UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended ~~March 31,~~September 30, 2003

¨
o		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 0-27428

OceanFirst Financial Corp.

(Exact name of registrant as specified in its charter)

Delaware		22-3412577

~~Commission file number 0-27428~~

~~OceanFirst Financial Corp.~~

~~(Exact name of registrant as specified in its charter)~~

~~Delaware~~		~~22-3412577~~

(State of other jurisdiction of		(I.R.S. Employer
incorporation or organization)		~~(I.R.S. Employer~~ Identification No.)



975 Hooper Avenue, Toms River, NJ		08754-2009

(Address of principal executive offices)		(Zip Code)

~~Registrant’s telephone number, including area code: (732)240-4500~~


~~(Former name, former address and formal fiscal year, if changed since last report)~~

Registrant’s telephone number, including area code: (732)240-4500

(Former name, former address and formal fiscal year, if changed since last report)

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 x NO ¨.

~~YES~~ x

NO o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES x NO ¨.

~~YES~~ x

NO o

As of ~~May 8,~~November 7, 2003, there were ~~13,756,348~~13,403,383 shares of the Registrant’s Common Stock, par value $.01 per share, outstanding.

OceanFirst Financial Corp.

INDEX TO FORM 10-Q

				PAGE

PART I.I.		FINANCIAL INFORMATION

Item1.
~~Item 1.~~	Consolidated Financial Statements (Unaudited)

		Consolidated Statements of Financial Condition as of ~~March 31,~~September 30, 2003 and December 31, 2002		1

		Consolidated Statements of Income for the three and nine months ended ~~March 31,~~September 30, 2003 and 2002		2

		Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2003 and 2002		3

		Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2003 and 2002	3	4

		Notes to Unaudited Consolidated Financial Statements	5	6

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	7	8

Item 3.		Quantitative and Qualitative ~~Disclosure about~~Disclosures About Market Risk	10	13

Item 4.		Controls and Procedures	11	13

Part II.		OTHER INFORMATION

Item 1.		Legal Proceedings	12	15

Item 2.		Changes in Securities and Use of Proceeds	12	15

Item 3.		~~Default~~Defaults Upon Senior Securities	12	15

Item 4.		Submission of Matters to a Vote of Security Holders	12	15

Item 5.		Other Information	12	15

Item 6.		Exhibits and Reports on Form 8-K	12	15

Signatures	14

~~Certifications~~		15	16

OceanFirst Financial Corp.

~~wOceanFirst Financial Corp.~~
Consolidated Statements of Financial Condition

(dollars in thousands, except per share amounts)

March 31,
2003

December 31,
2002

(Unaudited)

ASSETS

Cash and due from banks

$
35,104

$
17,192

Investment securities available for sale

77,823

91,978

Federal Home Loan Bank of New York stock, at cost

19,850

18,700

Mortgage-backed securities available for sale

142,587

138,657

Loans receivable, net

1,336,696

1,335,898

Mortgage loans held for sale

57,211

66,626

Interest and dividends receivable

6,572

6,378

Real estate owned, net

—

141

Premises and equipment, net

17,320

17,708

Servicing asset

7,328

7,907

Bank Owned Life Insurance

32,818

32,398

Other assets

11,628

10,115

Total assets

$
1,744,937

$
1,743,698

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits

$
1,151,882

$
1,184,836

Securities sold under agreements to repurchase with retail customers

52,870

44,584

Securities sold under agreements to repurchase with the Federal Home Loan Bank

115,000

140,000

Federal Home Loan Bank advances

269,500

214,000

Advances by borrowers for taxes and insurance

6,789

5,952

Other liabilities

13,524

19,021

Total liabilities

1,609,565

1,608,393

Stockholders’ equity:

Preferred stock, $.01 par value, 5,000,000 shares authorized, no shares issued

—

—

Common stock, $.01 par value, 55,000,000 shares authorized, 27,177,372 shares issued and 13,777,942 and 13,757,880 shares outstanding at March 31, 2003 and December 31, 2002, respectively

272

272

Additional paid-in capital

186,740

184,934

Retained earnings

144,067

142,224

Accumulated other comprehensive loss

(4,429
)

(3,201
)
Less:
Unallocated common stock held by Employee Stock Ownership Plan (ESOP)

(10,913
)

(11,248
)

Treasury stock, 13,399,430 and 13,419,492 shares at March 31, 2003 and December 31, 2002, respectively

(180,365
)

(177,676
)

Total stockholders’ equity

135,372

135,305

Total liabilities and stockholders’ equity

$
1,744,937

$
1,743,698

		September 30, 2003			December 31, 2002
	��	(Unaudited)
ASSETS

Cash and due from banks		$	42,117		$	17,192
Investment securities available for sale			79,322			91,978
Federal Home Loan Bank of New York stock, at cost			19,950			18,700
Mortgage-backed securities available for sale			102,361			138,657
Loans receivable, net			1,351,866			1,335,898
Mortgage loans held for sale			83,671			66,626
Interest and dividends receivable			6,598			6,378
Real estate owned, net			264			141
Premises and equipment, net			16,867			17,708
Servicing asset			7,121			7,907
Bank Owned Life Insurance			33,573			32,398
Other assets			10,884			10,115

Total assets		$	1,754,594		$	1,743,698


LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:
Deposits		$	1,164,745		$	1,184,836
Securities sold under agreements to repurchase with retail customers			52,242			44,584
Securities sold under agreements to repurchase with the Federal Home Loan Bank			100,000			140,000
Federal Home Loan Bank advances			283,500			214,000
Advances by borrowers for taxes and insurance			6,741			5,952
Other liabilities			14,542			19,021

Total liabilities			1,621,770			1,608,393


Stockholders’ equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized, no shares issued			—			—
Common stock, $.01 par value, 55,000,000 shares authorized, 27,177,372 shares issued and 13,418,183 and 13,757,880 shares outstanding at September 30, 2003 and December 31, 2002, respectively			272			272
Additional paid-in capital			188,526			184,934
Retained earnings			149,014			142,224
Accumulated other comprehensive loss			(4,236	)		(3,201	)
Less: Unallocated common stock held by Employee Stock Ownership Plan (ESOP)			(10,245	)		(11,248	)
Treasury stock, 13,759,189 and 13,419,492 shares at September 30, 2003 and December 31, 2002, respectively			(190,507	)		(177,676	)
Total stockholders’ equity			132,824			135,305

Total liabilities and stockholders’ equity		$	1,754,594		$	1,743,698

See accompanying Notes to Unaudited Consolidated Financial Statements.

OceanFirst Financial Corp.

Consolidated Statements of Income

(in thousands, except per share amounts)

For the three months
ended March 31,

2003

2002

(Unaudited)

Interest income:

Loans

$
22,746

$
23,856

Mortgage-backed securities

1,436

3,098

Investment securities and other

1,246

1,460

Total interest income

25,428

28,414

Interest expense:

Deposits

5,233

7,385

Borrowed funds

4,808

5,361

Total interest expense

10,041

12,746

Net interest income

15,387

15,668

Provision for loan losses

375

500

Net interest income after provision for loan losses

15,012

15,168

Other income:

Loan servicing (loss) income

(1,190
)

41

Fees and service charges

1,824

1,437

Net gain on sales of loans and securities available for sale

2,505

394

Net income from other real estate operations

110

19

Income on Bank Owned Life Insurance

420

524

Other

11

10

Total other income

3,680

2,425

Operating expenses:

Compensation and employee benefits

5,093

5,262

Occupancy

937

792

Equipment

591

543

Marketing

421

424

Federal deposit insurance

93

126

Data processing

715

588

General and administrative

2,766

2,143

Total operating expense

10,616

9,878

Income before provision for income taxes

8,076

7,715

Provision for income taxes

2,827

2,666

Net income

$
5,249

$
5,049

Basic earnings per share

$
0.42

$
0.38

Diluted earnings per share

$
0.40

$
0.36

Average basic shares outstanding

12,442

13,182

Average diluted shares outstanding

13,210

13,895


For the three months
ended September 30

For the nine months
ended September 30,

   2003
2002
2003
2002

   (Unaudited) (Unaudited)
Interest income:

Loans
   $ 21,159 $ 23,993 $ 66,058 $ 71,222
Mortgage-backed securities
   819 2,353 3,641 8,058
Investment securities and other
   721 925 2,742 3,273


Total interest income
   22,699 27,271 72,441 82,553


Interest expense:

Deposits
   3,886 6,784 13,557 21,426
Borrowed funds
   5,018 4,915 14,801 15,225


Total interest expense
   8,904 11,699 28,358 36,651


Net interest income
   13,795 15,572 44,083 45,902
Provision for loan losses
   48 375 673 1,250


Net interest income after provision for loan losses
   13,747 15,197 43,410 44,652


Other income:

Loan servicing loss
   (71 ) (2,047 ) (2,758 ) (2,091 )
Fees and service charges
   1,990 1,676 5,855 4,669
Net gain on sales of loans and securities available for sale
   3,335 1,258 8,737 2,766
Net (loss) income from other real estate operations
   (3 ) (7 ) 106 67
Other
   383 460 1,201 1,460


Total other income
   5,634 1,340 13,141 6,871


Operating expenses:

Compensation and employee benefits
   5,699 5,107 15,819 15,365
Occupancy
   852 848 2,663 2,438
Equipment
   633 561 1,809 1,679
Marketing
   369 583 1,338 1,439
Federal deposit insurance
   126 113 360 364
Data processing
   702 595 2,234 1,908
General and administrative
   2,676 2,092 8,265 6,393


Total operating expenses
   11,057 9,899 32,488 29,586


Income before provision for income taxes
   8,324 6,638 24,063 21,937
Provision for income taxes
   2,994 1,848 8,538 6,962


Net income
   $ 5,330 $ 4,790 $ 15,525 $ 14,975


Basic earnings per share
   $ 0.43 $ 0.38 $ 1.25 $ 1.16


Diluted earnings per share
   $ 0.41 $ 0.35 $ 1.19 $ 1.08


Average basic shares outstanding
   12,293 12,719 12,384 12,938


Average diluted shares outstanding
   13,072 13,666 13,080 13,822


See accompanying Notes to Unaudited Consolidated Financial Statements.
2
~~OceanFirst Financial Corp.~~
~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~
~~(dollars in thousands)~~

For the three months
ended March 31,

2003

2002

(Unaudited)

Cash flows from operating activities:

Net income

$
5,249

$
5,049

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization of premises and equipment

553

475

Amortization of Incentive Awards

—

161

Amortization of ESOP

334

354

ESOP adjustment

527

395

Amortization and impairment of servicing asset

1,772

462

Amortization of intangible assets

26

26

Net premium amortization in excess of discount accretion on securities

224

321

Net (accretion) amortization of deferred fees and discounts on loans

(268
)

1

Provision for loan losses

375

500

Net gain on sales of real estate owned

(114
)

(23
)
Net gain on sales of loans and securities

(2,505
)

