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OceanFirst Financial Corp. Announces Second Quarter Financial Results

TOMS RIVER, N.J., July 27, 2017 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:OCFC), (the "Company"), the holding company for OceanFirst Bank (the "Bank"), today announced that diluted earnings per share were $0.23 for the three months ended June 30, 2017, as compared to $0.16 for the corresponding prior year period. For the six months ended June 30, 2017, diluted earnings per share were $0.59, as compared to $0.39 for the prior corresponding year period.

The results of operations for the three and six months ended June 30, 2017 include merger related expenses and branch consolidation expenses and for the six months ended June 30, 2017 also include the acceleration of stock award expense from a director retirement. These items decreased net income, net of tax benefit, for the three and six months ended June 30, 2017, by $5.6 million and $6.7 million, respectively. Excluding these items, core earnings for the three and six months ended June 30, 2017 were $13.3 million, or $0.40 per diluted share, and $26.4 million, or $0.80 per diluted share, respectively. (Please refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of merger related expenses, branch consolidation expenses, certain other incurred expenses and quantification of core earnings).

Highlights for the quarter are described below:

  • Total loans grew $47.5 million, including $26.6 million in consumer loan growth and $20.9 million in commercial loan growth, while asset quality improved as non-performing loans decreased $5.4 million, or 25.0%, to $16.3 million, and non-performing loans as a percentage of total loans decreased to 0.42%, as compared to 0.56% in the prior linked quarter.
  • The Company maintained a loan to deposit ratio of 92.6% while cost of deposits increased one basis point from the prior linked quarter to 0.28%.
  • The Company successfully completed the consolidation of 15 branches throughout central and southern New Jersey, with total expected annualized cost savings of $6.1 million.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased with the accelerated loan growth achieved this quarter and to have completed the full integration of Ocean City Home Bank which will result in material expense reductions in the coming quarters. The systems integration of Ocean City Home Bank in May and the additional branch rationalization completed in July resulted in the consolidation of 15 branches.” Mr. Maher added, “On June 30, 2017, we announced our plans to acquire Sun Bancorp, Inc. ("Sun"). The Sun transaction provides a wonderful opportunity to enhance the OceanFirst franchise and continue our strategic growth plans. It is subject to regulatory and stockholder approvals which are not expected until the first quarter of 2018. As part of the transaction we are considering making application to convert to a bank holding company which would operate OceanFirst as a national bank.”

The Company also announced that the Company's Board of Directors declared its eighty-second consecutive quarterly cash dividend on common stock. The dividend for the quarter ended June 30, 2017 of $0.15 per share will be paid on August 18, 2017 to stockholders of record on August 7, 2017.

The Company continues to focus on actively managing expense levels. Expense reductions associated with the successful systems integration of Ocean Shore Holding Company ("Ocean Shore") in the second quarter of 2017 will be fully realized in the third quarter of 2017. The Company also expects to realize significant cost savings from branch consolidations, which is expected to provide a total of $6.1 million in annual cost savings. The Company intends to deploy a portion of the savings by further investing in commercial banking and electronic delivery channels while meeting the efficiency targets established in connection with the recent acquisitions. The Company expects to recognize additional branch consolidation expense of $2.1 million in the third quarter of 2017 relating to branch closures in early July.

Results of Operations

On May 2, 2016, the Company completed its acquisition of Cape and its results of operations are included in the consolidated results for the three and six months ended June 30, 2017, but are excluded from the results of operations for the period from January 1, 2016 to May 1, 2016.

On November 30, 2016, the Company completed its acquisition of Ocean Shore and its results of operations are included in the consolidated results for the three and six months ended June 30, 2017, but are excluded from the results of operations for the three and six months ended June 30, 2016.

Net income for the quarter ended June 30, 2017, was $7.7 million, or $0.23 per diluted share, as compared to $3.7 million, or $0.16 per diluted share, for the corresponding prior year period. Net income for the six months ended June 30, 2017 was $19.7 million, or $0.59 per diluted share, as compared to net income of $7.9 million, or $0.39 per diluted share, for the corresponding prior year period. Net income for the three and six months ended June 30, 2017, includes merger related and branch consolidation expenses and for the six months ended June 30, 2017, also includes the acceleration of stock award expense from a director retirement. These items decreased net income, net of tax benefit, for the three and six months ended June 30, 2017, by $5.6 million and $6.7 million, respectively. Net income for the three and six months ended June 30, 2016 includes merger related expenses of $7.2 million and $8.6 million, respectively, a Federal Home Loan Bank prepayment fee of $136,000 and a loss on the sale of investment securities available-for-sale of $12,000. Excluding these items, net income for the three and six months ended June 30, 2017 increased over the prior year periods primarily due to the acquisitions of Cape and Ocean Shore ("Acquisition Transactions"). In addition, in the first quarter of 2017 the Company adopted Accounting Standards Update ("ASU") 2016-09 "Compensation - Stock Compensation" which resulted in decreases in income tax expense for the three and six months ended June 30, 2017, of $172,000 and $1.5 million, respectively.

