×

OceanFirst Financial Corp. Announces Quarterly and Annual Financial Results and Effect of Strategic Initiatives

TOMS RIVER, N.J., Jan. 23, 2014 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (Nasdaq:OCFC), (the "Company"), the holding company for OceanFirst Bank (the "Bank"), today announced that, as a result of the planned series of strategic initiatives disclosed in the third quarter earnings release, diluted earnings per share amounted to $0.11 for the quarter ended December 31, 2013, as compared to $0.23 for the corresponding prior year period. For the year ended December 31, 2013, diluted earnings per share amounted to $0.95, as compared to $1.12 for the prior year.

Diluted earnings per share for the quarter and the year ended December 31, 2013 were adversely impacted by $0.19 per diluted share due to the previously announced strategic initiatives relating to the prepayment of $159.0 million of Federal Home Loan Bank ("FHLB") advances, at a cost of $4.3 million, and the consolidation of two branches into newer, in-market facilities, at a cost of $579,000.

Highlights for the quarter included:

  • Commercial loans outstanding increased $26.4 million, an annualized growth rate of 18.8%, the second consecutive quarter of double digit growth.
  • The net interest margin increased to 3.38%, as compared to 3.20% in the linked quarter, largely the result of the prepayment of higher-cost FHLB borrowings and growth in higher-yielding commercial loans which replaced maturing securities.
  • Tangible common equity remains strong at a ratio of 9.53%.

The Company also announced that the Board of Directors declared its sixty-eighth consecutive quarterly cash dividend on common stock. The dividend for the quarter ended December 31, 2013 of $0.12 per share will be paid on February 14, 2014 to shareholders of record on February 3, 2014.

Chairman and CEO John R. Garbarino observed "the second consecutive quarter of strong commercial loan growth and the restructuring of our FHLB advance book bolstered the net interest margin. Strategically, we continue to build our team of proven income producers in several areas, with these expenses largely offset by future savings from the consolidation of two branches into newer, in-market facilities. With strong commercial, and residential construction, loan pipelines at year-end and our high performing team of revenue producers in place, we are excited about our prospects for revenue growth in 2014."

Strategic Initiatives

As previously announced in the third quarter earnings release, the Company implemented two strategic initiatives during the fourth quarter. A total of $159.0 million of FHLB advances with a weighted average cost of 2.31% and a weighted average term to maturity of 16 months were prepaid with the Company incurring a prepayment fee of $4.3 million. The prepayment was initially funded by short-term advances, which the Company plans to replace over the next year with deposit growth and longer-term advances. This restructuring had an immediate beneficial effect on net interest income and margin in the current period. It will also improve the margin and net interest income in future periods, and as the borrowing maturities are fully extended, it will reduce the Company's sensitivity to future interest rate increases.

The Bank also performed a strategic review of branch expenses and decided to consolidate two branches into existing newer, in-market facilities. The consolidation was completed in the fourth quarter and resulted in a non-recurring charge of $579,000. The Company expects to benefit through an estimated $797,000 reduction in annual operating expenses, net of estimated lost revenue, which will partly offset the required investment to grow revenues in commercial lending, trust and asset management, and Bankcard services.

Results of Operations

Net income for the three months ended December 31, 2013 was $1.9 million, or $0.11 per diluted share, as compared to net income of $4.0 million, or $0.23 per diluted share for the corresponding prior year period. For the year ended December 31, 2013, net income totaled $16.3 million, or $0.95 per diluted share, as compared to net income of $20.0 million, or $1.12 per diluted share, for the prior year. Net income for the quarter and year ended December 31, 2013 was adversely impacted by the non-recurring expenses relating to the prepayment of FHLB advances and the consolidation of two branches. The net, after tax amount of these two items reduced net income and diluted earnings per share for the quarter and the year ended December 31, 2013 by $3.1 million and $0.19, respectively.

Net income for the quarter and the year ended December 31, 2012 was adversely impacted by an additional loan loss provision of $1.8 million, or $1.1 million, net of tax benefit, relating to superstorm Sandy, which caused substantial disruption to the Bank's market area on October 29, 2012. Additionally, net income for the year ended December 31, 2012 was adversely impacted by $687,000, or $430,000, net of tax benefit, in net severance expense recognized in the third quarter of 2012. These items reduced diluted earnings per share by $0.06 and $0.09, respectively, for the quarter and year ended December 31, 2012.

