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Oceanfirst Financial Corp (OCFC) SEC Filing 8-K Material Event for the period ending Thursday, April 28, 2022

Oceanfirst Financial Corp

CIK: 1004702 Ticker: OCFC

oceanfirstpressreleas19.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 FIRST QUARTER
FINANCIAL RESULTS

    RED BANK, NEW JERSEY, April 28, 2022 - OceanFirst Financial Corp. (NASDAQ:“OCFC”),
(the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), announced net income available to common stockholders of $24.8 million, or $0.42 per diluted share, for the quarter ended March 31, 2022, as compared to $31.7 million, or $0.53 per diluted share, for the corresponding prior year period. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information):
For the Three Months Ended,
Performance Ratios (Annualized):March 31,December 31,March 31,
202220212021
Return on average assets 0.84 %0.72 %1.12 %
Return on average stockholders’ equity6.57 5.65 8.59 
Return on average tangible stockholders’ equity (a)
9.94 8.59 13.22 
Efficiency ratio61.77 72.04 54.73 
Net interest margin3.18 2.99 2.93 
(a) Return on average tangible stockholders’ equity, a non-GAAP (“generally accepted accounting principles”) financial 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 non-GAAP financial measures.




Core earnings1 for the quarter ended March 31, 2022 amounted to $28.8 million, or $0.49 per diluted share. Non-core operations had an adverse impact of $4.0 million, net of tax, for the quarter ended March 31, 2022. Core earnings before income taxes and credit loss provision (“PTPP”) was $39.7 million, or $0.67 per diluted share for the quarter ended March 31, 2022.
For the Three Months Ended,
March 31,December 31,March 31,
Core Ratios1 (Annualized):
202220212021
Return on average assets 0.98 %0.95 %0.94 %
Return on average tangible stockholders’ equity11.55 11.30 11.04 
Efficiency ratio57.51 62.57 58.37 
Core diluted earnings per share$0.49 $0.48 $0.44 
Core PTPP diluted earnings per share 0.67 0.56 0.58 

