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OceanFirst Financial Corp. Announces Quarterly and Annual Earnings and Financial Results
ソース: Nasdaq GlobeNewswire / 18 1 2024 16:15:02 America/New_York
RED BANK, N.J., Jan. 18, 2024 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:“OCFC”) (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), announced net income available to common stockholders of $26.7 million, or $0.46 per diluted share, for the quarter ended December 31, 2023, as compared to $52.3 million, or $0.89 per diluted share, for the corresponding prior year period, and $19.7 million, or $0.33 per diluted share, for the prior linked quarter. For the year ended December 31, 2023, the Company reported net income available to common stockholders of $100.0 million, or $1.70 per diluted share, as compared to $142.6 million, or $2.42 per diluted share, for the prior year. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information):
For the Three Months Ended, For the Year Ended, Performance Ratios (Quarterly Ratios Annualized): December 31, September 30, December 31, December 31, December 31, 2023 2023 2022 2023 2022 Return on average assets 0.78 % 0.57 % 1.62 % 0.74 % 1.15 % Return on average stockholders’ equity 6.41 4.75 13.25 6.13 9.24 Return on average tangible stockholders’ equity (a) 9.33 6.93 19.85 8.97 13.96 Return on average tangible common equity (a) 9.81 7.29 20.97 9.44 14.76 Efficiency ratio 60.38 63.37 44.56 61.71 53.80 Net interest margin 2.82 2.91 3.64 3.02 3.37 (a) Return on average tangible stockholders’ equity and return on average tangible common equity (“ROTCE”) are non-GAAP (“generally accepted accounting principles”) financial measures and exclude the impact of intangible assets and goodwill from both assets and stockholders’ equity. ROTCE also excludes preferred stock from stockholders’ equity. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.
Core earnings1 for the quarter and year ended December 31, 2023 were $26.3 million and $104.7 million, respectively, or $0.45 and $1.78 per diluted share, a decrease from $39.5 million and $138.0 million, or $0.67 and $2.34 per diluted share, for the corresponding prior year periods, and an increase from $18.6 million, or $0.32 per diluted share, for the prior linked quarter.Core earnings PTPP1 for the quarter and year ended December 31, 2023 were $37.9 million and $156.6 million, respectively, or $0.65 and $2.66 per diluted share, as compared to $56.5 million and $190.7 million, or $0.96 and $3.24 per diluted share, for the corresponding prior year periods, and $35.0 million, or $0.59 per diluted share, for the prior linked quarter. Selected performance metrics are as follows:
For the Three Months Ended, For the Year Ended, December 31, September 30, December 31, December 31, December 31, Core Ratios1 (Quarterly Ratios Annualized): 2023 2023 2022 2023 2022 Return on average assets 0.77 % 0.54 % 1.22 % 0.78 % 1.11 % Return on average tangible stockholders’ equity 9.20 6.54 15.01 9.39 13.50 Return on average tangible common equity 9.67 6.88 15.86 9.89 14.28 Efficiency ratio 60.02 64.29 50.78 60.61 54.21 Core diluted earnings per share $ 0.45 $ 0.32 $ 0.67 $ 1.78 $ 2.34 Core PTPP diluted earnings per share 0.65 0.59 0.96 2.66 3.24 Key developments for the recent quarter are described below:
- Deposits: Total deposits remained stable decreasing less than 1% for the quarter to $10.4 billion, and grew 8% for the year. Additionally, the loan-to-deposit ratio was 97.70% at December 31, 2023.
- Capital: The Company’s estimated common equity tier 1 capital ratio increased to 10.88%, as compared to 9.93% in the prior year. Book value and tangible book value per share were $27.96 and $18.35, respectively, increasing $1.15 and $1.27 from the prior year.2
- Expenses: Non-interest expense decreased by 7% to $60.2 million from the prior linked quarter and remained relatively flat compared to the prior year period. Non-interest expense included a $1.7 million FDIC special assessment charge in the current quarter.
Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased to report on our current quarter results; rounding out the year positively and executing on our strategies to improve operating expenses, diversify and strengthen our deposit base, and bolster our capital position during a tumultuous year for the industry.” Mr. Maher added, “As we turn to 2024, the Company is well positioned to create shareholder value and will remain focused on high quality growth, expense discipline, and prudent balance sheet management.”
The Company’s Board of Directors declared its 108th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on February 16, 2024 to common stockholders of record on February 5, 2024. The Company’s Board of Directors also 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, 2024 to preferred stockholders of record on January 31, 2024.
1 Core earnings and core earnings before income taxes and provision for credit losses (“PTPP or Pre-Tax-Pre-Provision”), and ratios derived therefrom, are non-GAAP financial measures. For the periods presented, core earnings exclude merger related expenses, net branch consolidation expense (benefit), net (gain) loss on equity investments, net loss on sale of investments, Federal Deposit Insurance Corporation (“FDIC”) special assessment, and the income tax effect of these items, (collectively referred to as “non-core” operations). PTPP excludes the aforementioned pre-tax “non-core” items along with income tax expense (benefit) and provision for credit losses (benefit). Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.
2 Tangible book value per common share and tangible common equity to tangible assets are non-GAAP financial measures and exclude the impact of intangible assets, goodwill, and preferred equity from both stockholders’ equity and total assets. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.Results of Operations
The current quarter results were impacted by the following matters. Net interest income and margin were adversely impacted by a continued mix-shift to and repricing of higher cost deposits that outpaced the increase in yields on interest-earning assets. Deposit betas increased modestly to 38%, from 35% in the prior linked quarter.3 Operating expenses included a special assessment charge of $1.7 million related to the Federal Deposit Insurance Corporation’s final rule to recover the loss to the Deposit Insurance Fund in 2023. Additionally, operating expenses reflect the net realization of the Company’s performance improvement initiatives and strategic investments made over the past year.
3 Deposit beta measures the change in the interest rates paid for interest-bearing deposit accounts versus the change in the federal funds target rate. Represents the deposit beta for total deposits (interest-bearing and non-interest bearing) for the current rate cycle (since December 31, 2021).
Net Interest Income and Margin
Quarter ended December 31, 2023 vs. December 31, 2022
Net interest income decreased to $87.8 million, from $106.5 million, primarily reflecting the net impact of the higher interest rate environment.