Net interest income for the three and six months ended June 30, 2017 increased to $42.2 million and $83.7 million, respectively, as compared to $30.0 million and $50.6 million, respectively, for the same prior year periods, reflecting an increase in interest-earning assets. Average interest-earning assets increased $1.357 billion and $1.805 billion, respectively, for the three and six months ended June 30, 2017, as compared to the same prior year periods. The averages for the three and six months ended June 30, 2017, were favorably impacted by the interest-earning assets acquired in the Acquisition Transactions. The net interest margin remained stable at 3.57% for both the three months ended June 30, 2017 and 2016, and increased to 3.56% for the six months ended June 30, 2017, from 3.47% for the same prior year period. The yields on average interest-earning assets increased to 3.97% and 3.96%, respectively, for the three and six months ended June 30, 2017, from 3.94% and 3.86%, respectively, for the same prior year periods. The yields on average interest-earning assets for the three and six months ended June 30, 2017 benefited from an increase in the accretion of purchase accounting adjustments of $632,000 and $2.6 million, respectively, and the generally higher interest rate environment. For both the three and six months ended June 30, 2017, the cost of average interest-bearing liabilities increased to 0.49%, from 0.47% and 0.48%, respectively, in the corresponding prior year periods. The total cost of deposits (including non-interest bearing deposits) was 0.28% and 0.27%, respectively, for the three and six months ended June 30, 2017, as compared to 0.25% for both the three and six months ending June 30, 2016.

Net interest income for the three months ended June 30, 2017 increased $691,000, as compared to the prior linked quarter, as average interest-earning assets increased $12.9 million and the yield on average interest-earning assets increased to 3.97% for the three months ended June 30, 2017, from 3.95% for the prior linked quarter. The net interest margin increased to 3.57% for the three months ended June 30, 2017, from 3.56% for the prior linked quarter. The cost of average interest-bearing liabilities increased to 0.49% for the three months ended June 30, 2017 from 0.48% for the prior linked quarter.

For the three and six months ended June 30, 2017, the provision for loan losses was $1.2 million and $1.9 million, respectively, as compared to $662,000 and $1.2 million, respectively, for the corresponding prior year periods and $700,000 in the prior linked quarter. Net loan charge-offs were $759,000 and $491,000, respectively, for the three and six months ended June 30, 2017, as compared to net loan charge-offs of $198,000 and $1.3 million, respectively, in the corresponding prior year periods, and a $268,000 net loan recovery in the prior linked quarter. Non-performing loans totaled $16.3 million at June 30, 2017, as compared to $21.7 million at March 31, 2017, and $15.3 million at June 30, 2016. The decrease in non-performing loans from the prior quarter was primarily due to the sale of non-performing residential loans totaling $3.9 million and the payoff of two non-performing commercial loans totaling $1.7 million.

For the three and six months ended June 30, 2017, other income increased to $7.0 million and $13.0 million, respectively, as compared to $4.9 million and $8.3 million, respectively, in the same prior year periods. The increases were primarily due to the impact of the Acquisition Transactions, which added $1.7 million and $3.8 million, respectively, to other income for the three and six months ended June 30, 2017, as compared to the same prior year periods. Excluding the Acquisition Transactions, the remaining increase in other income was primarily related to higher deposit related fees of $389,000 and $902,000, respectively, for the three and six months ended June 30, 2017, as compared to the same prior year periods.

For the three months ended June 30, 2017, other income increased $978,000, as compared to the prior linked quarter. The increase in other income over the prior linked quarter was primarily due to the net gain from OREO operations for the quarter ended June 30, 2017 of $105,000, as compared to a net loss from OREO operations in the prior linked quarter of $733,000.

Operating expenses increased to $37.1 million and $68.1 million, respectively, for the three and six months ended June 30, 2017, as compared to $28.6 million and $45.4 million, respectively, in the same prior year periods. Operating expenses for the three and six months ended June 30, 2017 included $8.6 million and $10.1 million, respectively, of merger related and branch consolidation expenses, as compared to $7.2 million and $8.6 million, respectively, in the prior year periods. Excluding the impact of merger and branch consolidation expenses, the increase in operating expenses over the prior year was primarily due to the operations of the Cape and Ocean Shore, which added $5.9 million and $17.3 million for the three and six months ended June 30, 2017, respectively. For the three months ended June 30, 2017, excluding the Acquisition Transaction expenses, there were increases in salary compensation, equipment expense and professional fees. For the six months ended June 30, 2017, excluding the Acquisition Transaction expenses, there were increases in salary compensation, stock plan expense, equipment expense and professional fees.

For the three months ended June 30, 2017, operating expenses, excluding merger and branch consolidation expenses, decreased $1.0 million, as compared to the prior linked quarter, primarily due to reduced compensation and employee benefits expense.

