Company Contact:
Exhibit 99.1
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 QUARTERLY AND ANNUAL
EARNINGS AND FINANCIAL RESULTS
RED BANK, NEW JERSEY, JANUARY 27, 2022…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 $21.7 million, or $0.37 per diluted share, for the quarter ended December 31, 2021, as compared to $32.1 million, or $0.54 per diluted share, for the corresponding prior year period. For the year ended December 31, 2021, the Company reported net income available to common stockholders of $106.1 million, or $1.78 per diluted share, as compared to $61.2 million, or $1.02 per diluted share, for the prior year. 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 Years Ended, |
| Performance Ratios (Annualized): | December 31, | | September 30, | | December 31, | | December 31, | | December 31, |
| 2021 | | 2021 | | 2020 | | 2021 | | 2020 |
| Return on average assets | 0.72 | % | | 0.78 | % | | 1.09 | % | | 0.91 | % | | 0.55 | % |
| Return on average stockholders’ equity | 5.65 | | | 6.05 | | | 8.65 | | | 7.02 | | | 4.20 | |
Return on average tangible stockholders’ equity (a) | 8.59 | | | 9.20 | | | 13.43 | | | 10.73 | | | 6.59 | |
| Efficiency ratio | 72.04 | | | 67.43 | | | 59.86 | | | 63.50 | | | 63.70 | |
| Net interest margin | 2.99 | | | 2.93 | | | 2.97 | | | 2.93 | | | 3.16 | |
(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 quarter and year ended December 31, 2021 amounted to $28.5 million and $111.2 million, respectively, or $0.48 and $1.86 per diluted share, respectively. Non-core operations had an adverse impact, net of tax, of $6.8 million and $5.1 million for the quarter and year ended December 31, 2021, respectively.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended, | | For the Years Ended, |
| December 31, | | September 30, | | December 31, | | December 31, | | December 31, |
Core Ratios1 (Annualized): | 2021 | | 2021 | | 2020 | | 2021 | | 2020 |
| Return on average assets | 0.95 | % | | 0.90 | % | | 0.78 | % | | 0.95 | % | | 0.64 | % |
| Return on average tangible stockholders’ equity | 11.30 | | | 10.62 | | | 9.71 | | | 11.25 | | | 7.77 | |
| Efficiency ratio | 62.57 | | | 62.22 | | | 59.69 | | | 60.84 | | | 57.81 | |
Key developments for the recent quarter are described below:
•Loan Growth: Total loan growth for the quarter was $441.0 million. Excluding the impact of Paycheck Protection Program (“PPP”) loans of $29.6 million, total loan growth was $470.6 million for the quarter, reflecting record loan originations of $989.0 million and the purchase of a residential loan pool of $82.2 million. The committed loan pipeline remains strong at a record level of $671.0 million.
•Strengthening Margin: Net interest margin increased to 2.99%, from 2.93% in the prior linked quarter, largely driven by the reduction in excess liquidity to fund loan growth. Cost of deposits decreased two basis points to 0.20%, from 0.22% for the prior linked quarter, reflecting improved 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 Paycheck Protection Program (“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.
•Branch Consolidations: The Company consolidated nine branches during the fourth quarter for a total of 67 branches consolidated. The branch consolidation expense was $7.3 million for the quarter ended December 31, 2021. Average deposits per branch totaled $207.1 million as of December 31, 2021. Additionally, the Company expects to consolidate another 10 branches in the first quarter of 2022.
•Subordinated Debt: The Company has provided notice to its trustee that it will redeem $35.0 million of subordinated debt due September 30, 2026 as of March 30, 2022. The debt currently carries an interest rate of 4.14% based on a floating rate of three months LIBOR plus 392 basis points.
Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “During the fourth quarter, OceanFirst delivered exceptional loan growth with $989.0 million of loan originations while maintaining a robust committed pipeline of $671.0 million. This represents strong results from all of our commercial banking teams including our newest groups in Boston and Baltimore, which will add important momentum into 2022.” Mr. Maher added, “All of us at OceanFirst are proud to acknowledge our continued commitment to providing shareholder value as our Board of Directors has declared the Company’s 100th consecutive quarterly cash dividend for common stockholders.”
The Company’s Board of Directors declared its 100th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.17 per share will be paid on February 18, 2022 to common stockholders of record on February 7, 2022. 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 February 15, 2022 to preferred stockholders of record on January 31, 2022.
Results of Operations
Net income for the quarter ended December 31, 2021 was adversely impacted by non-core operations of $6.8 million, net of tax, while net income for the quarter ended December 31, 2020 was favorably impacted by non-core operations of $8.9 million, net of tax. Net income for the years ended December 31, 2021 and 2020 was adversely impacted by non-core operations of $5.1 million, net of tax, and $11.0 million, net of tax, respectively. Core earnings for the quarter ended December 31, 2021 were $28.5 million, or $0.48 per diluted share, representing an increase from core earnings of $23.2 million, or $0.39 per diluted share, for the corresponding prior year period. Core earnings for the year ended December 31, 2021 were $111.2 million, or $1.86 per diluted share, an increase from $72.2 million, or $1.20 per diluted share, for the prior year. Core earnings for the quarter ended December 31, 2021 increased from $26.7 million, or $0.45 per diluted share, for the prior linked quarter, which was adversely impacted by non-core operations of $3.6 million, net of tax.
Net Interest Income and Margin
Net interest income for the quarter ended December 31, 2021 increased to $80.6 million, as compared to $77.9 million for the corresponding prior year period. Net interest income for the year ended December 31, 2021 decreased to $305.3 million, as compared to $313.0 million for the prior year, as a result of the lower interest rate environment. Average interest-earning assets increased by $280.8 million for the quarter ended December 31, 2021, as compared to the corresponding prior year period, due to securities and loan growth, which was partly funded by the redeployment of excess cash. Average interest-earning assets increased by $512.9 million for the year ended December 31, 2021, as compared to the prior year, primarily concentrated in excess balance sheet liquidity and increased securities. Average loans receivable, net of allowance for loan credit losses, increased by $305.0 million and decreased by $201.0 million for the quarter and year ended December 31, 2021, respectively, as compared to the same prior year periods. Loans receivable, net was $8.58 billion at
December 31, 2021, as compared to an average balance of $8.30 billion for the quarter ended December 31, 2021.
Net interest margin for the quarter and year ended December 31, 2021 increased to 2.99% and decreased to 2.93%, respectively, from 2.97% and 3.16% for the same prior year periods, respectively. The net interest margin expansion for the quarter ended December 31, 2021 was primarily attributable to the decrease in excess balance sheet liquidity used to fund securities and loan growth. The net interest margin compression for the year ended December 31, 2021 was primarily due to the excess balance sheet liquidity and the lower interest rate environment. For the quarter and year ended December 31, 2021, the cost of average interest-bearing liabilities decreased to 0.40% and 0.49%, respectively, from 0.74% and 0.88% in the corresponding prior year periods, respectively, as a result of the lower interest rate environment. For the quarter and year ended December 31, 2021, the total cost of deposits (including non-interest bearing deposits) was 0.20% and 0.26%, respectively, as compared to 0.45% and 0.55% in the same prior year periods, respectively.
Net interest income for the quarter ended December 31, 2021 increased by $3.5 million, as compared to the prior linked quarter, and net interest margin increased to 2.99%, compared to 2.93% for the prior linked quarter. Excluding the impact of purchase accounting accretion and prepayment fees of 0.18% for each of the quarters ended December 31, 2021 and September 30, 2021, net interest margin increased to 2.81%, from 2.75%. The yield on average interest-earning assets increased to 3.28%, from 3.24% in the prior linked quarter. The total cost of average interest-bearing liabilities was 0.40% for the quarter ended December 31, 2021, as compared to 0.44% in the prior linked quarter, partly due to maturities of higher-yielding time deposits.