Net interest income for the quarter ended December 31, 2013 increased to $18.3 million as compared to $18.0 million, in the same prior year period, reflecting a higher net interest margin partly offset by slightly lower interest-earning assets. The net interest margin increased to 3.38% for the quarter ended December 31, 2013 from 3.29% in the same prior year period. Net interest income for the year ended December 31, 2013 decreased to $70.5 million, as compared to $73.5 million in the same prior year period, reflecting a lower net interest margin and lower interest-earning assets. For both the quarter and the year ended December 31, 2013, high loan refinance volume earlier in the year caused yields on loans and mortgage-backed securities to trend downward. The yield on average interest-earning assets decreased to 3.70% and 3.68%, respectively, for the quarter and the year ended December 31, 2013, as compared to 3.87% and 4.02%, respectively, for the same prior year periods. The cost of average interest-bearing liabilities decreased to 0.37% and 0.52%, respectively, for the quarter and year ended December 31, 2013, as compared to 0.67% and 0.75%, respectively, in the same prior year periods. Average interest-earning assets decreased $28.9 million and $2.8 million, respectively, for the quarter and year ended December 31, 2013, as compared to the same prior year periods. The decreases were due to reductions in average loans receivable of $10.3 million and $33.2 million, respectively, and interest-earning deposits of $36.1 million and $7.6 million, respectively, for the quarter and year ended December 31, 2013, partly offset by increases in average securities of $19.9 million and $39.0 million, respectively. The decline in interest-earning assets was balanced by decreases in average interest-bearing deposits and borrowed funds, partly offset by increases in average non-interest-bearing deposits.

For the quarter and year ended December 31, 2013, the provision for loan losses was $200,000 and $2.8 million, respectively, as compared to $3.1 million and $7.9 million, respectively, for the corresponding prior year periods. The amounts for the quarter and the year ended December 31, 2012 include a provision of $1.8 million directly related to superstorm Sandy. Over the past year, the Bank's actual loan loss experience relating to superstorm Sandy has been better than expected, as non-performing loans at December 31, 2013 include only a total of $3.1 million in loans adversely impacted by Sandy with an expected loss of $416,000. In evaluating the Allowance for Loan Losses, the Company also considered the adverse impact of recent changes to flood insurance premiums in the Bank's market area, and the growth in both commercial loans and residential construction loans. An additional positive effect was recognized from improvements in the local economy and reductions of $724,000 and $3.2 million, respectively, in net charge-offs as compared to the same prior year periods. Although non-performing loans increased $2.0 million at December 31, 2013, as compared to December 31, 2012, excluding loans impacted by superstorm Sandy, non-performing loans decreased $1.1 million.

For the quarter and year ended December 31, 2013, other income decreased to $4.3 million and $17.0 million, as compared to $4.5 million and $18.2 million in the same prior year periods. The decrease in other income was primarily caused by the net gain on sales of loans decreasing by $545,000 and $2.8 million for the quarter and year ended December 31, 2013, respectively, as compared to the same prior year periods. For the quarter and year ended December 31, 2013, Bankcard services revenue increased $46,000 and $484,000, respectively, and trust and asset management revenue increased $169,000 and $662,000, respectively, as compared to the same prior year periods. The increase in trust and asset management revenue was partly due to an increase in assets under administration to $216.1 million at December 31, 2013 from $172.9 million at December 31, 2012. For the quarter and year ended December 31, 2013, the net gain on the sale of loans decreased to $287,000 and $1.2 million, respectively, as compared to $832,000 and $4.0 million, respectively, in the same prior year periods due to decreased mortgage loan demand as a result of increased market rates for longer-term mortgage products and due to the reclassification of reverse mortgage income into fees and service charges. Additionally, the net gain on the sale of loans for the year ended December 31, 2013 was adversely impacted by an addition of $975,000 to the reserve for repurchased loans as compared to an addition of $750,000 in the same prior year period. For the three months ended December 31, 2013, there was no provision for repurchased loans as compared to $400,000 in the same prior year period. (Refer to discussion in Asset Quality section regarding the reserve for repurchased loans.) Effective January 1, 2013, income from the origination of reverse mortgage loans is classified as part of fees and service charges as compared to inclusion in the net gain on the sale of loans in prior periods as the Bank no longer closes these loans in its name. The amount of reverse mortgage fees included in fees and service charges for the quarter and year ended December 31, 2013 was $183,000 and $714,000, respectively. The results from other real estate operations declined $97,000 and $151,000, respectively, for the quarter and year ended December 31, 2013, as compared to the same prior year periods. Finally, for the year ended December 31, 2013, the net gain on sales of investment securities available for sale decreased to $46,000 from $226,000 in the same prior year period.