Key developments for the recent quarter are described below:
Loan and Deposit Growth: Loan growth for the quarter was $486.1 million, reflecting record loan originations of $1.02 billion and the purchase of residential loan pools of $161.7 million. The committed loan pipeline remains strong at $515.4 million. In addition, deposits increased $323.4 million during the first quarter, while cost of deposits decreased four basis points to 0.16%, from 0.20%, in the prior linked quarter. The loans-to-deposits ratio increased to 90.60%, from 88.60%, in the prior linked quarter.
Strengthening Net Interest Income and Margin: Net interest income increased by $3.6 million to $84.2 million, from $80.6 million, in the prior linked quarter. Net interest margin increased to 3.18%, as compared to 2.99% in the prior linked quarter, largely driven by the deployment of excess liquidity to fund interest earning assets.
1 Core earnings and core earnings before income taxes and credit loss provision (“PTPP”), and ratios derived from them, are non-GAAP financial measures. For the periods presented, core earnings exclude merger related expenses, net branch consolidation expenses, net loss (gain) on equity investments, 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 credit loss provision (benefit). Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding our non-GAAP financial measures.
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Expense Management: Total operating expenses decreased to $57.5 million, from $64.8 million in the prior linked quarter, and operating expenses excluding non-core operations decreased to $55.1 million from $57.1 million, for the same periods, reflecting improving trends in the Bank’s cost reduction initiatives. These efforts improved the efficiency ratio to 61.77%, from 72.04%, in the prior linked quarter, and core efficiency ratio improved to 57.51%, from 62.57%, in the prior linked quarter.
Branch Consolidations: The Company completed its consolidation of 10 branches during the first quarter for a total of 77 branches consolidated since 2013. Average deposits per branch totaled $264.6 million as of March 31, 2022.
Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased to report strong first quarter results, including record loan originations of over $1 billion, a material expansion in net interest margin, and decreased operating expenses. The exceptional loan growth, along with increased deposits, resulted in an increased loan to deposit ratio of 90.60%. Although deposits grew, our cost of deposits decreased to 16 basis points reflecting our continued commitment to building a high quality funding base.” Mr. Maher added, “As interest rates have begun to increase, our discipline regarding rate positions has protected our shareholders’ tangible book value position and set the stage for continued earnings growth.”
The Company’s Board of Directors declared its 101st consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.17 per share will be paid on May 20, 2022 to common stockholders of record on May 9, 2022. The Board previously declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock. This dividend will be paid on May 16, 2022 to preferred stockholders of record on April 29, 2022.
The Company completed its acquisition of a majority interest in Trident Abstract Title Agency, LLC on April 1, 2022.
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Results of Operations
Net income for the quarter ended March 31, 2022 was adversely impacted by non-core operations of $4.0 million, net of tax, while net income for the quarter ended March 31, 2021 was favorably impacted by non-core operations of $5.2 million, net of tax. Core earnings for the quarter ended March 31, 2022 was $28.8 million, or $0.49 per diluted share, an increase from core earnings of $26.5 million, or $0.44 per diluted share, for the corresponding prior year period. Core earnings for the quarter ended March 31, 2022 increased from $28.5 million, or $0.48 per diluted share, for the prior linked quarter, which was adversely impacted by non-core operations of $6.8 million, net of tax.
Net Interest Income and Margin
Net interest income for the quarter ended March 31, 2022 increased to $84.2 million, as compared to $73.6 million for the corresponding prior year period, reflecting an increase in net interest margin. Average interest-earning assets increased by $551.7 million for the quarter ended March 31, 2022, as compared to the same prior year period, primarily due to loan and securities growth, which was primarily funded by the redeployment of excess cash. Average loans receivable, net of allowance for loan credit losses, increased by $1.07 billion for the quarter ended March 31, 2022, as compared to the same prior year period.
Net interest margin for the quarter ended March 31, 2022 increased to 3.18% from 2.93% for the same prior year period. Excluding the impact of purchase accounting accretion and prepayment fees of 0.12% and 0.18% for the quarters ended March 31, 2022 and 2021, respectively, net interest margin increased to 3.06% from 2.75%. Net interest margin expansion was primarily attributable to the decrease in excess balance sheet liquidity used to fund loan and securities growth. In addition, for the quarter ended March 31, 2022, the cost of average interest-bearing liabilities decreased to 0.35% from 0.60% for the corresponding prior year period, as a result of the downward repricing of deposits. The
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total cost of deposits (including non-interest bearing deposits) was 0.16% for the quarter ended March 31, 2022, as compared to 0.37% for the same prior year period.
Net interest income for the quarter ended March 31, 2022 increased by $3.6 million, as compared to the prior linked quarter, and net interest margin increased to 3.18%, as compared to 2.99% for the prior linked quarter. Excluding the impact of purchase accounting accretion and prepayment fees of 0.12% and 0.18% for the quarter ended March 31, 2022 and December 31, 2021, respectively, net interest margin increased to 3.06% from 2.81%. The net interest margin expansion was primarily attributable to the decrease in excess balance sheet liquidity used to fund loan and securities growth. The yield on average interest-earning assets increased to 3.43% from 3.28% in the prior linked quarter. The total cost of average interest-bearing liabilities was 0.35% for the quarter ended March 31, 2022, as compared to 0.40% in the prior linked quarter, partly due to a decrease in higher-costing time deposits.
Provision/Benefit for Credit Losses
    For the quarter ended March 31, 2022, the credit loss expense was $1.9 million, as compared to a credit loss benefit of $620,000 for the corresponding prior year period and a credit loss benefit of $1.6 million in the prior linked quarter. The credit loss expense for the quarter ended March 31, 2022 was influenced by slowing prepayment rate assumptions primarily impacting the residential real estate portfolio, strong loan portfolio growth, and macro-economic forecast uncertainty related to the Russia-Ukraine war, partly offset by positive trends in the Bank’s criticized and classified assets and favorable employment outlook.
Net loan recoveries were $92,000 for the quarter ended March 31, 2022, as compared to $280,000 for the corresponding prior year period and $19,000 in the prior linked quarter. Refer to “Asset Quality” section for further discussion.
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Non-interest Income
    For the quarter ended March 31, 2022, other income decreased to $8.9 million, as compared to $20.8 million for the corresponding prior year period. Other income for the quarters ended March 31, 2022 and 2021 included net losses of $2.8 million and net gains of $8.3 million, respectively, related to the net loss/gain on equity investments, which are considered non-core operations.
Excluding non-core operations, the decrease in other income of $910,000 for the quarter ended March 31, 2022, as compared to the corresponding prior year period, was primarily due to decreases in net gain on sales of loans of $1.7 million and Paycheck Protection Program (“PPP”) loan origination referral fees of $662,000 in the prior year, partly offset by an increase in commercial loan swap income of $1.7 million.
Excluding non-core operations of $1.3 million in the prior linked quarter, other income for the quarter ended March 31, 2022 increased $976,000, primarily due to an increase in commercial loan swap income of $1.5 million.
Non-interest Expense
    Operating expenses increased to $57.5 million for the quarter ended March 31, 2022, as compared to $51.7 million in the same prior year period. Operating expenses for the quarters ended March 31, 2022 and 2021 included $2.4 million and $1.4 million, respectively, of net expenses related to non-core operations.
Excluding non-core operations, the $4.8 million increase in operating expenses for the quarter ended March 31, 2022, as compared to the corresponding prior year period, was primarily due to increases in compensation and benefits expense of $2.3 million, relating to the commercial banking strategy and the commercial banking hires in expansion markets of Boston and Baltimore as well as additional hires in New Jersey, New York and Philadelphia, data processing expense of $1.7 million, as a result of the migration to a new core banking system, and occupancy expense of $683,000.
    Excluding non-core operations of $7.7 million in the prior linked quarter, operating expenses for
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the quarter ended March 31, 2022, decreased $2.0 million, primarily due to a decrease in data processing expense of $2.0 million.
Income Tax Expense
The provision for income taxes was $8.0 million for the quarter ended March 31, 2022, as compared to $10.7 million for the same prior year period, and $4.1 million for the prior linked quarter. The effective tax rate was 23.6% for the quarter ended March 31, 2022, as compared to 24.6% for the same prior year period and 15.3% for the prior linked quarter. The lower effective tax rate in the prior linked quarter was primarily due to the allocation of more taxable income to jurisdictions other than New Jersey with lower income tax rates and other tax optimization efforts.
Financial Condition
    Total assets increased by $425.3 million to $12.16 billion at March 31, 2022, from $11.74 billion at December 31, 2021. Total loans, excluding PPP loans of $15.0 million and $22.9 million at March 31, 2022 and December 31, 2021, respectively, increased by $494.0 million, to $9.09 billion at March 31, 2022, from $8.60 billion at December 31, 2021, primarily due to loan originations and purchases of $161.7 million of residential real estate loan pools. Total debt securities decreased by $61.5 million at March 31, 2022, as compared to December 31, 2021.
    Deposits increased by $323.4 million to $10.06 billion at March 31, 2022, from $9.73 billion at December 31, 2021. Total deposits excluding time deposits increased by $211.1 million to $9.17 billion at March 31, 2022, from $8.96 billion at December 31, 2021, due to organic growth in all deposit categories. Time deposits increased to $887.3 million at March 31, 2022, from $775.0 million at December 31, 2021 primarily due to an increase in brokered time deposits, which were less costly than comparable term Federal Home Loan Bank (“FHLB”) advances. The loans-to-deposit ratio at March 31, 2022 was 90.6%, as compared to 88.6% at December 31, 2021. FHLB advances increased to $75.0 million at March 31, 2022 from $0 at December 31, 2021 to fund loan growth. Other borrowings
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decreased by $34.7 million to $194.4 million at March 31, 2022, from $229.1 million at December 31, 2021, primarily due to the extinguishment of $35.0 million of subordinated debt.
    Stockholders’ equity was $1.52 billion at March 31, 2022 and December 31, 2021. Accumulated other comprehensive loss increased by $12.3 million to $15.2 million at March 31, 2022 from $2.8 million at December 31, 2021, primarily due to unrealized losses on debt securities available-for-sale which were impacted by higher interest rates. For the quarter ended March 31, 2022, the Company repurchased 100,444 shares under its stock repurchase programs at a weighted average cost of $21.35 and there were 3,207,217 shares available for repurchase at March 31, 2022 under the existing repurchase programs. Stockholders’ equity per common share decreased to $25.58 at March 31, 2022, as compared to $25.63 at December 31, 2021. Tangible common equity per common share increased to $15.94 at March 31, 2022, as compared to $15.93 at December 31, 2021.