Benefit/Provision for Credit Loss
For the quarter and year ended December 31, 2021, the credit loss benefit was $1.6 million and $11.8 million, respectively, as compared to credit loss expense of $4.1 million and $59.4 million, respectively, for the corresponding prior year periods and a credit loss benefit of $3.2 million in the
prior linked quarter. The credit loss benefit for the quarter and year ended December 31, 2021 and the quarter ended September 30, 2021 was influenced by positive trends in the Bank’s asset quality combined with stabilizing trends in economic forecasts, including strong employment levels and modest GDP growth, partly offset by the continuing economic uncertainty related to COVID-19 variants.
Net loan recoveries were $19,000 and $461,000 for the quarter and year ended December 31, 2021, respectively, as compared to net loan charge-offs of $2.9 million and $18.9 million, respectively, for the corresponding prior year periods and net loan recoveries of $386,000 in the prior linked quarter. The quarter ended December 31, 2020 included $2.3 million of charge-offs related to the sale of under-performing residential and consumer loans. The year ended December 31, 2020 included $14.6 million of charge-offs related to the sale of higher risk commercial loans and $3.3 million of charge-offs related to the sale of under-performing residential and consumer loans. Non-performing loans totaled $18.9 million at December 31, 2021, as compared to $23.3 million at September 30, 2021 and $36.4 million at December 31, 2020.
Non-interest Income
For the quarter and year ended December 31, 2021, other income decreased to $9.4 million and $51.9 million, respectively, as compared to $40.6 million and $73.9 million, respectively, for the corresponding prior year periods. Other income for the quarter and year ended December 31, 2021 included net losses of $1.3 million and net gains of $7.1 million, respectively, related to non-core operations. Other income for the quarter and year ended December 31, 2020 included $29.6 million and $26.0 million, respectively, of net gains related to non-core operations. The net gain on equity investments was primarily a result of several programs implemented by the Company in 2020 to invest excess liquidity in high quality equity securities with attractive dividend yields which were subsequently sold in 2020 and 2021.
Excluding non-core operations, the decrease in other income of $370,000 for the quarter ended December 31, 2021, as compared to the corresponding prior year period, was primarily due to decreases in net gain on sale of loans of $1.2 million and fees and service charges of $636,000, partly offset by an increase in commercial loan swap income of $1.2 million.
Excluding non-core operations, the decrease in other income of $3.1 million for the year ended December 31, 2021, as compared to the prior year, was primarily due to decreases in commercial loan swap income of $4.0 million and fees and service charges of $2.0 million, partly offset by increases in bankcard services of $1.9 million, due to lower card activity in the prior year period as a result of the pandemic, and income from bank owned life insurance of $408,000.
Excluding non-core operations, other income for the quarter ended December 31, 2021 increased $313,000, as compared to the prior linked quarter, primarily due to an increase in income from bank owned life insurance of $421,000.
Non-interest Expense
Operating expenses decreased to $64.8 million and $226.9 million for the quarter and year ended December 31, 2021, respectively, as compared to $70.9 million and $246.4 million, respectively, for the same prior year periods. Operating expenses for the quarter and year ended December 31, 2021 included $7.7 million and $13.8 million, respectively, of net expenses related to non-core operations. Operating expenses for the quarter and year ended December 31, 2020 included $17.9 million and $37.8 million, respectively, of net expenses related to non-core operations.
Excluding non-core operations, the $4.0 million increase in operating expenses for the quarter ended December 31, 2021, as compared to the corresponding prior year period, was primarily due to increases in compensation and benefits expense of $3.7 million, and data processing expense of $3.2 million, partly offset by decreases in professional fees of $1.2 million, other operating expense of $573,000, and equipment expense of $503,000.
Excluding non-core operations, the $4.4 million increase in operating expenses for the year ended December 31, 2021, as compared to the prior year, was primarily due to increases in compensation and benefits expense of $5.9 million, primarily related to higher benefit costs, data processing expense of $4.1 million, and federal deposit insurance and regulatory assessments of $1.3 million, partly offset by decreases in equipment expense of $2.3 million, professional fees of $1.2 million, other operating expense of $1.0 million, marketing expense of $948,000, and amortization of core deposit intangible of $733,000.
Excluding non-core operations, operating expenses for the quarter ended December 31, 2021 increased $2.7 million, as compared to the prior linked quarter. The change was primarily due to an increase in data processing expense of $2.4 million.
Income Tax Expense
The provision for income taxes was $4.1 million and $32.2 million for the quarter and year ended December 31, 2021, respectively, as compared to $10.4 million and $17.7 million, respectively, for the same prior year periods and $7.4 million for the prior linked quarter. The effective tax rate was 15.3% and 22.6% for the quarter and year ended December 31, 2021, respectively, as compared to 24.0% and 21.9%, respectively, for the same prior year periods and 23.3% for the prior linked quarter. The lower effective tax rate for the quarter ended December 31, 2021, as compared to the corresponding prior year periods and prior linked quarter, was primarily due to allocation of taxable income to jurisdictions other than New Jersey, which is tied to our commercial banking strategy, and other tax optimization efforts.
Financial Condition
Total assets increased by $291.3 million to $11.74 billion at December 31, 2021, from $11.45 billion at December 31, 2020. Cash and due from banks decreased by $1.07 billion to $204.9 million at December 31, 2021, from $1.27 billion at December 31, 2020, as excess liquidity was primarily used to fund loan growth and purchase securities. Total debt securities increased by $586.9 million at
December 31, 2021, as compared to December 31, 2020. Total loans, excluding PPP loans of $22.9 million and $95.4 million at December 31, 2021 and December 31, 2020, respectively, increased by $939.2 million, to $8.60 billion at December 31, 2021, from $7.66 billion at December 31, 2020, primarily due to loan originations and purchases of residential real estate loan pools.
Deposits increased by $305.2 million, to $9.73 billion at December 31, 2021, from $9.43 billion at December 31, 2020. Total deposits, excluding time deposits of $775.0 million at December 31, 2021 and $1.37 billion at December 31, 2020, increased by $903.0 million to $8.96 billion at December 31, 2021, from $8.05 billion at December 31, 2020 as a result of the Company’s efforts to improve the quality of deposits. The loans-to-deposits ratio at December 31, 2021 was 88.6%, as compared to 82.3% at December 31, 2020.
Stockholders’ equity increased to $1.52 billion at December 31, 2021, as compared to $1.48 billion at December 31, 2020. On June 25, 2021, the Company announced the authorization by the Board of Directors of the 2021 Stock Repurchase Program to repurchase up to an additional 3.0 million shares, which was approximately 5% of the Company’s outstanding common stock. For the year ended December 31, 2021, the Company repurchased 1,711,484 shares under its stock repurchase programs, at a weighted average cost of $21.07, and there were 3,307,661 shares available for repurchase at December 31, 2021 under the existing stock repurchase programs. Stockholders’ equity per common share increased to $25.63 at December 31, 2021, as compared to $24.57 at December 31, 2020. Tangible common equity per common share increased by 6.3%, to $15.93 at December 31, 2021, as compared to $14.98 at December 31, 2020.
Asset Quality
The Company’s non-performing loans decreased to $18.9 million at December 31, 2021, as compared to $36.4 million at December 31, 2020. Non-performing loans at December 31, 2021 do not include $41.8 million of purchased with credit deterioration (“PCD”) loans from prior bank acquisitions. The allowance for loan credit losses as a percentage of total non-performing loans was 257.8% at December 31, 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 $13.5 million at December 31, 2021, from $34.7 million at December 31, 2020. The Company’s proactive management of higher risk loans in 2020 has proven valuable, as credit trends have steadily improved throughout 2021.
The Company’s allowance for loan credit losses was 0.57% of total loans at December 31, 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 $67.8 million, or 0.79% of total loans, at December 31, 2021.
Explanation of Non-GAAP Financial Measures
Reported amounts are presented in accordance with GAAP. The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding non-core operations and 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.
