TOMS RIVER, N.J., Jan. 26, 2017 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:OCFC), (the "Company"), the holding company for OceanFirst Bank (the "Bank"), today announced that diluted earnings per share were $0.22 for the quarter ended December 31, 2016, as compared to $0.31 for the corresponding prior year quarter. For the year ended December 31, 2016, diluted earnings per share were $0.98, as compared to $1.21 for the corresponding prior year period.
The results of operations for the quarter and the year ended December 31, 2016 include merger related expenses, which decreased net income, net of tax benefit, by $4.5 million and $11.9 million, respectively. Excluding this item, core earnings for the quarter and year ended December 31, 2016 were $10.6 million, or $0.38 per diluted share, and $35.0 million, or $1.49 per diluted share, respectively. (Please refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of merger related expenses, certain other expenses incurred in the second quarter of 2016, and quantification of core earnings).
Highlights for the quarter are described below.
- On November 30, 2016, the Company completed its acquisition of Ocean Shore Holding Company ("Ocean Shore"), which added $995.9 million to assets, $774.0 million to loans, and $875.1 million to deposits. The Company anticipates full integration of Ocean Shore’s operations and systems in May 2017.
- On October 15, 2016, the Bank completed the systems integration and rebranding effort related to the acquisition of Cape Bancorp, Inc. ("Cape"), which had been operated as a division of OceanFirst Bank since the closing on May 2, 2016.
- Non-performing loans decreased 25.8%, to $13.6 million, at December 31, 2016, from $18.3 million at December 31, 2015. Non-performing loans as a percent of total loans receivable decreased to 0.35% at December 31, 2016, from 0.91% at December 31, 2015, the lowest level in the past 10 years.
Chairman and Chief Executive Officer Christopher D. Maher reflected on the Company's results, "With the Ocean Shore closing on November 30th and the full systems conversion and rebranding of Cape completed, we are pleased to include the stockholders, employees and customers of both organizations in the OceanFirst family." Mr. Maher added, "Throughout 2017 we will be focused on effectively deploying excess liquidity and reducing operating expenses following the two acquisitions completed in 2016."
The Company continues to focus on organic growth while actively managing expense levels. Expense reductions associated with the successful systems integration of Cape in the fourth quarter of 2016 will be fully realized in the first quarter of 2017. Initial cost savings were realized at the time of the Ocean Shore acquisition on November 30, 2016, with incremental savings expected after the second quarter of 2017 due to the anticipated systems integration. The Company also expects to realize significant cost savings from the consolidation of branches. The Company's Board of Directors has approved the elimination of 10 such branches in the legacy Cape and Ocean Shore market area by mid-year 2017, with an expected annualized cost savings of $3.6 million. Further, the Company expects to consolidate other branches in its central New Jersey market area by the end of the year. These initiatives will allow the Company to continue to invest in commercial banking and electronic delivery channels while meeting the efficiency targets established in connection with the recent acquisitions.
The Company also announced that the Board of Directors declared its eightieth consecutive quarterly cash dividend on common stock. The dividend for the quarter ended December 31, 2016 of $0.15 per share will be paid on February 17, 2017 to stockholders of record on February 6, 2017.
Results of Operations
On July 31, 2015, the Company completed its acquisition of Colonial American Bank ("Colonial American"), which added $142.4 million to assets, $121.2 million to loans, and $123.3 million to deposits. Colonial American’s results of operations are included in the consolidated results for the quarter and year ended December 31, 2016, but are only included in the results of operations for the period from August 1, 2015 through December 31, 2015.
On May 2, 2016, the Company completed its acquisition of Cape and its results of operations from May 2, 2016 through December 31, 2016 are included in the consolidated results for the quarter and year ended December 31, 2016, but are not included in the results of operations for the corresponding prior year periods.
On November 30, 2016, the Company completed its acquisition of Ocean Shore and its results of operations from December 1, 2016 through December 31, 2016 are included in the consolidated results for the quarter and year ended December 31, 2016, but are not included in the results of operations for the corresponding prior year periods.
Net income for the quarter ended December 31, 2016, was $6.1 million, or $0.22 per diluted share, as compared to $5.2 million, or $0.31 per diluted share, for the corresponding prior year period. Net income for the year ended December 31, 2016, was $23.0 million, or $0.98 per diluted share, as compared to $20.3 million, or $1.21 per diluted share, for the corresponding prior year period. Net income for the quarter and year ended December 31, 2016 includes merger related expenses, net of tax benefit, of $4.5 million and $11.8 million, respectively, as compared to $441,000 and $1.3 million, respectively, for the same prior year periods. Additionally, net income for the year ended December 31, 2016, includes an FHLB advance prepayment fee of $136,000, and a loss on the sale of investment securities available-for-sale of $12,000. Excluding these items, diluted earnings per share increased over the prior year period due to higher net interest income and other income partially offset by increases in operating expenses, provision for loan losses, and average diluted shares outstanding.
Excluding merger related expenses, diluted earnings per share decreased $0.02 from the prior linked quarter. Excluding the impact of Ocean Shore, net interest income decreased for the fourth quarter of 2016, as compared to the prior linked quarter, due to a reduction in average loans receivable. This reduction was partly offset by the overall favorable impact of the Ocean Shore acquisition for the month of December.
Net interest income for the quarter and year ended December 31, 2016 increased to $35.8 million and $120.3 million, respectively, as compared to $20.7 million and $76.8 million for the same prior year periods, reflecting an increase in interest-earning assets and a higher net interest margin. Average interest-earning assets increased $1.730 billion and $1.116 billion, respectively, for the quarter and year ended December 31, 2016, as compared to the same prior year periods. The averages for the quarter and year ended December 31, 2016, were favorably impacted by $1.357 billion and $900.7 million, respectively, as a result of the interest-earning assets acquired from Ocean Shore, Cape and Colonial American ("Acquisition Transactions"). Average loans receivable, net, increased $1.323 billion and $956.7 million, respectively, for the quarter and the year ended December 31, 2016 as compared to the same prior year periods. The increases attributable to the Acquisition Transactions were $1.280 billion and $843.6 million for the quarter and the year ended December 31, 2016, respectively. The net interest margin increased to 3.40% and 3.47%, respectively, for the quarter and year ended December 31, 2016, from 3.34% and 3.28%, respectively, for the quarter and year ended December 31, 2015. The yield on average interest-earning assets increased to 3.79% and 3.85%, respectively, for the quarter and year ended December 31, 2016, from 3.74% and 3.66%, respectively, for the same prior year periods. The yields on average interest-earning assets for the quarter and year ended December 31, 2016 benefited from the accretion of purchase accounting adjustments on the Acquisition Transactions of $1.4 million and $4.5 million, respectively; the higher-yielding interest-earning assets acquired from Cape; and the higher interest rate environment in the fourth quarter of 2016. For the quarter and the year ended December 31, 2016, the cost of average interest-bearing liabilities decreased to 0.48% and 0.47%, from 0.49% and 0.48%, respectively, in the corresponding prior year periods. The total cost of deposits (including non-interest bearing deposits) was 0.26% and 0.25%, respectively, for the quarter and year ended December 31, 2016, as compared to 0.24% and 0.23%, respectively, for the corresponding prior year periods.
Net interest income for the quarter ended December 31, 2016 increased $1.8 million, as compared to the prior linked quarter, as average interest-earning assets increased $400.3 million, of which $317.8 million related to Ocean Shore. The net interest margin decreased to 3.40% for the quarter ended December 31, 2016, from 3.56% for the prior linked quarter. The yield on average interest-earning assets decreased to 3.79% for the quarter ended December 31, 2016, from 3.92% for the prior linked quarter due to increased average balances in lower yielding interest-earning deposits and short-term investments. The cost of average interest-bearing liabilities increased to 0.48% for the quarter ended December 31, 2016, as compared to 0.43% for the prior linked quarter, due to a full quarter of interest expense on the September 2016 issuance of $35.0 million in subordinated notes at an all-in cost of 5.45% with a stated maturity of September 30, 2026.
