OceanFirst Financial Corp. Announces Another Quarter of Improved Earnings and Continuation of Cash Dividend


TOMS RIVER, N.J., Oct. 23, 2008 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (Nasdaq:OCFC), the holding company for OceanFirst Bank, today announced that diluted earnings per share increased to $.32 for the quarter ended September 30, 2008 as compared to $.27 for the corresponding prior year period. For the nine months ended September 30, 2008 diluted earnings per share increased to $.96 as compared to a loss per share of $.18 for the corresponding prior year period. The Company also announced that its Board of Directors declared a regular quarterly cash dividend of $.20 per share - covering the three month period ended September 30, 2008 - to be paid on November 14, 2008, to shareholders of record on October 31, 2008.

Discussing the results, CEO John R. Garbarino reflected on the improvement in earnings over the prior year. "Our net interest margin significantly expanded to 3.30% from 2.76% in the prior year quarter as decreases in short-term interest rates benefited the Bank's core operations. In the face of a difficult economic environment our asset quality remains strong as non-performing assets actually decreased from the prior quarter by $2.4 million. We are also pleased to announce the payment of our forty-seventh consecutive quarterly cash dividend, unchanged from prior quarters."

Commenting on capital, he continued, "The strength of our quarterly earnings at the Bank, coupled with controls on our balance sheet growth, have helped stabilize our capital position. Additionally, as a healthy and well-capitalized institution we are acutely aware of the potential opportunities which may be available to us under the Treasury's Troubled Assets Relief Program (TARP). We are continuing to evaluate these as important new information is released on the program".

Results of Operations

Net interest income for the three and nine months ended September 30, 2008 increased to $14.6 million and $43.1 million, respectively as compared to $12.8 million and $39.9 million, respectively, in the same prior year periods, reflecting a higher net interest margin partly offset by lower levels of interest-earning assets. The net interest margin increased to 3.30% and 3.20%, respectively, for the three and nine months ended September 30, 2008 from 2.76% and 2.78%, respectively, in the same prior year periods. The yield on interest-earning assets decreased to 5.69% and 5.82%, respectively, as compared to 6.07% for both of the same prior year periods. The cost of interest-bearing liabilities decreased to 2.63% and 2.87%, respectively, for the three and nine months ended September 30, 2008, as compared to 3.61% and 3.59%, respectively, in the same prior year periods. Average interest-earning assets decreased by $85.5 million and $116.4 million, respectively, for the three and nine months ended September 30, 2008 as compared to the same prior year periods. The decrease was concentrated in average loans receivable which declined $60.0 million and $89.7 million, respectively, primarily due to the shuttering of Columbia Home Loans, LLC, (Columbia) the Company's mortgage banking subsidiary, in the fourth quarter of 2007.

Other income decreased to $3.6 million for the three months ended September 30, 2008 as compared to $4.6 million in the same prior year period. For the nine months ended September 30, 2008 other income increased to $10.0 million as compared to a loss of $1.6 million in the same prior year period. The net gain (loss) and lower of cost or market adjustment on sales of loans and securities available for sale was a gain of $466,000 and $344,000, respectively, for the three and nine months ended September 30, 2008 as compared to a gain of $1.2 million and a loss of $11.7 million, respectively, in the same prior year periods. The net gain for the three months ended September 30, 2008 includes a realized gain of $117,000 on the sale of an investment security which was subject to an impairment charge in the second quarter of 2008. The net gain for the nine months ended September 30, 2008 includes a $902,000 loss on investment securities transactions. The net loss for the nine months ended September 30, 2007 includes a $9.4 million charge by Columbia to reduce loans held for sale to their current fair market value, a $1.3 million loss on the bulk sale of subprime loans and a $3.8 million charge to supplement the reserve for repurchased loans. The reserve for repurchased loans, which is included in other liabilities in the Company's consolidated statements of financial condition, was $1.2 million at September 30, 2008. For the three months ended September 30, 2008 the Company recognized a reversal of the provision for repurchased loans of $50,000, along with charge-offs of $475,000 relating to a comprehensive settlement in lieu of a repurchase, and the repurchase of one loan. For the nine months ended September 30, 2008, the Company recognized a reversal of the provision for repurchased loans of $211,000 and charge-offs of $1.0 million relating to three loan repurchases and two comprehensive negotiated settlements in lieu of a loan repurchase. At September 30, 2008 there was one outstanding loan repurchase request, which the Company is contesting.