Asset Quality
    The Company’s non-performing loans increased to $26.9 million at March 31, 2022, as compared to $25.5 million at December 31, 2021. The Company’s non-performing loans, excluding $3.7 million and $6.5 million of non-performing purchased with credit deterioration (“PCD”) loans from prior bank acquisitions at March 31, 2022 and December 31, 2021, increased to $23.2 million at March 31, 2022, as compared to $18.9 million at December 31, 2021, primarily due to one commercial relationship of $3.2 million, which moved to non-performing loans. The allowance for loan credit losses as a percentage of total non-performing loans was 187.9% at March 31, 2022, as compared to 191.6% at December 31, 2021. The allowance for loan credit losses as a percentage of total non-performing loans, excluding PCD loans, was 218.3% at March 31, 2022, as compared to 257.8% at December 31, 2021. The level of 30 to 89 days delinquent loans expanded to $18.7 million at March 31, 2022, from $14.5 million at December 31, 2021. The level of 30 to 89 days delinquent loans, excluding non-performing and PCD loans, expanded to $15.9 million at March 31, 2022, from $13.5 million at December 31, 2021.
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The Company’s allowance for loan credit losses was 0.56% of total loans at March 31, 2022, as compared to 0.57% at December 31, 2021. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $67.5 million, or 0.74% of total loans, at March 31, 2022.

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 credit loss provision, and reporting equity and asset amounts excluding intangible assets and goodwill, which can vary from period to period, provides a better comparison of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.
Annual Meeting
The Annual Meeting of Stockholders will be held on Wednesday, May 25, 2022 at 9:00 a.m. Eastern Time, as previously announced. The meeting will be held in a virtual format only. Stockholders of record are invited to participate in the live webcast of the meeting, which will offer the same rights and opportunities to participate as at an in-person meeting, using online tools to ensure access and participation. The record date for stockholders to vote at the Annual Meeting was April 6, 2022. Voting before the meeting is encouraged, even for stockholders planning to participate in the live virtual broadcast. Votes may be submitted by telephone or online according to the instructions on the proxy card or by mail. A link to the live webcast, and a replay of the event, is available by visiting
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oceanfirst.com - Investor Relations. Access will begin at 8:45 a.m. Eastern Time to allow time for stockholders to log-in with the control number provided on the proxy card prior to the 9:00 a.m. Eastern Time scheduled start. Eligible stockholders may also vote during the live meeting online at www.virtualshareholdermeeting.com/OCFC2022 by entering the 16-digit control number included on the proxy card or notice. Whether or not stockholders plan to attend the virtual Annual Meeting, the Company encourages all eligible stockholders to vote using proxy card materials included in the meeting materials distributed beginning April 26, 2022. As a reminder, participating in the meeting is not required to vote.
Conference Call
    As previously announced, the Company will host an earnings conference call on Friday, April 29, 2022 at 11:00 a.m. Eastern Time. The direct dial number for the call is (844) 200-6205, using the access code 956037. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (866) 813-9403, access code 401866, from one hour after the end of the call until July 29, 2022. The conference call, as well as the replay, are also available (listen-only) by internet webcast at www.oceanfirst.com in the Investor Relations section.
* * *
    OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank N.A., founded in 1902, is a $12.2 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.
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The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: the impact of the COVID-19 or any other pandemic on our operations and financial results and those of our customers, changes in interest rates, inflation, 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 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, 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, 2021, 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)