For the quarter and year ended December 31, 2016, the provision for loan losses was $510,000 and $2.6 million, respectively, as compared to $300,000 and $1.3 million, respectively, for the corresponding prior year periods. Net charge-offs were $944,000 and $4.2 million, respectively, for the quarter and the year ended December 31, 2016, as compared to $217,000 and $870,000, respectively, in the corresponding prior year periods. The increase in net charge-offs for the quarter and the year ended December 31, 2016, was primarily due to fourth quarter and full-year charge-offs of $535,000 and $2.1 million, respectively, on loans sold, and to a lesser extent, first quarter charge-offs of $886,000 on two non-performing commercial loans. Excluding charge-offs attributable to the loan sale, net charge-offs for the quarter totaled $409,000. Non-performing loans totaled $13.6 million at December 31, 2016, as compared to $16.5 million at September 30, 2016, and $18.3 million at December 31, 2015.
For the quarter and the year ended December 31, 2016, other income increased to $6.3 million and $20.4 million, respectively, as compared to $4.1 million and $16.4 million, respectively, in the same prior year periods. The increases from the prior periods were primarily due to the impact of the Ocean Shore and Cape acquisitions which added $1.6 million and $3.9 million to total other income for the quarter and the year ended December 31, 2016, respectively, as compared to the same prior year periods. Excluding Ocean Shore and Cape, other income increased $529,000 and $133,000 for the quarter and year ended December 31, 2016, as compared to the same prior year periods. For the quarter and the year ended December 31, 2016, other income included losses of $49,000 and $342,000, respectively, attributable to the operations of a hotel, golf and banquet facility acquired as Other Real Estate Owned ("OREO") in the fourth quarter of 2015. The Bank is currently engaged in a sales process with qualified buyers for this property.
For the quarter ended December 31, 2016, other income, excluding the impact from Ocean Shore, increased $12,000, as compared to the prior linked quarter.
Operating expenses increased to $32.5 million and $102.9 million, respectively, for the quarter and the year ended December 31, 2016, as compared to $16.5 million and $60.8 million, respectively, in the same prior year periods. Operating expenses for the quarter and the year ended December 31, 2016 include $6.6 million and $16.5 million, respectively, in merger related expenses, as compared to merger related expenses of $614,000 and $1.9 million, respectively, in the same prior year periods. Excluding merger related expenses, the increases in operating expenses over the prior year were primarily due to the operations of Cape and Ocean Shore, which added $8.2 million and $20.5 million for the quarter and year-to-date, respectively; the investment in commercial lending which added expenses of $15,000 and $816,000 for the quarter and year-to-date, respectively; the addition of branches (excluding those acquired in the Acquisition Transactions) which added expenses of $176,000 and $1.2 million for the quarter and year-to-date, respectively: the amortization of the core deposit intangible which added expenses of $291,000 and $602,000 for the quarter and year-to-date, respectively; and the FHLB advance prepayment fee of $136,000.
For the quarter ended December 31, 2016, operating expenses, excluding merger related expenses, increased $2.1 million, as compared to the prior linked quarter. The increase was primarily related to the additional expense from the operations of Ocean Shore of $1.3 million, as well as $363,000 in costs associated with the Bank's rebranding effort.
The provision for income taxes was $3.0 million and $12.2 million, respectively, for the quarter and year ended ended December 31, 2016, as compared to $2.8 million and $10.9 million, respectively, for the same prior year periods. The effective tax rate was 33.0% and 34.5%, respectively, for the quarter and year ended December 31, 2016, as compared to 34.7% and 34.9%, respectively, for the same prior year periods and 34.4% in the prior linked quarter. The variances in the effective tax rate were primarily due to the timing of non-deductible merger related expenses.
Financial Condition
Total assets increased by $2.574 billion to $5.167 billion at December 31, 2016, from $2.593 billion at December 31, 2015, primarily as a result of the acquisitions of Cape and Ocean Shore. Cash and due from banks and interest-bearing deposits increased by $257.4 million, to $301.4 million at December 31, 2016, from $43.9 million at December 31, 2015. The increase was primarily due to cash flows from a reduction in loans receivable (exclusive of acquired loans), deposit growth not utilized to reduce FHLB advances (exclusive of acquired deposits), and the issuance of subordinated notes. Loans receivable, net, increased by $1.833 billion, to $3.803 billion at December 31, 2016, from $1.971 billion at December 31, 2015, due to acquired loans of $1.931 billion. As part of the Acquisition Transactions, and the purchase of an existing retail branch in the Toms River market in the first quarter of 2016, at December 31, 2016, the Company had outstanding goodwill of $145.1 million and core deposit intangibles of $10.9 million.
Deposits increased by $2.271 billion, to $4.188 billion at December 31, 2016, from $1.917 billion at December 31, 2015, which include deposits of $2.140 billion acquired from Ocean Shore, Cape, and the purchase of an existing retail branch located in the Toms River market. Excluding those acquired, deposits increased $130.7 million, while core deposits (all deposits excluding time deposits) increased $169.7 million. The loan-to-deposit ratio at December 31, 2016 was 90.8%, as compared to 102.8% at December 31, 2015. The deposit growth funded a decrease in FHLB advances of $73.9 million to $250.5 million at December 31, 2016 from $324.4 million at December 31, 2015. The increase in other borrowings relates to the September 2016 issuance of $35.0 million in subordinated notes at an all-in cost of 5.45% with a stated maturity of September 30, 2026.
Stockholders' equity increased to $572.0 million at December 31, 2016, as compared to $238.4 million at December 31, 2015. The acquisitions of Cape and Ocean Shore added $165.9 million and $152.3 million, respectively, to stockholders' equity. At December 31, 2016, there were 154,804 shares available for repurchase under the Company's stock repurchase program adopted in July of 2014. In the fourth quarter, the Company repurchased 90,000 shares under this plan at an average cost of $20.86 per share. Tangible stockholders' equity per common share decreased to $12.95 at December 31, 2016, as compared to $13.67 at December 31, 2015, due to the addition of intangible assets in the Ocean Shore and Cape acquisitions.
Asset Quality
The Company's non-performing loans decreased to $13.6 million at December 31, 2016, as compared to $18.3 million at December 31, 2015, partly due to the bulk sale of non-performing and under-performing loans in the third and fourth quarters. Non-performing loans do not include $7.6 million of purchased credit-impaired ("PCI") loans acquired in the Acquisition Transactions. The Company's OREO totaled $9.8 million at December 31, 2016, as compared to $8.8 million at December 31, 2015. The amount includes $7.0 million relating to the hotel, golf and banquet facility located in New Jersey which the Company acquired in the fourth quarter of 2015. At December 31, 2016, the Company's allowance for loan losses was 0.40% of total loans, a decrease from 0.84% at December 31, 2015. These ratios exclude existing fair value credit marks of $26.0 million at December 31, 2016 on the Ocean Shore, Cape and Colonial American loans and $2.2 million at December 31, 2015 on the Colonial American loans. These loans were acquired at fair value with no related allowance for loan losses. The allowance for loan losses as a percent of total non-performing loans was 111.92% at December 31, 2016 as compared to 91.51% at December 31, 2015.
