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Oceanfirst Financial Corp (OCFC) SEC Filing 8-K Material Event for the period ending Thursday, July 29, 2021

Oceanfirst Financial Corp

CIK: 1004702 Ticker: OCFC

oceanfirstpressreleas19a.jpg
Press Release
Exhibit 99.1
Company Contact:
Michael J. Fitzpatrick
Chief Financial Officer
OceanFirst Financial Corp.
Tel: (732) 240-4500, ext. 7506
Email: Mfitzpatrick@oceanfirst.com


FOR IMMEDIATE RELEASE


OCEANFIRST FINANCIAL CORP.
ANNOUNCES SECOND QUARTER
FINANCIAL RESULTS

    RED BANK, NEW JERSEY, July 29, 2021…OceanFirst Financial Corp. (NASDAQ:“OCFC”), (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), today announced net income available to common stockholders of $29.6 million, or $0.49 per diluted share, for the three months ended June 30, 2021 as compared to $18.6 million, or $0.31 per diluted share, for the corresponding prior year period. For the six months ended June 30, 2021, the Company reported net income available to common stockholders of $61.2 million, or $1.02 per diluted share, as compared to $35.2 million, or $0.58 per diluted share, for the corresponding prior year period. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information regarding the metrics):
For the Three Months Ended,For the Six Months Ended,
Performance Ratios (Annualized):June 30, 2021March 31, 2021June 30, 2020June 30, 2021June 30, 2020
Return on average assets 1.03 %1.12 %0.67 %1.07 %0.66 %
Return on average stockholders’ equity7.88 8.59 5.16 8.23 4.93 
Return on average tangible stockholders’ equity(a)12.07 13.22 8.10 12.64 7.81 
Efficiency ratio60.21 54.73 62.08 57.34 64.72 
Net interest margin2.89 2.93 3.24 2.91 3.37 
(a) Return on average tangible stockholders’ equity, a non-GAAP (“generally accepted accounting principles”) measure, excludes the impact of intangible assets and goodwill from both assets and stockholders’ equity. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding our non-GAAP measures and impact per period.



Core earnings1 for the three and six months ended June 30, 2021 amounted to $29.5 million and $55.9 million, respectively, or $0.49 and $0.93 per diluted share, respectively. Non-core operations had a favorable impact, net of tax, of $78,000 and $5.3 million for the three and six months ended June 30, 2021, respectively.
For the Three Months Ended,For the Six Months Ended,
Core Ratios (Annualized)1:
June 30, 2021March 31, 2021June 30, 2020June 30, 2021June 30, 2020
Return on average assets 1.02 %0.94 %0.81 %0.98 %0.92 %
Return on average tangible stockholders’ equity12.04 11.04 9.69 11.55 10.94 
Efficiency ratio60.06 58.37 56.69 59.21 56.01 

