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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________________ 
FORM 10-Q
 ________________________________________________  
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20222023
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission file number 001-11713
________________________________________________  
OceanFirst Financial Corp.
(Exact name of registrant as specified in its charter)
 ________________________________________________ 
Delaware22-3412577
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
110 West Front Street,Red Bank,NJ07701
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (732) 240-4500
________________________________________________  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per shareOCFCNASDAQ
Depositary Shares (each representing a 1/40th interest in a share of 7.0% Series A Non-Cumulative, perpetual preferred stock)OCFCPNASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ☒    No   ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☒Accelerated Filer ☐
Non-accelerated Filer ☐Smaller Reporting Company ☐
Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ☐    NO  ☒.
As of November 4, 2022,3, 2023, there were 59,141,52859,423,069 shares of the Registrant’s Common Stock, par value $0.01 per share, outstanding.

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OceanFirst Financial Corp.
INDEX TO FORM 10-Q
 
  PAGE
PART I.FINANCIAL INFORMATION
Item 1.Consolidated Financial Statements (unaudited)
1922
2023
2124
2225
2427
2629
Item 2.
4
Item 3.
1719
Item 4.
1820
PART II.
5052
Item 1.
5052
Item 1A.
5052
Item 2.
5052
Item 3.
5052
Item 4.
5052
Item 5.
5052
Item 6.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FINANCIAL SUMMARY(1)
FINANCIAL SUMMARY(1)
At or for the Quarters Ended
FINANCIAL SUMMARY(1)
At or for the Quarters Ended
(dollars in thousands, except per share amounts)(dollars in thousands, except per share amounts)September 30, 2022June 30, 2022September 30, 2021(dollars in thousands, except per share amounts)September 30, 2023June 30, 2023September 30, 2022
SELECTED FINANCIAL CONDITION DATA:SELECTED FINANCIAL CONDITION DATA:SELECTED FINANCIAL CONDITION DATA:
Total assetsTotal assets$12,683,453 $12,438,653 $11,829,688 Total assets$13,498,183 $13,538,903 $12,683,453 
Loans receivable, net of allowance for loan credit lossesLoans receivable, net of allowance for loan credit losses9,672,488 9,380,688 8,139,961 Loans receivable, net of allowance for loan credit losses10,068,156 10,030,106 9,672,488 
DepositsDeposits9,959,469 9,831,484 9,774,097 Deposits10,533,929 10,158,337 9,959,469 
Total stockholders’ equityTotal stockholders’ equity1,540,216 1,521,432 1,513,249 Total stockholders’ equity1,637,604 1,626,283 1,540,216 
SELECTED OPERATING DATA:SELECTED OPERATING DATA:SELECTED OPERATING DATA:
Net interest incomeNet interest income95,965 90,797 77,132 Net interest income90,996 92,109 95,965 
Credit loss expense (benefit)1,016 1,254 (3,179)
Provision for credit lossesProvision for credit losses10,283 1,229 1,016 
Other incomeOther income15,150 7,541 9,883 Other income10,762 8,928 15,150 
Operating expensesOperating expenses58,997 58,661 58,673 Operating expenses64,484 62,930 58,997 
Net incomeNet income38,804 29,483 24,167 Net income20,532 27,882 38,804 
Net income attributable to OceanFirst Financial Corp.Net income attributable to OceanFirst Financial Corp.38,611 28,961 24,167 Net income attributable to OceanFirst Financial Corp.20,667 27,797 38,611 
Net income available to common stockholdersNet income available to common stockholders37,607 27,957 23,163 Net income available to common stockholders19,663 26,793 37,607 
Diluted earnings per shareDiluted earnings per share0.64 0.47 0.39 Diluted earnings per share0.33 0.45 0.64 
SELECTED FINANCIAL RATIOS:SELECTED FINANCIAL RATIOS:SELECTED FINANCIAL RATIOS:
Stockholders’ equity per common share at end of period26.04 25.73 25.47 
Book value per common share at end of periodBook value per common share at end of period27.56 27.37 26.04 
Cash dividend per shareCash dividend per share0.20 0.17 0.17 Cash dividend per share0.20 0.20 0.20 
Dividend payout ratio per common shareDividend payout ratio per common share31.25 %36.17 %43.59 %Dividend payout ratio per common share60.61 %44.44 %31.25 %
Stockholders’ equity to total assetsStockholders’ equity to total assets12.14 12.23 12.79 Stockholders’ equity to total assets12.13 12.01 12.14 
Return on average assets (2) (3) (4)
Return on average assets (2) (3) (4)
1.19 0.92 0.78 
Return on average assets (2) (3) (4)
0.57 0.80 1.19 
Return on average stockholders’ equity (2) (3) (4)
Return on average stockholders’ equity (2) (3) (4)
9.68 7.31 6.05 
Return on average stockholders’ equity (2) (3) (4)
4.75 6.61 9.68 
Net interest rate spread (5)
Net interest rate spread (5)
3.19 3.18 2.80 
Net interest rate spread (5)
2.37 2.52 3.19 
Net interest margin (2) (6)
Net interest margin (2) (6)
3.36 3.29 2.93 
Net interest margin (2) (6)
2.91 3.02 3.36 
Operating expenses to average assets (2) (4)
Operating expenses to average assets (2) (4)
1.87 1.92 1.98 
Operating expenses to average assets (2) (4)
1.88 1.87 1.87 
Efficiency ratio (4) (7)
Efficiency ratio (4) (7)
53.10 59.65 67.43 
Efficiency ratio (4) (7)
63.37 62.28 53.10 
Loans-to-deposits ratio97.60 95.90 83.71 
ASSET QUALITY:
Non-performing loans (8)
$21,498 $20,753 $30,304 
Non-performing assets (8)
21,498 20,753 30,410 
Allowance for loan credit losses as a percent of total loans receivable (9) (10)
0.55 %0.55 %0.61 %
Allowance for loan credit losses as a percent of total non-performing loans (8) (10)
248.96 250.86 165.50 
Non-performing loans as a percent of total loans receivable (8) (9)
0.22 0.22 0.37 
Non-performing assets as a percent of total assets (8)
0.17 0.17 0.26 
Loan-to-deposit ratio (8)
Loan-to-deposit ratio (8)
96.10 99.30 97.60 
ASSET QUALITY (9):
ASSET QUALITY (9):
Non-performing loans (10)
Non-performing loans (10)
$30,098 $22,758 $21,498 
Allowance for loan credit losses as a percent of total loans receivable (8) (11)
Allowance for loan credit losses as a percent of total loans receivable (8) (11)
0.63 %0.61 %0.55 %
Allowance for loan credit losses as a percent of total non-performing loans (10) (11)
Allowance for loan credit losses as a percent of total non-performing loans (10) (11)
212.23 271.51 248.96 
Non-performing loans as a percent of total loans receivable (8) (10)
Non-performing loans as a percent of total loans receivable (8) (10)
0.30 0.23 0.22 
Non-performing assets as a percent of total assets (10)
Non-performing assets as a percent of total assets (10)
0.22 0.17 0.17 
(1) With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2) Ratios are annualized.
(3) Ratios for each period are based on net income available to common stockholders.
(4) IncludedPerformance ratios for the three months ended September 30, 2023 included a net gain on equity investments of $1.5 million, or $1.1 million, net of tax expense. Performance ratios for the three months ended June 30, 2023 included a net loss on equity investments of $559,000, or $397,000, net of tax benefit. Performance ratios for the three months ended September 30, 2022 included a net benefit related to merger related expenses, net branch consolidation (benefit) expense, and gain on equity investments of $3.4 million, or $2.6 million, net of tax expense, for the three months ended September 30, 2022. Included a net expense related to merger related expenses, net branch consolidation expenses, and net loss on equity investments of $8.8 million, or $6.7 million, net of tax benefit, for the three months ended June 30, 2022. Included a net expense related to merger related expenses, net branch consolidation expenses, and net loss on equity investments of $4.7$3.4 million, or $3.6$2.6 million, net of tax benefit, for the three months ended September 30, 2021.expense.
(5) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(7) Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.

(8) Total loans receivable excludes loans held-for-sale.
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(8) Non-performing assets consist of(9) At September 30, 2023, non-performing loans andincluded the remaining exposure of $8.8 million on a single commercial real estate acquired through foreclosure.relationship that was partially charged-off of $8.4 million during the three months ended September 30, 2023.
(10) Non-performing loans and assets generally consist of all loans 90 days or more past due and other loans in the process of foreclosure. It is the Company’s policy to cease accruing interest on all such loans and to reverse previously accrued interest.
(9) Total loans receivable excludes loans held-for-sale.
(10)(11) Loans acquired from prior bank acquisitions were recorded at fair value. The net unamortized credit and purchased with credit deterioration (“PCD”) marks on these loans, not reflected in the allowance for loan credit losses, was $13.6$8.8 million, $15.5$9.8 million, and $21.3$13.6 million at September 30, 2022,2023, June 30, 20222023 and September 30, 2021,2022, respectively.

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Summary
OceanFirst Financial Corp. is the holding company for OceanFirst Bank N.A. (the “Bank”), a regional bank serving business and retail customers throughout New Jersey and the major metropolitan areas of Philadelphia, New York, Baltimore, and Boston. The term “Company” refers to OceanFirst Financial Corp., the Bank and all of their subsidiaries on a consolidated basis. The Company’s results of operations are primarily dependent on net interest income, which is the difference between the interest income earned on interest-earning assets, such as loans and investments, and the interest expense on its interest-bearing liabilities, such as deposits and borrowings. The Company also generates non-interest income such as income from bankcard services, trust and asset management products and services, deposit account services, bank owned life insurance, commercial loan swap income, gain on sale of loans, securities and on equity investments, title-related fees and service charges and other fees. The Company’s operating expenses primarily consist of compensation and employee benefits, occupancy and equipment, marketing, federal deposit insurance and regulatory assessments, data processing, check card processing, professional fees and other general and administrative expenses. The Company’s results of operations are also significantly affected by competition, general economic conditions, including levels of unemployment and real estate values, as well as changes in market interest rates, inflation, government policies and actions of regulatory agencies.
Key developments relating to the Company’s financial results and corporate activities for the three months ended September 30, 20222023 were as follows:

•Strengthening Net Interest Income and Margin:Deposit Growth: Net interest incomeTotal deposits increased by $5.2$375.6 million, or 4%, as compared to $96.0 million, from $90.8 million in the prior linked quarter. Net interest margin increased to 3.36%, as compared to 3.29%The current quarter includes a reduction in brokered time deposits of $425.7 million and a loan-to-deposit ratio of 96.10% at September 30, 2023. The Company’s non-interest-bearing deposits declined modestly and represented 17% of the prior linked quarter, largely driven bytotal deposits.
•Asset Quality: Asset quality metrics remain strong, despite the impact of the rising rate environment on interest earning assets, anda charge-off related to a lesser extentsingle credit relationship. Criticized and classified loans, and non-performing loans both as a percent of total loans, were 1.30% and 0.20%, respectively, at September 30, 2023.
•Strong Capital: The Company’s common equity tier 1 capital ratio remained above “well-capitalized” levels, at 10.36% at September 30, 2023.
The current quarter results were impacted by the following matters. Net interest income and margin were adversely impacted by a continued mix-shift and repricing to higher cost deposits that outpaced the repricing and increase in yields on interest-earning assets. Deposit betas, which is the change in rates paid to customers relative to the change in federal funds target rate, increased modestly to 35%, from 29%. Additionally, the current quarter results were impacted by an increase in loan balances, partly offsetnon-performing loans due to a single commercial real estate credit relationship totaling $17 million, which was written down to an estimated realizable value of $8.8 million. The credit was originated in June 2019 and is secured by an increased cost of funds and lower prepayment fees.
•Loan and Deposit Growth: Loan growth for the quarteroffice building in Midtown Manhattan, New York City. The credit was $293.9 million, reflecting originations of $543.8 million. The committed loan pipeline increasedalso included in total delinquent loans 30 to $439.5 million as of89 days at September 30, 2022. Deposits grew by $128.0 million for the quarter and $226.7 million year-to-date.
•Interchange Fees: Effective July 1, 2022,the Bank became subject to the Durbin amendment, as contained in the Dodd-Frank Act, which imposes limitations on debit card interchange fees collected by banks with assets of $10 billion or more. As a result, bankcard services revenue was adversely impacted by $1.7 million. The Company is strategically positioned to absorb the decreased fee income and continue to grow earnings.
•Partners Bancorp: On November 9, 2022,2023. Lastly, the Company recognized one-time compensation and Partners Bancorp (“Partners”) entered into a Mutual Termination Agreement (the “Termination Agreement”) pursuantbenefits expenses of $2.4 million attributable to which, amongseverance and other things, the Company and Partners mutually agreed to terminate the Agreement and Plan of Merger (the “Merger Agreement”) and transactions contemplated thereby. Each party will bear its ownprogram costs and expenses in connection with the terminated transaction, and neither party will pay a termination fee in connection with the termination of the Merger Agreement. The Termination Agreement also mutually releases the parties from any claims of liability to one another relating to the Merger Agreement and the terminated transaction.performance improvement initiatives.
Net income available to common stockholders for the three and nine months ended September 30, 2022 was $37.62023 decreased to $19.7 million and $90.3$73.3 million, respectively, or $0.64$0.33 and $1.53$1.24 per diluted share, as compared to $23.2$37.6 million and $84.4$90.3 million, or $0.39$0.64 and $1.41$1.53 per diluted share, for the corresponding prior year periods. The dividends paid to preferred stockholders were $1.0 million and $3.0 million for the three and nine months ended September 30, 2023 and 2022, and 2021, respectively. Net income available to common stockholders for the three and nine months ended September 30, 2022 included merger related expenses of $298,000 and $2.5 million, respectively, net branch consolidation benefit of $346,000 and net branch consolidation expense of $602,000, and gain on equity investments of $3.4 million and net loss on equity investments of $7.5 million. Net income available to common stockholders for the three and nine months ended September 30, 2021 included merger related expenses of $225,000 and $1.1 million, respectively, net branch consolidation expenses of $4.0 million and $5.1 million, and net loss on equity investments of $466,000 and net gain on equity investments of $8.4 million.
The Company remains well-capitalized with a stockholders’ equity to total assets ratio of 12.14% at September 30, 2022.
On October 24, 2022,19, 2023, the Company’s Board of Directors declared a quarterly cash dividend on common stock of $0.20 per share. The dividend, related to the quarter ended September 30, 2022,2023, will be paid on November 18, 202217, 2023 to common stockholders of record on November 7, 2022.6, 2023. The Board also declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing a 1/40th interest in the Series A Preferred Stock. This dividend will be paid on November 15, 20222023 to preferred stockholders of record on October 31, 2022.2023.
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Recent Developments
The banking industry continued to experience volatility through the third quarter of 2023, which began earlier in the year with several bank failures coupled with related industry-wide concerns including liquidity, funding, and unrealized losses on securities brought on by a rapid increasing rate environment. These developments, among other industry concerns, have created volatility in stock prices across the banking industry, including the Company's own stock price. Despite these industry-concerns, the Company has continued to maintain and strengthen its liquidity and capital position, and serve its customers and communities.

The Company will continue to monitor these industry-wide matters and the impact they may have in future periods, and will respond accordingly as economic and industry conditions change. Refer to the “Liquidity and Capital Resources” section for further information regarding liquidity.
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Analysis of Net Interest Income
Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rate earned or paid on them. For the three and nine months ended September 30, 20222023, interest income included net loan fees of $832,000$621,000 and $5.0$2.6 million, respectively, as compared to $1.6 million$832,000 and $4.2$5.0 million for the same prior year periods, respectively.
The following tables set forth certain information relating to the Company for the three and nine months ended September 30, 20222023 and 2021.2022. The yields and costs, which are annualized, are derived by dividing the income or expense by the average balance of the related assets or liabilities, respectively, for the periods shown except where noted otherwise. Average balances are derived from average daily balances. The yields and costs include certain fees and costs which are considered adjustments to yields.
For the Three Months Ended September 30, For the Three Months Ended September 30,
20222021 20232022
(dollars in thousands)(dollars in thousands)Average BalanceInterest
Average
Yield/
Cost (1)
Average BalanceInterest
Average
Yield/
Cost (1)
(dollars in thousands)Average BalanceInterest
Average
Yield/
Cost (1)
Average BalanceInterest
Average
Yield/
Cost (1)
Assets:Assets:Assets:
Interest-earning assets:Interest-earning assets:Interest-earning assets:
Interest-earning deposits and short-term investmentsInterest-earning deposits and short-term investments$65,648 $336 2.03 %$1,053,797 $441 0.17 %Interest-earning deposits and short-term investments$470,825 $6,440 5.43 %$65,648 $336 2.03 %
Securities (2)
Securities (2)
1,748,687 10,022 2.27 1,542,630 6,090 1.57 
Securities (2)
1,873,450 18,039 3.82 1,748,687 10,022 2.27 
Loans receivable, net (3)
Loans receivable, net (3)
Loans receivable, net (3)
CommercialCommercial6,509,515 74,309 4.53 5,361,472 55,387 4.10 Commercial6,923,743 103,069 5.91 6,509,515 74,309 4.53 
Residential real estateResidential real estate2,791,067 22,818 3.27 2,260,673 20,076 3.55 Residential real estate2,918,612 26,765 3.67 2,791,067 22,818 3.27 
Home equity loans and lines and other consumer (“other consumer”)Home equity loans and lines and other consumer (“other consumer”)256,638 3,014 4.66 289,011 3,426 4.70 Home equity loans and lines and other consumer (“other consumer”)252,126 4,097 6.45 256,638 3,014 4.66 
Allowance for loan credit losses, net of deferred loan costs and feesAllowance for loan credit losses, net of deferred loan costs and fees(44,773)— — (46,436)— — Allowance for loan credit losses, net of deferred loan costs and fees(53,959)— — (44,773)— — 
Loans receivable, netLoans receivable, net9,512,447 100,141 4.18 7,864,720 78,889 3.98 Loans receivable, net10,040,522 133,931 5.30 9,512,447 100,141 4.18 
Total interest-earning assetsTotal interest-earning assets11,326,782 110,499 3.88 10,461,147 85,420 3.24 Total interest-earning assets12,384,797 158,410 5.08 11,326,782 110,499 3.88 
Non-interest-earning assetsNon-interest-earning assets1,191,173 1,276,890 Non-interest-earning assets1,252,416 1,191,173 
Total assetsTotal assets$12,517,955 $11,738,037 Total assets$13,637,213 $12,517,955 
Liabilities and Stockholders’ Equity:Liabilities and Stockholders’ Equity:Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:Interest-bearing liabilities:Interest-bearing liabilities:
Interest-bearing checkingInterest-bearing checking$3,873,968 2,671 0.27 %$3,841,475 2,854 0.29 %Interest-bearing checking$3,692,500 14,938 1.61 %$3,873,968 2,671 0.27 %
Money marketMoney market793,230 721 0.36 767,854 245 0.13 Money market832,729 5,698 2.71 793,230 721 0.36 
SavingsSavings1,603,147 187 0.05 1,609,197 146 0.04 Savings1,391,811 3,311 0.94 1,603,147 187 0.05 
Time depositsTime deposits1,467,297 5,659 1.53 904,384 2,134 0.94 Time deposits2,867,921 29,340 4.06 1,467,297 5,659 1.53 
TotalTotal7,737,642 9,238 0.47 7,122,910 5,379 0.30 Total8,784,961 53,287 2.41 7,737,642 9,238 0.47 
Federal Home Loan Bank (“FHLB”) advancesFederal Home Loan Bank (“FHLB”) advances352,392 2,208 2.49 — — — Federal Home Loan Bank (“FHLB”) advances701,343 8,707 4.93 352,392 2,208 2.49 
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase96,147 35 0.14 142,494 51 0.14 Securities sold under agreements to repurchase76,620 261 1.35 96,147 35 0.14 
Other borrowings(4)Other borrowings(4)194,755 3,053 6.22 228,695 2,858 4.96 Other borrowings(4)317,210 5,159 6.45 194,755 3,053 6.22 
Total borrowingsTotal borrowings643,294 5,296 3.27 371,189 2,909 3.11 Total borrowings1,095,173 14,127 5.12 643,294 5,296 3.27 
Total interest-bearing liabilitiesTotal interest-bearing liabilities8,380,936 14,534 0.69 7,494,099 8,288 0.44 Total interest-bearing liabilities9,880,134 67,414 2.71 8,380,936 14,534 0.69 
Non-interest-bearing depositsNon-interest-bearing deposits2,328,700 2,576,123 Non-interest-bearing deposits1,841,198 2,328,700 
Non-interest-bearing liabilities(4)Non-interest-bearing liabilities(4)266,564 148,327 Non-interest-bearing liabilities(4)272,982 266,564 
Total liabilitiesTotal liabilities10,976,200 10,218,549 Total liabilities11,994,314 10,976,200 
Stockholders’ equityStockholders’ equity1,541,755 1,519,488 Stockholders’ equity1,642,899 1,541,755 
Total liabilities and equityTotal liabilities and equity$12,517,955 $11,738,037 Total liabilities and equity$13,637,213 $12,517,955 
Net interest incomeNet interest income$95,965 $77,132 Net interest income$90,996 $95,965 
Net interest rate spread (4)(5)
Net interest rate spread (4)(5)
3.19 %2.80 %
Net interest rate spread (4)(5)
2.37 %3.19 %
Net interest margin (5)(6)
Net interest margin (5)(6)
3.36 %2.93 %
Net interest margin (5)(6)
2.91 %3.36 %
Total cost of deposits (including non-interest-bearing deposits)Total cost of deposits (including non-interest-bearing deposits)0.36 %0.22 %Total cost of deposits (including non-interest-bearing deposits)1.99 %0.36 %
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For the Nine Months Ended September 30,For the Nine Months Ended September 30,
2022202120232022
(dollars in thousands)(dollars in thousands)Average
Balance		Interest
Average
Yield/
Cost (1)
Average
Balance		Interest
Average
Yield/
Cost (1)
(dollars in thousands)Average
Balance		Interest
Average
Yield/
Cost (1)
Average
Balance		Interest
Average
Yield/
Cost (1)
Assets:Assets:Assets:
Interest-earning assets:Interest-earning assets:Interest-earning assets:
Interest-earning deposits and short-term investmentsInterest-earning deposits and short-term investments$73,886 $472 0.85 %$1,061,419 $958 0.12 %Interest-earning deposits and short-term investments$304,184 $11,661 5.13 %$73,886 $472 0.85 %
Securities (2)
Securities (2)
1,801,978 27,086 2.01 1,452,778 18,832 1.73 
Securities (2)
1,919,660 51,124 3.56 1,801,978 27,086 2.01 
Loans receivable, net (3)
Loans receivable, net (3)
Loans receivable, net (3)
CommercialCommercial6,275,836 198,054 4.22 5,270,138 163,315 4.14 Commercial6,892,456 295,199 5.73 6,275,836 198,054 4.22 
Residential real estateResidential real estate2,685,080 66,899 3.32 2,269,066 59,242 3.48 Residential real estate2,895,601 77,862 3.59 2,685,080 66,899 3.32 
Other consumerOther consumer254,891 8,387 4.40 306,681 11,288 4.92 Other consumer257,063 11,694 6.08 254,891 8,387 4.40 
Allowance for loan credit losses, net of deferred loan costs and feesAllowance for loan credit losses, net of deferred loan costs and fees(42,987)— — (50,912)— — Allowance for loan credit losses, net of deferred loan costs and fees(52,626)— — (42,987)— — 
Loans receivable, netLoans receivable, net9,172,820 273,340 3.98 7,794,973 233,845 4.01 Loans receivable, net9,992,494 384,755 5.15 9,172,820 273,340 3.98 
Total interest-earning assetsTotal interest-earning assets11,048,684 300,898 3.64 10,309,170 253,635 3.29 Total interest-earning assets12,216,338 447,540 4.90 11,048,684 300,898 3.64 
Non-interest-earning assetsNon-interest-earning assets1,191,358 1,264,347 Non-interest-earning assets1,234,942 1,191,358 
Total assetsTotal assets$12,240,042 $11,573,517 Total assets$13,451,280 $12,240,042 
Liabilities and Stockholders’ Equity:Liabilities and Stockholders’ Equity:Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:Interest-bearing liabilities:Interest-bearing liabilities:
Interest-bearing checkingInterest-bearing checking$4,088,759 6,433 0.21 %$3,753,457 10,549 0.38 %Interest-bearing checking$3,757,417 33,171 1.18 %$4,088,759 6,433 0.21 %
Money marketMoney market773,666 1,317 0.23 761,975 823 0.14 Money market744,689 11,136 2.00 773,666 1,317 0.23 
SavingsSavings1,617,354 473 0.04 1,571,345 490 0.04 Savings1,336,497 4,034 0.40 1,617,354 473 0.04 
Time depositsTime deposits1,060,027 9,373 1.18 1,041,371 8,338 1.07 Time deposits2,388,299 64,210 3.59 1,060,027 9,373 1.18 
TotalTotal7,539,806 17,596 0.31 7,128,148 20,200 0.38 Total8,226,902 112,551 1.83 7,539,806 17,596 0.31 
FHLB AdvancesFHLB Advances308,043 3,890 1.69 — — — FHLB Advances1,055,106 38,530 4.88 308,043 3,890 1.69 
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase105,821 117 0.15 135,754 203 0.20 Securities sold under agreements to repurchase73,441 544 0.99 105,821 117 0.15 
Other borrowings(4)Other borrowings(4)205,796 8,306 5.40 228,472 8,480 4.96 Other borrowings(4)302,649 14,008 6.19 205,796 8,306 5.40 
Total borrowingsTotal borrowings619,660 12,313 2.66 364,226 8,683 3.19 Total borrowings1,431,196 53,082 4.96 619,660 12,313 2.66 
Total interest-bearing liabilitiesTotal interest-bearing liabilities8,159,466 29,909 0.49 7,492,374 28,883 0.52 Total interest-bearing liabilities9,658,098 165,633 2.29 8,159,466 29,909 0.49 
Non-interest-bearing depositsNon-interest-bearing deposits2,352,606 2,416,866 Non-interest-bearing deposits1,913,624 2,352,606 
Non-interest-bearing liabilities(4)Non-interest-bearing liabilities(4)193,147 157,821 Non-interest-bearing liabilities(4)253,014 193,147 
Total liabilitiesTotal liabilities10,705,219 10,067,061 Total liabilities11,824,736 10,705,219 
Stockholders’ equityStockholders’ equity1,534,823 1,506,456 Stockholders’ equity1,626,544 1,534,823 
Total liabilities and equityTotal liabilities and equity$12,240,042 $11,573,517 Total liabilities and equity$13,451,280 $12,240,042 
Net interest incomeNet interest income$270,989 $224,752 Net interest income$281,907 $270,989 
Net interest rate spread (4)(5)
Net interest rate spread (4)(5)
3.15 %2.77 %
Net interest rate spread (4)(5)
2.61 %3.15 %
Net interest margin (5)(6)
Net interest margin (5)(6)
3.28 %2.91 %
Net interest margin (5)(6)
3.09 %3.28 %
Total cost of deposits (including non-interest-bearing deposits)Total cost of deposits (including non-interest-bearing deposits)0.24 %0.28 %Total cost of deposits (including non-interest-bearing deposits)1.48 %0.24 %
(1)Average yields and costs are annualized.
(2)Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank (“FRB”) 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)For the 2023 period, the average balances of derivative cash collateral have been reclassified from non-interest bearing liabilities to other borrowings.
(5)Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5)(6)Net interest margin represents net interest income divided by average interest-earning assets.
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Comparison of Financial Condition at September 30, 20222023 and December 31, 20212022
Total assets increased by $943.8$394.3 million to $12.68$13.50 billion, at September 30, 2022, from $11.74$13.10 billion, at December 31, 2021.primarily due to higher cash balances and loan growth. Cash and due from banks increased $240.9 million to $408.9 million, from $167.9 million as the Company maintained elevated levels of on-balance sheet cash from net deposit inflows. Total loans increased by $1.10$205.5 million to $10.12 billion, to $9.72from $9.92 billion, at September 30, 2022, from $8.62 billion at December 31, 2021, due to strong loan originations. Total debt securities decreased by $209.4 million at September 30, 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. Other assets increased by $81.1 million to $228.1 million at September 30, 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 $920.2$342.1 million to $11.14$11.86 billion, at September 30, 2022, from $10.22 billion at December 31, 2021.$11.52 billion. Deposits increased by $226.7$858.7 million to $9.96$10.53 billion, at September 30, 2022, from $9.73 billion at December 31, 2021. Total deposits, excluding time deposits, decreased by $402.7 million to $8.56 billion at September 30, 2022, from $8.96 billion at December 31, 2021, primarily due to the net runoff of interest-bearing checking balances.$9.68 billion. Time deposits increased to $1.40$2.65 billion, at September 30, 2022, from $775.0 million at December 31, 2021, primarily due to an increase in brokered$1.54 billion, or 25.2% and 15.9% of total deposits, respectively. Brokered time deposits which increased to $828.7$122.1 million at September 30, 2022 from $25.0 million at December 31, 2021.and retail time deposits increased $988.0 million. The loans-to-depositloan-to-deposit ratio at September 30, 2022 was 97.6%96.10%, as compared to 88.6% at December 31, 2021.