Explanation of Non-GAAP Financial Measures
Reported amounts are presented in accordance with generally accepted accounting principles in the United States ("GAAP"). The Company's management believes that the supplemental non-GAAP information, which consists of reported net income excluding merger related expenses, loss on sale of investment securities available for sale and FHLB prepayment fee, which can vary from period to period, provides a better comparison of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Please refer to 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 Friday, June 2, 2017 at 10:00 a.m. Eastern time, at Navesink Country Club located at 50 Luffburrow Lane, Middletown, New Jersey. The record date for stockholders to vote at the Annual Meeting is April 11, 2017.
Conference Call
As previously announced, the Company will host an earnings conference call on Friday, January 27, 2017 at 11 a.m. Eastern time. The direct dial number for the call is (888) 338-7143. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (877) 344-7529, Replay Conference Number 10098553 from one hour after the end of the call until April 27, 2017. The conference call, as well as the replay, are also available (listen-only) by internet webcast at www.oceanfirst.com in the Investor Relations section.
OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank, founded in 1902, is a $5.2 billion community bank with branches located throughout central and southern New Jersey. OceanFirst Bank delivers commercial and residential financing solutions, wealth management and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey.
OceanFirst Financial Corp.'s press releases are available by visiting us at 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, general economic conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters and increases to flood insurance premiums, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company's market area, accounting principles and guidelines and the Bank's ability to successfully integrate acquired operations. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 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, except per share amounts) | ||||||||||||
| December 31, 2016 | September 30, 2016 | December 31, 2015 | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 301,373 | $ | 311,583 | $ | 43,946 | ||||||
| Securities available-for-sale, at estimated fair value | 12,224 | 2,497 | 29,902 | |||||||||
| Securities held-to-maturity, net (estimated fair value of $596,413 at December 31, 2016, $478,727 at September 30, 2016, and $397,763 at December 31, 2015) | 598,691 | 470,642 | 394,813 | |||||||||
| Federal Home Loan Bank of New York stock, at cost | 19,313 | 18,289 | 19,978 | |||||||||
| Loans receivable, net | 3,803,443 | 3,028,696 | 1,970,703 | |||||||||
| Loans held-for-sale | 1,551 | 21,679 | 2,697 | |||||||||
| Interest and dividends receivable | 11,989 | 9,396 | 5,860 | |||||||||
| Other real estate owned | 9,803 | 9,107 | 8,827 | |||||||||
| Premises and equipment, net | 71,385 | 51,243 | 28,419 | |||||||||
| Servicing asset | 228 | 259 | 589 | |||||||||
| Bank Owned Life Insurance | 132,172 | 106,433 | 57,549 | |||||||||
| Deferred tax asset | 38,787 | 39,391 | 16,807 | |||||||||
| Other assets | 10,105 | 11,543 | 10,900 | |||||||||
| Core deposit intangible | 10,924 | 3,722 | 256 | |||||||||
| Goodwill | 145,064 | 66,537 | 1,822 | |||||||||
| Total assets | $ | 5,167,052 | $ | 4,151,017 | $ | 2,593,068 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Deposits | $ | 4,187,750 | $ | 3,324,681 | $ | 1,916,678 | ||||||
| Securities sold under agreements to repurchase with retail customers | 69,935 | 69,078 | 75,872 | |||||||||
| Federal Home Loan Bank advances | 250,498 | 251,146 | 324,385 | |||||||||
| Other borrowings | 56,559 | 56,399 | 22,500 | |||||||||
| Advances by borrowers for taxes and insurance | 14,030 | 8,287 | 7,121 | |||||||||
| Other liabilities | 16,242 | 24,182 | 8,066 | |||||||||
| Total liabilities | 4,595,014 | 3,733,773 | 2,354,622 | |||||||||
| Stockholders’ equity: | ||||||||||||
| Preferred stock, $.01 par value, $1,000 liquidation preference, 5,000,000 shares authorized, no shares issued | — | — | ||||||||||
| Common stock, $.01 par value, 55,000,000 shares authorized, 33,566,772 shares issued and 32,136,892, 25,850,956, and 17,286,557 shares outstanding at December 31, 2016, September 30, 2016, and December 31, 2015, respectively | 336 | 336 | 336 | |||||||||
| Additional paid-in capital | 364,433 | 308,979 | 269,757 | |||||||||
| Retained earnings | 238,192 | 236,472 | 229,140 | |||||||||
| Accumulated other comprehensive loss | (5,614 | ) | (5,611 | ) | (6,241 | ) | ||||||
| Less: Unallocated common stock held by Employee Stock Ownership Plan | (2,761 | ) | (2,832 | ) | (3,045 | ) | ||||||
| Treasury stock, 1,429,880, 7,715,816, and 16,280,215 shares at December 31, 2016, September 30, 2016, and December 31, 2015, respectively | (22,548 | ) | (120,100 | ) | (251,501 | ) | ||||||
| Common stock acquired by Deferred Compensation Plan | (313 | ) | (310 | ) | (314 | ) | ||||||
| Deferred Compensation Plan Liability | 313 | 310 | 314 | |||||||||
| Total stockholders’ equity | 572,038 | 417,244 | 238,446 | |||||||||
| Total liabilities and stockholders’ equity | $ | 5,167,052 | $ | 4,151,017 | $ | 2,593,068 | ||||||
| OceanFirst Financial Corp. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) | ||||||||||||||||||||
| For the Three Months Ended, | For the Years Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| |--------------------- (unaudited) ---------------------| | (unaudited) | |||||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans | $ | 36,799 | $ | 34,607 | $ | 21,143 | $ | 122,962 | $ | 77,694 | ||||||||||
| Mortgage-backed securities | 1,874 | 1,700 | 1,449 | 6,697 | 6,051 | |||||||||||||||
| Investment securities and other | 1,231 | 1,000 | 557 | 3,766 | 2,118 | |||||||||||||||