Annual Meeting
The Company also announced today that its Annual Meeting of Stockholders will be held on Wednesday, May 25, 2022 at 9:00 a.m. Eastern Time. The record date for stockholders to vote at the Annual Meeting is April 6, 2022. Additional information regarding virtual access to the meeting will be distributed prior to the meeting.
Conference Call
As previously announced, the Company will host an earnings conference call on Friday, January 28, 2022 at 11:00 a.m. Eastern Time. The direct dial number for the call is 1-844-200-6205, toll free, using the access code 733688. For those unable to participate in the conference call, a replay will be available. To access the replay, dial 1-866-813-9403, access code 549028, from one hour after the end of the call until April 28, 2022. The conference call will also be available (listen-only) via the Internet by accessing the Company’s Web address: www.oceanfirst.com - Investor Relations. The webcast will be available for 90 days.
* * *
OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank N.A., founded in 1902, is a $11.7 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) | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2021 | | September 30, 2021 | | December 31, 2020 |
| | (Unaudited) | | (Unaudited) | | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 204,949 | | | $ | 981,126 | | | $ | 1,272,134 | |
| Debt securities available-for-sale, at estimated fair value | | 568,255 | | | 314,620 | | | 183,302 | |
| Debt securities held-to-maturity, net of allowance for securities credit losses of $1,467 at December 31, 2021, $1,503 at September 30, 2021, and $1,715 at December 31, 2020 (estimated fair value of $1,152,744 at December 31, 2021, $1,143,381 at September 30, 2021, and $968,466 at December 31, 2020) | | 1,139,193 | | | 1,125,382 | | | 937,253 | |
| Equity investments | | 101,155 | | | 101,314 | | | 107,079 | |
| Restricted equity investments, at cost | | 53,195 | | | 53,017 | | | 51,705 | |
| Loans receivable, net of allowance for loan credit losses of $48,850 at December 31, 2021, $50,153 at September 30, 2021, and $60,735 at December 31, 2020 | | 8,583,352 | | | 8,139,961 | | | 7,704,857 | |
| Loans held-for-sale | | — | | | 13,428 | | | 45,524 | |
| Interest and dividends receivable | | 32,606 | | | 32,512 | | | 35,269 | |
| Other real estate owned | | 106 | | | 106 | | | 106 | |
| Premises and equipment, net | | 125,828 | | | 123,669 | | | 107,094 | |
| | | | | | |
| Bank owned life insurance | | 259,207 | | | 260,072 | | | 265,253 | |
| | | | | | |
| | | | | | |
| Assets held for sale | | 6,229 | | | 4,613 | | | 5,782 | |
| Goodwill | | 500,319 | | | 500,319 | | | 500,319 | |
| Core deposit intangible | | 18,215 | | | 19,558 | | | 23,668 | |
| Other assets | | 147,007 | | | 159,991 | | | 208,968 | |
| Total assets | | $ | 11,739,616 | | | $ | 11,829,688 | | | $ | 11,448,313 | |
| Liabilities and Stockholders’ Equity | | | | | | |
| Deposits | | $ | 9,732,816 | | | $ | 9,774,097 | | | $ | 9,427,616 | |
| | | | | | |
| Securities sold under agreements to repurchase with retail customers | | 118,769 | | | 143,292 | | | 128,454 | |
| Other borrowings | | 229,141 | | | 228,887 | | | 235,471 | |
| Advances by borrowers for taxes and insurance | | 20,305 | | | 22,214 | | | 17,296 | |
| Other liabilities | | 122,032 | | | 147,949 | | | 155,346 | |
| Total liabilities | | 10,223,063 | | | 10,316,439 | | | 9,964,183 | |
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| | | | | | |
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| | | | | | |
| | | | | | |
| Total stockholders’ equity | | 1,516,553 | | | 1,513,249 | | | 1,484,130 | |
| Total liabilities and stockholders’ equity | | $ | 11,739,616 | | | $ | 11,829,688 | | | $ | 11,448,313 | |
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended, | | For the Year Ended |
| | December 31, | | September 30, | | December 31, | | December 31, |
| | 2021 | | 2021 | | 2020 | | 2021 | | 2020 |
| | |--------------------- (Unaudited) ---------------------| | | (Unaudited) | | |
| Interest income: | | | | | | | | | | |
| Loans | | $ | 81,392 | | | $ | 78,889 | | | $ | 84,997 | | | $ | 315,237 | | | $ | 349,221 | |
| Debt securities | | 5,654 | | | 5,040 | | | 5,539 | | | 22,033 | | | 24,116 | |
| Equity investments and other | | 1,411 | | | 1,491 | | | 2,026 | | | 4,822 | | | 6,271 | |
| Total interest income | | 88,457 | | | 85,420 | | | 92,562 | | | 342,092 | | | 379,608 | |
| Interest expense: | | | | | | | | | | |
| Deposits | | 5,010 | | | 5,379 | | | 10,679 | | | 25,210 | | | 48,290 | |
| Borrowed funds | | 2,861 | | | 2,909 | | | 4,032 | | | 11,544 | | | 18,367 | |
| Total interest expense | | 7,871 | | | 8,288 | | | 14,711 | | | 36,754 | | | 66,657 | |
| Net interest income | | 80,586 | | | 77,132 | | | 77,851 | | | 305,338 | | | 312,951 | |
| Credit loss (benefit) expense | | (1,573) | | | (3,179) | | | 4,072 | | | (11,832) | | | 59,404 | |
| Net interest income after credit loss (benefit) expense | | 82,159 | | | 80,311 | | | 73,779 | | | 317,170 | | | 253,547 | |
| Other income: | | | | | | | | | | |
| Bankcard services revenue | | 3,308 | | | 3,409 | | | 3,098 | | | 13,360 | | | 11,417 | |
| Trust and asset management revenue | | 562 | | | 584 | | | 492 | | | 2,336 | | | 2,052 | |
| Fees and service charges | | 3,314 | | | 2,973 | | | 3,950 | | | 13,833 | | | 15,808 | |
| | | | | | | | | | |
| | | | | | | | | | |
| Net gain (loss) on sales of loans | | 6 | | | (15) | | | 6,348 | | | 3,186 | | | 8,278 | |
| Net (loss) gain on equity investments | | (1,252) | | | (466) | | | 24,487 | | | 7,145 | | | 21,214 | |
| Net (loss) gain from other real estate operations | | (3) | | | (3) | | | 23 | | | (15) | | | 35 | |