The provision for income taxes was $3.2 million and $7.0 million, respectively, for the three and six months ended June 30, 2017, as compared to $1.9 million and $4.4 million, respectively, for the same prior year periods. The effective tax rate was 29.2% and 26.1%, respectively, for the three and six months ended June 30, 2017, as compared to 34.5% and 35.8%, respectively, for the same prior year periods. The lower effective tax rate for the three and six months ended June 30, 2017 resulted from the adoption of ASU 2016-09 "Compensation - Stock Compensation," which decreased income tax expense by $172,000 and $1.5 million, respectively. Excluding the impact of ASU 2016-09, the effective tax rate would have been 30.8% and 31.9% for the three and six months ended June 30, 2017, respectively. Under the ASU, the tax benefits of exercised stock options and vested stock awards are recognized as a benefit to income tax expense in the reporting period in which they occur. The tax benefit relating to the Company's stock plans was $62,000 for the year ended December 31, 2016, which was recorded directly into stockholders equity. The elevated tax benefit for the three and six months ended June 30, 2017 was related to the exercise of options assumed in the acquisitions of Cape and Ocean Shore and the increase in the Company's stock price.

Financial Condition

Total assets increased by $35.1 million to $5.202 billion at June 30, 2017, from $5.167 billion at December 31, 2016. Cash and due from banks decreased by $193.7 million, to $107.7 million at June 30, 2017, from $301.4 million at December 31, 2016, as these funds were deployed into higher-yielding securities which increased $171.8 million. Loans receivable, net, increased by $65.4 million, to $3.869 billion at June 30, 2017 from $3.803 billion at December 31, 2016. Premises and equipment decreased $11.9 million at June 30, 2017, as compared to December 31, 2016, due to the consolidation of 15 branches, of which 5 were closed in early July. The premises and equipment at these locations were written down to their net realizable value and the remaining balance of $5.8 million was reclassified to assets held for sale.

Deposits decreased by $10.8 million, to $4.177 billion at June 30, 2017, from $4.188 billion at December 31, 2016. The loan-to-deposit ratio at June 30, 2017 was 92.6%, as compared to 90.8% at December 31, 2016.

Stockholders' equity increased to $587.3 million at June 30, 2017, as compared to $572.0 million at December 31, 2016. At June 30, 2017, there were 1.8 million shares available for repurchase under the Company's stock repurchase programs. In the six months ended June 30, 2017, the Company did not repurchase any shares under these repurchase programs. Tangible stockholders' equity per common share increased to $13.19 at June 30, 2017, as compared to $12.95 at December 31, 2016.

Asset Quality

The Company's non-performing loans increased to $16.3 million at June 30, 2017, as compared to $13.6 million at December 31, 2016. The increase was primarily due to a single commercial real estate relationship with a balance of $4.2 million, which was partly offset by the payoff of two non-performing loans totaling $1.7 million. An increase in non-performing residential mortgage loans in the first quarter of 2017 was largely offset by the bulk sale of non-performing residential loans in the second quarter of 2017. Non-performing loans do not include $5.0 million of purchased credit-impaired ("PCI") loans acquired in the Acquisition Transactions. The Company's OREO totaled $8.9 million at June 30, 2017, as compared to $9.8 million at December 31, 2016. At June 30, 2017, the Company's allowance for loan losses was 0.42% of total loans, an increase from 0.40% at December 31, 2016. These ratios exclude existing fair value credit marks of $21.8 million at June 30, 2017 on the Ocean Shore, Cape and Colonial American Bank loans. These loans were acquired at fair value with no related allowance for loan losses. The allowance for loan losses as a percent of total non-performing loans was 101.82% at June 30, 2017 as compared to 111.92% at December 31, 2016.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with generally accepted accounting principles in the United States ("GAAP"). The Company's management believes that the supplemental non-GAAP information, which consists of reported net income excluding merger related expenses, branch consolidation expenses, accelerated stock award expense relating to a director retirement, loss on sale of investment securities available for sale and FHLB prepayment fee, which can vary from period to period, provides a better comparison of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Please refer to Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, July 28, 2017 at 11 a.m. Eastern time. The direct dial number for the call is (888) 338-7143. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (877) 344-7529, Replay Conference Number 10109403 from one hour after the end of the call until October 28, 2017. The conference call, as well as the replay, are also available (listen-only) by internet webcast at www.oceanfirst.com in the Investor Relations section.

OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank, founded in 1902, is a $5.2 billion community bank with branches located throughout central and southern New Jersey. OceanFirst Bank delivers commercial and residential financing solutions, wealth management and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey.

OceanFirst Financial Corp.'s press releases are available by visiting us at www.oceanfirst.com.