(394
)
Proceeds from sales of mortgage loans held for sale

149,411

127,543

Mortgage loans originated for sale

(139,007
)

(162,794
)
Increase in value of Bank Owned Life Insurance

(420
)

(524
)
Increase in interest and dividends receivable

(194
)

(434
)
Increase in other assets

(701
)

(891
)
Decrease in other liabilities

(4,217
)

(7,290
)

Total adjustments

5,796

(42,112
)

Net cash provided by (used in) operating activities

11,045

(37,063
)

Cash flows from investing activities:

Net (decrease) increase in loans receivable

(905
)

46,951

Proceeds from sale of investment securities available for sale

1,273

—

Purchase of investment securities available for sale

(1,332
)

(600
)
Purchase of mortgage-backed securities available for sale

(50,392
)

—

Proceeds from maturities of investment securities available for sale

13,171

—

Principal payments on mortgage-backed securities available for sale

45,538

32,266

Increase in Federal Home Loan Bank of New York stock

(1,150
)

(325
)
Proceeds from sales of real estate owned

255

72

Purchases of premises and equipment

(165
)

(1,361
)

Net cash provided by investing activities

6,293

77,003

~~Continued~~
3
~~OceanFirst Financial Corp.~~
~~CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)~~
~~(dollars in thousands)~~

For the three months
ended March 31,

2003

2002

(Unaudited)

Cash flows from financing activities:

(Decrease) increase in deposits

$
(32,954
)
$
4,987

Increase (decrease) in short-term borrowings

18,786

(45,005
)
Proceeds from Federal Home Loan Bank advances

20,000

25,000

Repayments of Federal Home Loan Bank advances

—

(15,000
)
Increase in advances by borrowers for taxes and insurance

837

133

Exercise of stock options

2,903

246

Dividends paid

(2,247
)

(2,129
)
Purchase of treasury stock

(6,751
)

(5,881
)

Net cash provided by (used in) financing activities

574

(37,649
)

Net increase in cash and due from banks

17,912

2,291

Cash and due from banks at beginning of period

17,192

16,876

Cash and due from banks at end of period

$
35,104

$
19,167

Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for:

Interest

$
9,979

$
12,960

Income taxes

7,654

2,353

Noncash investing activities:

Transfer of loans receivable to real estate owned

—

97

Mortgage loans securitized into mortgage-backed securities

28,520

47,624

~~See accompanying notes to unaudited consolidated financial statements.~~
4
OceanFirst Financial Corp.
Consolidated Statements of
Changes in Stockholders’ Equity (Unaudited)
(in thousands, except per share amounts)
   Common
Stock

Additional
Paid-In
Capital
   Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Employee
Stock
Ownership
Plan
Unearned
Incentive
Awards

Treasury
Stock
   Total

Balance at December 31, 2001
   $ 272    $ 181,780    $ 131,655 $ (824 ) $ (12,663 ) $ (161 ) $ (153,330 )    $ 146,729

Comprehensive income:

Net income
   —      —      14,975 —   —   —   —      14,975
Other comprehensive loss:

Unrealized loss on securities (net of tax benefit $630)
   —      —      —   (1,073 ) —   —   —      (1,073 )

Total comprehensive income
            13,902

Earned Incentive Awards
   —      —      —   —   —   161 —      161
Tax benefit of stock plans
   —      558    —   —   —   —   —      558
Purchase 940,050 shares of common stock
   —      —      —   —   —   —   (19,885 )    (19,885 )
Allocation of ESOP stock
   —      —      —   —   1,062 —   —      1,062
ESOP adjustment
   —      1,514    —   —   —   —   —      1,514
Cash dividend – $.51 per share
   —      —      (6,679 ) —   —   —   —      (6,679 )
Exercise of stock options
   —      —      (155 ) —   —   —   924    769





Balance at September 30, 2002
   $ 272    $ 183,852    $ 139,796 $ (1,897 ) $ (11,601 ) $ —   $ (172,291 )    $ 138,131





Balance at December 31, 2002
   $ 272    $ 184,934    $ 142,224 $ (3,201 ) $ (11,248 ) $ $ (177,676 )    $ 135,305

Comprehensive income:

Net income
   —      —      15,525 —   —   —   —      15,525
Other comprehensive loss:

Unrealized loss on securities (net of tax benefit $847)
   —      —      —   (1,245 ) —   —   —      (1,245 )
Reclassification adjustment for gains included in net income (net of tax expense $113)
   —      —      —   210 —   —   —      210

Total comprehensive income
            14,490
Tax benefit of stock plans
   —      1,821    —   —   —   —   —      1,821
Purchase 771,713 shares of common stock
   —      —      —   —   —   —   (18,062 )    (18,062 )
Allocation of ESOP stock
   —      —      —   —   1,003 —   —      1,003
ESOP adjustment
   —      1,771    —   —   —   —   —      1,771
Cash dividend – $.58 per share
   —      —      (7,199 ) —   —   —   —      (7,199 )
Exercise of stock options
   —        —      (1,536 ) —   —   —   5,231    3,695





Balance at September 30, 2003
   $ 272    $ 188,526    $ 149,014 $ (4,236 ) $ (10,245 ) $ —   $ (190,507 )    $ 132,824





See accompanying Notes to Unaudited Consolidated Financial Statements.
3
OceanFirst Financial Corp.
Consolidated Statements of Cash Flows
(dollars in thousands)
   For the nine months ended
September 30,

   2003
2002

   (Unaudited)
Cash flows from operating activities:

Net income
   $ 15,525 $ 14,975


Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of premises and equipment
   1,596 1,501
Amortization of Incentive Awards
   —   161
Amortization of ESOP
   1,003 1,062
ESOP adjustment
   1,771 1,514
Amortization and impairment of servicing asset
   4,529 3,715
Amortization of intangible assets
   79 79
Net premium amortization in excess of discount accretion on securities
   986 948
Net accretion of deferred fees and discounts on loans
   (270 ) (330 )
Provision for loan losses
   673 1,250
Net gain on sales of real estate owned
   (114 ) (81 )
Net gain on sales of loans and securities
   (8,737 ) (2,766 )
Proceeds from sales of mortgage loans held for sale
   477,990 364,647
Mortgage loans originated for sale
   (490,364 ) (356,324 )
Increase in value of Bank Owned Life Insurance
   (1,175 ) (1,424 )
Increase in interest and dividends receivable
   (220 ) (249 )
Increase in other assets
   (143 ) (3,820 )
Decrease in other liabilities
   (2,658 ) (1,932 )


Total adjustments
   (15,054 ) 7,951


Net cash provided by operating activities
   471 22,926


Cash flows from investing activities:

Net increase in loans receivable
   (16,635 ) (635 )
Proceeds from sale of investment securities available for sale
   1,273 —
Purchase of investment securities available for sale
   (2,330 ) (600 )
Purchase of mortgage-backed securities available for sale
   (70,581 ) (30,165 )
Proceeds from maturities of investment securities available for sale
   14,171 —
Principal payments on mortgage-backed securities available for sale
   104,016 81,114
(Increase) decrease in Federal Home Loan Bank of New York stock
   (1,250 ) 5,120
Proceeds from sales of real estate owned
   255 472
Purchases of premises and equipment
   (755 ) (2,620 )


Net cash provided by investing activities
   28,164 52,686


Continued
4
OceanFirst Financial Corp.
Consolidated Statements of Cash Flows (Continued)
(dollars in thousands)

For the nine months
ended September 30,

   2003
2002

   (Unaudited)
Cash flows from financing activities:

(Decrease) increase in deposits
   $ (20,091 ) $ 61,006
Increase (decrease) in short-term borrowings
   30,158 (71,132 )
Proceeds from Federal Home Loan Bank advances
   55,000 25,000
Repayments of Federal Home Loan Bank advances
   (48,000 ) (43,000 )
Increase (decrease) in advances by borrowers for taxes and insurance
   789 (3,706 )
Exercise of stock options
   3,695 769
Dividends paid
   (7,199 ) (6,679 )
Purchase of treasury stock
   (18,062 ) (19,885 )


Net cash used in financing activities
   (3,710 ) (57,627 )


Net increase in cash and due from banks
   24,925 17,985
Cash and due from banks at beginning of period
   17,192 16,876


Cash and due from banks at end of period
   $ 42,117 $ 34,861


Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for:

Interest
   $ 28,527 $ 37,213
Income taxes
   8,003 2,803
Noncash investing activities:

Transfer of loans receivable to real estate owned
   264 617
Mortgage loans securitized into mortgage-backed securities
   40,931 96,275


See accompanying Notes to Unaudited Consolidated Financial Statements.
5
OceanFirst Financial Corp.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
The accompanying unaudited consolidated financial statements include the accounts of OceanFirst Financial Corp. (the “Company”) and its wholly-owned subsidiary, OceanFirst Bank (the “Bank”) and its wholly-owned subsidiaries, Columbia Equities, Ltd., OceanFirst REIT Holdings, Inc., OceanFirst Realty Corp. and OceanFirst Services, ~~LLC.~~LLC and its wholly-owned subsidiary OFB Re-Insurance, Ltd.

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 ~~March 31,~~September 30, 2003 are not necessarily indicative of the results of operations that may be expected for all of 2003.
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.
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 to Stockholders on Form 10-K for the year ended December 31, 2002.
~~Stock Based~~Stock-Based Compensation
The Company accounts for ~~stock based~~stock-based compensation using the intrinsic value method under Accounting Principles Board No. 25 and accordingly has recognized no compensation expense under this method. Statement of Financial Accounting Standards No. 123, ~~Accounting~~“Accounting for Stock-based ~~Compensation~~Compensation” as amended by Statement of Financial Accounting Standards No. 148, ~~Accounting~~“Accounting for Stock-based Compensation-Transition and ~~Disclosure,~~Disclosure”, permits the use of the intrinsic value method; however, the amended statement requires the Company to disclose the pro forma net income and earnings per share as if the stock-based compensation had been accounted for using the fair value method. Had the compensation costs for the Company’s stock option plan been determined based on the fair value method, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below (in thousands, except per share data):

Three months ended
March 31,

2003

2002

Net income - as reported

$
5,249

$
5,049

Stock based employee compensation expense included in reported net income, all relating to earned incentive awards, net of related tax effects

—

105

Total stock-based employee compensation expense determined under the fair value based method, including earned incentive awards and stock option grants, net of related tax effects

(93
)

(199
)

Net stock based employee compensation expense not included in reported net income, all relating to stock option grants, net of related tax effects

(93
)

(94
)

Net income - pro forma

$
5,156

$
4,955

Basic earnings per share:

As reported

$
.42

$
.38

Pro forma

$
.41

$
.38

Diluted earnings per share:

As reported

$
.40

$
.36

Pro forma

$
.39

$
.36

5
   Three months ended
September 30,
Nine months ended
September 30,

   2003
2002
2003
2002

Net income – as reported
   $ 5,330 $ 4,790 $ 15,525 $ 14,975


Stock-based employee compensation expense included in reported net income, all relating to earned incentive awards, net of related tax effects
   —   —   —   105
Total stock-based employee compensation expense determined under the fair value based method, including earned incentive awards and stock option grants, net of related tax effects
   (138 ) (116 ) (336 ) (430 )