| Total interest income | 39,904 | 37,307 | 23,149 | 133,425 | 85,863 | |||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Deposits | 2,392 | 2,083 | 1,217 | 7,517 | 4,301 | |||||||||||||||
| Borrowed funds | 1,758 | 1,289 | 1,244 | 5,646 | 4,733 | |||||||||||||||
| Total interest expense | 4,150 | 3,372 | 2,461 | 13,163 | 9,034 | |||||||||||||||
| Net interest income | 35,754 | 33,935 | 20,688 | 120,262 | 76,829 | |||||||||||||||
| Provision for loan losses | 510 | 888 | 300 | 2,623 | 1,275 | |||||||||||||||
| Net interest income after provision for loan losses | 35,244 | 33,047 | 20,388 | 117,639 | 75,554 | |||||||||||||||
| Other income: | ||||||||||||||||||||
| Bankcard services revenue | 1,424 | 1,347 | 926 | 4,833 | 3,537 | |||||||||||||||
| Wealth management revenue | 545 | 608 | 530 | 2,324 | 2,187 | |||||||||||||||
| Fees and services charges | 3,273 | 2,916 | 2,082 | 10,508 | 8,124 | |||||||||||||||
| Loan servicing income | 73 | 26 | 82 | 250 | 268 | |||||||||||||||
| Net gain on sale of loan servicing | — | — | — | — | 111 | |||||||||||||||
| Net gain on sales of loans available-for-sale | 290 | 347 | 185 | 986 | 822 | |||||||||||||||
| Net loss on sales of investment securities available-for-sale | — | — | — | (12 | ) | — | ||||||||||||||
| Net loss from other real estate operations | (74 | ) | (63 | ) | (38 | ) | (856 | ) | (149 | ) | ||||||||||
| Income from Bank Owned Life Insurance | 710 | 659 | 343 | 2,230 | 1,501 | |||||||||||||||
| Other | 16 | 56 | 8 | 149 | 25 | |||||||||||||||
| Total other income | 6,257 | 5,896 | 4,118 | 20,412 | 16,426 | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Compensation and employee benefits | 13,649 | 13,558 | 8,438 | 47,105 | 31,946 | |||||||||||||||
| Occupancy | 2,380 | 2,315 | 1,518 | 8,332 | 5,722 | |||||||||||||||
| Equipment | 1,499 | 1,452 | 1,162 | 5,104 | 3,725 | |||||||||||||||
| Marketing | 609 | 479 | 428 | 1,882 | 1,516 | |||||||||||||||
| Federal deposit insurance | 830 | 743 | 528 | 2,825 | 2,072 | |||||||||||||||
| Data processing | 2,291 | 2,140 | 1,349 | 7,577 | 4,731 | |||||||||||||||
| Check card processing | 662 | 623 | 427 | 2,210 | 1,815 | |||||||||||||||
| Professional fees | 969 | 681 | 541 | 2,848 | 1,865 | |||||||||||||||
| Other operating expense | 2,640 | 1,543 | 1,481 | 7,676 | 5,484 | |||||||||||||||
| Amortization of core deposit intangible | 304 | 181 | 13 | 623 | 21 | |||||||||||||||
| Federal Home Loan Bank advance prepayment fee | — | — | — | 136 | — | |||||||||||||||
| Merger related expenses | 6,632 | 1,311 | 614 | 16,534 | 1,878 | |||||||||||||||
| Total operating expenses | 32,465 | 25,026 | 16,499 | 102,852 | 60,775 | |||||||||||||||
| Income before provision for income taxes | 9,036 | 13,917 | 8,007 | 35,199 | 31,205 | |||||||||||||||
| Provision for income taxes | 2,984 | 4,789 | 2,777 | 12,153 | 10,883 | |||||||||||||||
| Net income | $ | 6,052 | $ | 9,128 | $ | 5,230 | $ | 23,046 | $ | 20,322 | ||||||||||
| Basic earnings per share | $ | 0.22 | $ | 0.36 | $ | 0.31 | $ | 1.00 | $ | 1.22 | ||||||||||
| Diluted earnings per share | $ | 0.22 | $ | 0.35 | $ | 0.31 | $ | 0.98 | $ | 1.21 | ||||||||||
| Average basic shares outstanding | 27,461 | 25,435 | 16,867 | 23,093 | 16,600 | |||||||||||||||
| Average diluted shares outstanding | 28,128 | 25,889 | 17,126 | 23,526 | 16,811 | |||||||||||||||
| OceanFirst Financial Corp. SELECTED LOAN AND DEPOSIT DATA (dollars in thousands) | ||||||||||||||||||||||
| LOANS RECEIVABLE | At | |||||||||||||||||||||
| December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||||||||
| Commercial: | ||||||||||||||||||||||
| Commercial and industrial | $ | 152,810 | $ | 185,633 | $ | 222,355 | $ | 141,364 | $ | 144,788 | ||||||||||||
| Commercial real estate - owner- occupied | 534,365 | 493,157 | 523,662 | 308,666 | 307,509 | |||||||||||||||||
| Commercial real estate - investor | 1,134,507 | 1,014,699 | 1,011,354 | 536,754 | 510,936 | |||||||||||||||||
| Total commercial | 1,821,682 | 1,693,489 | 1,757,371 | 986,784 | 963,233 | |||||||||||||||||
| Consumer: | ||||||||||||||||||||||
| Residential mortgage | 1,651,695 | 1,061,752 | 1,090,781 | 792,753 | 791,249 | |||||||||||||||||
| Residential construction | 65,408 | 46,813 | 48,266 | 54,259 | 50,757 | |||||||||||||||||
| Home equity loans and lines | 289,110 | 251,421 | 258,398 | 190,621 | 192,368 | |||||||||||||||||
| Other consumer | 1,566 | 1,273 | 1,586 | 570 | 792 | |||||||||||||||||
| Total consumer | 2,007,779 | 1,361,259 | 1,399,031 | 1,038,203 | 1,035,166 | |||||||||||||||||
| Total loans | 3,829,461 | 3,054,748 | 3,156,402 | 2,024,987 | 1,998,399 | |||||||||||||||||
| Loans in process | (14,249 | ) | (13,842 | ) | (13,119 | ) | (15,033 | ) | (14,206 | ) | ||||||||||||
| Deferred origination costs, net | 3,414 | 3,407 | 3,441 | 3,253 | 3,232 | |||||||||||||||||
| Allowance for loan losses | (15,183 | ) | (15,617 | ) | (16,678 | ) | (16,214 | ) | (16,722 | ) | ||||||||||||
| Loans receivable, net | $ | 3,803,443 | $ | 3,028,696 | $ | 3,130,046 | $ | 1,996,993 | $ | 1,970,703 | ||||||||||||
| Mortgage loans serviced for others | $ | 137,881 | $ | 143,657 | $ | 145,903 | $ | 152,653 | $ | 158,244 | ||||||||||||
| At December 31, 2016 Average Yield | ||||||||||||||||||||||
| Loan pipeline (1): | ||||||||||||||||||||||
| Commercial | 4.82 | % | $ | 99,060 | $ | 64,976 | $ | 48,897 | $ | 57,571 | $ | 53,785 | ||||||||||
| Residential mortgage and construction | 3.91 | 38,486 | 39,252 | 30,520 | 28,528 | 31,860 | ||||||||||||||||
| Home equity loans and lines | 4.51 | 6,522 | 5,099 | 5,594 | 8,082 | 5,481 | ||||||||||||||||
| Total | 4.56 | $ | 144,068 | $ | 109,327 | $ | 85,011 | $ | 94,181 | $ | 91,126 | |||||||||||
| For the Three Months Ended, | ||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||||||
| Average Yield | ||||||||||||||||||||||||
| Loan originations: | ||||||||||||||||||||||||
| Commercial | 4.14 | % | $ | 105,062 | (4 | ) | $ | 63,310 | $ | 59,543 | $ | 58,005 | $ | 72,534 | ||||||||||