Net interest margin decreased to 2.82%, from 3.64%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.10% for the respective quarters, net interest margin decreased to 2.77%, from 3.54%. Net interest margin decreased primarily due to the increase in cost of funds outpacing the increase in yield on average interest earning assets.
Average interest-earning assets increased by $743.2 million, primarily driven by increases of $326.8 million in interest-earning deposits and short-term investments and $318.1 million in total loans. The yield on average interest earning assets increased to 5.16%, from 4.46%.
The cost of average interest-bearing liabilities increased to 2.91%, from 1.09%, primarily due to higher cost of deposits. The total cost of deposits (including non-interest bearing deposits) increased to 2.22%, from 0.53%.
Year ended December 31, 2023 vs. December 31, 2022
Net interest income decreased to $369.7 million, from $377.5 million, reflecting the net impact of the higher interest rate environment.
Net interest margin decreased to 3.02%, from 3.37%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.11% for the respective years, net interest margin decreased to 2.97%, from 3.26%.
Average interest-earning assets increased by $1.06 billion, primarily driven by increases in total loans of $693.2 million and interest-earning deposits and short-term investments of $254.6 million. The yield on average interest earning assets increased to 4.96%, from 3.85%.
The cost of average interest-bearing liabilities increased to 2.45%, from 0.65%, primarily due to higher cost of deposits and Federal Home Loan Bank (“FHLB”) advances. The total cost of deposits (including non-interest bearing deposits) increased to 1.68%, from 0.31%.
Quarter ended December 31, 2023 vs. September 30, 2023
Net interest income decreased by $3.2 million, reflecting a decrease in net interest margin to 2.82%, from 2.91%, as the increase in cost of funds outpaced the increase in yield of average interest earning assets. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.06% for the respective quarters, net interest margin decreased to 2.77%, from 2.85%.
Average interest-earning assets decreased by $35.7 million, while the yield on average interest-earning assets increased to 5.16%, from 5.08%.
The total cost of average interest-bearing liabilities increased to 2.91%, from 2.71%, primarily due to higher cost of deposits. Total cost of deposits (including non-interest bearing deposits) increased to 2.22%, from 1.99%. Average interest-bearing liabilities increased $30.6 million, primarily due to an increase in total deposits, partially offset by a decrease in FHLB advances.
Provision for Credit Losses
Provision for credit losses for the quarter and year ended December 31, 2023, was $3.2 million and $17.7 million, respectively, as compared to $3.6 million and $7.8 million for the corresponding prior year periods, and $10.3 million in the prior linked quarter. The current quarter provision was impacted by the net effect of credit rating migrations, declines in prepayment assumptions, and use of an external downside macro-economic forecast scenario.
Net loan charge-offs were $35,000 and $8.4 million for the quarter and year ended December 31, 2023, respectively. Net loan recoveries were $5,000 and $340,000 for the quarter and year ended December 31, 2022, respectively. Net loan charge-offs were $8.3 million in the prior linked quarter, which primarily related to a partial charge-off of $8.4 million on a single credit relationship. Refer to “Asset Quality” section for further discussion.
Non-interest Income
Quarter ended December 31, 2023 vs. December 31, 2022
Other income decreased to $11.9 million, as compared to $27.6 million. Other income was favorably impacted by non-core operations of $2.2 million and $17.2 million, for the respective quarters, related to net gains on equity investments, which included a $17.5 million unrealized gain on the Company’s investment in Auxilior Capital Partners, Inc. in the prior year.
Excluding non-core operations, other income decreased $679,000. The primary driver was a decrease in commercial loan swap income of $490,000, which was adversely impacted by the current interest rate environment resulting in lower swap volume.
Year ended December 31, 2023 vs. December 31, 2022
Other income decreased to $33.6 million, as compared to $59.1 million. Other income was adversely impacted by non-core operations of $4.4 million for the current year, primarily related to $5.3 million of losses related to the sale of investments in the first quarter. Other income for the prior year was favorably impacted by non-core operations of $9.7 million, primarily related to net gains on equity investments.
Excluding non-core operations, other income decreased $11.4 million. The primary drivers were decreases in commercial loan swap income of $6.3 million on lower volume, fees and service charges of $1.5 million primarily due to lower title activity, and bank owned life insurance of $1.3 million related to non-recurring death benefits recognized in the prior year. Additionally, bankcard services revenue decreased $3.3 million due to the Durbin Amendment, which became effective for the Company on July 1, 2022.
Quarter ended December 31, 2023 vs. September 30, 2023
Other income in the prior linked quarter was $10.8 million, which included non-core operations of $1.5 million related to net gains on equity investments. Excluding non-core operations, other income increased by $375,000 primarily due to gain on sales of loans.
Non-interest Expense
Quarter ended December 31, 2023 vs. December 31, 2022
Operating expenses increased to $60.2 million, as compared to $59.7 million. Operating expenses were adversely impacted by non-core items of $1.7 million from the FDIC special assessment in the current year and $387,000 from merger related and branch consolidation expenses in the prior year.
Excluding non-core operations, operating expenses decreased $815,000. The primary drivers were decreases in compensation and benefits of $1.8 million due to lower incentive compensation and professional fees of $1.8 million tied to the Company’s performance improvement initiatives and strategic investments. This was partly offset by increases in data processing expense of $1.8 million, partly driven by one-time recoveries recorded in the prior year, and federal deposit insurance and regulatory assessments of $799,000, primarily due to new assessment rates that went into effect on January 1, 2023.
Year ended December 31, 2023 vs. December 31, 2022
Operating expenses increased to $248.9 million, as compared to $234.9 million. Operating expenses for the years were adversely impacted by $1.8 million and $3.4 million of non-core operations, respectively.
Excluding non-core operations, operating expenses increased by $15.7 million. This was due to increases in professional fees of $5.3 million and compensation and benefits of $3.9 million related to the Company’s performance improvement initiatives and strategic investments, and related severance and other program costs. Additionally, there were increases in federal deposit insurance and regulatory assessments of $2.1 million and data processing expense of $1.7 million, which were driven by the same factors as the three months ended. Marketing expense also increased $1.3 million due to the Company’s enhanced digital strategy efforts, and other operating expenses included higher expenses of $1.1 million primarily related to real estate charges on assets sold during the period from assets held for sale.