Net stock-based employee compensation expense not included in reported net income, all relating to stock option grants, net of related tax effects
   (138 ) (116 ) (336 ) (325 )


Net income – pro forma
   $ 5,192 $ 4,674 $ 15,189 $ 14,650


Basic earnings per share:

As reported
   $ .43 $ .38 $ 1.25 $ 1.16


Pro forma
   $ .42 $ .37 $ 1.23 $ 1.13


Diluted earnings per share:

As reported
   $ .41 $ .35 $ 1.19 $ 1.08


Pro forma
   $ .40 $ .34 $ 1.16 $ 1.06


6
Earnings per Share
The following reconciles shares outstanding for basic and diluted earnings per share for the three and nine months ended ~~March 31,~~September 30, 2003 and 2002 (in thousands):

Three months ended
March 31,

2003

2002

Weighted average shares issued net of Treasury shares

13,801

14,740

Less:
Unallocated ESOP shares

(1,314
)

(1,481
)

Unallocated incentive award shares

(45
)

(78
)

Average basic shares outstanding

12,442

13,181

Add:
Effect of dilutive securities:

Stock options

732

648

Incentive awards

36

65

Average diluted shares outstanding

13,210

13,894

   Three months ended
September 30,
Nine months ended
September 30,

   2003
2002
2003
2002

Weighted average shares issued net of Treasury shares
   13,566 14,169 13,699 14,451
Less: Unallocated ESOP shares
   (1,235 ) (1,397 ) (1,275 ) (1,438 )
Unallocated incentive award shares
   (38 ) (53 ) (40 ) (75 )


Average basic shares outstanding
   12,293 12,719 12,384 12,938
Add: Effect of dilutive securities:

Stock options
   749 905 664 824
Incentive awards
   30 42 32 60


Average diluted shares outstanding
   13,072 13,666 13,080 13,822


Comprehensive Income
For the three month periods ended ~~March 31,~~September 30, 2003 and 2002, total comprehensive income, representing net income plus or minus items recorded directly in equity, such as the change in unrealized gains or losses on securities available for sale amounted to ~~$4,021,000~~$5,236,000 and ~~$2,862,000,~~$3,909,000, respectively. For the nine months ended September 30, 2003 and 2002, total comprehensive income amounted to $14,490,000 and $13,902,000, respectively.
Impact of Recent Accounting Pronouncements
Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” was issued in May 2003. Statement 150 requires instruments within its scope to be classified as a liability (or, in some cases, as an asset). Statement 150 is generally effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003 (i.e., July 1, 2003 for calendar year entities). For financial instruments created before June 1, 2003 and still existing at the beginning of the interim period of adoption, transition generally should be applied by reporting the cumulative effect of a change in an accounting principle by initially measuring the financial instruments at fair value or other measurement attributes of the Statement. The adoption of Statement 150 did not have a significant effect on the Bank’s consolidated financial statements.
Statement of Financial Accounting Standards No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” was issued on April 30, 2003. The Statement amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under Statement 133. This Statement is effective for contracts entered into or modified after June 30, 2003. The adoption of this Statement did not have a significant effect on the Bank’s consolidated financial statements.
FASB Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”) was issued in January 2003. FIN 46 applies immediately to enterprises that hold a variable interest in variable interest entities created after January 31, 2003. It applies in the first fiscal year or interim period beginning after June 15, 2003 to enterprises that hold a variable interest in variable interest entities created before February 1, 2003. FIN 46 applies to public enterprises as of the beginning of the applicable interim or annual period, and it applies to nonpublic enterprises no later than the end of the applicable annual period. FIN 46 may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more years with a cumulative-effect adjustment as of the beginning of the first year restated. FIN 46 provides guidance on the identification of entities controlled through means other than voting rights. FIN 46 specifies how a business enterprise should evaluate its interest in a variable interest entity to determine whether to consolidate that entity. A variable interest entity must be consolidated by its primary beneficiary if the entity does not effectively disperse risks among the parties involved. On October 9, 2003, the effective date was deferred until the end of the first interim or annual period ending after December 15, 2003, for certain interests held by a public entity in certain variable interest entities or potential variable interest entities created before February 1, 2003. The adoption of FIN 46 is not expected to have a material impact on the consolidated financial statements of the Company.
7
Note 2. Loans Receivable, Net
Loans receivable, net at ~~March 31,~~September 30, 2003 and December 31, 2002 consisted of the following (in thousands):

March 31, 2003

December 31, 2002

Real estate:

One- to four-family

$
1,086,785

$
1,104,976

Commercial real estate, multi-family and land

146,715

139,654

Construction

12,333

11,079

Consumer

81,664

80,218

Commercial

78,022

77,968

Total loans

1,405,519

1,413,895

Loans in process

(3,981
)

(3,531
)
Deferred origination costs, net

2,827

2,239

Unearned discount

(5
)

(5
)
Allowance for loan losses

(10,453
)

(10,074
)

Total loans, net

1,393,907

1,402,524

Less: mortgage loans held for sale

57,211

66,626

Loans receivable, net

$
1,336,696

$
1,335,898

   September 30,
2003
December 31,
2002

Real estate:

One-to four-family
   $ 1,105,153 $ 1,101,904
Commercial real estate, multi-family and land
   166,734 142,726
Construction
   10,802 11,079
Consumer
   78,758 80,218
Commercial
   83,874 77,968


Total loans
   1,445,321 1,413,895
Loans in process
   (2,920 ) (3,531 )
Deferred origination costs, net
   3,923 2,239
Unearned discount
   (5 ) (5 )
Allowance for loan losses
   (10,782 ) (10,074 )


Total loans, net
   1,435,537 1,402,524
Less: mortgage loans held for sale
   83,671 66,626


Loans receivable, net
   $ 1,351,866 $ 1,335,898


Note 3. Deposits
The major types of deposits at ~~March 31,~~September 30, 2003 and December 31, 2002 were as follows (in thousands):
Type of Account

March 31, 2003

December 31, 2002

Non-interest bearing

$
92,279

$
86,290

NOW

247,529

260,762

Money market deposit

127,280

123,960

Savings

245,029

234,995

Time deposits

439,765

478,829

$
1,151,882

$
1,184,836

6
   September 30,
2003
   December 31,
2002
Type of Account

Non-interest bearing
   $ 108,608    $ 86,290
NOW
   254,135    260,762
Money market deposit
   137,875    123,960
Savings
   265,713    234,995
Time deposits
   398,414    478,829


   $ 1,164,745    $ 1,184,836


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Critical Accounting Policies
~~Item 2. Management’s Discussion~~
Note 1 to the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2002 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002, as supplemented by this report, contains a summary of significant accounting policies. Various elements of these accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and ~~Analysis~~other subjective assessments. Certain assets are carried in the consolidated statements of ~~Financial Condition~~financial condition at fair value or the lower of cost or fair value. Policies with respect to the methodologies used to determine the allowance for loan losses, the valuation of Mortgage Servicing Rights and ~~Results~~judgments regarding goodwill and securities impairment are the most critical accounting policies because they are important to the presentation of ~~Operations~~the Company’s financial condition and results of operations, involve a higher degree of complexity and require 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. These critical accounting policies and their application are reviewed periodically and, at least annually, with the Audit Committee of the Board of Directors.
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 also depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rate earned or paid on them.
The following table sets forth certain information relating to the Company for the three and nine months ended ~~March 31,~~
8
September 30, 2003 and 2002. The yields and costs are derived by dividing income or expense by the average balance of 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 fees which are considered adjustments to yields.

Three Months Ended March 31,

2003

2002

Average
Balance

Interest

Average Yield/
Cost

Average
Balance

Interest

Average Yield/
Cost

(Dollars in thousands)

Assets

Interest-earnings assets:

Interest-earning deposits and short term investments

$
13,876

$
40

1.15
%
$
2,618

$
6

. 92
%
Investment securities

89,010

951

4.27

80,563

1,197

5.94

FHLB stock

19,110

255

5.34

23,721

257

4.33

Mortgage-backed securities

123,880

1,436

4.64

216,822

3,098

5.72

Loans receivable, net (1)

1,402,070

22,746

6.49

1,345,568

23,856

7.09

Total interest-earning assets

1,647,946

25,428

6.17

1,669,292

28,414

6.81

Non-interest earning assets

84,861

82,462

Total assets

$
1,732,807

$
1,751,754

Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Transaction deposits

$
630,277

1,570

1.00

509,850

2,017

1.58

Time deposits

459,912

3,663

3.19

524,683

5,368

4.09

Total

1,090,189

5,233

1.92

1,034,533

7,385

2.86

Borrowed funds

400,729

4,808

4.80

485,047

5,361

4.42

Total interest-bearing liabilities

1,490,918

10,041

2.69

1,519,580

12,746

3.36

Non-interest-bearing deposits

88,147

72,635

Non-interest bearing liabilities

19,208

14,566

Total liabilities

1,598,273

1,606,781

Stockholders’equity

134,534

144,973

Total liabilities and stockholders’ equity

$
1,732,807

$
1,751,754

Net interest income

$
15,387

$
15,668

Net interest rate spread (2)

3.48
%

3.45
%

Net interest margin (3)

3.73
%

3.75
%

   FOR THE QUARTER ENDED SEPTEMBER 30,

   2003
2002


AVERAGE
BALANCE
   INTEREST

AVERAGE
YIELD/
COST

AVERAGE
BALANCE
   INTEREST

AVERAGE
YIELD/
COST

   (Dollars in thousands)
Assets

Interest-earnings assets:

Interest-earning deposits and short term investments
   $ 9,918    $ 24    .97 % $ 30,714    $ 129    1.68 %
Investment securities
   86,924    454    2.09 86,456    608    2.81
FHLB stock
   19,544    243    4.97 18,704    188    4.02
Mortgage-backed securities
   118,649    819    2.76 166,140    2,353    5.67
Loans receivable, net (1)
   1,433,215    21,159    5.91 1,338,229    23,993    7.17






Total interest-earning assets
   1,668,250    22,699    5.44 1,640,243    27,271    6.65




Non-interest earning assets
   98,647       86,531



Total assets
   $ 1,766,897       $ 1,726,774



Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Transaction deposits
   $ 665,099    987    .59 $ 599,665    2,241    1.49
Time deposits
   405,096    2,899    2.86 494,668    4,543    3.67






Total
   1,070,195    3,886    1.45 1,094,333    6,784    2.48
Borrowed funds
   433,780    5,018    4.63 392,189    4,915    4.99






Total interest-bearing liabilities
   1,503,975    8,904    2.37 1,486,522    11,699    3.15




Non-interest-bearing deposits
   111,012       83,611
Non-interest-bearing liabilities
   17,711       15,891