Key developments for the recent quarter are described below:
Operations: Commercial banking expansion remains a strategic focus with seven commercial bankers added to the team in this quarter, for a total of 16 this year. This has contributed to a record loan pipeline of $628.6 million as of June 30, 2021.
Net Interest Income: Net interest income increased by $412,000 to $74.0 million from $73.6 million in the prior linked quarter, as non-interest bearing deposits grew by $372.2 million year-to-date, reflecting the continued trend in improving deposit quality.
1 Core earnings, a non-GAAP measure, and ratios derived from core earnings, for the periods presented, excludes merger related expenses, branch consolidation expenses, net (gain) loss 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.
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Expense Management: Operating expenses were $51.7 million and core operating expenses were $51.2 million, which includes the additional commercial banking hires, partially offset by savings related to four branch consolidations completed in April 2021. Since 2015, the Bank has consolidated 57 branch locations. Management will discuss the commercial banking expansion plans, digital banking investments, as well as expense management strategies in more detail at the Company’s previously announced Investor Day scheduled to take place at the Administrative Offices in Red Bank, New Jersey, on August 5, 2021.
Interchange Fees:
Under the temporary relief provisions of a joint rule published by the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System, the Bank received relief from Dodd-Frank limitations on debit card interchange fees collected by banks with assets of $10 billion or more. The Bank will remain exempt from limits on debit card interchange fees until June 30, 2022.
    Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased with our commercial banking expansion which is reflected in the second quarter loan pipeline of $628.6 million, a record level.” Mr. Maher added, “A few weeks ago, the Bank successfully completed the conversion of our core operating system with hundreds of thousands of customer accounts transferred to a new platform. The generational core systems upgrade will enhance our operational functionality and efficiencies, improve the customer experience and services, and enable the integration of customer accounts from our New York operations, previously Country Bank. We appreciate the tireless efforts of our employees and the patience of our customers as we completed the pivotal transition to the new core system.”
The Company’s Board of Directors declared its ninety-eighth consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.17 per share will be
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paid on August 20, 2021 to common stockholders of record on August 9, 2021. The Board previously declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock. This dividend will be paid on August 16, 2021 to preferred stockholders of record on July 30, 2021.
Results of Operations
Net income was favorably impacted by $78,000, net of tax, and adversely impacted by $3.7 million, net of tax, of non-core operations for the quarters ended June 30, 2021 and 2020, respectively. Net income was favorably impacted by $5.3 million, net of tax, and adversely impacted by $14.1 million, net of tax, of non-core operations for the six months ended June 30, 2021 and 2020, respectively. Core earnings for the three months ended June 30, 2021 were $29.5 million, or $0.49 per diluted share, an increase from core earnings of $22.3 million, or $0.37 per diluted share, for the corresponding prior year period. Core earnings for the six months ended June 30, 2021 were $55.9 million, or $0.93 per diluted share, an increase from core earnings of $49.3 million, or $0.82 per diluted share, for the corresponding prior year period. Net income was favorably impacted by $5.2 million, net of tax, of non-core operations for the prior linked quarter. Core earnings for the three months ended June 30, 2021 increased from $26.5 million, or $0.44 per diluted share, for the prior linked quarter.
Net Interest Income and Margin
Net interest income for the three and six months ended June 30, 2021 decreased to $74.0 million and $147.6 million, respectively, as compared to $78.7 million and $158.3 million, respectively, for the corresponding prior year periods, reflecting a reduction in net interest margin, partly offset by an increase in interest-earning assets. Average interest-earning assets increased by $502.5 million and $791.3 million for the three and six months ended June 30, 2021, respectively, as compared to the same prior year periods, primarily concentrated in excess balance sheet liquidity. Average loans receivable, net of allowance for loan credit losses, decreased by $506.7 million and $313.6 million for the three and six months ended June 30, 2021, respectively, as compared to the same prior year periods. Net
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interest margin for the three and six months ended June 30, 2021 decreased to 2.89% and 2.91%, respectively, from 3.24% and 3.37%, respectively, for the same prior year periods. The net interest margin compression was primarily due to the excess balance sheet liquidity and the lower interest rate environment. For the three and six months ended June 30, 2021, the cost of average interest-bearing liabilities decreased to 0.50% and 0.55%, respectively, from 0.92% and 0.98%, respectively, for the corresponding prior year periods. The total cost of deposits (including non-interest bearing deposits) was 0.27% and 0.32% for the three and six months ended June 30, 2021, respectively, as compared to 0.57% and 0.63%, respectively, for the same prior year periods.
Net interest income for the three months ended June 30, 2021 increased by $412,000, as compared to the prior linked quarter, while the net interest margin decreased to 2.89%, compared to 2.93%. Excluding the impact of purchase accounting accretion and prepayment fees, the net interest margin decreased to 2.73% from 2.75%. The yield on average interest-earning assets decreased to 3.25% from 3.38% in the prior linked quarter, primarily due to lower purchase accounting accretion and the impact of the lower interest rate environment on loan originations and securities purchases. The total cost of interest-bearing liabilities was 0.50% for the quarter ended June 30, 2021, as compared to 0.60% in the prior linked quarter, due to repricing of deposit costs and maturities of higher yielding time deposits.
Benefit/Provision for Credit Losses
    For the three and six months ended June 30, 2021, the benefit for credit loss expense was $6.5 million and $7.1 million, respectively, as compared to a provision for credit loss expense of $9.6 million and $19.6 million, respectively, for the corresponding prior year periods, and a benefit for credit loss expense of $620,000 in the prior linked quarter. The benefit for credit loss expense for the three and six months ended June 30, 2021 was significantly influenced by improved economic forecasts, including stronger employment levels and GDP growth, combined with stabilizing trends in the Bank’s asset quality.
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Net loan charge-offs were $224,000 for the quarter and net loan recoveries were $56,000 for the six months ended June 30, 2021, as compared to net loan recoveries of $232,000 and net loan charge-offs of $922,000 for the corresponding prior year periods, respectively, and net loan recoveries of $280,000 for the prior linked quarter. The six months ended June 30, 2020 included $949,000 in charge-offs on the sale of higher risk residential loans. Non-performing loans totaled $31.7 million at June 30, 2021, as compared to $34.1 million at March 31, 2021 and $21.0 million at June 30, 2020.
Non-interest Income
    For the three and six months ended June 30, 2021, other income increased to $11.8 million and $32.6 million, respectively, as compared to $11.4 million and $25.1 million, respectively, for the corresponding prior year periods. Other income for the three and six months ended June 30, 2021 included non-core operations of $576,000 and $8.9 million, respectively, related to net gain on equity investments. Excluding this item, the decrease in other income for the three months ended June 30, 2021, as compared to the corresponding prior year period, was primarily due to a decrease in commercial loan swap income of $2.4 million, as a result of lower activity, partially offset by increases in bankcard services of $850,000 due to lower card activity in the prior period as a result of the pandemic, fees and service charges of $556,000, and gain on sale of loans of $523,000.
Excluding non-core operations, the decrease in other income for the six months ended June 30, 2021, as compared to the corresponding prior year period, was primarily due to a decrease in commercial loan swap income of $5.4 million, as a result of lower activity, partially offset by increases in gain on sale of loans of $2.3 million and bankcard services of $1.4 million due to lower card activity in the prior period as a result of the pandemic.
Excluding non-core operations, other income for the three months ended June 30, 2021 decreased $1.3 million, as compared to the prior linked quarter, primarily due to decreases in commercial loan swap income of $1.0 million, as a result of lower activity, and gain on sale of loans of $637,000.
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Non-interest Expense
    Operating expenses decreased to $51.7 million and $103.4 million for the three and six months ended June 30, 2021, respectively, as compared to $55.9 million and $118.7 million, respectively, in the same prior year periods. Operating expenses for the three and six months ended June 30, 2021 included $472,000 and $1.9 million, respectively, of net expenses related to non-core operations. Operating expenses for the three and six months ended June 30, 2020 included $4.9 million and $16.0 million, respectively, of net expenses related to non-core operations. Excluding non-core operations, the $123,000 increase in operating expenses for the three months ended June 30, 2021, as compared to the corresponding prior year period, was primarily due to an increase in compensation and benefits expense of $2.0 million, primarily relating to higher benefit costs, partly offset by decreases in other operating expenses of $853,000, and equipment of $676,000.
Excluding non-core operations, the $1.3 million decrease in operating expenses for the six months ended June 30, 2021, as compared to the corresponding prior year period, was primarily due to decreases in other operating expense of $1.3 million and equipment expense of $1.0 million, partly offset by an increase in federal deposit insurance and regulatory assessments of $1.2 million.
    Excluding non-core operations, operating expenses for the quarter ended June 30, 2021, increased $907,000 as compared to the prior linked quarter. The change was due to an increase in compensation and benefits expense of $1.5 million, partly offset by a decrease in federal deposit insurance and regulatory assessments of $765,000.
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Income Tax Expense
The provision for income taxes was $10.1 million and $20.7 million for the three and six months ended June 30, 2021, respectively, as compared to $5.9 million and $9.9 million for the same prior year periods, respectively, and $10.7 million for the prior linked quarter. The effective tax rate was 24.8% and 24.7% for the three and six months ended June 30, 2021, respectively, as compared to 24.0% and 22.0% for the same prior year periods, respectively, and 24.6% for the prior linked quarter. The higher effective tax rate for the current year period, as compared to the prior year period, was primarily due to the impact of a New Jersey tax code change and a higher allocation of taxable income to New York.
Financial Condition
    Total assets increased by $35.6 million to $11.48 billion at June 30, 2021, from $11.45 billion at December 31, 2020. Cash and due from banks decreased $188.1 million, to $1.08 billion at June 30, 2021, from $1.27 billion at December 31, 2020. Total debt securities increased by $275.5 million at June 30, 2021, as compared to December 31, 2020, while equity investments decreased $16.2 million due to $90.7 million in sales of common stock partly offset by $73.8 million in purchases of preferred stock and a non-controlling equity investment. Total loans, excluding PPP loans of $83.0 million and $95.4 million at June 30, 2021 and December 31, 2020, respectively, increased by $77.1 million, to $7.74 billion at June 30, 2021, from $7.66 billion at December 31, 2020.
    Deposits decreased by $12.3 million to $9.42 billion at June 30, 2021, from $9.43 billion at December 31, 2020, which reflected a decrease in time deposits of $416.4 million, partly offset by an increase in non-interest bearing deposits of $372.2 million. The loan-to-deposit ratio at June 30, 2021 was 83.1%, as compared to 82.3% at December 31, 2020.
    Stockholders’ equity increased to $1.51 billion at June 30, 2021, as compared to $1.48 billion at December 31, 2020. On June 25, 2021, the Company announced the authorization of the Board of Directors of the 2021 Stock Repurchase Program to repurchase up to an additional 3.0 million shares,
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which is approximately 5% of the Company’s outstanding common stock. For the six months ended June 30, 2021, the Company repurchased 1.0 million shares under its stock repurchase program at a weighted average cost of $20.94, and there were 4,019,145 shares available for repurchase at June 30, 2021 under the existing repurchase programs. Tangible common equity per common share increased to $15.58 at June 30, 2021, as compared to $14.98 at December 31, 2020.

