Exhibit 99.1
Company Contact:
Michael J. Fitzpatrick
Chief Financial Officer
OceanFirst Financial Corp.
Tel: (732) 240-4500, ext. 7506
Email: Mfitzpatrick@oceanfirst.com
FOR IMMEDIATE RELEASE
OCEANFIRST FINANCIAL CORP.
ANNOUNCES THIRD QUARTER
FINANCIAL RESULTS
RED BANK, NEW JERSEY, October 28, 2021 - OceanFirst Financial Corp. (NASDAQ:“OCFC”), (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), announced net income available to common stockholders of $23.2 million, or $0.39 per diluted share, for the three months ended September 30, 2021 as compared to net loss available to common stockholders of $6.0 million, or $0.10 per diluted share, for the corresponding prior year period. For the nine months ended September 30, 2021, the Company reported net income available to common stockholders of $84.4 million, or $1.41 per diluted share, as compared to $29.2 million, or $0.49 per diluted share, for the corresponding prior year period. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information regarding the metrics):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended, | | For the Nine Months Ended, |
| Performance Ratios (Annualized): | September 30, | | June 30, | | September 30, | | September 30, | | September 30, |
| 2021 | | 2021 | | 2020 | | 2021 | | 2020 |
| Return on average assets | 0.78 | % | | 1.03 | % | | (0.21) | % | | 0.98 | % | | 0.35 | % |
| Return on average stockholders’ equity | 6.05 | | | 7.88 | | | (1.61) | | | 7.49 | | | 2.68 | |
Return on average tangible stockholders’ equity (a) | 9.20 | | | 12.07 | | | (2.51) | | | 11.46 | | | 4.22 | |
| Efficiency ratio | 67.43 | | | 60.21 | | | 66.83 | | | 60.62 | | | 65.39 | |
| Net interest margin | 2.93 | | | 2.89 | | | 2.97 | | | 2.91 | | | 3.23 | |
(a) Return on average tangible stockholders’ equity, a non-GAAP (“generally accepted accounting principles”) measure, excludes the impact of intangible assets and goodwill from both assets and stockholders’ equity. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding our non-GAAP measures and impact per period.
Core earnings1 for the three and nine months ended September 30, 2021 amounted to $26.7 million and $82.7 million, respectively, or $0.45 and $1.38 per diluted share, respectively. Non-core operations had an adverse impact, net of tax, of $3.6 million for the three months ended September 30, 2021 and a favorable impact, net of tax, of $1.7 million for the nine months ended September 30, 2021, respectively.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended, | | For the Nine Months Ended, |
| September 30, | | June 30, | | September 30, | | September 30, | | September 30, |
Core Ratios1 (Annualized): | 2021 | | 2021 | | 2020 | | 2021 | | 2020 |
| Return on average assets | 0.90 | % | | 1.02 | % | | (0.01) | % | | 0.95 | % | | 0.59 | % |
| Return on average tangible stockholders’ equity | 10.62 | | | 12.04 | | | (0.11) | | | 11.23 | | | 7.10 | |
| Efficiency ratio | 62.22 | | | 60.06 | | | 59.63 | | | 60.23 | | | 57.95 | |
Key developments for the recent quarter are described below:
•Loan Growth: Total loan growth for the quarter was $361.0 million. Total loan growth, excluding the impact of Paycheck Protection Program (“PPP”) loans of $30.5 million, was $391.5 million for the quarter, reflecting quarterly loan originations of $771.8 million and the purchase of a residential loan pool of $219.7 million. Along with record loan production during the quarter, the committed loan pipeline remains strong at $651.4 million.
•Deposit Growth: Deposits increased $358.8 million during the third quarter, while cost of deposits decreased 5 basis points to 0.22% from 0.27% in the prior linked quarter, reflecting a trend in improving deposit quality.
1 Core earnings, a non-GAAP measure, and ratios derived from core earnings, for the periods presented, excludes merger related expenses, branch consolidation expenses, net loss (gain) on equity investments, Federal Home Loan Bank (“FHLB”) advance prepayment fees, gain on sale of PPP loans, the opening credit loss expense under the Current Expected Credit Loss (“CECL”) model related to the acquisitions of Two River Bancorp (“Two River”) and Country Bank Holding Company, Inc. (“Country Bank”) and the income tax effect of these items, (collectively referred to as “non-core” operations). Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding our non-GAAP measures and impact per period.
•Net Interest Income and Margin: Net interest income increased by $3.1 million to $77.1 million from $74.0 million in the prior linked quarter. Net interest margin increased to 2.93%, compared to 2.89% in the prior linked quarter, largely driven by the Bank’s disciplined deposit pricing practices.
Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased to report strong loan originations of $771.8 million along with a record loan pipeline of $651.4 million, reflecting the momentum from our expanding commercial banking team.” Mr. Maher added, “During the quarter, the system integration of our New York Region was completed, which included the customers acquired from Country Bank last year. With this latest system conversion, all OceanFirst customers are able to take advantage of our accounts and services across all channels providing seamless and fully integrated operations.”
The Company’s Board of Directors declared its ninety-ninth consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.17 per share, will be paid on November 19, 2021 to common stockholders of record on November 8, 2021. The Board previously declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock. This dividend will be paid on November 15, 2021 to preferred stockholders of record on October 29, 2021.
As previously announced on August 4, 2021, the Bank entered into a definitive agreement to sell two New Jersey branch locations to First Bank, including the owned premises and equipment, all deposits associated with the branches, which totaled approximately $124 million as of June 30, 2021, as well as selected performing loans totaling approximately $14 million as of June 30, 2021. The Bank has received the required regulatory approval and the closing of the sale and customer conversion is expected to take place in early December.
Results of Operations
Net income for the three months ended September 30, 2021 and net loss for the three months ended September 30, 2020 were adversely impacted by non-core operations of $3.6 million, net of tax, and $5.8 million, net of tax, respectively. Net income was favorably impacted by $1.7 million, net of tax, and adversely impacted by $19.9 million, net of tax, of non-core operations for the nine months ended September 30, 2021 and 2020, respectively. Core earnings for the three months ended September 30, 2021 were $26.7 million, or $0.45 per diluted share, an increase from core losses of $266,000, or $0.00 per diluted share, for the corresponding prior year period. Core earnings for the nine months ended September 30, 2021 were $82.7 million, or $1.38 per diluted share, an increase from core earnings of $49.0 million, or $0.82 per diluted share, for the corresponding prior year period. Net income was favorably impacted by $78,000, net of tax, of non-core operations for the prior linked quarter. Core earnings for the three months ended September 30, 2021 decreased from $29.5 million, or $0.49 per diluted share, for the prior linked quarter.
Net Interest Income and Margin
Net interest income for the three months ended September 30, 2021, increased to $77.1 million, as compared to $76.8 million for the corresponding prior year period. Net interest income for the nine months ended September 30, 2021 decreased to $224.8 million as compared to $235.1 million for the corresponding prior year period, as a result of the lower interest rate environment. Average interest-earning assets increased by $192.3 million and $590.4 million for the three and nine months ended September 30, 2021, respectively, as compared to the same prior year periods, primarily concentrated in excess balance sheet liquidity. Average loans receivable, net of allowance for loan credit losses, decreased by $486.1 million and $371.4 million for the three and nine months ended September 30, 2021, respectively, as compared to the same prior year periods, primarily due to reductions in PPP loans. Net interest margin for the three and nine months ended September 30, 2021 decreased to 2.93% and 2.91%, respectively, from 2.97% and 3.23%, respectively, for the same prior year periods. The net
interest margin compression was primarily due to the excess balance sheet liquidity and the lower interest rate environment. For the three and nine months ended September 30, 2021, the cost of average interest-bearing liabilities decreased to 0.44% and 0.52%, respectively, from 0.83% and 0.93%, respectively, for the corresponding prior year periods. The total cost of deposits (including non-interest bearing deposits) was 0.22% and 0.28% for the three and nine months ended September 30, 2021, respectively, as compared to 0.49% and 0.58%, respectively, for the same prior year periods.
