RED BANK, New Jersey, July 29, 2021 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:“OCFC”), (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), today announced net income available to common stockholders of $29.6 million, or $0.49 per diluted share, for the three months ended June 30, 2021 as compared to $18.6 million, or $0.31 per diluted share, for the corresponding prior year period. For the six months ended June 30, 2021, the Company reported net income available to common stockholders of $61.2 million, or $1.02 per diluted share, as compared to $35.2 million, or $0.58 per diluted share, for the corresponding prior year period. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information regarding the metrics):
| For the Three Months Ended, | For the Six Months Ended, | |||||||||||||||
| Performance Ratios (Annualized): | June 30, 2021 | March 31, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||
| Return on average assets | 1.03 | % | 1.12 | % | 0.67 | % | 1.07 | % | 0.66 | % | ||||||
| Return on average stockholders’ equity | 7.88 | 8.59 | 5.16 | 8.23 | 4.93 | |||||||||||
| Return on average tangible stockholders’ equity | (a) | 12.07 | 13.22 | 8.10 | 12.64 | 7.81 | ||||||||||
| Efficiency ratio | 60.21 | 54.73 | 62.08 | 57.34 | 64.72 | |||||||||||
| Net interest margin | 2.89 | 2.93 | 3.24 | 2.91 | 3.37 | |||||||||||
| (a) Return on average tangible stockholders’ equity, a non-GAAP (“generally accepted accounting principles”) measure, excludes the impact of intangible assets and goodwill from both assets and stockholders’ equity. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding our non-GAAP measures and impact per period. | ||||||||||||||||
Core earnings1 for the three and six months ended June 30, 2021 amounted to $29.5 million and $55.9 million, respectively, or $0.49 and $0.93 per diluted share, respectively. Non-core operations had a favorable impact, net of tax, of $78,000 and $5.3 million for the three and six months ended June 30, 2021, respectively.
| For the Three Months Ended, | For the Six Months Ended, | |||||||||||||
| Core Ratios (Annualized)1: | June 30, 2021 | March 31, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||
| Return on average assets | 1.02 | % | 0.94 | % | 0.81 | % | 0.98 | % | 0.92 | % | ||||
| Return on average tangible stockholders’ equity | 12.04 | 11.04 | 9.69 | 11.55 | 10.94 | |||||||||
| Efficiency ratio | 60.06 | 58.37 | 56.69 | 59.21 | 56.01 | |||||||||
Key developments for the recent quarter are described below:
- Operations: Commercial banking expansion remains a strategic focus with seven commercial bankers added to the team in this quarter, for a total of 16 this year. This has contributed to a record loan pipeline of $628.6 million as of June 30, 2021.
- Net Interest Income: Net interest income increased by $412,000 to $74.0 million from $73.6 million in the prior linked quarter, as non-interest bearing deposits grew by $372.2 million year-to-date, reflecting the continued trend in improving deposit quality.
- Expense Management: Operating expenses were $51.7 million and core operating expenses were $51.2 million, which includes the additional commercial banking hires, partially offset by savings related to four branch consolidations completed in April 2021. Since 2015, the Bank has consolidated 57 branch locations. Management will discuss the commercial banking expansion plans, digital banking investments, as well as expense management strategies in more detail at the Company’s previously announced Investor Day scheduled to take place at the Administrative Offices in Red Bank, New Jersey, on August 5, 2021.
- Interchange Fees: Under the temporary relief provisions of a joint rule published by the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System, the Bank received relief from Dodd-Frank limitations on debit card interchange fees collected by banks with assets of $10 billion or more. The Bank will remain exempt from limits on debit card interchange fees until June 30, 2022.
Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased with our commercial banking expansion which is reflected in the second quarter loan pipeline of $628.6 million, a record level.” Mr. Maher added, “A few weeks ago, the Bank successfully completed the conversion of our core operating system with hundreds of thousands of customer accounts transferred to a new platform. The generational core systems upgrade will enhance our operational functionality and efficiencies, improve the customer experience and services, and enable the integration of customer accounts from our New York operations, previously Country Bank. We appreciate the tireless efforts of our employees and the patience of our customers as we completed the pivotal transition to the new core system.”
The Company’s Board of Directors declared its ninety-eighth consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.17 per share will be paid on August 20, 2021 to common stockholders of record on August 9, 2021. The Board previously declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock. This dividend will be paid on August 16, 2021 to preferred stockholders of record on July 30, 2021.
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1 Core earnings, a non-GAAP measure, and ratios derived from core earnings, for the periods presented, excludes merger related expenses, branch consolidation expenses, net (gain) loss on equity investments, Federal Home Loan Bank (“FHLB”) advance prepayment fees, gain on sale of Paycheck Protection Program (“PPP”) loans, the opening credit loss expense under the Current Expected Credit Loss (“CECL”) model related to the acquisitions of Two River Bancorp (“Two River”) and Country Bank Holding Company, Inc. (“Country Bank”) and the income tax effect of these items, (collectively referred to as “non-core” operations). Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding our non-GAAP measures and impact per period.
Results of Operations
Net income was favorably impacted by $78,000, net of tax, and adversely impacted by $3.7 million, net of tax, of non-core operations for the quarters ended June 30, 2021 and 2020, respectively. Net income was favorably impacted by $5.3 million, net of tax, and adversely impacted by $14.1 million, net of tax, of non-core operations for the six months ended June 30, 2021 and 2020, respectively. Core earnings for the three months ended June 30, 2021 were $29.5 million, or $0.49 per diluted share, an increase from core earnings of $22.3 million, or $0.37 per diluted share, for the corresponding prior year period. Core earnings for the six months ended June 30, 2021 were $55.9 million, or $0.93 per diluted share, an increase from core earnings of $49.3 million, or $0.82 per diluted share, for the corresponding prior year period. Net income was favorably impacted by $5.2 million, net of tax, of non-core operations for the prior linked quarter. Core earnings for the three months ended June 30, 2021 increased from $26.5 million, or $0.44 per diluted share, for the prior linked quarter.
Net Interest Income and Margin
Net interest income for the three and six months ended June 30, 2021 decreased to $74.0 million and $147.6 million, respectively, as compared to $78.7 million and $158.3 million, respectively, for the corresponding prior year periods, reflecting a reduction in net interest margin, partly offset by an increase in interest-earning assets. Average interest-earning assets increased by $502.5 million and $791.3 million for the three and six months ended June 30, 2021, respectively, as compared to the same prior year periods, primarily concentrated in excess balance sheet liquidity. Average loans receivable, net of allowance for loan credit losses, decreased by $506.7 million and $313.6 million for the three and six months ended June 30, 2021, respectively, as compared to the same prior year periods. Net interest margin for the three and six months ended June 30, 2021 decreased to 2.89% and 2.91%, respectively, from 3.24% and 3.37%, respectively, for the same prior year periods. The net interest margin compression was primarily due to the excess balance sheet liquidity and the lower interest rate environment. For the three and six months ended June 30, 2021, the cost of average interest-bearing liabilities decreased to 0.50% and 0.55%, respectively, from 0.92% and 0.98%, respectively, for the corresponding prior year periods. The total cost of deposits (including non-interest bearing deposits) was 0.27% and 0.32% for the three and six months ended June 30, 2021, respectively, as compared to 0.57% and 0.63%, respectively, for the same prior year periods.
Net interest income for the three months ended June 30, 2021 increased by $412,000, as compared to the prior linked quarter, while the net interest margin decreased to 2.89%, compared to 2.93%. Excluding the impact of purchase accounting accretion and prepayment fees, the net interest margin decreased to 2.73% from 2.75%. The yield on average interest-earning assets decreased to 3.25% from 3.38% in the prior linked quarter, primarily due to lower purchase accounting accretion and the impact of the lower interest rate environment on loan originations and securities purchases. The total cost of interest-bearing liabilities was 0.50% for the quarter ended June 30, 2021, as compared to 0.60% in the prior linked quarter, due to repricing of deposit costs and maturities of higher yielding time deposits.