Forward-Looking Statements

In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," "will," "should," "may," "view," "opportunity," "potential," or similar expressions or expressions of confidence. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: changes in interest rates, general economic conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters and increases to flood insurance premiums, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company's market area, accounting principles and guidelines and the Bank's ability to successfully integrate acquired operations. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 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,
2017
March 31,
2017
December 31,
2016
June 30,
2016
(Unaudited) (Unaudited) (Unaudited)
Assets
Cash and due from banks $107,660 $175,252 $301,373 $66,222
Securities available-for-sale, at estimated fair value 62,154 47,104 12,224 12,509
Securities held-to-maturity, net (estimated fair value of $724,250
at June 30, 2017, $695,564 at March 31, 2017, $598,119 at
December 31, 2016, and $520,971 at June 30, 2016)
720,511 695,918 598,691 513,721
Federal Home Loan Bank of New York stock, at cost 20,358 19,253 19,313 21,128
Loans receivable, net 3,868,805 3,825,600 3,803,443 3,130,046
Loans held-for-sale 168 283 1,551 5,310
Interest and dividends receivable 13,036 12,258 11,989 10,143
Other real estate owned 8,898 8,774 9,803 9,791
Premises and equipment, net 59,509 70,806 71,385 49,392
Servicing asset 181 203 228 664
Bank Owned Life Insurance 133,572 132,789 132,172 105,929
Deferred tax asset 29,804 33,652 38,787 37,052
Assets held for sale 6,114 360 360 669
Other assets 13,110 15,873 9,745 13,912
Core deposit intangible 9,887 10,400 10,924 3,903
Goodwill 148,433 147,815 145,064 67,102
Total assets $5,202,200 $5,196,340 $5,167,052 $4,047,493
Liabilities and Stockholders’ Equity
Deposits $4,176,909 $4,198,663 $4,187,750 $3,206,262
Securities sold under agreements to repurchase with retail customers 75,050 77,207 69,935 67,673
Federal Home Loan Bank advances 277,541 250,021 250,498 312,603
Other borrowings 56,623 56,591 56,559 22,500
Advances by borrowers for taxes and insurance 15,036 14,876 14,030 9,828
Other liabilities 13,738 16,302 16,242 19,369
Total liabilities 4,614,897 4,613,660 4,595,014 3,638,235
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation
preference, 5,000,000 shares authorized, no shares issued
Common stock, $.01 par value, 55,000,000 shares
authorized, 33,566,772 shares issued and 32,528,658,
32,465,413, 32,136,892, and 25,748,898 shares
outstanding at June 30, 2017, March 31, 2017, December
31, 2016, and June 30, 2016, respectively
336 336 336 336
Additional paid-in capital 353,296 352,316 364,433 308,460
Retained earnings 258,470 256,045 238,192 230,895
Accumulated other comprehensive loss (5,198) (5,382) (5,614) (5,798)
Less: Unallocated common stock held by Employee Stock Ownership Plan (2,620) (2,690) (2,761) (2,903)
Treasury stock, 1,038,114, 1,101,359, 1,429,880, and
7,817,874 shares at June 30, 2017, March 31, 2017,
December 31, 2016, and June 30, 2016, respectively
(16,981) (17,945) (22,548) (121,732)
Common stock acquired by Deferred Compensation Plan (176) (316) (313) (308)
Deferred Compensation Plan Liability 176 316 313 308
Total stockholders’ equity 587,303 582,680 572,038 409,258
Total liabilities and stockholders’ equity $5,202,200 $5,196,340 $5,167,052 $4,047,493


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,
2017
March 31,
2017
June 30,
2016
June 30,
2017
June 30,
2016
|-------------------- (unaudited) --------------------| |------------- (unaudited) -------------|
Interest income:
Loans $42,608 $41,742 $30,521 $84,350 $51,556
Mortgage-backed securities 2,791 2,660 1,708 5,451 3,123
Investment securities and other 1,480 1,612 912 3,092 1,535
Total interest income 46,879 46,014 33,141 92,893 56,214
Interest expense:
Deposits 2,914 2,781 1,771 5,695 3,042
Borrowed funds 1,791 1,750 1,356 3,541 2,599
Total interest expense 4,705 4,531 3,127 9,236 5,641
Net interest income 42,174 41,483 30,014 83,657 50,573
Provision for loan losses 1,165 700 662 1,865 1,225
Net interest income after provision for loan losses 41,009 40,783 29,352 81,792 49,348
Other income:
Bankcard services revenue 1,837 1,579 1,211 3,416 2,062
Wealth management revenue 565 516 621 1,081 1,171
Fees and service charges 3,658 3,807 2,597 7,465 4,470
Net loss on sale of investment securities available-for-sale (12) (12)
Net gain on sales of loans available-for-sale 15 42 170 57 349
Net gain (loss) from other real estate operations 105 (733) (313) (628) (719)
Income from Bank Owned Life Insurance 783 772 542 1,555 861
Other 10 12 67 23 77
Total other income 6,973 5,995 4,883 12,969 8,259
Operating expenses:
Compensation and employee benefits 15,328 16,138 11,432 31,466 19,898
Occupancy 2,641 2,767 2,011 5,409 3,637
Equipment 1,703 1,698 1,184 3,400 2,153
Marketing 730 740 543 1,470 794
Federal deposit insurance 705 661 723 1,366 1,252
Data processing 2,046 2,396 1,881 4,442 3,146
Check card processing 815 953 505 1,768 925
Professional fees 1,095 960 700 2,055 1,198
Other operating expense 2,951 2,644 2,217 5,595 3,493
Federal Home Loan Bank prepayment fee 136 136
Amortization of core deposit intangible 513 524 125 1,037 138
Branch consolidation expenses 5,451 33 5,484
Merger related expenses 3,155 1,447 7,189 4,602 8,591
Total operating expenses 37,133 30,961 28,646 68,094 45,361
Income before provision for income taxes 10,849 15,817 5,589 26,667 12,246
Provision for income taxes 3,170 3,799 1,928 6,969 4,380
Net income $7,679 $12,018 $3,661 $19,698 $7,866
Basic earnings per share $0.24 $0.38 $0.16 $0.62 $0.40
Diluted earnings per share $0.23 $0.36 $0.16 $0.59 $0.39
Average basic shares outstanding 32,122 31,901 22,478 32,014 19,694
Average diluted shares outstanding 33,138 33,090 22,880 33,111 19,996


OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
LOANS RECEIVABLE At
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
Commercial:
Commercial and industrial $193,759 $205,720 $152,810 $185,633 $222,355
Commercial real estate - owner-
occupied
557,734 533,052 534,365 493,157 523,662
Commercial real estate - investor 1,122,186 1,113,964 1,134,507 1,014,699 1,011,354
Total commercial 1,873,679 1,852,736 1,821,682 1,693,489 1,757,371
Consumer:
Residential mortgage 1,667,831 1,639,611 1,651,695 1,061,752 1,090,781
Residential construction 78,339 76,985 65,408 46,813 48,266
Home equity loans and lines 282,402 285,149 289,110 251,421 258,398
Other consumer 1,335 1,560 1,566 1,273 1,586
Total consumer 2,029,907 2,003,305 2,007,779 1,361,259 1,399,031
Total loans 3,903,586 3,856,041 3,829,461 3,054,748 3,156,402
Loans in process (22,589) (17,976) (14,249) (13,842) (13,119)
Deferred origination costs, net 4,365 3,686 3,414 3,407 3,441
Allowance for loan losses (16,557) (16,151) (15,183) (15,617) (16,678)
Loans receivable, net $3,868,805 $3,825,600 $3,803,443 $3,028,696 $3,130,046
Mortgage loans serviced for others $131,284 $132,973 $137,881 $143,657 $145,903
At June 30, 2017
Average Yield
Loan pipeline (1):
Commercial4.20% $61,287 $73,793 $99,060 $64,976 $48,897
Residential mortgage and construction 3.74 64,510 57,600 38,486 39,252 30,520
Home equity loans and lines4.40 11,194 7,879 6,522 5,099 5,594
Total4.00 $136,991 $139,272 $144,068 $109,327 $85,011


For the three months ended
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Average Yield
Loan originations:
Commercial 4.52% $115,048 (2)$106,896 $105,062 $63,310 $59,543
Residential mortgage and construction 3.97 79,610
64,452 62,087 41,170 40,295
Home equity loans and lines4.38 20,539 12,500 11,790 11,007 10,067
Total4.30 $215,197 $183,848 $178,939 $115,487 $109,905
Loans sold $865 (3)$1,907 $12,098 (4)$17,787 (5)$10,303
(1) Loan pipeline includes pending loan applications and loans approved but not funded
(2) Includes purchased loans totaling $16.6 million
(3) Excludes the sale of under-performing residential loans of $4.3 million
(4) Excludes the sale of under-performing loans of $21.0 million
(5) Excludes the sale of under-performing loans of $12.8 million


DEPOSITSAt
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
Type of Account
Non-interest-bearing$770,057 $806,728 $782,504 $512,957 $554,709
Interest-bearing checking 1,727,828 1,629,589 1,626,713 1,451,083 1,310,290
Money market deposit 378,538 448,093 458,911 400,054 366,942
Savings677,939 681,853 672,519 489,173 489,132
Time deposits622,547 632,400 647,103 471,414 485,189
$4,176,909 $4,198,663 $4,187,750 $3,324,681 $3,206,262


OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
ASSET QUALITY
Non-performing loans:
Commercial and industrial$68 $231 $441 $1,152 $964
Commercial real estate - owner-occupied943 2,383 2,414 5,213 4,363
Commercial real estate - investor5,608 5,118 521 1,675 1,675
Residential mortgage7,936 11,993 8,126 7,017 7,102
Home equity loans and lines1,706 1,954 2,064 1,450 1,226
Total non-performing loans16,261 21,679 13,566 16,507 15,330
Other real estate owned8,898 8,774 9,803 9,107 9,791
Total non-performing assets$25,159 $30,453 $23,369 $25,614 $25,121
Purchased credit-impaired ("PCI") loans$4,969 $7,118 $7,575 $5,836 $9,673
Delinquent loans 30 to 89 days$25,224 $18,516 $22,598 $8,553 $15,643
Troubled debt restructurings:
Non-performing (included in total non-performing loans above) $1,251 $3,547 $3,471 $3,520 $2,990
Performing34,130 26,974 27,042 26,396 28,173
Total troubled debt restructurings$35,381 $30,521 $30,513 $29,916 $31,163
Allowance for loan losses$16,557 $16,151 $15,183 $15,617 $16,678
Allowance for loan losses as a percent of total loans receivable (1)0.42% 0.42% 0.40% 0.51% 0.53%
Allowance for loan losses as a percent of total non-performing loans 101.82 74.50 111.92 94.61 108.79
Non-performing loans as a percent of total loans receivable0.42 0.56 0.35 0.54 0.48
Non-performing assets as a percent of total assets0.48 0.59 0.45 0.62 0.62


