TOMS RIVER, N.J., Jan. 22, 2009 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (Nasdaq:OCFC), the holding company for OceanFirst Bank, today announced that diluted earnings per share increased to $.30 for the quarter ended December 31, 2008 as compared to $.26 for the corresponding prior year period. For the year ended December 31, 2008 diluted earnings per share increased to $1.26 as compared to $.09 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 December 31, 2008 - to be paid on February 13, 2009, to shareholders of record on January 30, 2009.
Discussing the results, CEO John R. Garbarino reflected on the improvement in earnings over the prior year. "In the face of a difficult economic environment we continue to grow earnings over the prior year. Our net interest margin again expanded to 3.35% in the current quarter from 2.83% in the prior year quarter and 3.30% in the linked quarter. Decreases in short-term interest rates coupled with disciplined deposit pricing benefited the Bank's core operations. We are also pleased to announce the payment of our forty-eighth consecutive quarterly cash dividend, unchanged from prior quarters."
Commenting on capital, he continued, "The consistency of our quarterly earnings at the Bank this year, coupled with controls on our balance sheet growth, have helped stabilize our capital position. Additionally, as a healthy, well-capitalized institution we were pleased to be invited to take advantage of the Treasury's Capital Purchase Plan, accepting $38.3 million in Treasury's preferred equity investment in January 2009, further bolstering our capital position in the New Year."
Results of Operations
Net interest income for the quarter and year ended December 31, 2008 increased to $14.9 million and $58.0 million, respectively as compared to $13.0 million and $52.9 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 3.35% and 3.24%, respectively, for the quarter and year ended December 31, 2008 from 2.83% and 2.79%, respectively, in the same prior year periods. The yield on interest-earning assets decreased to 5.62% and 5.77%, respectively, as compared to 6.06% and 6.07%, respectively, in the same prior year periods. The cost of interest-bearing liabilities decreased to 2.48% and 2.77%, respectively, for the quarter and year ended December 31, 2008, as compared to 3.51% and 3.57%, respectively, in the same prior year periods. Average interest-earning assets decreased by $58.6 million and $102.0 million, respectively, for the quarter and year ended December 31, 2008 as compared to the same prior year periods. The decrease was concentrated in average loans receivable which declined $34.0 million and $75.7 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 $2.8 million for the quarter ended December 31, 2008 as compared to $4.1 million in the same prior year period. For the year ended December 31, 2008 other income increased to $12.8 million as compared to $2.5 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 $455,000 and $799,000, respectively, for the quarter and year ended December 31, 2008 as compared to a gain of $627,000 and a loss of $11.0 million, respectively, in the same prior year periods. The net gain for the year ended December 31, 2008 includes a $902,000 loss on investment securities transactions. The net loss for the year ended December 31, 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 $3.5 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 $1.1 million at December 31, 2008. For the quarter ended December 31, 2008 the Company recognized a reversal of the provision for repurchased loans of $37,000. There were no charge-offs and no loan repurchases during the quarter. For the year ended December 31, 2008, the Company recognized a reversal of the provision for repurchased loans of $248,000 and charge-offs of $1.0 million relating to three loan repurchases and two comprehensive negotiated settlements in lieu of a loan repurchase. At December 31, 2008 there was one outstanding loan repurchase request, which the Company is contesting.
Income (loss) from Bank Owned Life Insurance ("BOLI") was a net loss of $252,000 and income of $704,000, respectively, for the quarter and year ended December 31, 2008 as compared to income of $343,000 and $1,285,000, respectively, for the corresponding prior year periods. The results for the quarter and year-ended December 31, 2008 were adversely affected by a $568,000 impairment to certain investment securities held by the BOLI's underlying investment fund. The Company's BOLI is invested in a separate account insurance product which is invested in a fixed income portfolio designed to mirror the Lehman Brothers Aggregate Bond Index.
Operating expenses amounted to $12.2 million and $47.4 million, respectively, for the quarter and year ended December 31, 2008, as compared to $12.4 million and $53.8 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 year ended December 31, 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 quarter and year ended December 31, 2008 also benefited from a reduction in retirement plan expense. Operating expenses for the quarter and year ended December 31, 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.
The provision (benefit) for income taxes amounted to $1.4 million and $6.9 million for the quarter and year ended December 31, 2008 as compared to $1.5 million and a benefit of $140,000 in the same prior year periods. The provision for income taxes for the quarter and year ended December 31, 2008 benefited from $524,000 in state tax refunds relating to OceanFirst Realty Corp. for the years 2002 through 2006.