Benefit/Provision for Credit Losses
For the three and six months ended June 30, 2021, the benefit for credit loss expense was $6.5 million and $7.1 million, respectively, as compared to a provision for credit loss expense of $9.6 million and $19.6 million, respectively, for the corresponding prior year periods, and a benefit for credit loss expense of $620,000 in the prior linked quarter. The benefit for credit loss expense for the three and six months ended June 30, 2021 was significantly influenced by improved economic forecasts, including stronger employment levels and GDP growth, combined with stabilizing trends in the Bank’s asset quality.
Net loan charge-offs were $224,000 for the quarter and net loan recoveries were $56,000 for the six months ended June 30, 2021, as compared to net loan recoveries of $232,000 and net loan charge-offs of $922,000 for the corresponding prior year periods, respectively, and net loan recoveries of $280,000 for the prior linked quarter. The six months ended June 30, 2020 included $949,000 in charge-offs on the sale of higher risk residential loans. Non-performing loans totaled $31.7 million at June 30, 2021, as compared to $34.1 million at March 31, 2021 and $21.0 million at June 30, 2020.
Non-interest Income
For the three and six months ended June 30, 2021, other income increased to $11.8 million and $32.6 million, respectively, as compared to $11.4 million and $25.1 million, respectively, for the corresponding prior year periods. Other income for the three and six months ended June 30, 2021 included non-core operations of $576,000 and $8.9 million, respectively, related to net gain on equity investments. Excluding this item, the decrease in other income for the three months ended June 30, 2021, as compared to the corresponding prior year period, was primarily due to a decrease in commercial loan swap income of $2.4 million, as a result of lower activity, partially offset by increases in bankcard services of $850,000 due to lower card activity in the prior period as a result of the pandemic, fees and service charges of $556,000, and gain on sale of loans of $523,000.
Excluding non-core operations, the decrease in other income for the six months ended June 30, 2021, as compared to the corresponding prior year period, was primarily due to a decrease in commercial loan swap income of $5.4 million, as a result of lower activity, partially offset by increases in gain on sale of loans of $2.3 million and bankcard services of $1.4 million due to lower card activity in the prior period as a result of the pandemic.
Excluding non-core operations, other income for the three months ended June 30, 2021 decreased $1.3 million, as compared to the prior linked quarter, primarily due to decreases in commercial loan swap income of $1.0 million, as a result of lower activity, and gain on sale of loans of $637,000.
Non-interest Expense
Operating expenses decreased to $51.7 million and $103.4 million for the three and six months ended June 30, 2021, respectively, as compared to $55.9 million and $118.7 million, respectively, in the same prior year periods. Operating expenses for the three and six months ended June 30, 2021 included $472,000 and $1.9 million, respectively, of net expenses related to non-core operations. Operating expenses for the three and six months ended June 30, 2020 included $4.9 million and $16.0 million, respectively, of net expenses related to non-core operations. Excluding non-core operations, the $123,000 increase in operating expenses for the three months ended June 30, 2021, as compared to the corresponding prior year period, was primarily due to an increase in compensation and benefits expense of $2.0 million, primarily relating to higher benefit costs, partly offset by decreases in other operating expenses of $853,000, and equipment of $676,000.
Excluding non-core operations, the $1.3 million decrease in operating expenses for the six months ended June 30, 2021, as compared to the corresponding prior year period, was primarily due to decreases in other operating expense of $1.3 million and equipment expense of $1.0 million, partly offset by an increase in federal deposit insurance and regulatory assessments of $1.2 million.
Excluding non-core operations, operating expenses for the quarter ended June 30, 2021, increased $907,000 as compared to the prior linked quarter. The change was due to an increase in compensation and benefits expense of $1.5 million, partly offset by a decrease in federal deposit insurance and regulatory assessments of $765,000.
Income Tax Expense
The provision for income taxes was $10.1 million and $20.7 million for the three and six months ended June 30, 2021, respectively, as compared to $5.9 million and $9.9 million for the same prior year periods, respectively, and $10.7 million for the prior linked quarter. The effective tax rate was 24.8% and 24.7% for the three and six months ended June 30, 2021, respectively, as compared to 24.0% and 22.0% for the same prior year periods, respectively, and 24.6% for the prior linked quarter. The higher effective tax rate for the current year period, as compared to the prior year period, was primarily due to the impact of a New Jersey tax code change and a higher allocation of taxable income to New York.
Financial Condition
Total assets increased by $35.6 million to $11.48 billion at June 30, 2021, from $11.45 billion at December 31, 2020. Cash and due from banks decreased $188.1 million, to $1.08 billion at June 30, 2021, from $1.27 billion at December 31, 2020. Total debt securities increased by $275.5 million at June 30, 2021, as compared to December 31, 2020, while equity investments decreased $16.2 million due to $90.7 million in sales of common stock partly offset by $73.8 million in purchases of preferred stock and a non-controlling equity investment. Total loans, excluding PPP loans of $83.0 million and $95.4 million at June 30, 2021 and December 31, 2020, respectively, increased by $77.1 million, to $7.74 billion at June 30, 2021, from $7.66 billion at December 31, 2020.
Deposits decreased by $12.3 million to $9.42 billion at June 30, 2021, from $9.43 billion at December 31, 2020, which reflected a decrease in time deposits of $416.4 million, partly offset by an increase in non-interest bearing deposits of $372.2 million. The loan-to-deposit ratio at June 30, 2021 was 83.1%, as compared to 82.3% at December 31, 2020.
Stockholders’ equity increased to $1.51 billion at June 30, 2021, as compared to $1.48 billion at December 31, 2020. On June 25, 2021, the Company announced the authorization of the Board of Directors of the 2021 Stock Repurchase Program to repurchase up to an additional 3.0 million shares, which is approximately 5% of the Company’s outstanding common stock. For the six months ended June 30, 2021, the Company repurchased 1.0 million shares under its stock repurchase program at a weighted average cost of $20.94, and there were 4,019,145 shares available for repurchase at June 30, 2021 under the existing repurchase programs. Tangible common equity per common share increased to $15.58 at June 30, 2021, as compared to $14.98 at December 31, 2020.
Asset Quality
The Company’s non-performing loans decreased to $31.7 million at June 30, 2021, as compared to $36.4 million at December 31, 2020. Non-performing loans do not include $40.1 million of purchased with credit deterioration (“PCD”) loans from prior bank acquisitions. The allowance for loan credit losses as a percentage of non-performing loans was 170.1% at June 30, 2021, as compared to 166.8% at December 31, 2020. The Company’s level of 30 to 89 days delinquent loans improved to $5.3 million at June 30, 2021, from $34.7 million at December 31, 2020.
The Company’s allowance for loan credit losses was 0.69% of total loans at June 30, 2021, as compared to 0.78% at December 31, 2020. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $77.5 million, or 0.99% of total loans.
Explanation of Non-GAAP Financial Measures
Reported amounts are presented in accordance with GAAP. The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding non-core operations and reporting equity and asset amounts excluding intangible assets and goodwill, which can vary from period to period, provides a better comparison of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.
Conference Call
As previously announced, the Company will host an earnings conference call on Friday, July 30, 2021 at 11:00 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 10158125 from one hour after the end of the call until October 30, 2021. 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.
Investor Day 2021
The Company will host an Investor Day on Thursday, August 5, 2021 at 1:00 p.m. Eastern Time at the Administrative Offices at 110 West Front Street in Red Bank, New Jersey. Various members of management will provide informative presentations regarding strategic Bank initiatives throughout the afternoon along with the opportunity for questions and answers. Following the formal agenda, guests are welcome to tour the facility and demonstrations of various digital banking platforms will be available. Advance registration is required and can be accessed by visiting the Investor Relations page of www.oceanfirst.com.
OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank N.A., founded in 1902, is a $11.5 billion regional bank providing financial services throughout New Jersey and in the major metropolitan markets of Philadelphia, New York, Baltimore, Washington D.C. and Boston. OceanFirst Bank delivers commercial and residential financing, treasury management, trust and asset management, and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey. To learn more about OceanFirst, go to www.oceanfirst.com.
Forward-Looking Statements
In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: the impact of the COVID-19 pandemic on our operations and financial results and those of our customers, 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, 2020, under Item 1A - Risk Factors and elsewhere, and subsequent securities filings and should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
| June 30, 2021 | March 31, 2021 | December 31, 2020 | June 30, 2020 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
| Assets | ||||||||||||||||
| Cash and due from banks | $ | 1,084,029 | $ | 1,173,665 | $ | 1,272,134 | $ | 721,049 | ||||||||
| Debt securities available-for-sale, at estimated fair value | 249,330 | 268,511 | 183,302 | 153,239 | ||||||||||||
| Debt securities held-to-maturity, net of allowance for securities credit losses of $1,609 at June 30, 2021, $1,717 at March 31, 2021, $1,715 at December 31, 2020 and $2,446 at June 30, 2020 (estimated fair value of $1,169,123 at June 30, 2021, $1,099,745 at March 31, 2021, $968,466 at December 31, 2020 and $895,897 at June 30, 2020) | 1,146,735 | 1,082,326 | 937,253 | 867,959 | ||||||||||||
| Equity investments, at estimated fair value | 90,917 | 50,159 | 107,079 | 13,830 | ||||||||||||
| Restricted equity investments, at cost | 52,519 | 52,199 | 51,705 | 68,091 | ||||||||||||
| Loans receivable, net of allowance for loan credit losses of $53,876 at June 30, 2021, $59,976 at March 31, 2021, $60,735 at December 31, 2020 and $38,509 at June 30, 2020 | 7,774,351 | 7,820,590 | 7,704,857 | 8,335,480 | ||||||||||||
| Loans held-for-sale | 1,493 | 43,175 | 45,524 | 21,799 | ||||||||||||
| Interest and dividends receivable | 28,014 | 32,819 | 35,269 | 37,811 | ||||||||||||
| Other real estate owned | 106 | 106 | 106 | 248 | ||||||||||||
| Premises and equipment, net | 117,509 | 110,093 | 107,094 | 100,576 | ||||||||||||
| Bank owned life insurance | 259,608 | 264,548 | 265,253 | 262,637 | ||||||||||||
| Assets held for sale | 4,032 | 5,340 | 5,782 | 7,828 | ||||||||||||
| Goodwill | 500,319 | 500,319 | 500,319 | 501,472 | ||||||||||||
| Core deposit intangible | 20,912 | 22,273 | 23,668 | 26,732 | ||||||||||||
| Other assets | 154,027 | 151,349 | 208,968 | 226,614 | ||||||||||||
| Total assets | $ | 11,483,901 | $ | 11,577,472 | $ | 11,448,313 | $ | 11,345,365 | ||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||
| Deposits | $ | 9,415,286 | $ | 9,502,812 | $ | 9,427,616 | $ | 8,967,754 | ||||||||
| Federal Home Loan Bank advances | — | — | — | 343,392 | ||||||||||||
| Securities sold under agreements to repurchase with retail customers | 141,475 | 134,465 | 128,454 | 152,821 | ||||||||||||
| Other borrowings | 228,564 | 228,176 | 235,471 | 246,840 | ||||||||||||
| Advances by borrowers for taxes and insurance | 21,281 | 20,980 | 17,296 | 19,582 | ||||||||||||
| Other liabilities | 168,506 | 192,320 | 155,346 | 138,542 | ||||||||||||
| Total liabilities | 9,975,112 | 10,078,753 | 9,964,183 | 9,868,931 | ||||||||||||
| Total stockholders’ equity | 1,508,789 | 1,498,719 | 1,484,130 | 1,476,434 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 11,483,901 | $ | 11,577,472 | $ | 11,448,313 | $ | 11,345,365 | ||||||||
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
| For the Three Months Ended, | For the Six Months Ended, | |||||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | ||||||||||||||||
| |-------------------- (Unaudited) --------------------| | |---------- (Unaudited) -----------| | |||||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans | $ | 77,048 | $ | 77,908 | $ | 88,347 | $ | 154,956 | $ | 178,291 | ||||||||||
| Debt securities | 5,984 | 5,355 | 6,209 | 11,339 | 12,981 | |||||||||||||||
| Equity investments and other | 309 | 1,611 | 1,321 | 1,920 | 2,812 | |||||||||||||||
| Total interest income | 83,341 | 84,874 | 95,877 | 168,215 | 194,084 | |||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Deposits | 6,325 | 8,496 | 12,305 | 14,821 | 26,241 | |||||||||||||||
| Borrowed funds | 3,000 | 2,774 | 4,905 | 5,774 | 9,531 | |||||||||||||||
| Total interest expense | 9,325 | 11,270 | 17,210 | 20,595 | 35,772 | |||||||||||||||
| Net interest income | 74,016 | 73,604 | 78,667 | 147,620 | 158,312 | |||||||||||||||
| Credit loss (benefit) expense | (6,460 | ) | (620 | ) | 9,649 | (7,080 | ) | 19,618 | ||||||||||||
| Net interest income after credit loss (benefit) expense | 80,476 | 74,224 | 69,018 | 154,700 | 138,694 | |||||||||||||||
| Other income: | ||||||||||||||||||||
| Bankcard services revenue | 3,591 | 3,052 | 2,741 | 6,643 | 5,222 | |||||||||||||||
| Trust and asset management revenue | 591 | 599 | 555 | 1,190 | 1,070 | |||||||||||||||
| Fees and service charges | 3,809 | 3,737 | 3,253 | 7,546 | 8,126 | |||||||||||||||
| Net gain on sales of loans | 1,279 | 1,916 | 756 | 3,195 | 929 | |||||||||||||||
| Net gain on equity investments | 576 | 8,287 | 148 | 8,863 | 303 | |||||||||||||||
| Net loss from other real estate operations | (1 | ) | (8 | ) | (52 | ) | (9 | ) | (202 | ) | ||||||||||
| Income from bank owned life insurance | 1,716 | 1,415 | 1,521 | 3,131 | 3,096 | |||||||||||||||
| Commercial loan swap income | 73 | 1,111 | 2,489 | 1,184 | 6,539 | |||||||||||||||
| Other | 169 | 726 | 19 | 895 | 44 | |||||||||||||||
| Total other income | 11,803 | 20,835 | 11,430 | 32,638 | 25,127 | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Compensation and employee benefits | 29,912 | 28,366 | 27,935 | 58,278 | 57,820 | |||||||||||||||
| Occupancy | 5,314 | 5,061 | 5,268 | 10,375 | 10,544 | |||||||||||||||
| Equipment | 1,306 | 1,578 | 1,982 | 2,884 | 3,925 | |||||||||||||||
| Marketing | 625 | 434 | 753 | 1,059 | 1,522 | |||||||||||||||
| Federal deposit insurance and regulatory assessments | 1,099 | 1,864 | 1,133 | 2,963 | 1,800 | |||||||||||||||
| Data processing | 4,402 | 4,031 | 4,149 | 8,433 | 8,326 | |||||||||||||||
| Check card processing | 1,303 | 1,372 | 1,290 | 2,675 | 2,566 | |||||||||||||||
| Professional fees | 2,391 | 2,837 | 2,683 | 5,228 | 4,985 | |||||||||||||||