| Income from bank owned life insurance | | 2,061 | | | 1,640 | | | 1,798 | | | 6,832 | | | 6,424 | |
| Commercial loan swap income | | 1,323 | | | 1,588 | | | 116 | | | 4,095 | | | 8,080 | |
| Other | | 91 | | | 173 | | | 308 | | | 1,159 | | | 618 | |
| Total other income | | 9,410 | | | 9,883 | | | 40,620 | | | 51,931 | | | 73,926 | |
| Operating expenses: | | | | | | | | | | |
| Compensation and employee benefits | | 31,006 | | | 30,730 | | | 27,323 | | | 120,014 | | | 114,155 | |
| Occupancy | | 5,101 | | | 5,005 | | | 4,968 | | | 20,481 | | | 20,782 | |
| Equipment | | 1,435 | | | 1,124 | | | 1,938 | | | 5,443 | | | 7,769 | |
| Marketing | | 614 | | | 496 | | | 632 | | | 2,169 | | | 3,117 | |
| Federal deposit insurance and regulatory assessments | | 1,733 | | | 1,459 | | | 1,859 | | | 6,155 | | | 4,871 | |
| Data processing | | 7,774 | | | 5,363 | | | 4,624 | | | 21,570 | | | 17,467 | |
| Check card processing | | 1,170 | | | 1,337 | | | 1,507 | | | 5,182 | | | 5,458 | |
| Professional fees | | 2,726 | | | 3,089 | | | 3,908 | | | 11,043 | | | 12,247 | |
| FHLB advance prepayment fees | | — | | | — | | | 13,333 | | | — | | | 14,257 | |
| Amortization of core deposit intangible | | 1,343 | | | 1,354 | | | 1,526 | | | 5,453 | | | 6,186 | |
| Branch consolidation expense | | 7,286 | | | 4,014 | | | 3,336 | | | 12,337 | | | 7,623 | |
| Merger related expenses | | 451 | | | 225 | | | 1,194 | | | 1,503 | | | 15,947 | |
| Other operating expense | | 4,195 | | | 4,477 | | | 4,768 | | | 15,510 | | | 16,552 | |
| Total operating expenses | | 64,834 | | | 58,673 | | | 70,916 | | | 226,860 | | | 246,431 | |
| Income before provision for income taxes | | 26,735 | | | 31,521 | | | 43,483 | | | 142,241 | | | 81,042 | |
| Provision for income taxes | | 4,078 | | | 7,354 | | | 10,419 | | | 32,165 | | | 17,733 | |
| Net income | | 22,657 | | | 24,167 | | | 33,064 | | | 110,076 | | | 63,309 | |
| Dividends on preferred shares | | 1,004 | | | 1,004 | | | 1,004 | | | 4,016 | | | 2,097 | |
| Net income available to common stockholders | | $ | 21,653 | | | $ | 23,163 | | | $ | 32,060 | | | $ | 106,060 | | | $ | 61,212 | |
| Basic earnings per share | | $ | 0.37 | | | $ | 0.40 | | | $ | 0.53 | | | $ | 1.79 | | | $ | 1.02 | |
| Diluted earnings per share | | $ | 0.37 | | | $ | 0.39 | | | $ | 0.54 | | | $ | 1.78 | | | $ | 1.02 | |
| Average basic shares outstanding | | 58,801 | | | 59,311 | | | 59,961 | | | 59,406 | | | 59,919 | |
| Average diluted shares outstanding | | 59,044 | | | 59,515 | | | 60,057 | | | 59,649 | | | 60,072 | |
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| LOANS RECEIVABLE | | | At |
| | | December 31, 2021 | | September 30,
2021 | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 |
| Commercial: | | | | | | | | | | | |
| Commercial and industrial | | | $ | 449,224 | | | $ | 457,674 | | | $ | 474,919 | | | $ | 498,245 | | | $ | 470,656 | |
| Commercial real estate - owner-occupied | | 1,055,065 | | | 1,123,973 | | | 1,045,514 | | | 1,066,351 | | | 1,145,065 | |
| Commercial real estate - investor | | 4,378,061 | | | 3,922,983 | | | 3,836,230 | | | 3,804,351 | | | 3,491,464 | |
| Total commercial | | | 5,882,350 | | | 5,504,630 | | | 5,356,663 | | | 5,368,947 | | | 5,107,185 | |
| Consumer: | | | | | | | | | | | |
| Residential real estate | | | 2,479,701 | | | 2,401,240 | | | 2,168,545 | | | 2,189,348 | | | 2,309,459 | |
| | | | | | | | | | | |
| Home equity loans and lines and other consumer | | 260,819 | | | 275,962 | | | 295,582 | | | 314,242 | | | 339,462 | |
| | | | | | | | | | | |
| Total consumer | | | 2,740,520 | | | 2,677,202 | | | 2,464,127 | | | 2,503,590 | | | 2,648,921 | |
| Total loans | | | 8,622,870 | | | 8,181,832 | | | 7,820,790 | | | 7,872,537 | | | 7,756,106 | |
| | | | | | | | | | | |
| Deferred origination costs (fees), net | | 9,332 | | | 8,282 | | | 7,437 | | | 8,029 | | | 9,486 | |
| Allowance for loan credit losses | | | (48,850) | | | (50,153) | | | (53,876) | | | (59,976) | | | (60,735) | |
| Loans receivable, net | | | $ | 8,583,352 | | | $ | 8,139,961 | | | $ | 7,774,351 | | | $ | 7,820,590 | | | $ | 7,704,857 | |
| Mortgage loans serviced for others | | $ | 60,447 | | | $ | 64,840 | | | $ | 68,778 | | | $ | 74,037 | | | $ | 95,789 | |
| At December 31, 2021 Average Yield | | | | | | | | | | |
Loan pipeline (1): | | | | | | | | | | | |
| Commercial | 3.65 | % | | $ | 539,426 | | | $ | 482,942 | | | $ | 463,388 | | | $ | 154,946 | | | $ | 210,024 | |
| Residential real estate | 3.03 | | | 123,211 | | | 160,070 | | | 153,798 | | | 178,352 | | | 151,152 | |
| Home equity loans and lines | 4.41 | | | 8,381 | | | 8,420 | | | 11,369 | | | 11,031 | | | 6,630 | |
| Total | 3.55 | % | | $ | 671,018 | | | $ | 651,432 | | | $ | 628,555 | | | $ | 344,329 | | | $ | 367,806 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended | |
| December 31, 2021 | | September 30,
2021 | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | |
| Average Yield | | | | | | | | | | | |
| Loan originations: | | | | | | | | | | | | |
| Commercial | 3.28 | % | | $ | 780,464 | | | $ | 585,667 | | | $ | 259,163 | | (2) | $ | 547,591 | | (2) | $ | 173,715 | | |
| Residential real estate | 3.01 | | | 195,942 | | (3) | 174,365 | | (3) | 173,354 | | | 189,942 | | | 222,780 | | |
| Home equity loans and lines | 4.05 | | | 12,552 | | | 11,782 | | | 14,870 | | | 10,278 | | | 13,435 | | |
| Total | 3.24 | % | | $ | 988,958 | | | $ | 771,814 | | | $ | 447,387 | | | $ | 747,811 | | | $ | 409,930 | | |
| Loans sold | | | $ | 649 | | | $ | 1,756 | | | $ | 29,556 | | | $ | 67,500 | | | $ | 56,126 | | (4) |
(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 residential real estate loan pool purchases of $82.2 million and $219.7 million for the three months ended December 31, 2021 and September 30, 2021, respectively.