March 31,December 31,March 31,
202220212021
(Unaudited)(Unaudited)
Assets
Cash and due from banks$210,919 $204,949 $1,173,665 
Debt securities available-for-sale, at estimated fair value546,470 568,255 268,511 
Debt securities held-to-maturity, net of allowance for securities credit losses of $1,380 at March 31, 2022, $1,467 at December 31, 2021, and $1,717 at March 31, 2021 (estimated fair value of $1,050,892 at March 31, 2022, $1,152,744 at December 31, 2021 and $1,099,745 at March 31, 2021)
1,099,514 1,139,193 1,082,326 
Equity investments93,888 101,155 50,159 
Restricted equity investments, at cost56,704 53,195 52,199 
Loans receivable, net of allowance for loan credit losses of $50,598 at March 31, 2022, $48,850 at December 31, 2021 and $59,976 at March 31, 2021
9,065,679 8,583,352 7,820,590 
Loans held-for-sale— — 43,175 
Interest and dividends receivable33,353 32,606 32,819 
Other real estate owned106 106 106 
Premises and equipment, net126,767 125,828 110,093 
Bank owned life insurance259,121 259,207 264,548 
Assets held for sale5,676 6,229 5,340 
Goodwill500,319 500,319 500,319 
Core deposit intangible17,005 18,215 22,273 
Other assets149,424 147,007 151,349 
Total assets$12,164,945 $11,739,616 $11,577,472 
Liabilities and Stockholders’ Equity
Deposits$10,056,233 $9,732,816 $9,502,812 
Federal Home Loan Bank advances75,002 — — 
Securities sold under agreements to repurchase with retail customers
117,782 118,769 134,465 
Other borrowings194,396 229,141 228,176 
Advances by borrowers for taxes and insurance25,398 20,305 20,980 
Other liabilities176,800 122,032 192,320 
Total liabilities10,645,611 10,223,063 10,078,753 
Total stockholders’ equity1,519,334 1,516,553 1,498,719 
Total liabilities and stockholders’ equity$12,164,945 $11,739,616 $11,577,472 
