| Other operating expense | 3,485 | 3,353 | 4,338 | 6,838 | 8,140 | |||||||||||||||
| FHLB advance prepayment fees | — | — | 924 | — | 924 | |||||||||||||||
| Amortization of core deposit intangible | 1,361 | 1,395 | 1,544 | 2,756 | 3,122 | |||||||||||||||
| Branch consolidation expense | 26 | 1,011 | 863 | 1,037 | 3,457 | |||||||||||||||
| Merger related expenses | 446 | 381 | 3,070 | 827 | 11,597 | |||||||||||||||
| Total operating expenses | 51,670 | 51,683 | 55,932 | 103,353 | 118,728 | |||||||||||||||
| Income before provision for income taxes | 40,609 | 43,376 | 24,516 | 83,985 | 45,093 | |||||||||||||||
| Provision for income taxes | 10,054 | 10,679 | 5,878 | 20,733 | 9,922 | |||||||||||||||
| Net income | 30,555 | 32,697 | 18,638 | 63,252 | 35,171 | |||||||||||||||
| Dividends on preferred shares | 1,004 | 1,004 | — | 2,008 | — | |||||||||||||||
| Net income available to common stockholders | $ | 29,551 | $ | 31,693 | $ | 18,638 | $ | 61,244 | $ | 35,171 | ||||||||||
| Basic earnings per share | $ | 0.49 | $ | 0.53 | $ | 0.31 | $ | 1.02 | $ | 0.59 | ||||||||||
| Diluted earnings per share | $ | 0.49 | $ | 0.53 | $ | 0.31 | $ | 1.02 | $ | 0.58 | ||||||||||
| Average basic shares outstanding | 59,701 | 59,840 | 59,877 | 59,776 | 59,881 | |||||||||||||||
| Average diluted shares outstanding | 59,966 | 60,101 | 59,999 | 60,040 | 60,122 | |||||||||||||||
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
| LOANS RECEIVABLE | At | |||||||||||||||||||||
| June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | ||||||||||||||||||
| Commercial: | ||||||||||||||||||||||
| Commercial and industrial | $ | 474,919 | $ | 498,245 | $ | 470,656 | $ | 599,188 | $ | 910,762 | ||||||||||||
| Commercial real estate - owner-occupied | 1,045,514 | 1,066,351 | 1,145,065 | 1,176,529 | 1,199,742 | |||||||||||||||||
| Commercial real estate - investor | 3,836,230 | 3,804,351 | 3,491,464 | 3,453,276 | 3,449,160 | |||||||||||||||||
| Total commercial | 5,356,663 | 5,368,947 | 5,107,185 | 5,228,993 | 5,559,664 | |||||||||||||||||
| Consumer: | ||||||||||||||||||||||
| Residential real estate | 2,168,545 | 2,189,348 | 2,309,459 | 2,407,178 | 2,426,277 | |||||||||||||||||
| Home equity loans and lines | 255,097 | 267,591 | 285,016 | 301,712 | 320,627 | |||||||||||||||||
| Other consumer | 40,485 | 46,651 | 54,446 | 63,095 | 71,721 | |||||||||||||||||
| Total consumer | 2,464,127 | 2,503,590 | 2,648,921 | 2,771,985 | 2,818,625 | |||||||||||||||||
| Total loans | 7,820,790 | 7,872,537 | 7,756,106 | 8,000,978 | 8,378,289 | |||||||||||||||||
| Deferred origination costs (fees), net | 7,437 | 8,029 | 9,486 | (1,238 | ) | (4,300 | ) | |||||||||||||||
| Allowance for loan credit losses | (53,876 | ) | (59,976 | ) | (60,735 | ) | (56,350 | ) | (38,509 | ) | ||||||||||||
| Loans receivable, net | $ | 7,774,351 | $ | 7,820,590 | $ | 7,704,857 | $ | 7,943,390 | $ | 8,335,480 | ||||||||||||
| Mortgage loans serviced for others | $ | 68,778 | $ | 74,037 | $ | 95,789 | $ | 88,210 | $ | 101,840 | ||||||||||||
| At June 30, 2021 Average Yield | ||||||||||||||||||||||
| Loan pipeline (1): | ||||||||||||||||||||||
| Commercial | 3.78 | % | $ | 463,388 | $ | 154,946 | $ | 210,024 | $ | 154,700 | $ | 169,093 | ||||||||||
| Residential real estate | 3.11 | 153,798 | 178,352 | 151,152 | 212,107 | 181,800 | ||||||||||||||||
| Home equity loans and lines | 4.23 | 11,369 | 11,031 | 6,630 | 10,301 | 8,282 | ||||||||||||||||
| Total | 3.62 | % | $ | 628,555 | $ | 344,329 | $ | 367,806 | $ | 377,108 | $ | 359,175 | ||||||||||
| For the Three Months Ended | |||||||||||||||||||||||
| June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | |||||||||||||||||||
| Average Yield | |||||||||||||||||||||||
| Loan originations: | |||||||||||||||||||||||
| Commercial | 3.26 | % | $ | 259,163 | (2) | $ | 547,591 | (2) | $ | 173,715 | $ | 187,747 | $ | 216,979 | (2) | ||||||||
| Residential real estate | 3.16 | 173,354 | 189,942 | 222,780 | 219,325 | 242,137 | |||||||||||||||||
| Home equity loans and lines | 3.99 | 14,870 | 10,278 | 13,435 | 10,966 | 12,128 | |||||||||||||||||
| Total | 3.25 | % | $ | 447,387 | $ | 747,811 | $ | 409,930 | $ | 418,038 | $ | 471,244 | |||||||||||
| Loans sold | $ | 29,556 | $ | 67,500 | $ | 56,126 | (3) | $ | 56,722 | $ | 104,600 | (3) | |||||||||||
| (1) | Loan pipeline includes loans approved but not funded. |
| (2) | Excludes loans originated through the PPP of $13 million, $60 million and $504 million for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively. |
| (3) | Excludes the sale of PPP loans of $298.1 million, higher risk commercial loans of $64.8 million, net of charge-offs and under-performing residential and home equity loans and lines of $10.5 million, net of charge-offs, for the three months ended December 31, 2020 and the sale of under-performing commercial loans of $4.9 million for the three months ended June 30, 2020. |
| DEPOSITS | At | ||||||||||||||||||
| June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | |||||||||||||||
| Type of Account | |||||||||||||||||||
| Non-interest-bearing | $ | 2,505,355 | $ | 2,417,935 | $ | 2,133,195 | $ | 2,240,799 | $ | 2,161,766 | |||||||||
| Interest-bearing checking | 3,628,741 | 3,623,132 | 3,646,866 | 3,317,296 | 3,022,887 | ||||||||||||||
| Money market deposit | 734,320 | 782,459 | 783,521 | 691,872 | 680,199 | ||||||||||||||
| Savings | 1,590,441 | 1,568,528 | 1,491,251 | 1,471,554 | 1,456,931 | ||||||||||||||
| Time deposits | 956,429 | 1,110,758 | 1,372,783 | 1,561,767 | 1,645,971 | ||||||||||||||
| Total | $ | 9,415,286 | $ | 9,502,812 | $ | 9,427,616 | $ | 9,283,288 | $ | 8,967,754 | |||||||||
OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
| ASSET QUALITY | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | ||||||||||||||
| Non-performing loans held-for-investment: | |||||||||||||||||||
| Commercial and industrial | $ | 1,566 | $ | 1,616 | $ | 1,551 | $ | 586 | $ | 1,586 | |||||||||
| Commercial real estate - owner-occupied | 11,527 | 11,676 | 13,054 | 11,365 | 4,582 | ||||||||||||||
| Commercial real estate - investor | 10,549 | 12,366 | 10,660 | 2,978 | 5,274 | ||||||||||||||
| Residential real estate | 6,114 | 6,398 | 8,642 | 11,518 | 6,568 | ||||||||||||||
| Home equity loans and lines | 1,924 | 2,072 | 2,503 | 3,448 | 3,034 | ||||||||||||||
| Total non-performing loans held-for-investment | 31,680 | 34,128 | 36,410 | 29,895 | 21,044 | ||||||||||||||
| Non-performing loans held-for-sale | — | — | — | 67,489 | — | ||||||||||||||
| Other real estate owned | 106 | 106 | 106 | 106 | 248 | ||||||||||||||