Net interest income for the three months ended September 30, 2021 increased by $3.1 million, as compared to the prior linked quarter, and net interest margin increased to 2.93%, compared to 2.89% for the prior linked quarter. Excluding the impact of purchase accounting accretion and prepayment fees, of 0.18% and 0.16% for the three months ended September 30, 2021 and June 30, 2021, respectively, net interest margin increased to 2.75% from 2.73%. The yield on average interest-earning assets decreased marginally to 3.24% from 3.25% in the prior linked quarter. The total cost of average interest-bearing liabilities was 0.44% for the three months ended September 30, 2021, as compared to 0.50% in the prior linked quarter, due to repricing of deposit costs and maturities of higher-yielding time deposits.
Benefit/Provision for Credit Losses
For the three and nine months ended September 30, 2021, the credit loss benefit was $3.2 million and $10.3 million, respectively, as compared to credit loss expense of $35.7 million and $55.3 million, respectively, for the corresponding prior year periods, and a credit loss benefit of $6.5 million in the prior linked quarter. The credit loss benefit for the three and nine months ended September 30, 2021 was significantly influenced by positive trends in the Bank’s asset quality combined with stabilizing trends in economic forecasts, including strong employment levels and GDP growth, partly offset by the economic uncertainty related to supply chain and labor market constraints.
Net loan recoveries were $386,000 and $442,000 for the three and nine months ended September 30, 2021, respectively, as compared to net loan charge-offs of $15.0 million and $15.9 million for the corresponding prior year periods, respectively, and net loan charge-offs of $224,000 in the prior linked quarter. The three months ended September 30, 2020 included $14.2 million in charge-offs related to the transfer of higher-risk commercial loans to held-for-sale, which were ultimately sold in the fourth quarter of 2020. Non-performing loans held-for-investment totaled $23.3 million at September 30, 2021, as compared to $31.7 million at June 30, 2021 and $29.9 million at September 30, 2020.
Non-interest Income
For the three and nine months ended September 30, 2021, other income increased to $9.9 million and $42.5 million, respectively, as compared to $8.2 million and $33.3 million, respectively, for the corresponding prior year periods. Other income for the three and nine months ended September 30, 2021 included non-core operations of $466,000 related to net losses on equity investments and $8.4 million related to net gains on equity investments, respectively. Other income for both the three and nine months ended September 30, 2020 included $3.6 million of net losses on equity investments. Excluding non-core operations, the decrease in other income for the three months ended September 30, 2021, as compared to the corresponding prior year period, was primarily due to decreases in gain on sale of loans of $1.0 million and fees and service charges of $759,000.
Excluding non-core operations, the decrease in other income for the nine months ended September 30, 2021, as compared to the corresponding prior year period, was primarily due to decreases in commercial loan swap income of $5.2 million, as a result of lower activity, and lower fees and service charges of $1.3 million, partially offset by increases in bankcard services of $1.7 million, due to lower card activity in the prior year period as a result of the pandemic, gain on sale of loans of $1.3 million, and PPP loan referral fees of $800,000.
Excluding non-core operations, other income for the three months ended September 30, 2021 decreased $878,000, as compared to the prior linked quarter, primarily due to decreases in gain on sale of loans of $1.3 million and lower fees and service charges of $836,000, partially offset by an increase in commercial loan swap income of $1.5 million, as a result of higher activity.
Non-interest Expense
Operating expenses increased to $58.7 million and decreased to $162.0 million for the three and nine months ended September 30, 2021, respectively, as compared to $56.8 million and $175.5 million, respectively, in the same prior year periods. Operating expenses for the three and nine months ended September 30, 2021 included $4.2 million and $6.1 million, respectively, of net expenses related to non-core operations. Operating expenses for the three and nine months ended September 30, 2020 included $4.0 million and $20.0 million, respectively, of net expenses related to non-core operations. Excluding non-core operations, the $1.6 million increase in operating expenses for the three months ended September 30, 2021, as compared to the corresponding prior year period, was primarily due to increases in compensation and benefits expense of $1.7 million and data processing expense of $846,000, partly offset by a decrease in equipment expense of $782,000.
Excluding non-core operations, the $372,000 increase in operating expenses for the nine months ended September 30, 2021, as compared to the corresponding prior year period, was primarily due to increases in compensation and benefits expense of $2.2 million, primarily related to higher benefit costs, federal deposit insurance and regulatory assessments of $1.4 million, and data processing expense of $953,000, partly offset by decreases in equipment expense of $1.8 million, marketing expense of $930,000, other operating expense of $469,000, and occupancy expense of $434,000.
Excluding non-core operations, operating expenses for the quarter ended September 30, 2021, increased $3.2 million, as compared to the prior linked quarter. The change was due to increases in data processing expense of $961,000, compensation and benefits expense of $818,000, professional fees of $698,000, and federal deposit insurance and regulatory assessments of $360,000.
Income Tax Expense/Benefit
The provision for income taxes was $7.4 million and $28.1 million for the three and nine months ended September 30, 2021, respectively, as compared to a benefit for income taxes of $2.6 million and provision for income taxes of $7.3 million for the same prior year periods, respectively, and provision for income taxes of $10.1 million for the prior linked quarter. The effective tax rate was 23.3% and 24.3% for the three and nine months ended September 30, 2021, respectively, as compared to 34.6% and 19.5% for the same prior year periods, respectively, and 24.8% for the prior linked quarter. The higher effective tax rate for the three months ended September 30, 2020 was primarily attributable to the net loss recognized during the quarter. The higher effective tax rate for the nine months ended September 30, 2021, as compared to the prior year period, was primarily due to the impact of a New Jersey tax code change and a higher allocation of taxable income to New York.
Financial Condition
Total assets increased by $381.4 million to $11.83 billion at September 30, 2021, from $11.45 billion at December 31, 2020. Cash and due from banks decreased $291.0 million, to $981.1 million at September 30, 2021, from $1.27 billion at December 31, 2020 as excess liquidity was primarily used to purchase securities and fund loan growth. Total debt securities increased by $319.4 million at September 30, 2021, as compared to December 31, 2020. Total loans, excluding PPP loans of $52.5 million and $95.4 million at September 30, 2021 and December 31, 2020, respectively, increased by $468.6 million, to $8.13 billion at September 30, 2021, from $7.66 billion at December 31, 2020.
Deposits increased by $346.5 million to $9.77 billion at September 30, 2021, from $9.43 billion at December 31, 2020. Excluding time deposits of $855.4 million at September 30, 2021 and $1.37 billion at December 31, 2020, total deposits increased by $863.8 million to $8.92 billion at September 30, 2021 from $8.05 billion at December 31, 2020. The loans-to-deposit ratio at September 30, 2021 was 83.7%, as compared to 82.3% at December 31, 2020.
Stockholders’ equity increased to $1.51 billion at September 30, 2021, as compared to $1.48 billion at December 31, 2020. On June 25, 2021, the Company announced the authorization of the Board of Directors of the 2021 Stock Repurchase Program to repurchase up to an additional 3.0 million shares, which is approximately 5% of the Company’s outstanding common stock. For the nine months ended September 30, 2021, the Company repurchased 1,460,009 shares under its stock repurchase program at a weighted average cost of $20.98, and there were 3,559,136 shares available for repurchase at September 30, 2021 under the existing repurchase programs. Stockholders’ equity per common share increased to $25.47 at September 30, 2021, as compared to $24.57 at December 31, 2020. Tangible common equity per common share increased to $15.78 at September 30, 2021, as compared to $14.98 at December 31, 2020.
Asset Quality
The Company’s non-performing loans decreased to $23.3 million at September 30, 2021, as compared to $36.4 million at December 31, 2020. Non-performing loans at September 30, 2021 do not include $41.4 million of purchased with credit deterioration (“PCD”) loans from prior bank acquisitions. The allowance for loan credit losses as a percentage of non-performing loans was 214.8% at September 30, 2021, as compared to 166.8% at December 31, 2020. The Company’s level of 30 to 89 days delinquent loans, excluding non-performing and PCD loans, improved to $6.6 million at September 30, 2021, from $34.7 million at December 31, 2020.
The Company’s allowance for loan credit losses was 0.61% of total loans at September 30, 2021, as compared to 0.78% at December 31, 2020. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $71.5 million, or 0.87% of total loans, at September 30, 2021.
Explanation of Non-GAAP Financial Measures
Reported amounts are presented in accordance with GAAP. The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding non-core operations and reporting equity and asset amounts excluding intangible assets and goodwill, which can vary from period to period, provides a better comparison of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.