| Residential mortgage and construction | 3.69 | 62,087 | 41,170 | 40,295 | 34,361 | 43,616 | ||||||||||||||||||
| Home equity loans and lines | 4.49 | 11,790 | 11,007 | 10,067 | 10,915 | 10,431 | ||||||||||||||||||
| Total | 4.00 | $ | 178,939 | $ | 115,487 | $ | 109,905 | $ | 103,281 | $ | 126,581 | |||||||||||||
| Loans sold | $ | 12,098 | (3 | ) | $ | 17,787 | (2 | ) | $ | 10,303 | $ | 8,901 | $ | 9,784 | ||||||||||
(1) Loan pipeline includes pending loan applications and loans approved but not funded
(2) Excludes the sale of under-performing loans of $12.8 million
(3) Excludes the sale of under-performing loans of $21.0 million
(4) Includes purchased loans totaling $24.6 million
| DEPOSITS | At | |||||||||||||||||||
| December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | ||||||||||||||||
| Type of Account | ||||||||||||||||||||
| Non-interest-bearing | $ | 782,504 | $ | 512,957 | $ | 554,709 | $ | 351,743 | $ | 337,143 | ||||||||||
| Interest-bearing checking | 1,626,713 | 1,451,083 | 1,310,290 | 860,468 | 859,927 | |||||||||||||||
| Money market deposit | 458,911 | 400,054 | 366,942 | 163,885 | 153,196 | |||||||||||||||
| Savings | 672,519 | 489,173 | 489,132 | 327,845 | 310,989 | |||||||||||||||
| Time deposits | 647,103 | 471,414 | 485,189 | 267,420 | 255,423 | |||||||||||||||
| $ | 4,187,750 | $ | 3,324,681 | $ | 3,206,262 | $ | 1,971,361 | $ | 1,916,678 | |||||||||||
| OceanFirst Financial Corp. ASSET QUALITY (dollars in thousands) | |||||||||||||||||||
| December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | |||||||||||||||
| ASSET QUALITY | |||||||||||||||||||
| Non-performing loans: | |||||||||||||||||||
| Commercial and industrial | $ | 441 | $ | 1,152 | $ | 964 | $ | 909 | $ | 123 | |||||||||
| Commercial real estate - owner-occupied | 2,414 | 5,213 | 4,363 | 4,354 | 7,684 | ||||||||||||||
| Commercial real estate - investor | 521 | 1,675 | 1,675 | 940 | 3,112 | ||||||||||||||
| Residential mortgage | 8,126 | 7,017 | 7,102 | 8,788 | 5,779 | ||||||||||||||
| Home equity loans and lines | 2,064 | 1,450 | 1,226 | 1,202 | 1,574 | ||||||||||||||
| Other consumer | — | — | — | — | 2 | ||||||||||||||
| Total non-performing loans | 13,566 | 16,507 | 15,330 | 16,193 | 18,274 | ||||||||||||||
| Other real estate owned | 9,803 | 9,107 | 9,791 | 9,029 | 8,827 | ||||||||||||||
| Total non-performing assets | $ | 23,369 | $ | 25,614 | $ | 25,121 | $ | 25,222 | $ | 27,101 | |||||||||
| Purchased credit-impaired ("PCI") loans | $ | 7,575 | $ | 5,836 | $ | 9,673 | $ | 376 | $ | 461 | |||||||||
| Delinquent loans 30 to 89 days | $ | 22,598 | $ | 8,553 | $ | 15,643 | $ | 6,996 | $ | 9,087 | |||||||||
| Troubled debt restructurings: | |||||||||||||||||||
| Non-performing (included in total non-performing loans above) | $ | 3,471 | $ | 3,520 | $ | 2,990 | $ | 4,775 | $ | 4,918 | |||||||||
| Performing | 27,042 | 26,396 | 28,173 | 26,689 | 26,344 | ||||||||||||||
| Total troubled debt restructurings | $ | 30,513 | $ | 29,916 | $ | 31,163 | $ | 31,464 | $ | 31,262 | |||||||||
| Allowance for loan losses | $ | 15,183 | $ | 15,617 | $ | 16,678 | $ | 16,214 | $ | 16,722 | |||||||||
| Allowance for loan losses as a percent of total loans receivable (1) | 0.40 | % | 0.51 | % | 0.53 | % | 0.80 | % | 0.84 | % | |||||||||
| Allowance for loan losses as a percent of total non-performing loans | 111.92 | 94.61 | 108.79 | 100.13 | 91.51 | ||||||||||||||
| Non-performing loans as a percent of total loans receivable | 0.35 | 0.54 | 0.48 | 0.80 | 0.91 | ||||||||||||||
| Non-performing assets as a percent of total assets | 0.45 | 0.62 | 0.62 | 0.97 | 1.05 | ||||||||||||||
(1) The loans acquired from Ocean Shore, Cape, and Colonial American were recorded at fair value. The net credit mark on these loans, not reflected in the allowance for loan losses, was $25,973, $17,051, $27,281, $2,013, and $2,202 at December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively.
NET CHARGE-OFFS
| For the three months ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
| Net Charge-offs: | ||||||||||||||||||||
| Loan charge-offs | $ | (979 | ) | $ | (2,116 | ) | $ | (223 | ) | $ | (1,172 | ) | $ | (236 | ) | |||||
| Recoveries on loans | 35 | 167 | 25 | 101 | 19 | |||||||||||||||
| Net loan charge-offs | $ | (944 | ) | $ | (1,949 | ) | $ | (198 | ) | $ | (1,071 | ) | $ | (217 | ) | |||||
| Net loan charge-offs to average total loans (annualized) | 0.11 | % | 0.25 | % | 0.03 | % | 0.21 | % | 0.04 | % | ||||||||||
| Net charge-off detail - (loss) recovery: | ||||||||||||||||||||
| Commercial | $ | (510 | ) | $ | (1,707 | ) | $ | (84 | ) | $ | (1,073 | ) | $ | 12 | ||||||
| Residential mortgage and construction | (233 | ) | (161 | ) | (69 | ) | (24 | ) | (117 | ) | ||||||||||
| Home equity loans and lines | (194 | ) | (83 | ) | (45 | ) | 28 | (109 | ) | |||||||||||
| Other consumer | (7 | ) | 2 | — | (2 | ) | (3 | ) | ||||||||||||
| Net loans charged-off | $ | (944 | ) | $ | (1,949 | ) | $ | (198 | ) | $ | (1,071 | ) | $ | (217 | ) | |||||
Note: Included in net loan charge-offs for the three months ended December 31, 2016 and September 30, 2016 are $535 and $1,627 relating to under-performing loans sold or held-for-sale, respectively.
| OceanFirst Financial Corp. ANALYSIS OF NET INTEREST INCOME | ||||||||||||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||||||||||||
| December 31, 2016 | September 30, 2016 | December 31, 2015 | ||||||||||||||||||||||||||||||
| (dollars in thousands) | Average Balance | Interest | Average Yield/ Cost | Average Balance | Interest | Average Yield/ Cost | Average Balance | Interest | Average Yield/ Cost | |||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||
| Interest-earning deposits and short-term investments | $ | 359,804 | $ | 484 | 0.54 | % | $ | 168,045 | $ | 139 | 0.33 | % | $ | 41,227 | $ | 16 | 0.15 | % | ||||||||||||||
| Securities (1) and FHLB stock | 545,302 | 2,621 | 1.91 | 533,809 | 2,561 | 1.91 | 456,486 | 1,990 | 1.73 | |||||||||||||||||||||||