102.50%. FHLB advances increased to $514.2 million at September 30, 2022 from $0 at December 31, 2021 to fund liquidity needs. Other borrowings decreased by $34.2$605.1 million to $194.9$606.1 million, at September 30, 2022, from $229.1 million at December 31, 2021, primarily$1.21 billion due to the extinguishment of $35.0 million of subordinated debta change in March 2022. funding mix.
Other liabilities increased by $230.9$65.6 million to $352.9$411.7 million, at September 30, 2022, from $122.0$346.2 million, at December 31, 2021, primarily due to an increase in the market values associated with customer interest rate swap programsswaps and related collateral received from counterparties.

Stockholders’Total stockholders’ equity increased to $1.54$1.64 billion, at September 30, 2022, as compared to $1.52$1.59 billion, at December 31, 2021. Accumulatedprimarily reflecting net income net of dividends for the nine months ended September 30, 2023. Additionally, accumulated other comprehensive loss increaseddecreased by $35.7$7.2 million to $38.5 million at September 30, 2022 from $2.8 million at December 31, 2021, primarily due to unrealized losses onincreases in fair market value of available-for-sale debt securities, available-for-sale which were adversely impacted by the rising interest rate environment. net of tax.
For the nine months ended September 30, 2022,2023, the Company repurchased 373,223did not repurchase shares totaling $7.4 million under its stock repurchase program at a weighted average cost of $19.82.program. There were 2,934,438 shares available for repurchase at September 30, 20222023 under the existing repurchase program. Stockholders’ equityprogram. Book value per common share increased to $26.04 at September 30, 2022,$27.56, as compared to $25.63 at December 31, 2021.$26.81.

Comparison of Operating Results for the Three and Nine Months Ended September 30, 20222023 and September 30, 20212022
General
Net income available to common stockholders for the three and nine months ended September 30, 2022 was $37.62023 decreased to $19.7 million and $90.3$73.3 million, respectively, or $0.64$0.33 and $1.53$1.24 per diluted share, as compared to $23.2$37.6 million and $84.4$90.3 million, or $0.39$0.64 and $1.41$1.53 per diluted share, for the corresponding prior year periods. Net income available to common stockholdersfor the three and nine months ended September 30, 2023 included net gain on equity investments of $1.5 million and net loss on equity investments of $1.3 million, respectively. Net income for the nine months ended September 30, 2023 also included merger related expenses of $22,000, net branch consolidation expense of $70,000 and net loss on sale of investments of $5.3 million. These items increased net income by $1.1 million and decreased net income by $5.1 million, net of tax, for the three and nine months ended September 30, 2023, respectively.
Net income for the three and nine months ended September 30, 2022 included merger related expenses of $298,000 and $2.5 million, respectively, net branch consolidation benefit of $346,000 and net branch consolidation expense of $602,000, and net gain on equity investments of $3.4 million and net loss on equity investments of $7.5 million. These items increased net income by $2.6 million and decreased net income by $8.1 million, net of tax, for the three and nine months ended September 30, 2022, respectively. Net income available to common stockholders for the three and nine months ended September 30, 2021 included merger related expenses of $225,000 and $1.1 million, respectively, net branch consolidation expenses of $4.0 million and $5.1 million, and a net loss on equity investments of $466,000 and net gain on equity investments of $8.4 million. These items decreased net income by $3.6 million and increased net income by $1.7 million, net of tax, for the three and nine months ended September 30, 2021, respectively.
Interest Income
Interest income for the three and nine months ended September 30, 20222023 increased to $158.4 million and $447.5 million, respectively, from $110.5 million and $300.9 million respectively, as compared to $85.4 million and $253.6 million for the corresponding prior year periods. Average interest-earning assets increased by $865.6 million and $739.5 million for the three and nine months ended September 30, 2022, respectively, as compared to the same prior year periods, primarily due to loan and securities growth funded by the redeployment of excess cash. Average loans receivable, net of allowance for loan credit losses, increased by $1.65 billion and $1.38 billion for the three and nine months ended September 30, 2022, respectively, as compared to the same prior year periods. For the three and nine months ended September 30, 2022,2023, the yield on average interest-earning assets increased to 5.08% and 4.90%, respectively, from 3.88% and 3.64% for the corresponding prior year periods, due to the impact of rising rates on interest-earning assets. Average interest-earning assets increased by $1.06 billion and $1.17 billion for the three and nine months ended September 30, 2023, respectively, primarily driven by commercial loan growth and increases in deposits and short-term investments.
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3.64%, respectively, from 3.24% and 3.29%, for the corresponding prior year periods due to interest earning asset growth funded by the redeployment of excess cash and the rising rate environment.
Interest Expense
Interest expense for the three and nine months ended September 30, 2022 was2023 increased to $67.4 million and $165.6 million, respectively, from $14.5 million and $29.9 million, respectively, as compared to $8.3 million and $28.9 million in the corresponding prior year periods.periods, reflecting rising rates on costs, deposit mix shift to higher cost time deposits, and increased FHLB advances, and repricing of government deposits. For the three and nine months ended September 30, 2022,2023, the cost of average interest-bearing liabilities increased to 2.71% and 2.29%, respectively, from 0.69% from 0.44% for corresponding prior year period, as a result of higher costs associated with FHLB advances and time deposits issued in an elevated rate environment in 2022. For the nine months ended September 30, 2022, the cost of average interest-bearing liabilities decreased to 0.49% from 0.52% for the corresponding prior year period, as a result of downward repricingperiods, due to mix shift to higher cost of deposits that began in the prior year and continued through the current year, partly offset by the recent pacehigher costs of the rising rate environment in the current quarter and increased funding costs on FHLB advances. The total cost of deposits (including non-interest bearingnon-interest-bearing deposits) was 0.36%increased to 1.99% and 0.24%1.48% for the three and nine months ended September 30, 2022,2023, respectively, as compared to 0.22%from 0.36% and 0.28%,0.24% for the same prior year periods.
Net Interest Income and Margin
Net interest income for the three and nine months ended September 30, 20222023 decreased to $91.0 million and increased to $281.9 million, respectively, from $96.0 million and $271.0 million respectively, as compared to $77.1 million and $224.8 million forin the corresponding prior year periods, primarily reflecting an increase in average interest-earning assets andthe net impact of the higher interest margin.rate environment. Net interest margin for the three and nine months ended September 30, 2022 increased2023 decreased to 2.91% and 3.09%, respectively, from 3.36% and 3.28%, respectively, from 2.93% and 2.91% from for the same prior year periods. The netNet interest margin expansiondecreased primarily due to the increase in cost of funds outpacing the increase in yield on average interest earnings assets in the current interest rate environment and elevated levels of on-balance sheet cash.
Provision for Credit Losses
Provision for credit losses for the three and nine months ended September 30, 2023 was positively impacted by$10.3 million and $14.5 million, respectively, as compared to $1.0 million and $4.1 million for the redeployment of excess cash into loans andcorresponding prior year periods. The current quarter provision included the net impact of the rising rate environment on interest earning assets, partly offset by an increased cost$8.4 million charge-off noted above and, to a lesser extent, elevated risks and uncertainty in macro-economic conditions in a downside forecast scenario. Net loan charge-offs were $8.3 million for both the three and nine months ended September 30, 2023, respectively, as compared to net loan recoveries of funds$252,000 and the growth in interest-bearing liabilities balances.
Credit Loss Expense (Benefit)
Credit loss expense$335,000 for the three and nine months ended September 30, 2022, was $1.0 million and $4.1 million, respectively, as compared to a credit loss benefit of $3.2 million and $10.3 million, for the corresponding prior year periods. The credit loss expense for the three and ninerespectively.
Non-interest Income
Three months ended September 30, 2023 vs. September 30, 2022
Other income decreased to $10.8 million, as compared to $15.2 million. Other income was influencedfavorably impacted by loan growth, slowing prepayment rates,net gains on equity investments of $1.5 million and increasingly uncertain macro-economic forecasts due to rising interest rates, inflation, and global economic headwinds, partly offset by positive trends in the Company’s criticized and classified assets. Net loan recoveries were $252,000 and $386,000$3.4 million, for the threerespective quarters. The remaining decrease of $2.5 million was driven by decreases in commercial loan swap income of $1.5 million and fees and service charges of $1.1 million, which were adversely impacted by the current interest rate environment resulting in lower swap volume and mortgage activity.
Nine months ended September 30, 2022 and 2021, respectively. Net loan recoveries were $335,000 and $442,000 for the nine months ended2023 vs. September 30, 2022 and 2021, respectively. Non-performing loans totaled $21.5
Other income decreased to $21.8 million, at September 30, 2022, as compared to $30.3 million at September 30, 2021, primarily due to loans that were paid off and partly due to loans that returned to accrual status.
Non-interest Income
$31.5 million. Other income increased to $15.2 million for the three months ended September 30, 2022, as compared to $9.9 million for the corresponding prior year period. The increase was drivenadversely impacted by a gainnet losses on equity investments of $3.4$6.6 million, as comparedwhich included $5.3 million of losses related to a net lossthe sale of investments in the first quarter of 2023, and $7.5 million, for the respective periods. The remaining decrease of $10.7 million was driven by decreases in commercial loan swap income on equity investmentslower volume of $466,000$5.8 million, fees and service charges of $1.1 million on lower title activity, and income from bank owned life insurance of $1.0 million on non-recurring death benefits recognized in the prior year period, along with the acquisition of a majority interest in Trident Abstract Title Agency, LLC (“Trident”), which added $3.3 million of title-related fees and service charges. These increases were partially offset by lower income fromyear. Additionally, bankcard services of $1.9revenue decreased $3.4 million, primarily as a result of the impact ofdue to the Durbin amendment,Amendment which became effective for the Company on July 1, 2022.
Other income decreased to $31.5 million for the nineNon-interest Expense
Three months ended September 30, 2023 vs. September 30, 2022 as compared to $42.5 million for the corresponding prior year period. The decrease was driven by a net loss on equity investments of $7.5 million as compared to a net gain on equity investments of $8.4 million in the prior year period, along with decreases in net gain on sale of loans of $2.8 million, income from bankcard services of $2.3 million primarily as a result of the impact of the Durbin amendment, fees and service charges of $849,000, and Paycheck Protection Program (“PPP”) loan origination referral fees of $800,000. These decreases were partially offset by the impact of Trident, which added $7.8 million of title-related fees and service charges and an increase in commercial loan swap income of $3.8 million.
Non-interest Expense
Operating expenses increased to $59.0$64.5 million, for the three months ended September 30, 2022, as compared to $58.7$59.0 million. The increase of $5.4 million was due to increases in professional fees of $2.8 million and $2.4 million in the same prior year period. Operatingcompensation and employee benefits expenses for the three months ended September 30, 2022 and 2021 included $48,000 and $4.2 million, respectively, of merger related expenses and net branch consolidation benefit/expense. The remaining increase of $4.6 million in operating expenses for the three months ended September 30, 2022, as compared to the corresponding prior yearCompany’s ongoing investments to improve profitability and operational efficiencies, and one-time related severance and other program costs. The increase in compensation and benefits expense were partly offset by decreased employee medical benefit claims. The current quarter also included increases to federal deposit insurance and regulatory assessments of $800,000 primarily due to new assessment rates that went into effect on January 1, 2023.
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period, was partly due to the acquisition of a majority interest in Trident, which added $2.8 million of expenses, compensation and benefits expense of $1.8 million primarily related to increased employee medical benefit claims, and data processing expense of $1.2 million, as a result of the migration to a new core banking system. These increases were partly offset by a decrease in professional fees of $615,000.Nine months ended September 30, 2023 vs. September 30, 2022
Operating expenses increased to $188.7 million, as compared to $175.2 million. Operating expenses were adversely impacted by $92,000 and $3.1 million, for the nine months ended September 30, 2022, as comparedrespective periods, related to $162.0 million in the same prior year period. Operating expenses for the nine months ended September 30, 2022 and 2021 included $3.1 million and $6.1 million, respectively, of merger related expenses and net branch consolidation expenses.expense. The remaining increase of $16.2$16.5 million in operating expenses for the nine months ended September 30, 2022, as compared to the corresponding prior year period, was partly due to the impact of Trident, which added $6.0 million of expenses, and increases in compensation and benefits expenseprofessional fees of $5.3$7.1 million partly relating to the commercial banking strategy and commercial banking hires in expansion markets of Boston and Baltimore, data processing expense of $4.6 million as a result of the migration to a new core banking system, and federal deposit insurance and regulatory assessments of $1.0$1.3 million as a resultthat were driven by the same factors for the three months ended. The increase in compensation and benefits expense of a higher assessment base$5.7 million was due to the $2.4 million increase noted above and multiplier. These increases were partly offset by a decrease in amortization of core deposit intangible of $551,000.merit-related increases.
Income Tax Expense
The provision for income taxes was $12.3$6.5 million and $29.2$24.1 million for the three and nine months ended September 30, 2022,2023, respectively, as compared to $7.4$12.3 million and $28.1$29.2 million for the same prior year periods. The effective tax rate was 24.1%23.9% and 23.7%24.0% for the three and nine months ended September 30, 2022,2023, respectively, as compared to 23.3%24.1% and 24.3%23.7% for the same prior year periods.
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Liquidity and Capital Resources
Liquidity Management
The Company manages its liquidity and funding needs through its Treasury function and the Asset Liability Committee. The Company has an internal policy that addresses liquidity and management monitors the adherence to policy limits to satisfy current and future cash flow needs. The policy includes internal limits, monitoring of key indicators, deposit concentrations, liquidity sources and availability, quarterly stress testing, collateral management, and other qualitative and quantitative metrics.
Management monitors cash on a daily basis to determine the liquidity needs of the Bank and OceanFirst Financial Corp. (the “Parent Company”), a separate legal entity from the Bank. Additionally, management performs multiple liquidity stress test scenarios on a quarterly basis. As of September 30, 2023, the Bank and Parent Company continued to maintain adequate liquidity under all stress scenarios. The Company also has a detailed contingency funding plan and obtains comprehensive reporting of funding trends on a monthly and quarterly basis, which are reviewed by management.
The Company continually evaluates its on-balance sheet liquidity, including cash and unpledged securities; and funding capacity at the FHLB and FRB Discount Window, and periodically tests each of its lines of credit. As of September 30, 2023, total on-balance sheet liquidity and funding capacity was $4.3 billion.
The Company has a highly operational and granular deposit base, with long-standing client relationships across multiple customer segments providing stable funding. The vast majority of the government deposits are protected by the Federal Deposit Insurance Corporation insurance as well as the State of New Jersey under the Government Unit Deposit Protection Act, which requires uninsured government deposits to be further collateralized by the Bank. At September 30, 2023, the Bank reported in its Call Report $5.27 billion of estimated uninsured deposits. This total included $2.16 billion of collateralized government deposits and $1.46 billion of intercompany deposits of fully consolidated subsidiaries, leaving estimated adjusted uninsured deposits of $1.65 billion, or 16% of total deposits. On balance-sheet liquidity and funding capacity represented 262% of the estimated adjusted uninsured deposits.