| Total non-performing assets | $ | 31,786 | $ | 34,234 | $ | 36,516 | $ | 97,490 | $ | 21,292 | |||||||||
| PCD loans (1) | $ | 40,064 | $ | 44,421 | $ | 48,488 | $ | 56,422 | $ | 61,694 | |||||||||
| Delinquent loans 30 to 89 days | $ | 5,313 | $ | 16,477 | $ | 34,683 | $ | 13,753 | $ | 13,640 | |||||||||
| Troubled debt restructurings: | |||||||||||||||||||
| Non-performing (included in total non-performing loans above) | $ | 9,803 | $ | 4,785 | $ | 5,158 | $ | 9,866 | $ | 6,189 | |||||||||
| Performing | 10,311 | 11,466 | 12,009 | 12,777 | 16,365 | ||||||||||||||
| Total troubled debt restructurings | $ | 20,114 | $ | 16,251 | $ | 17,167 | $ | 22,643 | $ | 22,554 | |||||||||
| Allowance for loan credit losses | $ | 53,876 | $ | 59,976 | $ | 60,735 | $ | 56,350 | $ | 38,509 | |||||||||
| Allowance for loan credit losses as a percent of total loans receivable (2) | 0.69 | % | 0.76 | % | 0.78 | % | 0.70 | % | 0.46 | % | |||||||||
| Allowance for loan credit losses as a percent of total non-performing loans held-for-investment (2) | 170.06 | 175.74 | 166.81 | 188.49 | 182.99 | ||||||||||||||
| Non-performing loans held-for-investment as a percent of total loans receivable | 0.41 | 0.43 | 0.47 | 0.37 | 0.25 | ||||||||||||||
| Non-performing assets as a percent of total assets | 0.28 | 0.30 | 0.32 | 0.84 | 0.19 | ||||||||||||||
| (1) | PCD loans are not included in non-performing loans held-for-investment, troubled debt restructurings or delinquent loans totals. |
| (2) | Loans acquired from prior bank acquisitions were recorded at fair value. The net unamortized credit and PCD marks on these loans, not reflected in the allowance for loan credit losses, was $23.6 million, $25.7 million, $28.0 million, $31.6 million and $35.4 million at June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020 respectively. |
| NET (CHARGE-OFFS) RECOVERIES | For the Three Months Ended | |||||||||||||||||||||
| June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | ||||||||||||||||||
| Net (charge-offs) recoveries: | ||||||||||||||||||||||
| Loan charge-offs | $ | (420 | ) | $ | (356 | ) | $ | (3,220 | ) | $ | (15,411 | ) | $ | (169 | ) | |||||||
| Recoveries on loans | 196 | 636 | 278 | 416 | 401 | |||||||||||||||||
| Net loan (charge-offs) recoveries | $ | (224 | ) | $ | 280 | $ | (2,942 | ) | (1) | $ | (14,995 | ) | (2) | $ | 232 | |||||||
| Net loan (charge-offs) recoveries to average total loans (annualized) | 0.01 | % | NM* | 0.15 | % | 0.71 | % | NM* | ||||||||||||||
| Net loan (charge-offs) recoveries detail: | ||||||||||||||||||||||
| Commercial | $ | (304 | ) | $ | 126 | $ | (775 | ) | $ | (14,801 | ) | $ | 30 | |||||||||
| Residential real estate | — | (203 | ) | (1,731 | ) | 314 | 212 | |||||||||||||||
| Home equity loans and lines | 58 | 352 | (451 | ) | (490 | ) | (3 | ) | ||||||||||||||
| Other consumer | 22 | 5 | 15 | (18 | ) | (7 | ) | |||||||||||||||
| Net loan (charge-offs) recoveries | $ | (224 | ) | $ | 280 | $ | (2,942 | ) | (1) | $ | (14,995 | ) | (2) | $ | 232 | |||||||
| (1) | Included in net loan charge-offs for the three months ended December 31, 2020 is $2.3 million relating to under-performing residential and consumer loans sold. |
| (2) | Included in net loan charge-offs for the three months ended September 30, 2020 is $14.2 million relating to loans transferred to held-for-sale. |
| * Not meaningful | |
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
| For the Three Months Ended | ||||||||||||||||||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||||||||||||||||||||
| (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 | $ | 992,485 | $ | 241 | 0.10 | % | $ | 1,138,911 | $ | 277 | 0.10 | % | $ | 354,016 | $ | 115 | 0.13 | % | ||||||||||||||
| Securities (1) | 1,501,484 | 6,052 | 1.62 | 1,311,683 | 6,689 | 2.07 | 1,130,779 | 7,415 | 2.64 | |||||||||||||||||||||||
| Loans receivable, net (2) | ||||||||||||||||||||||||||||||||
| Commercial | 5,318,436 | 54,258 | 4.09 | 5,127,940 | 53,670 | 4.24 | 5,409,238 | 59,460 | 4.42 | |||||||||||||||||||||||
| Residential real estate | 2,219,425 | 19,097 | 3.44 | 2,327,838 | 20,069 | 3.45 | 2,507,076 | 23,870 | 3.81 | |||||||||||||||||||||||
| Home equity loans and lines | 260,374 | 3,163 | 4.87 | 275,943 | 3,523 | 5.18 | 328,144 | 3,853 | 4.72 | |||||||||||||||||||||||
| Other consumer | 44,167 | 530 | 4.81 | 50,964 | 646 | 5.14 | 76,382 | 1,164 | 6.13 | |||||||||||||||||||||||
| Allowance for loan credit losses, net of deferred loan costs and fees | (53,483 | ) | — | — | (52,887 | ) | — | — | (25,218 | ) | — | — | ||||||||||||||||||||
| Loans receivable, net | 7,788,919 | 77,048 | 3.97 | 7,729,798 | 77,908 | 4.09 | 8,295,622 | 88,347 | 4.28 | |||||||||||||||||||||||
| Total interest-earning assets | 10,282,888 | 83,341 | 3.25 | 10,180,392 | 84,874 | 3.38 | 9,780,417 | 95,877 | 3.94 | |||||||||||||||||||||||
| Non-interest-earning assets | 1,256,844 | 1,259,109 | 1,334,169 | |||||||||||||||||||||||||||||
| Total assets | $ | 11,539,732 | $ | 11,439,501 | $ | 11,114,586 | ||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | ||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||
| Interest-bearing checking | $ | 3,701,496 | 3,385 | 0.37 | % | $ | 3,711,976 | 4,311 | 0.47 | % | $ | 2,966,631 | 4,800 | 0.65 | % | |||||||||||||||||
| Money market | 760,323 | 212 | 0.11 | 757,634 | 367 | 0.20 | 652,485 | 705 | 0.43 | |||||||||||||||||||||||
| Savings | 1,581,284 | 166 | 0.04 | 1,522,603 | 179 | 0.05 | 1,445,953 | 414 | 0.12 | |||||||||||||||||||||||
| Time deposits | 1,002,086 | 2,562 | 1.03 | 1,221,123 | 3,639 | 1.21 | 1,623,890 | 6,386 | 1.58 | |||||||||||||||||||||||
| Total | 7,045,189 | 6,325 | 0.36 | 7,213,336 | 8,496 | 0.48 | 6,688,959 | 12,305 | 0.74 | |||||||||||||||||||||||
| FHLB Advances | — | — | — | — | — | — | 476,598 | 1,946 | 1.64 | |||||||||||||||||||||||
| Securities sold under agreements to repurchase | 135,181 | 56 | 0.17 | 129,444 | 95 | 0.30 | 131,382 | 138 | 0.42 | |||||||||||||||||||||||
| Other borrowings | 228,350 | 2,944 | 5.17 | 228,368 | 2,679 | 4.76 | 220,948 | 2,821 | 5.14 | |||||||||||||||||||||||
| Total borrowings | 363,531 | 3,000 | 3.31 | 357,812 | 2,774 | 3.14 | 828,928 | 4,905 | 2.38 | |||||||||||||||||||||||
| Total interest-bearing liabilities | 7,408,720 | 9,325 | 0.50 | 7,571,148 | 11,270 | 0.60 | 7,517,887 | 17,210 | 0.92 | |||||||||||||||||||||||
| Non-interest-bearing deposits | 2,462,203 | 2,212,273 | 2,018,044 | |||||||||||||||||||||||||||||
| Non-interest-bearing liabilities | 164,774 | 160,500 | 124,997 | |||||||||||||||||||||||||||||