(1) The loans acquired from Ocean Shore, Cape, and Colonial American were recorded at fair value. The net credit mark on these loans, not
reflected in the allowance for loan losses, was $21,794, $24,002, $25,973, $17,051, and $27,281, at June 30, 2017, March 31, 2017,
December 31, 2016, September 30, 2016, and June 30, 2016, respectively.

NET CHARGE-OFFS

For the three months ended
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Net Charge-offs:
Loan charge-offs$(1,299) $(205) $(979) $(2,116) $(223)
Recoveries on loans540 473 35 167 25
Net loan (charge-offs) recoveries$(759) $268 $(944) $(1,949) $(198)
Net loan charge-offs to average total loans
(annualized)
0.08% NM* 0.11% 0.25% 0.03%
Net charge-off detail - (loss) recovery:
Commercial$(81) $311 $(510) $(1,707) $(84)
Residential mortgage and construction (716) (49) (233) (161) (69)
Home equity loans and lines39 24 (194) (83) (45)
Other consumer(1) (18) (7) 2
Net loan (charge-offs) recoveries $(759) $268 $(944) $(1,949) $(198)
Note: Included in net loan charge-offs for the three months ended June 30, 2017, December 31, 2016 and September 30, 2016 are $925, $535 and
$1,627, respectively, relating to under-performing loans sold or held-for-sale.
* Not meaningful


OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
For the Three Months Ended
June 30, 2017 March 31, 2017 June 30, 2016
(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
$114,019 $211 0.74% $214,165 $409 0.77% $40,567 $41 0.41%
Securities (1) and FHLB stock786,964 4,060 2.07 703,712 3,863 2.23 571,463 2,579 1.82
Loans receivable, net (2)
Commercial1,850,737 22,057 4.78 1,830,641 21,140 4.68 1,471,159 17,783 4.86
Residential1,718,413 17,304 4.04 1,704,035 17,339 4.13 1,076,557 10,225 3.82
Home Equity283,124 3,225 4.57 287,335 3,245 4.58 236,937 2,498 4.24
Other1,161 22 7.60 1,248 18 5.85 1,011 15 5.97
Allowance for loan loss net of
deferred loan fees
(12,518) (12,123) (13,146)
Loans Receivable, net3,840,917 42,608 4.45 3,811,136 41,742 4.44 2,772,518 30,521 4.43
Total interest-earning assets4,741,900 46,879 3.97 4,729,013 46,014 3.95 3,384,548 33,141 3.94
Non-interest-earning assets473,736 482,058 262,554
Total assets$5,215,636 $5,211,071 $3,647,102
Liabilities and Stockholders'
Equity:
Interest-bearing liabilities:
Interest-bearing checking$1,716,930 1,038 0.24% $1,668,545 876 0.21% $1,166,298 503 0.17%
Money market422,439 281 0.27 445,186 311 0.28 298,530 180 0.24
Savings679,806 97 0.06 674,721 130 0.08 434,438 41 0.04
Time deposits624,020 1,498 0.96 640,269 1,464 0.93 417,301 1,047 1.01
Total3,443,195 2,914 0.34 3,428,721 2,781 0.33 2,316,567 1,771 0.31
Securities sold under agreements
to repurchase
73,574 25 0.14 76,351 27 0.14 76,907 26 0.14
FHLB Advances259,291 1,118 1.73 250,339 1,070 1.73 287,171 1,201 1.68
Other borrowings56,456 648 4.60 56,392 653 4.70 22,500 129 2.31
Total interest-bearing
liabilities
3,832,516 4,705 0.49 3,811,803 4,531 0.48 2,703,145 3,127 0.47
Non-interest-bearing deposits772,739 791,036 529,230
Non-interest-bearing liabilities23,260 29,399 26,033
Total liabilities4,628,515 4,632,238 3,258,408
Stockholders’ equity587,121 578,833 388,694
Total liabilities and equity$5,215,636 $5,211,071 $3,647,102
Net interest income $42,174 $41,483 $30,014
Net interest rate spread (3) 3.48% 3.47% 3.47%
Net interest margin (4) 3.57% 3.56% 3.57%
Total cost of deposits (including non-
interest-bearing deposits)
0.28% 0.27% 0.25%
(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.