Total liabilities
   1,632,698       1,586,024
Stockholders’ equity
   134,199       140,750



Total liabilities and stockholders’ equity
   $ 1,766,897       $ 1,726,774



Net interest income
      $ 13,795       $ 15,572



Net interest rate spread (2)
         3.07 %       3.50 %


Net interest margin (3)
         3.31 %       3.80 %


   FOR THE NINE MONTHS ENDED SEPTEMBER 30,

   2003
2002


AVERAGE
BALANCE
   INTEREST

AVERAGE
YIELD/
COST

AVERAGE
BALANCE
   INTEREST

AVERAGE
YIELD/
COST

   (Dollars in thousands)
Assets

Interest-earnings assets:

Interest-earning deposits and short term investments
   $ 13,096    $ 108    1.10 % $ 11,968    $ 149    1.66 %
Investment securities
   89,705    1,884    2.80 86,241    2,414    3.73
FHLB stock
   19,324    750    5.17 21,022    710    4.50
Mortgage-backed securities
   124,045    3,641    3.91 188,007    8,058    5.71
Loans receivable, net (1)
   1,414,011    66,058    6.23 1,335,701    71,222    7.11






Total interest-earning assets
   1,660,181    72,441    5.82 1,642,939    82,553    6.70




Non-interest earning assets
   88,129       84,694



Total assets
   $ 1,748,310       $ 1,727,633



Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Transaction deposits
   $ 645,383    3,825    .79 $ 554,739    6,493    1.56
Time deposits
   430,194    9,732    3.02 511,818    14,933    3.89






Total
   1,075,577    13,557    1.68 1,066,557    21,426    2.68
Borrowed funds
   421,149    14,801    4.69 426,037    15,225    4.76






Total interest-bearing liabilities
   1,496,726    28,358    2.53 1,492,594    36,651    3.27




Non-interest-bearing deposits
   100,162       78,442
Non-interest-bearing liabilities
   16,917       14,232



Total liabilities
   1,613,805       1,585,268
Stockholders’ equity
   134,505       142,365



Total liabilities and stockholders’ equity
   $ 1,748,310       $ 1,727,633



Net interest income
      $ 44,083       $ 45,902



Net interest rate spread (2)
         3.29 %       3.43 %


Net interest margin (3)
         3.54 %       3.73 %


(1)
~~(1)~~
Amount is net of deferred loan fees, undisbursed loan funds, discounts and premiums and estimated loss allowances and includes loans held for sale and non-performing loans.
(2)
~~(2)~~
Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3)
~~(3)~~
Net interest margin represents net interest income divided by average interest-earning assets.
Comparison of Financial Condition at ~~March 31,~~September 30, 2003 and December 31, 2002
Total assets at ~~March 31,~~September 30, 2003 were ~~$1.745~~$1.755 billion, an increase of ~~$1.2~~$10.9 million, compared to $1.744 billion at December 31, 2002.
Loans receivable, net increased by ~~$798,000~~$16.0 million to a balance of ~~$1.337~~$1.352 billion at ~~March 31,~~September 30, 2003, compared to a balance of $1.336 billion at December 31, 2002. Commercial and commercial real estate loans outstanding increased ~~$7.1~~$29.9 million,
9
while one- to four-family mortgage loans declined, as the Bank actively sold 30-year fixed-rate mortgage loans during the period.

Deposit balances decreased ~~$33.0~~$20.1 million to ~~$1.152~~$1.165 billion at ~~March 31,~~September 30, 2003 from $1.185 billion at December 31, 2002. ~~During the quarter a large commercial deposit relationship transferred $11.6 million to the securities sold under agreement to repurchase account.~~ Core ~~deposit categories,~~deposits (all deposits except certificates), a key emphasis for the Company, increased by ~~$6.1~~$60.3 million, ~~net of the $11.6 million mentioned above,~~ as time deposits declined.
Total borrowings, consisting of securities sold under agreements to repurchase and Federal Home Loan Bank advances, increased $37.1 million to $435.7 million at September 30, 2003, compared to a balance of $398.6 million at December 31, 2002. Repurchase agreements with retail customers increased $7.7 million as a large commercial deposit relationship transferred their deposit balances to the securities sold under agreements to repurchase account. Overnight borrowings increased by $22.5 million and longer-term wholesale borrowings used to fund balance sheet leverage increased by $7.0 million.

Stockholders’ equity at ~~March 31,~~September 30, 2003 ~~increased~~decreased to ~~$135.4~~$132.8 million, compared to $135.3 million at December 31, 2002. The Company repurchased ~~310,800~~771,713 shares of common stock during the ~~three~~nine months ended ~~March 31,~~September 30, 2003 at a total cost of ~~$6.8~~$18.1 million. Under the 10% repurchase program authorized by the Board of Directors in August 2002, ~~639,035~~178,122 shares remain to be purchased as of ~~March 31,~~September 30, 2003. A new repurchase program, the Company’s eleventh, was announced on October 22, 2003. Under this 10% repurchase program, an additional 1,341,818 shares are available for repurchase. The cost of the share repurchases was partly offset by ~~the~~ proceeds from stock option exercises and the related tax ~~benefit.~~benefits.
7
Comparison of Operating Results for the Three and Nine Months Ended ~~March 31,~~September 30, 2003 and ~~March 31,~~September 30, 2002
General
Net income increased to ~~$5.2~~$5.3 million and $15.5 million for the three and nine months ended ~~March 31,~~September 30, 2003, respectively, as compared to net income of ~~$5.0~~$4.8 million and $15.0 million, respectively, for the three and nine months ended ~~March 31,~~September 30, 2002. Diluted earnings per share increased to ~~$.40~~$.41 and $1.19, respectively, for the three and nine months ended ~~March 31,~~September 30, 2003, as compared to ~~$.36,~~$.35 and $1.08, respectively, for the same prior year ~~period.~~periods. Earnings per share was favorably affected by the Company’s repurchase program, which reduced the number of shares outstanding.
Interest Income
Interest income for the three and nine months ended ~~March 31,~~September 30, 2003 was ~~$25.4~~$22.7 million and $72.4 million, respectively, compared to ~~$28.4~~$27.3 million and $82.6 million, respectively, for the three and nine months ended ~~March 31,~~September 30, 2002. The decrease in interest income was due to a decline in the yield on interest-earning assets to ~~6.17%,~~5.44% and 5.82 %, respectively, for the three and nine months ended ~~March 31,~~September 30, 2003, as compared to ~~6.81%~~6.65% and 6.70%, respectively, for the same prior year ~~period.~~periods. Despite the decline, which was reflective of the general interest rate environment, the asset yield continued to benefit from the Bank’s loan growth over the past year, which was partly funded by reductions in the lower-yielding investment and mortgage-backed securities available for sale portfolios. For the three and nine months ended ~~March 31,~~September 30, 2003 loans receivable represented ~~85.1%~~85.9% and 85.2%, respectively, of average interest-earning assets as compared to ~~80.6%~~81.6 % and 81.3%, respectively, for the same prior year ~~period. The asset yield for the three months ended March 31, 2003 benefited from $407,000 of income relating to an equity investment. The comparable benefit for the prior year period was $600,000.~~periods.
Interest Expense
Interest expense for the three and nine months ended ~~March 31,~~September 30, 2003 was ~~$10.0~~$8.9 million and $28.4 million, respectively, compared to ~~$12.7~~$11.7 million and $36.7 million, respectively, for the three and nine months ended ~~March 31,~~September 30, 2002. The decrease in interest expense was primarily the result of a decrease in the cost of interest-bearing liabilities to ~~2.69%~~2.37% and 2.53%, respectively, for the three and nine months ended ~~March 31,~~September 30, 2003, as compared to ~~3.36%~~3.15% and 3.27%, respectively, in the same prior year ~~period.~~periods. Funding costs decreased due to the lower interest rate environment and also due to the Company’s focus on lower-costing core deposit growth. Core deposits (including non-interest-bearing deposits) represented ~~61.0%~~65.7% and 63.4%, respectively, of average deposits for the three and nine months ended ~~March 31,~~September 30, 2003, as compared to ~~52.6%~~58.0% and 55.3%, respectively, for the same prior year ~~period.~~periods.

Provision for Loan Losses
For the three and nine months ended ~~March 31,~~September 30, 2003, the Company’s provision for loan losses was ~~$375,000~~$48,000 and $673,000, respectively, as compared to ~~$500,000~~$375,000 and $1.3 million, respectively, for the same prior year ~~period.~~periods. The ~~prior period~~ provision for the nine months ended September 30, 2002 was increased to reflect the charge-off of a large ~~nonperforming~~non-performing commercial loan which was part of a shared national credit. The Company recognized a net recovery of $36,000 through the allowance for loan losses for the nine months ended September 30, 2003. Additionally, non-performing loans declined to $2.3 million at September 30, 2003 as compared to $2.8 million at September 30, 2002.
10
Other Income
Other income was ~~$3.7~~$5.6 million and $13.1 million, respectively, for the three and nine months ended ~~March 31,~~September 30, 2003, compared to ~~$2.4~~$1.3 million and $6.9 million, respectively, for the same prior year ~~period.~~periods. For the three and nine months ended ~~March 31,~~September 30, 2003, respectively, the Company recorded a gain of ~~$2.5~~$3.3 million and $8.7 million, respectively, on the sale of loans and securities available for sale, as compared to a gain of ~~$394,000~~$1.3 million and $2.8 million, respectively, in the same prior year ~~period.~~periods. For the ~~three~~nine months ended ~~March 31,~~September 30, 2003 the gain on sale of loans and securities available for sale includes a gain of $323,000 on the sale of equity securities.