| Total liabilities | 10,035,697 | 9,943,921 | 9,660,928 | |||||||||||||||||||||||||||||
| Stockholders’ equity | 1,504,035 | 1,495,580 | 1,453,658 | |||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 11,539,732 | $ | 11,439,501 | $ | 11,114,586 | ||||||||||||||||||||||||||
| Net interest income | $ | 74,016 | $ | 73,604 | $ | 78,667 | ||||||||||||||||||||||||||
| Net interest rate spread (3) | 2.75 | % | 2.78 | % | 3.02 | % | ||||||||||||||||||||||||||
| Net interest margin (4) | 2.89 | % | 2.93 | % | 3.24 | % | ||||||||||||||||||||||||||
| Total cost of deposits (including non-interest-bearing deposits) | 0.27 | % | 0.37 | % | 0.57 | % | ||||||||||||||||||||||||||
| For the Six Months Ended | |||||||||||||||||||||
| June 30, 2021 | June 30, 2020 | ||||||||||||||||||||
| (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 | $ | 1,065,294 | $ | 518 | 0.10 | % | $ | 208,871 | $ | 457 | 0.44 | % | |||||||||
| Securities (1) | 1,407,108 | 12,741 | 1.83 | 1,158,657 | 15,336 | 2.66 | |||||||||||||||
| Loans receivable, net (2) | |||||||||||||||||||||
| Commercial | 5,223,714 | 107,927 | 4.17 | 5,185,114 | 119,335 | 4.63 | |||||||||||||||
| Residential real estate | 2,273,332 | 39,166 | 3.45 | 2,490,243 | 48,499 | 3.90 | |||||||||||||||
| Home equity loans and lines | 268,115 | 6,686 | 5.03 | 333,574 | 7,923 | 4.78 | |||||||||||||||
| Other consumer | 47,547 | 1,177 | 4.99 | 81,930 | 2,534 | 6.22 | |||||||||||||||
| Allowance for loan credit losses, net of deferred loan costs and fees | (53,187 | ) | — | — | (17,720 | ) | — | — | |||||||||||||
| Loans receivable, net | 7,759,521 | 154,956 | 4.03 | 8,073,141 | 178,291 | 4.44 | |||||||||||||||
| Total interest-earning assets | 10,231,923 | 168,215 | 3.32 | 9,440,669 | 194,084 | 4.13 | |||||||||||||||
| Non-interest-earning assets | 1,257,970 | 1,283,029 | |||||||||||||||||||
| Total assets | $ | 11,489,893 | $ | 10,723,698 | |||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||
| Interest-bearing checking | $ | 3,707,398 | 7,695 | 0.42 | % | $ | 2,887,212 | 9,931 | 0.69 | % | |||||||||||
| Money market | 758,986 | 579 | 0.15 | 633,273 | 1,745 | 0.55 | |||||||||||||||
| Savings | 1,552,106 | 345 | 0.04 | 1,424,646 | 1,969 | 0.28 | |||||||||||||||
| Time deposits | 1,111,000 | 6,202 | 1.13 | 1,541,619 | 12,596 | 1.64 | |||||||||||||||
| Total | 7,129,490 | 14,821 | 0.42 | 6,486,750 | 26,241 | 0.81 | |||||||||||||||
| FHLB Advances | — | — | — | 553,963 | 4,770 | 1.73 | |||||||||||||||
| Securities sold under agreements to repurchase | 132,328 | 151 | 0.23 | 106,743 | 234 | 0.44 | |||||||||||||||
| Other borrowings | 228,359 | 5,623 | 4.97 | 169,900 | 4,527 | 5.36 | |||||||||||||||
| Total borrowings | 360,687 | 5,774 | 3.23 | 830,606 | 9,531 | 2.31 | |||||||||||||||
| Total interest-bearing liabilities | 7,490,177 | 20,595 | 0.55 | 7,317,356 | 35,772 | 0.98 | |||||||||||||||
| Non-interest-bearing deposits | 2,337,238 | 1,852,813 | |||||||||||||||||||
| Non-interest-bearing liabilities | 162,647 | 119,237 | |||||||||||||||||||
| Total liabilities | 9,990,062 | 9,289,406 | |||||||||||||||||||
| Stockholders’ equity | 1,499,831 | 1,434,292 | |||||||||||||||||||
| Total liabilities and equity | $ | 11,489,893 | $ | 10,723,698 | |||||||||||||||||
| Net interest income | $ | 147,620 | $ | 158,312 | |||||||||||||||||
| Net interest rate spread (3) | 2.77 | % | 3.15 | % | |||||||||||||||||
| Net interest margin (4) | 2.91 | % | 3.37 | % | |||||||||||||||||
| Total cost of deposits (including non-interest-bearing deposits) | 0.32 | % | 0.63 | % | |||||||||||||||||
| (1) | Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost, net of allowance for securities credit losses. |
| (2) | Amount is net of deferred loan costs and fees, undisbursed loan funds, discounts and premiums and allowance for loan credit losses, and includes loans held for sale and non-performing loans. |
| (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)
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||||
| Selected Financial Condition Data: | ||||||||||||||||||||
| Total assets | $ | 11,483,901 | $ | 11,577,472 | $ | 11,448,313 | $ | 11,651,297 | $ | 11,345,365 | ||||||||||
| Debt securities available-for-sale, at | ||||||||||||||||||||
| estimated fair value | 249,330 | 268,511 | 183,302 | 169,634 | 153,239 | |||||||||||||||
| Debt securities held-to-maturity, net of allowance for | ||||||||||||||||||||
| securities credit losses | 1,146,735 | 1,082,326 | 937,253 | 871,688 | 867,959 | |||||||||||||||
| Equity investments, at estimated fair value | 90,917 | 50,159 | 107,079 | 63,846 | 13,830 | |||||||||||||||
| Restricted equity investments, at cost | 52,519 | 52,199 | 51,705 | 67,505 | 68,091 | |||||||||||||||
| Loans receivable, net of allowance for loan credit losses | 7,774,351 | 7,820,590 | 7,704,857 | 7,943,390 | 8,335,480 | |||||||||||||||
| Deposits | 9,415,286 | 9,502,812 | 9,427,616 | 9,283,288 | 8,967,754 | |||||||||||||||
| Federal Home Loan Bank advances | — | — | — | 343,452 | 343,392 | |||||||||||||||
| Securities sold under agreements to repurchase | ||||||||||||||||||||
| and other borrowings | 370,039 | 362,641 | 363,925 | 389,764 | 399,661 | |||||||||||||||
| Stockholders’ equity | 1,508,789 | 1,498,719 | 1,484,130 | 1,461,714 | 1,476,434 | |||||||||||||||
| For the Three Months Ended, | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||||
| Selected Operating Data: | ||||||||||||||||||||
| Interest income | $ | 83,341 | $ | 84,874 | $ | 92,562 | $ | 92,962 | $ | 95,877 | ||||||||||
| Interest expense | 9,325 | 11,270 | 14,711 | 16,174 | 17,210 | |||||||||||||||
| Net interest income | 74,016 | 73,604 | 77,851 | 76,788 | 78,667 | |||||||||||||||
| Credit loss (benefit) expense | (6,460 | ) | (620 | ) | 4,072 | 35,714 | 9,649 | |||||||||||||
| Net interest income after credit loss | ||||||||||||||||||||
| (benefit) expense | 80,476 | 74,224 | 73,779 | 41,074 | 69,018 | |||||||||||||||
| Other income (excluding net gain (loss) on equity | ||||||||||||||||||||
| investments and gain on sale of PPP loans) | 11,227 | 12,548 | 11,032 | 11,755 | 11,430 | |||||||||||||||
| Net gain (loss) on equity investments | 576 | 8,287 | 24,487 | (3,576 | ) | — | ||||||||||||||
| Gain on sale of PPP loans | — | — | 5,101 | — | — | |||||||||||||||
| Operating expenses (excluding FHLB | ||||||||||||||||||||
| advance prepayment fees, branch consolidation and merger related expenses) | 51,198 | 50,291 | 53,053 | 52,801 | 51,075 | |||||||||||||||
| FHLB advance prepayment fees | — | — | 13,333 | — | 924 | |||||||||||||||