(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 |
| | December 31, 2021 | | September 30,
2021 | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 |
| Type of Account | | | | | | | | | | |
| Non-interest-bearing | | $ | 2,412,056 | | | $ | 2,467,952 | | | $ | 2,505,355 | | | $ | 2,417,935 | | | $ | 2,133,195 | |
| Interest-bearing checking | | 4,201,736 | | | 4,013,565 | | | 3,628,741 | | | 3,623,132 | | | 3,646,866 | |
| Money market | | 736,090 | | | 816,691 | | | 734,320 | | | 782,459 | | | 783,521 | |
| Savings | | 1,607,933 | | | 1,620,447 | | | 1,590,441 | | | 1,568,528 | | | 1,491,251 | |
| Time deposits | | 775,001 | | | 855,442 | | | 956,429 | | | 1,110,758 | | | 1,372,783 | |
| Total deposits | | $ | 9,732,816 | | | $ | 9,774,097 | | | $ | 9,415,286 | | | $ | 9,502,812 | | | $ | 9,427,616 | |
OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ASSET QUALITY | December 31, 2021 | | September 30,
2021 | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 |
| Non-performing loans: | | | | | | | | | |
| Commercial and industrial | $ | 299 | | | $ | 354 | | | $ | 1,566 | | | $ | 1,616 | | | $ | 1,551 | |
| Commercial real estate - owner-occupied | 8,687 | | | 8,997 | | | 11,527 | | | 11,676 | | | 13,054 | |
| Commercial real estate - investor | 2,021 | | | 6,904 | | | 10,549 | | | 12,366 | | | 10,660 | |
| Residential real estate | 6,094 | | | 5,484 | | | 6,114 | | | 6,398 | | | 8,642 | |
| Home equity loans and lines and other consumer | 1,847 | | | 1,605 | | | 1,924 | | | 2,072 | | | 2,503 | |
| | | | | | | | | |
| Total non-performing loans | 18,948 | | | 23,344 | | | 31,680 | | | 34,128 | | | 36,410 | |
| | | | | | | | | |
| Other real estate owned | 106 | | | 106 | | | 106 | | | 106 | | | 106 | |
| Total non-performing assets | $ | 19,054 | | | $ | 23,450 | | | $ | 31,786 | | | $ | 34,234 | | | $ | 36,516 | |
PCD loans (1) | $ | 41,817 | | | $ | 41,372 | | | $ | 40,064 | | | $ | 44,421 | | | $ | 48,488 | |
| Delinquent loans 30 to 89 days | $ | 13,546 | | | $ | 6,647 | | | $ | 5,313 | | | $ | 16,477 | | | $ | 34,683 | |
| Troubled debt restructurings: | | | | | | | | | |
| Non-performing (included in total non-performing loans above) | $ | 10,974 | | | $ | 9,617 | | | $ | 9,803 | | | $ | 4,785 | | | $ | 5,158 | |
| Performing | 12,320 | | | 9,661 | | | 10,311 | | | 11,466 | | | 12,009 | |
| Total troubled debt restructurings | $ | 23,294 | | | $ | 19,278 | | | $ | 20,114 | | | $ | 16,251 | | | $ | 17,167 | |
| Allowance for loan credit losses | $ | 48,850 | | | $ | 50,153 | | | $ | 53,876 | | | $ | 59,976 | | | $ | 60,735 | |
Allowance for loan credit losses as a percent of total loans receivable (2) | 0.57 | % | | 0.61 | % | | 0.69 | % | | 0.76 | % | | 0.78 | % |
Allowance for loan credit losses as a percent of total non-performing loans (2) | 257.81 | | | 214.84 | | | 170.06 | | | 175.74 | | | 166.81 | |
| Non-performing loans as a percent of total loans receivable | 0.22 | | | 0.29 | | | 0.41 | | | 0.43 | | | 0.47 | |
| Non-performing assets as a percent of total assets | 0.16 | | | 0.20 | | | 0.28 | | | 0.30 | | | 0.32 | |
(1)PCD loans are not included in non-performing loans, troubled debt restructurings or delinquent loans totals as such loans are marked to fair value at the time of acquisition.
(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 $18.9 million, $21.3 million, $23.6 million, $25.7 million, and $28.0 million at December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020, respectively.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NET LOAN RECOVERIES (CHARGE-OFFS) | | For the Three Months Ended |
| | December 31, 2021 | | September 30,
2021 | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 | | |
| Net loan recoveries (charge-offs): | | | | | | | | | | | | |
| Loan charge-offs | | $ | (92) | | | $ | (163) | | | $ | (420) | | | $ | (356) | | | $ | (3,220) | | | |
| Recoveries on loans | | 111 | | | 549 | | | 196 | | | 636 | | | 278 | | | |
| Net loan recoveries (charge-offs) | | $ | 19 | | | $ | 386 | | | $ | (224) | | | $ | 280 | | | $ | (2,942) | | (1) | |
| Net loan recoveries (charge-offs) to average total loans (annualized) | | NM* | | NM* | | 0.01 | % | | NM* | | 0.15 | % | | |
| Net loan recoveries (charge-offs) detail: | | | | | | | | | | | | |
| Commercial | | $ | (24) | | | $ | (33) | | | $ | (304) | | | $ | 126 | | | $ | (775) | | | |
| Residential real estate | | 21 | | | 280 | | | — | | | (203) | | | (1,731) | | | |
| Home equity loans and lines and other consumer | | 22 | | | 139 | | | 80 | | | 357 | | | (436) | | | |
| | | | | | | | | | | | |
| Net loan recoveries (charge-offs) | | $ | 19 | | | $ | 386 | | | $ | (224) | | | $ | 280 | | | $ | (2,942) | | (1) | |
(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.
* Not meaningful
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| | December 31, 2021 | | September 30, 2021 | | December 31, 2020 |
| (dollars in thousands) | Average
Balance | | Interest | | Average Yield/ Cost (1) | | Average
Balance | | Interest | | Average Yield/ Cost (1) | | Average
Balance | | Interest | | Average Yield/ Cost (1) |
| Assets: | | | | | | | | | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | | | | | | | | | |
| Interest-earning deposits and short-term investments | $ | 698,652 | | | $ | 300 | | | 0.17 | % | | $ | 1,053,797 | | | $ | 441 | | | 0.17 | % | | $ | 1,223,472 | | | $ | 341 | | | 0.11 | % |
Securities (2) | 1,710,143 | | | 6,765 | | | 1.57 | | | 1,542,630 | | | 6,090 | | | 1.57 | | | 1,209,543 | | | 7,224 | | | 2.38 | |
Loans receivable, net (3) | | | | | | | | | | | | | | | | | |
| Commercial | 5,635,642 | | | 57,829 | | | 4.07 | | | 5,361,472 | | | 55,387 | | | 4.10 | | | 5,271,633 | | | 58,776 | | | 4.44 | |
| Residential real estate | 2,430,635 | | | 20,454 | | | 3.37 | | | 2,260,673 | | | 20,076 | | | 3.55 | | | 2,420,494 | | | 21,530 | | | 3.56 | |
| Home equity loans and lines and other consumer | 273,007 | | | 3,109 | | | 4.52 | | | 289,011 | | | 3,426 | | | 4.70 | | | 351,920 | | | 4,691 | | | 5.30 | |
| | | | | | | | | | | | | | | | | |
| Allowance for loan credit losses, net of deferred loan costs and fees | (41,889) | | | — | | | — | | | (46,436) | | | — | | | — | | | (51,682) | | | — | | | — | |
| Loans receivable, net | 8,297,395 | | | 81,392 | | | 3.89 | | | 7,864,720 | | | 78,889 | | | 3.98 | | | 7,992,365 | | | 84,997 | | | 4.23 | |