Financial Condition
Loans receivable, net decreased by $27.5 million at December 31, 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 December 31, 2008, the Company was holding subprime loans from the former Columbia portfolio with a gross principal balance of $5.3 million and a carrying value, net of reserves and lower of cost or market adjustment of $3.3 million. Deposits decreased to $1,274.1 million at December 31, 2008 from $1,283.8 million at December 31, 2007. Core deposits, however, defined as all deposits excluding time deposits, increased $77.1 million which was offset by a $86.7 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 $359.9 million at December 31, 2008 from $405.0 million at December 31, 2007, primarily due to the reduction in loans receivable, net.
Asset Quality
The Company's non-performing loans totaled $16.0 million at December 31, 2008, an increase from $8.7 million at December 31, 2007. The increase is partly related to two commercial loan relationships totaling $4.0 million which became non-performing during 2008. The first loan relationship totals $2.1 million and is well secured by commercial real estate collateral and a strong guarantor. The second loan relationship totals $1.9 million and is likewise well-secured by commercial real estate collateral. Additionally, non-performing 1-4 family loans increased $2.1 million over the prior year. Non-performing loans at December 31, 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 $3.2 million of loans previously held for sale that were also written down to market value. For the year ended December 31, 2008, the Company realized net loan charge-offs of $578,000.
Conference Call
As previously announced, the Company will host an earnings conference call on Friday, January 23, 2009 at 11:00 a.m. Eastern time. The direct dial number for the call is (800) 860-2442. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (877)344-7529, Replay Conference Number 426841, from one hour after the end of the call until 9:00 a.m. on February 9, 2009.
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.
Annual Meeting
The Company also announced today that its Annual Meeting of Stockholders will be held on Thursday, May 7, 2009 at 10:00 A.M. Eastern Standard Time, at the Crystal Point Yacht Club located at 3900 River Road at the intersection of State Highway 70, Point Pleasant, New Jersey. The record date for shareholders entitled to vote at the Annual Meeting is March 10, 2009.
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)
December 31, December 31,
2008 2007
------------ ------------
ASSETS
------
Cash and due from banks $ 18,475 $ 27,547
Investment securities available for sale 34,364 57,625
Federal Home Loan Bank of New York stock,
at cost 20,910 22,941
Mortgage-backed securities available for
sale 40,801 54,137
Loans receivable, net 1,648,378 1,675,919
Mortgage loans held for sale 3,903 6,072
Interest and dividends receivable 6,298 6,915
Real estate owned, net 1,141 438
Premises and equipment, net 21,336 17,882
Servicing asset 7,229 8,940
Bank Owned Life Insurance 39,135 38,430
Other assets 15,976 10,653
---------- ----------
Total assets $1,857,946 $1,927,499
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits $1,274,132 $1,283,790
Securities sold under agreements to
repurchase with retail customers 62,422 69,807
Securities sold under agreements to
repurchase with the Federal Home Loan Bank -- 12,000
Federal Home Loan Bank advances 359,900 393,000
Other borrowings 27,500 27,500
Advances by borrowers for taxes and insurance 7,581 7,588
Other liabilities 6,628 9,508
---------- ----------
Total liabilities 1,738,163 1,803,193
---------- ----------
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 and 12,346,465 shares
outstanding at December 31, 2008 and
December 31, 2007, respectively 272 272
Additional paid-in capital 204,298 203,532
Retained earnings 160,267 154,929
Accumulated other comprehensive loss (14,462) (3,211)
Less: Unallocated common stock held by
Employee Stock Ownership Plan (5,069) (5,360)
Treasury stock, 14,812,799 and
14,830,907 shares at December 31,
2008 and December 31, 2007,
respectively (225,523) (225,856)
Common stock acquired by Deferred
Compensation Plan 981 1,307
Deferred Compensation Plan Liability (981) (1,307)
---------- ----------
Total stockholders' equity 119,783 124,306
---------- ----------