| Branch consolidation expense | 26 | 1,011 | 3,336 | 830 | 863 | |||||||||||||||
| Merger related expenses | 446 | 381 | 1,194 | 3,156 | 3,070 | |||||||||||||||
| Income (loss) before provision | ||||||||||||||||||||
| (benefit) for income taxes | 40,609 | 43,376 | 43,483 | (7,534 | ) | 24,516 | ||||||||||||||
| Provision (benefit) for income taxes | 10,054 | 10,679 | 10,419 | (2,608 | ) | 5,878 | ||||||||||||||
| Net income (loss) | $ | 30,555 | $ | 32,697 | $ | 33,064 | $ | (4,926 | ) | $ | 18,638 | |||||||||
| Net income (loss) available to common | ||||||||||||||||||||
| stockholders | $ | 29,551 | $ | 31,693 | $ | 32,060 | $ | (6,019 | ) | $ | 18,638 | |||||||||
| Diluted earnings (loss) per share | $ | 0.49 | $ | 0.53 | $ | 0.54 | $ | (0.10 | ) | $ | 0.31 | |||||||||
| Net accretion/amortization of purchase accounting | ||||||||||||||||||||
| adjustments included in net interest income | $ | 2,835 | $ | 3,650 | $ | 6,186 | $ | 4,364 | $ | 5,536 | ||||||||||
| At or For the Three Months Ended | ||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||
| 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||
| Selected Financial Ratios and Other Data(1): | ||||||||||||||||
| Performance Ratios (Annualized): | ||||||||||||||||
| Return on average assets (2) | 1.03 | % | 1.12 | % | 1.09 | % | (0.21 | ) | % | 0.67 | % | |||||
| Return on average tangible assets (2) (3) | 1.08 | 1.18 | 1.14 | (0.22 | ) | 0.71 | ||||||||||
| Return on average stockholders’ equity (2) | 7.88 | 8.59 | 8.65 | (1.61 | ) | 5.16 | ||||||||||
| Return on average tangible stockholders’ equity (2) (3) | 12.07 | 13.22 | 13.43 | (2.51 | ) | 8.10 | ||||||||||
| Stockholders’ equity to total assets | 13.14 | 12.95 | 12.96 | 12.55 | 13.01 | |||||||||||
| Tangible stockholders’ equity to tangible assets (3) | 9.01 | 8.83 | 8.79 | 8.41 | 8.77 | |||||||||||
| Tangible common equity to tangible assets (3) | 8.50 | 8.33 | 8.28 | 7.91 | 8.25 | |||||||||||
| Net interest rate spread | 2.75 | 2.78 | 2.79 | 2.77 | 3.02 | |||||||||||
| Net interest margin | 2.89 | 2.93 | 2.97 | 2.97 | 3.24 | |||||||||||
| Operating expenses to average assets (2) | 1.80 | 1.83 | 2.40 | 1.94 | 2.02 | |||||||||||
| Efficiency ratio (2) (4) | 60.21 | 54.73 | 59.86 | 66.83 | 62.08 | |||||||||||
| Loans to deposits | 83.06 | 82.84 | 82.27 | 86.19 | 93.43 | |||||||||||
| For the Six Months Ended June 30, | ||||||
| 2021 | 2020 | |||||
| Performance Ratios (Annualized): | ||||||
| Return on average assets (2) | 1.07 | % | 0.66 | % | ||
| Return on average tangible assets (2) (3) | 1.13 | 0.69 | ||||
| Return on average stockholders’ equity (2) | 8.23 | 4.93 | ||||
| Return on average tangible stockholders’ equity (2) (3) | 12.64 | 7.81 | ||||
| Net interest rate spread | 2.77 | 3.15 | ||||
| Net interest margin | 2.91 | 3.37 | ||||
| Operating expenses to average assets (2) | 1.81 | 2.23 | ||||
| Efficiency ratio (2) (4) | 57.34 | 64.72 | ||||
| At or For the Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||||
| Trust and Asset Management: | ||||||||||||||||||||
| Wealth assets under administration and management | $ | 278,785 | $ | 274,172 | $ | 245,175 | $ | 232,292 | $ | 224,042 | ||||||||||
| Nest Egg | 129,674 | 101,701 | 93,237 | 80,472 | 57,383 | |||||||||||||||
| Per Share Data: | ||||||||||||||||||||
| Cash dividends per common share | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.17 | ||||||||||
| Stockholders’ equity per common share at | ||||||||||||||||||||
| end of period | 25.22 | 24.84 | 24.57 | 24.21 | 24.47 | |||||||||||||||
| Tangible common equity per common share at | ||||||||||||||||||||
| end of period (3) | 15.58 | 15.26 | 14.98 | 14.58 | 14.79 | |||||||||||||||
| Common shares outstanding at end of period | 59,834,018 | 60,329,504 | 60,392,043 | 60,378,120 | 60,343,077 | |||||||||||||||
| Preferred shares outstanding at end of period | 57,370 | 57,370 | 57,370 | 57,370 | 57,370 | |||||||||||||||
| Number of full-service customer facilities: | 58 | 62 | 62 | 62 | 62 | |||||||||||||||
| Quarterly Average Balances | ||||||||||||||||||||
| Total securities | $ | 1,501,484 | $ | 1,311,683 | $ | 1,209,543 | $ | 1,112,174 | $ | 1,130,779 | ||||||||||
| Loans receivable, net | 7,788,919 | 7,729,798 | 7,992,365 | 8,350,797 | 8,295,622 | |||||||||||||||
| Total interest-earning assets | 10,282,888 | 10,180,392 | 10,425,380 | 10,268,834 | 9,780,417 | |||||||||||||||
| Total assets | 11,539,732 | 11,439,501 | 11,747,439 | 11,621,969 | 11,114,586 | |||||||||||||||
| Time deposits | 1,002,086 | 1,221,123 | 1,437,770 | 1,606,632 | 1,623,890 | |||||||||||||||
| Total deposits (including non-interest | ||||||||||||||||||||
| -bearing deposits) | 9,507,392 | 9,425,609 | 9,505,835 | 9,241,265 | 8,707,003 | |||||||||||||||
| Total borrowed funds | 363,531 | 357,812 | 590,295 | 735,035 | 828,928 | |||||||||||||||
| Total interest-bearing liabilities | 7,408,720 | 7,571,148 | 7,886,598 | 7,767,059 | 7,517,887 | |||||||||||||||
| Non-interest bearing deposits | 2,462,203 | 2,212,273 | 2,209,532 | 2,209,241 | 2,018,044 | |||||||||||||||
| Stockholders’ equity | 1,504,035 | 1,495,580 | 1,475,088 | 1,482,682 | 1,453,658 | |||||||||||||||
| Quarterly Yields | ||||||||||||||||||||
| Total securities | 1.62 | % | 2.07 | % | 2.38 | % | 2.43 | % | 2.64 | % | ||||||||||
| Loans receivable, net | 3.97 | 4.09 | 4.23 | 4.09 | 4.28 | |||||||||||||||
| Total interest-earning assets | 3.25 | 3.38 | 3.53 | 3.60 | 3.94 | |||||||||||||||
| Time deposits | 1.03 | 1.21 | 1.39 | 1.45 | 1.58 | |||||||||||||||
| Total cost of deposits (including non-interest-bearing deposits) | 0.27 | 0.37 | 0.45 | 0.49 | 0.57 | |||||||||||||||
| Total borrowed funds | 3.31 | 3.14 | 2.72 | 2.60 | 2.38 | |||||||||||||||
| Total interest-bearing liabilities | 0.50 | 0.60 | 0.74 | 0.83 | 0.92 | |||||||||||||||
| Net interest spread | 2.75 | 2.78 | 2.79 | 2.77 | 3.02 | |||||||||||||||
| Net interest margin | 2.89 | 2.93 | 2.97 | 2.97 | 3.24 | |||||||||||||||
| (1) | With the exception of end of quarter ratios, all ratios are based on average daily balances. |
| (2) | Performance ratios for each period are presented on a GAAP basis and include non-core operations. Refer to “Non-GAAP Reconciliation.” |
| (3) | Tangible stockholders’ equity and tangible assets exclude intangible assets relating to goodwill and core deposit intangible. Tangible common equity excludes goodwill, core deposit intangible and preferred equity. |
| (4) | Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income. |
OceanFirst Financial Corp.