| Total interest-earning assets | 10,706,190 | | | 88,457 | | | 3.28 | | | 10,461,147 | | | 85,420 | | | 3.24 | | | 10,425,380 | | | 92,562 | | | 3.53 | |
| Non-interest-earning assets | 1,247,420 | | | | | | | 1,276,890 | | | | | | | 1,322,112 | | | | | |
| Total assets | $ | 11,953,610 | | | | | | | $ | 11,738,037 | | | | | | | $ | 11,747,492 | | | | | |
| Liabilities and Stockholders' Equity: | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | |
| Interest-bearing checking | $ | 4,249,001 | | | 2,851 | | | 0.27 | % | | $ | 3,841,475 | | | 2,854 | | | 0.29 | % | | $ | 3,601,814 | | | 4,836 | | | 0.53 | % |
| Money market | 790,471 | | | 282 | | | 0.14 | | | 767,854 | | | 245 | | | 0.13 | | | 766,866 | | | 586 | | | 0.30 | |
| Savings | 1,611,522 | | | 141 | | | 0.03 | | | 1,609,197 | | | 146 | | | 0.04 | | | 1,489,853 | | | 240 | | | 0.06 | |
| Time deposits | 819,025 | | | 1,736 | | | 0.84 | | | 904,384 | | | 2,134 | | | 0.94 | | | 1,437,770 | | | 5,017 | | | 1.39 | |
| Total | 7,470,019 | | | 5,010 | | | 0.27 | | | 7,122,910 | | | 5,379 | | | 0.30 | | | 7,296,303 | | | 10,679 | | | 0.58 | |
| FHLB advances | — | | | — | | | — | | | — | | | — | | | — | | | 204,880 | | | 779 | | | 1.51 | |
| Securities sold under agreements to repurchase | 132,520 | | | 50 | | | 0.15 | | | 142,494 | | | 51 | | | 0.14 | | | 143,385 | | | 154 | | | 0.43 | |
| Other borrowings | 228,980 | | | 2,811 | | | 4.87 | | | 228,695 | | | 2,858 | | | 4.96 | | | 242,030 | | | 3,099 | | | 5.09 | |
| Total borrowings | 361,500 | | | 2,861 | | | 3.14 | | | 371,189 | | | 2,909 | | | 3.11 | | | 590,295 | | | 4,032 | | | 2.72 | |
| Total interest-bearing liabilities | 7,831,519 | | | 7,871 | | | 0.40 | | | 7,494,099 | | | 8,288 | | | 0.44 | | | 7,886,598 | | | 14,711 | | | 0.74 | |
| Non-interest-bearing deposits | 2,467,588 | | | | | | | 2,576,123 | | | | | | | 2,209,532 | | | | | |
| Non-interest-bearing liabilities | 134,527 | | | | | | | 148,327 | | | | | | | 176,274 | | | | | |
| Total liabilities | 10,433,634 | | | | | | | 10,218,549 | | | | | | | 10,272,404 | | | | | |
| Stockholders’ equity | 1,519,976 | | | | | | | 1,519,488 | | | | | | | 1,475,088 | | | | | |
| Total liabilities and equity | $ | 11,953,610 | | | | | | | $ | 11,738,037 | | | | | | | $ | 11,747,492 | | | | | |
| Net interest income | | | $ | 80,586 | | | | | | | $ | 77,132 | | | | | | | $ | 77,851 | | | |
Net interest rate spread (4) | | | | | 2.88 | % | | | | | | 2.80 | % | | | | | | 2.79 | % |
Net interest margin (5) | | | | | 2.99 | % | | | | | | 2.93 | % | | | | | | 2.97 | % |
| Total cost of deposits (including non-interest-bearing deposits) | | | | | 0.20 | % | | | | | | 0.22 | % | | | | | | 0.45 | % |
(footnotes on following page)
(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Year Ended |
| | | December 31, 2021 | | December 31, 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 | | $ | 969,982 | | | $ | 1,258 | | | 0.13 | % | | $ | 613,971 | | | $ | 1,034 | | | 0.17 | % |
Securities (2) | | 1,517,649 | | | 25,597 | | | 1.69 | | | 1,159,764 | | | 29,353 | | | 2.53 | |
Loans receivable, net (3) | | | | | | | | | | | | |
| Commercial | | 5,362,265 | | | 221,144 | | | 4.12 | | | 5,299,813 | | | 236,749 | | | 4.47 | |
| Residential real estate | | 2,309,790 | | | 79,696 | | | 3.45 | | | 2,465,740 | | | 93,120 | | | 3.78 | |
| Home equity loans and lines and other consumer | | 298,193 | | | 14,397 | | | 4.83 | | | 390,421 | | | 19,352 | | | 4.96 | |
| | | | | | | | | | | | |
| Allowance for loan credit losses, net of deferred loan costs and fees | | (48,637) | | | — | | | — | | | (33,343) | | | — | | | — | |
| Loans receivable, net | | 7,921,611 | | | 315,237 | | | 3.98 | | | 8,122,631 | | | 349,221 | | | 4.30 | |
| Total interest-earning assets | | 10,409,242 | | | 342,092 | | | 3.29 | | | 9,896,366 | | | 379,608 | | | 3.84 | |
| Non-interest-earning assets | | 1,260,079 | | | | | | | 1,310,474 | | | | | |
| Total assets | | $ | 11,669,321 | | | | | | | $ | 11,206,840 | | | | | |
| Liabilities and Stockholders' Equity: | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | |
| Interest-bearing checking | | $ | 3,878,465 | | | 13,400 | | | 0.35 | % | | $ | 3,168,889 | | | 19,395 | | | 0.61 | % |
| Money market | | 769,157 | | | 1,105 | | | 0.14 | | | 677,554 | | | 2,902 | | | 0.43 | |
| Savings | | 1,581,472 | | | 631 | | | 0.04 | | | 1,449,982 | | | 2,505 | | | 0.17 | |
| Time deposits | | 985,328 | | | 10,074 | | | 1.02 | | | 1,531,857 | | | 23,488 | | | 1.53 | |
| Total | | 7,214,422 | | | 25,210 | | | 0.35 | | | 6,828,282 | | | 48,290 | | | 0.71 | |
| FHLB advances | | — | | | — | | | — | | | 413,290 | | | 7,018 | | | 1.70 | |
| Securities sold under agreements to repurchase | | 134,939 | | | 253 | | | 0.19 | | | 125,500 | | | 562 | | | 0.45 | |
| Other borrowings | | 228,600 | | | 11,291 | | | 4.94 | | | 207,386 | | | 10,787 | | | 5.20 | |
| Total borrowings | | 363,539 | | | 11,544 | | | 3.18 | | | 746,176 | | | 18,367 | | | 2.46 | |
| Total interest-bearing liabilities | | 7,577,961 | | | 36,754 | | | 0.49 | | | 7,574,458 | | | 66,657 | | | 0.88 | |
| Non-interest-bearing deposits | | 2,429,547 | | | | | | | 2,031,100 | | | | | |
| Non-interest-bearing liabilities | | 151,950 | | | | | | | 144,571 | | | | | |
| Total liabilities | | 10,159,458 | | | | | | | 9,750,129 | | | | | |
| Stockholders’ equity | | 1,509,863 | | | | | | | 1,456,711 | | | | | |
| Total liabilities and equity | | $ | 11,669,321 | | | | | | | $ | 11,206,840 | | | | | |
| Net interest income | | | | $ | 305,338 | | | | | | | $ | 312,951 | | | |
Net interest rate spread (4) | | | | | | 2.80 | % | | | | | | 2.96 | % |
Net interest margin (5) | | | | | | 2.93 | % | | | | | | 3.16 | % |
| Total cost of deposits (including non-interest-bearing deposits) | | | | | | 0.26 | % | | | | | | 0.55 | % |
(1) Average yields and costs are annualized.
(2) Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost, net of allowance for securities credit losses.
(3) Amount is net of deferred loan costs and fees, undisbursed loan funds, discounts and premiums and allowance for loan credit losses, and includes loans held for sale and non-performing loans.
(4) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average interest-earning assets.