| Loans receivable, net (2) | ||||||||||||||||||||||||||||||||
| Commercial | 1,717,502 | 21,016 | 4.87 | 1,723,520 | 20,970 | 4.84 | 943,116 | 11,154 | 4.69 | |||||||||||||||||||||||
| Residential | 1,314,667 | 12,857 | 3.89 | 1,118,435 | 10,874 | 3.87 | 836,722 | 7,953 | 3.77 | |||||||||||||||||||||||
| Home Equity | 262,372 | 2,907 | 4.41 | 255,919 | 2,745 | 4.27 | 193,314 | 2,028 | 4.16 | |||||||||||||||||||||||
| Other | 1,149 | 19 | 6.58 | 1,163 | 18 | 6.16 | 544 | 8 | 5.83 | |||||||||||||||||||||||
| Allowance for loan loss net of deferred loan fees | (12,987 | ) | — | — | (13,346 | ) | — | — | (13,597 | ) | — | — | ||||||||||||||||||||
| Loans Receivable, net | 3,282,703 | 36,799 | 4.46 | 3,085,691 | 34,607 | 4.46 | 1,960,099 | 21,143 | 4.28 | |||||||||||||||||||||||
| Total interest-earning assets | 4,187,809 | 39,904 | 3.79 | 3,787,545 | 37,307 | 3.92 | 2,457,812 | 23,149 | 3.74 | |||||||||||||||||||||||
| Non-interest-earning assets | 368,965 | 316,290 | 129,297 | |||||||||||||||||||||||||||||
| Total assets | $ | 4,556,774 | $ | 4,103,835 | $ | 2,587,109 | ||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||
| Interest-bearing checking | $ | 1,538,706 | 723 | 0.19 | % | $ | 1,425,350 | 583 | 0.16 | % | $ | 909,962 | 278 | 0.12 | % | |||||||||||||||||
| Money market | 424,613 | 312 | 0.29 | 386,490 | 295 | 0.30 | 152,416 | 76 | 0.20 | |||||||||||||||||||||||
| Savings | 549,032 | 74 | 0.05 | 488,749 | 49 | 0.04 | 309,037 | 27 | 0.03 | |||||||||||||||||||||||
| Time deposits | 527,817 | 1,283 | 0.97 | 477,496 | 1,156 | 0.96 | 256,378 | 836 | 1.29 | |||||||||||||||||||||||
| Total | 3,040,168 | 2,392 | 0.31 | 2,778,085 | 2,083 | 0.30 | 1,627,793 | 1,218 | 0.30 | |||||||||||||||||||||||
| Securities sold under agreements to repurchase | 72,063 | 24 | 0.13 | 68,540 | 24 | 0.14 | 78,892 | 29 | 0.15 | |||||||||||||||||||||||
| FHLB Advances | 250,829 | 1,120 | 1.78 | 264,213 | 1,067 | 1.61 | 252,812 | 1,041 | 1.63 | |||||||||||||||||||||||
| Other borrowings | 56,397 | 614 | 4.33 | 26,207 | 198 | 3.01 | 25,467 | 174 | 2.71 | |||||||||||||||||||||||
| Total interest-bearing liabilities | 3,419,457 | 4,150 | 0.48 | 3,137,045 | 3,372 | 0.43 | 1,984,964 | 2,461 | 0.49 | |||||||||||||||||||||||
| Non-interest-bearing deposits | 622,882 | 521,088 | 349,473 | |||||||||||||||||||||||||||||
| Non-interest-bearing Liabilities | 42,773 | 31,536 | 16,174 | |||||||||||||||||||||||||||||
| Total liabilities | 4,085,112 | 3,689,669 | 2,350,611 | |||||||||||||||||||||||||||||
| Stockholders’ equity | 471,662 | 414,166 | 236,498 | |||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 4,556,774 | $ | 4,103,835 | $ | 2,587,109 | ||||||||||||||||||||||||||
| Net interest income | $ | 35,754 | $ | 33,935 | $ | 20,688 | ||||||||||||||||||||||||||
| Net interest rate spread (3) | 3.31 | % | 3.49 | % | 3.25 | % | ||||||||||||||||||||||||||
| Net interest margin (4) | 3.40 | % | 3.56 | % | 3.34 | % | ||||||||||||||||||||||||||
| Total cost of deposits (including non-interest-bearing deposits) | 0.26 | % | 0.25 | % | 0.24 | % | ||||||||||||||||||||||||||
(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.
| (continued) | ||||||||||||||||||||||
| For the Years Ended | ||||||||||||||||||||||
| December 31, 2016 | December 31, 2015 | |||||||||||||||||||||
| (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 | $ | 154,830 | $ | 693 | 0.45 | % | $ | 38,371 | $ | 44 | 0.11 | % | ||||||||||
| Securities (1) and FHLB stock | 524,152 | 9,770 | 1.86 | 481,306 | 8,125 | 1.69 | ||||||||||||||||
| Loans receivable, net (2) | ||||||||||||||||||||||
| Commercial | 1,472,421 | 70,768 | 4.81 | 840,531 | 38,186 | 4.54 | ||||||||||||||||
| Residential | 1,085,991 | 41,996 | 3.87 | 804,404 | 31,423 | 3.91 | ||||||||||||||||
| Home Equity | 236,769 | 10,139 | 4.28 | 194,383 | 8,054 | 4.14 | ||||||||||||||||
| Other | 957 | 59 | 6.17 | 482 | 31 | 6.43 | ||||||||||||||||
| Allowance for loan loss net of deferred loan fees | (13,280 | ) | — | — | (13,639 | ) | — | — | ||||||||||||||
| Loans Receivable, net | 2,782,858 | 122,962 | 4.42 | 1,826,161 | 77,694 | 4.25 | ||||||||||||||||
| Total interest-earning assets | 3,461,840 | 133,425 | 3.85 | 2,345,838 | 85,863 | 3.66 | ||||||||||||||||
| Non-interest-earning assets | 269,622 | 119,035 | ||||||||||||||||||||
| Total assets | $ | 3,731,462 | $ | 2,464,873 | ||||||||||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||
| Interest-bearing checking | $ | 1,266,135 | 2,114 | 0.17 | % | $ | 875,325 | 952 | 0.11 | % | ||||||||||||
| Money market | 316,977 | 858 | 0.27 | 129,775 | 187 | 0.14 | ||||||||||||||||
| Savings | 447,484 | 191 | 0.04 | 306,151 | 102 | 0.03 | ||||||||||||||||
| Time deposits | 422,026 | 4,354 | 1.03 | 229,786 | 3,060 | 1.33 | ||||||||||||||||
| Total | 2,452,622 | 7,517 | 0.31 | 1,541,037 | 4,301 | 0.28 | ||||||||||||||||
| Securities sold under agreements to repurchase | 75,227 | 102 | 0.14 | 73,029 | 103 | 0.14 | ||||||||||||||||
| FHLB Advances | 266,981 | 4,471 | 1.67 | 253,864 | 3,849 | 1.52 | ||||||||||||||||
| Other borrowings | 32,029 | 1,073 | 3.35 | 26,967 | 781 | 2.90 | ||||||||||||||||
| Total interest-bearing liabilities | 2,826,859 | 13,163 | 0.47 | 1,894,897 | 9,034 | 0.48 | ||||||||||||||||
| Non-interest-bearing deposits | 497,166 | 327,216 | ||||||||||||||||||||
| Non-interest-bearing Liabilities | 28,454 | 14,851 | ||||||||||||||||||||
| Total liabilities | 3,352,479 | 2,236,964 | ||||||||||||||||||||
| Stockholders’ equity | 378,983 | 227,909 | ||||||||||||||||||||
| Total liabilities and equity | $ | 3,731,462 | $ | 2,464,873 | ||||||||||||||||||
| Net interest income | $ | 120,262 | $ | 76,829 | ||||||||||||||||||
| Net interest rate spread (3) | 3.38 | % | 3.18 | % | ||||||||||||||||||
| Net interest margin (4) | 3.47 | % | 3.28 | % | ||||||||||||||||||
| Total cost of deposits (including non-interest-bearing deposits) | 0.25 | % | 0.23 | % | ||||||||||||||||||
(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.