Asset Quality
    The Company’s non-performing loans decreased to $31.7 million at June 30, 2021, as compared to $36.4 million at December 31, 2020. Non-performing loans do not include $40.1 million of purchased with credit deterioration (“PCD”) loans from prior bank acquisitions. The allowance for loan credit losses as a percentage of non-performing loans was 170.1% at June 30, 2021, as compared to 166.8% at December 31, 2020. The Company’s level of 30 to 89 days delinquent loans improved to $5.3 million at June 30, 2021, from $34.7 million at December 31, 2020.
The Company’s allowance for loan credit losses was 0.69% of total loans at June 30, 2021, as compared to 0.78% at December 31, 2020. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $77.5 million, or 0.99% of total loans.

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Explanation of Non-GAAP Financial Measures
    Reported amounts are presented in accordance with GAAP. The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding non-core operations and reporting equity and asset amounts excluding intangible assets and goodwill, which can vary from period to period, provides a better comparison of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.
Conference Call
    As previously announced, the Company will host an earnings conference call on Friday, July 30, 2021 at 11:00 a.m. Eastern Time. The direct dial number for the call is (888) 338-7143. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (877) 344-7529, Replay Conference Number 10158125 from one hour after the end of the call until October 30, 2021. The conference call, as well as the replay, are also available (listen-only) by internet webcast at www.oceanfirst.com in the Investor Relations section.
Investor Day 2021
The Company will host an Investor Day on Thursday, August 5, 2021 at 1:00 p.m. Eastern Time at the Administrative Offices at 110 West Front Street in Red Bank, New Jersey. Various members of management will provide informative presentations regarding strategic Bank initiatives throughout the afternoon along with the opportunity for questions and answers. Following the formal agenda, guests are welcome to tour the facility and demonstrations of various digital banking platforms will be
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available. Advance registration is required and can be accessed by visiting the Investor Relations page of www.oceanfirst.com.
* * *
    OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank N.A., founded in 1902, is a $11.5 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 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.