Conference Call
As previously announced, the Company will host an earnings conference call on Friday, October 29, 2021 at 11:00 a.m. Eastern Time. The direct dial number for the call is (844) 200-6205, using the access code 946108. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (866) 813-9403, access code 327620, from one hour after the end of the call until January 27, 2022. The conference call, as well as the replay, are also available (listen-only) by internet webcast at www.oceanfirst.com in the Investor Relations section.
* * *
OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank N.A., founded in 1902, is a $11.8 billion regional bank providing financial services throughout New Jersey and in the major metropolitan markets of Philadelphia, New York, Baltimore, Washington D.C. and Boston. OceanFirst Bank delivers commercial and residential financing, treasury management, trust and asset management, and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey. To learn more about OceanFirst, go to www.oceanfirst.com.
Forward-Looking Statements
In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: the impact of the COVID-19 or any other pandemic on our operations and financial results and those of our customers, changes in interest rates, general economic conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters and increases to flood insurance premiums, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area, accounting principles and guidelines and the Bank’s ability to successfully integrate acquired operations. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, under Item 1A - Risk Factors and elsewhere, and subsequent securities filings and should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, | | June 30, | | December 31, | | September 30, |
| | 2021 | | 2021 | | 2020 | | 2020 |
| | (Unaudited) | | (Unaudited) | | | | (Unaudited) |
| Assets | | | | | | | | |
| Cash and due from banks | | $ | 981,126 | | | $ | 1,084,029 | | | $ | 1,272,134 | | | $ | 980,870 | |
| | | | | | | | |
| Debt securities available-for-sale, at estimated fair value | | 314,620 | | | 249,330 | | | 183,302 | | | 169,634 | |
| Debt securities held-to-maturity, net of allowance for securities credit losses of $1,503 at September 30, 2021, $1,609 at June 30, 2021, $1,715 at December 31, 2020 and $2,393 at September 30, 2020 (estimated fair value of $1,143,381 at September 30, 2021, $1,169,123 at June 30, 2021, $968,466 at December 31, 2020 and $902,418 at September 30, 2020) | | 1,125,382 | | | 1,146,735 | | | 937,253 | | | 871,688 | |
| Equity investments | | 101,314 | | | 90,917 | | | 107,079 | | | 63,846 | |
| Restricted equity investments, at cost | | 53,017 | | | 52,519 | | | 51,705 | | | 67,505 | |
| Loans receivable, net of allowance for loan credit losses of $50,153 at September 30, 2021, $53,876 at June 30, 2021, $60,735 at December 31, 2020 and $56,350 at September 30, 2020 | | 8,139,961 | | | 7,774,351 | | | 7,704,857 | | | 7,943,390 | |
| Loans held-for-sale | | 13,428 | | | 1,493 | | | 45,524 | | | 388,763 | |
| Interest and dividends receivable | | 32,512 | | | 28,014 | | | 35,269 | | | 40,671 | |
| Other real estate owned | | 106 | | | 106 | | | 106 | | | 106 | |
| Premises and equipment, net | | 123,669 | | | 117,509 | | | 107,094 | | | 103,249 | |
| | | | | | | | |
| Bank owned life insurance | | 260,072 | | | 259,608 | | | 265,253 | | | 264,167 | |
| | | | | | | | |
| Assets held for sale | | 4,613 | | | 4,032 | | | 5,782 | | | 6,717 | |
| Goodwill | | 500,319 | | | 500,319 | | | 500,319 | | | 500,849 | |
| Core deposit intangible | | 19,558 | | | 20,912 | | | 23,668 | | | 25,194 | |
| Other assets | | 159,991 | | | 154,027 | | | 208,968 | | | 224,648 | |
| Total assets | | $ | 11,829,688 | | | $ | 11,483,901 | | | $ | 11,448,313 | | | $ | 11,651,297 | |
| Liabilities and Stockholders’ Equity | | | | | | | | |
| Deposits | | $ | 9,774,097 | | | $ | 9,415,286 | | | $ | 9,427,616 | | | $ | 9,283,288 | |
| Federal Home Loan Bank advances | | — | | | — | | | — | | | 343,452 | |
| Securities sold under agreements to repurchase with retail customers | | 143,292 | | | 141,475 | | | 128,454 | | | 142,823 | |
| Other borrowings | | 228,887 | | | 228,564 | | | 235,471 | | | 246,941 | |
| Advances by borrowers for taxes and insurance | | 22,214 | | | 21,281 | | | 17,296 | | | 20,104 | |
| Other liabilities | | 147,949 | | | 168,506 | | | 155,346 | | | 152,975 | |
| Total liabilities | | 10,316,439 | | | 9,975,112 | | | 9,964,183 | | | 10,189,583 | |
| Total stockholders’ equity | | 1,513,249 | | | 1,508,789 | | | 1,484,130 | | | 1,461,714 | |
| Total liabilities and stockholders’ equity | | $ | 11,829,688 | | | $ | 11,483,901 | | | $ | 11,448,313 | | | $ | 11,651,297 | |
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended, | | For the Nine Months Ended, |
| | September 30, | | June 30, | | September 30, | | September 30, | | September 30, |
| | 2021 | | 2021 | | 2020 | | 2021 | | 2020 |
| | |---------------------- (Unaudited) ----------------------| | | |---------- (Unaudited) -----------| |
| Interest income: | | | | | | | | | | |
| Loans | | $ | 78,889 | | | $ | 77,048 | | | $ | 85,933 | | | $ | 233,845 | | | $ | 264,224 | |
| Debt securities | | 5,040 | | | 5,984 | | | 5,596 | | | 16,379 | | | 18,577 | |
| Equity investments and other | | 1,491 | | | 309 | | | 1,433 | | | 3,411 | | | 4,245 | |
| Total interest income | | 85,420 | | | 83,341 | | | 92,962 | | | 253,635 | | | 287,046 | |
| Interest expense: | | | | | | | | | | |
| Deposits | | 5,379 | | | 6,325 | | | 11,370 | | | 20,200 | | | 37,611 | |
| Borrowed funds | | 2,909 | | | 3,000 | | | 4,804 | | | 8,683 | | | 14,335 | |
| Total interest expense | | 8,288 | | | 9,325 | | | 16,174 | | | 28,883 | | | 51,946 | |
| Net interest income | | 77,132 | | | 74,016 | | | 76,788 | | | 224,752 | | | 235,100 | |
| Credit loss (benefit) expense | | (3,179) | | | (6,460) | | | 35,714 | | | (10,259) | | | 55,332 | |
| Net interest income after credit loss (benefit) expense | | 80,311 | | | 80,476 | | | 41,074 | | | 235,011 | | | 179,768 | |
| Other income: | | | | | | | | | | |
| Bankcard services revenue | | 3,409 | | | 3,591 | | | 3,097 | | | 10,052 | | | 8,319 | |
| Trust and asset management revenue | | 584 | | | 591 | | | 490 | | | 1,774 | | | 1,560 | |