SUPPLEMENTAL INFORMATION
(dollars in thousands, except per share amounts)
NON-GAAP RECONCILIATION
| For the Three Months Ended | |||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||
| 2021 | 2021 | 2020 | 2020 | 2020 | |||||||||||||||||||||
| Core Earnings: | |||||||||||||||||||||||||
| Net income (loss) available to common stockholders (GAAP) | $ | 29,551 | $ | 31,693 | $ | 32,060 | $ | (6,019 | ) | $ | 18,638 | ||||||||||||||
| Add (less) non-recurring and non-core items: | |||||||||||||||||||||||||
| Merger related expenses | 446 | 381 | 1,194 | 3,156 | 3,070 | ||||||||||||||||||||
| Branch consolidation expenses | 26 | 1,011 | 3,336 | 830 | 863 | ||||||||||||||||||||
| Net (gain) loss on equity investments | (576 | ) | (8,287 | ) | (24,487 | ) | 3,576 | — | |||||||||||||||||
| FHLB advance prepayment fees | — | — | 13,333 | — | 924 | ||||||||||||||||||||
| Gain on sale of PPP loans | — | — | (5,101 | ) | — | — | |||||||||||||||||||
| Income tax expense (benefit) on items | 26 | 1,666 | 2,832 | (1,809 | ) | (1,190 | ) | ||||||||||||||||||
| Core earnings (loss) (Non-GAAP) | $ | 29,473 | $ | 26,464 | $ | 23,167 | $ | (266 | ) | $ | 22,305 | ||||||||||||||
| Core diluted earnings (loss) per share | $ | 0.49 | $ | 0.44 | $ | 0.39 | $ | — | $ | 0.37 | |||||||||||||||
| Core Ratios (Annualized): | |||||||||||||||||||||||||
| Return on average assets | 1.02 | % | 0.94 | % | 0.78 | % | (0.01 | ) | % | 0.81 | % | ||||||||||||||
| Return on average tangible assets | 1.07 | 0.98 | 0.82 | (0.01 | ) | 0.85 | |||||||||||||||||||
| Return on average tangible stockholders’ equity | 12.04 | 11.04 | 9.71 | (0.11 | ) | 9.69 | |||||||||||||||||||
| Efficiency ratio | 60.06 | 58.37 | 59.69 | 59.63 | 56.69 | ||||||||||||||||||||
| For the Six Months Ended June 30, | ||||||||||
| 2021 | 2020 | |||||||||
| Core Earnings: | ||||||||||
| Net income available to common stockholders (GAAP) | $ | 61,244 | $ | 35,171 | ||||||
| Add (less) non-recurring and non-core items: | ||||||||||
| Merger related expenses | 827 | 11,597 | ||||||||
| Branch consolidation expenses | 1,037 | 3,457 | ||||||||
| Net gain on equity investments | (8,863 | ) | — | |||||||
| Two River and Country Bank opening credit loss expense under the CECL model | — | 2,447 | ||||||||
| FHLB advance prepayment fees | — | 924 | ||||||||
| Income tax expense on items | 1,692 | (4,311 | ) | |||||||
| Core earnings (Non-GAAP) | $ | 55,937 | $ | 49,285 | ||||||
| Core diluted earnings per share | $ | 0.93 | $ | 0.82 | ||||||
| Core Ratios (Annualized): | ||||||||||
| Return on average assets | 0.98 | % | 0.92 | % | ||||||
| Return on average tangible assets | 1.03 | 0.97 | ||||||||
| Return on average tangible stockholders’ equity | 11.55 | 10.94 | ||||||||
| Efficiency ratio | 59.21 | 56.01 | ||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||||
| Tangible Stockholders’ Equity to Tangible Assets: | ||||||||||||||||||||
| Total stockholders’ equity | $ | 1,508,789 | $ | 1,498,719 | $ | 1,484,130 | $ | 1,461,714 | $ | 1,476,434 | ||||||||||
| Less: | ||||||||||||||||||||
| Goodwill | 500,319 | 500,319 | 500,319 | 500,849 | 501,472 | |||||||||||||||
| Core deposit intangible | 20,912 | 22,273 | 23,668 | 25,194 | 26,732 | |||||||||||||||
| Tangible stockholders’ equity | $ | 987,558 | $ | 976,127 | $ | 960,143 | $ | 935,671 | $ | 948,230 | ||||||||||
| Total assets | $ | 11,483,901 | $ | 11,577,472 | $ | 11,448,313 | $ | 11,651,297 | $ | 11,345,365 | ||||||||||
| Less: | ||||||||||||||||||||
| Goodwill | 500,319 | 500,319 | 500,319 | 500,849 | 501,472 | |||||||||||||||
| Core deposit intangible | 20,912 | 22,273 | 23,668 | 25,194 | 26,732 | |||||||||||||||
| Tangible assets | $ | 10,962,670 | $ | 11,054,880 | $ | 10,924,326 | $ | 11,125,254 | $ | 10,817,161 | ||||||||||
| Tangible stockholders’ equity to tangible assets | 9.01 | % | 8.83 | % | 8.79 | % | 8.41 | % | 8.77 | % | ||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||||||
| Tangible Common Equity to Tangible Assets: | ||||||||||||||||||||
| Total stockholders’ equity | $ | 1,508,789 | $ | 1,498,719 | $ | 1,484,130 | $ | 1,461,714 | $ | 1,476,434 | ||||||||||
| Less: | ||||||||||||||||||||
| Goodwill | 500,319 | 500,319 | 500,319 | 500,849 | 501,472 | |||||||||||||||
| Core deposit intangible | 20,912 | 22,273 | 23,668 | 25,194 | 26,732 | |||||||||||||||
| Preferred stock | 55,527 | 55,527 | 55,527 | 55,544 | 55,711 | |||||||||||||||
| Tangible common equity | $ | 932,031 | $ | 920,600 | $ | 904,616 | $ | 880,127 | $ | 892,519 | ||||||||||
| Total assets | $ | 11,483,901 | $ | 11,577,472 | $ | 11,448,313 | $ | 11,651,297 | $ | 11,345,365 | ||||||||||
| Less: | ||||||||||||||||||||
| Goodwill | 500,319 | 500,319 | 500,319 | 500,849 | 501,472 | |||||||||||||||
| Core deposit intangible | 20,912 | 22,273 | 23,668 | 25,194 | 26,732 | |||||||||||||||
| Tangible assets | $ | 10,962,670 | $ | 11,054,880 | $ | 10,924,326 | $ | 11,125,254 | $ | 10,817,161 | ||||||||||
| Tangible common equity to tangible assets | 8.50 | % | 8.33 | % | 8.28 | % | 7.91 | % | 8.25 | % | ||||||||||
Company Contact:
Michael J. Fitzpatrick
Chief Financial Officer
OceanFirst Financial Corp.
Tel: (732) 240-4500, ext. 7506
Email: Mfitzpatrick@oceanfirst.com