Loan servicing ~~income decreased by $1.2~~loss was $71,000 and $2.8 million, respectively, for the three and nine months ended ~~March 31,~~September 30, 2003, as compared to $2.0 million and $2.1 million, respectively, for the same prior year ~~period~~periods. The losses were due to actual and anticipated prepayments of the loans underlying the servicing portfolio. Results for the ~~three~~nine months ended ~~March 31,~~September 30, 2003 include the recognition of an impairment charge on the loan servicing asset for ~~$1.0~~$2.2 million. ~~There was no~~For the three and nine months ended September 30, 2002 the Company recognized impairments to the loan servicing ~~impairment in the same prior period.~~asset of $1.9 million and $2.1 million, respectively.
Fees and service charges increased by ~~$387,000,~~$314,000, or ~~26.9%~~18.7%, and $1.2 million, or 25.4%, respectively, for the three and nine months ended ~~March 31,~~September 30, 2003, as compared to the same prior year ~~period~~periods due to the growth in commercial account services, retail core account balances and trust ~~fees.~~fees and the establishment of a captive insurance subsidiary to recognize fee income from private mortgage insurance.
Operating Expenses
Operating expenses were ~~$10.6~~$11.1 million and $32.5 million, respectively, for the three and nine months ended ~~March 31,~~September 30, 2003, as compared to $9.9 million and $29.6 million, respectively, in the same prior year ~~period.~~periods. The increase was principally due to higher loan-related expenses and for the year-to-date, the costs associated with the opening ~~and operation~~ of the Bank’s seventeenth branch office in May 2002, as well as higher loan-related expenses. Additionally, ESOP expense increased by $113,000 due to the higher average market price for the Company’s shares during the first quarter of 2003, as compared to the same prior year period.2002.
8
Provision for Income Taxes
Income tax expense was ~~$2.8~~$3.0 million and $8.5 million, respectively, for the three and nine months ended ~~March 31,~~September 30, 2003, compared to ~~$2.7~~$1.8 million and $7.0 million, respectively, for the same prior year ~~period.~~periods. The effective tax rate increased ~~slightly~~ to ~~35.0%~~36.0% and 35.5%, respectively, for the three and nine months ended ~~March 31,~~September 30, 2003 as compared to ~~34.6%~~27.8% and 31.7% for the same prior year ~~period.~~periods. The Company’s higher average stock price in 2003 as compared to 2002 increased that portion of the Company’s ESOP expense which is not deductible for tax purposes. For the three and nine months ended September 30, 2002, the provision for income taxes included a $389,000 tax benefit relating to the passage of the New Jersey Business Tax Reform Act. The legislation increased the tax rate on savings institutions, such as the Bank, from 3% to 9%. As a result, deferred tax assets were increased to reflect their expected recognition at the higher tax rate of 9% and current period expense was decreased.
Liquidity and Capital Resources
The Company’s primary sources of funds are deposits, principal and interest payments on loans and mortgage-backed securities, proceeds from the sale of loans, Federal Home Loan Bank (“FHLB”) and other borrowings and, to a lesser extent, investment maturities. While scheduled amortization of loans is a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company has other sources of liquidity if a need for additional funds arises, including an overnight line of credit and advances from the FHLB.
At ~~March 31,~~September 30, 2003, the Company had outstanding overnight borrowings from the FHLB of ~~$10.5~~$22.5 million, an increase from no outstanding overnight borrowings at December 31, 2002. The Company utilizes the overnight line from time to time to fund short-term liquidity needs. Securities sold under agreements to repurchase with retail customers increased to $52.2 million at September 30, 2003 from $44.6 million at December 31, 2002 as a large commercial deposit relationship transferred their deposit balances to the securities sold under agreements to repurchase account. The Company also had other borrowings of ~~$426.9~~$361.0 million at ~~March 31,~~September 30, 2003, an increase from ~~$398.6~~$354.0 million at December 31, 2002. These borrowings were used to fund a wholesale leverage strategy designed to improve returns on invested capital.
The Company’s cash needs for the ~~three~~nine months ended ~~March 31,~~September 30, 2003, were primarily ~~provided~~satisfied by principal payments on loans and mortgage-backed securities, increased total borrowings and proceeds from the sale of mortgage loans held for sale. The cash was principally utilized for loan originations, the purchase of mortgage-backed securities, the funding of deposit outflows and the purchase of treasury stock. For the ~~three~~nine months ended ~~March 31,~~September 30, 2002, the cash needs of the Company were primarily satisfied by principal payments on loans and mortgage-backed securities, ~~maturities of investment securities~~increased deposits and
11
proceeds from the sale of mortgage loans held for sale. The cash provided was principally used for the origination of loans, the purchase of mortgage-backed securities, a reduction in total borrowings and the purchase of treasury stock.
In the normal course of business, the Company routinely enters into various commitments, primarily relating to the origination and sale of loans. At ~~March 31,~~September 30, 2003, outstanding commitments to originate loans totaled $143.0 million; outstanding unused lines of credit totaled $99.9 million; and outstanding commitments to sell loans totaled $80.3 million. The Company expects to have sufficient funds available to meet current commitments in the normal course of business.
At September 30, 2003, the Bank exceeded all of its regulatory capital requirements with tangible capital of ~~$117.1~~$114.2 million, or ~~6.70%~~6.5%, of total adjusted assets, which is above the required level of ~~$26.2~~$26.3 million or 1.5%; core capital of ~~$117.1~~$114.2 million or ~~6.70%~~6.5% of total adjusted assets, which is above the required level of ~~$52.4~~$52.7 million, or 3.0%; and risk-based capital of ~~$127.4~~$124.9 million, or ~~11.79%~~11.3% of risk-weighted assets, which is above the required level of ~~$86.4~~$88.6 million or 8.0%. The Bank is considered a “well-capitalized” institution under the Office of Thrift Supervision’s prompt corrective action regulations.
9
Non-Performing Assets
The following table sets forth information regarding the Company’s non-performing assets consisting of non-accrual loans and Real Estate Owned (REO). 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.

March 31,
2003

December 31,
2002

(dollars in thousands)

Non-accrual loans:

Real estate:

One-to four-family

$
3,175

$
2,222

Commercial real estate, multi-family and land

73

74

Consumer

146

95

Commercial

291

297

Total

3,685

2,688

REO, net

—

141

Total non-performing assets

$
3,685

$
2,829

Allowance for loan losses as a percent of total loans receivable

.74
%

.71
%
Allowance for loan losses as percent of total non-performing loans

283.66

374.78

Non-performing loans as a percent of total loans receivable

.26

.19

Non-performing assets as a percent of total assets

.21

.16

   September 30,
2003
December 31,
2002

   (dollars in thousands)
Non-accrual loans:

Real estate:

One-to four-family
   $ 1,876 $ 2,222
Commercial real estate, multi-family and land
   72 74
Consumer
   87 95
Commercial
   289 297


Total non-performing loans
   2,324 2,688
REO, net
   264 141


Total non-performing assets
   $ 2,588 $ 2,829


Allowance for loan losses as a percent of total loans receivable
   .75 % .71 %
Allowance for loan losses as percent of total non-performing loans
   463.94 374.78
Non-performing loans as a percent of total loans receivable
   .16 .19
Non-performing assets as a percent of total assets
   .15 .16
Private Securities Litigation Reform Act Safe Harbor Statement
In addition to historical information, this quarterly report contains certain forward-looking statements which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. 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 the subsidiaries include, but are not limited to, changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on 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. Further description of the risks and uncertainties to the business are included in Item 1, BUSINESS of the Company’s 2002 Form 10-K.
12
Item 3. ~~Quantitative and Qualitative Disclosure about Market Risk~~ Quantitative and Qualitative Disclosures About Market Risk
The Company’s interest rate sensitivity is monitored by management through the use of an interest rate risk (IRR) model. The following table sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at ~~March 31,~~September 30, 2003, which were anticipated by the Company, based upon certain assumptions, to reprice or mature in each of the future time periods shown. At ~~March 31,~~September 30, 2003 the Company’s ~~one year~~one-year gap was positive ~~8.16%~~6.28% as compared to positive 10.05% at December 31, 2002.
10
At September 30, 2003

3 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: (1)

Interest-earning deposits and short- term investments
   $ 8,705 $ —   $ —   $ —   $ —   $ 8,705
Investment securities
   76,543 —   —   —   10,395 86,938
FHLB stock
   —   —   —   —   19,950 19,950
Mortgage-backed securities
   9,447 23,713 30,011 35,678 3,060 101,909
Loans receivable (2)
   264,861 280,095 467,810 277,176 152,459 1,442,401


Total interest-earning assets
   359,556 303,808 497,821 312,854 185,864 1,659,903


Interest-bearing liabilities:

Money market deposit accounts
   7,113 19,211 38,529 73,022 —   137,875
Savings accounts
   13,710 37,031 74,268 140,704 —   265,713
NOW accounts
   13,110 35,411 71,018 134,596 —   254,135
Time deposits
   70,729 202,013 75,514 30,972 19,186 398,414
FHLB advances
   38,500 40,000 123,000 52,000 30,000 283,500
Securities sold under agreements to repurchase
   52,242 30,000 20,000 30,000 20,000 152,242


Total interest-bearing liabilities
   195,404 363,666 402,329 461,294 69,186 1,491,879


Interest sensitivity gap (3)
   $ 164,152 $ (59,858 ) $ 95,492 $ (148,440 ) $ 116,678 $ 168,024


Cumulative interest sensitivity gap
   $ 164,152 $ 104,294 $ 199,786 $ 51,346 $ 168,024 $ 168,024


Cumulative interest sensitivity gap as a percent of total interest-earning assets
   9.89 % 6.28 % 12.04 % 3.09 % 10.12 % 10.12 %
At March 31, 2003
(dollars in thousands)

3 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

Interest-earning assets: ⁽¹⁾

Interest-earning deposits and short- term investments

$
15,637

$
—

$
—

$
—

$
—

$
15,637

Investment securities

75,300

1,200

—

—

10,394

86,894

FHLB stock

—

—

—

—

19,850

19,850

Mortgage-backed securities

21,378

48,059

47,998

15,279

8,289

141,003

Loans receivable ⁽²⁾

246,224

256,682

435,124

275,378

188,130

1,401,538

Total interest-earning assets

358,539

305,941

483,122

290,657

226,663

1,664,922

Interest-bearing liabilities:

Money market deposit accounts

6,566

17,734

35,568

67,412

—

127,280

Savings accounts

12,640

34,141

68,473

129,775

—

245,029

NOW accounts

12,769

34,489

69,172

131,099

—

247,529

Time deposits

107,314

167,598

117,627

31,665

15,561

439,765

FHLB advances

14,500

68,000

90,000

77,000

20,000

269,500

Securities sold under agreements to repurchase

52,870

—

55,000

25,000

35,000

167,870

Total interest-bearing liabilities

206,659

321,962

435,840

461,951

70,561

1,496,973

Interest sensitivity gap ⁽³⁾

$
151,880

$
(16,021
)
$
47,282

$
(171,294
)
$
156,102

$
167,949

Cumulative interest sensitivity gap

$
151,880

$
135,859

$
183,141

$
11,847

$
167,949

$
167,949

Cumulative interest sensitivity gap as a percent of total interest- earning assets

9.12
%

8.16
%

11.00
%

0.71
%

10.09
%

10.09
%

(1)
Interest-earning assets are included in the period in which the balances are expected to be redeployed and/or repriced as a result of anticipated prepayments, scheduled rate adjustments, and contractual maturities.
(2)
For purposes of the gap analysis, loans receivable includes loans held for sale and non-performing loans gross of the allowance for loan losses, unamortized discounts and deferred loan fees.
(3)
Interest sensitivity gap represents the difference between interest-earning assets and interest-bearing liabilities.
Additionally, the table below sets forth the Company’s exposure to interest rate risk as measured by the change in net portfolio value (“NPV”) and net interest income under varying rate shocks as of ~~March 31,~~September 30, 2003 and December 31, 2002. All methods used to measure interest rate sensitivity involve the use of assumptions, which may tend to oversimplify the manner in which actual yields and costs respond to changes in market interest rates. The Company’s interest rate sensitivity should be reviewed in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report for the year ended December 31, 2002.