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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
For the Three Months Ended,
March 31,December 31,March 31,
202220212021
|---------------------- (Unaudited) ----------------------|
Interest income:
Loans$82,468 $81,392 $77,908 
Debt securities7,504 5,654 5,355 
Equity investments and other1,011 1,411 1,611 
Total interest income90,983 88,457 84,874 
Interest expense:
Deposits4,041 5,010 8,496 
Borrowed funds2,715 2,861 2,774 
Total interest expense6,756 7,871 11,270 
Net interest income84,227 80,586 73,604 
Credit loss expense (benefit) 1,851 (1,573)(620)
Net interest income after credit loss expense (benefit) 82,376 82,159 74,224 
Other income:
Bankcard services revenue2,963 3,308 3,052 
Trust and asset management revenue609 562 599 
Fees and service charges3,060 3,314 3,737 
Net gain on sales of loans177 1,916 
Net (loss) gain on equity investments(2,786)(1,252)8,287 
Net loss from other real estate operations(2)(3)(8)
Income from bank owned life insurance2,103 2,061 1,415 
Commercial loan swap income2,781 1,323 1,111 
Other(53)91 726 
Total other income8,852 9,410 20,835 
Operating expenses:
Compensation and employee benefits30,695 31,006 28,366 
Occupancy5,744 5,101 5,061 
Equipment1,370 1,435 1,578 
Marketing616 614 434 
Federal deposit insurance and regulatory assessments1,890 1,733 1,864 
Data processing5,736 7,774 4,031 
Check card processing982 1,170 1,372 
Professional fees3,322 2,726 2,837 
Amortization of core deposit intangible1,210 1,343 1,395 
Branch consolidation expense, net402 7,286 1,011 
Merger related expenses1,965 451 381 
Other operating expense3,563 4,195 3,353 
Total operating expenses57,495 64,834 51,683 
Income before provision for income taxes33,733 26,735 43,376 
Provision for income taxes7,974 4,078 10,679 
Net income25,759 22,657 32,697 
Dividends on preferred shares1,004 1,004 1,004 
Net income available to common stockholders$24,755 $21,653 $31,693 
Basic earnings per share$0.42 $0.37 $0.53 
Diluted earnings per share$0.42 $0.37 $0.53 
Average basic shares outstanding58,739 58,801 59,840 
Average diluted shares outstanding58,943 59,044 60,101 
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OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
LOANS RECEIVABLEAt
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Commercial:
Commercial real estate - investor$4,607,880 $4,378,061 $3,922,983 $3,836,230 $3,804,351 
Commercial real estate - owner-occupied1,057,246 1,055,065 1,123,973 1,045,514 1,066,351 
Commercial and industrial502,739 449,224 457,674 474,919 498,245 
Total commercial6,167,865 5,882,350 5,504,630 5,356,663 5,368,947 
Consumer:
Residential real estate2,687,927 2,479,701 2,401,240 2,168,545 2,189,348 
Home equity loans and lines and other consumer ("other consumer")253,184 260,819 275,962 295,582 314,242 
Total consumer2,941,111 2,740,520 2,677,202 2,464,127 2,503,590 
Total loans9,108,976 8,622,870 8,181,832 7,820,790 7,872,537 
Deferred origination costs (fees), net7,301 9,332 8,282 7,437 8,029 
Allowance for loan credit losses(50,598)(48,850)(50,153)(53,876)(59,976)
Loans receivable, net$9,065,679 $8,583,352 $8,139,961 $7,774,351 $7,820,590 
Mortgage loans serviced for others$58,089 $60,447 $64,840 $68,778 $74,037 
At March 31, 2022 Average Yield
Loan pipeline (1):
Commercial4.07 %$385,986 $539,426 $482,942 $463,388 $154,946 
Residential real estate3.45 116,554 123,211 160,070 153,798 178,352 
Other consumer4.48 12,814 8,381 8,420 11,369 11,031 
Total3.94 %$515,354 $671,018 $651,432 $628,555 $344,329 
For the Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Average Yield
Loan originations:
Commercial3.66 %$816,517 $780,464 $585,667 $259,163 
(2)
$547,591 
(2)
Residential real estate3.08 192,721 
(3)
195,942 
(3)
174,365 
(3)
173,354 189,942 
Other consumer4.35 12,718 12,552 11,782 14,870 10,278 
Total3.56 %$1,021,956 $988,958 $771,814 $447,387 $747,811 
Loans sold$703 
(4)
$649 $1,756 $29,556 $67,500 
(1)Loan pipeline includes loans approved but not funded.
(2)Excludes loans originated through the PPP of $13 million and $60 million for the three months ended June 30, 2021 and March 31, 2021, respectively.
(3)Excludes residential real estate loan pool purchases of $161.7 million, $82.2 million and $219.7 million for the three months ended March 31, 2022, December 31, 2021 and September 30, 2021, respectively.
(4)Excludes the sale of higher risk commercial loans of $12.0 million for the three months ended March 31, 2022.
DEPOSITSAt
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Type of Account
Non-interest-bearing$2,444,833 $2,412,056 $2,467,952 $2,505,355 $2,417,935 
Interest-bearing checking4,287,745 4,201,736 4,013,565 3,628,741 3,623,132 
Money market811,588 736,090 816,691 734,320 782,459 
Savings1,624,751 1,607,933 1,620,447 1,590,441 1,568,528 
Time deposits887,316 775,001 855,442 956,429 1,110,758 
  Total deposits$10,056,233 $9,732,816 $9,774,097 $9,415,286 $9,502,812 


14



OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
ASSET QUALITYMarch 31,December 31,September 30,June 30,March 31,
20222021202120212021
Non-performing loans:
Commercial real estate - investor$3,575 $3,614 $8,506 $15,211 $18,520 
Commercial real estate - owner-occupied9,632 11,904 12,524 12,100 12,345 
Commercial and industrial2,830 277 418 1,635 1,689 
Residential real estate7,047 6,114 5,505 6,137 6,422 
Other consumer3,841 3,585 3,351 3,576 3,782 
Total non-performing loans26,925 25,494 30,304 38,659 42,758 
Other real estate owned106 106 106 106 106 
Total non-performing assets$27,031 $25,600 $30,410 $38,765 $42,864 
Delinquent loans 30 to 89 days$18,691 $14,546 $7,840 $6,364 $18,421 
Troubled debt restructuring (“TDR”):
Non-performing (included in total non-performing loans above)$11,914 $11,311 $9,962 $10,120 $5,107 
Performing7,716 12,320 9,661 10,311 11,466 
Total TDRs$19,630 $23,631 $19,623 $20,431 $16,573 
Allowance for loan credit losses$50,598 $48,850 $50,153 $53,876 $59,976 
Allowance for loan credit losses as a percent of total loans receivable (1)
0.56 %0.57 %0.61 %0.69 %0.76 %
Allowance for loan credit losses as a percent of total non-performing loans (1)
187.92 191.61 165.50 139.36 140.27 
Non-performing loans as a percent of total loans receivable0.30 0.30 0.37 0.49 0.54 
Non-performing assets as a percent of total assets0.22 0.22 0.26 0.34 0.37 
PCD loans
PCD loans$37,032 $41,817 $41,372 $40,064 $44,421 
Non-performing PCD loans3,745 6,546 6,960 6,979 8,630 
Delinquent PCD loans 30 to 89 days2,749 1,000 1,193 1,051 1,944 
TDR PCD loans1,033 337 345 317 322 
Asset quality, excluding PCD loans (2)
Non-performing loans23,180 18,948 23,344 31,680 34,128 
Non-performing assets23,286 19,054 23,450 31,786 34,234 
Delinquent loans 30 to 89 days
15,942 13,546 6,647 5,313 16,477 
TDRs
18,597 23,294 19,278 20,114 16,251 
Allowance for loan credit losses as a percent of total non-performing loans (1)
218.28 %257.81 %214.84 %170.06 %175.74 %
Non-performing loans as a percent of total loans receivable
0.25 0.22 0.29 0.41 0.43 
Non-performing assets as a percent of total assets0.19 0.16 0.20 0.28 0.30 
(1)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 $16.9 million, $18.9 million, $21.3 million, $23.6 million and $25.7 million at March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, respectively.
(2)All balances and ratios below exclude PCD loans.