| OceanFirst Financial Corp. SELECTED QUARTERLY FINANCIAL DATA (in thousands, except per share amounts) | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
| Selected Financial Condition Data: | ||||||||||||||||||||
| Total assets | $ | 5,167,052 | $ | 4,151,017 | $ | 4,047,493 | $ | 2,588,447 | $ | 2,593,068 | ||||||||||
| Securities available-for-sale, at estimated fair value | 12,224 | 2,497 | 12,509 | 30,085 | 29,902 | |||||||||||||||
| Securities held-to-maturity, net | 598,691 | 470,642 | 513,721 | 375,616 | 394,813 | |||||||||||||||
| Federal Home Loan Bank of New York stock | 19,313 | 18,289 | 21,128 | 16,645 | 19,978 | |||||||||||||||
| Loans receivable, net | 3,803,443 | 3,028,696 | 3,130,046 | 1,996,993 | 1,970,703 | |||||||||||||||
| Loans held-for-sale | 1,551 | 21,679 | 5,310 | 3,386 | 2,697 | |||||||||||||||
| Deposits | 4,187,750 | 3,324,681 | 3,206,262 | 1,971,360 | 1,916,678 | |||||||||||||||
| Federal Home Loan Bank advances | 250,498 | 251,146 | 312,603 | 251,917 | 324,385 | |||||||||||||||
| Securities sold under agreements to repurchase and other borrowings | 126,494 | 125,477 | 90,173 | 106,413 | 98,372 | |||||||||||||||
| Stockholders' equity | 572,038 | 417,244 | 409,258 | 241,076 | 238,446 | |||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
| Selected Operating Data: | ||||||||||||||||||||
| Interest income | $ | 39,904 | $ | 37,307 | $ | 33,141 | $ | 23,073 | $ | 23,149 | ||||||||||
| Interest expense | 4,150 | 3,372 | 3,127 | 2,514 | 2,461 | |||||||||||||||
| Net interest income | 35,754 | 33,935 | 30,014 | 20,559 | 20,688 | |||||||||||||||
| Provision for loan losses | 510 | 888 | 662 | 563 | 300 | |||||||||||||||
| Net interest income after provision for loan losses | 35,244 | 33,047 | 29,352 | 19,996 | 20,388 | |||||||||||||||
| Other income | 6,257 | 5,896 | 4,883 | 3,376 | 4,118 | |||||||||||||||
| Operating expenses | 25,833 | 23,715 | 21,457 | 15,314 | 15,885 | |||||||||||||||
| Merger related expenses | 6,632 | 1,311 | 7,189 | 1,402 | 614 | |||||||||||||||
| Income before provision for income taxes | 9,036 | 13,917 | 5,589 | 6,656 | 8,007 | |||||||||||||||
| Provision for income taxes | 2,984 | 4,789 | 1,928 | 2,451 | 2,777 | |||||||||||||||
| Net income | $ | 6,052 | $ | 9,128 | $ | 3,661 | $ | 4,205 | $ | 5,230 | ||||||||||
| Diluted earnings per share | $ | 0.22 | $ | 0.35 | $ | 0.16 | $ | 0.25 | $ | 0.31 | ||||||||||
| Net accretion/amortization of purchase accounting adjustments included in net interest income | $ | 1,385 | $ | 1,637 | $ | 1,267 | $ | 164 | $ | 177 | ||||||||||
| (continued) | |||||||||||||||
| At or For the Three Months Ended | |||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | |||||||||||
| Selected Financial Ratios and Other Data(1): | |||||||||||||||
| Performance Ratios (Annualized): | |||||||||||||||
| Return on average assets (2) | 0.53 | % | 0.88 | % | 0.40 | % | 0.65 | % | 0.80 | % | |||||
| Return on average stockholders' equity (2) | 5.10 | 8.77 | 3.79 | 7.05 | 8.77 | ||||||||||
| Return on average tangible stockholders' equity (2) (3) | 6.48 | 10.58 | 4.32 | 7.59 | 8.86 | ||||||||||
| Stockholders' equity to total assets | 11.07 | 10.05 | 10.11 | 9.31 | 9.19 | ||||||||||
| Tangible stockholders' equity to tangible assets (3) | 8.30 | 8.50 | 8.51 | 9.23 | 9.12 | ||||||||||
| Net interest rate spread | 3.31 | 3.49 | 3.47 | 3.25 | 3.25 | ||||||||||
| Net interest margin | 3.40 | 3.56 | 3.57 | 3.34 | 3.35 | ||||||||||
| Operating expenses to average assets (2) | 2.83 | 2.43 | 3.16 | 2.58 | 2.53 | ||||||||||
| Efficiency ratio (2) (4) | 77.28 | 62.83 | 82.09 | 69.84 | 66.51 | ||||||||||
| At or For the Years Ended December 31, | ||||||
| 2016 | 2015 | |||||
| Performance Ratios: | ||||||
| Return on average assets (2) | 0.62 | % | 0.82 | % | ||
| Return on average stockholders' equity (2) | 6.08 | 8.92 | ||||
| Return on average tangible stockholders' equity (2) (3) | 7.13 | 8.96 | ||||
| Net interest rate spread | 3.38 | 3.18 | ||||
| Net interest margin | 3.47 | 3.28 | ||||
| Operating expenses to average assets (2) | 2.76 | 2.47 | ||||
| Efficiency ratio (2) (4) | 73.11 | 65.17 | ||||
| (continued) | ||||||||||||||||||||
| At or For the Three Months Ended | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
| Wealth Management: | ||||||||||||||||||||
| Assets under administration | $ | 218,336 | $ | 221,612 | $ | 221,277 | $ | 203,723 | $ | 229,039 | ||||||||||
| Per Share Data: | ||||||||||||||||||||
| Cash dividends per common share | $ | 0.15 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | ||||||||||
| Stockholders' equity per common share at end of period | 17.80 | 16.14 | 15.89 | 13.89 | 13.79 | |||||||||||||||
| Tangible stockholders' equity per common share at end of period (3) | 12.95 | 13.42 | 13.14 | 13.75 | 13.67 | |||||||||||||||
| Number of full-service customer facilities: | 61 | 50 | 50 | 28 | 27 | |||||||||||||||
| Quarterly Average Balances | ||||||||||||||||||||
| Total securities | $ | 545,302 | $ | 533,809 | $ | 571,463 | $ | 445,696 | $ | 456,486 | ||||||||||
| Loans, receivable, net | 3,282,703 | 3,085,691 | 2,772,518 | 1,981,101 | 1,960,099 | |||||||||||||||
| Total interest-earning assets | 4,187,809 | 3,787,545 | 3,384,548 | 2,475,298 | 2,457,812 | |||||||||||||||
| Total assets | 4,556,774 | 4,103,835 | 3,647,102 | 2,605,017 | 2,587,109 | |||||||||||||||
| Interest-bearing transaction deposits | 2,512,351 | 2,300,589 | 1,899,266 | 1,372,357 | 1,371,415 | |||||||||||||||
| Time deposits | 527,817 | 477,496 | 417,301 | 263,722 | 256,378 | |||||||||||||||
| Total borrowed funds | 379,289 | 358,960 | 386,578 | 372,240 | 357,171 | |||||||||||||||
| Total interest-bearing liabilities | 3,419,457 | 3,137,045 | 2,703,145 | 2,008,319 | 1,984,964 | |||||||||||||||
| Non-interest bearing deposits | 622,882 | 521,088 | 529,230 | 343,371 | 349,473 | |||||||||||||||
| Stockholder’s equity | 471,662 | 414,166 | 388,694 | 239,999 | 236,498 | |||||||||||||||
| Total deposits | 3,663,050 | 3,299,173 | 2,845,797 | 1,979,450 | 1,977,266 | |||||||||||||||
| Quarterly Yields | ||||||||||||||||||||
| Total securities | 1.91 | % | 1.91 | % | 1.82 | % | 1.81 | % | 1.73 | % | ||||||||||
| Loans, receivable, net | 4.46 | 4.46 | 4.43 | 4.27 | 4.28 | |||||||||||||||
| Total interest-earning assets | 3.79 | 3.92 | 3.94 | 3.75 | 3.74 | |||||||||||||||
| Interest-bearing transaction deposits | 0.18 | 0.16 | 0.15 | 0.12 | 0.11 | |||||||||||||||
| Time deposits | 0.97 | 0.96 | 1.01 | 1.33 | 1.29 | |||||||||||||||
| Borrowed funds | 1.84 | 1.43 | 1.41 | 1.34 | 1.38 | |||||||||||||||
| Total interest-bearing liabilities | 0.48 | 0.43 | 0.47 | 0.50 | 0.49 | |||||||||||||||
| Net interest spread | 3.31 | 3.49 | 3.47 | 3.25 | 3.25 | |||||||||||||||
| Net interest margin | 3.40 | 3.56 | 3.57 | 3.34 | 3.34 | |||||||||||||||
| Total deposits | 0.26 | 0.25 | 0.25 | 0.26 | 0.24 | |||||||||||||||
(1) With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2) Performance ratios for each period include merger related expenses. Refer to Other Items - Non-GAAP Reconciliation for impact of merger related expenses.