The primary sources of liquidity specifically available to OceanFirst Financial Corp.the Parent Company are dividends from the Bank, proceeds from the sale of investments, and the issuance of debt, preferred and common stock, and debt.stock. For the nine months ended September 30, 2022,2023, the holding companyParent Company received dividend payments of $50.0$73.5 million from the Bank. At September 30, 2022, OceanFirst Financial Corp.2023, the Parent Company held $38.2$70.2 million in cash.cash and cash equivalents.
The Bank’s primary sources of funds are deposits, principal and interest payments on loans and investments, FHLB advances, other borrowings, and proceeds from the sale of loans and investments. While scheduled payments on loans and securities are predictable sources of funds, deposit flows, loan prepayments, and loan and investment sales are greatly influenced by interest rates, economic conditions, and competition. The Bank has other sources of liquidity if a need for additional funds arises, including various lines of credit at multiple financial institutions, and access to the Federal ReserveFRB discount window, and the Bank discount window.Term Funding Program (“BTFP”).
AtAs of September 30, 2022,2023, the BankCompany pledged $7.25 billion of loans with the FHLB and FRB to enhance the Company’s borrowing capacity, and includes collateral pledged to the FHLB to obtain a municipal letter of credit to collateralize certain municipal deposits. The Company also pledged $1.09 billion of securities with FHLB and FRB to secure borrowings, enhance borrowing capacity, collateralize its repurchase agreements, and for other purposes required by law. The Company had $500.0$606.1 million of short-termterm advances and $14.2 millionfrom the FHLB as of September 30, 2023, as compared to $1.21 billion at December 31, 2022, reflecting a shift in funding mix to deposits. As of September 30, 2023, the Company had no overnight borrowings from the FHLB as compared to $0 at December 31, 2021. The Bank regularly utilizes overnight and short-termno outstanding borrowings to fund short-term liquidity needs.from the FRB discount window or the BTFP.
The Company’s cash needs for the nine months ended September 30, 2022 were primarily satisfied by the net proceeds from FHLB advances, deposits, which included the issuance of brokered time deposits, principal repayments on debt securities and loans, and proceeds from maturities and calls of debt maturities. The cash was principally utilized for loan originations, purchases of residential loan pools, purchases of debt and equity securities, redemption of subordinated debt, and dividend payments. The Company’s cash needs for the nine months ended September 30, 20212023 were primarily satisfied by the increase in deposits, proceeds from sales of loans and equity investments, principal repayments on debt securities held-to-maturity, and proceeds from maturities and calls of debt securities.deposits. The cash was principallyprimarily kept on the balance sheet to maintain liquidity on hand, and utilized for purchasesloan originations and the reduction of debtFHLB advances.
Off-Balance Sheet Commitments and equity securities, a purchase of a residential loan pool, and loan originations.Contractual Obligations
In the normal course of business, the Bank routinely enters into various off-balance-sheetoff-balance sheet commitments, primarily relating to the origination and salefunding of loans. At September 30, 2022,2023, outstanding commitments to originate loans totaled $439.5$131.2 million and outstanding undrawn lines of credit totaled $1.72$1.56 billion, of which $1.34$1.21 billion were commitments to commercial and commercial construction borrowers and $382.3$349.3 million were commitments to consumer borrowers and residential construction borrowers. Commitments to fund undrawn lines of credit and commitments to originate loans are agreements to lend to a customer as long as there is no violation of any condition established in the existing contracts. Commitments generally have
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fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company’s exposure to credit risk is represented by the contractual amount of the instruments.
Time deposits scheduled to mature in one year or less totaled $866.3 million at September 30, 2022.
At September 30, 2022,2023, the Company also had various contractual obligations, which included debt obligations of $805.4$885.2 million, including finance lease obligations of $1.8$1.7 million, and an additional $20.4$20.6 million in operating lease obligations included in other liabilities. The Company expects to have sufficient funds available to meet current commitments in the normal course of business. Time deposits scheduled to mature in one year or less totaled $2.47 billion at September 30, 2023.
The Company has a detailed contingency funding planLiquidity Used in Stock Repurchases and obtains comprehensive reporting of funding trends on a monthly and quarterly basis, which are reviewed by management. Management also monitors cash on a daily basis to determine the liquidity needs of the Company and the Bank. Additionally, management performs multiple liquidity stress test scenarios on a quarterly basis. The Company and Bank continue to maintain adequate liquidity under all stress scenarios.Cash Dividends
Under the Company’s stock repurchase program, shares of OceanFirst Financial Corp. common stock may be purchased in the open market andor through other privately-negotiated transactions, from time-to-time, depending on market conditions. The repurchased shares are held as treasury stock for general corporate purposes. For the three and nine months ended September 30, 2022,2023, the Company did not repurchase any shares of its common stock. For the nine months ended September 30, 2022, the Company repurchased 373,223 shares of its common stock, at a total cost of $7.4 million. For the three and nine months ended September 30, 2021, the Company repurchased 460,009 and 1.5 million shares of its common stock, respectively, at a total cost of $9.7 million and $30.6 million, respectively. At September 30, 2022,2023, there were 2,934,438 shares available to be repurchased under the authorized stock repurchase program.
Cash dividends on common stock declared and paid during the first nine months of September 30, 2022 were $31.8 million, as compared to $30.4 million for the same prior year period. The increase in dividends2023 was a result of an increase in the dividend rate from $0.17 to $0.20 per common share. On October 24, 2022, the Company’s Board of Directors declared a quarterly cash
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dividend of $0.20 per common share. The dividend is payable on November 18, 2022 to common stockholders of record at the close of business on November 7, 2022.
$35.4 million. Cash dividends on preferred stock declared and paid during the first nine months of September 30, 2022 and 2021 were2023 was $3.0 million for both periods. The Company’s Board of Directors also declared a quarterly cash dividend of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock, payable on November 15, 2022 to preferred stockholders of record on October 31, 2022.million.
The Company’s ability to continue to pay dividends remains dependent upon capital distributions from the Bank, which may be adversely affected by capital restraints imposed by applicable regulations. The Company cannot predict whether the Bank will be permitted under applicable regulations to pay a dividend to the Parent Company. If applicable regulations or regulatory bodies prevent the Bank from paying a dividend to the Parent Company, the Company may not have the liquidity necessary to pay a dividend in the future or pay a dividend at the same rate as historically paid or be able to meet current debt obligations. Additionally, regulations of the Federal Reserve may prevent the Company from either paying or increasing the cash dividend to common stockholders.
Capital Management
The Company manages its capital sources, uses, and expected future needs through its Treasury function and the Asset Liability Committee. The Company has an internal policy that addresses capital and management monitors the adherence to policy limits to satisfy current and future capital needs. The policy includes internal limits, monitoring of key indicators, sources and availability, intercompany transactions, forecasts and stress testing, and other qualitative and quantitative metrics.
Additionally, management performs multiple capital stress test scenarios on a quarterly basis, varying loan growth, earnings, access to the capital markets, credit losses, and more recently, mark-to-market losses in the investment portfolio, including both available-for-sale and held-to-maturity. As of September 30, 20222023, the Bank and Parent Company continued to maintain adequate capital under all stress scenarios, including a scenario where all losses related to the investment securities portfolio are realized. The Bank and the Parent Company also have detailed contingency capital plans and obtain comprehensive reporting of capital trends on a regular basis, which are reviewed by management and the Board.
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Regulatory Capital Requirements
As of September 30, 2023 and December 31, 2021,2022, the Company and the Bank satisfysatisfied all regulatory capital requirements currently applicable as follows (dollars in thousands):
ActualFor capital adequacy
purposes		To be well-capitalized
under prompt
corrective action		ActualFor capital adequacy
purposes		To be well-capitalized
under prompt
corrective action
As of September 30, 2022AmountRatioAmountRatioAmountRatio
As of September 30, 2023As of September 30, 2023AmountRatioAmountRatioAmountRatio
Company:Company:
Tier 1 capital (to average assets)Tier 1 capital (to average assets)$1,200,832 9.14 %$525,331 4.00 %N/AN/A
Common equity Tier 1 (to risk-weighted assets)Common equity Tier 1 (to risk-weighted assets)1,071,480 10.36 723,689 7.00 (1)N/AN/A
Tier 1 capital (to risk-weighted assets)Tier 1 capital (to risk-weighted assets)1,200,832 11.62 878,766 8.50 (1)N/AN/A
Total capital (to risk-weighted assets)Total capital (to risk-weighted assets)1,392,971 13.47 1,085,534 10.50 (1)N/AN/A
Bank:Bank:Bank:
Tier 1 capital (to average assets)Tier 1 capital (to average assets)$1,097,654 9.23 %$475,574 4.00 %$594,467 5.00 %Tier 1 capital (to average assets)$1,147,262 8.80 %$521,320 4.00 %$651,650 5.00 %
Common equity Tier 1 (to risk-weighted assets)Common equity Tier 1 (to risk-weighted assets)1,097,654 10.98 699,932 7.00 (1)649,937 6.50 Common equity Tier 1 (to risk-weighted assets)1,147,262 11.21 716,158 7.00 (1)665,004 6.50 
Tier 1 capital (to risk-weighted assets)Tier 1 capital (to risk-weighted assets)1,097,654 10.98 849,918 8.50 (1)799,923 8.00 Tier 1 capital (to risk-weighted assets)1,147,262 11.21 869,620 8.50 (1)818,466 8.00 
Total capital (to risk-weighted assets)Total capital (to risk-weighted assets)1,154,421 11.55 1,049,899 10.50 (1)999,903 10.00 Total capital (to risk-weighted assets)1,214,139 11.87 1,074,237 10.50 (1)1,023,083 10.00 
As of December 31, 2022As of December 31, 2022
Company:Company:Company:
Tier 1 capital (to average assets)Tier 1 capital (to average assets)$1,106,915 9.30 %$475,873 4.00 %N/AN/ATier 1 capital (to average assets)$1,150,690 9.43 %$488,297 4.00 %N/AN/A
Common equity Tier 1 (to risk-weighted assets)Common equity Tier 1 (to risk-weighted assets)978,012 9.69 706,355 7.00 (1)N/AN/ACommon equity Tier 1 (to risk-weighted assets)1,021,774 9.93 720,641 7.00 (1)N/AN/A
Tier 1 capital (to risk-weighted assets)Tier 1 capital (to risk-weighted assets)1,106,915 10.97 857,717 8.50 (1)N/AN/ATier 1 capital (to risk-weighted assets)1,150,690 11.18 875,064 8.50 (1)N/AN/A
Total capital (to risk-weighted assets)Total capital (to risk-weighted assets)1,289,224 12.78 1,059,533 10.50 (1)N/AN/ATotal capital (to risk-weighted assets)1,336,652 12.98 1,080,961 10.50 (1)N/AN/A
As of December 31, 2021
Bank:Bank:Bank:
Tier 1 capital (to average assets)Tier 1 capital (to average assets)$1,027,660 9.08 %$452,669 4.00 %$565,836 5.00 %Tier 1 capital (to average assets)$1,122,946 9.20 %$488,033 4.00 %$610,041 5.00 %
Common equity Tier 1 (to risk-weighted assets)Common equity Tier 1 (to risk-weighted assets)1,027,660 11.62 619,178 7.00 (1)574,951 6.50 Common equity Tier 1 (to risk-weighted assets)1,122,946 11.02 713,194 7.00 (1)662,251 6.50 
Tier 1 capital (to risk-weighted assets)Tier 1 capital (to risk-weighted assets)1,027,660 11.62 751,860 8.50 (1)707,633 8.00 Tier 1 capital (to risk-weighted assets)1,122,946 11.02 866,021 8.50 (1)815,078 8.00 
Total capital (to risk-weighted assets)Total capital (to risk-weighted assets)1,079,766 12.21 928,768 10.50 (1)884,541 10.00 Total capital (to risk-weighted assets)1,183,705 11.62 1,069,791 10.50 (1)1,018,848 10.00 
Company:
Tier 1 capital (to average assets)$1,044,518 9.22 %$453,087 4.00 %N/AN/A
Common equity Tier 1 (to risk-weighted assets)917,088 10.26 625,801 7.00 (1)N/AN/A
Tier 1 capital (to risk-weighted assets)1,044,518 11.68 759,902 8.50 (1)N/AN/A
Total capital (to risk-weighted assets)1,257,372 14.06 938,702 10.50 (1)N/AN/A
(1)Includes the Capital Conservation Buffer of 2.50%.
The Company and the Bank satisfied the criteria to be “well-capitalized” under the Prompt Corrective Action Regulations.regulations.
At September 30, 20222023 and December 31, 2021,2022, the Company maintained a stockholders’ equity to total assets ratio of 12.14%12.13% and 12.92%12.10%, respectively.

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Non-Performing Assets
The following table sets forth information regarding the Company’s non-performing assets, consisting of non-performing loans and other real estate owned.loans. It is the policy of the Company to cease accruing interest on loans 90 days or more past due or in the process of foreclosure.
September 30,December 31,September 30,December 31,
2022202120232022
(dollars in thousands) (dollars in thousands)
Non-performing loans:Non-performing loans:Non-performing loans:
Commercial real estate – investorCommercial real estate – investor$9,866 $3,614 Commercial real estate – investor$20,723 $10,483 
Commercial real estate – owner occupiedCommercial real estate – owner occupied1,976 11,904 Commercial real estate – owner occupied240 4,025 
Commercial and industrialCommercial and industrial321 277 Commercial and industrial1,120 331 
Residential real estateResidential real estate5,958 6,114 Residential real estate5,624 5,969 
Other consumerOther consumer3,377 3,585 Other consumer2,391 2,457 
Total non-performing loans21,498 25,494 
Other real estate owned— 106 
Total non-performing assets$21,498 $25,600 
Total non-performing loans and assetsTotal non-performing loans and assets$30,098 $23,265 
PCD loans, net of allowance for loan credit losses
PCD loans, net of allowance for loan credit losses
$29,249 $41,817 
PCD loans, net of allowance for loan credit losses
$18,640 $27,129 
Delinquent loans 30-89 daysDelinquent loans 30-89 days$11,846 $14,546 Delinquent loans 30-89 days$20,591 $14,148 
Allowance for loan credit losses as a percent of total loansAllowance for loan credit losses as a percent of total loans0.55 %0.57 %Allowance for loan credit losses as a percent of total loans0.63 %0.57 %
Allowance for loan credit losses as a percent of total non-performing loans
Allowance for loan credit losses as a percent of total non-performing loans
248.96 191.61
Allowance for loan credit losses as a percent of total non-performing loans
212.23 244.25 
Non-performing loans as a percent of total loans receivableNon-performing loans as a percent of total loans receivable0.22 0.30Non-performing loans as a percent of total loans receivable0.30 0.23 
Non-performing assets as a percent of total assetsNon-performing assets as a percent of total assets0.17 0.22Non-performing assets as a percent of total assets0.22 0.18 
The Company’s non-performing loans totaled $21.5$30.1 million at September 30, 2022,2023, as compared to $25.5$23.3 million at December 31, 2021, primarily due to loans that were paid off and partly due to loans that returned to accrual status. Included in the2022. At September 30, 2023, non-performing loans included the remaining exposure of $8.8 million on a single commercial real estate relationship that was partially charged-off during the three months ended September 30, 2023. At September 30, 2023, total was $10.0 millionnon-performing loans included $869,000 of modified loans to borrowers experiencing financial difficulty and $11.3$5.8 million of troubled debt restructuring (“TDR”) loans at September 30, 2022 andthat existed prior to adoption of Accounting Standards Update (“ASU”) 2022-02 on January 1, 2023. At December 31, 2021, respectively.2022, total non-performing loans included $6.4 million of TDR loans. Included in the non-performing loans total was $3.0$3.2 million and $6.5$3.9 million of PCD loans at September 30, 20222023 and December 31, 2021,2022, respectively. At September 30, 2022,2023, the allowance for loan credit losses totaled $53.5$63.9 million, or 0.55%0.63% of total loans, as compared to $48.9$56.8 million, or 0.57% of total loans, at December 31, 2021.2022. These ratios exclude existing net unamortized credit and PCD marks on acquired loans of $13.6$8.8 million and $18.9$11.4 million at September 30, 20222023 and December 31, 2021,2022, respectively. 

The Company classifies loans and other assets in accordance with regulatory guidelines. The table below excludes any loans held-for-sale and represents Special Mention and Substandard assets (in thousands):
September 30,December 31,September 30,December 31,
2022202120232022
Special MentionSpecial Mention$54,330 $91,607 Special Mention$44,940 $48,214 
SubstandardSubstandard97,353 148,557 Substandard86,597 50,776 
The decreaseschange in special mention and substandard loans werewas primarily due to improved profitabilitya migration of borrowers and their ability to service their loans. The decrease incertain loans from special mention also included oneto substandard risk rating, which partly consisted of two CRE-Investor Owned relationships totaling $16.1 million. The remaining increase in substandard loans was primarily due to three commercial loan of $14.1relationships for $13.7 million, which was repaid in fullwere downgraded to substandard during the nine months ended September 30, 2022.2023. Additionally, the change in special mention loans was primarily due to two commercial relationships totaling $22.9 million that were downgraded during the nine months ended September 30, 2023, partly offset by the commercial real estate relationship that was charged-off for $8.4 million for the three months ended September 30, 2023.
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Critical Accounting Policies and Estimates

Note 1 to the Company’s Audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20212022 (the “2021“2022 Form 10-K”), as supplemented by this report, contains a summary of significant accounting policies. Various elements of these accounting policies, by their nature, are subject to estimation techniques, valuation assumptions and other subjective assessments. Certain assets are carried in the consolidated statements of financial condition at estimated fair value or the lower of cost or estimated fair value. Policies with respect to the methodology used to determine the allowance for credit losses is a critical accounting policy and estimate because of its importance to the presentation of the Company’s financial condition and results of operations. The critical accounting policy involves a higher degree of complexity and requires management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions, and estimates could result in material differences in the results of operations or financial condition. The critical accounting policy and its application is reviewed periodically, and at least annually, with the Audit Committee of the Board of Directors.

Goodwill

Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets acquired through purchase acquisitions. Goodwill is evaluated for impairment on an annual basis, or more frequently if events or changes in circumstances indicate potential impairment between annual measurement dates (i.e. triggering events). For the purposes of goodwill impairment testing, management has concluded that the Company has one reporting unit and the annual impairment test is performed as of August 31.

Testing of goodwill impairment comprises a two-step process. First, the Company performs a qualitative assessment to evaluate relevant events or circumstances to determine whether it is more likely than not that the fair value of the Company is less than its carrying amount, including goodwill. The factors considered in the qualitative assessment include macroeconomic conditions, industry and market conditions and overall financial performance of the Company, among other factors. If the Company determines that it is more likely than not that the fair value of the Company is less than its carrying amounts, then it proceeds to the quantitative impairment test, whereby it calculates the fair value of the Company. In its performance of impairment testing, management has the unconditional option to proceed directly to the quantitative impairment test, bypassing the qualitative assessment. If the carrying amount of the Company exceeds its fair value, the amount by which the carrying amount exceeds fair value, up to the carrying value of goodwill, is recorded through earnings as an impairment charge.If the results of the qualitative assessment indicate that it is not more likely than not that an impairment has occurred, or if the quantitative impairment test results in a fair value of the Company that is greater than the carrying amount, then no impairment charge is recorded.

As of the annual impairment testing date of August 31, 2023, the Company bypassed the qualitative assessment and proceeded directly to the quantitative impairment test based on the stock price on the measurement date and economic uncertainty and market volatility impacting the banking sector. To perform the quantitative assessment, the Company engaged a third-party service provider to assist management with the determination of the fair value of the Company. A combination of an income valuation methodology, comprising a discounted cash flow analysis, and a market valuation methodology, comprising the guideline public company method, was employed. Management then assigned weightings to the two approaches to conclude on the estimated fair value. The weightings took into consideration recent market volatility and suppressed stock price of the Company and the banking industry.

The discounted cash flow (“DCF”) estimated the present value of future cash flows. A DCF analysis requires significant judgment to model financial forecasts, which included loan and deposit growth, funding mix, income on securities, credit performance, forward interest rates, future returns driven by net interest margin, fee generation and expense incurrence, industry and economic trends, and other relevant considerations. For periods beyond those forecasted, a terminal value was estimated based on an assumed long-term growth rate, which was derived using the Gordon Growth Model. The discount rate applied to the forecasted cash flows was calculated using a build-up approach, which starts with the risk-free interest rate and then calibrated for market and company specific risk premiums, including a beta, equity risk, size, and company-specific risk premiums to reflect risks and uncertainties in the financial market and in the Company’s business projections.

The market approach utilizes observable market data from comparable public companies, including price-to-tangible book value ratios, to estimate the Company’s fair value. The market approach also incorporates a control premium to represent the Company’s expectation of a hypothetical acquisition. Management uses judgment in the selection of comparable companies and includes those with similar business activities, and related operating environments.

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The results of the quantitative assessment indicated that the fair value of the Company’s reporting unit exceeded its carrying amount, though not substantially, which resulted in no impairment loss at August 31, 2023.

Management continued to carefully assess and evaluate all available information for potential triggering events after the August 31 annual testing date. Though it observed some deterioration in inputs to the market approach, management believes that the banking sector continues to experience market dislocation and concluded no triggering events were identified subsequent to the annual test date.

Significant negative industry or economic trends, including declines in the market price of the Company’s stock, reduced estimates of future cash flows or business disruptions could result in impairments to goodwill in the future, which would result in recording an impairment loss. Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations. Management will continue evaluating the economic conditions at future reporting periods for triggering events.

Impact of New Accounting Pronouncements

Accounting Pronouncements Adopted in 20222023

In December 2019,March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Income TaxesASU 2022-01 “Derivatives and Hedging (Topic 740) - Simplifying815): Fair Value Hedging – Portfolio Layer Method”, which made targeted improvements to the Accounting for Income Taxes” as partoptional hedge accounting model with the objective of improving hedge accounting to better portray the economic results of an initiative to reduce complexityentity’s risk management activities in accounting standards for income taxes. The amendments also improve consistent application of and simplify generally accepted accounting principles for other areas of Topic 740 by clarifying and amending existing guidance. This update was effective forits financial statements issued for fiscal years and interim periods beginning after December 15, 2021. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In June 2022, FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The amendments in this ASU clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. In addition, this update introduces new disclosure requirements to provide information about the contractual sales restriction including the nature and remaining duration of the restriction. This update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2023.2022. Early adoption is permitted.permitted for any entity that has adopted the amendments in ASU 2017-12 for the corresponding period. The adoption of this standard did not have an impact on the Company’s consolidated financial statements, as the Company currently does not expect this standard to have a material impact to the consolidated financial statements.

any fair value hedges.
In March 2022, FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures”. The amendments in this ASU were issued to (1) eliminate accounting guidance for TDRs by creditors, while enhancing disclosure requirements for loan refinancings and restructurings when a borrower is experiencing financial difficulty; (2) require disclosures of current period gross write-offs by year of origination for financing receivables and net investments in leases. For entities that have adopted the amendments in ASU 2016-13, Measurement of Credit Losses on Financial Instruments, this update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2022. Early adoption is permitted. The amendments in this ASU should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, where there is an option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The Company plans to adoptadopted this standard on January 1, 2023guidance prospectively, and is currently evaluating the impactadoption of this standard todid not have an impact on the Company’s consolidated financial statements.

In MarchDecember 2022, FASB issued ASU 2022-01 “Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method”2022-06, “Deferral of the Sunset Date of Topic 848”, which made targeted improvementswas effective upon issuance. The amendments in this ASU defer the sunset date of Topic 848 (Reference Rate Reform) from December 31, 2022 to December 31, 2024. Topic 848, originally issued in 2020 and later amended in 2021, provides optional accounting expedients and exceptions for certain loan agreements, derivatives and other transactions affected by the transition away from London Inter-Bank Offered Rate (“LIBOR”) towards alternative reference rates. As of December 31, 2021, the Company adopted certain of these practical expedients in Topic 848 and will continue to apply prospectively until December 31, 2024. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
Transition from LIBOR
As of December 31, 2021, the Company ceased issuing LIBOR-based products and transitioned to Alternative Rates. For the tenors of U.S. dollar LIBOR utilized by the Company, the administrator of LIBOR extended publication until June 30, 2023. As of June 30, 2023, the Company has transitioned substantially all of its previously existing LIBOR-based products that were not expected to mature or settle prior to the optional hedge accounting modelcessation date. Contract language for all remaining LIBOR-based loans, securities, and borrowings has been reviewed and updated as necessary to automatically convert to an Alternative Rate at their next rate reset date with no action required.

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Recent Accounting Pronouncements Not Yet Adopted
In June 2022, FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The amendments in this ASU clarify that a contractual restriction on the objective of improving hedge accounting to better portray the economic resultssale of an entity’s risk management activitiesequity security is not considered part of the unit of account of the equity security and, therefore, is not considered in its financial statements.measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. In addition, this update introduces new disclosure requirements to provide information about the contractual sales restriction including the nature and remaining duration of the restriction. This update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2022.2023. Early adoption is permitted for any entity that has adopted the amendments in ASU 2017-12 for the corresponding period. permitted. The Company does not expect this standard to have a material impact to the consolidated financial statements.statements.
In March 2023, FASB issued ASU 2023-02, “Investments - Equity Method and Joint Venture (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method”. The amendments in this ASU permit reporting entities to account for the tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method. This update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating the impact of this standard on the consolidated financial statements.
In August 2023, FASB issued ASU 2023-05, “Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement”. The amendments in this ASU require that a joint venture, upon formation, apply a new basis of accounting and initially measure assets and liabilities at fair value, with exceptions to fair value measurement that are consistent with the business combinations guidance. This update will be effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. Early adoption is permitted. The Company does not expect this standard to have a material impact to the consolidated financial statements.
Private Securities Litigation Reform Act Safe Harbor Statement
In addition to historical information, this quarterly report 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 OceanFirst Financial Corp. (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”,“believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence.
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The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: implications arising from the termination of the proposed merger with Partners Bancorp; the impact of the COVID-19 or any other pandemic on our operations and financial results and those of our customers, changes in interest rates, inflation, general economic conditions, potential recessionary conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, including specific loan exposures, such as lending for office space, potential goodwill impairment, future natural disasters, andpotential 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, volatility and deterioration in the credit and equity markets, our ability to access low-cost funding, 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;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.operations.
These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021,2022, 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.
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Item 3.    Quantitative and Qualitative Disclosures About Market Risk
Management of Interest Rate Risk (“IRR”)
Market risk is the risk of loss from adverse changes in market prices and rates. The Company’s market risk arises primarily from the IRR inherent in its lending, investment, deposit-taking, and funding activities. The Company’s profitability is affected by fluctuations in interest rates. Changes in interest rates may negatively or positively impact the Company’s earnings to the extent that the interest rates borne by assets and liabilities do not change at the same speed, to the same extent or on the same basis. Changes in interest rates may also negatively or positively impact the market value of the Company’s investment securities, in particular fixed-rate instruments. Net gains or losses in available-for-sale securities can increase or decrease accumulated other comprehensive income or loss and total stockholders’ equity. To that end, management actively monitors and manages IRR. The extent of the movement of interest rates, higher or lower, is an uncertainty that could have a substantial impact on the earnings and stockholders’ equity of the Company.
The principal objectives of the IRR management function are to: evaluate the IRR inherent in the Company’s business; determine the level of risk appropriate given the Company’s business focus, operating environment, capital, and liquidity requirements and performance objectives; and manage the risk consistent with Board approved guidelines. The Company’s Board has established an Asset Liability Committee (“ALCO”) consisting of members of management, responsible for reviewing asset liability policies and the IRR position. ALCO meets regularly and reports the Company’s IRR position and trends to the Board on a regular basis.
The Company utilizes a number of strategies to manage IRR including, but not limited to: (1) managing the origination, purchase, sale, and retention of various types of loans with differing IRR profiles; (2) attempting to reduce the overall interest rate sensitivity of liabilities by emphasizing core and longer-term deposits; (3) selectively purchasing interest rate swaps and caps converting the rates for customer loans to manage individual loans and the Bank’s overall IRR profile; (4) managing the investment portfolio IRR profile; (5) managing the maturities and rate structures of borrowings and time deposits; and (6) purchasing interest rate swaps to manage overall balance sheet interest rate risk.
The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive.” Interest rate sensitivity is monitored through the use of interest rate risk (“IRR”) modeling. The following table sets forthan IRR model, which measures the amounts of interest-earning assets and interest-bearing liabilities outstanding at September 30, 2022, which were estimated by the Company, based upon certain assumptions, to reprice or mature in each of the future time periods shown. At September 30, 2022, the Company’s one-year gap was positive 7.90% as compared to positive 14.15% at December 31, 2021.
The table is intended to provide an approximation of the projected repricing of assets and liabilities at September 30, 2022 on the basis of contractual maturities, anticipated prepayments, scheduled rate adjustments, and the rate sensitivity of non-maturity deposits within a three month period and subsequent selected time intervals.
At September 30, 20223 Months
or Less		More than
3 Months to
1 Year		More than
1 Year to
3 Years		More than
3 Years to
5 Years		More than
5 Years		Total
(dollars in thousands)      
Interest-earning assets:
Interest-earning deposits and short-term investments$24,618$2,877$1,637$—$—$29,132
Debt securities428,968116,384257,157246,065502,1061,550,680
Equity investments—1,976——79,74681,722
Restricted equity investments————77,55677,556
Loans receivable (1)
2,867,647906,2762,012,9151,708,7592,226,7129,722,309
Total interest-earning assets3,321,2331,027,5132,271,7091,954,8242,886,12011,461,399
Interest-bearing liabilities:
Interest-bearing checking accounts1,363,083193,502447,123362,1701,543,9863,909,864
Money market deposit accounts49,75051,889120,292331,950195,348749,229
Savings accounts110,277127,553288,159225,694818,7891,570,472
Time deposits319,431547,092497,97229,31410,5481,404,357
FHLB advances514,200————514,200
Securities sold under agreements to repurchase and other borrowings166,100145123,875525558291,203
Total interest-bearing liabilities2,522,841920,1811,477,421949,6532,569,2298,439,325
Interest sensitivity gap (2)
$798,392$107,332$794,288$1,005,171$316,891$3,022,074
Cumulative interest sensitivity gap$798,392$905,724$1,700,012$2,705,183$3,022,074$3,022,074
Cumulative interest sensitivity gap as a percent of total interest-earning assets6.97 %7.90 %14.83 %23.60 %26.37 %26.37 %
(1)For purposes of the gap analysis, loans receivable includes loans held for sale and non-performing loans gross of the allowance for loan credit losses, unamortized discounts and deferred loan costs and fees.
(2)Interest sensitivity gap represents the difference between interest-earning assets and interest-bearing liabilities.