| Fees and service charges | | 2,973 | | | 3,809 | | | 3,732 | | | 10,519 | | | 11,858 | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Net (loss) gain on sales of loans | | (15) | | | 1,279 | | | 1,001 | | | 3,180 | | | 1,930 | |
| Net (loss) gain on equity investments | | (466) | | | 576 | | | (3,576) | | | 8,397 | | | (3,273) | |
| Net (loss) gain from other real estate operations | | (3) | | | (1) | | | 214 | | | (12) | | | 12 | |
| Income from bank owned life insurance | | 1,640 | | | 1,716 | | | 1,530 | | | 4,771 | | | 4,626 | |
| Commercial loan swap income | | 1,588 | | | 73 | | | 1,425 | | | 2,772 | | | 7,964 | |
| Other | | 173 | | | 169 | | | 266 | | | 1,068 | | | 310 | |
| Total other income | | 9,883 | | | 11,803 | | | 8,179 | | | 42,521 | | | 33,306 | |
| Operating expenses: | | | | | | | | | | |
| Compensation and employee benefits | | 30,730 | | | 29,912 | | | 29,012 | | | 89,008 | | | 86,832 | |
| Occupancy | | 5,005 | | | 5,314 | | | 5,270 | | | 15,380 | | | 15,814 | |
| Equipment | | 1,124 | | | 1,306 | | | 1,906 | | | 4,008 | | | 5,831 | |
| Marketing | | 496 | | | 625 | | | 963 | | | 1,555 | | | 2,485 | |
| Federal deposit insurance and regulatory assessments | | 1,459 | | | 1,099 | | | 1,212 | | | 4,422 | | | 3,012 | |
| Data processing | | 5,363 | | | 4,402 | | | 4,517 | | | 13,796 | | | 12,843 | |
| Check card processing | | 1,337 | | | 1,303 | | | 1,385 | | | 4,012 | | | 3,951 | |
| Professional fees | | 3,089 | | | 2,391 | | | 3,354 | | | 8,317 | | | 8,339 | |
| Other operating expense | | 4,477 | | | 3,485 | | | 3,644 | | | 11,315 | | | 11,784 | |
| FHLB advance prepayment fees | | — | | | — | | | — | | | — | | | 924 | |
| Amortization of core deposit intangible | | 1,354 | | | 1,361 | | | 1,538 | | | 4,110 | | | 4,660 | |
| Branch consolidation expense | | 4,014 | | | 26 | | | 830 | | | 5,051 | | | 4,287 | |
| Merger related expenses | | 225 | | | 446 | | | 3,156 | | | 1,052 | | | 14,753 | |
| Total operating expenses | | 58,673 | | | 51,670 | | | 56,787 | | | 162,026 | | | 175,515 | |
| Income (loss) before provision (benefit) for income taxes | | 31,521 | | | 40,609 | | | (7,534) | | | 115,506 | | | 37,559 | |
| Provision (benefit) for income taxes | | 7,354 | | | 10,054 | | | (2,608) | | | 28,087 | | | 7,314 | |
| Net income (loss) | | 24,167 | | | 30,555 | | | (4,926) | | | 87,419 | | | 30,245 | |
| Dividends on preferred shares | | 1,004 | | | 1,004 | | | 1,093 | | | 3,012 | | | 1,093 | |
| Net income (loss) available to common stockholders | | $ | 23,163 | | | $ | 29,551 | | | $ | (6,019) | | | $ | 84,407 | | | $ | 29,152 | |
| Basic earnings (loss) per share | | $ | 0.40 | | | $ | 0.49 | | | $ | (0.10) | | | $ | 1.42 | | | $ | 0.49 | |
| Diluted earnings (loss) per share | | $ | 0.39 | | | $ | 0.49 | | | $ | (0.10) | | | $ | 1.41 | | | $ | 0.49 | |
| Average basic shares outstanding | | 59,311 | | | 59,701 | | | 59,935 | | | 59,619 | | | 59,901 | |
| Average diluted shares outstanding | | 59,515 | | | 59,966 | | | 59,935 | | | 59,862 | | | 60,076 | |
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| LOANS RECEIVABLE | | | At |
| | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | | 2021 | | 2021 | | 2021 | | 2020 | | 2020 |
| Commercial: | | | | | | | | | | | |
| Commercial and industrial | | | $ | 457,674 | | | $ | 474,919 | | | $ | 498,245 | | | $ | 470,656 | | | $ | 599,188 | |
| Commercial real estate - owner-occupied | | 1,123,973 | | | 1,045,514 | | | 1,066,351 | | | 1,145,065 | | | 1,176,529 | |
| Commercial real estate - investor | | 3,922,983 | | | 3,836,230 | | | 3,804,351 | | | 3,491,464 | | | 3,453,276 | |
| Total commercial | | | 5,504,630 | | | 5,356,663 | | | 5,368,947 | | | 5,107,185 | | | 5,228,993 | |
| Consumer: | | | | | | | | | | | |
| Residential real estate | | | 2,401,240 | | | 2,168,545 | | | 2,189,348 | | | 2,309,459 | | | 2,407,178 | |
| | | | | | | | | | | |
| Home equity loans and lines and other consumer | | 275,962 | | | 295,582 | | | 314,242 | | | 339,462 | | | 364,807 | |
| | | | | | | | | | | |
| Total consumer | | | 2,677,202 | | | 2,464,127 | | | 2,503,590 | | | 2,648,921 | | | 2,771,985 | |
| Total loans | | | 8,181,832 | | | 7,820,790 | | | 7,872,537 | | | 7,756,106 | | | 8,000,978 | |
| | | | | | | | | | | |
| Deferred origination costs (fees), net | | 8,282 | | | 7,437 | | | 8,029 | | | 9,486 | | | (1,238) | |
| Allowance for loan credit losses | | | (50,153) | | | (53,876) | | | (59,976) | | | (60,735) | | | (56,350) | |
| Loans receivable, net | | | $ | 8,139,961 | | | $ | 7,774,351 | | | $ | 7,820,590 | | | $ | 7,704,857 | | | $ | 7,943,390 | |
| Mortgage loans serviced for others | | $ | 64,840 | | | $ | 68,778 | | | $ | 74,037 | | | $ | 95,789 | | | $ | 88,210 | |
| At September 30, 2021 Average Yield | | | | | | | | | | |
Loan pipeline (1): | | | | | | | | | | | |
| Commercial | 3.69 | % | | $ | 482,942 | | | $ | 463,388 | | | $ | 154,946 | | | $ | 210,024 | | | $ | 154,700 | |
| Residential real estate | 3.08 | | | 160,070 | | | 153,798 | | | 178,352 | | | 151,152 | | | 212,107 | |
| Home equity loans and lines | 4.13 | | | 8,420 | | | 11,369 | | | 11,031 | | | 6,630 | | | 10,301 | |
| Total | 3.55 | % | | $ | 651,432 | | | $ | 628,555 | | | $ | 344,329 | | | $ | 367,806 | | | $ | 377,108 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended | |
| September 30, | | June 30, | | March 31, | | December 31, | | September 30, | |
| 2021 | | 2021 | | 2021 | | 2020 | | 2020 | |
| Average Yield | | | | | | | | | | | |
| Loan originations: | | | | | | | | | | | | |
| Commercial | 3.12 | % | | $ | 585,667 | | | $ | 259,163 | | (2) | $ | 547,591 | | (2) | $ | 173,715 | | | $ | 187,747 | | |
| Residential real estate | 3.04 | | | 174,365 | | (3) | 173,354 | | | 189,942 | | | 222,780 | | | 219,325 | | |
| Home equity loans and lines | 4.13 | | | 11,782 | | | 14,870 | | | 10,278 | | | 13,435 | | | 10,966 | | |
| Total | 3.12 | % | | $ | 771,814 | | | $ | 447,387 | | | $ | 747,811 | | | $ | 409,930 | | | $ | 418,038 | | |
| Loans sold | | | $ | 1,756 | | | $ | 29,556 | | | $ | 67,500 | | | $ | 56,126 | | (4) | $ | 56,722 | | |
(1)Loan pipeline includes loans approved but not funded.
(2)Excludes loans originated through the PPP of $13 million and $60 million for the three months ended June 30, 2021 and March 31, 2021, respectively.
(3)Excludes a residential real estate loan pool purchase of $219.7 million for the three months ended September 30, 2021.