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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)

June 30, 2021March 31, 2021December 31, 2020June 30, 2020
(Unaudited)(Unaudited)(Unaudited)
Assets
Cash and due from banks$1,084,029 $1,173,665 $1,272,134 $721,049 
Debt securities available-for-sale, at estimated fair value249,330 268,511 183,302 153,239 
Debt securities held-to-maturity, net of allowance for securities credit losses of $1,609 at June 30, 2021, $1,717 at March 31, 2021, $1,715 at December 31, 2020 and $2,446 at June 30, 2020 (estimated fair value of $1,169,123 at June 30, 2021, $1,099,745 at March 31, 2021, $968,466 at December 31, 2020 and $895,897 at June 30, 2020)
1,146,735 1,082,326 937,253 867,959 
Equity investments, at estimated fair value90,917 50,159 107,079 13,830 
Restricted equity investments, at cost52,519 52,199 51,705 68,091 
Loans receivable, net of allowance for loan credit losses of $53,876 at June 30, 2021, $59,976 at March 31, 2021, $60,735 at December 31, 2020 and $38,509 at June 30, 2020
7,774,351 7,820,590 7,704,857 8,335,480 
Loans held-for-sale1,493 43,175 45,524 21,799 
Interest and dividends receivable28,014 32,819 35,269 37,811 
Other real estate owned106 106 106 248 
Premises and equipment, net117,509 110,093 107,094 100,576 
Bank owned life insurance259,608 264,548 265,253 262,637 
Assets held for sale4,032 5,340 5,782 7,828 
Goodwill500,319 500,319 500,319 501,472 
Core deposit intangible20,912 22,273 23,668 26,732 
Other assets154,027 151,349 208,968 226,614 
Total assets$11,483,901 $11,577,472 $11,448,313 $11,345,365 
Liabilities and Stockholders’ Equity
Deposits$9,415,286 $9,502,812 $9,427,616 $8,967,754 
Federal Home Loan Bank advances
— — — 343,392 
Securities sold under agreements to repurchase with retail customers
141,475 134,465 128,454 152,821 
Other borrowings228,564 228,176 235,471 246,840 
Advances by borrowers for taxes and insurance21,281 20,980 17,296 19,582 
Other liabilities168,506 192,320 155,346 138,542 
Total liabilities9,975,112 10,078,753 9,964,183 9,868,931 
Total stockholders’ equity1,508,789 1,498,719 1,484,130 1,476,434 
Total liabilities and stockholders’ equity$11,483,901 $11,577,472 $11,448,313 $11,345,365 
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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
For the Three Months Ended,For the Six Months Ended,
June 30, 2021March 31, 2021June 30, 2020June 30, 2021June 30, 2020
|-------------------- (Unaudited) --------------------||---------- (Unaudited) -----------|
Interest income:
Loans$77,048 $77,908 $88,347 $154,956 $178,291 
Debt securities5,984 5,355 6,209 11,339 12,981 
Equity investments and other309 1,611 1,321 1,920 2,812 
Total interest income83,341 84,874 95,877 168,215 194,084 
Interest expense:
Deposits6,325 8,496 12,305 14,821 26,241 
Borrowed funds3,000 2,774 4,905 5,774 9,531 
Total interest expense9,325 11,270 17,210 20,595 35,772 
Net interest income74,016 73,604 78,667 147,620 158,312 
Credit loss (benefit) expense (6,460)(620)9,649 (7,080)19,618 
Net interest income after credit loss (benefit) expense 80,476 74,224 69,018 154,700 138,694 
Other income:
Bankcard services revenue3,591 3,052 2,741 6,643 5,222 
Trust and asset management revenue591 599 555 1,190 1,070 
Fees and service charges3,809 3,737 3,253 7,546 8,126 
Net gain on sales of loans1,279 1,916 756 3,195 929 
Net gain on equity investments576 8,287 148 8,863 303 
Net loss from other real estate operations(1)(8)(52)(9)(202)
Income from bank owned life insurance1,716 1,415 1,521 3,131 3,096 
Commercial loan swap income73 1,111 2,489 1,184 6,539 
Other169 726 19 895 44 
Total other income11,803 20,835 11,430 32,638 25,127 
Operating expenses:
Compensation and employee benefits29,912 28,366 27,935 58,278 57,820 
Occupancy5,314 5,061 5,268 10,375 10,544 
Equipment1,306 1,578 1,982 2,884 3,925 
Marketing625 434 753 1,059 1,522 
Federal deposit insurance and regulatory assessments1,099 1,864 1,133 2,963 1,800 
Data processing4,402 4,031 4,149 8,433 8,326 
Check card processing1,303 1,372 1,290 2,675 2,566 
Professional fees2,391 2,837 2,683 5,228 4,985 
Other operating expense3,485 3,353 4,338 6,838 8,140 
FHLB advance prepayment fees— — 924 — 924 
Amortization of core deposit intangible1,361 1,395 1,544 2,756 3,122 
Branch consolidation expense26 1,011 863 1,037 3,457 
Merger related expenses446 381 3,070 827 11,597 
Total operating expenses51,670 51,683 55,932 103,353 118,728 
Income before provision for income taxes40,609 43,376 24,516 83,985 45,093 
Provision for income taxes10,054 10,679 5,878 20,733 9,922 
Net income30,555 32,697 18,638 63,252 35,171 
Dividends on preferred shares1,004 1,004 — 2,008 — 
Net income available to common stockholders$29,551 $31,693 $18,638 $61,244 $35,171 
Basic earnings per share$0.49 $0.53 $0.31 $1.02 $0.59 
Diluted earnings per share$0.49 $0.53 $0.31 $1.02 $0.58 
Average basic shares outstanding59,701 59,840 59,877 59,776 59,881 
Average diluted shares outstanding59,966 60,101 59,999 60,040 60,122 
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OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
LOANS RECEIVABLEAt
June 30, 2021March 31, 2021December 31,
2020
September 30,
2020
June 30,
2020
Commercial:
Commercial and industrial$474,919 $498,245 $470,656 $599,188 $910,762 
Commercial real estate - owner-occupied1,045,514 1,066,351 1,145,065 1,176,529 1,199,742 
Commercial real estate - investor3,836,230 3,804,351 3,491,464 3,453,276 3,449,160 
Total commercial5,356,663 5,368,947 5,107,185 5,228,993 5,559,664 
Consumer:
Residential real estate2,168,545 2,189,348 2,309,459 2,407,178 2,426,277 
Home equity loans and lines255,097 267,591 285,016 301,712 320,627 
Other consumer40,485 46,651 54,446 63,095 71,721 
Total consumer2,464,127 2,503,590 2,648,921 2,771,985 2,818,625 
Total loans7,820,790 7,872,537 7,756,106 8,000,978 8,378,289 
Deferred origination costs (fees), net7,437 8,029 9,486 (1,238)(4,300)
Allowance for loan credit losses(53,876)(59,976)(60,735)(56,350)(38,509)
Loans receivable, net$7,774,351 $7,820,590 $7,704,857 $7,943,390 $8,335,480 
Mortgage loans serviced for others$68,778 $74,037 $95,789 $88,210 $101,840 
At June 30, 2021 Average Yield
Loan pipeline (1):
Commercial3.78 %$463,388 $154,946 $210,024 $154,700 $169,093 
Residential real estate3.11 153,798 178,352 151,152 212,107 181,800 
Home equity loans and lines4.23 11,369 11,031 6,630 10,301 8,282 
Total3.62 %$628,555 $344,329 $367,806 $377,108 $359,175 
For the Three Months Ended
June 30, 2021March 31, 2021December 31,
2020
September 30,
2020
June 30,
2020
Average Yield
Loan originations:
Commercial3.26 %$259,163 
(2)
$547,591 
(2)
$173,715 $187,747 $216,979 
(2)
Residential real estate3.16 173,354 189,942 222,780 219,325 242,137 
Home equity loans and lines3.99 14,870 10,278 13,435 10,966 12,128 
Total3.25 %$447,387 $747,811 $409,930 $418,038 $471,244 
Loans sold$29,556 $67,500 $56,126 
(3)
$56,722 $104,600 
(3)
(1)Loan pipeline includes loans approved but not funded.
(2)Excludes loans originated through the PPP of $13 million, $60 million and $504 million for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively.
(3)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 and the sale of under-performing commercial loans of $4.9 million for the three months ended June 30, 2020.
DEPOSITSAt
June 30, 2021March 31, 2021December 31,
2020
September 30,
2020
June 30,
2020
Type of Account
Non-interest-bearing$2,505,355 $2,417,935 $2,133,195 $2,240,799 $2,161,766 
Interest-bearing checking3,628,741 3,623,132 3,646,866 3,317,296 3,022,887 
Money market deposit734,320 782,459 783,521 691,872 680,199 
Savings1,590,441 1,568,528 1,491,251 1,471,554 1,456,931 
Time deposits956,429 1,110,758 1,372,783 1,561,767 1,645,971 
  Total$9,415,286 $9,502,812 $9,427,616 $9,283,288 $8,967,754 
14


OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
ASSET QUALITYJune 30, 2021March 31, 2021December 31,
2020
September 30,
2020
June 30,
2020
Non-performing loans held-for-investment:
Commercial and industrial$1,566 $1,616 $1,551 $586 $1,586 
Commercial real estate - owner-occupied11,527 11,676 13,054 11,365 4,582 
Commercial real estate - investor10,549 12,366 10,660 2,978 5,274 
Residential real estate6,114 6,398 8,642 11,518 6,568 
Home equity loans and lines1,924 2,072 2,503 3,448 3,034 
Total non-performing loans held-for-investment31,680 34,128 36,410 29,895 21,044 
Non-performing loans held-for-sale— — — 67,489 — 
Other real estate owned106 106 106 106 248 
Total non-performing assets$31,786 $34,234 $36,516 $97,490 $21,292 
PCD loans (1)
$40,064 $44,421 $48,488 $56,422 $61,694 
Delinquent loans 30 to 89 days$5,313 $16,477 $34,683 $13,753 $13,640 
Troubled debt restructurings:
Non-performing (included in total non-performing loans above)$9,803 $4,785 $5,158 $9,866 $6,189 
Performing10,311 11,466 12,009 12,777 16,365 
Total troubled debt restructurings$20,114 $16,251 $17,167 $22,643 $22,554 
Allowance for loan credit losses$53,876 $59,976 $60,735 $56,350 $38,509 
Allowance for loan credit losses as a percent of total loans receivable (2)
0.69 %0.76 %0.78 %0.70 %0.46 %
Allowance for loan credit losses as a percent of total non-performing loans held-for-investment (2)
170.06 175.74 166.81 188.49 182.99 
Non-performing loans held-for-investment as a percent of total loans receivable0.41 0.43 0.47 0.37 0.25 
Non-performing assets as a percent of total assets0.28 0.30 0.32 0.84 0.19 
(1)PCD loans are not included in non-performing loans held-for-investment, troubled debt restructurings or delinquent loans totals.
(2)Loans acquired from prior bank acquisitions were recorded at fair value. The net unamortized credit and PCD marks on these loans, not reflected in the allowance for loan credit losses, was $23.6 million, $25.7 million, $28.0 million, $31.6 million and $35.4 million at June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020 respectively.
NET (CHARGE-OFFS) RECOVERIESFor the Three Months Ended
June 30, 2021March 31, 2021December 31,
2020
September 30,
2020
June 30,
2020
Net (charge-offs) recoveries:
Loan charge-offs$(420)$(356)$(3,220)$(15,411)$(169)
Recoveries on loans196 636 278 416 401 
Net loan (charge-offs) recoveries $(224)