OceanFirst Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2021 | | September 30,
2021 | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 |
| Selected Financial Condition Data: | | | | | | | | | | |
| Total assets | | $ | 11,739,616 | | | $ | 11,829,688 | | | $ | 11,483,901 | | | $ | 11,577,472 | | | $ | 11,448,313 | |
| Debt securities available-for-sale, at estimated fair value | | 568,255 | | | 314,620 | | | 249,330 | | | 268,511 | | | 183,302 | |
| Debt securities held-to-maturity, net of allowance for securities credit losses | | 1,139,193 | | | 1,125,382 | | | 1,146,735 | | | 1,082,326 | | | 937,253 | |
| Equity investments | | 101,155 | | | 101,314 | | | 90,917 | | | 50,159 | | | 107,079 | |
| Restricted equity investments, at cost | | 53,195 | | | 53,017 | | | 52,519 | | | 52,199 | | | 51,705 | |
| Loans receivable, net of allowance for loan credit losses | | 8,583,352 | | | 8,139,961 | | | 7,774,351 | | | 7,820,590 | | | 7,704,857 | |
| | | | | | | | | | |
| Deposits | | 9,732,816 | | | 9,774,097 | | | 9,415,286 | | | 9,502,812 | | | 9,427,616 | |
| | | | | | | | | | |
| Securities sold under agreements to repurchase and other borrowings | | 347,910 | | | 372,179 | | | 370,039 | | | 362,641 | | | 363,925 | |
| Stockholders’ equity | | 1,516,553 | | | 1,513,249 | | | 1,508,789 | | | 1,498,719 | | | 1,484,130 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| | December 31, 2021 | | September 30,
2021 | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 |
| Selected Operating Data: | | | | | | | | | | |
| Interest income | | $ | 88,457 | | | $ | 85,420 | | | $ | 83,341 | | | $ | 84,874 | | | $ | 92,562 | |
| Interest expense | | 7,871 | | | 8,288 | | | 9,325 | | | 11,270 | | | 14,711 | |
| Net interest income | | 80,586 | | | 77,132 | | | 74,016 | | | 73,604 | | | 77,851 | |
| Credit loss (benefit) expense | | (1,573) | | | (3,179) | | | (6,460) | | | (620) | | | 4,072 | |
| Net interest income after credit loss (benefit) expense | | 82,159 | | | 80,311 | | | 80,476 | | | 74,224 | | | 73,779 | |
| Other income (excluding net (loss) gain on equity investments and gain on sale of PPP loans) | | 10,662 | | | 10,349 | | | 11,227 | | | 12,548 | | | 11,032 | |
| Net (loss) gain on equity investments | | (1,252) | | | (466) | | | 576 | | | 8,287 | | | 24,487 | |
| Gain on sale of PPP loans | | — | | | — | | | — | | | — | | | 5,101 | |
| Operating expenses (excluding FHLB advance prepayment fees, branch consolidation and merger related expenses) | | 57,097 | | | 54,434 | | | 51,198 | | | 50,291 | | | 53,053 | |
| FHLB advance prepayment fees | | — | | | — | | | — | | | — | | | 13,333 | |
| Branch consolidation expense | | 7,286 | | | 4,014 | | | 26 | | | 1,011 | | | 3,336 | |
| Merger related expenses | | 451 | | | 225 | | | 446 | | | 381 | | | 1,194 | |
| Income before provision for income taxes | | 26,735 | | | 31,521 | | | 40,609 | | | 43,376 | | | 43,483 | |
| Provision for income taxes | | 4,078 | | | 7,354 | | | 10,054 | | | 10,679 | | | 10,419 | |
| Net income | | $ | 22,657 | | | $ | 24,167 | | | $ | 30,555 | | | $ | 32,697 | | | $ | 33,064 | |
| Net income available to common stockholders | | $ | 21,653 | | | $ | 23,163 | | | $ | 29,551 | | | $ | 31,693 | | | $ | 32,060 | |
| Diluted earnings per share | | $ | 0.37 | | | $ | 0.39 | | | $ | 0.49 | | | $ | 0.53 | | | $ | 0.54 | |
| Net accretion/amortization of purchase accounting adjustments included in net interest income | | $ | 3,610 | | | $ | 3,644 | | | $ | 2,835 | | | $ | 3,650 | | | $ | 6,186 | |
(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | At or For the Three Months Ended |
| | December 31, 2021 | | September 30,
2021 | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 |
Selected Financial Ratios and Other Data(1): | | | | | | | | | | |
| Performance Ratios (Annualized): | | | | | | | | | | |
Return on average assets (2) | | 0.72 | % | | 0.78 | % | | 1.03 | % | | 1.12 | % | | 1.09 | % |
Return on average tangible assets (2) (3) | | 0.75 | | | 0.82 | | | 1.08 | | | 1.18 | | | 1.14 | |
Return on average stockholders' equity (2) | | 5.65 | | | 6.05 | | | 7.88 | | | 8.59 | | | 8.65 | |
Return on average tangible stockholders' equity (2) (3) | | 8.59 | | | 9.20 | | | 12.07 | | | 13.22 | | | 13.43 | |
| Stockholders' equity to total assets | | 12.92 | | | 12.79 | | | 13.14 | | | 12.95 | | | 12.96 | |
Tangible stockholders' equity to tangible assets (3) | | 8.89 | | | 8.78 | | | 9.01 | | | 8.83 | | | 8.79 | |
Tangible common equity to tangible assets (3) | | 8.40 | | | 8.29 | | | 8.50 | | | 8.33 | | | 8.28 | |
| Net interest rate spread | | 2.88 | | | 2.80 | | | 2.75 | | | 2.78 | | | 2.79 | |
| Net interest margin | | 2.99 | | | 2.93 | | | 2.89 | | | 2.93 | | | 2.97 | |
Operating expenses to average assets (2) | | 2.15 | | | 1.98 | | | 1.80 | | | 1.83 | | | 2.40 | |
Efficiency ratio (2) (4) | | 72.04 | | | 67.43 | | | 60.21 | | | 54.73 | | | 59.86 | |
| Loans-to-deposits | | 88.60 | | | 83.71 | | | 83.06 | | | 82.84 | | | 82.27 | |
| | | | | | | | | | | | | | |
| | At or For the Year Ended December 31, |
| | 2021 | | 2020 |
| Performance Ratios: | | | | |
Return on average assets (2) | | 0.91 | % | | 0.55 | % |
Return on average tangible assets (2) (3) | | 0.95 | | | 0.57 | |
Return on average stockholders' equity (2) | | 7.02 | | | 4.20 | |
Return on average tangible stockholders' equity (2) (3) | | 10.73 | | | 6.59 | |
| Net interest rate spread | | 2.80 | | | 2.96 | |
| Net interest margin | | 2.93 | | | 3.16 | |
Operating expenses to average assets (2) | | 1.94 | | | 2.20 | |
Efficiency ratio (2) (4) | | 63.50 | | | 63.70 | |
(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | At or For the Three Months Ended |
| | December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
| | 2021 | | 2021 | | 2021 | | 2021 | | 2020 |
| Trust and Asset Management: | | | | | | | | | | |
| Wealth assets under administration and management (“AUA/M”) | | $ | 287,404 | | | $ | 274,807 | | | $ | 278,785 | | | $ | 274,172 | | | $ | 245,175 | |
| Nest Egg AUA/M | | 428,558 | | | 423,563 | | | 425,921 | | | 410,497 | | | 398,174 | |
| Total AUA/M | | 715,962 | | | 698,370 | | | 704,706 | | | 684,669 | | | 643,349 | |
| 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 | | 25.63 | | | 25.47 | | | 25.22 | | | 24.84 | | | 24.57 | |
Tangible common equity per common share at end of period (3) | | 15.93 | | | 15.78 | | | 15.58 | | | 15.26 | | | 14.98 | |
| Common shares outstanding at end of period | | 59,175,046 | | | 59,417,266 | | | 59,834,018 | | 60,329,504 | | 60,392,043 | |
| Preferred shares outstanding at end of period | | 57,370 | | | 57,370 | | | 57,370 | | | 57,370 | | | 57,370 | |
| Number of full-service customer facilities: | | 47 | | | 58 | | | 58 | | | 62 | | | 62 | |
| Quarterly Average Balances | | | | | | | | | | |
| Total securities | | $ | 1,710,143 | | | $ | 1,542,630 | | | $ | 1,501,484 | | | $ | 1,311,683 | | | $ | 1,209,543 | |
| Loans receivable, net | | 8,297,395 | | | 7,864,720 | | | 7,788,919 | | | 7,729,798 | | | 7,992,365 | |
| Total interest-earning assets | | 10,706,190 | | | 10,461,147 | | | 10,282,888 | | | 10,180,392 | | | 10,425,380 | |
| Total goodwill and core deposit intangible | | 519,401 | | | 520,765 | | | 522,122 | | | 523,499 | | | 525,511 | |
| Total assets | | 11,953,610 | | | 11,738,037 | | | 11,539,732 | | | 11,439,501 | | | 11,747,439 | |
| | | | | | | | | | |
| Time deposits | | 819,025 | | | 904,384 | | | 1,002,086 | | | 1,221,123 | | | 1,437,770 | |
| Total deposits (including non-interest-bearing deposits) | | 9,937,607 | | | 9,699,033 | | | 9,507,392 | | | 9,425,609 | | | 9,505,835 | |
| Total borrowed funds | | 361,500 | | | 371,189 | | | 363,531 | | | 357,812 | | | 590,295 | |
| Total interest-bearing liabilities | | 7,831,519 | | | 7,494,099 | | | 7,408,720 | | | 7,571,148 | | | 7,886,598 | |
| Non-interest bearing deposits | | 2,467,588 | | | 2,576,123 | | | 2,462,203 | | | 2,212,273 | | | 2,209,532 | |
| Stockholders’ equity | | 1,519,976 | | | 1,519,488 | | | 1,504,035 | | | 1,495,580 | | | 1,475,088 | |
| Tangible stockholders’ equity | | 1,000,575 | | | 998,723 | | | 981,913 | | | 972,081 | | | 949,577 | |
| Quarterly Yields | | | | | | | | | | |
| Total securities | | 1.57 | % | | 1.57 | % | | 1.62 | % | | 2.07 | % | | 2.38 | % |
| Loans receivable, net | | 3.89 | | | 3.98 | | | 3.97 | | | 4.09 | | | 4.23 | |
| Total interest-earning assets | | 3.28 | | | 3.24 | | | 3.25 | | | 3.38 | | | 3.53 | |
| | | | | | | | | | |
| Time deposits | | 0.84 | | | 0.94 | | | 1.03 | | | 1.21 | | | 1.39 | |
| Total cost of deposits (including non-interest-bearing deposits) | | 0.20 | | | 0.22 | | | 0.27 | | | 0.37 | | | 0.45 | |
| Total borrowed funds | | 3.14 | | | 3.11 | | | 3.31 | | | 3.14 | | | 2.72 | |
| Total interest-bearing liabilities | | 0.40 | | | 0.44 | | | 0.50 | | | 0.60 | | | 0.74 | |
| Net interest spread | | 2.88 | | | 2.80 | | | 2.75 | | | 2.78 | | | 2.79 | |
| Net interest margin | | 2.99 | | | 2.93 | | | 2.89 | | | 2.93 | | | 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.