Certain shortcomings are inherent in gap analysis. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features which restrict changes in interest rates both on a short-term basis and over the life of the asset. Further,change in the event of a change in interest rates, loan prepayment rates and average lives of deposits would likely deviate significantly from those assumed in the calculation. Finally, the ability of many borrowers to service their adjustable-rate loans may be impaired in the event of an interest rate increase.
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Additionally, the table below sets forth the Company’s exposure to IRR as measured by the change ininstitution’s economic value of equity (“EVE”) and net interest income under varying rate shocks as of September 30, 2022 and December 31, 2021. All methods used to measurevarious interest rate scenarios. EVE is the difference between the net present value of assets, liabilities and off-balance-sheet contracts. The EVE ratio, in any interest rate scenario, is defined as the EVE in that scenario divided by the fair value of assets in the same scenario. Interest rate sensitivity involveis monitored by management through the use of a model which measures IRR by modeling the change in EVE and net interest income over a range of interest rate scenarios. Modeled assets and liabilities are assumed to reprice at respective repricing or maturity dates. Pricing caps and floors are included in the results, where applicable. The Company uses prepayment expectations set forth by market sources as well as Company generated data where applicable. Generally, cash flows from loans and securities are assumed to be reinvested to maintain a static balance sheet. Other assumptions which may tend to oversimplify the manner in which actual yields and costs respond to changes in market interest rates.about balance sheet mix are generally held constant. The Company’s interest rate sensitivity should be reviewed in conjunction with the financial statements and notes thereto contained in the 20212022 Form 10-K.
The methodologies and assumptions used in this analysis are periodically evaluated and refined in response to changes in the market environment, changes in the Company’s balance sheet composition, enhancements in the Company’s modeling and other factors. Such changes may affect historical comparisons of these results.
 September 30, 2022December 31, 2021
Change in Interest Rates in Basis Points (Rate Shock)Economic Value of EquityNet Interest IncomeEconomic Value of EquityNet Interest Income
Amount% ChangeEVE RatioAmount% ChangeAmount% ChangeEVE RatioAmount% Change
(dollars in thousands)          
300$1,543,173 (12.7)%14.3 %$449,321 5.4 %$1,817,134 24.5 %16.7 %$346,723 10.3 %
2001,611,932 (8.8)14.5 441,660 3.6 1,738,602 19.1 15.6 336,816 7.1 
1001,650,035 (6.7)14.4 432,993 1.6 1,621,984 11.1 14.2 325,960 3.7 
Static1,768,413 — 14.9 426,313 — 1,459,706 — 12.5 314,395 — 
(100)1,682,967 (4.8)13.9 405,872 (4.8)1,230,947 (15.7)10.3 299,994 (4.6)
In the third quarter of 2023, the Company refined certain fair value assumptions related to the loan portfolio, including prepayment rates. This resulted in a modest increase to EVE and a decrease to its sensitivity, and had a marginal impact to the net interest income scenarios.

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The Company performs a variety of EVE and twelve-month net interest income sensitivity scenarios. The following table sets forth sensitivity scenarios for a specific range of interest rate scenarios as of September 30, 2023 and December 31, 2022 (dollars in thousands).
 September 30, 2023December 31, 2022
Change in Interest Rates in Basis Points (Rate Shock)Economic Value of EquityNet Interest IncomeEconomic Value of EquityNet Interest Income
Amount% ChangeEVE RatioAmount% ChangeAmount% ChangeEVE RatioAmount% Change
(dollars in thousands)          
200$1,259,131 (5.8)%10.7 %$366,350 2.3 %$1,574,239 (8.5)%13.7 %$440,916 1.2 %
1001,292,658 (3.3)10.8 362,079 1.1 1,646,301 (4.3)13.9 438,280 0.6 
Static1,337,280 — 10.9 357,985 — 1,719,619 — 14.1 435,492 — 
(100)1,409,846 5.4 11.2 353,749 (1.2)1,762,678 2.5 14.0 428,519 (1.6)
(200)1,486,373 11.1 11.4 347,889 (2.8)1,740,837 1.2 13.5 412,038 (5.4)
The net interest income sensitivity results indicate that at both September 30, 2023 and December 31, 2022 the Company was modestly asset sensitive. The change in interest rate sensitivity between these periods was impacted by growth in floating rate loan and an increase in cash on hand, offset by the deploymentdeposit mix shift into short-term time deposits and higher-yield savings deposits.

Overall, the measure of cash into loans,EVE at risk increased in all rising rate scenarios from December 31, 2022 to September 30, 2023. This increase was the result of rising market rates resulting in lower market values in the loan and investment portfolios, along with the impact of an increase in deposit costs and a shift out of overnight borrowings intofrom lower cost, long-term non-maturity deposits to short-term borrowings, a slowdown in loanhigher cost time deposits and securities prepayment speeds, and a significant increase in market interest rates.higher-yield savings deposits.
As is the case with the gap calculation, certainCertain shortcomings are inherent in the methodology used in the EVE and net interest income IRR measurements. The model requires the making of certain assumptions which may tend to oversimplify the manner in which actual yields and costs respond to changes in market interest rates. First, the model assumes that the composition of the Company’s interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured. Second, the model assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Third, the model does not take into account the Company’s business or strategic plans or any steps it may take to respond to changes in rates. Fourth, prepayment, rate sensitivity, and average life assumptions can have a significant impact on the IRR model results. Lastly, the model utilizes data derived from historical performance. Accordingly, although the above measurements provide an indication of the Company’s IRR exposure at a particular point in time, such measurements are not intended to provide a precise forecast of the effect of changes in market interest rates, given the unique nature of the post-pandemic interest rate environment and the speed with which interest rates have been changing, the projections noted above on the Company’s EVE and net interest income and can be expected to significantly differ from actual results.

Item 4.    Controls and Procedures
(a) Disclosure Controls and Procedures
The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective. Disclosure controls and procedures are the controls and other procedures that are designed to ensure that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the SECSecurities and Exchange Commission (“SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 20222023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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1821
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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
September 30,December 31,September 30,December 31,
2022202120232022
(Unaudited)  (Unaudited) 
AssetsAssetsAssets
Cash and due from banksCash and due from banks$170,668 $204,949 Cash and due from banks$408,882 $167,946 
Debt securities available-for-sale, at estimated fair valueDebt securities available-for-sale, at estimated fair value470,300 568,255 Debt securities available-for-sale, at estimated fair value453,208 457,648 
Debt securities held-to-maturity, net of allowance for securities credit losses of $1,234 at September 30, 2022 and $1,467 at December 31, 2021 (estimated fair value of $905,426 at September 30, 2022 and $1,152,744 at December 31, 2021)1,027,712 1,139,193 
Debt securities held-to-maturity, net of allowance for securities credit losses of $932 at September 30, 2023 and $1,128 at December 31, 2022 (estimated fair value of $1,047,342 at September 30, 2023 and $1,110,041 at December 31, 2022)Debt securities held-to-maturity, net of allowance for securities credit losses of $932 at September 30, 2023 and $1,128 at December 31, 2022 (estimated fair value of $1,047,342 at September 30, 2023 and $1,110,041 at December 31, 2022)1,189,339 1,221,138 
Equity investmentsEquity investments81,722 101,155 Equity investments97,908 102,037 
Restricted equity investments, at costRestricted equity investments, at cost77,556 53,195 Restricted equity investments, at cost82,484 109,278 
Loans receivable, net of allowance for loan credit losses of $53,521 at September 30, 2022 and $48,850 at December 31, 20219,672,488 8,583,352 
Loans receivable, net of allowance for loan credit losses of $63,877 at September 30, 2023 and $56,824 at December 31, 2022Loans receivable, net of allowance for loan credit losses of $63,877 at September 30, 2023 and $56,824 at December 31, 202210,068,156 9,868,718 
Loans held-for-saleLoans held-for-sale3,549 — Loans held-for-sale— 690 
Interest and dividends receivableInterest and dividends receivable38,388 32,606 Interest and dividends receivable50,030 44,704 
Other real estate owned— 106 
Premises and equipment, netPremises and equipment, net127,868 125,828 Premises and equipment, net122,646 126,705 
Bank owned life insuranceBank owned life insurance261,118 259,207 Bank owned life insurance265,071 261,603 
Assets held for saleAssets held for sale3,216 6,229 Assets held for sale3,004 2,719 
GoodwillGoodwill506,146 500,319 Goodwill506,146 506,146 
Core deposit intangibleCore deposit intangible14,656 18,215 Core deposit intangible10,489 13,497 
Other assetsOther assets228,066 147,007 Other assets240,820 221,067 
Total assetsTotal assets$12,683,453 $11,739,616 Total assets$13,498,183 $13,103,896 
Liabilities and Stockholders’ EquityLiabilities and Stockholders’ EquityLiabilities and Stockholders’ Equity
DepositsDeposits$9,959,469 $9,732,816 Deposits$10,533,929 $9,675,206 
Federal Home Loan Bank (“FHLB”) advancesFederal Home Loan Bank (“FHLB”) advances514,200 — Federal Home Loan Bank (“FHLB”) advances606,056 1,211,166 
Securities sold under agreements to repurchase with customersSecurities sold under agreements to repurchase with customers96,289 118,769 Securities sold under agreements to repurchase with customers82,981 69,097 
Other borrowingsOther borrowings194,914 229,141 Other borrowings196,183 195,403 
Advances by borrowers for taxes and insuranceAdvances by borrowers for taxes and insurance25,457 20,305 Advances by borrowers for taxes and insurance29,696 21,405 
Other liabilitiesOther liabilities352,908 122,032 Other liabilities411,734 346,155 
Total liabilitiesTotal liabilities11,143,237 10,223,063 Total liabilities11,860,579 11,518,432 
Stockholders’ equity:Stockholders’ equity:Stockholders’ equity:
Preferred stock, $0.01 par value, $1,000 liquidation preference, 5,000,000 shares authorized, and 57,370 shares issued at both September 30, 2022 and December 31, 20211 1 
Common stock, $0.01 par value, 150,000,000 shares authorized, 61,872,065 and 61,535,381 shares issued at September 30, 2022 and December 31, 2021, respectively; and 59,138,507 and 59,175,046 shares outstanding at September 30, 2022 and December 31, 2021, respectively612 611 
Preferred stock, $0.01 par value, $1,000 liquidation preference, 5,000,000 shares authorized, and 57,370 shares issued at both September 30, 2023 and December 31, 2022Preferred stock, $0.01 par value, $1,000 liquidation preference, 5,000,000 shares authorized, and 57,370 shares issued at both September 30, 2023 and December 31, 20221 1 
Common stock, $0.01 par value, 150,000,000 shares authorized, 62,156,581 and 61,877,686 shares issued at September 30, 2023 and December 31, 2022, respectively; and 59,421,498 and 59,144,128 shares outstanding at September 30, 2023 and December 31, 2022, respectivelyCommon stock, $0.01 par value, 150,000,000 shares authorized, 62,156,581 and 61,877,686 shares issued at September 30, 2023 and December 31, 2022, respectively; and 59,421,498 and 59,144,128 shares outstanding at September 30, 2023 and December 31, 2022, respectively613 612 
Additional paid-in capitalAdditional paid-in capital1,153,072 1,146,781 Additional paid-in capital1,160,869 1,154,821 
Retained earningsRetained earnings499,967 442,306 Retained earnings577,708 540,507 
Accumulated other comprehensive lossAccumulated other comprehensive loss(38,496)(2,821)Accumulated other comprehensive loss(28,811)(35,982)
Less: Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")Less: Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")(6,797)(8,615)Less: Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")(4,383)(6,191)
Treasury stock, 2,733,558 and 2,360,335 shares at September 30, 2022 and December 31, 2021, respectively(69,106)(61,710)
Treasury stock, 2,735,083 and 2,733,558 shares at September 30, 2023 and December 31, 2022Treasury stock, 2,735,083 and 2,733,558 shares at September 30, 2023 and December 31, 2022(69,106)(69,106)
OceanFirst Financial Corp. stockholders’ equityOceanFirst Financial Corp. stockholders’ equity1,539,253 1,516,553 OceanFirst Financial Corp. stockholders’ equity1,636,891 1,584,662 
Non-controlling interestNon-controlling interest963 — Non-controlling interest713 802 
Total stockholders’ equityTotal stockholders’ equity1,540,216 1,516,553 Total stockholders’ equity1,637,604 1,585,464 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$12,683,453 $11,739,616 Total liabilities and stockholders’ equity$13,498,183 $13,103,896 

See accompanying Notes to Unaudited Consolidated Financial Statements.
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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
For the Three Months Ended September 30,For the Nine Months Ended September 30, For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021 2023202220232022
(Unaudited)(Unaudited) (Unaudited)(Unaudited)
Interest income:Interest income:Interest income:
LoansLoans$100,141 $78,889 $273,340 $233,845 Loans$133,931 $100,141 $384,755 $273,340 
Debt securitiesDebt securities8,479 5,040 23,456 16,379 Debt securities15,223 8,479 43,829 23,456 
Equity investments and otherEquity investments and other1,879 1,491 4,102 3,411 Equity investments and other9,256 1,879 18,956 4,102 
Total interest incomeTotal interest income110,499 85,420 300,898 253,635 Total interest income158,410 110,499 447,540 300,898 
Interest expense:Interest expense:Interest expense:
DepositsDeposits9,238 5,379 17,596 20,200 Deposits53,287 9,238 112,551 17,596 
Borrowed fundsBorrowed funds5,296 2,909 12,313 8,683 Borrowed funds14,127 5,296 53,082 12,313 
Total interest expenseTotal interest expense14,534 8,288 29,909 28,883 Total interest expense67,414 14,534 165,633 29,909 
Net interest incomeNet interest income95,965 77,132 270,989 224,752 Net interest income90,996 95,965 281,907 270,989 
Credit loss expense (benefit)1,016 (3,179)4,121 (10,259)
Net interest income after credit loss expense (benefit)94,949 80,311 266,868 235,011 
Provision for credit lossesProvision for credit losses10,283 1,016 14,525 4,121 
Net interest income after provision for credit lossesNet interest income after provision for credit losses80,713 94,949 267,382 266,868 
Other income:Other income:Other income:
Bankcard services revenueBankcard services revenue1,509 3,409 7,782 10,052 Bankcard services revenue1,507 1,509 4,381 7,782 
Trust and asset management revenueTrust and asset management revenue568 584 1,835 1,774 Trust and asset management revenue662 568 1,919 1,835 
Fees and service chargesFees and service charges6,320 2,973 17,026 10,519 Fees and service charges5,178 6,320 15,939 17,026 
Net gain (loss) on sales of loans168 (15)348 3,180 
Net gain on sales of loansNet gain on sales of loans66 168 119 348 
Net gain (loss) on equity investmentsNet gain (loss) on equity investments3,362 (466)(7,502)8,397 Net gain (loss) on equity investments1,452 3,362 (5,908)(7,502)
Net gain (loss) from other real estate operations— (3)48 (12)
Net gain from other real estate operationsNet gain from other real estate operations— — — 48 
Income from bank owned life insuranceIncome from bank owned life insurance1,356 1,640 4,881 4,771 Income from bank owned life insurance1,390 1,356 3,853 4,881 
Commercial loan swap incomeCommercial loan swap income1,471 1,588 6,546 2,772 Commercial loan swap income11 1,471 712 6,546 
OtherOther396 173 579 1,068 Other496 396 748 579 
Total other incomeTotal other income15,150 9,883 31,543 42,521 Total other income10,762 15,150 21,763 31,543 
Operating expenses:Operating expenses:Operating expenses:
Compensation and employee benefitsCompensation and employee benefits34,124 30,730 97,972 89,008 Compensation and employee benefits35,534 34,124 103,676 97,972 
OccupancyOccupancy5,288 5,005 15,790 15,380 Occupancy5,466 5,288 15,970 15,790 
EquipmentEquipment1,150 1,124 3,856 4,008 Equipment1,172 1,150 3,478 3,856 
MarketingMarketing655 496 2,242 1,555 Marketing1,183 655 3,126 2,242 
Federal deposit insurance and regulatory assessmentsFederal deposit insurance and regulatory assessments1,757 1,459 5,435 4,422 Federal deposit insurance and regulatory assessments2,557 1,757 6,771 5,435 
Data processingData processing6,560 5,363 18,466 13,796 Data processing6,086 6,560 18,405 18,466 
Check card processingCheck card processing1,231 1,337 3,728 4,012 Check card processing1,154 1,231 3,649 3,728 
Professional feesProfessional fees2,502 3,089 8,296 8,317 Professional fees5,258 2,502 15,439 8,296 
Amortization of core deposit intangibleAmortization of core deposit intangible1,171 1,354 3,559 4,110 Amortization of core deposit intangible987 1,171 3,008 3,559 
Branch consolidation (benefit) expense, netBranch consolidation (benefit) expense, net(346)4,014 602 5,051 Branch consolidation (benefit) expense, net— (346)70 602 
Merger related expensesMerger related expenses298 225 2,459 1,052 Merger related expenses— 298 22 2,459 
Other operating expenseOther operating expense4,607 4,477 12,748 11,315 Other operating expense5,087 4,607 15,109 12,748 
Total operating expensesTotal operating expenses58,997 58,673 175,153 162,026 Total operating expenses64,484 58,997 188,723 175,153 
Income before provision for income taxesIncome before provision for income taxes51,102 31,521 123,258 115,506 Income before provision for income taxes26,991 51,102 100,422 123,258 
Provision for income taxesProvision for income taxes12,298 7,354��29,212 28,087 Provision for income taxes6,459 12,298 24,109 29,212 
Net incomeNet income38,804 24,167 94,046 87,419 Net income20,532 38,804 76,313 94,046 
Net income attributable to non-controlling interest193 — 715 — 
Net (loss) income attributable to non-controlling interestNet (loss) income attributable to non-controlling interest(135)193 (34)715 
Net income attributable to OceanFirst Financial Corp.Net income attributable to OceanFirst Financial Corp.38,611 24,167 93,331 87,419 Net income attributable to OceanFirst Financial Corp.20,667 38,611 76,347 93,331 
Dividends on preferred sharesDividends on preferred shares1,004 1,004 3,012 3,012 Dividends on preferred shares1,004 1,004 3,012 3,012 
Net income available to common stockholdersNet income available to common stockholders$37,607 $23,163 $90,319 $84,407 Net income available to common stockholders$19,663 $37,607 $73,335 $90,319 
Basic earnings per shareBasic earnings per share$0.64 $0.40 $1.54 $1.42 Basic earnings per share$0.33 $0.64 $1.24 $1.54 
Diluted earnings per shareDiluted earnings per share$0.64 $0.39 $1.53 $1.41 Diluted earnings per share$0.33 $0.64 $1.24 $1.53 
Average basic shares outstandingAverage basic shares outstanding58,681 59,311 58,777 59,619 Average basic shares outstanding59,104 58,681 59,037 58,777 
Average diluted shares outstandingAverage diluted shares outstanding58,801 59,515 58,918 59,862 Average diluted shares outstanding59,111 58,801 59,068 58,918 
See accompanying Notes to Unaudited Consolidated Financial Statements.
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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
 
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2022202120222021
 (Unaudited)(Unaudited)
Net income$38,804 $24,167 $94,046 $87,419 
Other comprehensive loss:
Net unrealized loss on debt securities (net of tax benefit of $3,023 and $11,411 in 2022 and tax benefit of $232 and $446 in 2021)
(9,490)(855)(35,858)(1,658)
Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense of $60 and $186 in 2022 and tax expense of $66 and $209 in 2021)
87 95 265 303 
Reclassification adjustment for gains included in net income (net of tax benefit of $26 in 2022)— — (82)— 
Total other comprehensive loss, net of tax(9,403)(760)(35,675)(1,355)
Total comprehensive income29,401 23,407 58,371 86,064 
Less: comprehensive income attributable to non-controlling interest193 — 715 — 
Comprehensive income attributable to OceanFirst Financial Corp.29,208 23,407 57,656 86,064 
Less: Dividends on preferred shares1,004 1,004 3,012 3,012 
Comprehensive income available to common stockholders$28,204 $22,403 $54,644 $83,052 
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2023202220232022
 (Unaudited)(Unaudited)
Net income$20,532 $38,804 $76,313 $94,046 
Other comprehensive income (loss):
Net unrealized gain (loss) on debt securities (net of tax expense of $572 and $2,430 in 2023 and tax benefit of $3,023 and $11,411 in 2022, respectively)1,797 (9,490)7,626 (35,858)
Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense of $66 and $176 in 2023 and tax expense of $60 and $186 in 2022, respectively)116 87 277 265 
Unrealized loss on derivative hedges (net of tax benefit of $198 and $573 in 2023)(622)— (1,798)— 
Reclassification adjustment for losses (gains) included in net income (net of tax expense of $78 and $340 in 2023 and tax benefit $26 in 2022, respectively)246 — 1,066 (82)
Total other comprehensive income (loss), net of tax1,537 (9,403)7,171 (35,675)
Total comprehensive income22,069 29,401 83,484 58,371 
Less: comprehensive (loss) income attributable to non-controlling interest(135)193 (34)715 
Comprehensive income attributable to OceanFirst Financial Corp.22,204 29,208 83,518 57,656 
Less: Dividends on preferred shares1,004 1,004 3,012 3,012 
Total comprehensive income available to common stockholders$21,200 $28,204 $80,506 $54,644 
See accompanying Notes to Unaudited Consolidated Financial Statements.
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OceanFirst Financial Corp.
Consolidated Statements of Changes in Stockholders’ EquityCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(dollars in thousands, except per share amounts)
(Unaudited)
For the Three Months Ended September 30, 20222023 and 20212022
Preferred
Stock		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
(Loss) Income		Employee
Stock
Ownership
Plan		Treasury
Stock		Non-Controlling InterestTotal
Balance at June 30, 2021$1 $611 $1,143,907 $417,658 $26 $(6,824)$(46,590)$— $1,508,789 
Net income— — — 24,167 — — — — 24,167 
Other comprehensive loss, net of tax— — — — (760)— — — (760)
Stock compensation— — 1,505 — — — — — 1,505 
Allocation of ESOP stock— — 31 — — 305 — — 336 
Cash dividend $0.17 per share— — — (10,100)— — — — (10,100)
Exercise of stock options— — 5 — — — — — 5 
Repurchase 460,009 shares of common stock— — — — — — (9,689)— (9,689)
Preferred stock dividend— — — (1,004)— — — — (1,004)
Balance at September 30, 2021$1 $611 $1,145,448 $430,721 $(734)$(6,519)$(56,279)$— $1,513,249 
Preferred
Stock		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
(Loss) Income		Employee
Stock
Ownership
Plan		Treasury
Stock		Non-Controlling InterestTotal
Balance at June 30, 2022Balance at June 30, 2022$1 $612 $1,151,363 $474,114 $(29,093)$(7,403)$(69,106)$944 $1,521,432 Balance at June 30, 2022$1 $612 $1,151,363 $474,114 $(29,093)$(7,403)$(69,106)$944 $1,521,432 
Net incomeNet income— — — 38,611 — — — 193 38,804 Net income— — — 38,611 — — — 193 38,804 
Other comprehensive loss, net of taxOther comprehensive loss, net of tax— — — — (9,403)— — — (9,403)Other comprehensive loss, net of tax— — — — (9,403)— — — (9,403)
Stock compensationStock compensation— — 1,619 — — — — — 1,619 Stock compensation— — 1,619 — — — — — 1,619 
Allocation of ESOP stockAllocation of ESOP stock— — (5)— — 606 — — 601 Allocation of ESOP stock— — (5)— — 606 — — 601 
Cash dividend $0.20 per shareCash dividend $0.20 per share— — — (11,752)— — — — (11,752)Cash dividend $0.20 per share— — — (11,752)— — — — (11,752)
Exercise of stock optionsExercise of stock options— — 95 — — — — — 95 Exercise of stock options— — 95 — — — — — 95 
Preferred stock dividendPreferred stock dividend— — — (1,004)— — — — (1,004)Preferred stock dividend— — — (1,004)— — — — (1,004)
Distributions to non-controlling interestDistributions to non-controlling interest— — — (2)— — — (174)(176)Distributions to non-controlling interest— — — (2)— — — (174)(176)
Balance at September 30, 2022Balance at September 30, 2022$1 $612 $1,153,072 $499,967 $(38,496)$(6,797)$(69,106)$963 $1,540,216 
Balance at June 30, 2023Balance at June 30, 2023$1 $613 $1,159,394 $569,867 $(30,348)$(4,986)$(69,106)$848 $1,626,283 
Net income (loss)Net income (loss)— — — 20,667 — — — (135)20,532 
Other comprehensive income, net of taxOther comprehensive income, net of tax— — — — 1,537 — — — 1,537 
Stock compensationStock compensation— — 1,574 — — — — — 1,574 
Balance at September 30, 2022$1 $612 $1,153,072 $499,967 $(38,496)$(6,797)$(69,106)$963 $1,540,216 
Allocation of ESOP stockAllocation of ESOP stock— — (99)— — 603 — — 504 
Cash dividend $0.20 per shareCash dividend $0.20 per share— — — (11,822)— — — — (11,822)
Preferred stock dividendPreferred stock dividend— — — (1,004)— — — — (1,004)
Balance at September 30, 2023Balance at September 30, 2023$1 $613 $1,160,869 $577,708 $(28,811)$(4,383)$(69,106)$713 $1,637,604 

See accompanying Notes to Unaudited Consolidated Financial Statements.