(4)Excludes the sale of PPP loans of $298.1 million, higher risk commercial loans of $64.8 million, net of charge-offs and under-performing residential and home equity loans and lines of $10.5 million, net of charge-offs, for the three months ended December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| DEPOSITS | At |
| September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| 2021 | | 2021 | | 2021 | | 2020 | | 2020 |
| Type of Account | | | | | | | | | |
| Non-interest-bearing | $ | 2,467,952 | | | $ | 2,505,355 | | | $ | 2,417,935 | | | $ | 2,133,195 | | | $ | 2,240,799 | |
| Interest-bearing checking | 4,013,565 | | | 3,628,741 | | | 3,623,132 | | | 3,646,866 | | | 3,317,296 | |
| Money market deposit | 816,691 | | | 734,320 | | | 782,459 | | | 783,521 | | | 691,872 | |
| Savings | 1,620,447 | | | 1,590,441 | | | 1,568,528 | | | 1,491,251 | | | 1,471,554 | |
| Time deposits | 855,442 | | | 956,429 | | | 1,110,758 | | | 1,372,783 | | | 1,561,767 | |
| Total Deposits | $ | 9,774,097 | | | $ | 9,415,286 | | | $ | 9,502,812 | | | $ | 9,427,616 | | | $ | 9,283,288 | |
OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ASSET QUALITY | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| 2021 | | 2021 | | 2021 | | 2020 | | 2020 |
| Non-performing loans held-for-investment: | | | | | | | | | |
| Commercial and industrial | $ | 354 | | | $ | 1,566 | | | $ | 1,616 | | | $ | 1,551 | | | $ | 586 | |
| Commercial real estate - owner-occupied | 8,997 | | | 11,527 | | | 11,676 | | | 13,054 | | | 11,365 | |
| Commercial real estate - investor | 6,904 | | | 10,549 | | | 12,366 | | | 10,660 | | | 2,978 | |
| Residential real estate | 5,484 | | | 6,114 | | | 6,398 | | | 8,642 | | | 11,518 | |
| Home equity loans and lines and other consumer | 1,605 | | | 1,924 | | | 2,072 | | | 2,503 | | | 3,448 | |
| | | | | | | | | |
| Total non-performing loans held-for-investment | 23,344 | | | 31,680 | | | 34,128 | | | 36,410 | | | 29,895 | |
| Non-performing loans held-for-sale | — | | | — | | | — | | | — | | | 67,489 | |
| Other real estate owned | 106 | | | 106 | | | 106 | | | 106 | | | 106 | |
| Total non-performing assets | $ | 23,450 | | | $ | 31,786 | | | $ | 34,234 | | | $ | 36,516 | | | $ | 97,490 | |
PCD loans (1) | $ | 41,372 | | | $ | 40,064 | | | $ | 44,421 | | | $ | 48,488 | | | $ | 56,422 | |
| Delinquent loans 30 to 89 days | $ | 6,647 | | | $ | 5,313 | | | $ | 16,477 | | | $ | 34,683 | | | $ | 13,753 | |
| Troubled debt restructurings: | | | | | | | | | |
| Non-performing (included in total non-performing loans above) | $ | 9,617 | | | $ | 9,803 | | | $ | 4,785 | | | $ | 5,158 | | | $ | 9,866 | |
| Performing | 9,661 | | | 10,311 | | | 11,466 | | | 12,009 | | | 12,777 | |
| Total troubled debt restructurings | $ | 19,278 | | | $ | 20,114 | | | $ | 16,251 | | | $ | 17,167 | | | $ | 22,643 | |
| Allowance for loan credit losses | $ | 50,153 | | | $ | 53,876 | | | $ | 59,976 | | | $ | 60,735 | | | $ | 56,350 | |
Allowance for loan credit losses as a percent of total loans held-for-investment (2) | 0.61 | % | | 0.69 | % | | 0.76 | % | | 0.78 | % | | 0.70 | % |
Allowance for loan credit losses as a percent of total non-performing loans held-for-investment (2) | 214.84 | | | 170.06 | | | 175.74 | | | 166.81 | | | 188.49 | |
| Non-performing loans held-for-investment as a percent of total loans held-for-investment | 0.29 | | | 0.41 | | | 0.43 | | | 0.47 | | | 0.37 | |
| Non-performing assets as a percent of total assets | 0.20 | | | 0.28 | | | 0.30 | | | 0.32 | | | 0.84 | |
(1)PCD loans are not included in non-performing loans held-for-investment, troubled debt restructurings or delinquent loans totals.
(2)Loans acquired from prior bank acquisitions were recorded at fair value. The net unamortized credit and PCD marks on these loans, not reflected in the allowance for loan credit losses, was $21.3 million, $23.6 million, $25.7 million, $28.0 million and $31.6 million at September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NET RECOVERIES (CHARGE-OFFS) | For the Three Months Ended | | |
| September 30, | | June 30, | | March 31, | | December 31, | | September 30, | | |
| 2021 | | 2021 | | 2021 | | 2020 | | 2020 | | |
| Net recoveries (charge-offs): | | | | | | | | | | | |
| Loan charge-offs | $ | (163) | | | $ | (420) | | | $ | (356) | | | $ | (3,220) | | | $ | (15,411) | | | |
| Recoveries on loans | 549 | | | 196 | | | 636 | | | 278 | | | 416 | | | |
| Net loan recoveries (charge-offs) | $ | 386 | |
| $ | (224) | | | $ | 280 | | | $ | (2,942) | | (1) | $ | (14,995) | | (2) | |
| Net loan recoveries (charge-offs) to average total loans (annualized) | NM* | | 0.01 | % | | NM* | | 0.15 | % | | 0.71 | % | | |
| Net loan recoveries (charge-offs) detail: | | | | | | | | | | | |
| Commercial | $ | (33) | | | $ | (304) | | | $ | 126 | | | $ | (775) | | | $ | (14,801) | | | |
| Residential real estate | 280 | | | — | | | (203) | | | (1,731) | | | 314 | | | |
| Home equity loans and lines and other consumer | 139 | | | 80 | | | 357 | | | (436) | | | (508) | | | |
| | | | | | | | | | | |
| Net loan recoveries (charge-offs) | $ | 386 | | | $ | (224) | | | $ | 280 | | | $ | (2,942) | | (1) | $ | (14,995) | | (2) | |
(1)Included in net loan charge-offs for the three months ended December 31, 2020 was $2.3 million related to under-performing residential and consumer loans sold.
(2)Included in net loan charge-offs for the three months ended September 30, 2020 was $14.2 million related to loans transferred to held-for-sale.
* Not meaningful
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended |
| September 30, | | June 30, | | September 30, |
| 2021 | | 2021 | | 2020 |
| (dollars in thousands) | Average
Balance | | Interest | | Average
Yield/
Cost | | Average
Balance | | Interest | | Average
Yield/
Cost | | Average
Balance | | Interest | | Average
Yield/
Cost |
| Assets: | | | | | | | | | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | | | | | | | | | |
| Interest-earning deposits and short-term investments | $ | 1,053,797 | | | $ | 441 | | | 0.17 | % | | $ | 992,485 | | | $ | 241 | | | 0.10 | % | | $ | 805,863 | | | $ | 236 | | | 0.12 | % |
Securities (1) | 1,542,630 | | | 6,090 | | | 1.57 | | | 1,501,484 | | | 6,052 | | | 1.62 | | | 1,112,174 | | | 6,793 | | | 2.43 | |
Loans receivable, net (2) | | | | | | | | | | | | | | | | | |
| Commercial | 5,361,472 | | | 55,387 | | | 4.10 | | | 5,318,436 | | | 54,258 | | | 4.09 | | | 5,554,897 | | | 58,639 | | | 4.20 | |
| Residential real estate | 2,260,673 | | | 20,076 | | | 3.55 | | | 2,219,425 | | | 19,097 | | | 3.44 | | | 2,462,513 | | | 23,091 | | | 3.75 | |
| Home equity loans and lines and other consumer | 289,011 | | | 3,426 | | | 4.70 | | | 304,541 | | | 3,693 | | | 4.86 | | | 379,299 | | | 4,203 | | | 4.41 | |
| | | | | | | | | | | | | | | | | |
| Allowance for loan credit losses, net of deferred loan costs and fees | (46,436) | | | — | | | — | | | (53,483) | | | — | | | — | | | (45,912) | | | — | | | — | |