For the Six Months Ended,
June 30, 2017 June 30, 2016
(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$163,815 $620 0.76% $44,533 $70 0.32%
Securities (1) and FHLB stock745,568 7,923 2.14 508,590 4,588 1.81
Loans receivable, net (2)
Commercial1,840,745 43,197 4.73 1,221,604 28,780 4.74
Residential1,711,263 34,643 4.08 954,059 18,265 3.85
Home Equity285,208 6,470 4.57 214,146 4,488 4.21
Other1,215 40 6.64 756 23 6.12
Allowance for loan loss net of deferred loan fees(12,322) (13,396)
Loans Receivable, net3,826,109 84,350 4.45 2,377,169 51,556 4.36
Total interest-earning assets4,735,492 92,893 3.96 2,930,292 56,214 3.86
Non-interest-earning assets477,874 195,768
Total assets$5,213,366 $3,126,060
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing checking$1,692,820 1,913 0.23% $1,033,091 808 0.16%
Money market433,750 591 0.27 227,428 250 0.22
Savings677,278 227 0.07 375,293 67 0.04
Time deposits632,099 2,964 0.95 340,511 1,917 1.13
Total3,435,947 5,695 0.33 1,976,323 3,042 0.31
Securities sold under agreements to repurchase74,955 52 0.14 80,207 54 0.14
FHLB Advances254,840 2,186 1.73 276,547 2,284 1.66
Other borrowings56,424 1,303 4.66 22,500 261 2.33
Total interest-bearing liabilities3,822,166 9,236 0.49 2,355,577 5,641 0.48
Non-interest-bearing deposits781,888 436,300
Non-interest-bearing liabilities26,312 19,836
Total liabilities4,630,366 2,811,713
Stockholders’ equity583,000 314,347
Total liabilities and equity$5,213,366 $3,126,060
Net interest income $83,657 $50,573
Net interest rate spread (3) 3.47% 3.38%
Net interest margin (4) 3.56% 3.47%
Total cost of deposits (including non-interest-bearing deposits) 0.27% 0.25%
(1) Amounts are recorded at average amortized cost.
(2) Amount is net of deferred loan fees, undisbursed loan funds, discounts and premiums and estimated loss allowances and includes loans held for
sale and non-performing loans.
(3) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average interest-earning assets.


OceanFirst Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share amounts)
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Selected Financial Condition Data:
Total assets $5,202,200 $5,196,340 $5,167,052 $4,151,017 $4,047,493
Securities available-for-sale, at estimated fair value 62,154 47,104 12,224 2,497 12,509
Securities held-to-maturity, net 720,511 695,918 598,691 470,642 513,721
Federal Home Loan Bank of New York stock 20,358 19,253 19,313 18,289 21,128
Loans receivable, net 3,868,805 3,825,600 3,803,443 3,028,696 3,130,046
Deposits 4,176,909 4,198,663 4,187,750 3,324,681 3,206,262
Federal Home Loan Bank advances 277,541 250,021 250,498 251,146 312,603
Securities sold under agreements to repurchase and other borrowings 131,673 133,798 126,494 125,477 90,173
Stockholders' equity 587,303 582,680 572,038 417,244 409,258


For the Three Months Ended,
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Selected Operating Data:
Interest income $46,879 $46,014 $39,904 $37,307 $33,141
Interest expense 4,705 4,531 4,150 3,372 3,127
Net interest income 42,174 41,483 35,754 33,935 30,014
Provision for loan losses 1,165 700 510 888 662
Net interest income after provision for loan losses 41,009 40,783 35,244 33,047 29,352
Other income 6,973 5,995 6,257 5,896 4,883
Operating expenses 28,527 29,481 25,833 23,715 21,457
Branch consolidation expenses 5,451 33
Merger related expenses 3,155 1,447 6,632 1,311 7,189
Income before provision for income taxes 10,849 15,817 9,036 13,917 5,589
Provision for income taxes 3,170 3,799 2,984 4,789 1,928
Net income $7,679 $12,018 $6,052 $9,128 $3,661
Diluted earnings per share $0.23 $0.36 $0.22 $0.35 $0.16
Net accretion/amortization of purchase accounting adjustments included
in net interest income
$1,899 $2,175 $1,385 $1,637 $1,267


At or For the Three Months Ended
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Selected Financial Ratios and Other Data(1):
Performance Ratios (Annualized):
Return on average assets (2)0.59% 0.94% 0.53% 0.88% 0.40%
Return on average stockholders' equity (2)5.25 8.42 5.10 8.77 3.79
Return on average tangible stockholders' equity (2) (3) 7.19 11.50 6.48 10.58 4.32
Stockholders' equity to total assets11.29 11.21 11.07 10.05 10.11
Tangible stockholders' equity to tangible assets (3)8.51 8.43 8.30 8.50 8.51
Net interest rate spread3.48 3.47 3.31 3.49 3.47
Net interest margin3.57 3.56 3.40 3.56 3.57
Operating expenses to average assets (2)2.86 2.41 2.83 2.43 3.16
Efficiency ratio (2) (4)75.55 65.21 77.28 62.83 82.09
Loans to deposits92.62 91.11 90.82 91.10 97.62