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Consolidated Statements of Changes in Stockholders’ EquityCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(dollars in thousands, except per share amounts)
(Unaudited)
For the Nine Months Ended September 30, 20222023 and 20212022
Preferred
Stock		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
(Loss) Income		Employee
Stock
Ownership
Plan		Treasury
Stock		Non-Controlling InterestTotal
Balance at December 31, 2020$1 $609 $1,137,715 $378,268 $621 $(7,433)$(25,651)$— $1,484,130 
Net income— — — 87,419 — — — — 87,419 
Other comprehensive loss, net of tax— — — — (1,355)— — — (1,355)
Stock compensation— — 4,231 — — — — — 4,231 
Allocation of ESOP stock— — 142 — — 914 — — 1,056 
Cash dividend $0.51 per share— — — (30,425)— — — — (30,425)
Exercise of stock options— 2 3,360 (1,529)— — — — 1,833 
Repurchase 1,460,009 shares of common stock— — — — — — (30,628)— (30,628)
Preferred stock dividend— — — (3,012)— — — — (3,012)
Balance at September 30, 2021$1 $611 $1,145,448 $430,721 $(734)$(6,519)$(56,279)$— $1,513,249 
Balance at December 31, 2021$1 $611 $1,146,781 $442,306 $(2,821)$(8,615)$(61,710)$— $1,516,553 
Net income— — — 93,331 — — — 715 94,046 
Other comprehensive loss, net of tax— — — — (35,675)— — — (35,675)
Stock compensation— — 5,019 — — — — — 5,019 
Allocation of ESOP stock— — 30 — — 1,818 — — 1,848 
Cash dividend $0.54 per share— — — (31,767)— — — — (31,767)
Exercise of stock options— 1 1,242 (897)— — — — 346 
Repurchase 373,223 shares of common stock— — — — — — (7,396)— (7,396)
Preferred stock dividend— — — (3,012)— — — — (3,012)
Acquisition of Trident Abstract Title Agency, LLC (“Trident”)— — — — — — — 836 836 
Distributions to non-controlling interest— — — 6 — — — (588)(582)
Balance at September 30, 2022$1 $612 $1,153,072 $499,967 $(38,496)$(6,797)$(69,106)$963 $1,540,216 

Preferred
Stock		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
(Loss) Income		Employee
Stock
Ownership
Plan		Treasury
Stock		Non-Controlling InterestTotal
Balance at December 31, 2021$1 $611 $1,146,781 $442,306 $(2,821)$(8,615)$(61,710)$— $1,516,553 
Net income— — — 93,331 — — — 715 94,046 
Other comprehensive loss, net of tax— — — — (35,675)— — — (35,675)
Stock compensation— — 5,019 — — — — — 5,019 
Allocation of ESOP stock— — 30 — — 1,818 — — 1,848 
Cash dividend $0.54 per share— — — (31,767)— — — — (31,767)
Exercise of stock options— 1 1,242 (897)— — — — 346 
Repurchase 373,223 shares of common stock— — — — — — (7,396)— (7,396)
Preferred stock dividend— — — (3,012)— — — — (3,012)
Acquisition of Trident Abstract Title Agency, LLC (“Trident”)— — — — — — — 836 836 
Distributions to non-controlling interest— — — 6 — — — (588)(582)
Balance at September 30, 2022$1 $612 $1,153,072 $499,967 $(38,496)$(6,797)$(69,106)$963 $1,540,216 
Balance at December 31, 2022$1 $612 $1,154,821 $540,507 $(35,982)$(6,191)$(69,106)$802 $1,585,464 
Net income (loss)— — — 76,347 — — — (34)76,313 
Other comprehensive income, net of tax— — — — 7,171 — — — 7,171 
Stock compensation— — 4,910 — — — — — 4,910 
Allocation of ESOP stock— — (174)— — 1,808 — — 1,634 
Cash dividend $0.60 per share— — — (35,414)— — — — (35,414)
Exercise of stock options— 1 1,312 (720)— — — — 593 
Preferred stock dividend— — — (3,012)— — — — (3,012)
Distributions to non-controlling interest— — — — — — — (55)(55)
Balance at September 30, 2023$1 $613 $1,160,869 $577,708 $(28,811)$(4,383)$(69,106)$713 $1,637,604 
See accompanying Notes to Unaudited Consolidated Financial Statements.
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Consolidated Statements of Cash FlowsCONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
For the Nine Months Ended September 30, For the Nine Months Ended September 30,
20222021 20232022
(Unaudited) (Unaudited)
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net incomeNet income$94,046 $87,419 Net income$76,313 $94,046 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipmentDepreciation and amortization of premises and equipment8,526 6,150 Depreciation and amortization of premises and equipment9,164 8,526 
Allocation of ESOP stockAllocation of ESOP stock1,848 1,056 Allocation of ESOP stock1,634 1,848 
Stock compensationStock compensation5,019 4,231 Stock compensation4,910 5,019 
Net excess tax expense on stock compensationNet excess tax expense on stock compensation215 93 Net excess tax expense on stock compensation243 215 
Amortization of servicing assetAmortization of servicing asset77 60 Amortization of servicing asset54 77 
Net premium amortization in excess of discount accretion on securitiesNet premium amortization in excess of discount accretion on securities5,522 5,719 Net premium amortization in excess of discount accretion on securities3,818 5,522 
Net amortization of deferred costs on borrowingsNet amortization of deferred costs on borrowings416 688 Net amortization of deferred costs on borrowings445 416 
Amortization of core deposit intangibleAmortization of core deposit intangible3,559 4,110 Amortization of core deposit intangible3,008 3,559 
Net accretion of purchase accounting adjustmentsNet accretion of purchase accounting adjustments(7,433)(10,720)Net accretion of purchase accounting adjustments(4,219)(7,433)
Net amortization of deferred costs and discounts on loans349 606 
Provision (benefit) for credit losses4,121 (10,259)
Net amortization of deferred fees/costs and premiums/discounts on loansNet amortization of deferred fees/costs and premiums/discounts on loans(940)349 
Provision for credit lossesProvision for credit losses14,525 4,121 
Net gain on sale of other real estate ownedNet gain on sale of other real estate owned(54)— Net gain on sale of other real estate owned— (54)
Net write down of fixed assets held-for-sale to net realizable valueNet write down of fixed assets held-for-sale to net realizable value1,427 3,114 Net write down of fixed assets held-for-sale to net realizable value459 1,427 
Net (gain) loss on sale of fixed assets(52)11 
Net loss (gain) on equity securities7,502 (8,397)
Net gain on sale of fixed assetsNet gain on sale of fixed assets(26)(52)
Net loss on sales of available-for-sale securitiesNet loss on sales of available-for-sale securities697 — 
Net loss on equity investmentsNet loss on equity investments5,908 7,502 
Net gain on sales of loansNet gain on sales of loans(348)(3,180)Net gain on sales of loans(119)(348)
Proceeds from sales of residential loans held for saleProceeds from sales of residential loans held for sale10,266 101,992 Proceeds from sales of residential loans held for sale38,048 10,266 
Mortgage loans originated for sale(13,677)(53,935)
Residential loans originated for saleResidential loans originated for sale(37,239)(13,677)
Increase in value of bank owned life insuranceIncrease in value of bank owned life insurance(4,881)(4,771)Increase in value of bank owned life insurance(3,853)(4,881)
Net gain on sale of assets held for sale(1,947)(318)
(Increase) decrease in interest and dividends receivable(5,782)2,757 
Deferred tax (benefit) expense(66)570 
Net loss (gain) on sale of assets held for saleNet loss (gain) on sale of assets held for sale7 (1,947)
Increase in interest and dividends receivableIncrease in interest and dividends receivable(5,326)(5,782)
Deferred tax benefitDeferred tax benefit(93)(66)
(Increase) decrease in other assets(84,582)29,366 
Increase (decrease) in other liabilities185,927 (37,311)
Increase in other assetsIncrease in other assets(22,350)(84,582)
Increase in other liabilitiesIncrease in other liabilities66,016 185,927 
Total adjustmentsTotal adjustments115,952 31,632 Total adjustments74,771 115,952 
Net cash provided by operating activitiesNet cash provided by operating activities209,998 119,051 Net cash provided by operating activities151,084 209,998 
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Net increase in loans receivableNet increase in loans receivable(938,915)(203,104)Net increase in loans receivable(210,412)(938,915)
Proceeds from sale of loansProceeds from sale of loans13,388 825 Proceeds from sale of loans— 13,388 
Purchase of residential loan poolPurchase of residential loan pool(161,701)(219,745)Purchase of residential loan pool— (161,701)
Premiums paid on purchased loan poolPremiums paid on purchased loan pool(495)(6,318)Premiums paid on purchased loan pool— (495)
Purchase of debt securities available-for-salePurchase of debt securities available-for-sale(64,862)(200,034)Purchase of debt securities available-for-sale(4,287)(64,862)
Purchase of debt securities held-to-maturityPurchase of debt securities held-to-maturity(26,666)(381,032)Purchase of debt securities held-to-maturity(65,567)(26,666)
Purchase of equity investmentsPurchase of equity investments(5,935)(85,077)Purchase of equity investments(7,383)(5,935)
Proceeds from maturities and calls of debt securities available-for-saleProceeds from maturities and calls of debt securities available-for-sale84,200 93,835 Proceeds from maturities and calls of debt securities available-for-sale16,950 84,200 
Proceeds from maturities and calls of debt securities held-to-maturityProceeds from maturities and calls of debt securities held-to-maturity25,126 22,125 Proceeds from maturities and calls of debt securities held-to-maturity13,940 25,126 
Proceeds from sales of debt securities available-for-saleProceeds from sales of debt securities available-for-sale30,257 — Proceeds from sales of debt securities available-for-sale1,300 30,257 
Proceeds from sale of equity investmentsProceeds from sale of equity investments19,235 98,776 Proceeds from sale of equity investments4,822 19,235 
Principal repayments on debt securities available-for-sale— 114 
Principal repayments on debt securities held-to-maturityPrincipal repayments on debt securities held-to-maturity111,283 168,059 Principal repayments on debt securities held-to-maturity82,661 111,283 
Proceeds from bank owned life insuranceProceeds from bank owned life insurance2,970 9,952 Proceeds from bank owned life insurance385 2,970 
Proceeds from the redemption of restricted equity investmentsProceeds from the redemption of restricted equity investments164,939 1,110 Proceeds from the redemption of restricted equity investments128,544 164,939 
Purchases of restricted equity investmentsPurchases of restricted equity investments(189,300)(2,069)Purchases of restricted equity investments(101,745)(189,300)
Proceeds from sale of other real estate ownedProceeds from sale of other real estate owned160 — Proceeds from sale of other real estate owned— 160 
Proceeds from sales of assets held-for-saleProceeds from sales of assets held-for-sale7,676 2,601 Proceeds from sales of assets held-for-sale969 7,676 
Purchases of premises and equipmentPurchases of premises and equipment(14,358)(26,493)Purchases of premises and equipment(6,062)(14,358)
Purchases of operating lease equipmentPurchases of operating lease equipment(4,789)— Purchases of operating lease equipment— (4,789)
Net cash consideration received for acquisitionNet cash consideration received for acquisition38,609 — Net cash consideration received for acquisition— 38,609 
Net cash used in investing activitiesNet cash used in investing activities(909,178)(726,475)Net cash used in investing activities(145,885)(909,178)
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Consolidated Statements of Cash FlowsCONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
(dollars in thousands)
For the Nine Months Ended September 30, For the Nine Months Ended September 30,
20222021 20232022
(Unaudited) (Unaudited)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Increase in depositsIncrease in deposits$227,192 $347,672 Increase in deposits$858,947 $227,192 
(Decrease) increase in short-term borrowings(22,480)14,838 
Net proceeds from FHLB advances514,200 — 
Increase (decrease) in short-term borrowingsIncrease (decrease) in short-term borrowings13,807 (22,480)
Net (repayment) proceeds from FHLB advancesNet (repayment) proceeds from FHLB advances(605,110)514,200 
Repayments of other borrowingsRepayments of other borrowings(35,076)(7,585)Repayments of other borrowings— (35,076)
Increase in advances by borrowers for taxes and insuranceIncrease in advances by borrowers for taxes and insurance5,152 4,918 Increase in advances by borrowers for taxes and insurance8,291 5,152 
Exercise of stock optionsExercise of stock options346 1,833 Exercise of stock options593 346 
Payment of employee taxes withheld from stock awards(1,473)(1,176)
Payment of employee taxes withheld from stock awards and phantom stock unitsPayment of employee taxes withheld from stock awards and phantom stock units(2,350)(1,473)
Purchase of treasury stockPurchase of treasury stock(7,396)(30,628)Purchase of treasury stock— (7,396)
Dividends paidDividends paid(34,779)(33,437)Dividends paid(38,426)(34,779)
Distributions to non-controlling interestDistributions to non-controlling interest(582)— Distributions to non-controlling interest(55)(582)
Net cash provided by financing activitiesNet cash provided by financing activities645,104 296,435 Net cash provided by financing activities235,697 645,104 
Net decrease in cash and due from banks and restricted cash(54,076)(310,989)
Net increase (decrease) in cash and due from banks and restricted cashNet increase (decrease) in cash and due from banks and restricted cash240,896 (54,076)
Cash and due from banks and restricted cash at beginning of periodCash and due from banks and restricted cash at beginning of period224,784 1,318,661 Cash and due from banks and restricted cash at beginning of period167,986 224,784 
Cash and due from banks and restricted cash at end of periodCash and due from banks and restricted cash at end of period$170,708 $1,007,672 Cash and due from banks and restricted cash at end of period$408,882 $170,708 
Supplemental Disclosure of Cash Flow Information:Supplemental Disclosure of Cash Flow Information:Supplemental Disclosure of Cash Flow Information:
Cash and due from banks at beginning of periodCash and due from banks at beginning of period$204,949 $1,272,134 Cash and due from banks at beginning of period$167,946 $204,949 
Restricted cash at beginning of periodRestricted cash at beginning of period19,835 46,527 Restricted cash at beginning of period40 19,835 
Cash and due from banks and restricted cash at beginning of periodCash and due from banks and restricted cash at beginning of period$224,784 $1,318,661 Cash and due from banks and restricted cash at beginning of period$167,986 $224,784 
Cash and due from banks at end of periodCash and due from banks at end of period$170,668 $981,126 Cash and due from banks at end of period$408,882 $170,668 
Restricted cash at end of periodRestricted cash at end of period40 26,546 Restricted cash at end of period— 40 
Cash and due from banks and restricted cash at end of periodCash and due from banks and restricted cash at end of period$170,708 $1,007,672 Cash and due from banks and restricted cash at end of period$408,882 $170,708 
Cash paid during the period for:Cash paid during the period for:Cash paid during the period for:
InterestInterest$27,953 $28,009 Interest$148,950 $27,953 
Income taxesIncome taxes12,633 38,707 Income taxes28,151 12,633 
Non-cash activities:Non-cash activities:Non-cash activities:
Accretion of unrealized loss on securities reclassified to held-to-maturityAccretion of unrealized loss on securities reclassified to held-to-maturity451 512 Accretion of unrealized loss on securities reclassified to held-to-maturity453 451 
Net loan recoveries(335)(442)
Net loan charge-offs (recoveries)Net loan charge-offs (recoveries)8,271 (335)
Transfer of loans receivable to loans held-for-saleTransfer of loans receivable to loans held-for-sale13,178 12,781 Transfer of loans receivable to loans held-for-sale— 13,178 
Transfer of premises and equipment to assets held-for-saleTransfer of premises and equipment to assets held-for-sale2,776 1,476 Transfer of premises and equipment to assets held-for-sale1,302 2,776 
Acquisition:Acquisition:Acquisition:
Non-cash assets acquired:Non-cash assets acquired:Non-cash assets acquired:
Other current assetsOther current assets$238 $— Other current assets$— $238 
Premises and equipmentPremises and equipment18 — Premises and equipment— 18 
Right of use (“ROU”) assetRight of use (“ROU”) asset779 — Right of use (“ROU”) asset— 779 
Other assetsOther assets81 — Other assets— 81 
Total non-cash assets acquiredTotal non-cash assets acquired$1,116 $— Total non-cash assets acquired$— $1,116 
Liabilities assumed:Liabilities assumed:Liabilities assumed:
Lease liabilityLease liability$779 $— Lease liability$— $779 
Other liabilitiesOther liabilities43,937 — Other liabilities— 43,937 
Total liabilities assumedTotal liabilities assumed$44,716 $— Total liabilities assumed$— $44,716 

See accompanying Notes to Unaudited Consolidated Financial Statements.
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OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements


Note 1. Basis of Presentation
The consolidated financial statements include: the accounts of OceanFirst Financial Corp. (the “Company”),; its wholly-owned subsidiaries, OceanFirst Bank N.A. (the “Bank”) and OceanFirst Risk Management, Inc.; the Bank’s direct and indirect wholly-owned subsidiaries, OceanFirst REIT Holdings, Inc., OceanFirst Management Corp., OceanFirst Realty Corp., Casaba Real Estate Holdings Corporation, and Country Property Holdings, Inc; and a majority controlling interest in Trident Abstract Title Agency, LLC.Trident. Certain other subsidiaries were dissolved in 2022 and are included in the consolidated financial statements for previous periods. All significant intercompany accounts and transactions have been eliminated in consolidation.
The interim consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. The results of operations for the three and nine months ended September 30, 20222023 are not necessarily indicative of the results of operations that may be expected for the full year 20222023 or any other period. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and the results of operations for the periods presented. Actual results could differ from these estimates.
Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).
These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022.

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OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements

Note 2. Business Combinations
Trident Acquisition
On April 1, 2022, the Company completed its acquisition of a majority controlling interest of 60% in Trident. Trident provides commercial and residential title services throughout New Jersey, and through strategic alliances can also service clients’ title insurance needs outside of New Jersey. The acquisition is complimentary to the Company’s existing consumer and commercial lending business. Total consideration paid was $7.1 million and goodwill from the transaction amounted to $5.8 million.
The acquisition was accounted for under the acquisition method of accounting. Under this method of accounting, the purchase price has been allocated to the respective assets acquired and liabilities assumed based upon their estimated fair values. The excess of consideration paid over the estimated fair value of the net assets acquired, excluding the net assets attributable to the non-controlling interest, has been recorded as goodwill.
The Company consolidated Trident’s assets, liabilities and components of comprehensive income within its consolidated results. Thus, the consolidated results include amounts attributable to the Company and the non-controlling interest. Amounts attributable to the non-controlling interest are presented separately as a single line on the Consolidated Statements of Income (net income attributable to non-controlling interest) and the Consolidated Statements of Financial Condition (non-controlling interest in stockholders’ equity). Amounts attributed to the non-controlling interest are based upon the ownership interest in Trident that the Company does not own. For further discussion on the accounting for this arrangement refer to Note 11 Variable Interest Entity, of this Form 10-Q.
The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed by the Company at the date of the acquisition for Trident, net of total consideration paid (in thousands):
At April 1, 2022
Estimated
Fair Value
Total purchase price:$7,084 
Assets acquired:
Cash and cash equivalents$45,693 
Other current assets238 
Premises and equipment18 
ROU asset779 
Other assets81 
Total assets acquired46,809 
Liabilities assumed:
Lease liability779 
Other liabilities43,937 
Total liabilities assumed44,716 
Net assets acquired$2,093 
Net assets attributable to non-controlling interest$836 
Goodwill recorded$5,827 
The calculation of goodwill is subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available. As the Company finalizes its review of the acquired assets and liabilities, certain adjustments to the recorded carrying values may be required.
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OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

Note 3.2. Earnings per Share
The following reconciles shares outstanding for basic and diluted earnings per share for the three and nine months ended September 30, 20222023 and 20212022 (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,		Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021 2023202220232022
Weighted average shares outstandingWeighted average shares outstanding59,134 59,722 59,245 60,050 Weighted average shares outstanding59,422 59,134 59,388 59,245 
Less: Unallocated ESOP sharesLess: Unallocated ESOP shares(363)(353)(393)(369)Less: Unallocated ESOP shares(243)(363)(272)(393)
Unallocated incentive award shares Unallocated incentive award shares(90)(58)(75)(62) Unallocated incentive award shares(75)(90)(79)(75)
Average basic shares outstandingAverage basic shares outstanding58,681 59,311 58,777 59,619 Average basic shares outstanding59,104 58,681 59,037 58,777 
Add: Effect of dilutive securities:Add: Effect of dilutive securities:Add: Effect of dilutive securities:
Incentive awardsIncentive awards120 204 141 243 Incentive awards7 120 31 141 
Average diluted shares outstandingAverage diluted shares outstanding58,801 59,515 58,918 59,862 Average diluted shares outstanding59,111 58,801 59,068 58,918 
For the three and nine months ended September 30, 2023, antidilutive stock options of 1,961,000 and 1,525,000, respectively, were excluded from the earnings per share calculation. For both the three and nine months ended September 30, 2022, antidilutive stock options of 1,552,000 were excluded from the earnings per share calculation. For the three and nine months ended September 30, 2021, antidilutive stock options of 1,573,000 and 1,566,000, respectively, were excluded from the earnings per share calculation.
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Notes to Unaudited Consolidated Financial Statements (Continued)