OTHER ITEMS
(dollars in thousands, except per share amounts)
NON-GAAP RECONCILIATION
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| | December 31, 2021 | | September 30,
2021 | | June 30,
2021 | | March 31,
2021 | | December 31,
2020 |
| Core Earnings: | | | | | | | | | | |
Net income available to common stockholders (GAAP) | | $ | 21,653 | | | $ | 23,163 | | | $ | 29,551 | | | $ | 31,693 | | | $ | 32,060 | |
| Add (less) non-recurring and non-core items: | | | | | | | | | | |
| Merger related expenses | | 451 | | | 225 | | | 446 | | | 381 | | | 1,194 | |
| Branch consolidation expense | | 7,286 | | (1) | 4,014 | | | 26 | | | 1,011 | | | 3,336 | |
| Net loss (gain) on equity investments | | 1,252 | | | 466 | | | (576) | | | (8,287) | | | (24,487) | |
| FHLB advance prepayment fees | | — | | | — | | | — | | | — | | | 13,333 | |
| Gain on sale of PPP loans | | — | | | — | | | — | | | — | | | (5,101) | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Income tax (benefit) expense on items | | (2,144) | | | (1,138) | | | 26 | | | 1,666 | | | 2,832 | |
Core earnings (Non-GAAP) | | $ | 28,498 | | | $ | 26,730 | | | $ | 29,473 | | | $ | 26,464 | | | $ | 23,167 | |
| Core diluted earnings per share | | $ | 0.48 | | | $ | 0.45 | | | $ | 0.49 | | | $ | 0.44 | | | $ | 0.39 | |
| | | | | | | | | | |
| Core Ratios (Annualized): | | | | | | | | | | |
| Return on average assets | | 0.95 | % | | 0.90 | % | | 1.02 | % | | 0.94 | % | | 0.78 | % |
| Return on average tangible assets | | 0.99 | | | 0.95 | | | 1.07 | | | 0.98 | | | 0.82 | |
| Return on average tangible stockholders’ equity | | 11.30 | | | 10.62 | | | 12.04 | | | 11.04 | | | 9.71 | |
| Efficiency ratio | | 62.57 | | | 62.22 | | | 60.06 | | | 58.37 | | | 59.69 | |
| (1) Includes $2.0 million of gains related to the sale of two branches for the three months ended December 31, 2021. |
| | | | | | | | | | | | | | |
| | For the Years Ended December 31, |
| | 2021 | | 2020 |
| Core Earnings: | | | | |
Net income available to common stockholders (GAAP) | | $ | 106,060 | | | $ | 61,212 | |
| Add (less) non-recurring and non-core items: | | | | |
| Merger related expenses | | 1,503 | | | 15,947 | |
| Branch consolidation expense | | 12,337 | | (1) | 7,623 | |
| Net gain on equity investments | | (7,145) | | | (20,911) | |
| FHLB advance prepayment fees | | — | | | 14,257 | |
| Gain on sale of PPP loans | | — | | | (5,101) | |
| | | | |
| Two River and Country Bank opening credit loss expense under the CECL model | | — | | | 2,447 | |
| | | | |
| | | | |
| | | | |
| Income tax benefit on items | | (1,590) | | | (3,288) | |
Core earnings (Non-GAAP) | | $ | 111,165 | | | $ | 72,186 | |
| Core diluted earnings per share | | $ | 1.86 | | | $ | 1.20 | |
| | | | |
| Core Ratios: | | | | |
| Return on average assets | | 0.95 | % | | 0.64 | % |
| Return on average tangible assets | | 1.00 | | | 0.68 | |
| Return on average tangible stockholders’ equity | | 11.25 | | | 7.77 | |
| Efficiency ratio | | 60.84 | | | 57.81 | |
| (1) Includes $2.0 million of gains related to the sale of two branches for the year ended December 31, 2021. |
(continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
| | 2021 | | 2021 | | 2021 | | 2021 | | 2020 |
| Tangible Equity: | | | | | | | | | | |
| Total stockholders' equity | | $ | 1,516,553 | | | $ | 1,513,249 | | | $ | 1,508,789 | | | $ | 1,498,719 | | | $ | 1,484,130 | |
| Less: | | | | | | | | | | |
| Goodwill | | 500,319 | | | 500,319 | | | 500,319 | | | 500,319 | | | 500,319 | |
| Core deposit intangible | | 18,215 | | | 19,558 | | | 20,912 | | | 22,273 | | | 23,668 | |
| Tangible stockholders’ equity | | 998,019 | | | 993,372 | | | 987,558 | | | 976,127 | | | 960,143 | |
| Less: | | | | | | | | | | |
| Preferred stock | | 55,527 | | | 55,527 | | | 55,527 | | | 55,527 | | | 55,527 | |
| Tangible common equity | | $ | 942,492 | | | $ | 937,845 | | | $ | 932,031 | | | $ | 920,600 | | | $ | 904,616 | |
| | | | | | | | | | |
| Tangible Assets: | | | | | | | | | | |
| Total assets | | $ | 11,739,616 | | | $ | 11,829,688 | | | $ | 11,483,901 | | | $ | 11,577,472 | | | $ | 11,448,313 | |
| Less: | | | | | | | | | | |
| Goodwill | | 500,319 | | | 500,319 | | | 500,319 | | | 500,319 | | | 500,319 | |
| Core deposit intangible | | 18,215 | | | 19,558 | | | 20,912 | | | 22,273 | | | 23,668 | |
| Tangible assets | | $ | 11,221,082 | | | $ | 11,309,811 | | | $ | 10,962,670 | | | $ | 11,054,880 | | | $ | 10,924,326 | |
| | | | | | | | | | |
| Tangible stockholders' equity to tangible assets | | 8.89 | % | | 8.78 | % | | 9.01 | % | | 8.83 | % | | 8.79 | % |
| Tangible common equity to tangible assets | | 8.40 | % | | 8.29 | % | | 8.50 | % | | 8.33 | % | | 8.28 | % |