Quarter ended December 31, 2023 vs. September 30, 2023
Excluding non-core operations, operating expenses decreased by $6.0 million. This was primarily due to decreases in compensation and benefits expense of $3.4 million and professional fees of $2.4 million due to the Company’s improvement initiatives and strategic investments noted above.
Income Tax Expense
The provision for income taxes was $8.6 million and $32.7 million for the quarter and year ended December 31, 2023, respectively, as compared to $17.4 million and $46.6 million, for the same prior year periods, and $6.5 million for the prior linked quarter. The effective tax rate was 23.6% and 23.9% for the quarter and year ended December 31, 2023, respectively, as compared to 24.6% and 24.0% for the same prior year periods, and 23.9% for the prior linked quarter.
Financial Condition
December 31, 2023 vs. December 31, 2022
Total assets increased by $434.4 million to $13.54 billion, from $13.10 billion, primarily due to purchases of available-for-sale debt securities and loan growth. Available-for-sale debt securities increased by $296.2 million to $753.9 million, from $457.6 million, primarily due to purchases of variable-rate mortgage-backed securities in the fourth quarter of 2023. Total loans increased by $276.5 million to $10.19 billion, from $9.92 billion, due to loan originations and growth.
Other assets decreased by $41.4 million to $179.7 million, from $221.1 million, primarily due to a decrease in market values associated with customer interest rate swap programs.
Total liabilities increased by $357.9 million to $11.88 billion, from $11.52 billion. Deposits increased by $759.7 million to $10.43 billion, from $9.68 billion. Time deposits increased by $903.4 million to $2.45 billion, from $1.54 billion, or 23.4% and 15.9% of total deposits, respectively. Retail time deposits increased $1.13 billion, while brokered time deposits decreased $242.0 million. The loans-to-deposit ratio was 97.7%, as compared to 102.5%. FHLB advances decreased by $362.5 million to $848.6 million, from $1.21 billion due to mix shift in funding sources from FHLB advances to deposits.
Other liabilities decreased by $45.4 million to $300.7 million, from $346.2 million, primarily due to a decrease in the market values associated with customer interest rate swaps and related collateral received from counterparties.
Total stockholders’ equity increased to $1.66 billion, as compared to $1.59 billion, primarily reflecting net income, net of dividends, for the year ended December 31, 2023. Additionally, accumulated other comprehensive loss decreased by $15.1 million primarily due to increases in fair market value of available-for-sale debt securities, net of tax.
The Company's estimated common equity tier 1 capital ratio increased to 10.88%, which included an estimated 30 bps improvement due to balance sheet optimization efforts completed in the fourth quarter.
For the year ended December 31, 2023, the Company did not repurchase shares under its stock repurchase program. There were 2,934,438 shares available for repurchase at December 31, 2023 under the existing repurchase program. Book value per common share increased to $27.96, as compared to $26.81. Tangible book value per common share2 increased to $18.35, as compared to $17.08.
Asset Quality
December 31, 2023 vs. December 31, 2022
The Company’s non-performing loans increased to $29.5 million from $23.3 million and represented 0.29% and 0.23% of total loans, respectively. The increase in non-performing loans was primarily driven by the remaining exposure of $8.8 million on a single credit relationship reported in the prior quarter.
The allowance for loan credit losses as a percentage of total non-performing loans was 227.21%, as compared to 244.25%. The level of 30 to 89 days delinquent loans increased to $19.2 million, from $14.1 million. The Company’s allowance for loan credit losses was 0.66% of total loans as compared to 0.57%. Refer to “Provision for Credit Losses” section for further discussion.
The Company’s asset quality, excluding purchased with credit deterioration (“PCD”) loans, were as follows. Non-performing loans increased to $26.4 million, from $19.3 million. The allowance for loan credit losses as a percentage of total non-performing loans was 254.64%, as compared to 294.10%. The level of 30 to 89 days delinquent loans, excluding non-performing loans, increased to $17.7 million, from $10.5 million. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $74.7 million, or 0.73% of total loans, as compared to $68.2 million, or 0.69% of total loans.
Explanation of Non-GAAP Financial Measures
Reported amounts are presented in accordance with GAAP. The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding non-core operations and in some instances excluding income taxes and provision for credit losses, and reporting equity and asset amounts excluding intangible assets, goodwill or preferred stock, which can vary from period to period, provides a better comparison of period-to-period operating performance. 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 that may be presented by other companies. Refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.
Annual Meeting
The Company also announced today that its Annual Meeting of Stockholders will be held on Tuesday, May 21, 2024 at 8:00 a.m. Eastern Time. The record date for stockholders to vote at the Annual Meeting is Monday, March 25, 2024. 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 19, 2024 at 11:00 a.m. Eastern Time. The direct dial number for the call is 1-833-470-1428, toll free, using the access code 040735. 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 247218, from one hour after the end of the call until February 16, 2024. The conference call will also be available (listen-only) by internet webcast at www.oceanfirst.com - in the Investor Relations section.
OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank N.A., founded in 1902, is a $13.5 billion regional bank providing financial services throughout New Jersey and in the major metropolitan markets of Philadelphia, New York, Baltimore, and Boston. OceanFirst Bank delivers commercial and residential financing, treasury management, trust and asset management, and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey. To learn more about OceanFirst, go to www.oceanfirst.com.