Note 4.3. Securities
The amortized cost, estimated fair value, and allowance for securities credit losses of debt securities available-for-sale and held-to-maturity at September 30, 20222023 and December 31, 20212022 are as follows (in thousands):
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value		Allowance for Credit LossesAmortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value		Allowance for Credit Losses
At September 30, 2022
At September 30, 2023At September 30, 2023
Debt securities available-for-sale:Debt securities available-for-sale:Debt securities available-for-sale:
U.S. government and agency obligationsU.S. government and agency obligations$107,198 $(8,099)$99,099 $— U.S. government and agency obligations$71,895 $— $(7,815)$64,080 $— 
Corporate debt securitiesCorporate debt securities5,000 — (628)4,372 — Corporate debt securities10,084 — (1,132)8,952 — 
Asset-backed securitiesAsset-backed securities296,228 — (21,355)274,873 — Asset-backed securities296,212 — (5,768)290,444 — 
Agency commercial mortgage-backed securities (“MBS”)Agency commercial mortgage-backed securities (“MBS”)110,871 — (18,915)91,956 — Agency commercial mortgage-backed securities (“MBS”)109,827 — (20,095)89,732 — 
Total debt securities available-for-saleTotal debt securities available-for-sale$519,297 $— $(48,997)$470,300 $— Total debt securities available-for-sale$488,018 $— $(34,810)$453,208 $— 
Debt securities held-to-maturity:Debt securities held-to-maturity:Debt securities held-to-maturity:
State, municipal and sovereign debt obligations$263,614 $— $(31,052)$232,562 $(63)
State and municipal debt obligationsState and municipal debt obligations$228,779 $30 $(26,705)$202,104 $(41)
Corporate debt securitiesCorporate debt securities59,000 403 (3,135)56,268 (1,135)Corporate debt securities71,430 373 (6,106)65,697 (868)
Mortgage-backed securities:Mortgage-backed securities:Mortgage-backed securities:
Agency residentialAgency residential674,356 103 (89,696)584,763 — Agency residential787,875 3 (103,865)684,013 — 
Agency commercialAgency commercial7,440 6 (279)7,167 — Agency commercial83,322 16 (6,392)76,946 (16)
Non-agency commercialNon-agency commercial26,973 — (2,307)24,666 (36)Non-agency commercial20,760 — (2,178)18,582 (7)
Total mortgage-backed securitiesTotal mortgage-backed securities708,769 109 (92,282)616,596 (36)Total mortgage-backed securities891,957 19 (112,435)779,541 (23)
Total debt securities held-to-maturityTotal debt securities held-to-maturity$1,031,383 $512 $(126,469)$905,426 $(1,234)Total debt securities held-to-maturity$1,192,166 $422 $(145,246)$1,047,342 $(932)
Total debt securitiesTotal debt securities$1,550,680 $512 $(175,466)$1,375,726 $(1,234)Total debt securities$1,680,184 $422 $(180,056)$1,500,550 $(932)
At December 31, 2021
At December 31, 2022At December 31, 2022
Debt securities available-for-sale:Debt securities available-for-sale:Debt securities available-for-sale:
U.S. government and agency obligationsU.S. government and agency obligations$164,756 $1,135 $(471)$165,420 $— U.S. government and agency obligations$87,648 $1 $(7,635)$80,014 $— 
Corporate debt securitiesCorporate debt securities5,000 42 (11)5,031 — Corporate debt securities8,928 — (756)8,172 — 
Asset-backed securitiesAsset-backed securities298,976 41 (1,489)297,528 — Asset-backed securities296,222 — (19,349)276,873 — 
Agency commercial MBSAgency commercial MBS101,142 57 (923)100,276 — Agency commercial MBS110,606 — (18,017)92,589 — 
Total debt securities available-for-saleTotal debt securities available-for-sale$569,874 $1,275 $(2,894)$568,255 $— Total debt securities available-for-sale$503,404 $1 $(45,757)$457,648 $— 
Debt securities held-to-maturity:Debt securities held-to-maturity:Debt securities held-to-maturity:
State, municipal, and sovereign debt obligationsState, municipal, and sovereign debt obligations$281,389 $10,185 $(1,164)$290,410 $(85)State, municipal, and sovereign debt obligations$260,249 $46 $(24,940)$235,355 $(60)
Corporate debt securitiesCorporate debt securities68,823 1,628 (1,279)69,172 (1,343)Corporate debt securities56,893 380 (3,778)53,495 (1,059)
Mortgage-backed securities:Mortgage-backed securities:Mortgage-backed securities:
Agency residentialAgency residential756,844 6,785 (7,180)756,449 — Agency residential849,985 795 (83,586)767,194 — 
Agency commercialAgency commercial4,385 7 (44)4,348 — Agency commercial32,127 23 (1,189)30,961 — 
Non-agency commercialNon-agency commercial32,107 362 (104)32,365 (39)Non-agency commercial25,310 — (2,274)23,036 (9)
Total mortgage-backed securitiesTotal mortgage-backed securities793,336 7,154 (7,328)793,162 (39)Total mortgage-backed securities907,422 818 (87,049)821,191 (9)
Total debt securities held-to-maturityTotal debt securities held-to-maturity$1,143,548 $18,967 $(9,771)$1,152,744 $(1,467)Total debt securities held-to-maturity$1,224,564 $1,244 $(115,767)$1,110,041 $(1,128)
Total debt securitiesTotal debt securities$1,713,422 $20,242 $(12,665)$1,720,999 $(1,467)Total debt securities$1,727,968 $1,245 $(161,524)$1,567,689 $(1,128)

There was no allowance for securities credit losses on debt securities available-for-sale at September 30, 20222023 or December 31, 2021. The unrealized losses across security classes were due to interest rate movements. In addition, the asset-backed securities, which are largely comprised of collateralized-loan obligations, and the corporate debt securities were also impacted by credit spread widening across the fixed income markets. All of these securities are rated investment grade.2022.
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Notes to Unaudited Consolidated Financial Statements (Continued)

The following table presents the activity in the allowance for credit losses for debt securities held-to-maturity for the three and nine months ended September 30, 20222023 and 20212022 (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
20222021202220212023202220232022
Allowance for securities credit lossesAllowance for securities credit lossesAllowance for securities credit losses
Beginning balanceBeginning balance$(1,293)$(1,609)$(1,467)$(1,715)Beginning balance$(964)$(1,293)$(1,128)$(1,467)
Credit loss benefit59 106 233 212 
Provision for credit loss benefitProvision for credit loss benefit32 59 196 233 
Total ending allowance balanceTotal ending allowance balance$(1,234)$(1,503)$(1,234)$(1,503)Total ending allowance balance$(932)$(1,234)$(932)$(1,234)
The Company monitors the credit quality of debt securities held-to-maturity on a quarterly basis through the use of internal credit analysis supplemented by external credit ratings. Credit ratings of BBB- or Baa3 or higher are considered investment grade. Where multiple ratings are available, the Company considers the lowest rating when determining the allowance for securities credit losses. Under this approach, the amortized cost of debt securities held-to-maturity at September 30, 2022,2023, aggregated by credit quality indicator, are as follows (in thousands):
Investment GradeNon-Investment Grade/Non-ratedTotalInvestment GradeNon-Investment Grade/Non-ratedTotal
As of September 30, 2022
As of September 30, 2023As of September 30, 2023
State, municipal and sovereign debt obligations$263,614 $— $263,614 
State and municipal debt obligationsState and municipal debt obligations$228,779 $— $228,779 
Corporate debt securitiesCorporate debt securities43,635 15,365 59,000 Corporate debt securities57,050 14,380 71,430 
Agency commercial MBSAgency commercial MBS83,323 — 83,323 
Non-agency commercial MBSNon-agency commercial MBS26,973 — 26,973 Non-agency commercial MBS20,760 — 20,760 
Total debt securities held-to-maturityTotal debt securities held-to-maturity$334,222 $15,365 $349,587 Total debt securities held-to-maturity$389,912 $14,380 $404,292 
During 2021 and 2013, the Bank transferred $12.7 million and $536.0 million, respectively, of previously designated available-for-sale securities to a held-to-maturity designation at estimated fair value. The securities transferred had an unrealized net loss of $209,000 and $13.3 million at the time of transfer in 2021 and 2013, respectively, which continues to be reflected in accumulated other comprehensive loss on the Consolidated Statement of Financial Condition, net of subsequent amortization, which is being recognized over the life of the securities. The carrying value of the debt securities held-to-maturity at September 30, 20222023 and December 31, 2021 is2022 was as follows (in thousands): 
September 30,December 31,September 30,December 31,
2022202120232022
Amortized costAmortized cost$1,031,383 $1,143,548 Amortized cost$1,192,166 $1,224,564 
Allowance for securities credit lossesAllowance for securities credit losses(932)(1,128)
Net loss on date of transfer from available-for-saleNet loss on date of transfer from available-for-sale(13,556)(13,556)Net loss on date of transfer from available-for-sale(13,556)(13,556)
Allowance for securities credit losses(1,234)(1,467)
Accretion of net unrealized loss on securities reclassified as held-to-maturityAccretion of net unrealized loss on securities reclassified as held-to-maturity11,119 10,668 Accretion of net unrealized loss on securities reclassified as held-to-maturity11,661 11,258 
Carrying valueCarrying value$1,027,712 $1,139,193 Carrying value$1,189,339 $1,221,138 
There were$131,000 $0 realized gains/losses and $23,000$697,000 of realized gainslosses on sale of debt securities available-for-sale for the three and nine months ended September 30, 2022. There were no2023, respectively, as compared to realized gains or of $131,000 and $23,000 for the corresponding prior year periods, respectively. These realized gains/losses on debt securities forare presented within Other under Total other income of the three and nine months ended September 30, 2021.
The amortized cost and estimated fair valueConsolidated Statements of debt securities at September 30, 2022 by contractual maturity are shown below (in thousands).
September 30, 2022Amortized
Cost		Estimated
Fair Value
Less than one year$55,326 $54,972 
Due after one year through five years166,980 154,459 
Due after five years through ten years225,771 205,348 
Due after ten years282,963 252,395 
$731,040 $667,174 
Income.
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Notes to Unaudited Consolidated Financial Statements (Continued)

The amortized cost and estimated fair value of debt securities at September 30, 2023 by contractual maturity are shown below (in thousands):
September 30, 2023Amortized
Cost		Estimated
Fair Value
Less than one year$39,412 $38,958 
Due after one year through five years183,574 166,592 
Due after five years through ten years205,459 192,786 
Due after ten years249,955 232,941 
$678,400 $631,277 
Actual maturities may differ from contractual maturities in instances where issuers have the right to call or prepay obligations with or without call or prepayment penalties. At September 30, 2022,2023, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $56.0$80.4 million, $75.0$63.9 million, and $296.2 million,, respectively, and an estimated fair valuevalue of $52.7$73.6 million, $68.7$59.6 million, and $274.9$290.4 million,, respectively, were callable prior to the maturity date. Mortgage-backed securities are excluded from the above table since their effective lives are expected to be shorter than the contractual maturity date due to principal prepayments.
The estimated fair value of securities pledged for the ability to draw on FHLB advances, access to the Federal Reserve discount window, and other borrowings and for other purposes required by law amounted to $866.5 million and $1.14 billion at September 30, 2022 and December 31, 2021, respectively, which included $105.5 million and $142.9 million at September 30, 2022 and December 31, 2021, respectively, pledged as collateral for securities sold under agreements to repurchase.
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Notes to Unaudited Consolidated Financial Statements (Continued)

The estimated fair value and unrealized losses for debt securities available-for-sale and held-to-maturity at September 30, 20222023 and December 31, 2021,2022, segregated by the duration of the unrealized losses, are as follows (in thousands):
Less than 12 months12 months or longerTotal Less than 12 months12 months or longerTotal
Estimated
Fair
Value		Unrealized
Losses		Estimated
Fair
Value		Unrealized
Losses		Estimated
Fair
Value		Unrealized
Losses		 Estimated
Fair
Value		Unrealized
Losses		Estimated
Fair
Value		Unrealized
Losses		Estimated
Fair
Value		Unrealized
Losses
At September 30, 2022
At September 30, 2023At September 30, 2023
Debt securities available-for-sale:Debt securities available-for-sale:Debt securities available-for-sale:
U.S. government and agency obligationsU.S. government and agency obligations$75,464 $(5,924)$23,635 $(2,175)$99,099 $(8,099)U.S. government and agency obligations$1,060 $(11)$63,020 $(7,804)$64,080 $(7,815)
Corporate debt securitiesCorporate debt securities3,496 (504)877 (124)4,373 (628)Corporate debt securities6,519 (565)2,433 (567)8,952 (1,132)
Asset-backed securitiesAsset-backed securities216,926 (16,650)57,947 (4,705)274,873 (21,355)Asset-backed securities— — 290,444 (5,768)290,444 (5,768)
Agency commercial MBSAgency commercial MBS77,878 (16,233)14,078 (2,682)91,956 (18,915)Agency commercial MBS— — 89,732 (20,095)89,732 (20,095)
Total debt securities available-for-saleTotal debt securities available-for-sale373,764 (39,311)96,537 (9,686)470,301 (48,997)Total debt securities available-for-sale7,579 (576)445,629 (34,234)453,208 (34,810)
Debt securities held-to-maturity:Debt securities held-to-maturity:Debt securities held-to-maturity:
State, municipal and sovereign debt obligations172,090 (22,460)58,649 (8,592)230,739 (31,052)
State and municipal debt obligationsState and municipal debt obligations9,266 (397)187,876 (26,308)197,142 (26,705)
Corporate debt securitiesCorporate debt securities14,142 (319)36,516 (2,816)50,658 (3,135)Corporate debt securities38,247 (3,634)22,687 (2,472)60,934 (6,106)
MBS:MBS:MBS:
Agency residentialAgency residential252,724 (26,933)318,925 (62,763)571,649 (89,696)Agency residential222,066 (13,368)461,630 (90,497)683,696 (103,865)
Agency commercialAgency commercial3,609 (242)2,092 (37)5,701 (279)Agency commercial52,836 (5,460)16,431 (932)69,267 (6,392)
Non-agency commercialNon-agency commercial20,512 (1,981)4,154 (326)24,666 (2,307)Non-agency commercial— — 18,582 (2,178)18,582 (2,178)
Total MBSTotal MBS276,845 (29,156)325,171 (63,126)602,016 (92,282)Total MBS274,902 (18,828)496,643 (93,607)771,545 (112,435)
Total debt securities held-to-maturityTotal debt securities held-to-maturity463,077 (51,935)420,336 (74,534)883,413 (126,469)Total debt securities held-to-maturity322,415 (22,859)707,206 (122,387)1,029,621 (145,246)
Total debt securitiesTotal debt securities$836,841 $(91,246)$516,873 $(84,220)$1,353,714 $(175,466)Total debt securities$329,994 $(23,435)$1,152,835 $(156,621)$1,482,829 $(180,056)
At December 31, 2021
At December 31, 2022At December 31, 2022
Debt securities available-for-sale:Debt securities available-for-sale:Debt securities available-for-sale:
U.S. government and agency obligationsU.S. government and agency obligations$82,395 $(471)$— $— $82,395 $(471)U.S. government and agency obligations$27,232 $(450)$52,782 $(7,185)$80,014 $(7,635)
Corporate debt securitiesCorporate debt securities1,989 (11)— — 1,989 (11)Corporate debt securities4,735 (193)3,437 (563)8,172 (756)
Asset-backed securitiesAsset-backed securities279,486 (1,489)— — 279,486 (1,489)Asset-backed securities143,392 (9,179)133,481 (10,170)276,873 (19,349)
Agency commercial MBSAgency commercial MBS80,726 (923)— — 80,726 (923)Agency commercial MBS8,782 (1,675)83,807 (16,342)92,589 (18,017)
Total debt securities available-for-saleTotal debt securities available-for-sale444,596 (2,894)— — 444,596 (2,894)Total debt securities available-for-sale184,141 (11,497)273,507 (34,260)457,648 (45,757)
Debt securities held-to-maturity:Debt securities held-to-maturity:Debt securities held-to-maturity:
State, municipal, and sovereign debt obligationsState, municipal, and sovereign debt obligations75,329 (1,063)4,383 (101)79,712 (1,164)State, municipal, and sovereign debt obligations133,492 (11,952)97,135 (12,988)230,627 (24,940)
Corporate debt securitiesCorporate debt securities38,304 (1,279)— — 38,304 (1,279)Corporate debt securities11,783 (598)36,152 (3,180)47,935 (3,778)
MBS:MBS:MBS:
Agency residentialAgency residential445,399 (5,822)50,133 (1,358)495,532 (7,180)Agency residential297,296 (12,404)397,036 (71,182)694,332 (83,586)
Agency commercialAgency commercial2,255 (41)886 (3)3,141 (44)Agency commercial25,936 (1,150)2,062 (39)27,998 (1,189)
Non-agency commercialNon-agency commercial10,722 (104)— — 10,722 (104)Non-agency commercial16,839 (1,621)6,198 (653)23,037 (2,274)
Total MBSTotal MBS458,376 (5,967)51,019 (1,361)509,395 (7,328)Total MBS340,071 (15,175)405,296 (71,874)745,367 (87,049)
Total debt securities held-to-maturityTotal debt securities held-to-maturity572,009 (8,309)55,402 (1,462)627,411 (9,771)Total debt securities held-to-maturity485,346 (27,725)538,583 (88,042)1,023,929 (115,767)
Total debt securitiesTotal debt securities$1,016,605 $(11,203)$55,402 $(1,462)$1,072,007 $(12,665)Total debt securities$669,487 $(39,222)$812,090 $(122,302)$1,481,577 $(161,524)

The Company concluded that debt securities were not impaired at September 30, 20222023 based on a consideration of several factors. The Company noted that each issuer made all the contractually due payments when required. There were no defaults on principal or interest payments, and no interest payments were deferred. Based on management’s analysis of each individual security, the issuers appear to have the ability to meet debt service requirements over the life of the security. Furthermore, the change in net unrealized losses were primarily due to changes in the general credit and interest rate environment and not credit quality. Historically, the Company has not utilized securities sales as a source of liquidity and the Company’s liquidity plans include adequate sources of liquidity outside the securities portfolio.sales.
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Notes to Unaudited Consolidated Financial Statements (Continued)

Equity Investments
At September 30, 20222023 and December 31, 2021,2022, the Company held equity investments of $81.7$97.9 million and $101.2$102.0 million, respectively. The equity investments are primarily comprised of select financial services institutions’ preferred and common stocks, and, to a lesser extent, other equity investments in funds and other financial institutions.
The realized and unrealized gains or losses on equity securities for the three and nine months ended September 30, 20222023 and 20212022 are shown in the table below (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net gain (loss) on equity investments$3,362 $(466)$(7,502)$8,397 
Less: Net gains recognized on equity securities sold— — 1,351 8,123 
Unrealized gain (loss) recognized on equity securities still held$3,362 $(466)$(8,853)$274 
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net gain (loss) on equity investments$1,452 $3,362 $(5,908)$(7,502)
Less: Net (losses) gains recognized on equity investments sold— — (5,462)1,351 
Unrealized gains (losses) recognized on equity investments still held$1,452 $3,362 $(446)$(8,853)
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Notes to Unaudited Consolidated Financial Statements (Continued)

Note 5.4. Loans Receivable, Net
Loans receivable, net at September 30, 20222023 and December 31, 20212022 consisted of the following (in thousands):
September 30,December 31,
20222021
Commercial:
Commercial real estate – investor$5,007,637 $4,378,061 
Commercial real estate – owner occupied983,784 1,055,065 
Commercial and industrial (1)
652,620 449,224 
Total commercial6,644,041 5,882,350 
Consumer:
Residential real estate2,813,209 2,479,701 
Home equity loans and lines and other consumer (“other consumer”)261,510 260,819 
Total consumer3,074,719 2,740,520 
Total loans receivable9,718,760 8,622,870 
Deferred origination costs, net of fees7,249 9,332 
Allowance for loan credit losses(53,521)(48,850)
Total loans receivable, net$9,672,488 $8,583,352 
(1) The commercial and industrial loans balance at September 30, 2022 and December 31, 2021 includes Paycheck Protection Program (“PPP”) loans of $3.0 million and $22.9 million, respectively.
September 30,December 31,
20232022
Commercial:
Commercial real estate – investor$5,334,279 $5,171,952 
Commercial real estate – owner occupied957,216 997,367 
Commercial and industrial652,119 622,372 
Total commercial6,943,614 6,791,691 
Consumer:
Residential real estate2,928,259 2,861,991 
Home equity loans and lines and other consumer (“other consumer”)251,698 264,372 
Total consumer3,179,957 3,126,363 
Total loans receivable10,123,571 9,918,054 
Deferred origination costs, net of fees8,462 7,488 
Allowance for loan credit losses(63,877)(56,824)
Total loans receivable, net$10,068,156 $9,868,718 
The Company categorizes all loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, and current economic trends, among other factors. The Company evaluates risk ratings on an ongoing basis. The Company uses the following definitions for risk ratings:
    Pass: Loans classified as Pass are well protected by the paying capacity and net worth of the borrower.
    Special Mention: Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank’s credit position at some future date.
    Substandard: Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the collection or the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
    Doubtful: Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

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Notes to Unaudited Consolidated Financial Statements (Continued)

The following tables summarize total loans by year of origination, internally assigned credit grades and risk characteristics (in thousands):
202220212020201920182017 and priorRevolving lines of creditTotal202320222021202020192018 and priorRevolving lines of creditTotal
September 30, 2022
September 30, 2023September 30, 2023
Commercial real estate - investorCommercial real estate - investorCommercial real estate - investor
PassPass$936,746 $1,354,997 $574,752 $507,749 $214,473 $948,538 $374,043 $4,911,298 Pass$126,967 $1,165,509 $1,314,561 $527,205 $497,540 $972,537 $658,558 $5,262,877 
Special MentionSpecial Mention— — 193 19,021 9,303 8,628 2,188 39,333 Special Mention— — 2,437 187 60 17,893 1,388 21,965 
SubstandardSubstandard— — — 20,759 — 35,703 544 57,006 Substandard— — — 3,750 11,907 32,980 800 49,437 
Total commercial real estate - investorTotal commercial real estate - investor936,746 1,354,997 574,945 547,529 223,776 992,869 376,775 5,007,637 Total commercial real estate - investor126,967 1,165,509 1,316,998 531,142 509,507 1,023,410 660,746 5,334,279 
Commercial real estate - owner occupiedCommercial real estate - owner occupiedCommercial real estate - owner occupied
PassPass67,572 118,428 61,004 115,273 90,050 479,174 9,837 941,338 Pass54,658 115,573 109,260 65,866 106,434 461,324 13,543 926,658 
Special MentionSpecial Mention— — — — 757 10,018 — 10,775 Special Mention— — — — — 4,542 457 4,999 
SubstandardSubstandard— — 3,750 5,730 4,860 16,231 1,100 31,671 Substandard— 3,278 — — 1,986 20,205 90 25,559 
Total commercial real estate - owner occupiedTotal commercial real estate - owner occupied67,572 118,428 64,754 121,003 95,667 505,423 10,937 983,784 Total commercial real estate - owner occupied54,658 118,851 109,260 65,866 108,420 486,071 14,090 957,216 
Commercial and industrialCommercial and industrialCommercial and industrial
PassPass45,285 25,101 15,232 17,468 11,921 49,371 481,519 645,897 Pass98,193 58,728 20,374 10,087 9,193 53,478 379,799 629,852 
Special MentionSpecial Mention— — — — — 262 1,722 1,984 Special Mention— 654 197 — — 197 14,625 15,673 
SubstandardSubstandard— — 106 1,586 316 2,606 125 4,739 Substandard— — — — 902 1,438 4,254 6,594 
Total commercial and industrialTotal commercial and industrial45,285 25,101 15,338 19,054 12,237 52,239 483,366 652,620 Total commercial and industrial98,193 59,382 20,571 10,087 10,095 55,113 398,678 652,119 
Residential real estate (1)
Residential real estate (1)
Residential real estate (1)
PassPass829,041 595,233 431,072 253,353 103,330 597,224 — 2,809,253 Pass182,209 926,600 571,434 397,584 225,997 618,805 — 2,922,629 
Special MentionSpecial Mention— — — 131 — 1,690 — 1,821 Special Mention— 1,332 187 205 123 456 — 2,303 
SubstandardSubstandard— — — — 287 1,848 — 2,135 Substandard62 — — 258 487 2,520 — 3,327 
Total residential real estateTotal residential real estate829,041 595,233 431,072 253,484 103,617 600,762 — 2,813,209 Total residential real estate182,271 927,932 571,621 398,047 226,607 621,781 — 2,928,259 
Other consumer (1)
Other consumer (1)
Other consumer (1)
PassPass19,582 25,869 16,332 15,940 42,026 117,718 21,824 259,291 Pass26,676 20,640 21,656 13,339 13,142 124,084 30,481 250,018 
Special Mention— — — 164 22 231 — 417 
SubstandardSubstandard— — — — 18 1,784 — 1,802 Substandard— — — 1 6 1,673 — 1,680 
Total other consumerTotal other consumer19,582 25,869 16,332 16,104 42,066 119,733 21,824 261,510 Total other consumer26,676 20,640 21,656 13,340 13,148 125,757 30,481 251,698 
Total loansTotal loans$1,898,226 $2,119,628 $1,102,441 $957,174 $477,363 $2,271,026 $892,902 $9,718,760 Total loans$488,765 $2,292,314 $2,040,106 $1,018,482 $867,777 $2,312,132 $1,103,995 $10,123,571 
(1)For residential real estate and other consumer loans, the Company evaluates credit quality based on the aging status of the loan and by payment activity.