| Loans receivable, net | 7,864,720 | | | 78,889 | | | 3.98 | | | 7,788,919 | | | 77,048 | | | 3.97 | | | 8,350,797 | | | 85,933 | | | 4.09 | |
| Total interest-earning assets | 10,461,147 | | | 85,420 | | | 3.24 | | | 10,282,888 | | | 83,341 | | | 3.25 | | | 10,268,834 | | | 92,962 | | | 3.60 | |
| Non-interest-earning assets | 1,276,890 | | | | | | | 1,256,844 | | | | | | | 1,353,135 | | | | | |
| Total assets | $ | 11,738,037 | | | | | | | $ | 11,539,732 | | | | | | | $ | 11,621,969 | | | | | |
| Liabilities and Stockholders’ Equity: | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | |
| Interest-bearing checking | $ | 3,841,475 | | | 2,854 | | | 0.29 | % | | $ | 3,701,496 | | | 3,385 | | | 0.37 | % | | $ | 3,289,319 | | | 4,627 | | | 0.56 | % |
| Money market | 767,854 | | | 245 | | | 0.13 | | | 760,323 | | | 212 | | | 0.11 | | | 675,841 | | | 571 | | | 0.34 | |
| Savings | 1,609,197 | | | 146 | | | 0.04 | | | 1,581,284 | | | 166 | | | 0.04 | | | 1,460,232 | | | 296 | | | 0.08 | |
| Time deposits | 904,384 | | | 2,134 | | | 0.94 | | | 1,002,086 | | | 2,562 | | | 1.03 | | | 1,606,632 | | | 5,876 | | | 1.45 | |
| Total | 7,122,910 | | | 5,379 | | | 0.30 | | | 7,045,189 | | | 6,325 | | | 0.36 | | | 7,032,024 | | | 11,370 | | | 0.64 | |
| FHLB Advances | — | | | — | | | — | | — | | | — | | | — | | | 343,412 | | | 1,470 | | | 1.70 | |
| Securities sold under agreements to repurchase | 142,494 | | | 51 | | | 0.14 | | | 135,181 | | | 56 | | | 0.17 | | | 144,720 | | | 174 | | | 0.48 | |
| Other borrowings | 228,695 | | | 2,858 | | | 4.96 | | | 228,350 | | | 2,944 | | | 5.17 | | | 246,903 | | | 3,160 | | | 5.09 | |
| Total borrowings | 371,189 | | | 2,909 | | | 3.11 | | | 363,531 | | | 3,000 | | | 3.31 | | | 735,035 | | | 4,804 | | | 2.60 | |
| Total interest-bearing liabilities | 7,494,099 | | | 8,288 | | | 0.44 | | | 7,408,720 | | | 9,325 | | | 0.50 | | | 7,767,059 | | | 16,174 | | | 0.83 | |
| Non-interest-bearing deposits | 2,576,123 | | | | | | | 2,462,203 | | | | | | | 2,209,241 | | | | | |
| Non-interest-bearing liabilities | 148,327 | | | | | | | 164,774 | | | | | | | 162,987 | | | | | |
| Total liabilities | 10,218,549 | | | | | | | 10,035,697 | | | | | | | 10,139,287 | | | | | |
| Stockholders’ equity | 1,519,488 | | | | | | | 1,504,035 | | | | | | | 1,482,682 | | | | | |
| Total liabilities and equity | $ | 11,738,037 | | | | | | | $ | 11,539,732 | | | | | | | $ | 11,621,969 | | | | | |
| Net interest income | | | $ | 77,132 | | | | | | | $ | 74,016 | | | | | | | $ | 76,788 | | | |
Net interest rate spread (3) | | | | | 2.80 | % | | | | | | 2.75 | % | | | | | | 2.77 | % |
Net interest margin (4) | | | | | 2.93 | % | | | | | | 2.89 | % | | | | | | 2.97 | % |
| Total cost of deposits (including non-interest-bearing deposits) | | | | | 0.22 | % | | | | | | 0.27 | % | | | | | | 0.49 | % |
(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, | | | | | | | |
| | 2021 | | 2020 | | | | | | | |
| (dollars in thousands) | Average
Balance | | Interest | | Average
Yield/
Cost | | Average
Balance | | Interest | | Average
Yield/
Cost | | | | | | | |
| Assets: | | | | | | | | | | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | | | | | | | | | | |
| Interest-earning deposits and short-term investments | $ | 1,061,419 | | | $ | 958 | | | 0.12 | % | | $ | 409,321 | | | $ | 693 | | | 0.23 | % | | | | | | | |
Securities (1) | 1,452,778 | | | 18,832 | | | 1.73 | | | 1,143,049 | | | 22,129 | | | 2.59 | | | | | | | | |
Loans receivable, net (2) | | | | | | | | | | | | | | | | | | |
| Commercial | 5,270,138 | | | 163,315 | | | 4.14 | | | 5,309,275 | | | 177,973 | | | 4.48 | | | | | | | | |
| Residential real estate | 2,269,066 | | | 59,242 | | | 3.48 | | | 2,480,932 | | | 71,590 | | | 3.85 | | | | | | | | |
| Home equity loans and lines and other consumer | 306,681 | | | 11,288 | | | 4.92 | | | 403,348 | | | 14,661 | | | 4.86 | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Allowance for loan credit losses, net of deferred loan costs and fees | (50,912) | | | — | | | — | | | (27,186) | | | — | | | — | | | | | | | | |
| Loans receivable, net | 7,794,973 | | | 233,845 | | | 4.01 | | | 8,166,369 | | | 264,224 | | | 4.32 | | | | | | | | |
| Total interest-earning assets | 10,309,170 | | | 253,635 | | | 3.29 | | | 9,718,739 | | | 287,046 | | | 3.95 | | | | | | | | |
| Non-interest-earning assets | 1,264,347 | | | | | | | 1,306,568 | | | | | | | | | | | | |
| Total assets | $ | 11,573,517 | | | | | | | $ | 11,025,307 | | | | | | | | | | | | |
| Liabilities and Stockholders’ Equity: | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
| Interest-bearing checking | $ | 3,753,457 | | | 10,549 | | | 0.38 | % | | $ | 3,023,093 | | | 14,559 | | | 0.64 | % | | | | | | | |
| Money market | 761,975 | | | 823 | | | 0.14 | | | 647,566 | | | 2,316 | | | 0.48 | | | | | | | | |
| Savings | 1,571,345 | | | 490 | | | 0.04 | | | 1,436,594 | | | 2,266 | | | 0.21 | | | | | | | | |
| Time deposits | 1,041,371 | | | 8,338 | | | 1.07 | | | 1,563,449 | | | 18,470 | | | 1.58 | | | | | | | | |
| Total | 7,128,148 | | | 20,200 | | | 0.38 | | | 6,670,702 | | | 37,611 | | | 0.75 | | | | | | | | |
| FHLB Advances | — | | | — | | | — | | | 483,267 | | | 6,239 | | | 1.72 | | | | | | | | |
| Securities sold under agreements to repurchase | 135,754 | | | 203 | | | 0.20 | | | 119,495 | | | 408 | | | 0.46 | | | | | | | | |
| Other borrowings | 228,472 | | | 8,480 | | | 4.96 | | | 195,754 | | | 7,688 | | | 5.25 | | | | | | | | |
| Total borrowings | 364,226 | | | 8,683 | | | 3.19 | | | 798,516 | | | 14,335 | | | 2.40 | | | | | | | | |
| Total interest-bearing liabilities | 7,492,374 | | | 28,883 | | | 0.52 | | | 7,469,218 | | | 51,946 | | | 0.93 | | | | | | | | |
| Non-interest-bearing deposits | 2,416,866 | | | | | | | 1,971,622 | | | | | | | | | | | | |
| Non-interest-bearing liabilities | 157,821 | | | | | | | 133,928 | | | | | | | | | | | | |
| Total liabilities | 10,067,061 | | | | | | | 9,574,768 | | | | | | | | | | | | |
| Stockholders’ equity | 1,506,456 | | | | | | | 1,450,539 | | | | | | | | | | | | |
| Total liabilities and equity | $ | 11,573,517 | | | | | | | $ | 11,025,307 | | | | | | | | | | | | |
| Net interest income | | | $ | 224,752 | | | | | | | $ | 235,100 | | | | | | | | | | |
Net interest rate spread (3) | | | | | 2.77 | % | | | | | | 3.02 | % | | | | | | | |
Net interest margin (4) | | | | | 2.91 | % | | | | | | 3.23 | % | | | | | | | |
| Total cost of deposits (including non-interest-bearing deposits) | | | | | 0.28 | % | | | | | | 0.58 | % | | | | | | | |
(1) Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost, net of allowance for securities credit losses.
(2) Amount is net of deferred loan costs and fees, undisbursed loan funds, discounts and premiums and allowance for loan credit losses, and includes loans held for sale and non-performing loans.
(3) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average interest-earning assets.