Forward-Looking Statements
In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: changes in interest rates, inflation, general economic conditions, potential recessionary conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, potential goodwill impairment, natural disasters, potential increases to flood insurance premiums, the current or anticipated impact of military conflict, terrorism or other geopolitical events, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, changes in liquidity, including the size and composition of the Company’s deposit portfolio, including the percentage of uninsured deposits in the portfolio, competition, demand for financial services in the Company’s market area, changes in consumer spending, borrowing and saving habits, changes in accounting principles, a failure in or breach of the Company’s operational or security systems or infrastructure, including cyberattacks, the failure to maintain current technologies, failure to retain or attract employees, the effect of our rating under the Community Reinvestment Act, the impact of the COVID-19 pandemic or any other pandemic on our operations and financial results and those of our customers and the Bank’s ability to successfully integrate acquired operations. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, under Item 1A - Risk Factors and elsewhere, and subsequent securities filings and should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)December 31, 2023 September 30, 2023 December 31, 2022 (Unaudited) (Unaudited) Assets Cash and due from banks $ 153,718 $ 408,882 $ 167,946 Debt securities available-for-sale, at estimated fair value 753,892 453,208 457,648 Debt securities held-to-maturity, net of allowance for securities credit losses of $1,133 at December 31, 2023, $932 at September 30, 2023, and $1,128 at December 31, 2022 (estimated fair value of $1,068,438 at December 31, 2023, $1,047,342 at September 30, 2023, and $1,110,041 at December 31, 2022) 1,159,735 1,189,339 1,221,138 Equity investments 100,163 97,908 102,037 Restricted equity investments, at cost 93,766 82,484 109,278 Loans receivable, net of allowance for loan credit losses of $67,137 at December 31, 2023, $63,877 at September 30, 2023, and $56,824 at December 31, 2022 10,136,721 10,068,156 9,868,718 Loans held-for-sale 5,166 — 690 Interest and dividends receivable 51,874 50,030 44,704 Premises and equipment, net 121,372 122,646 126,705 Bank owned life insurance 266,498 265,071 261,603 Assets held for sale 28 3,004 2,719 Goodwill 506,146 506,146 506,146 Core deposit intangible 9,513 10,489 13,497 Other assets 179,661 240,820 221,067 Total assets $ 13,538,253 $ 13,498,183 $ 13,103,896 Liabilities and Stockholders’ Equity Deposits $ 10,434,949 $ 10,533,929 $ 9,675,206 Federal Home Loan Bank advances 848,636 606,056 1,211,166 Securities sold under agreements to repurchase with customers 73,148 82,981 69,097 Other borrowings 196,456 196,183 195,403 Advances by borrowers for taxes and insurance 22,407 29,696 21,405 Other liabilities 300,712 411,734 346,155 Total liabilities 11,876,308 11,860,579 11,518,432 Stockholders’ equity: OceanFirst Financial Corp. stockholders’ equity 1,661,163 1,636,891 1,584,662 Non-controlling interest 782 713 802 Total stockholders’ equity 1,661,945 1,637,604 1,585,464 Total liabilities and stockholders’ equity $ 13,538,253 $ 13,498,183 $ 13,103,896 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, 2023 2023 2022 2023 2022 |--------------------- (Unaudited) ---------------------| (Unaudited) Interest income: Loans $ 137,110 $ 133,931 $ 117,046 $ 521,865 $ 390,386 Debt securities 15,444 15,223 10,951 59,273 34,407 Equity investments and other 7,880 9,256 2,280 26,836 6,382 Total interest income 160,434 158,410 130,277 607,974 431,175 Interest expense: Deposits 59,467 53,287 13,425 172,018 31,021 Borrowed funds 13,143 14,127 10,364 66,225 22,677 Total interest expense 72,610 67,414 23,789 238,243 53,698 Net interest income 87,824 90,996 106,488 369,731 377,477 Provision for credit losses 3,153 10,283 3,647 17,678 7,768 Net interest income after provision for credit losses 84,671 80,713 102,841 352,053 369,709 Other income: Bankcard services revenue 1,531 1,507 1,437 5,912 9,219 Trust and asset management revenue 610 662 551 2,529 2,386 Fees and service charges 5,315 5,178 5,776 21,254 22,802 Net gain on sales of loans 309 66 10 428 358 Net gain (loss) on equity investments 2,176 1,452 17,187 (3,732 ) 9,685 Net gain from other real estate operations — — — — 48 Income from bank owned life insurance 1,427 1,390 1,697 5,280 6,578 Commercial loan swap income 29 11 519 741 7,065 Other 464 496 374 1,212 953 Total other income 11,861 10,762 27,551 33,624 59,094 Operating expenses: Compensation and employee benefits 32,126 35,534 33,943 135,802 131,915 Occupancy 5,218 5,466 5,027 21,188 20,817 Equipment 1,172 1,172 1,131 4,650 4,987 Marketing 1,112 1,183 705 4,238 2,947 Federal deposit insurance and regulatory assessments 4,386 2,557 1,924 11,157 7,359 Data processing 6,430 6,086 4,629 24,835 23,095 Check card processing 991 1,154 1,243 4,640 4,971 Professional fees 2,858 5,258 4,697 18,297 12,993 Amortization of core deposit intangible 976 987 1,159 3,984 4,718 Branch consolidation expense, net — — 111 70 713 Merger related expenses — — 276 22 2,735 Other operating expense 4,920 5,087 4,883 20,029 17,631 Total operating expenses 60,189 64,484 59,728 248,912 234,881 Income before provision for income taxes 36,343 26,991 70,664 136,765 193,922 Provision for income taxes 8,591 6,459 17,353 32,700 46,565 Net income 27,752 20,532 53,311 104,065 147,357 Net income (loss) attributable to non-controlling interest 70 (135 ) 39 36 754 Net income attributable to OceanFirst Financial Corp. 27,682 20,667 53,272 104,029 146,603 Dividends on preferred shares 1,004 1,004 1,004 4,016 4,016 Net income available to common stockholders $ 26,678 $ 19,663 $ 52,268 $ 100,013 $ 142,587 Basic earnings per share $ 0.46 $ 0.33 $ 0.89 $ 1.70 $ 2.43 Diluted earnings per share $ 0.46 $ 0.33 $ 0.89 $ 1.70 $ 2.42 Average basic shares outstanding 59,120 59,104 58,584 58,948 58,730 Average diluted shares outstanding 59,123 59,111 58,751 58,957 58,878 OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)LOANS RECEIVABLE