March 31, 2003

December 31, 2002

Net Portfolio Value

Net Interest Income

Net Portfolio Value

Net Interest Income

Change in Interest Rates in Basis Points (Rate Shock)

Amount

% Change

NPV
Ratio

Amount

% Change

Amount

% Change

NPV
Ratio

Amount

% Change

(dollars in thousands)

200

$
162,964

(6.7
)%

9.5
%
$
60,577

1.7
%
$
151,546

(7.1
)%

8.9
%
$
60,492

2.1
%
100

175,052

0.2

10.0

60,441

1.5

163,725

0.4

9.4

60,234

1.7

Static

174,758

—

9.8

59,553

—

163,127

—

9.2

59,230

—

(100)

161,759

(7.4
)

9.0

56,769

(4.7
)

150,429

(7.8
)

8.4

56,527

(4.6
)
   September 30, 2003
December 31, 2002

   Net Portfolio Value
Net Interest Income
Net Portfolio Value
Net Interest Income

Change in
Interest Rates
in Basis Points
(Rate Shock)
   Amount
   %
Change

NPV
Ratio
Amount
   %
Change
Amount
   %
Change

NPV
Ratio
Amount
   %
Change

(dollars in thousands)

200
   $ 139,170    (12.0 )% 8.2 % $ 57,892    1.2 % $ 151,546    (7.1 )% 8.9 % $ 60,492    2.1 %
100
   157,785    (0.2 ) 9.1 58,054    1.5 163,725    0.4 9.4 60,234    1.7
Static
   158,073    —   8.9 57,222    —   163,127    —   9.2 59,230    —
(100)
   148,317    (6.2 ) 8.3 54,377    (5.0 ) 150,429    (7.8 ) 8.4 56,527    (4.6 )
Item 4. ~~Item 4.~~ Controls and Procedures
The Company’s management, including the Company’s principal executive officer and ~~Procedures~~
~~Evaluation~~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) 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~~. The Company maintains controls and procedures designed to ensure~~ were effective for the purpose of ensuring that the information
13
required to be disclosed in the reports that the Company files or submits under the ~~Securities~~ Exchange Act ~~of 1934~~with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, ~~of the Securities~~ and ~~Exchange Commission. Based upon their evaluation of those controls~~(2) is accumulated and ~~procedures performed within 90 days of the filing date of this report, the chief executive officer and the principal financial officer of the Company concluded that~~communicated to the Company’s ~~disclosure controls and procedures were adequate.~~
~~Changes in internal controls.~~ ~~The Company made no significant changes in~~management, including its ~~internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the chief~~principal executive ~~officer~~ and principal financial ~~officer.~~officers, as appropriate to allow timely decisions regarding required disclosure. In addition, based on that evaluation, no change in the Company’s internal control over financial reporting occurred during the quarter ended September 30, 2003 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
11
14
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings
The Company is not engaged in any legal proceedings of a material nature at the present time. From time to time, the Company is a party to routine legal proceedings within the normal 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.

The Company is not engaged in any legal proceedings of a material nature at the present time. From time to time, the Company is a party to routine legal proceedings within the normal 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 2.
Changes in Securities and Use of Proceeds
Not Applicable

~~Not Applicable~~
Item 3.
Defaults Upon Senior Securities
Not Applicable

~~Not Applicable~~
Item 4.
Submission of Matters to a Vote of Security Holders
Not Applicable

The annual meeting of stockholders was held on April 24, 2003. The following directors were elected for terms of three years: John W. Chadwick, Carl Feltz, Jr. and Diane F. Rhine. The following proposals were voted on by the stockholders:

Proposal

For

Against

Withheld/
Abstain

Broker
Non-Votes

1)
Election of Directors

John W. Chadwick

10,543,644

—

451,542

—

Carl Feltz, Jr.

10,540,160

—

455,022

—

Diane F. Rhine

10,541,597

—

453,585

—

2)
Amendment of the OceanFirst Financial Corp. 2000 Stock Option Plan

6,814,253

2,570,788

39,587

1,570,554

3)
Ratification of the appointment of KPMG LLP as independent auditors of the Company for the fiscal year ending December 31, 2003.

10,991,371

71,891

11,920

—

Item 5.
Other Information
Not Applicable

~~Not Applicable~~
Item 6.
Exhibits and Reports on Form 8-K
a)
~~Exhibits:~~
~~3.1~~
Certificate of Incorporation of OceanFirst Financial Corp.*
~~3.2~~
Bylaws of OceanFirst Financial Corp.**
~~4.0~~
Stock Certificate of OceanFirst Financial Corp.*
12
a) Exhibits:
3.1      Certificate of Incorporation of OceanFirst Financial Corp.*
3.2      Bylaws of OceanFirst Financial Corp.**
4.0      Stock Certificate of OceanFirst Financial Corp.*
31.1    Rule 13a-14(a)/15d-14(a) Certification of CEO
31.2    Rule 13a-14(a)/15d-14(a) Certification of CFO
32.0    Section 1350 Certifications
b) Reports on Form 8-K
The Company filed a report on Form 8-K with the Securities and Exchange Commission on July 28, 2003 which included the press release, dated July 24, 2003, announcing the Company’s financial results for the quarter ended June 30, 2003.
*
~~99.1~~
~~CEO Certification pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002.~~
~~99.2~~
~~CFO Certification pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002.~~
b)
~~There were no reports on Form 8-K filed during the three months ended March 31, 2003.~~

*
Incorporated herein by reference into this document from the Exhibits to Form S-1, Registration Statement, effective May 13, 1996, as amended, Registration No. 33-80123.

**
**
Incorporated herein by reference into this document from the Exhibit to Form 10-K, Annual Report, filed on March 25, 2003.
1315
SIGNATURES
~~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.
O~~CEAN~~F~~IRST~~ F~~INANCIAL~~ C~~ORP~~.OceanFirst Financial Corp.
Registrant
~~Registrant~~
DATE: ~~May~~November 13, 2003
/s/    J~~OHN~~ ~~R. GARBARINO~~
John R. Garbarino
John R. Garbarino
Chairman of the Board, President and Chief Executive Officer
DATE: ~~May~~November 13, 2003
/s/    M~~ICHAEL~~ F~~ITZPATRICK~~Michael Fitzpatrick
Michael Fitzpatrick
Executive Vice President and Chief Financial Officer
14
16
~~CERTIFICATION~~
~~I, John R. Garbarino, certify, that:~~
1.
~~I have reviewed this quarterly report on Form 10-Q of OceanFirst Financial Corp.;~~
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a.
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.
~~evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and~~
c.
~~presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;~~
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a.
all significant deficiencies in the design or operation of the internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b.
~~any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~
6.
The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect the internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

~~Date:   May 13, 2003~~
Exhibit

Exhibit Index Description
   Page
31.1
   Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer    18
31.2
   Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer    19
32.1
   Section 1350 Certifications    20

~~/s/JOHN~~ ~~R. GARBARINO~~
~~John R. Garbarino~~
~~Chief Executive Officer~~
~~(principal executive officer)~~
15
~~CERTIFICATION~~17
~~I, Michael J. Fitzpatrick, certify, that:~~
1.
~~I have reviewed this quarterly report on Form 10-Q of OceanFirst Financial Corp.;~~
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a.
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.
~~evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and~~
c.
~~presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;~~
5.
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a.
all significant deficiencies in the design or operation of the internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b.
~~any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~
6.
The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect the internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

~~Date:   May 13, 2003~~
~~/s/ MICHAEL~~ F~~ITZPATRICK~~
~~Michael Fitzpatrick~~
~~Chief Financial Officer~~
~~(principal financial officer)~~
16

		March 31, 2003			December 31, 2002

		(Unaudited)
ASSETS
Cash and due from banks		$	35,104		$	17,192
Investment securities available for sale			77,823			91,978
Federal Home Loan Bank of New York stock, at cost			19,850			18,700
Mortgage-backed securities available for sale			142,587			138,657
Loans receivable, net			1,336,696			1,335,898
Mortgage loans held for sale			57,211			66,626
Interest and dividends receivable			6,572			6,378
Real estate owned, net			—			141
Premises and equipment, net			17,320			17,708
Servicing asset			7,328			7,907
Bank Owned Life Insurance			32,818			32,398
Other assets			11,628			10,115

Total assets		$	1,744,937		$	1,743,698

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits		$	1,151,882		$	1,184,836
Securities sold under agreements to repurchase with retail customers			52,870			44,584
Securities sold under agreements to repurchase with the Federal Home Loan Bank			115,000			140,000
Federal Home Loan Bank advances			269,500			214,000
Advances by borrowers for taxes and insurance			6,789			5,952
Other liabilities			13,524			19,021

Total liabilities			1,609,565			1,608,393

Stockholders’ equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized, no shares issued			—			—
Common stock, $.01 par value, 55,000,000 shares authorized, 27,177,372 shares issued and 13,777,942 and 13,757,880 shares outstanding at March 31, 2003 and December 31, 2002, respectively			272			272
Additional paid-in capital			186,740			184,934
Retained earnings			144,067			142,224
Accumulated other comprehensive loss			(4,429	)		(3,201	)
Less:	Unallocated common stock held by Employee Stock Ownership Plan (ESOP)		(10,913	)		(11,248	)
	Treasury stock, 13,399,430 and 13,419,492 shares at March 31, 2003 and December 31, 2002, respectively		(180,365	)		(177,676	)

	Total stockholders’ equity		135,372			135,305

	Total liabilities and stockholders’ equity	$	1,744,937		$	1,743,698

	For the three months ended March 31,

	2003			2002

	(Unaudited)
Interest income:
Loans	$	22,746		$	23,856
Mortgage-backed securities		1,436			3,098
Investment securities and other		1,246			1,460

Total interest income		25,428			28,414

Interest expense:
Deposits		5,233			7,385
Borrowed funds		4,808			5,361

Total interest expense		10,041			12,746

Net interest income		15,387			15,668
Provision for loan losses		375			500

Net interest income after provision for loan losses		15,012			15,168

Other income:
Loan servicing (loss) income		(1,190	)		41
Fees and service charges		1,824			1,437
Net gain on sales of loans and securities available for sale		2,505			394
Net income from other real estate operations		110			19
Income on Bank Owned Life Insurance		420			524
Other		11			10

Total other income		3,680			2,425

Operating expenses:
Compensation and employee benefits		5,093			5,262
Occupancy		937			792
Equipment		591			543
Marketing		421			424
Federal deposit insurance		93			126
Data processing		715			588
General and administrative		2,766			2,143

Total operating expense		10,616			9,878

Income before provision for income taxes		8,076			7,715
Provision for income taxes		2,827			2,666

Net income	$	5,249		$	5,049

Basic earnings per share	$	0.42		$	0.38

Diluted earnings per share	$	0.40		$	0.36

Average basic shares outstanding		12,442			13,182

Average diluted shares outstanding		13,210			13,895

	For the three months ended September 30						For the nine months ended September 30,
	2003			2002			2003			2002
	(Unaudited)						(Unaudited)
Interest income:
Loans	$	21,159		$	23,993		$	66,058		$	71,222
Mortgage-backed securities		819			2,353			3,641			8,058
Investment securities and other		721			925			2,742			3,273