Total liabilities and stockholders'
equity $1,857,946 $1,927,499
========== ==========
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
For the three months For the years
ended December 31, ended December 31,
------------------ ------------------
2008 2007 2008 2007
------------------ ------------------
(Unaudited)
Interest income:
Loans $ 23,734 $ 25,716 $ 96,660 $105,244
Mortgage-backed securities 500 648 2,210 2,775
Investment securities and
other 748 1,451 4,535 6,945
-------- -------- -------- --------
Total interest income 24,982 27,815 103,405 114,964
-------- -------- -------- --------
Interest expense:
Deposits 5,929 8,808 26,756 36,586
Borrowed funds 4,157 6,022 18,626 25,454
-------- -------- -------- --------
Total interest expense 10,086 14,830 45,382 62,040
-------- -------- -------- --------
Net interest income 14,896 12,985 58,023 52,924
Provision for loan losses 600 175 1,775 700
-------- -------- -------- --------
Net interest income after
provision for loan losses 14,296 12,810 56,248 52,224
-------- -------- -------- --------
Other income:
Loan servicing income 92 112 385 468
Fees and service charges 2,545 2,950 10,838 11,674
Net gain (loss) and lower of
cost or market adjustment on
sales of loans and securities
available for sale 455 627 799 (11,048)
Net (loss) income from other
real estate operations (24) 73 72 100
(Loss) income from Bank
Owned Life Insurance (252) 343 704 1,285
Other 10 11 25 52
-------- -------- -------- --------
Total other income 2,826 4,116 12,823 2,531
-------- -------- -------- --------
Operating expenses:
Compensation and employee
benefits 6,363 6,243 24,270 28,469
Occupancy 1,543 1,623 5,487 5,651
Equipment 548 592 1,981 2,202
Marketing 535 436 1,833 1,482
Federal deposit insurance 152 183 1,104 626
Data processing 801 829 3,176 3,454
General and administrative 2,240 2,469 9,596 10,922
Goodwill impairment -- -- -- 1,014
-------- -------- -------- --------
Total operating expenses 12,182 12,375 47,447 53,820
-------- -------- -------- --------
Income before provision
(benefit) for income taxes 4,940 4,551 21,624 935
Provision (benefit) for income
taxes 1,440 1,457 6,860 (140)
-------- -------- -------- --------
Net income $ 3,500 $ 3,094 $ 14,764 $ 1,075
======== ======== ======== ========
Basic earnings per share $ 0.30 $ 0.27 $ 1.27 $ 0.09
======== ======== ======== ========
Diluted earnings per share $ 0.30 $ 0.26 $ 1.26 $ 0.09
======== ======== ======== ========
Average basic shares
outstanding 11,687 11,612 11,667 11,545
======== ======== ======== ========
Average diluted shares
outstanding 11,741 11,685 11,758 11,648
======== ======== ======== ========
OceanFirst Financial Corp.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
At December 31, At December 31,
2008 2007
-------------- ---------------
STOCKHOLDERS' EQUITY
--------------------
Stockholders' equity to total assets 6.45% 6.45%
Common shares outstanding (in
thousands) 12,365 12,346
Stockholders' equity per common share $9.69 $10.07
Tangible stockholders' equity per
common share 9.69 10.07
ASSET QUALITY
-------------
Allowance for loan losses $11,665 $10,468
Non-performing loans 16,043 8,741
Non-performing assets 17,184 9,179
Allowance for loan losses as a percent
of total loans receivable 0.70% 0.62%
Allowance for loan losses as a percent
of non-performing loans 72.71 119.76
Non-performing loans as a percent of
total loans receivable 0.97 0.52
Non-performing assets as a percent of
total assets 0.92 0.48
For the three For the years
months ended ended
December 31, December 31,
------------- -------------
2008 2007 2008 2007
---- ---- ---- ----
PERFORMANCE RATIOS (ANNUALIZED)
-------------------------------
Return on average assets 0.75% 0.64% 0.78% 0.05%
Return on average stockholders' equity 11.39 10.09 11.98 0.86
Interest rate spread 3.14 2.55 3.00 2.50
Interest rate margin 3.35 2.83 3.24 2.79
Operating expenses to average assets 2.61 2.56 2.52 2.70
Efficiency ratio 68.74 72.36 66.97 97.05
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(in thousands)
LOANS RECEIVABLE
----------------
At December 31, At December 31,
2008 2007
-------------- --------------
Real estate:
One-to-four family $1,039,375 $1,084,687
Commercial real estate, multi-family
and land 329,844 326,707
Construction 10,561 10,816
Consumer 222,797 213,282
Commercial 59,760 54,279
---------- ----------