15


(continued)

NET LOAN RECOVERIES (CHARGE-OFFS)For the Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Net loan recoveries (charge-offs):
Loan charge-offs$(143)$(92)$(163)$(420)$(356)
Recoveries on loans235 111 549 196 636 
Net loan recoveries (charge-offs) $92 

$19 $386 $(224)$280 
Net loan recoveries (charge-offs) to average total loans (annualized)NM*NM*NM*0.01 %NM*
Net loan recoveries (charge-offs) detail:
Commercial$25 $(24)$(33)$(304)$126 
Residential real estate94 21 280 — (203)
Other consumer(27)22 139 80 357 
Net loan recoveries (charge-offs) $92 $19 $386 $(224)$280 
* Not meaningful



16


OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
For the Three Months Ended
March 31,December 31,March 31,
202220212021
(dollars in thousands)Average
Balance
Interest
Average
Yield/
Cost (1)
Average
Balance
Interest
Average
Yield/
Cost (1)
Average
Balance
Interest
Average
Yield/
Cost (1)
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments$88,826 $37 0.17 %$698,652 $300 0.17 %$1,138,911 $277 0.10 %
Securities (2)
1,846,452 8,478 1.86 1,710,143 6,765 1.57 1,311,683 6,689 2.07 
Loans receivable, net (3)
Commercial6,037,639 58,355 3.92 5,635,642 57,829 4.07 5,127,940 53,670 4.24 
Residential real estate2,542,655 21,339 3.36 2,430,635 20,454 3.37 2,327,838 20,069 3.45 
Other consumer257,024 2,774 4.38 273,007 3,109 4.52 326,907 4,169 5.17 
Allowance for loan credit losses, net of deferred loan costs and fees(40,457)— — (41,889)— — (52,887)— — 
Loans receivable, net8,796,861 82,468 3.79 8,297,395 81,392 3.89 7,729,798 77,908 4.09 
Total interest-earning assets10,732,139 90,983 3.43 10,706,190 88,457 3.28 10,180,392 84,874 3.38 
Non-interest-earning assets1,215,071 1,247,420 1,259,109 
Total assets$11,947,210 $11,953,610 $11,439,501 
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking$4,377,368 2,149 0.20 %$4,249,001 2,851 0.27 %$3,711,976 4,311 0.47 %
Money market788,063 318 0.16 790,471 282 0.14 757,634 367 0.20 
Savings1,609,415 125 0.03 1,611,522 141 0.03 1,522,603 179 0.05 
Time deposits767,709 1,449 0.77 819,025 1,736 0.84 1,221,123 3,639 1.21 
Total7,542,555 4,041 0.22 7,470,019 5,010 0.27 7,213,336 8,496 0.48 
FHLB Advances29,433 35 0.48 — — — — — — 
Securities sold under agreements to repurchase117,623 42 0.14 132,520 50 0.15 129,444 95 0.30 
Other borrowings228,522 2,638 4.68 228,980 2,811 4.87 228,368 2,679 4.76 
Total borrowings375,578 2,715 2.93 361,500 2,861 3.14 357,812 2,774 3.14 
Total interest-bearing liabilities7,918,133 6,756 0.35 7,831,519 7,871 0.40 7,571,148 11,270 0.60 
Non-interest-bearing deposits2,401,797 2,467,588 2,212,273 
Non-interest-bearing liabilities99,441 134,527 160,500 
Total liabilities10,419,371 10,433,634 9,943,921 
Stockholders’ equity
1,527,839 1,519,976 1,495,580 
Total liabilities and equity$11,947,210 $11,953,610 $11,439,501 
Net interest income$84,227 $80,586 $73,604 
Net interest rate spread (4)
3.08 %2.88 %2.78 %
Net interest margin (5)
3.18 %2.99 %2.93 %
Total cost of deposits (including non-interest-bearing deposits)
0.16 %0.20 %0.37 %
(1)    Average yields and costs are annualized.
(2)    Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost, net of allowance for securities credit losses.
(3)    Amount is net of deferred loan costs and fees, undisbursed loan funds, discounts and premiums and allowance for loan credit losses, and includes loans held for sale and non-performing loans.
(4)    Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5)    Net interest margin represents net interest income divided by average interest-earning assets.
17


