustments included in net interest income$2,278 $2,004  $2,196  $2,953  $3,610 


 At or For the Three Months Ended
 December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Selected Financial Ratios and Other Data (1) (2):         
Performance Ratios (Annualized):         
Return on average assets (3)1.62% 1.19% 0.92% 0.84% 0.72%
Return on average tangible assets (3) (4)1.68  1.24  0.96  0.88  0.75 
Return on average stockholders' equity (3)13.25  9.68  7.31  6.57  5.65 
Return on average tangible stockholders' equity (3) (4)19.85  14.62  11.08  9.94  8.59 
Return on average tangible common equity (3) (4)20.97  15.47  11.72  10.52  9.09 
Stockholders' equity to total assets12.10  12.14  12.23  12.49  12.92 
Tangible stockholders' equity to tangible assets (4)8.47  8.38  8.39  8.60  8.89 
Tangible common equity to tangible assets (4)8.03  7.92  7.92  8.13  8.40 
Net interest rate spread3.37  3.19  3.18  3.08  2.88 
Net interest margin3.64  3.36  3.29  3.18  2.99 
Operating expenses to average assets1.85  1.87  1.92  1.95  2.15 
Efficiency ratio (5)44.56  53.10  59.65  61.77  72.04 
Loans-to-deposits102.50  97.60  95.90  90.60  88.60 


 At or For the Year Ended December 31,
 2022 2021
Performance Ratios:   
Return on average assets (3)1.15% 0.91%
Return on average tangible assets (3) (4)1.20  0.95 
Return on average stockholders' equity (3)9.24  7.02 
Return on average tangible stockholders' equity (3) (4)13.96  10.73 
Return on average tangible common equity (3) (4)14.76  11.37 
Net interest rate spread3.20  2.80 
Net interest margin3.37  2.93 
Operating expenses to average assets1.90  1.94 
Efficiency ratio (5)53.80  63.50 


 At or For the Three Months Ended
 December 31, September 30, June 30, March 31, December 31,
 2022 2022 2022 2022 2021
Trust and Asset Management:         
Wealth assets under administration and management (“AUA/M”)$324,066  $273,815  $279,222  $296,818  $287,404 
Nest Egg AUA/M 403,538   402,256   398,344   415,478   428,558 
Total AUA/M 727,604   676,071   677,566   712,296   715,962 
Per Share Data:         
Cash dividends per common share$0.20  $0.20  $0.17  $0.17  $0.17 
Stockholders’ equity per common share at end of period 26.81   26.04   25.73   25.58   25.63 
Tangible common equity per common share at end of period (4) 17.08   16.30   15.96   15.94   15.93 
Common shares outstanding at end of period 59,144,128   59,138,507   59,130,236   59,388,983   59,175,046 
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   47 
Quarterly Average Balances         
Total securities$1,764,764  $1,748,687  $1,811,869  $1,846,452  $1,710,143 
Loans receivable, net 9,771,104   9,512,447   9,204,583   8,796,861   8,297,395 
Total interest-earning assets 11,605,891   11,326,782   11,083,892   10,732,139   10,706,190 
Total goodwill and core deposit intangible 520,400   521,566   522,666   518,106   519,401 
Total assets 12,834,411   12,517,955   12,251,985   11,947,210   11,953,610 
Time deposits 1,486,410   1,467,297   937,387   767,709   819,025 
Total deposits (including non-interest-bearing deposits) 9,975,509   10,066,342   9,665,200   9,944,352   9,937,607 
Total borrowings 915,565   643,294   837,164   375,578   361,500 
Total interest-bearing liabilities 8,669,190   8,380,936   8,174,240   7,918,133   7,831,519 
Non-interest bearing deposits 2,221,884   2,328,700   2,328,124   2,401,797   2,467,588 
Stockholders’ equity 1,564,856   1,541,755   1,534,721   1,527,839   1,519,976 
Tangible stockholders’ equity (4) 1,044,456   1,020,189   1,012,055   1,009,733   1,000,575 
Quarterly Yields and Costs         
Total securities 2.83%  2.27%  1.90%  1.86%  1.57%
Loans receivable, net 4.76   4.18   3.95   3.79   3.89 
Total interest-earning assets 4.46   3.88   3.60   3.43   3.28 
Time deposits 1.95   1.53   0.97   0.77   0.84 
Total cost of deposits (including non-interest-bearing deposits) 0.53   0.36   0.18   0.16   0.20 
Total borrowed funds 4.49   3.27   2.06   2.93   3.14 
Total interest-bearing liabilities 1.09   0.69   0.42   0.35   0.40 
Net interest spread 3.37   3.19   3.18   3.08   2.88 
Net interest margin 3.64   3.36   3.29   3.18   2.99 