$280 $(2,942)
(1)
$(14,995)
(2)
$232 
Net loan (charge-offs) recoveries to average total loans (annualized)0.01 %NM*0.15 %0.71 %NM*
Net loan (charge-offs) recoveries detail:
Commercial$(304)$126 $(775)$(14,801)$30 
Residential real estate— (203)(1,731)314 212 
Home equity loans and lines58 352 (451)(490)(3)
Other consumer22 15 (18)(7)
Net loan (charge-offs) recoveries $(224)$280 $(2,942)
(1)
$(14,995)
(2)
$232 
(1)Included in net loan charge-offs for the three months ended December 31, 2020 is $2.3 million relating to under-performing residential and consumer loans sold.
(2)Included in net loan charge-offs for the three months ended September 30, 2020 is $14.2 million relating to loans transferred to held-for-sale.
* Not meaningful
15


OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
For the Three Months Ended
June 30, 2021March 31, 2021June 30, 2020
(dollars in thousands)Average
Balance
InterestAverage
Yield/
Cost
Average
Balance
InterestAverage
Yield/
Cost
Average
Balance
InterestAverage
Yield/
Cost
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments$992,485 $241 0.10 %$1,138,911 $277 0.10 %$354,016 $115 0.13 %
Securities (1)
1,501,484 6,052 1.62 1,311,683 6,689 2.07 1,130,779 7,415 2.64 
Loans receivable, net (2)
Commercial5,318,436 54,258 4.09 5,127,940 53,670 4.24 5,409,238 59,460 4.42 
Residential real estate2,219,425 19,097 3.44 2,327,838 20,069 3.45 2,507,076 23,870 3.81 
Home equity loans and lines260,374 3,163 4.87 275,943 3,523 5.18 328,144 3,853 4.72 
Other consumer44,167 530 4.81 50,964 646 5.14 76,382 1,164 6.13 
Allowance for loan credit losses, net of deferred loan costs and fees(53,483)— — (52,887)— — (25,218)— — 
Loans receivable, net7,788,919 77,048 3.97 7,729,798 77,908 4.09 8,295,622 88,347 4.28 
Total interest-earning assets10,282,888 83,341 3.25 10,180,392 84,874 3.38 9,780,417 95,877 3.94 
Non-interest-earning assets1,256,844 1,259,109 1,334,169 
Total assets$11,539,732 $11,439,501 $11,114,586 
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking$3,701,496 3,385 0.37 %$3,711,976 4,311 0.47 %$2,966,631 4,800 0.65 %
Money market760,323 212 0.11 757,634 367 0.20 652,485 705 0.43 
Savings1,581,284 166 0.04 1,522,603 179 0.05 1,445,953 414 0.12 
Time deposits1,002,086 2,562 1.03 1,221,123 3,639 1.21 1,623,890 6,386 1.58 
Total7,045,189 6,325 0.36 7,213,336 8,496 0.48 6,688,959 12,305 0.74 
FHLB Advances— — — — — 476,598 1,946 1.64 
Securities sold under agreements to repurchase135,181 56 0.17 129,444 95 0.30 131,382 138 0.42 
Other borrowings228,350 2,944 5.17 228,368 2,679 4.76 220,948 2,821 5.14 
Total borrowings363,531 3,000 3.31 357,812 2,774 3.14 828,928 4,905 2.38 
Total interest-bearing
liabilities
7,408,720 9,325 0.50 7,571,148 11,270 0.60 7,517,887 17,210 0.92 
Non-interest-bearing deposits2,462,203 2,212,273 2,018,044 
Non-interest-bearing liabilities164,774 160,500 124,997 
Total liabilities10,035,697 9,943,921 9,660,928 
Stockholders’ equity
1,504,035 1,495,580 1,453,658 
Total liabilities and equity$11,539,732 $11,439,501 $11,114,586 
Net interest income$74,016 $73,604 $78,667 
Net interest rate spread (3)
2.75 %2.78 %3.02 %
Net interest margin (4)
2.89 %2.93 %3.24 %
Total cost of deposits (including non-interest-bearing deposits)
0.27 %0.37 %0.57 %