At December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Commercial: Commercial real estate - investor $ 5,353,974 $ 5,334,279 $ 5,319,686 $ 5,296,661 $ 5,171,952 Commercial real estate - owner-occupied 943,891 957,216 981,618 986,366 997,367 Commercial and industrial 666,532 652,119 620,284 622,201 622,372 Total commercial 6,964,397 6,943,614 6,921,588 6,905,228 6,791,691 Consumer: Residential real estate 2,979,534 2,928,259 2,906,556 2,881,811 2,861,991 Home equity loans and lines and other consumer (“other consumer”) 250,664 251,698 255,486 252,773 264,372 Total consumer 3,230,198 3,179,957 3,162,042 3,134,584 3,126,363 Total loans 10,194,595 10,123,571 10,083,630 10,039,812 9,918,054 Deferred origination costs (fees), net 9,263 8,462 8,267 7,332 7,488 Allowance for loan credit losses (67,137 ) (63,877 ) (61,791 ) (60,195 ) (56,824 ) Loans receivable, net $ 10,136,721 $ 10,068,156 $ 10,030,106 $ 9,986,949 $ 9,868,718 Mortgage loans serviced for others $ 68,217 $ 52,796 $ 50,820 $ 50,421 $ 51,736 At December 31, 2023 Average Yield Loan pipeline (1): Commercial 8.61 % $ 124,707 $ 50,756 $ 39,164 $ 236,550 $ 114,232 Residential real estate 7.14 49,499 66,682 58,022 61,258 36,958 Other consumer 8.50 8,819 13,795 18,621 20,589 14,890 Total 8.21 % $ 183,025 $ 131,233 $ 115,807 $ 318,397 $ 166,080 For the Three Months Ended December 31, September 30, June 30, March 31, December 31, 2023 2023 2023 2023 2022 Average Yield Loan originations: Commercial 7.68 % $ 94,294 $ 90,263 $ 197,732 $ 200,504 $ 539,949 Residential real estate 7.05 113,227 92,299 100,542 65,580 101,530 (2) Other consumer 8.19 16,971 17,019 22,487 15,927 42,624 Total 7.40 % $ 224,492 $ 199,581 $ 320,761 $ 282,011 $ 684,103 Loans sold $ 20,138 $ 15,404 $ 18,664 $ 3,861 $ 2,340 (1) Loan pipeline includes loans approved but not funded. (2) Excludes residential real estate loan pool purchases of $9.9 million for the three months ended December 31, 2022. DEPOSITS At December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Type of Account Non-interest-bearing $ 1,657,119 $ 1,827,381 $ 1,854,136 $ 1,984,197 $ 2,101,308 Interest-bearing checking 3,911,766 3,708,874 3,537,834 3,697,223 3,829,683 Money market 1,021,805 860,025 770,440 615,993 714,386 Savings 1,398,837 1,484,000 1,229,897 1,308,715 1,487,809 Time deposits (1) 2,445,422 2,653,649 2,766,030 2,386,967 1,542,020 Total deposits $ 10,434,949 $ 10,533,929 $ 10,158,337 $ 9,993,095 $ 9,675,206 (1) Includes brokered time deposits of $631.5 million, $995.5 million, $1.42 billion, $1.24 billion, and $873.4 million at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively. OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)ASSET QUALITY (1) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Non-performing loans: Commercial real estate - investor $ 20,820 $ 20,723 $ 13,000 $ 13,643 $ 10,483 Commercial real estate - owner-occupied 351 240 565 251 4,025 Commercial and industrial 304 1,120 199 162 331 Residential real estate 5,542 5,624 6,174 5,650 5,969 Other consumer 2,531 2,391 2,820 2,731 2,457 Total non-performing loans $ 29,548 $ 30,098 $ 22,758 $ 22,437 $ 23,265 Delinquent loans 30 to 89 days $ 19,202 $ 20,591 $ 3,136 $ 11,232 $ 14,148 Modifications to borrowers experiencing financial difficulty(2) Non-performing (included in total non-performing loans above) $ 6,420 $ 6,679 $ 6,882 $ 6,556 $ 6,361 Performing 15,361 7,645 7,516 7,619 7,530 Total modification to borrowers experiencing financial difficulty(2) $ 21,781 $ 14,324 $ 14,398 $ 14,175 $ 13,891 Allowance for loan credit losses $ 67,137 $ 63,877 $ 61,791 $ 60,195 $ 56,824 Allowance for loan credit losses as a percent of total loans receivable(3) 0.66 % 0.63 % 0.61 % 0.60 % 0.57 % Allowance for loan credit losses as a percent of total non-performing loans(3) 227.21 212.23 271.51 268.28 244.25 Non-performing loans as a percent of total loans receivable 0.29 0.30 0.23 0.22 0.23 Non-performing assets as a percent of total assets 0.22 0.22 0.17 0.17 0.18 Supplemental PCD and non-performing loans PCD loans, net of allowance for loan credit losses $ 16,122 $ 18,640 $ 18,872 $ 20,513 $ 27,129 Non-performing PCD loans 3,183 3,177 3,171 3,929 3,944 Delinquent PCD and non-performing loans 30 to 89 days 1,516 13,007 1,976 2,248 3,657 PCD modifications to borrowers experiencing financial difficulty(2) 771 750 755 758 765 Asset quality, excluding PCD loans(4) Non-performing loans 26,365 26,921 19,587 18,508 19,321 Delinquent loans 30 to 89 days (excludes non-performing loans) 17,686 7,584 1,160 8,984 10,491 Modification to borrowers experiencing financial difficulty(2) 21,010 13,574 13,643 13,417 13,126 Allowance for loan credit losses as a percent of total non-performing loans(3) 254.64 % 237.28 % 315.47 % 325.24 % 294.10 % Non-performing loans as a percent of total loans receivable 0.26 0.27 0.19 0.18 0.19 Non-performing assets as a percent of total assets 0.19 0.20 0.14 0.14 0.15 (1) At December 31, 2023 and September 30, 2023, non-performing loans included the remaining exposure of $8.8 million on a commercial real estate relationship that was partially charged-off during the quarter ended September 30, 2023. (2) For periods in 2023, balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings. For the 2022 period, the balances represent only troubled debt restructurings. (3) 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 $7.5 million, $8.8 million, $9.8 million, $10.5 million, and $11.4 million at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively. (4) All balances and ratios exclude PCD loans. NET LOAN (CHARGE-OFFS) RECOVERIES For the Three Months Ended December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Net loan (charge-offs) recoveries: Loan charge-offs $ (98 ) $ (8,379 ) $ (206 ) $ (10 ) $ (138 ) Recoveries on loans 63 108 83 57 143 Net loan (charge-offs) recoveries $ (35 ) $ (8,271 ) $ (123 ) $ 47 $ 5 Net loan (charge-offs) recoveries to average total loans (annualized) — % 0.33 % — % NM* NM* Net loan (charge-offs) recoveries detail: Commercial $ 9 $ (8,332 ) $ (117 ) $ — $ (46 ) Residential real estate 9 17 9 8 9 Other consumer (53 ) 44 (15 ) 39 42 Net loan (charge-offs) recoveries $ (35 ) $ (8,271 ) $ (123 ) $ 47 $ 5 * Not meaningful as amounts are net loan recoveries.