(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
 December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Core Earnings:         
Net income available to common stockholders (GAAP)$52,268  $37,607  $27,957  $24,755  $21,653 
Add (less) non-recurring and non-core items:         
Merger related expenses 276   298   196   1,965   451 
Branch consolidation expense (benefit), net (1) 111   (346)  546   402   7,286 
Net (gain) loss on equity investments (17,187)  (3,362)  8,078   2,786   1,252 
Income tax expense (benefit) on items 4,060   824   (2,132)  (1,141)  (2,144)
Core earnings (Non-GAAP)$39,528  $35,021  $34,645  $28,767  $28,498 
Income tax expense$17,353  $12,298  $8,940  $7,974  $4,078 
Credit loss expense (benefit) 3,647   1,016   1,254   1,851   (1,573)
Less: income tax expense (benefit) on non-core items 4,060   824   (2,132)  (1,141)  (2,144)
Core earnings PTPP (Non-GAAP)$56,468  $47,511  $46,971  $39,733  $33,147 
Core diluted earnings per share$0.67  $0.60  $0.59  $0.49  $0.48 
Core earnings PTPP diluted earnings per share$0.96  $0.81  $0.80  $0.67  $0.56 
          
Core Ratios (Annualized):         
Return on average assets 1.22%  1.11%  1.13%  0.98%  0.95%
Return on average tangible stockholders’ equity 15.01   13.62   13.73   11.55   11.30 
Return on average tangible common equity 15.86   14.40   14.53   12.23   11.96 
Efficiency ratio 50.78   54.80   54.43   57.51   62.57 
(1) Includes $2.0 million of gains related to the sale of two branches for the three months ended December 31, 2021.


 For the Years Ended December 31,
 2022 2021
Core Earnings:   
Net income available to common stockholders (GAAP)$142,587  $106,060 
Add (less) non-recurring and non-core items:   
Merger related expenses 2,735   1,503 
Branch consolidation expense, net (1) 713   12,337 
Net gain on equity investments (9,685)  (7,145)
Income tax expense (benefit) on items 1,611   (1,590)
Core earnings (Non-GAAP)$137,961  $111,165 
Income tax expense$46,565  $32,165 
Credit loss expense (benefit) 7,768   (11,832)
Less: income tax expense (benefit) on non-core items 1,611   (1,590)
Core earnings PTPP (Non-GAAP)$190,683  $133,088 
Core diluted earnings per share$2.34  $1.86 
Core earnings PTPP diluted earnings per share$3.24  $2.23 
    
Core Ratios:   
Return on average assets 1.11%  0.95%
Return on average tangible stockholders’ equity 13.50   11.25 
Return on average tangible common equity 14.28   11.92 
Efficiency ratio 54.21   60.84 
 
(1) Includes $2.0 million of gains related to the sale of two branches for the year ended December 31, 2021.


 December 31, September 30, June 30, March 31, December 31,
 2022 2022 2022 2022 2021
Tangible Equity:         
Total stockholders' equity$1,585,464  $1,540,216  $1,521,432  $1,519,334  $1,516,553 
Less:         
Goodwill 506,146   506,146   506,146   500,319   500,319 
Core deposit intangible 13,497   14,656   15,827   17,005   18,215 
Tangible stockholders’ equity 1,065,821   1,019,414   999,459   1,002,010   998,019 
Less:         
Preferred stock 55,527   55,527   55,527   55,527   55,527 
Tangible common equity$1,010,294  $963,887  $943,932  $946,483  $942,492 
          
Tangible Assets:         
Total assets$13,103,896  $12,683,453  $12,438,653  $12,164,945  $11,739,616 
Less:         
Goodwill 506,146   506,146   506,146   500,319   500,319 
Core deposit intangible 13,497   14,656   15,827   17,005   18,215 
Tangible assets$12,584,253  $12,162,651  $11,916,680  $11,647,621  $11,221,082 
          
Tangible stockholders' equity to tangible assets 8.47%  8.38%  8.39%  8.60%  8.89%
Tangible common equity to tangible assets 8.03%  7.92%  7.92%  8.13%  8.40%


SUPPLEMENTAL INFORMATION ON TRIDENT                                                           

 For the Three Months Ended, For the Year Ended,
 December 31, 2022 September 30, 2022 December 31, 2022
GAAP Measures:     
Net interest income$106,488  $95,965  $377,477 
Other income 27,551   15,150   59,094 
Total income 134,039   111,115   436,571 
Less: income attributable to Trident (1) 2,617   3,259   10,387 
Total income, excluding Trident 131,422   107,856   426,184 
      
Total operating expense 59,728   58,997   234,881 
Less: expense attributable to Trident (2) 2,519   2,777   8,502 
Total operating expense, excluding Trident 57,209   56,220   226,379 
      
Efficiency ratio 44.56%  53.10%  53.80%
Efficiency ratio, excluding Trident 43.53   52.13   53.12 
      
Core Measures (non-GAAP):     
Net interest income$106,488  $95,965  $377,477 
Other income 10,364   11,788   49,409 
Total income 116,852   107,753   426,886 
Less: income attributable to Trident (1) 2,617   3,259   10,387 
Total core income, excluding Trident 114,235   104,494   416,499 
      
Core operating expense 59,341   59,045   231,433 
Less: expense attributable to Trident (2) 2,519   2,777   8,502 
Total operating expense, excluding Trident 56,822   56,268   222,931 
      
Core efficiency ratio 50.78%  54.80%  54.21%
Core efficiency ratio, excluding Trident 49.74   53.85   53.52 


(1)Trident title-related activity is primarily included in fees and service charges in the Consolidated Statements of Income.
(2)Trident operating expenses are primarily included in compensation and employee benefits and other operating expenses in the Consolidated Statements of Income.
  

Company Contact: 

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


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