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OceanFirst Financial Corp. Announces Quarterly Financial Results

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TOMS RIVER, N.J., Oct. 22, 2015 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ: OCFC), (the "Company"), the holding company for OceanFirst Bank (the "Bank"), today announced that diluted earnings per share decreased to $0.28 for the quarter ended September 30, 2015, as compared to $0.31 for the corresponding prior year quarter.  For the nine months ended September 30, 2015, diluted earnings per share increased to $0.90, as compared to $0.89 for the corresponding prior year period.  

On July 31, 2015, the Company completed its acquisition of Colonial American Bank ("Colonial"), which added $142.4 million to assets, $121.2 million to loans, and $123.3 million to deposits.  Colonial's results of operations for August and September are included in the consolidated results for the quarter.  The results of operations for the three and nine months ended September 30, 2015 included non-recurring merger related expenses which decreased net income, net of tax benefit, by $714,000 and $904,000, respectively.  Excluding these items, core earnings for the three and nine months ended September 30, 2015 were $5.4 million, or $0.32 per diluted share, and $16.0 million, or $0.96 per diluted share, respectively.  Included in operating expenses for the quarter ended September 30, 2015 are approximately $200,000 of expenses associated with operating redundant systems for Colonial.  The Company expects to eliminate these expenses in periods subsequent to December 31, 2015.

Highlights for the quarter are described below.

  • Commercial loans outstanding increased $123.9 million, of which Colonial represented $82.1 million.  Excluding Colonial, the annualized growth rate was 20.7%, the ninth consecutive quarter of double digit percentage growth.  Over the last year, commercial loans outstanding increased $171.8 million, or 25.3%, excluding Colonial.
  • Loan growth was partly funded by a $206.1 million increase in deposits, of which Colonial represented $123.3 million.

Chief Executive Officer and President Christopher D. Maher commented, "The Company's results continue to be fueled by strong organic loan growth, driven by another quarter of double digit increases from our commercial lending team."  Mr. Maher continued; "We are also excited to have closed the Colonial American acquisition in the third quarter and are pleased to announce the successful integration and systems conversion, which was completed this past weekend."

The Company also announced that the Board of Directors declared its seventy-fifth consecutive quarterly cash dividend on common stock.  The dividend for the quarter ended September 30, 2015 of $0.13 per share will be paid on November 13, 2015 to stockholders of record on November 2, 2015.

With strong loan portfolio growth, the Bank is focused on expanding its funding sources.  The Bank opened an additional branch in Jackson Township, Ocean County, in the third quarter.  The branch operates with a smaller staff by handling sales and complex service transactions with universal bankers, while routine teller transactions are handled through "Personal Teller Machines", an advanced technology with a live team member in a remote location who performs transactions for multiple Personal Teller Machines.  Additionally, on July 31, 2015, the Bank executed an agreement to purchase an existing retail branch with total deposits of $24.6 million and core deposits (all deposits except time deposits) of $20.2 million located in the Toms River market.  The purchase recently received regulatory approval from the Office of the Comptroller of the Currency on October 8, 2015 and is expected to close in the first quarter of 2016.

Results of Operations

Net income for the three and nine months ended September 30, 2015 was $4.7 million and $15.1 million, respectively, or $0.28 per diluted share and $0.90 per diluted share, respectively, as compared to net income of $5.2 million and $15.0 million, respectively, or $0.31 per diluted share and $0.89 per diluted share, respectively, for the corresponding prior year periods.  Net income for the three and nine months ended September 30, 2015 includes non-recurring merger related expenses, net of tax benefit, of $714,000 and $904,000, respectively, which reduced diluted earnings per share by $0.04 and $0.06, respectively.  Excluding the non-recurring merger related expenses, the increases in diluted earnings per share over the previous year periods were primarily due to higher net interest income and lower provisions for loan losses, partly offset by a reduction in other income and, for the three months ended September 30, 2015, higher operating expenses.  As compared to the prior linked quarter, higher net interest income was offset by increased operating expenses.

Net interest income for the three and nine months ended September 30, 2015 increased to $19.6 million and $56.1 million, respectively, as compared to $18.1 million and $54.3 million, respectively, for the same prior year periods, reflecting an increase in interest-earning assets, partly offset by a lower net interest margin.  Average interest-earning assets increased $181.9 million and $129.7 million, respectively, for the three and nine months ended September 30, 2015, as compared to the same prior year periods.  Both of the current year periods were favorably impacted by the interest-earning assets acquired from Colonial which averaged $86.4 million and $29.1 million, respectively, for the three and nine months ended September 30, 2015.  Average loans receivable, net increased $243.8 million and $188.2 million, respectively, for the three and nine months ended September 30, 2015, as compared to the same prior year periods.  The increase attributable to Colonial was $79.2 million and $26.7 million for the three and nine months, respectively.  The net interest margin decreased to 3.26% and 3.24% for the three and nine months ended September 30, 2015, from 3.27% and 3.33%, respectively, for the same prior year periods.  The yield on average interest-earning assets increased to 3.66% for the three months ended September 30, 2015, as compared to 3.63% for the same prior year period.  The yield on average interest-earning assets decreased to 3.62% for the nine months ended September 30, 2015, as compared to 3.66% for the same prior year period.  The cost of average interest-bearing liabilities increased to 0.50% and 0.47% for the three and nine months ended September 30, 2015, as compared to 0.45% and 0.40%, respectively, in the prior year periods.  In anticipation of a rising interest rate environment, the Company extended its borrowed funds into higher-costing longer-term maturities.  Since December 31, 2013, the Bank has extended $183.3 million of short-term funding into 3-5 year maturities, extending the weighted average maturity of term borrowings from 1.3 years to 3.1 years at September 30, 2015.  The total cost of deposits (including non-interest bearing deposits) decreased to 0.22% for the nine months ended September 30, 2015, as compared to 0.24% for the corresponding prior year period.