Operating expenses amounted to $19.6 million and $59.8 million, respectively, for the quarter and year ended December 31, 2013, as compared to $13.2 million and $52.9 million, respectively, in the same prior year periods. The increases were primarily due to the expenses associated with the FHLB advance prepayment fee and the branch consolidations, totaling $4.8 million. Compensation and employee benefits expense increased $1.1 million for the quarter ended December 31, 2013, as compared to the same prior year period. For the year ended December 31, 2013, compensation and employee benefits expense, net of the non-recurring severance expense of $687,000 included in the total for the year ended December 31, 2012, increased $1.8 million, as compared to the same prior year period. The increases were primarily due to the opening of the Red Bank Financial Solutions Center and personnel additions in the second half of the year in revenue producing areas and related recruiting costs.

The provision for income taxes was $784,000 and $8.6 million, respectively, for the quarter and year ended December 31, 2013, as compared to $2.1 million and $10.9 million for the same prior year periods. The effective tax rate was 28.8% and 34.5% for the quarter and year ended December 31, 2013, as compared to 34.5% and 35.3%, respectively, in the same prior year periods.

Financial Condition

Total assets decreased by $19.5 million to $2,249.7 million at December 31, 2013, from $2,269.2 million at December 31, 2012. Securities, in the aggregate, decreased by $8.0 million, to $539.4 million at December 31, 2013, as compared to $547.5 million at December 31, 2012. During the period, the Company reclassified $536.0 million of securities available-for-sale to securities held-to-maturity as the Company has the intent and ability to hold these securities until maturity. Loans receivable, net, increased by $18.3 million, to $1,541.5 million at December 31, 2013 from $1,523.2 million at December 31, 2012, primarily due to growth in commercial lending of $56.4 million during this period and in residential construction loans, net of loans in process, which increased $12.7 million as homeowners rebuild from superstorm Sandy. This growth was partly offset by a decrease in one-to-four family mortgage loans due to prepayments and the sale of most newly originated 30-year fixed-rate one-to-four family loans.

Deposits increased by $27.1 million, to $1,746.8 million at December 31, 2013, from $1,719.7 million at December 31, 2012 with core deposits, (i.e. all deposits excluding time deposits) growing by $35.4 million. Securities sold under agreements to repurchase with retail customers increased by $7.5 million, to $68.3 million at December 31, 2013, from $60.8 million at December 31, 2012 and Federal Home Loan Bank advances decreased $50.0 million, to $175.0 million at December 31, 2013, from $225.0 million at December 31, 2012. Stockholders' equity decreased to $214.4 million at December 31, 2013, as compared to $219.8 million at December 31, 2012. Net income for the period was offset by an increase in accumulated other comprehensive loss of $6.7 million due to the recent rise in interest rates, the repurchase of 533,018 shares of common stock for $8.1 million (average cost per share of $15.21) and the cash dividend on common stock. The reclassification of most available-for-sale securities to held-to-maturity during the third quarter will reduce the risk of future reductions to stockholders' equity that could result in the event of additional increases in interest rates. There were no shares repurchased in the fourth quarter of 2013 and at December 31, 2013, 301,766 shares were available for repurchase under the stock repurchase program adopted in the fourth quarter of 2012. Tangible stockholders' equity per common share was $12.33 at December 31, 2013, as compared to $12.28 at December 31, 2012, benefitting from the reduction in shares outstanding.

Asset Quality

The Company's non-performing loans totaled $45.4 million at December 31, 2013, a $2.0 million increase from $43.4 million at December 31, 2012. Included in non-performing loans at December 31, 2013 were $3.1 million in loans which remain adversely impacted by superstorm Sandy. Added to non-performing loans in the fourth quarter of 2013 were two seasoned loans to a single commercial borrower totaling $6.2 million which are well secured by commercial real estate. This loan relationship was previously classified and closely monitored. Net loan charge-offs decreased to $2.4 million for the year ended December 31, 2013, as compared to $5.6 million for the corresponding prior year period.