Operating expenses amounted to $12.3 million and $35.3 million, respectively, for the three and nine months ended September 30, 2008, as compared to $12.6 million and $41.4 million, respectively, for the corresponding prior year periods. The expense reduction is primarily due to the shuttering of Columbia in late 2007. Also, operating expenses for the nine months ended September 30, 2007 included an expense of $1.0 million representing a write-off of the previously established goodwill on the acquisition of Columbia. Operating expenses for the three and nine months ended September 30, 2008 also benefited from a reduction in retirement plan expense. Operating expenses for the three and nine months ended September 30, 2008 include costs relating to the opening of new branches in Freehold, Waretown and Bayville, New Jersey as well as continued elevated professional fees and charges related to vacant office space for Columbia.

Financial Condition

Loans receivable, net decreased by $28.6 million at September 30, 2008 as compared to December 31, 2007 partly derived from increased prepayments due to refinancings and the Bank's ongoing strategy to sell newly originated longer-term 1-4 family fixed-rate loans. At September 30, 2008, the Company was holding subprime loans with a gross principal balance of $5.6 million and a carrying value, net of reserves and lower of cost or market adjustment of $3.5 million. Deposits increased to $1,315.7 million at September 30, 2008 from $1,283.8 million at December 31, 2007. Core deposits, defined as all deposits excluding time deposits, increased $105.9 million partly offset by a $74.0 million decrease in certificates of deposit as the Bank continued to moderate its pricing for this product. Total Federal Home Loan Bank borrowings decreased to $323.5 million at September 30, 2008 from $405.0 million at December 31, 2007, primarily due to the reduction in loans receivable, net and the increase in deposits.

Asset Quality

The Company's non-performing loans totaled $12.5 million at September 30, 2008, an increase from $8.7 million at December 31, 2007. The increase is partly related to one commercial loan relationship totaling $1.9 million which became non-performing during 2008. The loan relationship is well-secured by adequate commercial real estate collateral. Additionally, non-performing 1-4 family loans increased $1.7 million. Non-performing loans at September 30, 2008 include $1.4 million of loans repurchased due to early payment default that were written down to market value on the date of repurchase and $3.8 million of loans previously held for sale that were also written down to market value. For the nine months ended September 30, 2008, the Company realized net loan charge-offs of $425,000.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, October 24, 2008 at 11:00 a.m. Eastern time. The direct dial number for the call is (877) 407-8035. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (877)660-6853, Account #286, Conference ID#298825, from one hour after the end of the call until midnight on October 31, 2008.

OceanFirst Financial Corp.'s subsidiary, OceanFirst Bank, founded in 1902, is a federally-chartered stock savings bank with $1.9 billion in assets and twenty-three branches located in Ocean, Monmouth and Middlesex counties, New Jersey. The Bank is the largest and oldest community-based financial institution headquartered in Ocean County, New Jersey.

OceanFirst Financial Corp.'s press releases are available at no charge by visiting us on the worldwide web at http://www.oceanfirst.com.