OceanFirst Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | 2021 | | 2021 | | 2021 | | 2020 | | 2020 |
| Selected Financial Condition Data: | | | | | | | | | | |
| Total assets | | $ | 11,829,688 | | | $ | 11,483,901 | | | $ | 11,577,472 | | | $ | 11,448,313 | | | $ | 11,651,297 | |
| Debt securities available-for-sale, at estimated fair value | | 314,620 | | | 249,330 | | | 268,511 | | | 183,302 | | | 169,634 | |
| Debt securities held-to-maturity, net of allowance for securities credit losses | | 1,125,382 | | | 1,146,735 | | | 1,082,326 | | | 937,253 | | | 871,688 | |
| Equity investments | | 101,314 | | | 90,917 | | | 50,159 | | | 107,079 | | | 63,846 | |
| Restricted equity investments, at cost | | 53,017 | | | 52,519 | | | 52,199 | | | 51,705 | | | 67,505 | |
| Loans receivable, net of allowance for loan credit losses | | 8,139,961 | | | 7,774,351 | | | 7,820,590 | | | 7,704,857 | | | 7,943,390 | |
| | | | | | | | | | |
| Deposits | | 9,774,097 | | | 9,415,286 | | | 9,502,812 | | | 9,427,616 | | | 9,283,288 | |
| Federal Home Loan Bank advances | | — | | | — | | | — | | | — | | | 343,452 | |
| Securities sold under agreements to repurchase and other borrowings | | 372,179 | | | 370,039 | | | 362,641 | | | 363,925 | | | 389,764 | |
| Stockholders’ equity | | 1,513,249 | | | 1,508,789 | | | 1,498,719 | | | 1,484,130 | | | 1,461,714 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended, |
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | 2021 | | 2021 | | 2021 | | 2020 | | 2020 |
| Selected Operating Data: | | | | | | | | | | |
| Interest income | | $ | 85,420 | | | $ | 83,341 | | | $ | 84,874 | | | $ | 92,562 | | | $ | 92,962 | |
| Interest expense | | 8,288 | | | 9,325 | | | 11,270 | | | 14,711 | | | 16,174 | |
| Net interest income | | 77,132 | | | 74,016 | | | 73,604 | | | 77,851 | | | 76,788 | |
| Credit loss (benefit) expense | | (3,179) | | | (6,460) | | | (620) | | | 4,072 | | | 35,714 | |
| Net interest income after credit loss (benefit) expense | | 80,311 | | | 80,476 | | | 74,224 | | | 73,779 | | | 41,074 | |
| Other income (excluding net (loss) gain on equity investments and gain on sale of PPP loans) | | 10,349 | | | 11,227 | | | 12,548 | | | 11,032 | | | 11,755 | |
| Net (loss) gain on equity investments | | (466) | | | 576 | | | 8,287 | | | 24,487 | | | (3,576) | |
| Gain on sale of PPP loans | | — | | | — | | | — | | | 5,101 | | | — | |
| Operating expenses (excluding FHLB advance prepayment fees, branch consolidation and merger related expenses) | | 54,434 | | | 51,198 | | | 50,291 | | | 53,053 | | | 52,801 | |
| FHLB advance prepayment fees | | — | | | — | | | — | | | 13,333 | | | — | |
| Branch consolidation expense | | 4,014 | | | 26 | | | 1,011 | | | 3,336 | | | 830 | |
| Merger related expenses | | 225 | | | 446 | | | 381 | | | 1,194 | | | 3,156 | |
| Income (loss) before provision (benefit) for income taxes | | 31,521 | | | 40,609 | | | 43,376 | | | 43,483 | | | (7,534) | |
| Provision (benefit) for income taxes | | 7,354 | | | 10,054 | | | 10,679 | | | 10,419 | | | (2,608) | |
| Net income (loss) | | $ | 24,167 | | | $ | 30,555 | | | $ | 32,697 | | | $ | 33,064 | | | $ | (4,926) | |
| Net income (loss) available to common stockholders | | $ | 23,163 | | | $ | 29,551 | | | $ | 31,693 | | | $ | 32,060 | | | $ | (6,019) | |
| Diluted earnings (loss) per share | | $ | 0.39 | | | $ | 0.49 | | | $ | 0.53 | | | $ | 0.54 | | | $ | (0.10) | |
| Net accretion/amortization of purchase accounting adjustments included in net interest income | | $ | 3,644 | | | $ | 2,835 | | | $ | 3,650 | | | $ | 6,186 | | | $ | 4,364 | |
(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | At or For the Three Months Ended |
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | 2021 | | 2021 | | 2021 | | 2020 | | 2020 |
Selected Financial Ratios and Other Data(1): | | | | | | | | | | |
| Performance Ratios (Annualized): | | | | | | | | | | |
Return on average assets (2) | | 0.78 | % | | 1.03 | % | | 1.12 | % | | 1.09 | % | | (0.21) | % |
Return on average tangible assets (2) (3) | | 0.82 | | | 1.08 | | | 1.18 | | | 1.14 | | | (0.22) | |
Return on average stockholders’ equity (2) | | 6.05 | | | 7.88 | | | 8.59 | | | 8.65 | | | (1.61) | |
Return on average tangible stockholders’ equity (2) (3) | | 9.20 | | | 12.07 | | | 13.22 | | | 13.43 | | | (2.51) | |
| Stockholders’ equity to total assets | | 12.79 | | | 13.14 | | | 12.95 | | | 12.96 | | | 12.55 | |
Tangible stockholders’ equity to tangible assets (3) | | 8.78 | | | 9.01 | | | 8.83 | | | 8.79 | | | 8.41 | |
Tangible common equity to tangible assets (3) | | 8.29 | | | 8.50 | | | 8.33 | | | 8.28 | | | 7.91 | |
| Net interest rate spread | | 2.80 | | | 2.75 | | | 2.78 | | | 2.79 | | | 2.77 | |
| Net interest margin | | 2.93 | | | 2.89 | | | 2.93 | | | 2.97 | | | 2.97 | |
Operating expenses to average assets (2) | | 1.98 | | | 1.80 | | | 1.83 | | | 2.40 | | | 1.94 | |
Efficiency ratio (2) (4) | | 67.43 | | | 60.21 | | | 54.73 | | | 59.86 | | | 66.83 | |
| Loans to deposits | | 83.71 | | | 83.06 | | | 82.84 | | | 82.27 | | | 86.19 | |
| | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| | 2021 | | 2020 |
| Performance Ratios (Annualized): | | | | |
Return on average assets (2) | | 0.98 | % | | 0.35 | % |
Return on average tangible assets (2) (3) | | 1.02 | | | 0.37 | |
Return on average stockholders’ equity (2) | | 7.49 | | | 2.68 | |
Return on average tangible stockholders’ equity (2) (3) | | 11.46 | | | 4.22 | |
| Net interest rate spread | | 2.77 | | | 3.02 | |
| Net interest margin | | 2.91 | | | 3.23 | |
Operating expenses to average assets (2) | | 1.87 | | | 2.13 | |
Efficiency ratio (2) (4) | | 60.62 | | | 65.39 | |
(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | At or For the Three Months Ended |
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | 2021 | | 2021 | | 2021 | | 2020 | | 2020 |
| Trust and Asset Management: | | | | | | | | | | |
| Wealth assets under administration and management | | $ | 274,807 | | | $ | 278,785 | | | $ | 274,172 | | | $ | 245,175 | | | $ | 232,292 | |
| Nest Egg | | 138,087 | | | 129,674 | | | 101,701 | | | 93,237 | | | 80,472 | |
| Per Share Data: | | | | | | | | | | |
| Cash dividends per common share | | $ | 0.17 | | | $ | 0.17 | | | $ | 0.17 | | | $ | 0.17 | | | $ | 0.17 | |
| Stockholders' equity per common share at end of period | | 25.47 | | | 25.22 | | | 24.84 | | | 24.57 | | | 24.21 | |
Tangible common equity per common share at end of period (3) | | 15.78 | | | 15.58 | | | 15.26 | | | 14.98 | | | 14.58 | |
| Common shares outstanding at end of period | | 59,417,266 | | 59,834,018 | | 60,329,504 | | 60,392,043 | | | 60,378,120 |
| Preferred shares outstanding at end of period | | 57,370 | | | 57,370 | | | 57,370 | | | 57,370 | | | 57,370 | |
| Number of full-service customer facilities: | | 58 | | | 58 | | | 62 | | | 62 | | | 62 | |
| Quarterly Average Balances | | | | | | | | | | |