Total interest income		22,699			27,271			72,441			82,553


Interest expense:
Deposits		3,886			6,784			13,557			21,426
Borrowed funds		5,018			4,915			14,801			15,225

Total interest expense		8,904			11,699			28,358			36,651


Net interest income		13,795			15,572			44,083			45,902

Provision for loan losses		48			375			673			1,250

Net interest income after provision for loan losses		13,747			15,197			43,410			44,652


Other income:
Loan servicing loss		(71	)		(2,047	)		(2,758	)		(2,091	)
Fees and service charges		1,990			1,676			5,855			4,669
Net gain on sales of loans and securities available for sale		3,335			1,258			8,737			2,766
Net (loss) income from other real estate operations		(3	)		(7	)		106			67
Other		383			460			1,201			1,460


Total other income		5,634			1,340			13,141			6,871


Operating expenses:
Compensation and employee benefits		5,699			5,107			15,819			15,365
Occupancy		852			848			2,663			2,438
Equipment		633			561			1,809			1,679
Marketing		369			583			1,338			1,439
Federal deposit insurance		126			113			360			364
Data processing		702			595			2,234			1,908
General and administrative		2,676			2,092			8,265			6,393


Total operating expenses		11,057			9,899			32,488			29,586


Income before provision for income taxes		8,324			6,638			24,063			21,937
Provision for income taxes		2,994			1,848			8,538			6,962


Net income	$	5,330		$	4,790		$	15,525		$	14,975

Basic earnings per share	$	0.43		$	0.38		$	1.25		$	1.16

Diluted earnings per share	$	0.41		$	0.35		$	1.19		$	1.08


Average basic shares outstanding		12,293			12,719			12,384			12,938

Average diluted shares outstanding		13,072			13,666			13,080			13,822

	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Employee Stock Ownership Plan			Unearned Incentive Awards			Treasury Stock			Total
Balance at December 31, 2001	$	272	$	181,780	$	131,655		$	(824	)	$	(12,663	)	$	(161	)	$	(153,330	)	$	146,729

Comprehensive income:
Net income		—		—		14,975			—			—			—			—			14,975
Other comprehensive loss:
Unrealized loss on securities (net of tax benefit $630)		—		—		—			(1,073	)		—			—			—			(1,073	)

Total comprehensive income																					13,902

Earned Incentive Awards		—		—		—			—			—			161			—			161
Tax benefit of stock plans		—		558		—			—			—			—			—			558
Purchase 940,050 shares of common stock		—		—		—			—			—			—			(19,885	)		(19,885	)
Allocation of ESOP stock		—		—		—			—			1,062			—			—			1,062
ESOP adjustment		—		1,514		—			—			—			—			—			1,514
Cash dividend – $.51 per share		—		—		(6,679	)		—			—			—			—			(6,679	)
Exercise of stock options		—		—		(155	)		—			—			—			924			769

Balance at September 30, 2002	$	272	$	183,852	$	139,796		$	(1,897	)	$	(11,601	)	$	—		$	(172,291	)	$	138,131

Balance at December 31, 2002	$	272	$	184,934	$	142,224		$	(3,201	)	$	(11,248	)	$			$	(177,676	)	$	135,305

Comprehensive income:
Net income		—		—		15,525			—			—			—			—			15,525
Other comprehensive loss:
Unrealized loss on securities (net of tax benefit $847)		—		—		—			(1,245	)		—			—			—			(1,245	)
Reclassification adjustment for gains included in net income (net of tax expense $113)		—		—		—			210			—			—			—			210

Total comprehensive income																					14,490
Tax benefit of stock plans		—		1,821		—			—			—			—			—			1,821
Purchase 771,713 shares of common stock		—		—		—			—			—			—			(18,062	)		(18,062	)
Allocation of ESOP stock		—		—		—			—			1,003			—			—			1,003
ESOP adjustment		—		1,771		—			—			—			—			—			1,771
Cash dividend – $.58 per share		—		—		(7,199	)		—			—			—			—			(7,199	)
Exercise of stock options		—		—		(1,536	)		—			—			—			5,231			3,695

Balance at September 30, 2003	$	272	$	188,526	$	149,014		$	(4,236	)	$	(10,245	)	$	—		$	(190,507	)	$	132,824

	For the nine months ended September 30,
	2003			2002
	(Unaudited)
Cash flows from operating activities:
Net income	$	15,525		$	14,975

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment		1,596			1,501
Amortization of Incentive Awards		—			161
Amortization of ESOP		1,003			1,062
ESOP adjustment		1,771			1,514
Amortization and impairment of servicing asset		4,529			3,715
Amortization of intangible assets		79			79
Net premium amortization in excess of discount accretion on securities		986			948
Net accretion of deferred fees and discounts on loans		(270	)		(330	)
Provision for loan losses		673			1,250
Net gain on sales of real estate owned		(114	)		(81	)
Net gain on sales of loans and securities		(8,737	)		(2,766	)
Proceeds from sales of mortgage loans held for sale		477,990			364,647
Mortgage loans originated for sale		(490,364	)		(356,324	)
Increase in value of Bank Owned Life Insurance		(1,175	)		(1,424	)
Increase in interest and dividends receivable		(220	)		(249	)
Increase in other assets		(143	)		(3,820	)
Decrease in other liabilities		(2,658	)		(1,932	)

Total adjustments		(15,054	)		7,951

Net cash provided by operating activities		471			22,926

Cash flows from investing activities:
Net increase in loans receivable		(16,635	)		(635	)
Proceeds from sale of investment securities available for sale		1,273			—
Purchase of investment securities available for sale		(2,330	)		(600	)
Purchase of mortgage-backed securities available for sale		(70,581	)		(30,165	)
Proceeds from maturities of investment securities available for sale		14,171			—
Principal payments on mortgage-backed securities available for sale		104,016			81,114
(Increase) decrease in Federal Home Loan Bank of New York stock		(1,250	)		5,120
Proceeds from sales of real estate owned		255			472
Purchases of premises and equipment		(755	)		(2,620	)

Net cash provided by investing activities		28,164			52,686

	Three months ended March 31,

	2003			2002

Net income - as reported	$	5,249		$	5,049

Stock based employee compensation expense included in reported net income, all relating to earned incentive awards, net of related tax effects		—			105
Total stock-based employee compensation expense determined under the fair value based method, including earned incentive awards and stock option grants, net of related tax effects		(93	)		(199	)

Net stock based employee compensation expense not included in reported net income, all relating to stock option grants, net of related tax effects		(93	)		(94	)

Net income - pro forma	$	5,156		$	4,955

Basic earnings per share:
As reported	$	.42		$	.38

Pro forma	$	.41		$	.38

Diluted earnings per share:
As reported	$	.40		$	.36

Pro forma	$	.39		$	.36

	Three months ended September 30,						Nine months ended September 30,
	2003			2002			2003			2002
Net income – as reported	$	5,330		$	4,790		$	15,525		$	14,975

Stock-based employee compensation expense included in reported net income, all relating to earned incentive awards, net of related tax effects		—			—			—			105
Total stock-based employee compensation expense determined under the fair value based method, including earned incentive awards and stock option grants, net of related tax effects		(138	)		(116	)		(336	)		(430	)

Net stock-based employee compensation expense not included in reported net income, all relating to stock option grants, net of related tax effects		(138	)		(116	)		(336	)		(325	)

Net income – pro forma	$	5,192		$	4,674		$	15,189		$	14,650

Basic earnings per share:
As reported	$	.43		$	.38		$	1.25		$	1.16

Pro forma	$	.42		$	.37		$	1.23		$	1.13

Diluted earnings per share:
As reported	$	.41		$	.35		$	1.19		$	1.08

Pro forma	$	.40		$	.34		$	1.16		$	1.06

	March 31, 2003			December 31, 2002

Real estate:
One- to four-family	$	1,086,785		$	1,104,976
Commercial real estate, multi-family and land		146,715			139,654
Construction		12,333			11,079
Consumer		81,664			80,218
Commercial		78,022			77,968

Total loans		1,405,519			1,413,895
Loans in process		(3,981	)		(3,531	)
Deferred origination costs, net		2,827			2,239
Unearned discount		(5	)		(5	)
Allowance for loan losses		(10,453	)		(10,074	)

Total loans, net		1,393,907			1,402,524
Less: mortgage loans held for sale		57,211			66,626

Loans receivable, net	$	1,336,696		$	1,335,898

Type of Account	March 31, 2003		December 31, 2002

Non-interest bearing	$	92,279	$	86,290
NOW		247,529		260,762
Money market deposit		127,280		123,960
Savings		245,029		234,995
Time deposits		439,765		478,829

	$	1,151,882	$	1,184,836

	Three Months Ended March 31,

	2003							2002

	Average Balance		Interest		Average Yield/ Cost			Average Balance		Interest		Average Yield/ Cost

	(Dollars in thousands)
Assets
Interest-earnings assets:
Interest-earning deposits and short term investments	$	13,876	$	40		1.15	%	$	2,618	$	6		. 92	%
Investment securities		89,010		951		4.27			80,563		1,197		5.94
FHLB stock		19,110		255		5.34			23,721		257		4.33
Mortgage-backed securities		123,880		1,436		4.64			216,822		3,098		5.72
Loans receivable, net (1)		1,402,070		22,746		6.49			1,345,568		23,856		7.09

Total interest-earning assets		1,647,946		25,428		6.17			1,669,292		28,414		6.81

Non-interest earning assets		84,861							82,462

Total assets	$	1,732,807						$	1,751,754

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Transaction deposits	$	630,277		1,570		1.00			509,850		2,017		1.58
Time deposits		459,912		3,663		3.19			524,683		5,368		4.09

Total		1,090,189		5,233		1.92			1,034,533		7,385		2.86
Borrowed funds		400,729		4,808		4.80			485,047		5,361		4.42

Total interest-bearing liabilities		1,490,918		10,041		2.69			1,519,580		12,746		3.36

Non-interest-bearing deposits		88,147							72,635
Non-interest bearing liabilities		19,208							14,566

Total liabilities		1,598,273							1,606,781
Stockholders’equity		134,534							144,973

Total liabilities and stockholders’ equity	$	1,732,807						$	1,751,754

Net interest income			$	15,387						$	15,668

Net interest rate spread (2)						3.48	%						3.45	%

Net interest margin (3)						3.73	%						3.75	%

	FOR THE QUARTER ENDED SEPTEMBER 30,
	2003						2002
	AVERAGE BALANCE		INTEREST		AVERAGE YIELD/ COST		AVERAGE BALANCE		INTEREST		AVERAGE YIELD/ COST
	(Dollars in thousands)
Assets
Interest-earnings assets:
Interest-earning deposits and short term investments	$	9,918	$	24	.97	%	$	30,714	$	129	1.68	%
Investment securities		86,924		454	2.09			86,456		608	2.81
FHLB stock		19,544		243	4.97			18,704		188	4.02
Mortgage-backed securities		118,649		819	2.76			166,140		2,353	5.67
Loans receivable, net (1)		1,433,215		21,159	5.91			1,338,229		23,993	7.17