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOMEFor the Three Months Ended December 31, 2023 September 30, 2023 December 31, 2022 (dollars in thousands) Average
BalanceInterest Average
Yield/
Cost (1)Average
BalanceInterest Average
Yield/
Cost (1)Average
BalanceInterest Average
Yield/
Cost (1)Assets: Interest-earning assets: Interest-earning deposits and short-term investments $ 396,843 $ 5,423 5.42 % $ 470,825 $ 6,440 5.43 % $ 70,023 $ 634 3.59 % Securities(2) 1,863,136 17,901 3.81 1,873,450 18,039 3.82 1,764,764 12,597 2.83 Loans receivable, net(3) Commercial 6,937,191 105,260 6.02 6,923,743 103,069 5.91 6,715,896 88,991 5.26 Residential real estate 2,957,671 27,934 3.78 2,918,612 26,765 3.67 2,841,073 24,532 3.45 Other consumer 250,300 3,916 6.21 252,126 4,097 6.45 262,911 3,523 5.32 Allowance for loan credit losses, net of deferred loan costs and fees (56,001 ) — — (53,959 ) — — (48,776 ) — — Loans receivable, net 10,089,161 137,110 5.40 10,040,522 133,931 5.30 9,771,104 117,046 4.76 Total interest-earning assets 12,349,140 160,434 5.16 12,384,797 158,410 5.08 11,605,891 130,277 4.46 Non-interest-earning assets 1,243,967 1,252,416 1,228,520 Total assets $ 13,593,107 $ 13,637,213 $ 12,834,411 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Interest-bearing checking $ 3,908,517 19,728 2.00 % $ 3,692,500 14,938 1.61 % $ 3,989,403 4,911 0.49 % Money market 941,859 7,520 3.17 832,729 5,698 2.71 738,637 917 0.49 Savings 1,446,935 5,193 1.42 1,391,811 3,311 0.94 1,539,175 285 0.07 Time deposits 2,596,706 27,026 4.13 2,867,921 29,340 4.06 1,486,410 7,312 1.95 Total 8,894,017 59,467 2.65 8,784,961 53,287 2.41 7,753,625 13,425 0.69 FHLB advances 615,172 7,470 4.82 701,343 8,707 4.93 632,207 6,475 4.06 Securities sold under agreements to repurchase 80,181 387 1.91 76,620 261 1.35 88,191 41 0.18 Other borrowings(4) 321,369 5,286 6.53 317,210 5,159 6.45 195,167 3,848 7.82 Total borrowings 1,016,722 13,143 5.13 1,095,173 14,127 5.12 915,565 10,364 4.49 Total interest-bearing liabilities 9,910,739 72,610 2.91 9,880,134 67,414 2.71 8,669,190 23,789 1.09 Non-interest-bearing deposits 1,739,499 1,841,198 2,221,884 Non-interest-bearing liabilities(4) 292,170 272,982 378,481 Total liabilities 11,942,408 11,994,314 11,269,555 Stockholders’ equity 1,650,699 1,642,899 1,564,856 Total liabilities and equity $ 13,593,107 $ 13,637,213 $ 12,834,411 Net interest income $ 87,824 $ 90,996 $ 106,488 Net interest rate spread(5) 2.25 % 2.37 % 3.37 % Net interest margin(6) 2.82 % 2.91 % 3.64 % Total cost of deposits (including non-interest-bearing deposits) 2.22 % 1.99 % 0.53 % For the Year Ended December 31, 2023 December 31, 2022 (dollars in thousands) Average
BalanceInterest Average
Yield/
CostAverage
BalanceInterest Average
Yield/
CostAssets: Interest-earning assets: Interest-earning deposits and short-term investments $ 327,539 $ 17,084 5.22 % $ 72,913 $ 1,106 1.52 % Securities (2) 1,905,413 69,025 3.62 1,792,598 39,683 2.21 Loans receivable, net (3) Commercial 6,903,731 400,459 5.80 6,386,755 287,044 4.49 Residential real estate 2,911,246 105,796 3.63 2,724,398 91,432 3.36 Other consumer 255,359 15,610 6.11 256,912 11,910 4.64 Allowance for loan credit losses, net of deferred loan costs and fees (53,477 ) — — (44,446 ) — — Loans receivable, net 10,016,859 521,865 5.21 9,323,619 390,386 4.19 Total interest-earning assets 12,249,811 607,974 4.96 11,189,130 431,175 3.85 Non-interest-earning assets 1,237,218 1,200,725 Total assets $ 13,487,029 $ 12,389,855 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Interest-bearing checking $ 3,795,502 52,898 1.39 % $ 4,063,716 11,344 0.28 % Money market 794,387 18,656 2.35 764,837 2,234 0.29 Savings 1,364,333 9,227 0.68 1,597,648 758 0.05 Time deposits 2,440,829 91,237 3.74 1,167,499 16,685 1.43 Total 8,395,051 172,018 2.05 7,593,700 31,021 0.41 FHLB advances 944,219 46,000 4.87 389,750 10,365 2.66 Securities sold under agreements to repurchase 75,140 931 1.24 101,377 159 0.16 Other borrowings (4) 307,368 19,294 6.28 203,117 12,153 5.98 Total borrowings 1,326,727 66,225 4.99 694,244 22,677 3.27 Total interest-bearing liabilities 9,721,778 238,243 2.45 8,287,944 53,698 0.65 Non-interest-bearing deposits 1,869,735 2,319,657 Non-interest-bearing liabilities (4) 262,883 239,861 Total liabilities 11,854,396 10,847,462 Stockholders’ equity 1,632,633 1,542,393 Total liabilities and equity $ 13,487,029 $ 12,389,855 Net interest income $ 369,731 $ 377,477 Net interest rate spread (5) 2.51 % 3.20 % Net interest margin (6) 3.02 % 3.37 % Total cost of deposits (including non-interest-bearing deposits) 1.68 % 0.31 % (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) For the 2023 periods, the average balances of derivative cash collateral have been reclassified from non-interest bearing liabilities to other borrowings. (5) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. (6) 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,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Selected Financial Condition Data: Total assets $ 13,538,253 $ 13,498,183 $ 13,538,903 $ 13,555,175 $ 13,103,896 Debt securities available-for-sale, at estimated fair value 753,892 453,208 452,016 452,195 457,648 Debt securities held-to-maturity, net of allowance for securities credit losses 1,159,735 1,189,339 1,222,507 1,245,424 1,221,138 Equity investments 100,163 97,908 96,452 101,007 102,037 Restricted equity investments, at cost 93,766 82,484 105,305 115,750 109,278 Loans receivable, net of allowance for loan credit losses 10,136,721 10,068,156 10,030,106 9,986,949 9,868,718 Deposits 10,434,949 10,533,929 10,158,337 9,993,095 9,675,206 Federal Home Loan Bank advances 848,636 606,056 1,091,666 1,346,566 1,211,166 Securities sold under agreements to repurchase and other borrowings 269,604 279,164 270,377 266,601 264,500 Total stockholders’ equity 1,661,945 1,637,604 1,626,283 1,610,371 1,585,464 For the Three Months Ended December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Selected