OceanFirst Financial Corp. Announces Quarterly and Annual Earnings and Financial Results


RED BANK, N.J., Jan. 18, 2024 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:“OCFC”) (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), announced net income available to common stockholders of $26.7 million, or $0.46 per diluted share, for the quarter ended December 31, 2023, as compared to $52.3 million, or $0.89 per diluted share, for the corresponding prior year period, and $19.7 million, or $0.33 per diluted share, for the prior linked quarter. For the year ended December 31, 2023, the Company reported net income available to common stockholders of $100.0 million, or $1.70 per diluted share, as compared to $142.6 million, or $2.42 per diluted share, for the prior year. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information):

 For the Three Months Ended, For the Year Ended,
Performance Ratios (Quarterly Ratios Annualized):

December 31, September 30, December 31, December 31, December 31,
2023 2023 2022 2023 2022
Return on average assets0.78% 0.57% 1.62% 0.74% 1.15%
Return on average stockholders’ equity6.41  4.75  13.25  6.13  9.24 
Return on average tangible stockholders’ equity (a)9.33  6.93  19.85  8.97  13.96 
Return on average tangible common equity (a)9.81  7.29  20.97  9.44  14.76 
Efficiency ratio60.38  63.37  44.56  61.71  53.80 
Net interest margin2.82  2.91  3.64  3.02  3.37 

(a) Return on average tangible stockholders’ equity and return on average tangible common equity (“ROTCE”) are non-GAAP (“generally accepted accounting principles”) financial measures and exclude the impact of intangible assets and goodwill from both assets and stockholders’ equity. ROTCE also excludes preferred stock from stockholders’ equity. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.


Core earnings1 for the quarter and year ended December 31, 2023 were $26.3 million and $104.7 million, respectively, or $0.45 and $1.78 per diluted share, a decrease from $39.5 million and $138.0 million, or $0.67 and $2.34 per diluted share, for the corresponding prior year periods, and an increase from $18.6 million, or $0.32 per diluted share, for the prior linked quarter.

Core earnings PTPP1 for the quarter and year ended December 31, 2023 were $37.9 million and $156.6 million, respectively, or $0.65 and $2.66 per diluted share, as compared to $56.5 million and $190.7 million, or $0.96 and $3.24 per diluted share, for the corresponding prior year periods, and $35.0 million, or $0.59 per diluted share, for the prior linked quarter. Selected performance metrics are as follows:

 For the Three Months Ended, For the Year Ended,
 December 31, September 30, December 31, December 31, December 31,
Core Ratios1 (Quarterly Ratios Annualized): 2023   2023   2022   2023   2022 
Return on average assets 0.77%  0.54%  1.22%  0.78%  1.11%
Return on average tangible stockholders’ equity 9.20   6.54   15.01   9.39   13.50 
Return on average tangible common equity 9.67   6.88   15.86   9.89   14.28 
Efficiency ratio 60.02   64.29   50.78   60.61   54.21 
Core diluted earnings per share$0.45  $0.32  $0.67  $1.78  $2.34 
Core PTPP diluted earnings per share 0.65   0.59   0.96   2.66   3.24 
                    

Key developments for the recent quarter are described below:

  • Deposits: Total deposits remained stable decreasing less than 1% for the quarter to $10.4 billion, and grew 8% for the year. Additionally, the loan-to-deposit ratio was 97.70% at December 31, 2023.
  • Capital: The Company’s estimated common equity tier 1 capital ratio increased to 10.88%, as compared to 9.93% in the prior year. Book value and tangible book value per share were $27.96 and $18.35, respectively, increasing $1.15 and $1.27 from the prior year.2
  • Expenses: Non-interest expense decreased by 7% to $60.2 million from the prior linked quarter and remained relatively flat compared to the prior year period. Non-interest expense included a $1.7 million FDIC special assessment charge in the current quarter.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased to report on our current quarter results; rounding out the year positively and executing on our strategies to improve operating expenses, diversify and strengthen our deposit base, and bolster our capital position during a tumultuous year for the industry.” Mr. Maher added, “As we turn to 2024, the Company is well positioned to create shareholder value and will remain focused on high quality growth, expense discipline, and prudent balance sheet management.”

The Company’s Board of Directors declared its 108th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on February 16, 2024 to common stockholders of record on February 5, 2024. The Company’s Board of Directors also declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock. This dividend will be paid on February 15, 2024 to preferred stockholders of record on January 31, 2024.

1 Core earnings and core earnings before income taxes and provision for credit losses (“PTPP or Pre-Tax-Pre-Provision”), and ratios derived therefrom, are non-GAAP financial measures. For the periods presented, core earnings exclude merger related expenses, net branch consolidation expense (benefit), net (gain) loss on equity investments, net loss on sale of investments, Federal Deposit Insurance Corporation (“FDIC”) special assessment, and the income tax effect of these items, (collectively referred to as “non-core” operations). PTPP excludes the aforementioned pre-tax “non-core” items along with income tax expense (benefit) and provision for credit losses (benefit). Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.
2 Tangible book value per common share and tangible common equity to tangible assets are non-GAAP financial measures and exclude the impact of intangible assets, goodwill, and preferred equity from both stockholders’ equity and total assets. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

Results of Operations

The current quarter results were impacted by the following matters. Net interest income and margin were adversely impacted by a continued mix-shift to and repricing of higher cost deposits that outpaced the increase in yields on interest-earning assets. Deposit betas increased modestly to 38%, from 35% in the prior linked quarter.3 Operating expenses included a special assessment charge of $1.7 million related to the Federal Deposit Insurance Corporation’s final rule to recover the loss to the Deposit Insurance Fund in 2023. Additionally, operating expenses reflect the net realization of the Company’s performance improvement initiatives and strategic investments made over the past year.

3 Deposit beta measures the change in the interest rates paid for interest-bearing deposit accounts versus the change in the federal funds target rate. Represents the deposit beta for total deposits (interest-bearing and non-interest bearing) for the current rate cycle (since December 31, 2021).

Net Interest Income and Margin

Quarter ended December 31, 2023 vs. December 31, 2022

Net interest income decreased to $87.8 million, from $106.5 million, primarily reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 2.82%, from 3.64%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.10% for the respective quarters, net interest margin decreased to 2.77%, from 3.54%. Net interest margin decreased primarily due to the increase in cost of funds outpacing the increase in yield on average interest earning assets.