16


(continued)
For the Six Months Ended
 June 30, 2021June 30, 2020
(dollars in thousands)Average
Balance
InterestAverage
Yield/
Cost
Average
Balance
InterestAverage
Yield/
Cost
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments$1,065,294 $518 0.10 %$208,871 $457 0.44 %
Securities (1)
1,407,108 12,741 1.83 1,158,657 15,336 2.66 
Loans receivable, net (2)
Commercial5,223,714 107,927 4.17 5,185,114 119,335 4.63 
Residential real estate2,273,332 39,166 3.45 2,490,243 48,499 3.90 
Home equity loans and lines268,115 6,686 5.03 333,574 7,923 4.78 
Other consumer47,547 1,177 4.99 81,930 2,534 6.22 
Allowance for loan credit losses, net of deferred loan costs and fees(53,187)— — (17,720)— — 
Loans receivable, net7,759,521 154,956 4.03 8,073,141 178,291 4.44 
Total interest-earning assets10,231,923 168,215 3.32 9,440,669 194,084 4.13 
Non-interest-earning assets1,257,970 1,283,029 
Total assets
$11,489,893 $10,723,698 
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking$3,707,398 7,695 0.42 %$2,887,212 9,931 0.69 %
Money market758,986 579 0.15 633,273 1,745 0.55 
Savings1,552,106 345 0.04 1,424,646 1,969 0.28 
Time deposits1,111,000 6,202 1.13 1,541,619 12,596 1.64 
Total7,129,490 14,821 0.42 6,486,750 26,241 0.81 
FHLB Advances— — — 553,963 4,770 1.73 
Securities sold under agreements to repurchase132,328 151 0.23 106,743 234 0.44 
Other borrowings228,359 5,623 4.97 169,900 4,527 5.36 
Total borrowings360,687 5,774 3.23 830,606 9,531 2.31 
Total interest-bearing liabilities7,490,177 20,595 0.55 7,317,356 35,772 0.98 
Non-interest-bearing deposits2,337,238 1,852,813 
Non-interest-bearing liabilities162,647 119,237 
Total liabilities9,990,062 9,289,406 
Stockholders’ equity1,499,831 1,434,292 
Total liabilities and equity$11,489,893 $10,723,698 
Net interest income$147,620 $158,312 
Net interest rate spread (3)
2.77 %3.15 %
Net interest margin (4)
2.91 %3.37 %
Total cost of deposits (including non-interest-bearing deposits)
0.32 %0.63 %
(1)    Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost, net of allowance for securities credit losses.
(2)    Amount is net of deferred loan costs and fees, undisbursed loan funds, discounts and premiums and allowance for loan credit losses, and includes loans held for sale and non-performing loans.
(3)    Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(4)    Net interest margin represents net interest income divided by average interest-earning assets.
17


OceanFirst Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share amounts)
June 30,March 31,December 31,September 30,June 30,
20212021202020202020
Selected Financial Condition Data:
Total assets$11,483,901 $11,577,472 $11,448,313 $11,651,297 $11,345,365 
Debt securities available-for-sale, at estimated fair value
249,330 268,511 183,302 169,634 153,239 
Debt securities held-to-maturity, net of allowance for securities credit losses1,146,735 1,082,326 937,253 871,688 867,959 
Equity investments, at estimated fair value
90,917 50,159 107,079 63,846 13,830 
Restricted equity investments, at cost52,519 52,199 51,705 67,505 68,091 
Loans receivable, net of allowance for loan credit losses7,774,351 7,820,590 7,704,857 7,943,390 8,335,480 
Deposits9,415,286 9,502,812 9,427,616 9,283,288 8,967,754 
Federal Home Loan Bank advances— — — 343,452 343,392 
Securities sold under agreements to repurchase and other borrowings370,039 362,641 363,925 389,764 399,661 
Stockholders’ equity
1,508,789 1,498,719 1,484,130 1,461,714 1,476,434 

For the Three Months Ended,
June 30,March 31,December 31,September 30,June 30,
20212021202020202020
Selected Operating Data:
Interest income$83,341 $84,874 $92,562 $92,962 $95,877 
Interest expense9,325 11,270 14,711 16,174 17,210 
Net interest income74,016 73,604 77,851 76,788 78,667 
Credit loss (benefit) expense (6,460)(620)4,072 35,714 9,649 
Net interest income after credit loss (benefit) expense 80,476 74,224 73,779 41,074 69,018 
Other income (excluding net gain (loss) on equity investments and gain on sale of PPP loans)11,227 12,548 11,032 11,755 11,430 
Net gain (loss) on equity investments576 8,287 24,487 (3,576)— 
Gain on sale of PPP loans— — 5,101 — — 
Operating expenses (excluding FHLB advance prepayment fees, branch consolidation and merger related expenses)51,198 50,291 53,053 52,801 51,075 
FHLB advance prepayment fees— — 13,333 — 924 
Branch consolidation expense26 1,011 3,336 830 863 
Merger related expenses446 381 1,194 3,156 3,070 
Income (loss) before provision (benefit) for income taxes40,609 43,376 43,483 (7,534)24,516 
Provision (benefit) for income taxes10,054 10,679 10,419 (2,608)5,878 
Net income (loss)$30,555 $32,697 $33,064 $(4,926)$18,638 
Net income (loss) available to common stockholders$29,551 $31,693 $32,060 $(6,019)$18,638 
Diluted earnings (loss) per share$0.49 $0.53 $0.54 $(0.10)$0.31 
Net accretion/amortization of purchase accounting adjustments included in net interest income$2,835 $3,650 $6,186 $4,364 $5,536 
18


(continued)
At or For the Three Months Ended
June 30,March 31,December 31,September 30,June 30,
20212021202020202020
Selected Financial Ratios and Other Data(1):
Performance Ratios (Annualized):
Return on average assets (2)
1.03 %1.12 %1.09 %(0.21)%0.67 %
Return on average tangible assets (2) (3)
1.08 1.18 1.14 (0.22)0.71 
Return on average stockholders’ equity (2)
7.88 8.59 8.65 (1.61)5.16 
Return on average tangible stockholders’ equity (2) (3)
12.07 13.22 13.43 (2.51)8.10 
Stockholders’ equity to total assets13.14 12.95 12.96 12.55 13.01 
Tangible stockholders’ equity to tangible assets (3)
9.01 8.83 8.79 8.41 8.77 
Tangible common equity to tangible assets (3)
8.50 8.33 8.28 7.91 8.25 
Net interest rate spread2.75 2.78 2.79 2.77 3.02 
Net interest margin2.89 2.93 2.97 2.97 3.24 
Operating expenses to average assets (2)
1.80 1.83 2.40 1.94 2.02 
Efficiency ratio (2) (4)
60.21 54.73 59.86 66.83 62.08 
Loans to deposits83.06 82.84 82.27 86.19 93.43 