| Total securities | | $ | 1,542,630 | | | $ | 1,501,484 | | | $ | 1,311,683 | | | $ | 1,209,543 | | | $ | 1,112,174 | |
| Loans receivable, net | | 7,864,720 | | | 7,788,919 | | | 7,729,798 | | | 7,992,365 | | | 8,350,797 | |
| Total interest-earning assets | | 10,461,147 | | | 10,282,888 | | | 10,180,392 | | | 10,425,380 | | | 10,268,834 | |
| Total goodwill and core deposit intangible | | 520,765 | | | 522,122 | | | 523,499 | | | 525,511 | | | 527,679 | |
| Total assets | | 11,738,037 | | | 11,539,732 | | | 11,439,501 | | | 11,747,439 | | | 11,621,969 | |
| Time deposits | | 904,384 | | | 1,002,086 | | | 1,221,123 | | | 1,437,770 | | | 1,606,632 | |
| Total deposits (including non-interest-bearing deposits) | | 9,699,033 | | | 9,507,392 | | | 9,425,609 | | | 9,505,835 | | | 9,241,265 | |
| Total borrowed funds | | 371,189 | | | 363,531 | | | 357,812 | | | 590,295 | | | 735,035 | |
| Total interest-bearing liabilities | | 7,494,099 | | | 7,408,720 | | | 7,571,148 | | | 7,886,598 | | | 7,767,059 | |
| Non-interest bearing deposits | | 2,576,123 | | | 2,462,203 | | | 2,212,273 | | | 2,209,532 | | | 2,209,241 | |
| Stockholders' equity | | 1,519,488 | | | 1,504,035 | | | 1,495,580 | | | 1,475,088 | | | 1,482,682 | |
| | | | | | | | | | |
| Quarterly Yields | | | | | | | | | | |
| Total securities | | 1.57 | % | | 1.62 | % | | 2.07 | % | | 2.38 | % | | 2.43 | % |
| Loans receivable, net | | 3.98 | | | 3.97 | | | 4.09 | | | 4.23 | | | 4.09 | |
| Total interest-earning assets | | 3.24 | | | 3.25 | | | 3.38 | | | 3.53 | | | 3.60 | |
| Time deposits | | 0.94 | | | 1.03 | | | 1.21 | | | 1.39 | | | 1.45 | |
| Total cost of deposits (including non-interest-bearing deposits) | | 0.22 | | | 0.27 | | | 0.37 | | | 0.45 | | | 0.49 | |
| Total borrowed funds | | 3.11 | | | 3.31 | | | 3.14 | | | 2.72 | | | 2.60 | |
| Total interest-bearing liabilities | | 0.44 | | | 0.50 | | | 0.60 | | | 0.74 | | | 0.83 | |
| Net interest spread | | 2.80 | | | 2.75 | | | 2.78 | | | 2.79 | | | 2.77 | |
| Net interest margin | | 2.93 | | | 2.89 | | | 2.93 | | | 2.97 | | | 2.97 | |
(1) With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2) Performance ratios for each period are presented on a GAAP basis and include non-core operations. Refer to “Non-GAAP Reconciliation.”
(3) Tangible stockholders’ equity and tangible assets exclude intangible assets related to goodwill and core deposit intangible. Tangible common equity excludes goodwill, core deposit intangible and preferred equity.
(4) Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.
OceanFirst Financial Corp.
SUPPLEMENTAL INFORMATION
(dollars in thousands, except per share amounts)
NON-GAAP RECONCILIATION
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | 2021 | | 2021 | | 2021 | | 2020 | | 2020 |
| Core Earnings: | | | | | | | | | | |
Net income (loss) available to common stockholders (GAAP) | | $ | 23,163 | | | $ | 29,551 | | | $ | 31,693 | | | $ | 32,060 | | | $ | (6,019) | |
| Add (less) non-recurring and non-core items: | | | | | | | | | | |
| Merger related expenses | | 225 | | | 446 | | | 381 | | | 1,194 | | | 3,156 | |
| Branch consolidation expenses | | 4,014 | | | 26 | | | 1,011 | | | 3,336 | | | 830 | |
| Net loss (gain) on equity investments | | 466 | | | (576) | | | (8,287) | | | (24,487) | | | 3,576 | |
| FHLB advance prepayment fees | | — | | | — | | | — | | | 13,333 | | | — | |
| Gain on sale of PPP loans | | — | | | — | | | — | | | (5,101) | | | — | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Income tax (benefit) expense on items | | (1,138) | | | 26 | | | 1,666 | | | 2,832 | | | (1,809) | |
Core earnings (loss) (Non-GAAP) | | $ | 26,730 | | | $ | 29,473 | | | $ | 26,464 | | | $ | 23,167 | | | $ | (266) | |
| Core diluted earnings (loss) per share | | $ | 0.45 | | | $ | 0.49 | | | $ | 0.44 | | | $ | 0.39 | | | $ | — | |
| | | | | | | | | | |
| Core Ratios (Annualized): | | | | | | | | | | |
| Return on average assets | | 0.90 | % | | 1.02 | % | | 0.94 | % | | 0.78 | % | | (0.01) | % |
| Return on average tangible assets | | 0.95 | | | 1.07 | | | 0.98 | | | 0.82 | | | (0.01) | |
| Return on average tangible stockholders’ equity | | 10.62 | | | 12.04 | | | 11.04 | | | 9.71 | | | (0.11) | |
| Efficiency ratio | | 62.22 | | | 60.06 | | | 58.37 | | | 59.69 | | | 59.63 | |
| | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, |
| | 2021 | | 2020 |
| Core Earnings: | | | | |
Net income available to common stockholders (GAAP) | | $ | 84,407 | | | $ | 29,152 | |
| Add (less) non-recurring and non-core items: | | | | |
| Merger related expenses | | 1,052 | | | 14,753 | |
| Branch consolidation expenses | | 5,051 | | | 4,287 | |
| Net (gain) loss on equity investments | | (8,397) | | | 3,576 | |
| Two River and Country Bank opening credit loss expense under the CECL model | | — | | | 2,447 | |
| | | | |
| FHLB advance prepayment fees | | — | | | 924 | |
| | | | |
| | | | |
| Income tax expense (benefit) on items | | 554 | | | (6,120) | |
Core earnings (Non-GAAP) | | $ | 82,667 | | | $ | 49,019 | |
| Core diluted earnings per share | | $ | 1.38 | | | $ | 0.82 | |
| | | | |
| Core Ratios (Annualized): | | | | |
| Return on average assets | | 0.95 | % | | 0.59 | % |
| Return on average tangible assets | | 1.00 | | | 0.62 | |
| Return on average tangible stockholders’ equity | | 11.23 | | | 7.10 | |
| Efficiency ratio | | 60.23 | | | 57.95 | |
(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | 2021 | | 2021 | | 2021 | | 2020 | | 2020 |
| Tangible Equity: | | | | | | | | | | |
| Total stockholders' equity | | $ | 1,513,249 | | | $ | 1,508,789 | | | $ | 1,498,719 | | | $ | 1,484,130 | | | $ | 1,461,714 | |
| Less: | | | | | | | | | | |
| Goodwill | | 500,319 | | | 500,319 | | | 500,319 | | | 500,319 | | | 500,849 | |
| Core deposit intangible | | 19,558 | | | 20,912 | | | 22,273 | | | 23,668 | | | 25,194 | |
| Tangible stockholders' equity | | 993,372 | | | 987,558 | | | 976,127 | | | 960,143 | | | 935,671 | |
| Less: | | | | | | | | | | |
| Preferred Stock | | 55,527 | | | 55,527 | | | 55,527 | | | 55,527 | | | 55,544 | |
| Tangible common equity | | $ | 937,845 | | | $ | 932,031 | | | $ | 920,600 | | | $ | 904,616 | | | $ | 880,127 | |
| | | | | | | | | | |
| Tangible Assets: | | | | | | | | | | |
| Total assets | | $ | 11,829,688 | | | $ | 11,483,901 | | | $ | 11,577,472 | | | $ | 11,448,313 | | | $ | 11,651,297 | |
| Less: | | | | | | | | | | |
| Goodwill | | 500,319 | | | 500,319 | | | 500,319 | | | 500,319 | | | 500,849 | |
| Core deposit intangible | | 19,558 | | | 20,912 | | | 22,273 | | | 23,668 | | | 25,194 | |
| Tangible assets | | $ | 11,309,811 | | | $ | 10,962,670 | | | $ | 11,054,880 | | | $ | 10,924,326 | | | $ | 11,125,254 | |
| | | | | | | | | | |
| Tangible stockholders' equity to tangible assets | | 8.78 | % | | 9.01 | % | | 8.83 | % | | 8.79 | % | | 8.41 | % |
| Tangible common equity to tangible assets | | 8.29 | % | | 8.50 | % | | 8.33 | % | | 8.28 | % | | 7.91 | % |