Average interest-earning assets increased by $743.2 million, primarily driven by increases of $326.8 million in interest-earning deposits and short-term investments and $318.1 million in total loans. The yield on average interest earning assets increased to 5.16%, from 4.46%.

The cost of average interest-bearing liabilities increased to 2.91%, from 1.09%, primarily due to higher cost of deposits. The total cost of deposits (including non-interest bearing deposits) increased to 2.22%, from 0.53%.

Year ended December 31, 2023 vs. December 31, 2022

Net interest income decreased to $369.7 million, from $377.5 million, reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 3.02%, from 3.37%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.11% for the respective years, net interest margin decreased to 2.97%, from 3.26%.

Average interest-earning assets increased by $1.06 billion, primarily driven by increases in total loans of $693.2 million and interest-earning deposits and short-term investments of $254.6 million. The yield on average interest earning assets increased to 4.96%, from 3.85%.

The cost of average interest-bearing liabilities increased to 2.45%, from 0.65%, primarily due to higher cost of deposits and Federal Home Loan Bank (“FHLB”) advances. The total cost of deposits (including non-interest bearing deposits) increased to 1.68%, from 0.31%.

Quarter ended December 31, 2023 vs. September 30, 2023

Net interest income decreased by $3.2 million, reflecting a decrease in net interest margin to 2.82%, from 2.91%, as the increase in cost of funds outpaced the increase in yield of average interest earning assets. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.06% for the respective quarters, net interest margin decreased to 2.77%, from 2.85%.

Average interest-earning assets decreased by $35.7 million, while the yield on average interest-earning assets increased to 5.16%, from 5.08%.

The total cost of average interest-bearing liabilities increased to 2.91%, from 2.71%, primarily due to higher cost of deposits. Total cost of deposits (including non-interest bearing deposits) increased to 2.22%, from 1.99%. Average interest-bearing liabilities increased $30.6 million, primarily due to an increase in total deposits, partially offset by a decrease in FHLB advances.

Provision for Credit Losses

Provision for credit losses for the quarter and year ended December 31, 2023, was $3.2 million and $17.7 million, respectively, as compared to $3.6 million and $7.8 million for the corresponding prior year periods, and $10.3 million in the prior linked quarter. The current quarter provision was impacted by the net effect of credit rating migrations, declines in prepayment assumptions, and use of an external downside macro-economic forecast scenario.

Net loan charge-offs were $35,000 and $8.4 million for the quarter and year ended December 31, 2023, respectively. Net loan recoveries were $5,000 and $340,000 for the quarter and year ended December 31, 2022, respectively. Net loan charge-offs were $8.3 million in the prior linked quarter, which primarily related to a partial charge-off of $8.4 million on a single credit relationship. Refer to “Asset Quality” section for further discussion.

Non-interest Income

Quarter ended December 31, 2023 vs. December 31, 2022

Other income decreased to $11.9 million, as compared to $27.6 million. Other income was favorably impacted by non-core operations of $2.2 million and $17.2 million, for the respective quarters, related to net gains on equity investments, which included a $17.5 million unrealized gain on the Company’s investment in Auxilior Capital Partners, Inc. in the prior year.

Excluding non-core operations, other income decreased $679,000. The primary driver was a decrease in commercial loan swap income of $490,000, which was adversely impacted by the current interest rate environment resulting in lower swap volume.

Year ended December 31, 2023 vs. December 31, 2022

Other income decreased to $33.6 million, as compared to $59.1 million. Other income was adversely impacted by non-core operations of $4.4 million for the current year, primarily related to $5.3 million of losses related to the sale of investments in the first quarter. Other income for the prior year was favorably impacted by non-core operations of $9.7 million, primarily related to net gains on equity investments.

Excluding non-core operations, other income decreased $11.4 million. The primary drivers were decreases in commercial loan swap income of $6.3 million on lower volume, fees and service charges of $1.5 million primarily due to lower title activity, and bank owned life insurance of $1.3 million related to non-recurring death benefits recognized in the prior year. Additionally, bankcard services revenue decreased $3.3 million due to the Durbin Amendment, which became effective for the Company on July 1, 2022.

Quarter ended December 31, 2023 vs. September 30, 2023

Other income in the prior linked quarter was $10.8 million, which included non-core operations of $1.5 million related to net gains on equity investments. Excluding non-core operations, other income increased by $375,000 primarily due to gain on sales of loans.

Non-interest Expense

Quarter ended December 31, 2023 vs. December 31, 2022

Operating expenses increased to $60.2 million, as compared to $59.7 million. Operating expenses were adversely impacted by non-core items of $1.7 million from the FDIC special assessment in the current year and $387,000 from merger related and branch consolidation expenses in the prior year.

Excluding non-core operations, operating expenses decreased $815,000. The primary drivers were decreases in compensation and benefits of $1.8 million due to lower incentive compensation and professional fees of $1.8 million tied to the Company’s performance improvement initiatives and strategic investments. This was partly offset by increases in data processing expense of $1.8 million, partly driven by one-time recoveries recorded in the prior year, and federal deposit insurance and regulatory assessments of $799,000, primarily due to new assessment rates that went into effect on January 1, 2023.

Year ended December 31, 2023 vs. December 31, 2022

Operating expenses increased to $248.9 million, as compared to $234.9 million. Operating expenses for the years were adversely impacted by $1.8 million and $3.4 million of non-core operations, respectively.

Excluding non-core operations, operating expenses increased by $15.7 million. This was due to increases in professional fees of $5.3 million and compensation and benefits of $3.9 million related to the Company’s performance improvement initiatives and strategic investments, and related severance and other program costs. Additionally, there were increases in federal deposit insurance and regulatory assessments of $2.1 million and data processing expense of $1.7 million, which were driven by the same factors as the three months ended. Marketing expense also increased $1.3 million due to the Company’s enhanced digital strategy efforts, and other operating expenses included higher expenses of $1.1 million primarily related to real estate charges on assets sold during the period from assets held for sale.

Quarter ended December 31, 2023 vs. September 30, 2023

Excluding non-core operations, operating expenses decreased by $6.0 million. This was primarily due to decreases in compensation and benefits expense of $3.4 million and professional fees of $2.4 million due to the Company’s improvement initiatives and strategic investments noted above.