Total interest-earning assets		1,668,250		22,699	5.44			1,640,243		27,271	6.65

Non-interest earning assets		98,647						86,531

Total assets	$	1,766,897					$	1,726,774

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Transaction deposits	$	665,099		987	.59		$	599,665		2,241	1.49
Time deposits		405,096		2,899	2.86			494,668		4,543	3.67

Total		1,070,195		3,886	1.45			1,094,333		6,784	2.48
Borrowed funds		433,780		5,018	4.63			392,189		4,915	4.99

Total interest-bearing liabilities		1,503,975		8,904	2.37			1,486,522		11,699	3.15

Non-interest-bearing deposits		111,012						83,611
Non-interest-bearing liabilities		17,711						15,891

Total liabilities		1,632,698						1,586,024
Stockholders’ equity		134,199						140,750

Total liabilities and stockholders’ equity	$	1,766,897					$	1,726,774

Net interest income			$	13,795					$	15,572

Net interest rate spread (2)					3.07	%					3.50	%

Net interest margin (3)					3.31	%					3.80	%

	FOR THE NINE MONTHS ENDED SEPTEMBER 30,
	2003						2002
	AVERAGE BALANCE		INTEREST		AVERAGE YIELD/ COST		AVERAGE BALANCE		INTEREST		AVERAGE YIELD/ COST
	(Dollars in thousands)
Assets
Interest-earnings assets:
Interest-earning deposits and short term investments	$	13,096	$	108	1.10	%	$	11,968	$	149	1.66	%
Investment securities		89,705		1,884	2.80			86,241		2,414	3.73
FHLB stock		19,324		750	5.17			21,022		710	4.50
Mortgage-backed securities		124,045		3,641	3.91			188,007		8,058	5.71
Loans receivable, net (1)		1,414,011		66,058	6.23			1,335,701		71,222	7.11

Total interest-earning assets		1,660,181		72,441	5.82			1,642,939		82,553	6.70

Non-interest earning assets		88,129						84,694

Total assets	$	1,748,310					$	1,727,633

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Transaction deposits	$	645,383		3,825	.79		$	554,739		6,493	1.56
Time deposits		430,194		9,732	3.02			511,818		14,933	3.89

Total		1,075,577		13,557	1.68			1,066,557		21,426	2.68
Borrowed funds		421,149		14,801	4.69			426,037		15,225	4.76

Total interest-bearing liabilities		1,496,726		28,358	2.53			1,492,594		36,651	3.27

Non-interest-bearing deposits		100,162						78,442
Non-interest-bearing liabilities		16,917						14,232

Total liabilities		1,613,805						1,585,268
Stockholders’ equity		134,505						142,365

Total liabilities and stockholders’ equity	$	1,748,310					$	1,727,633

Net interest income			$	44,083					$	45,902

Net interest rate spread (2)					3.29	%					3.43	%

Net interest margin (3)					3.54	%					3.73	%

At September 30, 2003	3 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: (1)
Interest-earning deposits and short- term investments	$	8,705		$	—		$	—		$	—		$	—		$	8,705
Investment securities		76,543			—			—			—			10,395			86,938
FHLB stock		—			—			—			—			19,950			19,950
Mortgage-backed securities		9,447			23,713			30,011			35,678			3,060			101,909
Loans receivable (2)		264,861			280,095			467,810			277,176			152,459			1,442,401

Total interest-earning assets		359,556			303,808			497,821			312,854			185,864			1,659,903

Interest-bearing liabilities:
Money market deposit accounts		7,113			19,211			38,529			73,022			—			137,875
Savings accounts		13,710			37,031			74,268			140,704			—			265,713
NOW accounts		13,110			35,411			71,018			134,596			—			254,135
Time deposits		70,729			202,013			75,514			30,972			19,186			398,414
FHLB advances		38,500			40,000			123,000			52,000			30,000			283,500
Securities sold under agreements to repurchase		52,242			30,000			20,000			30,000			20,000			152,242

Total interest-bearing liabilities		195,404			363,666			402,329			461,294			69,186			1,491,879

Interest sensitivity gap (3)	$	164,152		$	(59,858	)	$	95,492		$	(148,440	)	$	116,678		$	168,024

Cumulative interest sensitivity gap	$	164,152		$	104,294		$	199,786		$	51,346		$	168,024		$	168,024

Cumulative interest sensitivity gap as a percent of total interest-earning assets		9.89	%		6.28	%		12.04	%		3.09	%		10.12	%		10.12	%

At March 31, 2003 (dollars in thousands)	3 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

Interest-earning assets: ⁽¹⁾
Interest-earning deposits and short- term investments	$	15,637		$	—		$	—		$	—		$	—		$	15,637
Investment securities		75,300			1,200			—			—			10,394			86,894
FHLB stock		—			—			—			—			19,850			19,850
Mortgage-backed securities		21,378			48,059			47,998			15,279			8,289			141,003
Loans receivable ⁽²⁾		246,224			256,682			435,124			275,378			188,130			1,401,538

Total interest-earning assets		358,539			305,941			483,122			290,657			226,663			1,664,922

Interest-bearing liabilities:
Money market deposit accounts		6,566			17,734			35,568			67,412			—			127,280
Savings accounts		12,640			34,141			68,473			129,775			—			245,029
NOW accounts		12,769			34,489			69,172			131,099			—			247,529
Time deposits		107,314			167,598			117,627			31,665			15,561			439,765
FHLB advances		14,500			68,000			90,000			77,000			20,000			269,500
Securities sold under agreements to repurchase		52,870			—			55,000			25,000			35,000			167,870

Total interest-bearing liabilities		206,659			321,962			435,840			461,951			70,561			1,496,973

Interest sensitivity gap ⁽³⁾	$	151,880		$	(16,021	)	$	47,282		$	(171,294	)	$	156,102		$	167,949

Cumulative interest sensitivity gap	$	151,880		$	135,859		$	183,141		$	11,847		$	167,949		$	167,949

Cumulative interest sensitivity gap as a percent of total interest- earning assets		9.12	%		8.16	%		11.00	%		0.71	%		10.09	%		10.09	%

	March 31, 2003													December 31, 2002

	Net Portfolio Value								Net Interest Income					Net Portfolio Value								Net Interest Income

Change in Interest Rates in Basis Points (Rate Shock)	Amount		% Change			NPV Ratio			Amount		% Change			Amount		% Change			NPV Ratio			Amount		% Change

(dollars in thousands)
200	$	162,964		(6.7	)%		9.5	%	$	60,577		1.7	%	$	151,546		(7.1	)%		8.9	%	$	60,492		2.1	%
100		175,052		0.2			10.0			60,441		1.5			163,725		0.4			9.4			60,234		1.7
Static		174,758		—			9.8			59,553		—			163,127		—			9.2			59,230		—
(100)		161,759		(7.4	)		9.0			56,769		(4.7	)		150,429		(7.8	)		8.4			56,527		(4.6	)

	September 30, 2003										December 31, 2002
	Net Portfolio Value						Net Interest Income				Net Portfolio Value						Net Interest Income
Change in Interest Rates in Basis Points (Rate Shock)	Amount		% Change		NPV Ratio		Amount		% Change		Amount		% Change		NPV Ratio		Amount		% Change
(dollars in thousands)
200	$	139,170	(12.0	)%	8.2	%	$	57,892	1.2	%	$	151,546	(7.1	)%	8.9	%	$	60,492	2.1	%
100		157,785	(0.2	)	9.1			58,054	1.5			163,725	0.4		9.4			60,234	1.7
Static		158,073	—		8.9			57,222	—			163,127	—		9.2			59,230	—
(100)		148,317	(6.2	)	8.3			54,377	(5.0	)		150,429	(7.8	)	8.4			56,527	(4.6	)

		The Company is not engaged in any legal proceedings of a material nature at the present time. From time to time, the Company is a party to routine legal proceedings within the normal 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 2.		Changes in Securities and Use of Proceeds

		~~Not Applicable~~

Item 4.		Submission of Matters to a Vote of Security Holders

Proposal		For		Against		Withheld/ Abstain		Broker Non-Votes

1)	Election of Directors
	John W. Chadwick		10,543,644		—		451,542		—
	Carl Feltz, Jr.		10,540,160		—		455,022		—
	Diane F. Rhine		10,541,597		—		453,585		—
2)	Amendment of the OceanFirst Financial Corp. 2000 Stock Option Plan		6,814,253		2,570,788		39,587		1,570,554
3)	Ratification of the appointment of KPMG LLP as independent auditors of the Company for the fiscal year ending December 31, 2003.		10,991,371		71,891		11,920		—

*		~~99.1~~	~~CEO Certification pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002.~~

		~~99.2~~	~~CFO Certification pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002.~~

	b)		~~There were no reports on Form 8-K filed during the three months ended March 31, 2003.~~

*	Incorporated herein by reference into this document from the Exhibits to Form S-1, Registration Statement, effective May 13, 1996, as amended, Registration No. 33-80123.

		O~~CEAN~~F~~IRST~~ F~~INANCIAL~~ C~~ORP~~.OceanFirst Financial Corp.	Registrant

	~~Registrant~~

DATE: ~~May~~November 13, 2003		/s/ J~~OHN~~ ~~R. GARBARINO~~

	John R. Garbarino
		John R. Garbarino Chairman of the Board, President and Chief Executive Officer

DATE: ~~May~~November 13, 2003		/s/ M~~ICHAEL~~ F~~ITZPATRICK~~Michael Fitzpatrick

	Michael Fitzpatrick Executive Vice President and Chief Financial Officer

~~I, John R. Garbarino, certify, that:~~

	1.	~~I have reviewed this quarterly report on Form 10-Q of OceanFirst Financial Corp.;~~

	2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

	3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

	4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

		a.		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

		b.		~~evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and~~

		c.		~~presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;~~

	5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

		a.	all significant deficiencies in the design or operation of the internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

		b.	~~any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~

	6.	The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect the internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

~~I, Michael J. Fitzpatrick, certify, that:~~

	1.	~~I have reviewed this quarterly report on Form 10-Q of OceanFirst Financial Corp.;~~

	2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

	3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

	4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

			a.	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

			b.	~~evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and~~

			c.	~~presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;~~

	5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

			a.	all significant deficiencies in the design or operation of the internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

			b.	~~any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and~~

	6.	The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect the internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

~~Date: May 13, 2003~~		~~/s/ MICHAEL~~ F~~ITZPATRICK~~

		~~Michael Fitzpatrick~~ ~~Chief Financial Officer~~ ~~(principal financial officer)~~