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OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

202120202019201820172016 and priorRevolving lines of creditTotal202220212020201920182017 and priorRevolving lines of creditTotal
December 31, 2021
December 31, 2022December 31, 2022
Commercial real estate - investorCommercial real estate - investorCommercial real estate - investor
PassPass$1,387,753 $609,916 $535,551 $274,662 $375,646 $800,089 $255,613 $4,239,230 Pass$1,144,763 $1,339,289 $555,937 $524,428 $220,999 $881,344 $450,787 $5,117,547 
Special MentionSpecial Mention— — 23,794 9,400 2,731 28,663 582 65,170 Special Mention— 2,508 192 17,094 — 12,818 2,188 34,800 
SubstandardSubstandard— 4,267 28,802 468 8,495 28,228 3,401 73,661 Substandard— — — 893 — 18,180 532 19,605 
Total commercial real estate - investorTotal commercial real estate - investor1,387,753 614,183 588,147 284,530 386,872 856,980 259,596 4,378,061 Total commercial real estate - investor1,144,763 1,341,797 556,129 542,415 220,999 912,342 453,507 5,171,952 
Commercial real estate - owner occupiedCommercial real estate - owner occupiedCommercial real estate - owner occupied
PassPass116,355 71,196 125,212 91,531 109,232 449,966 10,913 974,405 Pass119,912 110,440 59,952 115,385 88,204 458,708 14,932 967,533 
Special MentionSpecial Mention— — 1,365 3,829 479 14,371 2 20,046 Special Mention— — — — 748 5,679 — 6,427 
SubstandardSubstandard— — 14,166 8,549 5,606 31,576 717 60,614 Substandard— — 3,750 2,037 4,817 12,803 — 23,407 
Total commercial real estate - owner occupiedTotal commercial real estate - owner occupied116,355 71,196 140,743 103,909 115,317 495,913 11,632 1,055,065 Total commercial real estate - owner occupied119,912 110,440 63,702 117,422 93,769 477,190 14,932 997,367 
Commercial and industrialCommercial and industrialCommercial and industrial
PassPass42,955 22,573 22,878 16,404 8,671 50,887 271,818 436,186 Pass60,078 23,724 14,072 17,175 10,992 47,370 443,211 616,622 
Special MentionSpecial Mention— — 231 350 85 172 3,645 4,483 Special Mention— 7 — — — 250 1,680 1,937 
SubstandardSubstandard— 457 2,281 813 198 2,029 2,777 8,555 Substandard— 21 76 1,083 301 2,212 120 3,813 
Total commercial and industrialTotal commercial and industrial42,955 23,030 25,390 17,567 8,954 53,088 278,240 449,224 Total commercial and industrial60,078 23,752 14,148 18,258 11,293 49,832 445,011 622,372 
Residential real estate (1)
Residential real estate (1)
Residential real estate (1)
PassPass876,135 475,134 288,699 127,756 105,385 602,331 — 2,475,440 Pass919,364 591,745 419,712 247,387 99,945 577,392 — 2,855,545 
Special MentionSpecial Mention— 212 — 61 — 1,313 — 1,586 Special Mention— 193 1,514 204 59 2,407 — 4,377 
SubstandardSubstandard— — — — 351 2,324 — 2,675 Substandard— — — 656 286 1,127 — 2,069 
Total residential real estateTotal residential real estate876,135 475,346 288,699 127,817 105,736 605,968 — 2,479,701 Total residential real estate919,364 591,938 421,226 248,247 100,290 580,926 — 2,861,991 
Other consumer (1)
Other consumer (1)
Other consumer (1)
PassPass26,512 19,168 18,179 51,954 17,955 123,783 — 257,551 Pass24,069 24,111 15,440 15,471 39,057 108,818 34,851 261,817 
Special MentionSpecial Mention— — — — — 322 — 322 Special Mention— — — 75 — 598 — 673 
SubstandardSubstandard— — — 18 — 2,928 — 2,946 Substandard— — — 157 18 1,707 — 1,882 
Total other consumerTotal other consumer26,512 19,168 18,179 51,972 17,955 127,033 — 260,819 Total other consumer24,069 24,111 15,440 15,703 39,075 111,123 34,851 264,372 
Total loansTotal loans$2,449,710 $1,202,923 $1,061,158 $585,795 $634,834 $2,138,982 $549,468 $8,622,870 Total loans$2,268,186 $2,092,038 $1,070,645 $942,045 $465,426 $2,131,413 $948,301 $9,918,054 
(1)For residential real estate and other consumer loans, the Company evaluates credit quality based on the aging status of the loan and by payment activity.














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OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)


An analysis of the allowance for credit losses on loans for the three and nine months ended September 30, 2023 and 2022 and 2021 iswas as follows (in thousands):
 Commercial
Real Estate –
Investor		Commercial
Real Estate –
Owner
Occupied		Commercial
and 
Industrial		Residential
Real Estate		Other ConsumerTotal
For the three months ended September 30, 2023
Allowance for credit losses on loans
Balance at beginning of period$24,481 $4,342 $5,945 $26,152 $871 $61,791 
Provision (benefit) for credit losses9,602 119 604 95 (63)10,357 
Charge-offs (1)
(8,350)— — — (29)(8,379)
Recoveries2 3 13 17 73 108 
Balance at end of period$25,735 $4,464 $6,562 $26,264 $852 $63,877 
For the three months ended September 30, 2022
Allowance for credit losses on loans
Balance at beginning of period$22,608 $5,021 $5,240 $18,196 $996 $52,061 
Provision (benefit) for credit losses82 (1,047)554 1,618 1 1,208 
Charge-offs(3)— — — (2)(5)
Recoveries3 48 69 44 93 257 
Balance at end of period$22,690 $4,022 $5,863 $19,858 $1,088 $53,521 
For the nine months ended September 30, 2023
Allowance for credit losses on loans
Balance at beginning of period$21,070 $4,423 $5,695 $24,530 $1,106 $56,824 
Provision (benefit) for credit losses13,010 38 974 1,700 (322)15,400 
Charge-offs (1)
(8,350)(6)(128)— (111)(8,595)
Recoveries5 9 21 34 179 248 
Balance at end of period$25,735 $4,464 $6,562 $26,264 $852 $63,877 
For the nine months ended September 30, 2022
Allowance for credit losses on loans
Balance at beginning of period$25,504 $5,884 $5,039 $11,155 $1,268 $48,850 
(Benefit) provision for credit losses(2,865)(2,003)720 8,612 (128)4,336 
Charge-offs(3)(18)— (56)(358)(435)
Recoveries54 159 104 147 306 770 
Balance at end of period$22,690 $4,022 $5,863 $19,858 $1,088 $53,521 
 Commercial
Real Estate –
Investor		Commercial
Real Estate –
Owner
Occupied		Commercial
and 
Industrial		Residential
Real Estate		Other ConsumerTotal
For the three months ended September 30, 2022
Allowance for credit losses on loans
Balance at beginning of period$22,608 $5,021 $5,240 $18,196 $996 $52,061 
Credit loss expense (benefit)82 (1,047)554 1,618 1 1,208 
Charge-offs(3)— — — (2)(5)
Recoveries3 48 69 44 93 257 
Balance at end of period$22,690 $4,022 $5,863 $19,858 $1,088 $53,521 
For the three months ended September 30, 2021
Allowance for credit losses on loans
Balance at beginning of period$33,037 $6,350 $4,404 $8,818 $1,267 $53,876 
Credit loss (benefit) expense(9,902)515 1,962 3,081 235 (4,109)
Charge-offs— (64)(50)(12)(37)(163)
Recoveries5 26 50 292 176 549 
Balance at end of period$23,140 $6,827 $6,366 $12,179 $1,641 $50,153 
For the nine months ended September 30, 2022
Allowance for credit losses on loans
Balance at beginning of period$25,504 $5,884 $5,039 $11,155 $1,268 $48,850 
Credit loss (benefit) expense(2,865)(2,003)720 8,612 (128)4,336 
Charge-offs(3)(18)— (56)(358)(435)
Recoveries54 159 104 147 306 770 
Balance at end of period$22,690 $4,022 $5,863 $19,858 $1,088 $53,521 
For the nine months ended September 30, 2021
Allowance for credit losses on loans
Balance at beginning of period$26,703 $15,054 $5,390 $11,818 $1,770 $60,735 
Credit loss (benefit) expense(3,336)(8,225)958 284 (705)(11,024)
Charge-offs(345)(64)(83)(254)(193)(939)
Recoveries118 62 101 331 769 1,381 
Balance at end of period$23,140 $6,827 $6,366 $12,179 $1,641 $50,153 
(1) Gross charge-offs for the three and nine months ended September 30, 2023 of $8.4 million and $8.6 million, respectively, primarily related to one commercial relationship, which was originated in 2019 and had a partial charge-off of $8.4 million in the third quarter of 2023 to its estimated realizable value of $8.8 million. The remainder of the charge-offs were related to loans that were originated in and prior to 2018.
A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral and, therefore, is classified as non-accruing. At September 30, 20222023 and December 31, 2021,2022, the Company had collateral dependent loans with an amortized cost balance as follows: commercial real estate - investor of $3.9$15.1 million and $3.6$4.6 million, respectively, commercial real estate - owner occupied of $2.0 million$240,000 and $11.9$4.0 million, respectively, and commercial and industrial of $321,000$1.1 million and $277,000,$160,000, respectively. In addition, the Company had residential and consumer loans collateralized by residential real estate, which are in the process of foreclosure, with an amortized cost balance of $1.1$2.7 million and $438,000$858,000 at September 30, 20222023 and December 31, 2021,2022, respectively. At September 30, 2022 and December 31, 2021, the amount of foreclosed residential real estate property held by the Company was $0 and $106,000, respectively.









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OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

The following table presents the recorded investment in non-accrual loans, by loan portfolio segment as of September 30, 20222023 and December 31, 20212022 (in thousands):
September 30,December 31,September 30,December 31,
2022202120232022
Commercial real estate – investor(1)Commercial real estate – investor(1)$9,866 $3,614 Commercial real estate – investor(1)$20,723 $10,483 
Commercial real estate – owner occupiedCommercial real estate – owner occupied1,976 11,904 Commercial real estate – owner occupied240 4,025 
Commercial and industrialCommercial and industrial321 277 Commercial and industrial1,120 331 
Residential real estateResidential real estate5,958 6,114 Residential real estate5,624 5,969 
Other consumerOther consumer3,377 3,585 Other consumer2,391 2,457 
$21,498 $25,494 $30,098 $23,265 
(1) At September 30, 2023, non-performing loans included the remaining exposure of $8.8 million on a commercial real estate relationship that was partially charged-off during the three months ended September 30, 2023.

At September 30, 20222023 and December 31, 2021, the2022, non-accrual loans were included in the allowance for credit loss calculation and the Company did not recognize or accrue interest income on these loans. At September 30, 2023, there were no loans that were past due 90 days or greater and still accruing interest. At December 31, 2022, there was one PPPPaycheck Protection Program (“PPP”) loan for $21,000$14,000 that was past due greater than 90 days or greater and still accruing interest.accrued interest, which subsequently became current. Per Small Business AssociationAdministration (“SBA”) guidelines, the SBA will pay accrued interest through the deferral period up to a maximum of 120 days past due. Given these servicing guidelines, PPP loans that are 90 to120to 120 days past due will be reported as accruing loans. At December 31, 2021, there was one loan for $46,000 that was 90 days or greater past due and still accruing interest that was fully paid on January 14, 2022.
The following table presents the aging of the recorded investment in past due loans as of September 30, 20222023 and December 31, 20212022 by loan portfolio segment (in thousands):
30-59
Days
Past Due		60-89
Days
Past Due		90 Days or Greater Past DueTotal
Past Due		Loans Not
Past Due		Total30-59
Days
Past Due		60-89
Days
Past Due		90 Days or Greater Past DueTotal
Past Due		Loans Not
Past Due		Total
September 30, 2022
September 30, 2023September 30, 2023
Commercial real estate – investor(1)Commercial real estate – investor(1)$— $968 $2,025 $2,993 $5,004,644 $5,007,637 Commercial real estate – investor(1)$999 $11,266 $3,791 $16,056 $5,318,223 $5,334,279 
Commercial real estate – owner occupiedCommercial real estate – owner occupied428 5,613 85 6,126 977,658 983,784 Commercial real estate – owner occupied799 1,529 35 2,363 954,853 957,216 
Commercial and industrialCommercial and industrial1,472 450 — 1,922 650,698 652,620 Commercial and industrial1,773 803 145 2,721 649,398 652,119 
Residential real estateResidential real estate6 1,821 2,136 3,963 2,809,246 2,813,209 Residential real estate— 2,303 3,327 5,630 2,922,629 2,928,259 
Other consumerOther consumer671 417 1,801 2,889 258,621 261,510 Other consumer1,119 — 1,680 2,799 248,899 251,698 
$2,577 $9,269 $6,047 $17,893 $9,700,867 $9,718,760 $4,690 $15,901 $8,978 $29,569 $10,094,002 $10,123,571 
December 31, 2021
December 31, 2022December 31, 2022
Commercial real estate – investorCommercial real estate – investor$1,717 $102 $1,709 $3,528 $4,374,533 $4,378,061 Commercial real estate – investor$217 $875 $3,700 $4,792 $5,167,160 $5,171,952 
Commercial real estate – owner occupiedCommercial real estate – owner occupied599 — 575 1,174 1,053,891 1,055,065 Commercial real estate – owner occupied143 80 3,750 3,973 993,394 997,367 
Commercial and industrialCommercial and industrial25 151 277 453 448,771 449,224 Commercial and industrial159 47 180 386 621,986 622,372 
Residential real estateResidential real estate9,705 1,586 2,675 13,966 2,465,735 2,479,701 Residential real estate7,003 4,377 2,069 13,449 2,848,542 2,861,991 
Other consumerOther consumer339 322 2,946 3,607 257,212 260,819 Other consumer573 673 1,882 3,128 261,244 264,372 
$12,385 $2,161 $8,182 $22,728 $8,600,142 $8,622,870 $8,095 $6,052 $11,581 $25,728 $9,892,326 $9,918,054 
(1) At September 30, 2023, 60-89 days past due loans included the remaining exposure of $8.8 million on a commercial real estate relationship that was partially charged-off during the three months ended September 30, 2023.
The Company classifiesadopted Accounting Standards Update (“ASU”) 2022-02 on January 1, 2023. Since adoption, the Company has modified certain loans to borrowers experiencing financial difficulty. These modifications may include a reduction in interest rate, an extension in term, principal forgiveness and/or other than insignificant payment delay. At September 30, 2023, loans with modifications to borrowers experiencing financial difficulty totaled $1.1 million related to term extensions and interest rate reductions, which included residential real estate loans of $723,000 and other consumer loans of $410,000.
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Table of Contents
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Of the $1.1 million loans with modifications to borrowers experiencing financial difficulty, $994,000 were current and one residential loan of $140,000 had a payment default during the three and nine months ended September 30, 2023.
Prior to the adoption of ASU 2022-02, the Company classified certain loans as troubled debt restructuring (“TDR”) loans when credit terms to a borrower in financial difficulty are modified. The modifications may include a reductionwere modified in rate, an extension in term,accordance with ASC 310-40. Since adoption of this ASU, the capitalization of past due amounts and/Company has ceased to recognize or the restructuring of scheduled principal payments. Residential real estate and consumer loans where the borrower’s debt is discharged in a bankruptcy filing are also considered TDR loans. For these loans, the Bank retains its security interest in the real estate collateral. measure for new TDRs but those existing at December 31, 2022 remain until settled.
At September 30, 20222023 and December 31, 2021,2022, TDR loans totaled $16.1$13.2 million and $23.6$13.9 million, respectively. At September 30, 20222023 and December 31, 2021,2022, there were $10.0$5.8 million and $11.3$6.4 million, respectively, of TDR loans included in the non-accrual loan totals. At September 30, 2023 and December 31, 2022, the Company had a $667,000$354,000 and $590,000, respectively, of specific reserve allocated to aone loan that was classified as a TDR loan. At December 31, 2021, the Company had no specific reserves allocated to loans that were classified as TDR loans. Non-accrual loans which become TDR loans are generally returned to accrual status after six months of performance. In addition to the TDR loans included in non-accrual loans, the Company also has TDR loans classified as accruing loans, which totaled $6.1$7.4 million and $12.3$7.5 million at September 30, 20222023 and December 31, 2021,2022, respectively.
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OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

 
The following table presents information about TDR loans which occurred during the three and nine months ended September 30, 2022 and 2021 (dollars in thousands):
Number of LoansPre-modification
Recorded Investment		Post-modification
Recorded Investment		Number of LoansPre-modification
Recorded Investment		Post-modification
Recorded Investment
Three months ended September 30, 2022Three months ended September 30, 2022Three months ended September 30, 2022
Troubled debt restructurings:Troubled debt restructurings:Troubled debt restructurings:
Other consumerOther consumer3 $114 $124 Other consumer3$114 $124 
Three months ended September 30, 2021
Troubled debt restructurings:
Commercial real estate - owner occupied1 $93 $110 
Nine months ended September 30, 2022Nine months ended September 30, 2022Nine months ended September 30, 2022
Troubled debt restructurings:Troubled debt restructurings:Troubled debt restructurings:
Commercial and industrialCommercial and industrial165 65 
Commercial and industrial1 $65 $65 
Other consumerOther consumer6 1,105 1,233 Other consumer61,105 1,233 
Nine months ended September 30, 2021
Troubled debt restructurings:
Commercial real estate – investor1$4,903 $4,903 
Commercial real estate - owner occupied193 110 
Residential real estate3244336
Other consumer22633
There were no TDR loans that defaulted during the three and nine months ended September 30, 2023 and 2022, which were modified within the preceding year. There was one TDR commercial real estate - investor loan for $923,000 that defaulted during the three and nine months ended September 30, 2021, which was modified within the preceding year and the loan was subsequently paid in full as of June 30, 2022.
Note 6. Deposits
The major types of deposits at September 30, 2022 and December 31, 2021 were as follows (in thousands):
Type of AccountSeptember 30,December 31,
20222021
Non-interest-bearing$2,325,547 $2,412,056 
Interest-bearing checking3,909,864 4,201,736 
Money market deposit749,229 736,090 
Savings1,570,472 1,607,933 
Time deposits1,404,357 775,001 
Total deposits$9,959,469 $9,732,816 
Included in time deposits at September 30, 2022 and December 31, 2021 was $94.1 million and $145.4 million, respectively, in deposits of $250,000 or more. Time deposits also include brokered deposits of $828.7 million and $25.0 million at September 30, 2022 and December 31, 2021, respectively.
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OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

Note 7.5. Deposits
The major types of deposits at September 30, 2023 and December 31, 2022 were as follows (in thousands):
Type of AccountSeptember 30,December 31,
20232022
Non-interest-bearing$1,827,381 $2,101,308 
Interest-bearing checking3,708,874 3,829,683 
Money market deposit860,025 714,386 
Savings1,484,000 1,487,809 
Time deposits2,653,649 1,542,020 
Total deposits$10,533,929 $9,675,206 
Included in time deposits at September 30, 2023 and December 31, 2022 was $381.4 million and $117.7 million, respectively, of deposits of $250,000 or more. Time deposits also include brokered deposits of $995.5 million and $873.4 million at September 30, 2023 and December 31, 2022, respectively.
Note 6. Borrowed Funds
Borrowed funds at September 30, 20222023 and December 31, 20212022 were as follows (in thousands):
September 30,December 31,September 30,December 31,
2022202120232022
FHLB advancesFHLB advances$514,200 $— FHLB advances$606,056 $1,211,166 
Securities sold under agreements to repurchase with customersSecurities sold under agreements to repurchase with customers96,289 118,769 Securities sold under agreements to repurchase with customers82,981 69,097 
Other borrowingsOther borrowings194,914 229,141 Other borrowings196,183 195,403 
Total borrowed fundsTotal borrowed funds$805,403 $347,910 Total borrowed funds$885,220 $1,475,666 
At September 30, 2022, there were $500.0 million of short-termThe Company had no FHLB overnight advances and $14.2 million of overnightno borrowings from the FHLB, as compared to $0Federal Reserve Bank (“FRB”) Discount Window or Bank Term Funding Program at September 30, 2023 and December 31, 2021.2022.
In March 2022,Pledged assets
The following table presents the Company redeemed $35.0 millionassets pledged to secure borrowings, borrowing capacity, repurchase agreements, letters of subordinated debt due September 30, 2026. The debt carried an interest rate of 4.14% based on a floating rate of three months LIBOR plus 392 basis points.credit, and for other purposes required by law at carrying value (in thousands):
LoansDebt securitiesTotal
September 30, 2023
FHLB and FRB$7,253,277 $997,973 $8,251,250 
Repurchase agreements— 93,145 93,145 
Total pledged assets$7,253,277 $1,091,118 $8,344,395 
December 31, 2022
FHLB and FRB$6,487,980 $830,057 $7,318,037 
Repurchase agreements— 105,294 105,294 
Total pledged assets$6,487,980 $935,351 $7,423,331 

The securities pledged, which collateralize the repurchase agreements are delivered to the lender, with whom each transaction is executed, or to a third-party custodian. The lender, who may sell, loan or otherwise dispose of such securities to other parties in the normal course of their operations, agrees to resell to the Company substantially the same securities at the maturity of the repurchase agreements.
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Note 8.7. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.
The Company uses valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability and developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability and developed based on the best information available in the circumstances. In that regard, a fair value hierarchy has been established for valuation inputs that gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlations or other means.
Level 3 Inputs – Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.
Assets and Liabilities Measured at Fair Value
A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis, that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).
Debt Securities Available-for-Sale
Debt securities classified as available-for-sale are reported at fair value. Fair value for theseof U.S. Treasuries are determined using quoted prices in active markets (Level 1). The majority of the other debt securities isare determined using inputs other than quoted prices that are based on market observable information (Level 2). Level 2 debt securities are priced through third-party pricing services or security industry sources that actively participate in the buying and selling of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing is a mathematical technique used principally to value certain debt securities without relying exclusively on quoted prices for the specific securities, but comparing the debt securities to benchmark or comparable debt securities.
Equity Investments
Equity investments with readily determinable fair value are reported at fair value. Fair value for these investments is primarily determined using a quoted price in an active market or exchange (Level 1) or using inputs other than quoted prices that are based on market observable information (Level 2). Fair value for certain securities, including convertible preferred stock, was determined using broker or dealer quotes with limited levels of activity and price transparency (Level 3). Equity investments without readily determinable fair values are carried at cost less impairment, if any, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer (measurement alternative). Certain equity investments without readily
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observable price changesdeterminable fair values are measured at net asset value (“NAV”) per share as a practical expedient, which are excluded from the fair value hierarchy levels in orderly transactions for the identical or similar investment of the same issuer (measurement alternative).table below.
Interest Rate Derivatives
The Company’s interest rate swaps and cap contracts are reported at fair value utilizing discounted cash flow models provided by an independent, third-party and observable market data (Level 2). When entering into an interest rate swap or cap contract, the Company is exposed to fair value changes due to interest rate movements, and also the potential nonperformance of the contract counterparty.
Other Real Estate Owned and Loans Individually Measured for Impairment
Other real estate owned and loansLoans measured for impairment based on the fair value of the underlying collateral are recorded at estimated fair value, less estimated selling costs. Fair value is generally based on independent appraisals (Level 3)., which may be adjusted by management for qualitative factors, such as economic factors and estimated liquidation expenses.
The following table summarizes financial assets and financial liabilities measured at fair value as of September 30, 20222023 and December 31, 2021,2022, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):
 Fair Value Measurements at Reporting Date Using:  Fair Value Measurements at Reporting Date Using:
Total Fair
Value		Level 1
Inputs		Level 2
Inputs		Level 3
Inputs		Total Fair
Value		Level 1
Inputs		Level 2
Inputs		Level 3
Inputs
September 30, 2022
September 30, 2023September 30, 2023
Items measured on a recurring basis:Items measured on a recurring basis:Items measured on a recurring basis:
Debt securities available-for-saleDebt securities available-for-sale$470,300 $— $470,300 $— Debt securities available-for-sale$453,208 $42,054 $411,154 $— 
Equity investmentsEquity investments62,343 566 61,777 — Equity investments50,945 — 50,945 — 
Interest rate derivative assetInterest rate derivative asset122,605 — 122,605 — Interest rate derivative asset137,090 — 137,090 — 
Interest rate derivative liabilityInterest rate derivative liability(122,618)— (122,618)— Interest rate derivative liability(138,806)— (138,806)— 
Items measured on a non-recurring basis:Items measured on a non-recurring basis:Items measured on a non-recurring basis:
Equity investments (1)
19,379 — — 19,379 
Equity investments (1) (2)
Equity investments (1) (2)
46,963 — — 43,576 
Loans measured for impairment based on the fair value of the underlying collateral (2)
7,268 — — 7,268 
December 31, 2021
Loans measured for impairment based on the fair value of the underlying collateral (3)
Loans measured for impairment based on the fair value of the underlying collateral (3)
19,080 — — 19,080 
December 31, 2022December 31, 2022
Items measured on a recurring basis:Items measured on a recurring basis:Items measured on a recurring basis:
Debt securities available-for-saleDebt securities available-for-sale$568,255 $— $568,255 $— Debt securities available-for-sale$457,648 $— $457,648 $— 
Equity investmentsEquity investments90,726 14,608 73,400 2,718 Equity investments61,942 430 61,511 — 
Interest rate derivative assetInterest rate derivative asset22,787 — 22,787 — Interest rate derivative asset113,420 — 113,420 — 
Interest rate derivative liabilityInterest rate derivative liability(22,855)— (22,855)— Interest rate derivative liability(113,473)— (113,473)— 
Items measured on a non-recurring basis:Items measured on a non-recurring basis:Items measured on a non-recurring basis:
Equity investments10,429 — — 10,429 
Other real estate owned106 — — 106 
Loans measured for impairment based on the fair value of the underlying collateral (2)
16,233 — — 16,233 
Equity investments (1) (2)
Equity investments (1) (2)
40,095 — — 37,076 
Loans measured for impairment based on the fair value of the underlying collateral (3)
Loans measured for impairment based on the fair value of the underlying collateral (3)
9,635 — — 9,635 
(1)    PrimarilyAs of September 30, 2023 and December 31, 2022, primarily consists of $16.8$43.6 million and $37.1 million, respectively, of equity investments measured under the measurement alternative, whichalternative. This included a $2.5 millionno unrealized gaingains or losses for the threenine months ended September 30, 2023 and $20.0 million of unrealized gains for the year ended December 31, 2022.
(2)    As of September 30, 2023 and December 31, 2022, equity investments of $47.0 million and $40.1 million, respectively, included $3.4 million and $3.0 million, respectively, of certain equity investment funds measured at NAV per share (or its equivalent) as a practical expedient to fair value and these equity investments have not been classified in the fair value hierarchy levels.
(3) Primarily consists of commercial loans, which are collateral dependent. The amounts are based on independent appraisals, which may be adjusted by management for qualitative factors, such as economic factors and estimated liquidation expenses. The range may vary but is generally 0% to 8% on the discount for costs to sell and 0% to 10% on appraisal adjustments.