Forward-Looking Statements

This news release contains certain forward-looking statements 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," or similar expressions. 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 the subsidiaries include, but are not limited to, changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, 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 and accounting principles and guidelines. These risks and uncertainties 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, except per share amounts)

                                     Sept. 30,   Dec. 31,    Sept. 30,
                                       2008        2007        2007
                                    ----------  ----------  ----------
                                    (Unaudited)             (Unaudited)
 ASSETS
 ------

 Cash and due from banks            $   26,730  $   27,547  $   29,456
 Investment securities available
  for sale                              45,309      57,625      58,133
 Federal Home Loan Bank of New York
  stock, at cost                        19,130      22,941      22,040
 Mortgage-backed securities
  available for sale                    43,487      54,137      58,285
 Loans receivable, net               1,647,317   1,675,919   1,678,937
 Mortgage loans held for sale            4,161       6,072       3,244
 Interest and dividends receivable       6,896       6,915       8,357
 Real estate owned, net                    654         438         433
 Premises and equipment, net            20,988      17,882      17,372
 Servicing asset                         7,658       8,940       9,340
 Bank Owned Life Insurance              39,387      38,430      38,087
 Other assets                           14,541      10,653      13,146
                                    ----------  ----------  ----------

   Total assets                     $1,876,258  $1,927,499  $1,936,830
                                    ==========  ==========  ==========

 LIABILITIES AND STOCKHOLDERS' EQUITY
 ------------------------------------

 Deposits                           $1,315,748  $1,283,790  $1,310,941
 Securities sold under agreements to
  repurchase with retail customers      67,682      69,807      69,742
 Securities sold under agreements to
  repurchase with the Federal Home
  Loan Bank                                 --      12,000      13,000
 Federal Home Loan Bank advances       323,500     393,000     371,500
 Other borrowings                       27,500      27,500      27,500
 Advances by borrowers for taxes and
  insurance                              8,088       7,588       8,247
 Other liabilities                       9,695       9,508      12,329
                                    ----------  ----------  ----------

   Total liabilities                 1,752,213   1,803,193   1,813,259
                                    ----------  ----------  ----------

 Stockholders' equity:
  Preferred stock, $.01 par value,
   5,000,000 shares authorized, no
   shares issued                            --          --          --
  Common stock, $.01 par value,
   55,000,000 shares authorized,
   27,177,372 shares issued and
   12,364,573, 12,346,465, and
   12,341,915 shares outstanding at
   September 30, 2008, December 31,
   2007 and September 30, 2007,
   respectively                            272         272         272
  Additional paid-in capital           204,040     203,532     203,237
  Retained earnings                    159,107     154,929     154,317
 Accumulated other comprehensive loss   (8,710)     (3,211)     (2,704)
  Less: Unallocated common stock
         held by Employee Stock
         Ownership Plan                 (5,141)     (5,360)     (5,612)
        Treasury stock, 14,812,799,
         14,830,907 and 14,835,457
         shares at September 30,
         2008, December 31, 2007 and
         September 30, 2007,
         respectively                 (225,523)   (225,856)   (225,939)

 Common stock acquired by Deferred
  Compensation Plan                        982       1,307       1,406

 Deferred Compensation Plan
  Liability                               (982)     (1,307)     (1,406)
                                    ----------  ----------  ----------
        Total stockholders' equity     124,045     124,306     123,571
                                    ----------  ----------  ----------

        Total liabilities and
         stockholders' equity       $1,876,258  $1,927,499  $1,936,830
                                    ==========  ==========  ==========


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

                                      For the three     For the nine
                                      months ended      months ended
                                      September 30,     September 30,
                                    ----------------  ----------------
                                     2008      2007    2008      2007
                                    ----------------  ----------------
                                       (Unaudited)       (Unaudited)
 Interest income:
  Loans                             $23,821  $25,945  $72,926  $79,528
  Mortgage-backed securities            525      688    1,710    2,127
  Investment securities and other       888    1,590    3,787    5,494
                                    -------  -------  -------  -------
   Total interest income             25,234   28,223   78,423   87,149
                                    -------  -------  -------  -------

 Interest expense:
  Deposits                            6,256    9,326   20,827   27,778
  Borrowed funds                      4,348    6,066   14,469   19,431
                                    -------  -------  -------  -------
   Total interest expense            10,604   15,392   35,296   47,209
                                    -------  -------  -------  -------
   Net interest income               14,630   12,831   43,127   39,940