OceanFirst Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share amounts)
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Selected Financial Condition Data:
Total assets$12,164,945 $11,739,616 $11,829,688 $11,483,901 $11,577,472 
Debt securities available-for-sale, at estimated fair value
546,470 568,255 314,620 249,330 268,511 
Debt securities held-to-maturity, net of allowance for securities credit losses1,099,514 1,139,193 1,125,382 1,146,735 1,082,326 
Equity investments93,888 101,155 101,314 90,917 50,159 
Restricted equity investments, at cost56,704 53,195 53,017 52,519 52,199 
Loans receivable, net of allowance for loan credit losses9,065,679 8,583,352 8,139,961 7,774,351 7,820,590 
Deposits10,056,233 9,732,816 9,774,097 9,415,286 9,502,812 
Federal Home Loan Bank advances75,002 — — — — 
Securities sold under agreements to repurchase and other borrowings312,178 347,910 372,179 370,039 362,641 
Stockholders’ equity
1,519,334 1,516,553 1,513,249 1,508,789 1,498,719 

For the Three Months Ended,
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Selected Operating Data:
Interest income$90,983 $88,457 $85,420 $83,341 $84,874 
Interest expense6,756 7,871 8,288 9,325 11,270 
Net interest income84,227 80,586 77,132 74,016 73,604 
Credit loss expense (benefit) 1,851 (1,573)(3,179)(6,460)(620)
Net interest income after credit loss expense (benefit) 82,376 82,159 80,311 80,476 74,224 
Other income (excluding net (loss) gain on equity investments)11,638 10,662 10,349 11,227 12,548 
Net (loss) gain on equity investments(2,786)(1,252)(466)576 8,287 
Operating expenses (excluding merger related and branch consolidation expenses, net)55,128 57,097 54,434 51,198 50,291 
Branch consolidation expense, net402 7,286 4,014 26 1,011 
Merger related expenses1,965 451 225 446 381 
Income before provision for income taxes33,733 26,735 31,521 40,609 43,376 
Provision for income taxes7,974 4,078 7,354 10,054 10,679 
Net income$25,759 $22,657 $24,167 $30,555 $32,697 
Net income available to common stockholders$24,755 $21,653 $23,163 $29,551 $31,693 
Diluted earnings per share$0.42 $0.37 $0.39 $0.49 $0.53 
Net accretion/amortization of purchase accounting adjustments included in net interest income$2,953 $3,610 $3,644 $2,835 $3,650 
18


(continued)
At or For the Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Selected Financial Ratios and Other Data(1):
Performance Ratios (Annualized):
Return on average assets (2)
0.84 %0.72 %0.78 %1.03 %1.12 %
Return on average tangible assets (2) (3)
0.88 0.75 0.82 1.08 1.18 
Return on average stockholders’ equity (2)
6.57 5.65 6.05 7.88 8.59 
Return on average tangible stockholders’ equity (2) (3)
9.94 8.59 9.20 12.07 13.22 
Stockholders’ equity to total assets12.49 12.92 12.79 13.14 12.95 
Tangible stockholders’ equity to tangible assets (3)
8.60 8.89 8.78 9.01 8.83 
Tangible common equity to tangible assets (3)
8.13 8.40 8.29 8.50 8.33 
Net interest rate spread3.08 2.88 2.80 2.75 2.78 
Net interest margin3.18 2.99 2.93 2.89 2.93 
Operating expenses to average assets (2)
1.95 2.15 1.98 1.80 1.83 
Efficiency ratio (2) (4)
61.77 72.04 67.43 60.21 54.73 
Loans-to-deposits90.60 88.60 83.71 83.06 82.84 