Income Tax Expense

The provision for income taxes was $8.6 million and $32.7 million for the quarter and year ended December 31, 2023, respectively, as compared to $17.4 million and $46.6 million, for the same prior year periods, and $6.5 million for the prior linked quarter. The effective tax rate was 23.6% and 23.9% for the quarter and year ended December 31, 2023, respectively, as compared to 24.6% and 24.0% for the same prior year periods, and 23.9% for the prior linked quarter.

Financial Condition

December 31, 2023 vs. December 31, 2022        

Total assets increased by $434.4 million to $13.54 billion, from $13.10 billion, primarily due to purchases of available-for-sale debt securities and loan growth. Available-for-sale debt securities increased by $296.2 million to $753.9 million, from $457.6 million, primarily due to purchases of variable-rate mortgage-backed securities in the fourth quarter of 2023. Total loans increased by $276.5 million to $10.19 billion, from $9.92 billion, due to loan originations and growth.

Other assets decreased by $41.4 million to $179.7 million, from $221.1 million, primarily due to a decrease in market values associated with customer interest rate swap programs.

Total liabilities increased by $357.9 million to $11.88 billion, from $11.52 billion. Deposits increased by $759.7 million to $10.43 billion, from $9.68 billion. Time deposits increased by $903.4 million to $2.45 billion, from $1.54 billion, or 23.4% and 15.9% of total deposits, respectively. Retail time deposits increased $1.13 billion, while brokered time deposits decreased $242.0 million. The loans-to-deposit ratio was 97.7%, as compared to 102.5%. FHLB advances decreased by $362.5 million to $848.6 million, from $1.21 billion due to mix shift in funding sources from FHLB advances to deposits.

Other liabilities decreased by $45.4 million to $300.7 million, from $346.2 million, primarily due to a decrease in the market values associated with customer interest rate swaps and related collateral received from counterparties.

Total stockholders’ equity increased to $1.66 billion, as compared to $1.59 billion, primarily reflecting net income, net of dividends, for the year ended December 31, 2023. Additionally, accumulated other comprehensive loss decreased by $15.1 million primarily due to increases in fair market value of available-for-sale debt securities, net of tax.

The Company's estimated common equity tier 1 capital ratio increased to 10.88%, which included an estimated 30 bps improvement due to balance sheet optimization efforts completed in the fourth quarter.

For the year ended December 31, 2023, the Company did not repurchase shares under its stock repurchase program. There were 2,934,438 shares available for repurchase at December 31, 2023 under the existing repurchase program. Book value per common share increased to $27.96, as compared to $26.81. Tangible book value per common share2 increased to $18.35, as compared to $17.08.

Asset Quality

December 31, 2023 vs. December 31, 2022

The Company’s non-performing loans increased to $29.5 million from $23.3 million and represented 0.29% and 0.23% of total loans, respectively. The increase in non-performing loans was primarily driven by the remaining exposure of $8.8 million on a single credit relationship reported in the prior quarter.

The allowance for loan credit losses as a percentage of total non-performing loans was 227.21%, as compared to 244.25%. The level of 30 to 89 days delinquent loans increased to $19.2 million, from $14.1 million. The Company’s allowance for loan credit losses was 0.66% of total loans as compared to 0.57%. Refer to “Provision for Credit Losses” section for further discussion.

The Company’s asset quality, excluding purchased with credit deterioration (“PCD”) loans, were as follows. Non-performing loans increased to $26.4 million, from $19.3 million. The allowance for loan credit losses as a percentage of total non-performing loans was 254.64%, as compared to 294.10%. The level of 30 to 89 days delinquent loans, excluding non-performing loans, increased to $17.7 million, from $10.5 million. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $74.7 million, or 0.73% of total loans, as compared to $68.2 million, or 0.69% of total loans.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding non-core operations and in some instances excluding income taxes and provision for credit losses, and reporting equity and asset amounts excluding intangible assets, goodwill or preferred stock, which can vary from period to period, provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.

Annual Meeting

The Company also announced today that its Annual Meeting of Stockholders will be held on Tuesday, May 21, 2024 at 8:00 a.m. Eastern Time. The record date for stockholders to vote at the Annual Meeting is Monday, March 25, 2024. Additional information regarding virtual access to the meeting will be distributed prior to the meeting.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, January 19, 2024 at 11:00 a.m. Eastern Time. The direct dial number for the call is 1-833-470-1428, toll free, using the access code 040735. For those unable to participate in the conference call, a replay will be available. To access the replay, dial 1-866-813-9403, access code 247218, from one hour after the end of the call until February 16, 2024. The conference call will also be available (listen-only) by internet webcast at www.oceanfirst.com - in the Investor Relations section.

OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank N.A., founded in 1902, is a $13.5 billion regional bank providing financial services throughout New Jersey and in the major metropolitan markets of Philadelphia, New York, Baltimore, and Boston. OceanFirst Bank delivers commercial and residential financing, treasury management, trust and asset management, and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey. To learn more about OceanFirst, go to www.oceanfirst.com.

Forward-Looking Statements
        
In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: changes in interest rates, inflation, general economic conditions, potential recessionary conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, potential goodwill impairment, natural disasters, potential increases to flood insurance premiums, the current or anticipated impact of military conflict, terrorism or other geopolitical events, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, changes in liquidity, including the size and composition of the Company’s deposit portfolio, including the percentage of uninsured deposits in the portfolio, competition, demand for financial services in the Company’s market area, changes in consumer spending, borrowing and saving habits, changes in accounting principles, a failure in or breach of the Company’s operational or security systems or infrastructure, including cyberattacks, the failure to maintain current technologies, failure to retain or attract employees, the effect of our rating under the Community Reinvestment Act, the impact of the COVID-19 pandemic or any other pandemic on our operations and financial results and those of our customers and the Bank’s ability to successfully integrate acquired operations. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, under Item 1A - Risk Factors and elsewhere, and subsequent securities filings and should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.


OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)

  December 31, 2023 September 30, 2023 December 31, 2022
  (Unaudited) (Unaudited)  
Assets      
Cash and due from banks $153,718 $408,882 $167,946
Debt securities available-for-sale, at estimated fair value  753,892  453,208  457,648
Debt securities held-to-maturity, net of allowance for securities credit losses of $1,133 at December 31, 2023, $932 at September 30, 2023, and $1,128 at December 31, 2022 (estimated fair value of $1,068,438 at December 31, 2023, $1,047,342 at September 30, 2023, and $1,110,041 at December 31, 2022)  1,159,735  1,189,339  1,221,138
Equity investments  100,163  97,908  102,037
Restricted equity investments, at cost  93,766  82,484  109,278
Loans receivable, net of allowance for loan credit losses of $67,137 at December 31, 2023, $63,877 at September 30, 2023, and $56,824 at December 31, 2022  10,136,721  10,068,156  9,868,718
Loans held-for-sale  5,166    690
Interest and dividends receivable  51,874  50,030  44,704
Premises and equipment, net  121,372  122,646  126,705
Bank owned life insurance  266,498  265,071  261,603
Assets held for sale  28  3,004  2,719
Goodwill  506,146  506,146  506,146
Core deposit intangible  9,513  10,489  13,497
Other assets  179,661  240,820  221,067
Total assets $13,538,253 $13,498,183 $13,103,896
Liabilities and Stockholders’ Equity      
Deposits $10,434,949 $10,533,929 $9,675,206
Federal Home Loan Bank advances  848,636  606,056  1,211,166
Securities sold under agreements to repurchase with customers  73,148  82,981  69,097
Other borrowings  196,456  196,183  195,403
Advances by borrowers for taxes and insurance  22,407  29,696  21,405
Other liabilities  300,712  411,734  346,155
Total liabilities  11,876,308  11,860,579  11,518,432
Stockholders’ equity:      
OceanFirst Financial Corp. stockholders’ equity  1,661,163  1,636,891  1,584,662
Non-controlling interest  782  713  802
Total stockholders’ equity  1,661,945  1,637,604  1,585,464
Total liabilities and stockholders’ equity $13,538,253 $13,498,183 $13,103,896
          


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

  For the Three Months Ended For the Year Ended
  December 31, September 30, December 31, December 31,
  2023  2023  2022  2023  2022
  |--------------------- (Unaudited) ---------------------| (Unaudited)  
Interest income:          
Loans $137,110 $133,931  $117,046 $521,865  $390,386
Debt securities  15,444  15,223   10,951  59,273   34,407
Equity investments and other  7,880  9,256   2,280  26,836   6,382
Total interest income  160,434  158,410   130,277  607,974   431,175
Interest expense:          
Deposits  59,467  53,287   13,425  172,018   31,021
Borrowed funds  13,143  14,127   10,364  66,225   22,677
Total interest expense  72,610  67,414   23,789  238,243   53,698
Net interest income  87,824  90,996   106,488  369,731   377,477
Provision for credit losses  3,153  10,283   3,647  17,678   7,768
Net interest income after provision for credit losses  84,671  80,713   102,841  352,053   369,709
Other income:          
Bankcard services revenue  1,531  1,507   1,437  5,912   9,219
Trust and asset management revenue  610  662   551  2,529   2,386
Fees and service charges  5,315  5,178   5,776  21,254   22,802
Net gain on sales of loans  309  66   10  428   358
Net gain (loss) on equity investments  2,176  1,452   17,187  (3,732)  9,685
Net gain from other real estate operations            48
Income from bank owned life insurance  1,427  1,390   1,697  5,280   6,578
Commercial loan swap income  29  11   519  741   7,065
Other  464  496   374  1,212   953
Total other income  11,861  10,762   27,551  33,624   59,094
Operating expenses:          
Compensation and employee benefits  32,126  35,534   33,943  135,802   131,915
Occupancy  5,218  5,466   5,027  21,188   20,817
Equipment  1,172  1,172   1,131  4,650   4,987
Marketing  1,112  1,183   705  4,238   2,947
Federal deposit insurance and regulatory assessments  4,386  2,557   1,924  11,157   7,359
Data processing  6,430  6,086   4,629  24,835   23,095
Check card processing  991  1,154   1,243  4,640   4,971
Professional fees  2,858  5,258   4,697  18,297   12,993
Amortization of core deposit intangible  976  987   1,159  3,984   4,718
Branch consolidation expense, net       111  70   713
Merger related expenses       276  22   2,735
Other operating expense  4,920  5,087   4,883  20,029   17,631
Total operating expenses  60,189  64,484   59,728  248,912   234,881
Income before provision for income taxes  36,343  26,991   70,664  136,765   193,922
Provision for income taxes  8,591  6,459   17,353  32,700   46,565
Net income  27,752  20,532   53,311  104,065   147,357
Net income (loss) attributable to non-controlling interest  70  (135)  39  36   754
Net income attributable to OceanFirst Financial Corp.  27,682  20,667   53,272  104,029   146,603
Dividends on preferred shares  1,004  1,004   1,004  4,016   4,016
Net income available to common stockholders $26,678 $19,663  $52,268 $100,013  $142,587
Basic earnings per share $0.46 $0.33  $0.89 $1.70  $2.43
Diluted earnings per share $0.46 $0.33  $0.89 $1.70  $2.42
Average basic shares outstanding  59,120  59,104   58,584  58,948   58,730
Average diluted shares outstanding  59,123  59,111   58,751  58,957   58,878
                  


OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)

LOANS RECEIVABLE  At
   December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
 December 31,
2022
Commercial:          
Commercial real estate - investor $5,353,974  $5,334,279  $5,319,686  $5,296,661  $5,171,952 
Commercial real estate - owner-occupied  943,891   957,216   981,618   986,366   997,367 
Commercial and industrial  666,532   652,119   620,284   622,201   622,372 
Total commercial  6,964,397   6,943,614   6,921,588   6,905,228   6,791,691 
Consumer:          
Residential real estate  2,979,534   2,928,259   2,906,556   2,881,811   2,861,991 
Home equity loans and lines and other consumer (“other consumer”)  250,664   251,698   255,486   252,773   264,372 
Total consumer  3,230,198   3,179,957   3,162,042   3,134,584   3,126,363 
Total loans  10,194,595   10,123,571   10,083,630   10,039,812   9,918,054 
Deferred origination costs (fees), net  9,263   8,462   8,267   7,332   7,488 
Allowance for loan credit losses  (67,137)  (63,877)  (61,791)  (60,195)  (56,824)
Loans receivable, net $10,136,721  $10,068,156  $10,030,106  $9,986,949  $9,868,718 
Mortgage loans serviced for others $68,217  $52,796  $50,820  $50,421  $51,736 
 At December 31, 2023 Average Yield          
Loan pipeline (1):           
Commercial8.61% $124,707  $50,756  $39,164  $236,550  $114,232 
Residential real estate7.14   49,499   66,682   58,022   61,258   36,958 
Other consumer8.50   8,819   13,795   18,621   20,589   14,890 
Total8.21% $183,025  $131,233  $115,807  $318,397  $166,080 
                       