For the Six Months Ended June 30,
2017 2016
Performance Ratios (Annualized):
Return on average assets (2)0.76% 0.51%
Return on average stockholders' equity (2)6.81 5.03
Return on average tangible stockholders' equity (2) (3) 9.32 5.47
Net interest rate spread3.47 3.38
Net interest margin3.56 3.47
Operating expenses to average assets (2)2.63 2.92
Efficiency ratio (2) (4)70.47 77.10


At or For the Three Months Ended
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Wealth Management:
Assets under administration $214,479 $215,593 $218,336 $221,612 $221,277
Per Share Data:
Cash dividends per common share $0.15 $0.15 $0.15 $0.13 $0.13
Stockholders' equity per common share at end of period 18.05 17.95 17.80 16.14 15.89
Tangible stockholders' equity per common share at end of period (3) 13.19 13.07 12.95 13.42 13.14
Number of full-service customer facilities: 51 61 61 50 50
Quarterly Average Balances
Total securities $786,964 $703,712 $545,302 $533,809 $571,463
Loans, receivable, net 3,840,917 3,811,136 3,282,703 3,085,691 2,772,518
Total interest-earning assets 4,741,900 4,729,013 4,187,809 3,787,545 3,384,548
Total assets 5,215,636 5,211,071 4,556,774 4,103,835 3,647,102
Interest-bearing transaction deposits 2,819,175 2,788,452 2,512,351 2,300,589 1,899,266
Time deposits 624,020 640,269 527,817 477,496 417,301
Total borrowed funds 389,321 383,082 379,289 358,960 386,578
Total interest-bearing liabilities 3,832,516 3,811,803 3,419,457 3,137,045 2,703,145
Non-interest bearing deposits 772,739 791,036 622,882 521,088 529,230
Stockholder’s equity 587,121 578,833 471,662 414,166 388,694
Total deposits 4,215,934 4,219,757 3,663,050 3,299,173 2,845,797
Quarterly Yields
Total securities 2.07% 2.23% 1.91% 1.91% 1.82%
Loans, receivable, net 4.45 4.44 4.46 4.46 4.43
Total interest-earning assets 3.97 3.95 3.79 3.92 3.94
Interest-bearing transaction deposits 0.20 0.18 0.18 0.16 0.15
Time deposits 0.96 0.93 0.97 0.96 1.01
Total borrowed funds 1.85 1.85 1.84 1.43 1.41
Total interest-bearing liabilities 0.49 0.48 0.48 0.43 0.47
Net interest spread 3.48 3.47 3.31 3.49 3.47
Net interest margin 3.57 3.56 3.40 3.56 3.57
Total deposits 0.28 0.27 0.26 0.25 0.25
(1) With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2) Performance ratios for each period include merger related and branch consolidation expenses. Refer to Other Items - Non-GAAP Reconciliation for
impact of merger related and branch consolidation expenses.
(3) Tangible stockholders' equity and tangible assets exclude intangible assets relating to goodwill and core deposit intangible.
(4) Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.


OceanFirst Financial Corp.
OTHER ITEMS
(dollars in thousands, except per share amounts)

NON-GAAP RECONCILIATION

For the three months ended
June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Core earnings:
Net income $7,679 $12,018 $6,052 $9,128 $3,661
Add: Merger related expenses 3,155 1,447 6,632 1,311 7,189
Branch consolidation expense 5,451 33
Accelerated stock award expense 242
Loss on sale of investment securities available for sale 12
Federal Home Loan Bank prepayment fee 136
Less: Income tax benefit on items (3,012) (587) (2,108) (172) (2,311)
Core earnings $13,273 $13,153 $10,576 $10,267 $8,687
Core diluted earnings per share $0.40 $0.40 $0.38 $0.40 $0.38
Core ratios (Annualized):
Return on average assets 1.02% 1.02% 0.92% 1.00% 0.96%
Return on average tangible stockholder's equity 12.42 12.56 11.33 11.90 10.26
Efficiency ratio 58.04 61.58 61.49 59.54 61.06

COMPUTATION OF TOTAL TANGIBLE EQUITY TO TOTAL TANGIBLE ASSETS

June 30, March 31, December 31, September 30, June 30,
2017 2017 2016 2016 2016
Total stockholders' equity $587,303 $582,680 $572,038 $417,244 $409,258
Less:
Goodwill 148,433 147,815 145,064 66,537 67,102
Core deposit intangible 9,887 10,400 10,924 3,722 3,903
Tangible stockholders’ equity $428,983 $424,465 $416,050 $346,985 $338,253
Total assets $5,202,200 $5,196,340 $5,167,052 $4,151,017 $4,047,493
Less:
Goodwill 148,433 147,815 145,064 66,537 67,102
Core deposit intangible 9,887 10,400 10,924 3,722 3,903
Tangible assets $5,043,880 $5,038,125 $5,011,064 $4,080,758 $3,976,488
Tangible stockholders' equity to tangible assets 8.51% 8.43% 8.30% 8.50% 8.51%


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

Source:OceanFirst Financial Corp.