Operating Data: Interest income $ 160,434 $ 158,410 $ 150,096 $ 139,034 $ 130,277 Interest expense 72,610 67,414 57,987 40,232 23,789 Net interest income 87,824 90,996 92,109 98,802 106,488 Provision for credit losses 3,153 10,283 1,229 3,013 3,647 Net interest income after provision for credit losses 84,671 80,713 90,880 95,789 102,841 Other income (excluding activity related to debt and equity investments) 9,685 9,310 9,487 9,571 10,364 Net gain (loss) on equity investments 2,176 1,452 (559 ) (2,193 ) 17,187 Net loss on sale of investments — — — (5,305 ) — Operating expenses (excluding FDIC special assessment, merger related and branch consolidation expense, net) 58,526 64,484 62,930 61,217 59,341 FDIC special assessment 1,663 — — — — Branch consolidation expense, net — — — 70 111 Merger related expenses — — — 22 276 Income before provision for income taxes 36,343 26,991 36,878 36,553 70,664 Provision for income taxes 8,591 6,459 8,996 8,654 17,353 Net income 27,752 20,532 27,882 27,899 53,311 Net income (loss) attributable to non-controlling interest 70 (135 ) 85 16 39 Net income attributable to OceanFirst Financial Corp. $ 27,682 $ 20,667 $ 27,797 $ 27,883 $ 53,272 Net income available to common stockholders $ 26,678 $ 19,663 $ 26,793 $ 26,879 $ 52,268 Diluted earnings per share $ 0.46 $ 0.33 $ 0.45 $ 0.46 $ 0.89 Net accretion/amortization of purchase accounting adjustments included in net interest income $ 1,604 $ 1,745 $ 1,152 $ 1,237 $ 2,278 At or For the Three Months Ended December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Selected Financial Ratios and Other Data (1) (2): Performance Ratios (Annualized): Return on average assets (3) 0.78 % 0.57 % 0.80 % 0.82 % 1.62 % Return on average tangible assets (3) (4) 0.81 0.59 0.83 0.86 1.68 Return on average stockholders' equity (3) 6.41 4.75 6.61 6.77 13.25 Return on average tangible stockholders' equity (3) (4) 9.33 6.93 9.70 10.00 19.85 Return on average tangible common equity (3) (4) 9.81 7.29 10.21 10.53 20.97 Stockholders' equity to total assets 12.28 12.13 12.01 11.88 12.10 Tangible stockholders' equity to tangible assets (4) 8.80 8.64 8.51 8.37 8.47 Tangible common equity to tangible assets (4) 8.38 8.21 8.09 7.95 8.03 Net interest rate spread 2.25 2.37 2.52 2.94 3.37 Net interest margin 2.82 2.91 3.02 3.34 3.64 Operating expenses to average assets 1.76 1.88 1.87 1.88 1.85 Efficiency ratio (5) 60.38 63.37 62.28 60.78 44.56 Loans-to-deposits 97.70 96.10 99.30 100.50 102.50 At or For the Year Ended December 31, 2023 2022 Performance Ratios: Return on average assets (3) 0.74 % 1.15 % Return on average tangible assets (3) (4) 0.77 1.20 Return on average stockholders' equity (3) 6.13 9.24 Return on average tangible stockholders' equity (3) (4) 8.97 13.96 Return on average tangible common equity (3) (4) 9.44 14.76 Net interest rate spread 2.51 3.20 Net interest margin 3.02 3.37 Operating expenses to average assets 1.85 1.90 Efficiency ratio (5) 61.71 53.80 At or For the Three Months Ended December 31, September 30, June 30, March 31, December 31, 2023 2023 2023 2023 2022 Trust and Asset Management: Wealth assets under administration and management (“AUA/M”) $ 335,769 $ 336,913 $ 339,890 $ 333,436 $ 324,066 Nest Egg AUA/M 401,420 385,317 397,927 400,227 403,538 Total AUA/M 737,189 722,230 737,817 733,663 727,604 Per Share Data: Cash dividends per common share $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.20 Book value per common share at end of period 27.96 27.56 27.37 27.07 26.81 Tangible book value per common share at end of period (4) 18.35 17.93 17.72 17.42 17.08 Common shares outstanding at end of period 59,447,684 59,421,498 59,420,859 59,486,086 59,144,128 Preferred shares outstanding at end of period 57,370 57,370 57,370 57,370 57,370 Number of full-service customer facilities: 39 38 38 38 38 Quarterly Average Balances Total securities $ 1,863,136 $ 1,873,450 $ 1,931,032 $ 1,955,399 $ 1,764,764 Loans receivable, net 10,089,161 10,040,522 10,010,785 9,924,905 9,771,104 Total interest-earning assets 12,349,140 12,384,797 12,250,055 12,010,044 11,605,891 Total goodwill and core deposit intangible 516,289 517,282 518,265 519,282 520,400 Total assets 13,593,107 13,637,213 13,467,721 13,244,593 12,834,411 Time deposits 2,596,706 2,867,921 2,458,872 1,826,662 1,486,410 Total deposits (including non-interest-bearing deposits) 10,633,516 10,626,159 9,993,010 9,793,256 9,975,509 Total borrowings 1,016,722 1,095,173 1,603,126 1,600,845 915,565 Total interest-bearing liabilities 9,910,739 9,880,134 9,722,910 9,365,594 8,669,190 Non-interest bearing deposits 1,739,499 1,841,198 1,873,226 2,028,507 2,221,884 Stockholders’ equity 1,650,699 1,642,899 1,626,693 1,609,677 1,564,856 Tangible stockholders’ equity (4) 1,134,410 1,125,617 1,108,428 1,090,395 1,044,456 Quarterly Yields and Costs Total securities 3.81 % 3.82 % 3.47 % 3.40 % 2.83 % Loans receivable, net 5.40 5.30 5.17 4.96 4.76 Total interest-earning assets 5.16 5.08 4.91 4.68 4.46 Time deposits 4.13 4.06 3.57 2.88 1.95 Total cost of deposits (including non-interest-bearing deposits) 2.22 1.99 1.52 0.88 0.53 Total borrowed funds 5.13 5.12 5.02 4.79 4.49 Total interest-bearing liabilities 2.91 2.71 2.39 1.74 1.09 Net interest spread 2.25 2.37 2.52 2.94 3.37 Net interest margin 2.82 2.91 3.02 3.34 3.64 (1) With the exception of end of quarter ratios, all ratios are based on average daily balances. (2) Performance ratios for each period are presented on a GAAP basis and include non-core operations. Refer to “Non-GAAP Reconciliation.” (3) Ratios for each period are based on net income available to common stockholders. (4) Tangible stockholders’ equity and tangible assets exclude intangible assets related to goodwill and core deposit intangible. Tangible common equity (also referred to as “tangible book value”) excludes goodwill, core deposit intangible and preferred equity. Refer to “Non-GAAP Reconciliation.” (5) Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.