 For the Three Months Ended 
 December 31, September 30, June 30, March 31, December 31, 
 2023 2023 2023 2023 2022 
 Average Yield           
Loan originations:            
Commercial7.68% $94,294 $90,263 $197,732 $200,504 $539,949 
Residential real estate7.05   113,227  92,299  100,542  65,580  101,530(2)
Other consumer8.19   16,971  17,019  22,487  15,927  42,624 
Total7.40% $224,492 $199,581 $320,761 $282,011 $684,103 
Loans sold  $20,138 $15,404 $18,664 $3,861 $2,340 


(1)Loan pipeline includes loans approved but not funded.
(2)Excludes residential real estate loan pool purchases of $9.9 million for the three months ended December 31, 2022.


DEPOSITS At
  December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
 December 31,
2022
Type of Account          
Non-interest-bearing $1,657,119 $1,827,381 $1,854,136 $1,984,197 $2,101,308
Interest-bearing checking  3,911,766  3,708,874  3,537,834  3,697,223  3,829,683
Money market  1,021,805  860,025  770,440  615,993  714,386
Savings  1,398,837  1,484,000  1,229,897  1,308,715  1,487,809
Time deposits (1)  2,445,422  2,653,649  2,766,030  2,386,967  1,542,020
Total deposits $10,434,949 $10,533,929 $10,158,337 $9,993,095 $9,675,206


(1)Includes brokered time deposits of $631.5 million, $995.5 million, $1.42 billion, $1.24 billion, and $873.4 million at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.


OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)

ASSET QUALITY (1)December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
 December 31,
2022
Non-performing loans:         
Commercial real estate - investor$20,820  $20,723  $13,000  $13,643  $10,483 
Commercial real estate - owner-occupied 351   240   565   251   4,025 
Commercial and industrial 304   1,120   199   162   331 
Residential real estate 5,542   5,624   6,174   5,650   5,969 
Other consumer 2,531   2,391   2,820   2,731   2,457 
Total non-performing loans$29,548  $30,098  $22,758  $22,437  $23,265 
Delinquent loans 30 to 89 days$19,202  $20,591  $3,136  $11,232  $14,148 
Modifications to borrowers experiencing financial difficulty(2)         
Non-performing (included in total non-performing loans above)$6,420  $6,679  $6,882  $6,556  $6,361 
Performing 15,361   7,645   7,516   7,619   7,530 
Total modification to borrowers experiencing financial difficulty(2)$21,781  $14,324  $14,398  $14,175  $13,891 
Allowance for loan credit losses$67,137  $63,877  $61,791  $60,195  $56,824 
Allowance for loan credit losses as a percent of total loans receivable(3) 0.66%  0.63%  0.61%  0.60%  0.57%
Allowance for loan credit losses as a percent of total non-performing loans(3) 227.21   212.23   271.51   268.28   244.25 
Non-performing loans as a percent of total loans receivable 0.29   0.30   0.23   0.22   0.23 
Non-performing assets as a percent of total assets 0.22   0.22   0.17   0.17   0.18 
Supplemental PCD and non-performing loans         
PCD loans, net of allowance for loan credit losses$16,122  $18,640  $18,872  $20,513  $27,129 
Non-performing PCD loans 3,183   3,177   3,171   3,929   3,944 
Delinquent PCD and non-performing loans 30 to 89 days 1,516   13,007   1,976   2,248   3,657 
PCD modifications to borrowers experiencing financial difficulty(2) 771   750   755   758   765 
Asset quality, excluding PCD loans(4)         
Non-performing loans 26,365   26,921   19,587   18,508   19,321 
Delinquent loans 30 to 89 days (excludes non-performing loans) 17,686   7,584   1,160   8,984   10,491 
Modification to borrowers experiencing financial difficulty(2) 21,010   13,574   13,643   13,417   13,126 
Allowance for loan credit losses as a percent of total non-performing loans(3) 254.64%  237.28%  315.47%  325.24%  294.10%
Non-performing loans as a percent of total loans receivable 0.26   0.27   0.19   0.18   0.19 
Non-performing assets as a percent of total assets 0.19   0.20   0.14   0.14   0.15 


(1)At December 31, 2023 and September 30, 2023, non-performing loans included the remaining exposure of $8.8 million on a commercial real estate relationship that was partially charged-off during the quarter ended September 30, 2023.
(2)For periods in 2023, balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings. For the 2022 period, the balances represent only troubled debt restructurings.
(3)Loans acquired from prior bank acquisitions were recorded at fair value. The net unamortized credit and PCD marks on these loans, not reflected in the allowance for loan credit losses, was $7.5 million, $8.8 million, $9.8 million, $10.5 million, and $11.4 million at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.
(4)All balances and ratios exclude PCD loans.


NET LOAN (CHARGE-OFFS) RECOVERIES For the Three Months Ended
  December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
 December 31,
2022
Net loan (charge-offs) recoveries:          
Loan charge-offs $(98) $(8,379) $(206) $(10) $(138)
Recoveries on loans  63   108   83   57   143 
Net loan (charge-offs) recoveries $(35) $(8,271) $(123) $47  $5 
Net loan (charge-offs) recoveries to average total loans (annualized)  %  0.33%  % NM* NM*
Net loan (charge-offs) recoveries detail:          
Commercial $9  $(8,332) $(117) $  $(46)
Residential real estate  9   17   9   8   9 
Other consumer  (53)  44   (15)  39   42 
Net loan (charge-offs) recoveries $(35) $(8,271) $(123) $47  $5 

* Not meaningful as amounts are net loan recoveries.


OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME

 For the Three Months Ended
 December 31, 2023 September 30, 2023 December 31, 2022
(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$396,843  $5,423 5.42% $470,825  $6,440 5.43% $70,023  $634 3.59%
Securities(2) 1,863,136   17,901 3.81   1,873,450   18,039 3.82   1,764,764   12,597 2.83 
Loans receivable, net(3)                 
Commercial 6,937,191   105,260 6.02   6,923,743   103,069 5.91   6,715,896   88,991 5.26 
Residential real estate 2,957,671   27,934 3.78   2,918,612   26,765 3.67   2,841,073   24,532 3.45 
Other consumer 250,300   3,916 6.21   252,126   4,097 6.45   262,911   3,523 5.32 
Allowance for loan credit losses, net of deferred loan costs and fees (56,001)      (53,959)      (48,776)    
Loans receivable, net 10,089,161   137,110 5.40   10,040,522   133,931 5.30   9,771,104   117,046 4.76 
Total interest-earning assets 12,349,140   160,434 5.16   12,384,797   158,410 5.08   11,605,891   130,277 4.46 
Non-interest-earning assets 1,243,967       1,252,416       1,228,520     
Total assets$13,593,107      $13,637,213      $12,834,411     
Liabilities and Stockholders' Equity:                 
Interest-bearing liabilities:                 
Interest-bearing checking$3,908,517   19,728 2.00% $3,692,500   14,938 1.61% $3,989,403   4,911 0.49%
Money market 941,859   7,520 3.17   832,729   5,698 2.71   738,637   917 0.49 
Savings 1,446,935   5,193 1.42   1,391,811   3,311 0.94   1,539,175   285 0.07 
Time deposits 2,596,706   27,026 4.13   2,867,921   29,340 4.06   1,486,410   7,312 1.95 
Total 8,894,017   59,467 2.65   8,784,961   53,287 2.41   7,753,625   13,425 0.69 
FHLB advances 615,172   7,470 4.82   701,343   8,707 4.93   632,207   6,475 4.06 
Securities sold under agreements to repurchase 80,181   387 1.91   76,620   261 1.35   88,191   41 0.18 
Other borrowings(4) 321,369   5,286 6.53   317,210   5,159 6.45   195,167   3,848 7.82 
Total borrowings 1,016,722   13,143 5.13   1,095,173   14,127 5.12   915,565   10,364 4.49 
Total interest-bearing liabilities 9,910,739   72,610 2.91   9,880,134   67,414 2.71   8,669,190   23,789 1.09 
Non-interest-bearing deposits 1,739,499       1,841,198       2,221,884     
Non-interest-bearing liabilities(4) 292,170       272,982       378,481     
Total liabilities 11,942,408       11,994,314       11,269,555     
Stockholders’ equity 1,650,699       1,642,899       1,564,856     
Total liabilities and equity$13,593,107      $13,637,213      $12,834,411     
Net interest income  $87,824     $90,996     $106,488  
Net interest rate spread(5)    2.25%     2.37%     3.37%
Net interest margin(6)    2.82%     2.91%     3.64%
Total cost of deposits (including non-interest-bearing deposits)    2.22%     1.99%     0.53%
                     


  For the Year Ended
  December 31, 2023 December 31, 2022
(dollars in thousands) Average
Balance
 Interest Average
Yield/
Cost
 Average
Balance
 Interest Average
Yield/
Cost
Assets:            
Interest-earning assets:            
Interest-earning deposits and short-term investments $327,539  $17,084 5.22% $72,913  $1,106 1.52%
Securities (2)  1,905,413   69,025 3.62   1,792,598   39,683 2.21 
Loans receivable, net (3)            
Commercial  6,903,731   400,459 5.80   6,386,755   287,044 4.49 
Residential real estate  2,911,246   105,796 3.63   2,724,398   91,432 3.36 
Other consumer  255,359   15,610 6.11   256,912   11,910 4.64 
Allowance for loan credit losses, net of deferred loan costs and fees  (53,477)      (44,446)    
Loans receivable, net  10,016,859   521,865 5.21   9,323,619   390,386 4.19 
Total interest-earning assets  12,249,811   607,974 4.96   11,189,130   431,175 3.85 
Non-interest-earning assets  1,237,218       1,200,725     
Total assets $13,487,029      $12,389,855     
Liabilities and Stockholders' Equity:            
Interest-bearing liabilities:            
Interest-bearing checking $3,795,502   52,898 1.39% $4,063,716   11,344 0.28%
Money market  794,387   18,656 2.35   764,837   2,234 0.29 
Savings  1,364,333   9,227 0.68   1,597,648   758 0.05 
Time deposits  2,440,829   91,237 3.74   1,167,499   16,685 1.43 
Total  8,395,051   172,018 2.05   7,593,700   31,021 0.41 
FHLB advances  944,219   46,000 4.87   389,750   10,365 2.66 
Securities sold under agreements to repurchase  75,140   931 1.24   101,377   159 0.16 
Other borrowings (4)  307,368   19,294 6.28   203,117   12,153 5.98 
Total borrowings  1,326,727   66,225 4.99   694,244   22,677 3.27 
Total interest-bearing liabilities  9,721,778   238,243 2.45   8,287,944   53,698 0.65 
Non-interest-bearing deposits  1,869,735       2,319,657     
Non-interest-bearing liabilities (4)  262,883       239,861     
Total liabilities  11,854,396       10,847,462     
Stockholders’ equity  1,632,633       1,542,393     
Total liabilities and equity $13,487,029      $12,389,855     
Net interest income   $369,731     $377,477  
Net interest rate spread (5)     2.51%     3.20%
Net interest margin (6)     3.02%     3.37%
Total cost of deposits (including non-interest-bearing deposits)     1.68%     0.31%


(1)Average yields and costs are annualized.
(2)Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost, net of allowance for securities credit losses.
(3)Amount is net of deferred loan costs and fees, undisbursed loan funds, discounts and premiums and allowance for loan credit losses, and includes loans held for sale and non-performing loans.
(4)For the 2023 periods, the average balances of derivative cash collateral have been reclassified from non-interest bearing liabilities to other borrowings.
(5)Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(6)Net interest margin represents net interest income divided by average interest-earning assets.
  