The reserve for repurchased loans and loss sharing obligations, which is included in other liabilities in the Company's consolidated statements of financial condition, was $1.5 million at December 31, 2013, a $265,000 increase from December 31, 2012. The increase was due to mostly first quarter activity relating to an additional provision for loans sold to the Federal Home Loan Bank, incurred losses relating to the FHLB loan sales, a comprehensive settlement with one investor relating to existing and anticipated loan repurchase requests, and recoveries of previously charged-off amounts. At December 31, 2013, there were 5 outstanding loan repurchase requests which the Company is disputing on loans with a total principal balance of $1.2 million, as compared to 12 outstanding loan repurchase requests with a principal balance of $3.6 million at December 31, 2012.

Annual Meeting

The Company also announced today that its Annual Meeting of Stockholders will be held on Thursday, May 8, 2014 at 10:00 a.m. Eastern time, at the Crystal Point Yacht Club located at 3900 River Road at the intersection of State Highway 70, Point Pleasant, New Jersey. The record date for shareholders entitled to vote at the Annual Meeting is March 11, 2014.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, January 24, 2014 at 11:00 a.m. Eastern time. The direct dial number for the call is (888) 317-6016. 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 10038694 from one hour after the end of the call until May 26, 2014. 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 federally-chartered savings bank with $2.2 billion in assets and twenty-three branches located in Ocean, Monmouth and Middlesex Counties, New Jersey. The Bank is the largest and oldest community-based financial institution headquartered in Ocean County, New Jersey.