OceanFirst Financial Corp.
OTHER ITEMS
(dollars in thousands, except per share amounts)NON-GAAP RECONCILIATION
For the Three Months Ended December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Core Earnings: Net income available to common stockholders (GAAP) $ 26,678 $ 19,663 $ 26,793 $ 26,879 $ 52,268 (Less) add non-recurring and non-core items: Net (gain) loss on equity investments (1) (2,176 ) (1,452 ) 559 2,193 (17,187 ) Net loss on sale of investments (1) — — — 5,305 — FDIC special assessment 1,663 — — — — Merger related expenses — — — 22 276 Branch consolidation expense, net — — — 70 111 Income tax expense (benefit) on items 129 351 (162 ) (1,797 ) 4,060 Core earnings (Non-GAAP) $ 26,294 $ 18,562 $ 27,190 $ 32,672 $ 39,528 Income tax expense $ 8,591 $ 6,459 $ 8,996 $ 8,654 $ 17,353 Provision for credit losses 3,153 10,283 1,229 3,013 3,647 Less: income tax expense (benefit) on non-core items 129 351 (162 ) (1,797 ) 4,060 Core earnings PTPP (Non-GAAP) $ 37,909 $ 34,953 $ 37,577 $ 46,136 $ 56,468 Core diluted earnings per share $ 0.45 $ 0.32 $ 0.46 $ 0.55 $ 0.67 Core earnings PTPP diluted earnings per share $ 0.65 $ 0.59 $ 0.64 $ 0.78 $ 0.96 Core Ratios (Annualized): Return on average assets 0.77 % 0.54 % 0.81 % 1.00 % 1.22 % Return on average tangible stockholders’ equity 9.20 6.54 9.84 12.15 15.01 Return on average tangible common equity 9.67 6.88 10.36 12.80 15.86 Efficiency ratio 60.02 64.29 61.94 56.49 50.78 (1) The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on equity investments ($4.6 million) and other ($697,000), respectively, for the three months ended March 31, 2023. For the Years Ended December 31, 2023 2022 Core Earnings: Net income available to common stockholders (GAAP) $ 100,013 $ 142,587 (Less) add non-recurring and non-core items: Net gain on equity investments (1) (876 ) (9,685 ) Net loss on sale of investments (1) 5,305 — FDIC special assessment 1,663 — Merger related expenses 22 2,735 Branch consolidation expense, net 70 713 Income tax (benefit) expense on items (1,479 ) 1,611 Core earnings (Non-GAAP) $ 104,718 $ 137,961 Income tax expense $ 32,700 $ 46,565 Credit loss provision 17,678 7,768 Less: income tax (benefit) expense on non-core items (1,479 ) 1,611 Core earnings PTPP (Non-GAAP) $ 156,575 $ 190,683 Core diluted earnings per share $ 1.78 $ 2.34 Core earnings PTPP diluted earnings per share $ 2.66 $ 3.24 Core Ratios: Return on average assets 0.78 % 1.11 % Return on average tangible stockholders’ equity 9.39 13.50 Return on average tangible common equity 9.89 14.28 Efficiency ratio 60.61 54.21 (1) The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on equity investments ($4.6 million) and other ($697,000), respectively, for the three months ended March 31, 2023. December 31, September 30, June 30, March 31, December 31, 2023 2023 2023 2023 2022 Tangible Equity: Total stockholders' equity $ 1,661,945 $ 1,637,604 $ 1,626,283 $ 1,610,371 $ 1,585,464 Less: Goodwill 506,146 506,146 506,146 506,146 506,146 Core deposit intangible 9,513 10,489 11,476 12,470 13,497 Tangible stockholders’ equity 1,146,286 1,120,969 1,108,661 1,091,755 1,065,821 Less: Preferred stock 55,527 55,527 55,527 55,527 55,527 Tangible common equity $ 1,090,759 $ 1,065,442 $ 1,053,134 $ 1,036,228 $ 1,010,294 Tangible Assets: Total assets $ 13,538,253 $ 13,498,183 $ 13,538,903 $ 13,555,175 $ 13,103,896 Less: Goodwill 506,146 506,146 506,146 506,146 506,146 Core deposit intangible 9,513 10,489 11,476 12,470 13,497 Tangible assets $ 13,022,594 $ 12,981,548 $ 13,021,281 $ 13,036,559 $ 12,584,253 Tangible stockholders' equity to tangible assets 8.80 % 8.64 % 8.51 % 8.37 % 8.47 % Tangible common equity to tangible assets 8.38 % 8.21 % 8.09 % 7.95 % 8.03 % Company Contact:
Patrick S. Barrett
Chief Financial Officer
OceanFirst Financial Corp.
Tel: (732) 240-4500, ext. 27507
Email: pbarrett@oceanfirst.com