 

OceanFirst Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share amounts)

  December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
 December 31,
2022
Selected Financial Condition Data:          
Total assets $13,538,253 $13,498,183 $13,538,903 $13,555,175 $13,103,896
Debt securities available-for-sale, at estimated fair value  753,892  453,208  452,016  452,195  457,648
Debt securities held-to-maturity, net of allowance for securities credit losses  1,159,735  1,189,339  1,222,507  1,245,424  1,221,138
Equity investments  100,163  97,908  96,452  101,007  102,037
Restricted equity investments, at cost  93,766  82,484  105,305  115,750  109,278
Loans receivable, net of allowance for loan credit losses  10,136,721  10,068,156  10,030,106  9,986,949  9,868,718
Deposits  10,434,949  10,533,929  10,158,337  9,993,095  9,675,206
Federal Home Loan Bank advances  848,636  606,056  1,091,666  1,346,566  1,211,166
Securities sold under agreements to repurchase and other borrowings  269,604  279,164  270,377  266,601  264,500
Total stockholders’ equity  1,661,945  1,637,604  1,626,283  1,610,371  1,585,464
                


  For the Three Months Ended
  December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
 December 31,
2022
Selected Operating Data:          
Interest income $160,434 $158,410  $150,096  $139,034  $130,277
Interest expense  72,610  67,414   57,987   40,232   23,789
Net interest income  87,824  90,996   92,109   98,802   106,488
Provision for credit losses  3,153  10,283   1,229   3,013   3,647
Net interest income after provision for credit losses  84,671  80,713   90,880   95,789   102,841
Other income (excluding activity related to debt and equity investments)  9,685  9,310   9,487   9,571   10,364
Net gain (loss) on equity investments  2,176  1,452   (559)  (2,193)  17,187
Net loss on sale of investments          (5,305)  
Operating expenses (excluding FDIC special assessment, merger related and branch consolidation expense, net)  58,526  64,484   62,930   61,217   59,341
FDIC special assessment  1,663           
Branch consolidation expense, net          70   111
Merger related expenses          22   276
Income before provision for income taxes  36,343  26,991   36,878   36,553   70,664
Provision for income taxes  8,591  6,459   8,996   8,654   17,353
Net income  27,752  20,532   27,882   27,899   53,311
Net income (loss) attributable to non-controlling interest  70  (135)  85   16   39
Net income attributable to OceanFirst Financial Corp. $27,682 $20,667  $27,797  $27,883  $53,272
Net income available to common stockholders $26,678 $19,663  $26,793  $26,879  $52,268
Diluted earnings per share $0.46 $0.33  $0.45  $0.46  $0.89
Net accretion/amortization of purchase accounting adjustments included in net interest income $1,604 $1,745  $1,152  $1,237  $2,278


  At or For the Three Months Ended
  December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
 December 31,
2022
Selected Financial Ratios and Other Data (1) (2):          
Performance Ratios (Annualized):          
Return on average assets (3) 0.78% 0.57% 0.80% 0.82% 1.62%
Return on average tangible assets (3) (4) 0.81  0.59  0.83  0.86  1.68 
Return on average stockholders' equity (3) 6.41  4.75  6.61  6.77  13.25 
Return on average tangible stockholders' equity (3) (4) 9.33  6.93  9.70  10.00  19.85 
Return on average tangible common equity (3) (4) 9.81  7.29  10.21  10.53  20.97 
Stockholders' equity to total assets 12.28  12.13  12.01  11.88  12.10 
Tangible stockholders' equity to tangible assets (4) 8.80  8.64  8.51  8.37  8.47 
Tangible common equity to tangible assets (4) 8.38  8.21  8.09  7.95  8.03 
Net interest rate spread 2.25  2.37  2.52  2.94  3.37 
Net interest margin 2.82  2.91  3.02  3.34  3.64 
Operating expenses to average assets 1.76  1.88  1.87  1.88  1.85 
Efficiency ratio (5) 60.38  63.37  62.28  60.78  44.56 
Loans-to-deposits 97.70  96.10  99.30  100.50  102.50 
                


  At or For the Year Ended December 31,
  2023 2022
Performance Ratios:    
Return on average assets (3) 0.74% 1.15%
Return on average tangible assets (3) (4) 0.77  1.20 
Return on average stockholders' equity (3) 6.13  9.24 
Return on average tangible stockholders' equity (3) (4) 8.97  13.96 
Return on average tangible common equity (3) (4) 9.44  14.76 
Net interest rate spread 2.51  3.20 
Net interest margin 3.02  3.37 
Operating expenses to average assets 1.85  1.90 
Efficiency ratio (5) 61.71  53.80 
       


  At or For the Three Months Ended
  December 31, September 30, June 30, March 31, December 31,
   2023   2023   2023   2023   2022 
Trust and Asset Management:          
Wealth assets under administration and management (“AUA/M”) $335,769  $336,913  $339,890  $333,436  $324,066 
Nest Egg AUA/M  401,420   385,317   397,927   400,227   403,538 
Total AUA/M  737,189   722,230   737,817   733,663   727,604 
Per Share Data:          
Cash dividends per common share $0.20  $0.20  $0.20  $0.20  $0.20 
Book value per common share at end of period  27.96   27.56   27.37   27.07   26.81 
Tangible book value per common share at end of period (4)  18.35   17.93   17.72   17.42   17.08 
Common shares outstanding at end of period  59,447,684   59,421,498   59,420,859   59,486,086   59,144,128 
Preferred shares outstanding at end of period  57,370   57,370   57,370   57,370   57,370 
Number of full-service customer facilities:  39   38   38   38   38 
Quarterly Average Balances          
Total securities $1,863,136  $1,873,450  $1,931,032  $1,955,399  $1,764,764 
Loans receivable, net  10,089,161   10,040,522   10,010,785   9,924,905   9,771,104 
Total interest-earning assets  12,349,140   12,384,797   12,250,055   12,010,044   11,605,891 
Total goodwill and core deposit intangible  516,289   517,282   518,265   519,282   520,400 
Total assets  13,593,107   13,637,213   13,467,721   13,244,593   12,834,411 
Time deposits  2,596,706   2,867,921   2,458,872   1,826,662   1,486,410 
Total deposits (including non-interest-bearing deposits)  10,633,516   10,626,159   9,993,010   9,793,256   9,975,509 
Total borrowings  1,016,722   1,095,173   1,603,126   1,600,845   915,565 
Total interest-bearing liabilities  9,910,739   9,880,134   9,722,910   9,365,594   8,669,190 
Non-interest bearing deposits  1,739,499   1,841,198   1,873,226   2,028,507   2,221,884 
Stockholders’ equity  1,650,699   1,642,899   1,626,693   1,609,677   1,564,856 
Tangible stockholders’ equity (4)  1,134,410   1,125,617   1,108,428   1,090,395   1,044,456 
Quarterly Yields and Costs          
Total securities  3.81%  3.82%  3.47%  3.40%  2.83%
Loans receivable, net  5.40   5.30   5.17   4.96   4.76 
Total interest-earning assets  5.16   5.08   4.91   4.68   4.46 
Time deposits  4.13   4.06   3.57   2.88   1.95 
Total cost of deposits (including non-interest-bearing deposits)  2.22   1.99   1.52   0.88   0.53 
Total borrowed funds  5.13   5.12   5.02   4.79   4.49 
Total interest-bearing liabilities  2.91   2.71   2.39   1.74   1.09 
Net interest spread  2.25   2.37   2.52   2.94   3.37 
Net interest margin  2.82   2.91   3.02   3.34   3.64 