 Provision for loan losses              400       75    1,175      525
                                    -------  -------  -------  -------
   Net interest income after
    provision for loan losses        14,230   12,756   41,952   39,415
                                    -------  -------  -------  -------

 Other income (loss):
  Loan servicing income                 121      126      293      356
  Fees and service charges            2,625    2,942    8,292    8,724
  Net gain (loss) and lower of cost
   or market adjustment on sales of
   loans and securities available
   for sale                             466    1,156      344  (11,676)
  Net income from other real estate
   operations                            79        8       97       27
  Income from Bank Owned Life
   Insurance                            314      324      957      942
  Other                                   2        6       13       41
                                    -------  -------  -------  -------
   Total other income (loss)          3,607    4,562    9,996   (1,586)
                                    -------  -------  -------  -------

 Operating expenses:
  Compensation and employee benefits  6,166    6,755   17,907   22,227
  Occupancy                           1,548    1,569    3,943    4,028
  Equipment                             468      543    1,433    1,631
  Marketing                             452      359    1,298    1,046
  Federal deposit insurance             301      168      952      444
  Data processing                       779      859    2,375    2,625
  General and administrative          2,549    2,357    7,357    8,430
  Goodwill impairment                    --       --       --    1,014
                                    -------  -------  -------  -------
   Total operating expenses          12,263   12,610   35,265   41,445
                                    -------  -------  -------  -------
   Income (loss) before provision
    (benefit) for income taxes        5,574    4,708   16,683   (3,616)
  Provision (benefit) for income
   taxes                              1,852    1,582    5,420   (1,597)
                                    -------  -------  -------  -------
   Net income (loss)                $ 3,722  $ 3,126  $11,263  $(2,019)
                                    =======  =======  =======  =======

  Basic earnings (loss) per share   $  0.32  $  0.27  $  0.97  $ (0.18)
                                    =======  =======  =======  =======


  Diluted earnings (loss) per share $  0.32  $  0.27  $  0.96  $ (0.18)
                                    =======  =======  =======  =======

  Average basic shares outstanding   11,678   11,561   11,661   11,522
                                    =======  =======  =======  =======
  Average diluted shares outstanding 11,751   11,643   11,722   11,522
                                    =======  =======  =======  =======


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

                                 At Sept. 30, At Dec. 31,  At Sept. 30,
                                     2008         2007         2007
                                 -----------  -----------  -----------

 STOCKHOLDERS' EQUITY
 --------------------
 Stockholders' equity to total
  assets                              6.61%        6.45%        6.38%
 Common shares outstanding (in
  thousands)                        12,365       12,346       12,342
 Stockholders' equity per common
  share                            $ 10.03      $ 10.07      $ 10.01
 Tangible stockholders' equity
  per common share                   10.03        10.07        10.01

 ASSET QUALITY
 -------------
 Allowance for loan losses         $11,218      $10,468      $10,687
 Non-performing loans               12,484        8,741        9,162
 Non-performing assets              13,138        9,179        9,595
 Allowance for loan losses as a
  percent of total loans
  receivable                          0.68%        0.62%        0.63%
 Allowance for loan losses as a
  percent of non-performing loans    89.86       119.76       116.64
 Non-performing loans as
  a percent of total loans
  receivable                          0.75         0.52         0.54
 Non-performing assets as a
  percent of total assets             0.70         0.48         0.50


                                       For the three    For the nine
                                        months ended    months ended
                                        September 30,   September 30,
                                       --------------  -------------
                                        2008    2007    2008    2007
                                        ----    ----    ----    ----
 PERFORMANCE RATIOS (ANNUALIZED)
 -------------------------------
 Return on average assets               0.80%   0.64%   0.79%   (0.13)%
 Return on average stockholders'
  equity                               12.04   10.19   12.18    (2.14)
 Interest rate spread                   3.06    2.46    2.95     2.48
 Interest rate margin                   3.30    2.76    3.20     2.78
 Operating expenses to average
  assets                                2.63    2.57    2.49     2.74
 Efficiency ratio                      67.24   72.50   66.38   108.06