19


(continued)
At or For the Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Trust and Asset Management:
Wealth assets under administration and management (“AUA/M”)$296,818 $287,404 $274,807 $278,785 $274,172 
Nest Egg AUA/M415,478 428,558 423,563 425,921 410,497 
Total AUA/M712,296 715,962 698,370 704,706 684,669 
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 period25.58 25.63 25.47 25.22 24.84 
Tangible common equity per common share at end of period (3)
15.94 15.93 15.78 15.58 15.26 
Common shares outstanding at end of period59,388,98359,175,04659,417,26659,834,01860,329,504
Preferred shares outstanding at end of period57,370 57,370 57,370 57,370 57,370 
Number of full-service customer facilities:38 47 58 58 62 
Quarterly Average Balances
Total securities$1,846,452 $1,710,143 $1,542,630 $1,501,484 $1,311,683 
Loans receivable, net8,796,861 8,297,395 7,864,720 7,788,919 7,729,798 
Total interest-earning assets10,732,139 10,706,190 10,461,147 10,282,888 10,180,392 
Total goodwill and core deposit intangible518,106 519,401 520,765 522,122 523,499 
Total assets11,947,210 11,953,610 11,738,037 11,539,732 11,439,501 
Time deposits767,709 819,025 904,384 1,002,086 1,221,123 
Total deposits (including non-interest-bearing deposits)9,944,352 9,937,607 9,699,033 9,507,392 9,425,609 
Total borrowed funds375,578 361,500 371,189 363,531 357,812 
Total interest-bearing liabilities7,918,133 7,831,519 7,494,099 7,408,720 7,571,148 
Non-interest bearing deposits2,401,797 2,467,588 2,576,123 2,462,203 2,212,273 
Stockholders' equity1,527,839 1,519,976 1,519,488 1,504,035 1,495,580 
Tangible stockholders’ equity1,009,733 1,000,575 998,723 981,913 972,081 
Quarterly Yields
Total securities1.86 %1.57 %1.57 %1.62 %2.07 %
Loans receivable, net3.79 3.89 3.98 3.97 4.09 
Total interest-earning assets3.43 3.28 3.24 3.25 3.38 
Time deposits0.77 0.84 0.94 1.03 1.21 
Total cost of deposits (including non-interest-bearing deposits)0.16 0.20 0.22 0.27 0.37 
Total borrowed funds2.93 3.14 3.11 3.31 3.14 
Total interest-bearing liabilities0.35 0.40 0.44 0.50 0.60 
Net interest spread3.08 2.88 2.80 2.75 2.78 
Net interest margin3.18 2.99 2.93 2.89 2.93 
(1)    With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2)    Performance ratios for each period are presented on a GAAP basis and include non-core operations. Refer to “Non-GAAP Reconciliation.”
(3)    Tangible stockholders’ equity and tangible assets exclude intangible assets related to goodwill and core deposit intangible. Tangible common equity excludes goodwill, core deposit intangible and preferred equity. Refer to “Non-GAAP Reconciliation.”
(4)    Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.




20




OceanFirst Financial Corp.
OTHER ITEMS
(dollars in thousands, except per share amounts)

NON-GAAP RECONCILIATION
For the Three Months Ended
March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Core Earnings:
Net income available to common stockholders (GAAP)
$24,755 $21,653 $23,163 $29,551 $31,693 
Add (less) non-recurring and non-core items:
Merger related expenses1,965 451 225 446 381 
Branch consolidation expense, net (1)
402 7,286 4,014 26 1,011 
Net loss (gain) on equity investments2,786 1,252 466 (576)(8,287)
Income tax (benefit) expense on items(1,141)(2,144)(1,138)26 1,666 
Core earnings (Non-GAAP)
$28,767 $28,498 $26,730 $29,473 $26,464 
Income tax expense7,974 4,078 7,354 10,054 10,679 
Credit loss provision (benefit)1,851 (1,573)(3,179)(6,460)(620)
Income tax (benefit) expense on non-core items(1,141)(2,144)(1,138)26 1,666 
Core earnings PTPP (Non-GAAP)
$39,733 $33,147 $32,043 $33,041 $34,857 
Core earnings diluted earnings per share$0.49 $0.48 $0.45 $0.49 $0.44 
Core earnings PTPP diluted earnings per share$0.67 $0.56 $0.54 $0.55 $0.58 
Core Ratios (Annualized):
Return on average assets0.98 %0.95 %0.90 %1.02 %0.94 %
Return on average tangible stockholders’ equity11.55 11.30 10.62 12.04 11.04 
Efficiency ratio57.51 62.57 62.22 60.06 58.37 
(1) Includes $2.0 million of gains related to the sale of two branches for the three months ended December 31, 2021.


21


(continued)

March 31,December 31,September 30,June 30,March 31,
20222021202120212021
Tangible Equity:
Total stockholders' equity$1,519,334 $1,516,553 $1,513,249 $1,508,789 $1,498,719 
Less:
Goodwill500,319 500,319 500,319 500,319 500,319 
Core deposit intangible17,005 18,215 19,558 20,912 22,273 
Tangible stockholders' equity1,002,010 998,019 993,372 987,558 976,127 
Less:
Preferred stock55,527 55,527 55,527 55,527 55,527 
Tangible common equity$946,483 $942,492 $937,845 $932,031 $920,600 
Tangible Assets:
Total assets$12,164,945 $11,739,616 $11,829,688 $11,483,901 $11,577,472 
Less:
Goodwill500,319 500,319 500,319 500,319 500,319 
Core deposit intangible17,005 18,215 19,558 20,912 22,273 
Tangible assets$11,647,621 $11,221,082 $11,309,811 $10,962,670 $11,054,880 
Tangible stockholders' equity to tangible assets8.60 %8.89 %8.78 %9.01 %8.83 %
Tangible common equity to tangible assets8.13 %8.40 %8.29 %8.50 %8.33 %





22

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Ticker: OCFC
CIK: 1004702
Form Type: 8-K Corporate News
Accession Number: 0001004702-22-000085
Submitted to the SEC: Thu Apr 28 2022 4:46:31 PM EST
Accepted by the SEC: Thu Apr 28 2022
Period: Thursday, April 28, 2022
Industry: Savings Institution Federally Chartered
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Other Events
  4. Regulated Disclosure

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