OceanFirst Financial Corp.'s press releases are available 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 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, 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 and accounting principles and guidelines. These risks and uncertainties are further discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 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, December 31,
2013 2012
ASSETS
Cash and due from banks $33,958 $62,544
Securities available-for-sale, at estimated fair value 43,836 547,450
Securities held-to-maturity, net (estimated fair value of $495,082 at December 31, 2013) 495,599
Federal Home Loan Bank of New York stock, at cost 14,518 17,061
Loans receivable, net 1,541,460 1,523,200
Mortgage loans held for sale 785 6,746
Interest and dividends receivable 5,380 5,976
Other real estate owned, net 4,345 3,210
Premises and equipment, net 23,684 22,233
Servicing asset 4,178 4,568
Bank Owned Life Insurance 54,571 53,167
Other assets 27,397 23,073
Total assets $2,249,711 $2,269,228
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $1,746,763 $1,719,671
Securities sold under agreements to repurchase with retail customers 68,304 60,791
Federal Home Loan Bank advances 175,000 225,000
Other borrowings 27,500 27,500
Due to brokers
Advances by borrowers for taxes and insurance 6,471 7,386
Other liabilities 11,323 9,088
Total liabilities 2,035,361 2,049,436
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 17,387,049 and 17,894,929 shares outstanding at December 31, 2013 and December 31, 2012, respectively 336 336
Additional paid-in capital 263,319 262,704
Retained earnings 206,201 198,109
Accumulated other comprehensive (loss) gain (6,619) 49
Less: Unallocated common stock held by Employee Stock Ownership Plan (3,616) (3,904)
Treasury stock, 16,179,723 and 15,671,843 shares at December 31, 2013 and December 31, 2012, respectively (245,271) (237,502)
Common stock acquired by Deferred Compensation Plan (665) (647)
Deferred Compensation Plan Liability 665 647
Total stockholders' equity 214,350 219,792
Total liabilities and stockholders' equity $2,249,711 $2,269,228
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
For the three months For the years
ended December 31, ended December 31,
2013 2012 2013 2012
(unaudited)
Interest income:
Loans $17,368 $18,526 $69,863 $76,168
Mortgage-backed securities 1,863 1,891 7,403 8,509
Investment securities and other 729 772 2,891 2,938
Total interest income 19,960 21,189 80,157 87,615
Interest expense:
Deposits 1,102 1,588 4,709 7,547
Borrowed funds 607 1,584 4,919 6,556
Total interest expense 1,709 3,172 9,628 14,103
Net interest income 18,251 18,017 70,529 73,512
Provision for loan losses 200 3,100 2,800 7,900
Net interest income after provision for loan losses 18,051 14,917 67,729 65,612
Other income:
Bankcard services revenue 909 863 3,584 3,100
Trust and asset management revenue 591 422 2,174 1,512
Fees and service charges 1,954 1,830 7,992 7,542
Loan servicing income 220 129 748 538
Net gain on sales of loans available for sale 287 832 1,163 3,968
Net gain on sales of investment securities available for sale 4 46 226
Net (loss) gain from other real estate operations (49) 48 (161) (10)
Income from Bank Owned Life Insurance 338 360 1,404 1,338
Other 29 8 49 12
Total other income 4,283 4,492 16,999 18,226
Operating expenses:
Compensation and employee benefits 7,747 6,632 28,762 27,610
Occupancy 1,458 1,177 5,562 5,074
Equipment 721 740 2,724 2,632
Marketing 490 401 1,632 1,633
Federal deposit insurance 543 526 2,141 2,113
Data processing 994 895 3,996 3,632
Check card processing 480 394 1,768 1,455
Professional fees 776 638 2,449 2,546
Other operating expense 1,558 1,841 5,907 6,196
Federal Home Loan Bank advance prepayment fee 4,265 4,265
Branch consolidation expense 579 579
Total operating expenses 19,611 13,244 59,785 52,891
Income before provision for income taxes 2,723 6,165 24,943 30,947
Provision for income taxes 784 2,124 8,613 10,927
Net income $1,939 $4,041 $16,330 $20,020
Basic earnings per share $0.12 $0.23 $0.96 $1.13
Diluted earnings per share $0.11 $0.23 $0.95 $1.12
Average basic shares outstanding 16,855 17,412 17,071 17,730
Average diluted shares outstanding 17,056 17,451 17,157 17,829
OceanFirst Financial Corp.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
At December 31, At December 31,
2013 2012
STOCKHOLDERS' EQUITY
Stockholders' equity to total assets 9.53% 9.69%
Common shares outstanding (in thousands) 17,387 17,895
Stockholders' equity per common share $12.33 $12.28
Tangible stockholders' equity per common share 12.33 12.28
ASSET QUALITY
Non-performing loans:
Real estate – one-to-four family $28,213 $26,521
Commercial real estate 12,304 11,567
Consumer 4,328 4,540
Commercial 515 746
Total non-performing loans 45,360 43,374
OREO, net 4,345 3,210
Total non-performing assets $49,705 $46,584
Delinquent loans 30 to 89 days $ 9,147 (1) $11,437 (1)
Troubled debt restructurings:
Non-performing (included in total non-performing loans above) $9,663 $18,160
Performing 21,456 17,733
Total troubled debt restructurings $31,119 $35,893
Allowance for loan losses $20,930 $20,510
Allowance for loan losses as a percent of total
loans receivable 1.33% 1.32%
Allowance for loan losses as a percent of total
non-performing loans 46.14 47.29
Non-performing loans as a percent of total
loans receivable 2.88 2.80
Non-performing assets as a percent of total assets 2.21 2.05