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The following table reconciles for the three and nine months ended September 30, 2022 and 2021, the beginning and ending balances for equity investments that are recognized at fair value on a recurring basis, in the Consolidated Statements of Financial Condition, using significant unobservable inputs (in thousands):
For the Three Months Ended September 30,For the Nine Months Ended September 30,
2022202120222021
Beginning balance$— $2,978 $2,718 $2,540 
Total losses included in earnings— (622)— (184)
Transfers out of Level 3— — (2,718)— 
Ending balance$— $2,356 $— $2,356 
For the Nine Months Ended September 30,
2022
Beginning balance$2,718 
Transfers out of Level 3(2,718)
Ending balance$— 
The Company recognizes transfers between levels of the valuation hierarchy at the end of the applicable reporting periods. There were no assets in Level 3 that were recognized at fair value on a recurring basis or transfers into or out of Level 3 for the three and nine months ended September 30, 2022.2023. During the nine months ended September 30, 2022, the Company executed its right to convert $2.7 million of preferred stock into common stock, which resulted in a transfer from Level 3 into Level 1. There were no transfers into or out of Level 3 assets and liabilities in the fair value hierarchy for the three and nine months ended September 30, 2021.

Assets and Liabilities Disclosed at Fair Value
A description of the valuation methodologies used for assets and liabilities disclosed at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy is set forth below.
Cash and Due from Banks
For cash and due from banks, the carrying amount approximates fair value.
Debt Securities Held-to-Maturity
Debt securities classified as held-to-maturity are carried at amortized cost, as the Company has the positive intent and ability to hold these debt securities to maturity. The Company determines the fair value of the debt securities utilizing Level 2 and, infrequently, Level 3 inputs. Most of the Company’s debt securities are fixed income instruments that are not quoted on an exchange, but are bought and sold in active markets. Prices for these instruments are obtained through third-party pricing vendors or security industry sources that actively participate in the buying and selling of debt securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing is a mathematical technique used principally to value certain debt securities without relying exclusively on quoted prices for the specific debt securities, but comparing the debt securities to benchmark or comparable debt securities.
Management’s policy is to obtain and review all available documentation from the third-party pricing service relating to their fair value determinations, including their methodology and summary of inputs. Management reviews this documentation, makes inquiries of the third-party pricing service and decides as to the level of the valuation inputs. Based on the Company’s review of the available documentation from the third-party pricing service, management concluded that Level 2 inputs were utilized for all securities except for certain state and municipal obligations, known as bond anticipation notes, as well as certain debt securities where management utilized Level 3 inputs, such as broker or dealer quotes with limited levels of activity and price transparency.
Restricted Equity Investments
The fair value for Federal Home Loan Bank of New York, Federal Reserve Bank stock, and Atlantic Community Bankers Bank is its carrying value since this is the amount for which it could be redeemed. There is no active market for this stock and the Company is required to maintain a minimum investment as stipulated by the respective entities.
Loans Receivable and Loans Held-for-Sale
Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as residential real estate, consumer and commercial. Each loan category is further segmented into fixed and adjustable rate interest terms.
Fair value of performing and non-performing loans, which is based on an exit price notion, was estimated by discounting the future cash flows, net of estimated prepayments, at amarket discount rates that reflect the credit and interest rate for which similar loans would be originated to new borrowers with similar terms.
The fair value of loans was measured usingrisk inherent in the exit price notion.
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loan.
Deposits Other than Time Deposits
The fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, and interest-bearing checking accounts and money market accounts is, by definition, equal to the amount payable on demand. The related
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insensitivity of the majority of these deposits to interest rate changes creates a significant inherent value which is not reflected in the fair value reported.
Time Deposits
The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.
Securities Sold Under Agreements to Repurchase with Customers
Fair value approximates the carrying amount as these borrowings are payable on demand and the interest rate adjusts monthly.
Borrowed FundsFHLB Advances and Other Borrowings
Fair value estimates are based on discounting contractual cash flows using rates which approximate the rates offered for borrowings of similar remaining maturities.
The book value and estimated fair value of the Company’s significant financial instruments not recorded at fair value as of September 30, 20222023 and December 31, 20212022 are presented in the following tables (in thousands):
 Fair Value Measurements at Reporting Date Using:  Fair Value Measurements at Reporting Date Using:
Book
Value		Level 1
Inputs		Level 2
Inputs		Level 3
Inputs		Book
Value		Level 1
Inputs		Level 2
Inputs		Level 3
Inputs
September 30, 2022
September 30, 2023September 30, 2023
Financial Assets:Financial Assets:Financial Assets:
Cash and due from banksCash and due from banks$170,668 $170,668 $— $— Cash and due from banks$408,882 $408,882 $— $— 
Debt securities held-to-maturityDebt securities held-to-maturity1,027,712 — 893,044 12,382 Debt securities held-to-maturity1,189,339 — 1,047,342 — 
Restricted equity investmentsRestricted equity investments77,556 — — 77,556 Restricted equity investments82,484 — — 82,484 
Loans receivable, net and loans held-for-saleLoans receivable, net and loans held-for-sale9,676,037 — — 8,992,317 Loans receivable, net and loans held-for-sale10,068,156 — — 9,035,358 
Financial Liabilities:Financial Liabilities:Financial Liabilities:
Deposits other than time deposits(1)Deposits other than time deposits(1)8,555,112 — 8,555,112 — Deposits other than time deposits(1)7,880,280 — 7,880,280 — 
Time depositsTime deposits1,404,357 — 1,365,574 — Time deposits2,653,649 — 2,626,602 — 
FHLB advances and other borrowingsFHLB advances and other borrowings709,114 — 722,430 — FHLB advances and other borrowings802,239 — 770,544 — 
Securities sold under agreements to repurchase with customersSecurities sold under agreements to repurchase with customers96,289 96,289 — — Securities sold under agreements to repurchase with customers82,981 82,981 — — 
December 31, 2021
December 31, 2022December 31, 2022
Financial Assets:Financial Assets:Financial Assets:
Cash and due from banksCash and due from banks$204,949 $204,949 $— $— Cash and due from banks$167,946 $167,946 $— $— 
Debt securities held-to-maturityDebt securities held-to-maturity1,139,193 — 1,138,529 14,215 Debt securities held-to-maturity1,221,138 — 1,097,984 12,057 
Restricted equity investmentsRestricted equity investments53,195 — — 53,195 Restricted equity investments109,278 — — 109,278 
Loans receivable, net and loans held-for-saleLoans receivable, net and loans held-for-sale8,583,352 — — 8,533,506 Loans receivable, net and loans held-for-sale9,869,408 — — 9,103,137 
Financial Liabilities:Financial Liabilities:Financial Liabilities:
Deposits other than time deposits(1)Deposits other than time deposits(1)8,957,815 — 8,957,815 — Deposits other than time deposits(1)8,133,186 — 8,133,186 — 
Time depositsTime deposits775,001 — 773,766 — Time deposits1,542,020 — 1,504,601 — 
Other borrowings229,141 — 251,491 — 
FHLB advances and other borrowingsFHLB advances and other borrowings1,406,569 — 1,416,384 — 
Securities sold under agreements to repurchase with customersSecurities sold under agreements to repurchase with customers118,769 118,769 — — Securities sold under agreements to repurchase with customers69,097 69,097 — — 
(1)    The estimated fair value of non-maturity deposits does not consider any inherent value and represents the amount payable on demand. However, non-maturity deposits do contain significant inherent value to the Company, particularly when overnight funding costs are greater than the deposit costs.

Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because a limited market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience,
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current economic conditions, risk characteristics of various financial instruments and other significant unobservable inputs. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include premises and equipment, bank owned life insurance, deferred tax assets and goodwill. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

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Note 9.8. Derivatives and Hedging Activities and Other Financial Instruments
The Company enters into derivative financial instruments which involve, to varying degrees, interest rate market and credit risk. The Company manages these risks as part of its asset and liability management process and through credit policies and procedures, seeking to minimize counterparty credit risk by establishing credit limits and collateral agreements. The Company utilizes derivative financial instruments to accommodate the business needs of its customers as well as to economically hedge the exposure that this creates for the Company. Additionally, the Company enters into certain derivative financial instruments to enhance its ability to manage interest rate risk that exists as part of its ongoing business operations. The derivative financial instruments entered into by the Company are an economic hedge of a derivative offering to its customers. The Company does not use derivative financial instruments for trading purposes.
Customer Derivatives – Interest Rate Swaps and Cap Contracts
Derivatives Not Designated as Hedging Instruments
The Company enters into interest rate swaps that allow commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. Under these agreements, the Company enters into a variable-rate loan agreement with a customer in addition to an interest rate swap agreement, which serves to effectively swap the customer’s variable-rate loan into a fixed-rate loan. The Company then enters into a corresponding swap agreement with a third party in order to economically hedge its exposure through the customer agreement. The Company also enters into interest rate cap contracts that enable commercial loan customers to lock in a cap on a variable-rate commercial loan agreement. This feature prevents the loan from repricing to a level that exceeds the cap contract’s specified interest rate, which serves to hedge the risk from rising interest rates. The Company then enters into an offsetting interest rate cap contract with a third party in order to economically hedge its exposure through the customer agreement.
TheThese interest rate swaps and cap contracts with both the customers and third parties are not designated as hedges under FASB Accounting Standards Codification (“ASC”)ASC Topic 815, Derivatives and Hedging, andtherefore changes in fair value are marked to market throughreported in earnings. As the interest rate swaps and cap contracts are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by FASB ASC Topic 820, Fair Value Measurements. The Company recognized a gainlosses of $19,000$2,000 and $56,000$2,000 in commercial loan swap income resulting from the fair value adjustment for the three and nine months ended September 30, 2022,2023, respectively, as compared to gains of $14,000$19,000 and $55,000$56,000 for the threecorresponding prior year periods.
Derivatives Designated as Hedging Instruments
During the fourth quarter of 2022, the Company entered into a three-year interest rate swap intended to add stability to its net interest income and nine months ended September 30, 2021, respectively.to manage its exposure to future interest rate movements associated with a pool of floating rate commercial loans. The notional amountswap requires the Company to pay variable-rate amounts indexed to one-month term Secured Overnight Financing Rate (“SOFR”) to the counterparty in exchange for the receipt of fixed-rate amounts at 4.0% from the counterparty. The swap was designated and qualified as a cash flow hedge, under ASC Topic 815, Derivatives and Hedging. The changes in the fair value of cash flow hedges are initially reported in other comprehensive income. Amounts are subsequently reclassified from accumulated other comprehensive income to earnings when the hedged transactions occur, specifically within the same line item as the hedged item (interest income). Therefore, a portion of the balance reported in accumulated other comprehensive income related to derivatives not designatedwill be reclassified to interest income as hedging instruments was $1.30 billion and $938.7 million at September 30, 2022 and December 31, 2021, respectively.interest payments are made or received on the Company’s interest rate swaps.
The table below presents the effect on the Company’s accumulated other comprehensive income/loss (“AOCI” or “AOCL”) attributable to the cash flow hedge derivative, net of tax, and the related gains/(losses) reclassified from AOCI into income (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
20232023
AOCL balance at beginning of period, net of tax$(909)$(25)
Unrealized losses recognized in OCI(622)(1,798)
Losses reclassified from AOCI into interest income246 538 
AOCL balance at end of period, net of tax$(1,285)$(1,285)
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During the next twelve months ending September 30, 2024, the Company estimates that an additional $1.4 million will be reclassified as a reduction to interest income.
The table below presents the notional amount and fair value of derivatives designated and not designated as hedging instruments, as well as their location on the consolidated statementsConsolidated Statements of financial conditionFinancial Condition (in thousands):
Fair Value
Balance Sheet LocationSeptember 30,December 31,
20222021
Other assets$122,605 $22,787 
Other liabilities122,618 22,855 
NotionalFair Value
Other assetsOther liabilities
As of September 30, 2023
Derivatives Not Designated as Hedging Instruments
Interest rate swaps and cap contracts$1,420,826 $137,090 $137,111 
Derivatives Designated as Cash Flow Hedge
Interest rate swap contract100,000 — 1,695 
Total Derivatives$1,520,826 $137,090 $138,806 
As of December 31, 2022
Derivatives Not Designated as Hedging Instruments
Interest rate swaps and cap contracts$1,368,245 $113,420 $113,440 
Derivatives Designated as Cash Flow Hedge
Interest rate swap contract100,000 — 33 
Total Derivatives$1,468,245 $113,420 $113,473 
Credit Risk-Related Contingent Features
The Company is exposed to credit risk in the event of nonperformance by the interest rate derivative counterparty. The Company minimizes this risk by being a party to International Swaps and Derivatives Association agreements with third party broker-dealers that require a minimum dollar transfer amount upon a margin call. This requirement is dependent on certain specified credit measures. The amount of collateral posted with third parties was $40,000$0 and $19.8 million$40,000 at September 30, 20222023 and December 31, 2021,2022, respectively. The amount of collateral received from third parties was $112.1$142.3 million and $0$104.5 million at September 30, 20222023 and December 31, 2021,2022, respectively. The amount of collateral posted with third parties and received from third parties is deemed to be sufficient to collateralize both the fair market value change as well as any additional amounts that may be required as a result of a change in the specified credit measures. The aggregate fair value of all derivative financial instruments in a liability position with credit measure contingencies and entered into with third parties was $122.6$138.8 million and $22.9$113.5 million at September 30, 20222023 and December 31, 2021,2022, respectively.
The interest rate derivatives which the Company executes with the commercial borrowers are collateralized by the borrowers’ commercial real estate financed by the Company.

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Note 10.9. Leases
A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company’s leases are comprised of real estate property for branches, automated teller machine locations and office space with terms extending through 2038. The Company has one existing finance lease, which has a lease term through 2029.
The following table represents the classification of the Company’s right-of-useROU assets and lease liabilities on the consolidated statementsConsolidated Statements of financial conditionFinancial Condition (in thousands):
September 30,December 31,September 30,December 31,
2022202120232022
Lease ROU AssetsLease ROU AssetsClassificationLease ROU AssetsClassification
Operating lease ROU assetsOperating lease ROU assetsOther assets$19,474 $17,442 Operating lease ROU assetsOther assets$19,610 $19,055 
Finance lease ROU assetFinance lease ROU assetPremises and equipment, net1,347 1,495 Finance lease ROU assetPremises and equipment, net1,362 1,532 
Total lease ROU assetsTotal lease ROU assets$20,821 $18,937 Total lease ROU assets$20,972 $20,587 
Lease LiabilitiesLease LiabilitiesLease Liabilities
Operating lease liabilities (1)
Operating lease liabilities (1)
Other liabilities$20,430 $17,982 
Operating lease liabilities (1)
Other liabilities$20,645 $20,053 
Finance lease liabilityFinance lease liabilityOther borrowings1,750 1,904 Finance lease liabilityOther borrowings1,748 1,934 
Total lease liabilitiesTotal lease liabilities$22,180 $19,886 Total lease liabilities$22,393 $21,987 
(1) Operating lease liabilities excludes liabilities for future rent and estimated lease termination payments related to closed branches of $8.2$6.3 million and $7.7 million at both September 30, 20222023 and December 31, 2021.2022, respectively.
The calculated amount of the ROU assets and lease liabilities are impacted by the lease term and the discount rate used to calculate the present value of the minimum lease payments. Lease agreements often include one or more options to renew the lease at the Company’s discretion. If the exercise of a renewal option is considered to be reasonably certain, the Company includes the extended term in the calculation of the ROU asset and lease liability. For the discount rate, ASC Topic 842, Leases (Topic 842) requires the Company to use the rate implicit in the lease, provided the rate is readily determinable. As this rate is rarelynot readily determinable, the Company generally utilizes its incremental borrowing rate, at lease inception, over a similar term. For operating leases existing prior to January 1, 2019, the Company used the incremental borrowing rate for the remaining lease term as of January 1, 2019. For the finance lease, the Company utilized its incremental borrowing rate at lease inception.
September 30,December 31,September 30,December 31,
2022202120232022
Weighted-Average Remaining Lease TermWeighted-Average Remaining Lease TermWeighted-Average Remaining Lease Term
Operating leasesOperating leases7.04 years8.22 yearsOperating leases6.59 years6.87 years
Finance leaseFinance lease6.85 years7.59 yearsFinance lease5.85 years6.60 years
Weighted-Average Discount RateWeighted-Average Discount RateWeighted-Average Discount Rate
Operating leasesOperating leases2.84 %2.97 %Operating leases2.95 %2.86 %
Finance leaseFinance lease5.63 5.63 Finance lease5.63 5.63 






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OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

The following table represents lease expenses and other lease information (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
20222021202220212023202220232022
Lease ExpenseLease ExpenseLease Expense
Operating lease expenseOperating lease expense$1,159 $1,498 $3,857 $4,459 Operating lease expense$1,153 $1,159 $3,472 $3,857 
Finance lease expense:Finance lease expense:Finance lease expense:
Amortization of ROU assetsAmortization of ROU assets49 50 149 149 Amortization of ROU assets58 49 170 149 
Interest on lease liabilities(1)
Interest on lease liabilities(1)
24 28 76 85 
Interest on lease liabilities (1)
25 24 77 76 
TotalTotal$1,232 $1,576 $4,082 $4,693 Total$1,236 $1,232 $3,719 $4,082 
Other InformationOther InformationOther Information
Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leasesOperating cash flows from operating leases$955 $1,322 $3,366 $4,119 Operating cash flows from operating leases$1,154 $955 $3,414 $3,366 
Operating cash flows from finance leasesOperating cash flows from finance leases24 28 76 85 Operating cash flows from finance leases25 24 77 76 
Financing cash flows from finance leasesFinancing cash flows from finance leases52 50 154 146 Financing cash flows from finance leases63 52 186 154 
(1)Included in borrowed funds interest expense on the consolidated statementsConsolidated Statements of income.Income. All other costs are included in occupancy expense.expense on the Consolidated Statements of Income.
Future minimum payments for the finance lease and operating leases with initial or remaining terms of one year or more as of September 30, 2022 were as follows (in thousands):
Finance LeaseOperating Leases
For the Twelve Months Ending September 30,
2023$307 $4,268 
2024307 3,790 
2025307 3,841 
2026307 3,075 
2027307 2,198 
Thereafter568 5,721 
Total2,103 22,893 
Less: Imputed interest(353)(2,463)
Total lease liabilities$1,750 $20,430 

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OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)


Finance LeaseOperating Leases
For the Year Ending December 31,
2023$88 $1,157 
2024350 4,334 
2025350 4,351 
2026350 3,784 
2027350 2,628 
Thereafter559 6,754 
Total2,047 23,008 
Less: Imputed interest(299)(2,363)
Total lease liabilities$1,748 $20,645 
Note 11.10. Variable Interest Entity
On April 1, 2022, theThe Company acquired a 60% ownership inaccounts for Trident and held a variable interest in the entity. Trident meets the definition ofas a variable interest entity (“VIE”) under ASC 810, Consolidation, for which the Company is considered the primary beneficiary (i.e. the party that has a controlling financial interest). In accordance with ASC 810, Consolidation, the Company has consolidated Trident’s assets and liabilities. For further discussion on the acquisition of Trident refer to Note 2 Business Combinations, to this Form 10-Q.

The summarized financial information for the Company’s consolidated VIE at September 30, 2023 and December 31, 2022 consisted of the following (in thousands):
As of September 30, 2022
Cash and cash equivalents$33,234 
Other assets1,079 
Total assets34,313 
Other liabilities31,906 
Net assets$2,407 
September 30, 2023December 31, 2022
Cash and cash equivalents$26,082 $30,062 
Other assets937 941 
Total assets27,019 31,003 
Other liabilities25,237 28,998 
Net assets$1,782 $2,005 

Note 12. Subsequent Events

As previously disclosed, on November 4, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Partners Bancorp (“Partners”) and Coastal Merger Sub Corp. (“Merger Sub”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, (i) Merger Sub would merge with and into Partners, with Partners as the surviving entity, and (ii) immediately thereafter, Partners would merge with and into the Company, with the Company as the surviving entity.

On November 9, 2022, the Company and Partners entered into a Mutual Termination Agreement (the “Termination Agreement”) pursuant to which, among other things, the Company and Partners mutually agreed to terminate the Merger Agreement and transactions contemplated thereby, which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 9, 2022. Each party will bear its own costs and expenses in connection with the terminated transaction, and neither party will pay a termination fee in connection with the termination of the Merger Agreement. The Termination Agreement also mutually releases the parties from any claims of liability to one another relating to the Merger Agreement and the terminated transaction.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and the Bank are not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business. Such routine legal proceedings in the aggregate are believed by management to be immaterial to the Company’s financial condition or results of operations.
Item 1A. Risk Factors
For a summary of risk factors relevant to the Company, see Part I, Item 1A, “Risk Factors,” in the 20212022 Form 10-K. There10-K and Part II, Item 1A, “Risk Factors,” in the Form 10-Q for the quarter ended March 31, 2023. Except as previously disclosed, there have been no material changes to risk factors relevant to the Company’s operations since December 31, 2021.2022. Additional risks not presently known to the Company, or that the Company currently deems immaterial, may also adversely affect the business, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds, and Purchases of Equity Securities
On June 25, 2021, the Company announced the authorization by the Board of Directors to repurchase up to an additional 5% of the Company’s outstanding common stock, or 3.0 million shares. The Company did not repurchase any shares of its common stock under its repurchase program during the three month period ended September 30, 2022.2023. At September 30, 2022,2023, there were 2,934,438 shares available for repurchase under the Company’s stock repurchase program.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information

Not Applicable.During the three months ended September 30, 2023, no directors or executive officers of the Company adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and/or any “Rule 10b5-1 trading arrangement.”


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Item 6. Exhibits
 
Exhibit No:Exhibit DescriptionReference
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Filed here withinwith this document
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Filed here withinwith this document
Certification pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002Filed here withinwith this document
101.0The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022,2023, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements
104.0Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)



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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
OceanFirst Financial Corp.
Registrant
DATE:November 9, 20227, 2023/s/ Christopher D. Maher
Christopher D. Maher
Chairman and Chief Executive Officer
DATE:November 9, 20227, 2023/s/ Patrick S. Barrett
Patrick S. Barrett
Executive Vice President and Chief Financial Officer

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