For the Six Months Ended June 30,
20212020
Performance Ratios (Annualized):
Return on average assets (2)
1.07 %0.66 %
Return on average tangible assets (2) (3)
1.13 0.69 
Return on average stockholders’ equity (2)
8.23 4.93 
Return on average tangible stockholders’ equity (2) (3)
12.64 7.81 
Net interest rate spread2.77 3.15 
Net interest margin2.91 3.37 
Operating expenses to average assets (2)
1.81 2.23 
Efficiency ratio (2) (4)
57.34 64.72 

19


(continued)
At or For the Three Months Ended
June 30,March 31,December 31,September 30,June 30,
20212021202020202020
Trust and Asset Management:
Wealth assets under administration and management$278,785 $274,172 $245,175 $232,292 $224,042 
Nest Egg129,674 101,701 93,237 80,472 57,383 
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 period25.22 24.84 24.57 24.21 24.47 
Tangible common equity per common share at end of period (3)
15.58 15.26 14.98 14.58 14.79 
Common shares outstanding at end of period59,834,01860,329,50460,392,04360,378,12060,343,077 
Preferred shares outstanding at end of period57,370 57,370 57,370 57,370 57,370 
Number of full-service customer facilities:58 62 62 62 62 
Quarterly Average Balances
Total securities$1,501,484 $1,311,683 $1,209,543 $1,112,174 $1,130,779 
Loans receivable, net7,788,919 7,729,798 7,992,365 8,350,797 8,295,622 
Total interest-earning assets10,282,888 10,180,392 10,425,380 10,268,834 9,780,417 
Total assets11,539,732 11,439,501 11,747,439 11,621,969 11,114,586 
Time deposits1,002,086 1,221,123 1,437,770 1,606,632 1,623,890 
Total deposits (including non-interest-bearing deposits)9,507,392 9,425,609 9,505,835 9,241,265 8,707,003 
Total borrowed funds363,531 357,812 590,295 735,035 828,928 
Total interest-bearing liabilities7,408,720 7,571,148 7,886,598 7,767,059 7,517,887 
Non-interest bearing deposits2,462,203 2,212,273 2,209,532 2,209,241 2,018,044 
Stockholders’ equity1,504,035 1,495,580 1,475,088 1,482,682 1,453,658 
Quarterly Yields
Total securities1.62 %2.07 %2.38 %2.43 %2.64 %
Loans receivable, net3.97 4.09 4.23 4.09 4.28 
Total interest-earning assets3.25 3.38 3.53 3.60 3.94 
Time deposits1.03 1.21 1.39 1.45 1.58 
Total cost of deposits (including non-interest-bearing deposits)0.27 0.37 0.45 0.49 0.57 
Total borrowed funds3.31 3.14 2.72 2.60 2.38 
Total interest-bearing liabilities0.50 0.60 0.74 0.83 0.92 
Net interest spread2.75 2.78 2.79 2.77 3.02 
Net interest margin2.89 2.93 2.97 2.97 3.24 
(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 relating 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.






20


OceanFirst Financial Corp.
SUPPLEMENTAL INFORMATION
(dollars in thousands, except per share amounts)

NON-GAAP RECONCILIATION
For the Three Months Ended
June 30,March 31,December 31,September 30,June 30,
20212021202020202020
Core Earnings:
Net income (loss) available to common stockholders (GAAP)
$29,551 $31,693 $32,060 $(6,019)$18,638 
Add (less) non-recurring and non-core items:
Merger related expenses446 381 1,194 3,156 3,070 
Branch consolidation expenses26 1,011 3,336 830 863 
Net (gain) loss on equity investments(576)(8,287)(24,487)3,576 — 
FHLB advance prepayment fees— — 13,333 — 924 
Gain on sale of PPP loans— — (5,101)— — 
Income tax expense (benefit) on items26 1,666 2,832 (1,809)(1,190)
Core earnings (loss) (Non-GAAP)
$29,473 $26,464 $23,167 $(266)$22,305 
Core diluted earnings (loss) per share$0.49 $0.44 $0.39 $— $0.37 
Core Ratios (Annualized):
Return on average assets1.02 %0.94 %0.78 %(0.01)%0.81 %
Return on average tangible assets1.07 0.98 0.82 (0.01)0.85 
Return on average tangible stockholders’ equity12.04 11.04 9.71 (0.11)9.69 
Efficiency ratio60.06 58.37 59.69 59.63 56.69 

For the Six Months Ended June 30,
20212020
Core Earnings:
Net income available to common stockholders (GAAP)
$61,244 $35,171 
Add (less) non-recurring and non-core items:
Merger related expenses827 11,597 
Branch consolidation expenses1,037 3,457 
Net gain on equity investments(8,863)— 
Two River and Country Bank opening credit loss expense under the CECL model — 2,447 
FHLB advance prepayment fees— 924 
Income tax expense on items1,692 (4,311)
Core earnings (Non-GAAP)
$55,937 $49,285 
Core diluted earnings per share$0.93 $0.82 
Core Ratios (Annualized):
Return on average assets0.98 %0.92 %
Return on average tangible assets1.03 0.97 
Return on average tangible stockholders’ equity11.55 10.94 
Efficiency ratio59.21 56.01 


21


(continued)