TRUST and ASSET MANAGEMENT
Assets under administration $216,144 $172,879
For the three months ended For the years ended
December 31, December 31,
2013 2012 2013 2012
PERFORMANCE RATIOS (ANNUALIZED)
Return on average assets 0.34% 0.70% 0.71% 0.87%
Return on average stockholders' equity 3.64 7.36 7.51 9.15
Interest rate spread 3.33 3.20 3.16 3.27
Interest rate margin 3.38 3.29 3.24 3.37
Operating expenses to average assets 3.43 2.30 2.60 2.31
Efficiency ratio 87.03 (2) 58.84 68.30 (2) 57.65 (2)
(1) Delinquent loans 30 to 89 days excluded $16.5 million at December 31, 2012, of loans impacted by superstorm Sandy for which the Bank had granted a temporary payment plan. Delinquent loans 30 to 89 days at December 31, 2013 includes $381,000 of loans impacted by superstorm Sandy.
(2) Excluding non-recurring expenses for the FHLB advance prepayment fee and the branch consolidation expense, the efficiency ratio for the quarter and year ended December 31, 2013 would be 65.53% and 62.77%, respectively, and excluding the non-recurring severance expense for the year ended December 31, 2012, the efficiency ratio would be 56.91%.
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(in thousands)
LOANS RECEIVABLE
At December 31, 2013 At December 31, 2012
Real estate:
One-to-four family $751,370 $809,705
Commercial real estate, multi-family and land 528,945 475,155
Residential construction 30,821 9,013
Consumer 200,683 198,143
Commercial and industrial 60,545 57,967
Total loans 1,572,364 1,549,983
Loans in process (12,715) (3,639)
Deferred origination costs, net 3,526 4,112
Allowance for loan losses (20,930) (20,510)
Total loans, net 1,542,245 1,529,946
Less: mortgage loans held for sale 785 6,746
Loans receivable, net $1,541,460 $1,523,200
Mortgage loans serviced for others $806,810 $840,900
Loan pipeline: Average Yield
Commercial 4.39% $58,992 $23,145
Construction/permanent 4.07% 9,955 2,860
One-to-four family 3.99% 18,827 43,464
Consumer 4.11% 5,496 4,593
$93,270 $74,062
For the three months ended For the years ended
December 31, December 31,
2013 2012 2013 2012
Loan originations:
Commercial $53,700 $19,375 $150,916 $119,112
Construction/permanent 16,209 1,267 33,679 7,488
One-to-four family 31,706 66,519 191,157 271,030
Consumer 12,059 7,617 58,491 59,522
Total $113,674 $94,778 $434,243 $457,152
Loans sold $18,222 $39,138 $106,550 $166,821
Net charge-offs 157 881 2,380 5,620
DEPOSITS
At December 31, 2013 At December 31, 2012
Type of Account
Non-interest-bearing $207,608 $179,074
Interest-bearing checking 913,753 940,190
Money market deposit 116,947 118,154
Savings 290,512 256,035
Time deposits 217,943 226,218
$1,746,763 $1,719,671
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31,
2013 2012
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
(dollars in thousands)
Assets
Interest-earning assets:
Interest-earning deposits and short-term investments $34,566 $8 0.09% $70,621 $31 0.18%
Securities (1) 581,209 2,407 1.66 561,266 2,432 1.73
FHLB stock 14,650 177 4.83 17,138 200 4.67
Loans receivable, net (2) 1,528,956 17,368 4.54 1,539,269 18,526 4.81
Total interest-earning assets 2,159,381 19,960 3.70 2,188,294 21,189 3.87
Non-interest-earning assets 127,852 116,112
Total assets $2,287,233 $2,304,406
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Transaction deposits $1,345,106 371 0.11 $1,334,492 713 0.21
Time deposits 213,337 731 1.37 232,079 875 1.51
Total 1,558,443 1,102 0.28 1,566,571 1,588 0.41
Borrowed funds 289,434 607 0.84 325,104 1,584 1.95
Total interest-bearing liabilities 1,847,877 1,709 0.37 1,891,675 3,172 0.67
Non-interest-bearing deposits 209,715 175,238
Non-interest-bearing liabilities 16,489 17,765
Total liabilities 2,074,081 2,084,678
Stockholders' equity 213,152 219,728
Total liabilities and stockholders' equity $2,287,233 $2,304,406
Net interest income $18,251 $18,017
Net interest rate spread (3) 3.33% 3.20%
Net interest margin (4) 3.38% 3.29%
FOR THE YEARS ENDED DECEMBER 31,
2013 2012
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
(dollars in thousands)
Assets
Interest-earning assets:
Interest-earning deposits and short-term investments $50,704 $77 0.15% $58,277 $92 0.16%
Securities (1) 593,877 9,506 1.60 554,831 10,528 1.90
FHLB stock 16,492 711 4.31 17,596 827 4.70
Loans receivable, net (2) 1,518,288 69,863 4.60 1,551,462 76,168 4.91
Total interest-earning assets 2,179,361 80,157 3.68 2,182,166 87,615 4.02
Non-interest-earning assets 120,074 110,537
Total assets $2,299,435 $2,292,703
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Transaction deposits $1,327,905 1,760 0.13 $1,305,415 3,598 0.28
Time deposits 215,477 2,949 1.37 243,776 3,949 1.62
Total 1,543,382 4,709 0.31 1,549,191 7,547 0.49
Borrowed funds 316,223 4,919 1.56 336,676 6,556 1.95
Total interest-bearing liabilities 1,859,605 9,628 0.52 1,885,867 14,103 0.75
Non-interest-bearing deposits 205,855 170,859
Non-interest-bearing liabilities 16,470 17,152
Total liabilities 2,081,930 2,073,878
Stockholders' equity 217,505 218,825
Total liabilities and stockholders' equity $2,299,435 $2,292,703
Net interest income $70,529 $73,512
Net interest rate spread (3) 3.16% 3.27%
Net interest margin (4) 3.24% 3.37%
(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.

CONTACT: Michael J. Fitzpatrick Chief Financial Officer OceanFirst Financial Corp. Tel: (732) 240-4500, ext. 7506 Fax: (732) 349-5070 Email: Mfitzpatrick@oceanfirst.comSource:OceanFirst Financial Corp.