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

 LOANS RECEIVABLE
 ----------------
                                     At September 30,  At December 31,
                                           2008              2007
                                     ---------------   ---------------

 Real estate:
  One-to-four family                   $1,052,411        $1,084,687
  Commercial real estate, multi-
   family and land                        328,711           326,707
  Construction                              7,889            10,816
 Consumer                                 215,291           213,282
 Commercial                                55,982            54,279
                                       ----------        ----------
   Total loans                          1,660,284         1,689,771
  
  Loans in process                         (2,795)           (2,452)
  Deferred origination costs, net           5,207             5,140
  Allowance for loan losses               (11,218)          (10,468)
                                       ----------        ----------
   Total loans, net                     1,651,478         1,681,991

 Less: mortgage loans held for sale         4,161             6,072
                                       ----------        ----------
   Loans receivable, net               $1,647,317        $1,675,919
                                       ==========        ==========

 Mortgage loans serviced for others    $  986,939        $1,026,070
 Loan pipeline                             75,650            74,808

                                  For the three        For the nine
                                   months ended        months ended
                                   September 30,       September 30,
                                ------------------  ------------------
                                  2008      2007      2008      2007
                                  ----      ----      ----      ----

 Loan originations              $102,080  $123,677  $292,096  $570,236
 Loans sold                       19,395    63,991    78,493   359,802
 Net charge-offs                     101         7       425        76


 DEPOSITS
 --------
                                     At September 30,  At December 31,
                                           2008              2007
                                     ---------------   ---------------
 Type of Account
 ---------------

 Non-interest-bearing                  $  111,604        $  103,656
 Interest-bearing checking                534,835           454,666
 Money market deposit                      83,563            84,287
 Savings                                  205,636           187,095
 Time deposits                            380,110           454,086
                                       ----------        ----------
                                       $1,315,748        $1,283,790
                                       ==========        ==========


                     OceanFirst Financial Corp.
                   ANALYSIS OF NET INTEREST INCOME

                        FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                   ---------------------------------------------------
                             2008                      2007
                   ------------------------- -------------------------
                                     AVERAGE                   AVERAGE
                    AVERAGE           YIELD/  AVERAGE           YIELD/
                    BALANCE  INTEREST  COST   BALANCE  INTEREST  COST
                   ---------------------------------------------------
                                 (Dollars in thousands)
 Assets
 Interest-earnings
  assets:
  Interest-earning
   deposits and
   short-term
   investments     $   13,123 $    43  1.31% $   17,191 $   217  5.05%
  Investment
   securities(1)       60,379     524  3.47      62,836     895  5.70
  FHLB stock           19,019     321  6.75      22,432     478  8.52
  Mortgage-backed
   securities(1)       44,984     525  4.67      60,539     688  4.55
  Loans receivable,
   net(2)           1,636,707  23,821  5.82   1,696,679  25,945  6.12
                   ---------- -------  ----  ---------- -------  ----
   Total interest-
    earning assets  1,774,212  25,234  5.69   1,859,677  28,223  6.07
                              -------  ----             -------  ----
 Non-interest-
  earning assets       91,203                   102,284
                   ----------                ----------
   Total assets    $1,865,415                $1,961,961
                   ==========                ==========
 Liabilities and
  Stockholders'
  Equity
 Interest-bearing
  liabilities:
  Transaction
   deposits        $  799,671   3,299  1.65  $  727,233   3,837  2.11
  Time deposits       392,893   2,957  3.01     488,688   5,489  4.49
                   ---------- -------  ----  ---------- -------  ----
   Total            1,192,564   6,256  2.10   1,215,921   9,326  3.07
  Borrowed funds      417,873   4,348  4.16     489,662   6,066  4.96
                   ---------- -------  ----  ---------- -------  ----
   Total interest-
    bearing
    liabilities     1,610,437  10,604  2.63   1,705,583  15,392  3.61
                              -------  ----             -------  ----
 Non-interest-
  bearing deposits    113,303                   116,895
 Non-interest-
  bearing
  liabilities          18,050                    16,834
                   ----------                ----------
   Total
    liabilities     1,741,790                 1,839,312
 Stockholders'
  equity              123,625                   122,649
                   ----------                ----------
   Total
    liabilities and
    stockholders'
    equity         $1,865,415                $1,961,961
                   ==========                ==========
 Net interest
  income                      $14,630                   $12,831
                              =======                   =======
 Net interest rate
  spread(3)                            3.06%                     2.46%
                                       ====                      ====
 Net interest
  margin(4)                            3.30%                     2.76%
                                       ====                      ====