(3) Tangible stockholders' equity and tangible assets exclude intangible assets relating to goodwill and core deposit intangible.
(4) 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, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
| Core earnings: | ||||||||||||||||||||
| Net income | $ | 6,052 | $ | 9,128 | $ | 3,661 | $ | 4,205 | $ | 5,230 | ||||||||||
| Add: Merger related expenses | 6,632 | 1,311 | 7,189 | 1,402 | 614 | |||||||||||||||
| Loss on sale of investment securities available for sale | — | — | 12 | — | — | |||||||||||||||
| Federal Home Loan Bank prepayment fee | — | — | 136 | — | — | |||||||||||||||
| Less: Income tax benefit on items | (2,108 | ) | (172 | ) | (2,311 | ) | (171 | ) | (173 | ) | ||||||||||
| Core earnings | $ | 10,576 | $ | 10,267 | $ | 8,687 | $ | 5,436 | $ | 5,671 | ||||||||||
| Core diluted earnings per share | $ | 0.38 | $ | 0.40 | $ | 0.38 | $ | 0.32 | $ | 0.33 | ||||||||||
| Core ratios: | ||||||||||||||||||||
| Return on average assets | 0.92 | % | 1.00 | % | 0.96 | % | 0.84 | % | 0.87 | % | ||||||||||
| Return on average tangible stockholder's equity | 11.33 | 11.90 | 10.26 | 9.19 | 9.60 | |||||||||||||||
COMPUTATION OF TOTAL TANGIBLE EQUITY TO TOTAL TANGIBLE ASSETS
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
| Total stockholders' equity | $ | 572,038 | $ | 417,244 | $ | 409,258 | $ | 241,076 | $ | 238,446 | ||||||||||
| Less: | ||||||||||||||||||||
| Goodwill | 145,064 | 66,537 | 67,102 | 2,081 | 1,822 | |||||||||||||||
| Core deposit intangible | 10,924 | 3,722 | 3,903 | 310 | 256 | |||||||||||||||
| Tangible stockholders’ equity | $ | 416,050 | $ | 346,985 | $ | 338,253 | $ | 238,685 | $ | 236,368 | ||||||||||
| Total assets | $ | 5,167,052 | $ | 4,151,017 | $ | 4,047,493 | $ | 2,588,447 | $ | 2,593,068 | ||||||||||
| Less: | ||||||||||||||||||||
| Goodwill | 145,064 | 66,537 | 67,102 | 2,081 | 1,822 | |||||||||||||||
| Core deposit intangible | 10,924 | 3,722 | 3,903 | 310 | 256 | |||||||||||||||
| Tangible assets | $ | 5,011,064 | $ | 4,080,758 | $ | 3,976,488 | $ | 2,586,056 | $ | 2,590,990 | ||||||||||
| Tangible stockholders' equity to tangible assets | 8.30 | % | 8.50 | % | 8.51 | % | 9.23 | % | 9.12 | % | ||||||||||
ACQUISITION DATE - FAIR VALUE BALANCE SHEET
The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of the acquisition for Cape, net of the total consideration paid (in thousands):
| At May 2, 2016 | ||||||||||||||
| (in thousands) | Cape Book Value | Purchase Accounting Adjustments | Estimated Fair Value | |||||||||||
| Total Purchase Price: | $ | 196,403 | ||||||||||||
| Assets acquired: | ||||||||||||||
| Cash and cash equivalents | $ | 30,025 | $ | — | $ | 30,025 | ||||||||
| Securities and Federal Home Loan Bank Stock | 218,577 | 361 | 218,938 | |||||||||||
| Loans: | 1,169,568 | 1,156,807 | ||||||||||||
| Specific credit fair value on credit impaired loans | — | (5,859 | ) | — | ||||||||||
| General credit fair value | — | (20,545 | ) | — | ||||||||||
| Interest rate fair value | — | 1,888 | — | |||||||||||
| Reverse allowance for loan losses | — | 9,931 | — | |||||||||||
| Reverse net deferred fees, premiums and discounts | — | 1,824 | — | |||||||||||
| Premises and equipment | 27,972 | (1,973 | ) | 25,999 | ||||||||||
| Other real estate owned | 2,343 | (408 | ) | 1,935 | ||||||||||
| Deferred tax asset | 9,407 | 10,993 | 20,400 | |||||||||||
| Other assets | 61,793 | — | 61,793 | |||||||||||
| Core deposit intangible | 831 | 2,887 | 3,718 | |||||||||||
| Total assets acquired | 1,520,516 | (901 | ) | 1,519,615 | ||||||||||
| Liabilities assumed: | ||||||||||||||
| Deposits | (1,247,688 | ) | (679 | ) | (1,248,367 | ) | ||||||||
| Borrowings | (123,587 | ) | (879 | ) | (124,466 | ) | ||||||||
| Other liabilities | (7,611 | ) | (5,398 | ) | (13,009 | ) | ||||||||
| Total liabilities assumed | (1,378,886 | ) | (6,956 | ) | (1,385,842 | ) | ||||||||
| Net assets acquired | $ | 141,630 | $ | (7,857 | ) | 133,773 | ||||||||
| Goodwill recorded in the merger | $ | 62,630 | ||||||||||||
The calculation of goodwill is subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available. As the Company finalizes its review of the acquired assets and liabilities, certain adjustments to the recorded carrying values may be required.
ACQUISITION DATE - FAIR VALUE BALANCE SHEET
The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of the acquisition for Ocean Shore, net of the total consideration paid (in thousands):
| At November 30, 2016 | |||||||||||
| (in thousands) | Ocean Shore Book Value | Purchase Accounting Adjustments | Estimated Fair Value | ||||||||
| Total Purchase Price: | $ | 180,732 | |||||||||
| Assets acquired: | |||||||||||
| Cash and cash equivalents | $ | 60,871 | $ | — | $ | 60,871 | |||||
| Securities and Federal Home Loan Bank Stock | 94,109 | 24 | 94,133 | ||||||||
| Loans: | 790,396 | 774,046 | |||||||||
| Specific credit fair value on credit impaired loans | — | (2,062 | ) | — | |||||||
| General credit fair value | — | (8,127 | ) | — | |||||||
| Interest rate fair value | — | (5,779 | ) | — | |||||||
| Reverse allowance for loan losses | — | 3,265 | — | ||||||||
| Reverse net deferred fees, premiums and discounts | — | (3,647 | ) | — | |||||||
| Premises and equipment | 11,696 | 3,372 | 15,068 | ||||||||
| Other real estate owned | 1,090 | — | 1,090 | ||||||||
| Deferred tax asset | 5,587 | 2,210 | 7,797 | ||||||||
| Other assets | 35,369 | — | 35,369 | ||||||||
| Core deposit intangible | 348 | 7,158 | 7,506 | ||||||||
| Total assets acquired | 999,466 | (3,586 | ) | 995,880 | |||||||
| Liabilities assumed: | |||||||||||
| Deposits | (874,301 | ) | (772 | ) | (875,073 | ) | |||||
| Borrowings | (3,694 | ) | — | (3,694 | ) | ||||||
| Other liabilities | (17,629 | ) | 891 | (16,738 | ) | ||||||
| Total liabilities assumed | (895,624 | ) | 119 | (895,505 | ) | ||||||
| Net assets acquired | $ | 103,842 | $ | (3,467 | ) | 100,375 | |||||
| Goodwill recorded in the merger | $ | 80,357 | |||||||||
The calculation of goodwill is subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available. As the Company finalizes its review of the acquired assets and liabilities, certain adjustments to the recorded carrying values may be required.