Total loans 1,662,337 1,689,771
Loans in process (3,586) (2,452)
Deferred origination costs, net 5,195 5,140
Allowance for loan losses (11,665) (10,468)
---------- ----------
Total loans, net 1,652,281 1,681,991
Less: mortgage loans held for sale 3,903 6,072
---------- ----------
Loans receivable, net $1,648,378 $1,675,919
========== ==========
Mortgage loans serviced for others $ 977,410 $1,026,070
Loan pipeline 69,751 74,808
For the three For the years
months ended ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
---- ---- ---- ----
Loan originations $90,947 $108,554 $383,043 $678,790
Loans sold 23,529 26,160 102,022 385,962
Net charge-offs 153 394 578 470
DEPOSITS
-------
At December 31, At December 31,
2008 2007
-------------- --------------
Type of Account
---------------
Non-interest-bearing $ 97,278 $ 103,656
Interest-bearing checking 517,334 454,666
Money market deposit 84,928 84,287
Savings 207,224 187,095
Time deposits 367,368 454,086
---------- ----------
$1,274,132 $1,283,790
========== ==========
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
FOR THE QUARTERS ENDED DECEMBER 31,
------------------------------------------------------
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 $ 6,818 $ 6 .35% $ 8,740 $ 96 4.39%
Investment
securities(1) 57,613 575 3.99 62,591 900 5.75
FHLB stock 19,784 167 3.38 22,729 455 8.01
Mortgage-
backed
securities(1) 41,966 500 4.77 56,763 648 4.57
Loans
receivable,
net(2) 1,652,278 23,734 5.75 1,686,262 25,716 6.10
---------- -------- ---- ---------- -------- ----
Total
interest-
earning
assets 1,778,459 24,982 5.62 1,837,085 27,815 6.06
-------- ---- -------- ----
Non-interest-
earning assets 89,929 97,524
---------- ----------
Total assets $1,868,388 $1,934,609
========== ==========
Liabilities and
Stockholders'
Equity
Interest-
bearing
liabilities:
Transaction
deposits $ 825,646 3,151 1.53 $ 733,446 3,745 2.04
Time deposits 376,582 2,778 2.95 461,101 5,063 4.39
---------- -------- ---- ---------- -------- ----
Total 1,202,228 5,929 1.97 1,194,547 8,808 2.95
Borrowed funds 425,687 4,157 3.91 495,617 6,022 4.86
---------- -------- ---- ---------- -------- ----
Total
interest-
bearing
liabilities 1,627,915 10,086 2.48 1,690,164 14,830 3.51
-------- ---- -------- ----
Non-interest-
bearing
deposits 101,436 104,697
Non-interest-
bearing
liabilities 16,146 17,061
---------- ----------
Total
liabilities 1,745,497 1,811,922
Stockholders'
equity 122,891 122,687
---------- ----------
Total
liabilities
and
stockholders'
equity $1,868,388 $1,934,609
========== ==========
Net interest
income $ 14,896 $ 12,985
======== ========
Net interest
rate spread(3) 3.14% 2.55%
==== ====
Net interest
margin(4) 3.35% 2.83%
==== ====
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------
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 $ 10,496 $ 191 1.82% $ 10,572 $ 526 4.98%
Investment
securities(1) 60,952 2,948 4.84 68,118 4,561 6.70
FHLB stock 20,156 1,396 6.93 24,110 1,858 7.71
Mortgage-
backed
securities(1) 46,970 2,210 4.71 62,110 2,775 4.47
Loans
receivable,
net(2) 1,653,413 96,660 5.85 1,729,064 105,244 6.09
---------- -------- ---- ---------- -------- ----
Total
interest-
earning
assets 1,791,987 103,405 5.77 1,893,974 114,964 6.07
---- -------- ----
Non-interest-
earning assets 93,055 100,398
---------- ----------
Total assets $1,885,042 $1,994,372
========== ==========
Liabilities and
Stockholders'
Equity
Interest-
bearing
liabilities:
Transaction
deposits $ 785,906 12,793 1.63 $ 725,755 14,861 2.05
Time deposits 408,870 13,963 3.42 491,465 21,725 4.42
---------- -------- ---- ---------- -------- ----
Total 1,194,776 26,756 2.24 1,217,220 36,586 3.01
Borrowed funds 442,204 18,626 4.21 521,023 25,454 4.89
---------- -------- ---- ---------- -------- ----
Total
interest-
bearing
liabilities 1,636,980 45,382 2.77 1,738,243 62,040 3.57
-------- ---- -------- ----
Non-interest-
bearing
deposits 107,976 112,649
Non-interest-
bearing
liabilities 16,876 18,625
---------- ----------
Total
liabilities 1,761,832 1,869,517
Stockholders'
equity 123,210 124,855
---------- ----------
Total
liabilities
and
stockholders'
equity $1,885,042 $1,994,372
========== ==========
Net interest
income $ 58,023 $ 52,924
======== ========
Net interest
rate spread(3) 3.00% 2.50%
==== ====
Net interest
margin(4) 3.24% 2.79%
==== ====
(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.