                         FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                   ---------------------------------------------------
                             2008                      2007
                   ------------------------- -------------------------
                                     AVERAGE                   AVERAGE
                    AVERAGE           YIELD/  AVERAGE           YIELD/
                    BALANCE  INTEREST  COST   BALANCE  INTEREST  COST
                   ---------------------------------------------------
                                 (Dollars in thousands)
 Assets
 Interest-earnings
  assets:
  Interest-earning
   deposits and
   short-term
   investments     $   11,949 $   185  2.06% $   11,212 $   430  5.11%
  Investment
   securities(1)       62,074   2,374  5.10      69,980   3,661  6.98
  FHLB stock           20,280   1,228  8.07      24,575   1,403  7.61
  Mortgage-backed
   securities(1)       48,650   1,710  4.69      63,912   2,127  4.44
  Loans receivable,
   net(2)           1,653,794  72,926  5.88   1,743,488  79,528  6.08
                   ---------- -------  ----  ---------- -------  ----
   Total interest-
    earning assets  1,796,747  78,423  5.82   1,913,167  87,149  6.07
                              -------  ----             -------  ----
 Non-interest-
  earning assets       93,887                   101,345
                   ----------                ----------
   Total assets    $1,890,634                $2,014,512
                   ==========                ==========
 Liabilities and
  Stockholders'
  Equity
 Interest-bearing
  liabilities:
  Transaction
   deposits        $  772,577   9,643  1.66  $  723,194  11,116  2.05
  Time deposits       419,712  11,184  3.55     501,697  16,662  4.43
                   ---------- -------  ----  ---------- -------  ----
   Total            1,192,289  20,827  2.33   1,224,891  27,778  3.02
  Borrowed funds      447,750  14,469  4.31     529,584  19,431  4.89
                   ---------- -------  ----  ---------- -------  ----
   Total interest-
    bearing
    liabilities     1,640,039  35,296  2.87   1,754,475  47,209  3.59
                              -------  ----             -------  ----
 Non-interest-
  bearing deposits    110,157                   115,299
 Non-interest-
  bearing
  liabilities          17,121                    19,153
                   ----------                ----------
   Total
    liabilities     1,767,317                 1,888,927
 Stockholders'
  equity              123,317                   125,585
                   ----------                ----------
   Total
    liabilities and
    stockholders'
    equity         $1,890,634                $2,014,512
                   ==========                ==========

 Net interest
  income                      $43,127                   $39,940
                              =======                   =======
 Net interest rate
  spread(3)                            2.95%                     2.48%
                                       ====                      ====
 Net interest
  margin(4)                            3.20%                     2.78%
                                       ====                      ====

 (1) Amounts are recorded at average amortized cost.
 (2) Amount is net of deferred loan fees, undisbursed loan funds,
     discounts and premiums and estimated loss allowances and
     includes loans held for sale and non-performing loans.
 (3) Net interest rate spread represents the difference between
     the yield on interest-earning assets and the cost of
     interest-bearing liabilities.
 (4) Net interest margin represents net interest income divided by
     average interest-earning assets.


            

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