(1)With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2)Performance ratios for each period are presented on a GAAP basis and include non-core operations. Refer to “Non-GAAP Reconciliation.”
(3)Ratios for each period are based on net income available to common stockholders.
(4)Tangible stockholders’ equity and tangible assets exclude intangible assets related to goodwill and core deposit intangible. Tangible common equity (also referred to as “tangible book value”) excludes goodwill, core deposit intangible and preferred equity. Refer to “Non-GAAP Reconciliation.”
(5)Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.
  

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

NON-GAAP RECONCILIATION

  For the Three Months Ended
  December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
 December 31,
2022
Core Earnings:          
Net income available to common stockholders (GAAP) $26,678  $19,663  $26,793  $26,879  $52,268 
(Less) add non-recurring and non-core items:          
Net (gain) loss on equity investments (1)  (2,176)  (1,452)  559   2,193   (17,187)
Net loss on sale of investments (1)           5,305    
FDIC special assessment  1,663             
Merger related expenses           22   276 
Branch consolidation expense, net           70   111 
Income tax expense (benefit) on items  129   351   (162)  (1,797)  4,060 
Core earnings (Non-GAAP) $26,294  $18,562  $27,190  $32,672  $39,528 
Income tax expense $8,591  $6,459  $8,996  $8,654  $17,353 
Provision for credit losses  3,153   10,283   1,229   3,013   3,647 
Less: income tax expense (benefit) on non-core items  129   351   (162)  (1,797)  4,060 
Core earnings PTPP (Non-GAAP) $37,909  $34,953  $37,577  $46,136  $56,468 
Core diluted earnings per share $0.45  $0.32  $0.46  $0.55  $0.67 
Core earnings PTPP diluted earnings per share $0.65  $0.59  $0.64  $0.78  $0.96 
           
Core Ratios (Annualized):          
Return on average assets  0.77%  0.54%  0.81%  1.00%  1.22%
Return on average tangible stockholders’ equity  9.20   6.54   9.84   12.15   15.01 
Return on average tangible common equity  9.67   6.88   10.36   12.80   15.86 
Efficiency ratio  60.02   64.29   61.94   56.49   50.78 


(1)The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on equity investments ($4.6 million) and other ($697,000), respectively, for the three months ended March 31, 2023.
  


  For the Years Ended December 31,
   2023   2022 
Core Earnings:    
Net income available to common stockholders (GAAP) $100,013  $142,587 
(Less) add non-recurring and non-core items:    
Net gain on equity investments (1)  (876)  (9,685)
Net loss on sale of investments (1)  5,305    
FDIC special assessment  1,663    
Merger related expenses  22   2,735 
Branch consolidation expense, net  70   713 
Income tax (benefit) expense on items  (1,479)  1,611 
Core earnings (Non-GAAP) $104,718  $137,961 
Income tax expense $32,700  $46,565 
Credit loss provision  17,678   7,768 
Less: income tax (benefit) expense on non-core items  (1,479)  1,611 
Core earnings PTPP (Non-GAAP) $156,575  $190,683 
Core diluted earnings per share $1.78  $2.34 
Core earnings PTPP diluted earnings per share $2.66  $3.24 
     
Core Ratios:    
Return on average assets  0.78%  1.11%
Return on average tangible stockholders’ equity  9.39   13.50 
Return on average tangible common equity  9.89   14.28 
Efficiency ratio  60.61   54.21 


(1)The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on equity investments ($4.6 million) and other ($697,000), respectively, for the three months ended March 31, 2023.
  


  December 31, September 30, June 30, March 31, December 31,
   2023   2023   2023   2023   2022 
Tangible Equity:          
Total stockholders' equity $1,661,945  $1,637,604  $1,626,283  $1,610,371  $1,585,464 
Less:          
Goodwill  506,146   506,146   506,146   506,146   506,146 
Core deposit intangible  9,513   10,489   11,476   12,470   13,497 
Tangible stockholders’ equity  1,146,286   1,120,969   1,108,661   1,091,755   1,065,821 
Less:          
Preferred stock  55,527   55,527   55,527   55,527   55,527 
Tangible common equity $1,090,759  $1,065,442  $1,053,134  $1,036,228  $1,010,294 
           
Tangible Assets:          
Total assets $13,538,253  $13,498,183  $13,538,903  $13,555,175  $13,103,896 
Less:          
Goodwill  506,146   506,146   506,146   506,146   506,146 
Core deposit intangible  9,513   10,489   11,476   12,470   13,497 
Tangible assets $13,022,594  $12,981,548  $13,021,281  $13,036,559  $12,584,253 
           
Tangible stockholders' equity to tangible assets  8.80%  8.64%  8.51%  8.37%  8.47%
Tangible common equity to tangible assets  8.38%  8.21%  8.09%  7.95%  8.03%
 


Company Contact:

Patrick S. Barrett
Chief Financial Officer
OceanFirst Financial Corp.
Tel: (732) 240-4500, ext. 27507 
Email: pbarrett@oceanfirst.com