Net interest income for the quarter ended September 30, 2015 increased $1.1 million as compared to the prior linked quarter.  The net interest margin increased to 3.26%, from 3.23% in the prior linked quarter, and average interest-earning assets increased $116.8 million; $84.0 million of the increase in average interest-earning assets was due to assets acquired from Colonial.  The yield on average interest-earning assets increased to 3.66% for the quarter ended September 30, 2015, from 3.61% for the prior linked quarter, while the cost of average interest-bearing liabilities increased to 0.50% from 0.46%.  The net interest margin benefited from the higher-yielding interest-earning assets acquired from Colonial.

For the three and nine months ended September 30, 2015, the provision for loan losses was $300,000 and $975,000, respectively, as compared to $1.0 million and $1.8 million, for the corresponding prior year periods.  Net charge-offs decreased to $196,000 and $654,000, respectively, for the three and nine months ended September 30, 2015, as compared to net charge-offs of $5.6 million and $6.4 million, respectively, in the corresponding prior year periods.  In September 2014, the Company completed the bulk sale of certain non-performing residential mortgage loans which resulted in a total loan charge-off of $5.0 million.  The provision exceeded net charge-offs for both the three and nine months ended September 30, 2015 to account for loan growth.  The provision for loan losses, consistent with the low level of net charge-offs, was unchanged at $300,000, as compared to the prior linked quarter.  Net charge-offs were $196,000 for the quarter ended September 30, 2015, as compared to $185,000 for the quarter ended June 30, 2015.  Non-performing loans increased by $3.5 million at September 30, 2015, as compared to June 30, 2015.  All of the increase was related to two well-seasoned loans, a $1.4 million residential mortgage loan and a $2.3 million commercial real estate loan, for which there are no expected losses.

For the three and nine months ended September 30, 2015, other income decreased to $4.2 million and $12.3 million, respectively, as compared to $5.3 million and $14.0 million in the same prior year periods.  In the fourth quarter of 2014, the Company sold the servicing rights on a majority of residential mortgage loans serviced for the Federal agencies, recognizing a gain of $408,000.  Smaller, supplemental sales occurred in the first half of 2015 resulting in a gain of $111,000 for the nine months ended September 30, 2015.  The sale of loan servicing caused a decrease of $164,000 and $507,000 in loan servicing income for the three and nine months ended September 30, 2015, respectively, as compared to the same prior year periods but also reduced operating expenses by similar amounts.  For the three and nine months ended September 30, 2014, the Company recognized gains of $591,000 and $938,000, respectively, on the sale of equity securities, as compared to no gains in the current year periods.

Operating expenses increased to $16.1 million and $44.3 million, respectively, for the three and nine months ended September 30, 2015, as compared to $14.4 million and $43.4 million, respectively, in the same prior year periods.  Operating expenses for the three and nine months ended September 30, 2015 include $1.0 million and $1.3 million, respectively, in non-recurring merger related expenses relating to the acquisition of Colonial.  Compensation and employee benefits expense increased $523,000 for the three months ended September 30, 2015 as compared to the same prior year period.  The increase was primarily due to higher salary expense associated with personnel increases in commercial lending, the Colonial acquisition and the opening of two new branches.  Compensation and employee benefits expenses for the nine months ended September 30, 2015 was $54,000 lower than the prior year period which included $196,000 in severance related expenses due to the Company's strategic decision to improve efficiency in the residential mortgage loan area.

For the three months ended September 30, 2015, operating expenses increased $1.8 million, as compared to the prior linked quarter; $909,000 excluding merger related expenses.  The increase was primarily due to the Colonial acquisition and the opening of two new branches.  For the three months ended September 30, 2015, operating expenses attributable to Colonial, excluding merger related expenses, were $513,000, of which approximately $200,000 was associated with operating redundant systems.  The Company expects to eliminate these redundant expenses in periods subsequent to December 31, 2015.

The provision for income taxes was $2.6 million and $8.1 million, respectively, for the three and nine months ended September, 2015, as compared to $2.8 million and $8.1 million, respectively, for the same prior year periods.  The effective tax rate was 35.5% and 34.9%, respectively, for the three and nine months ended September 30, 2015, as compared to 35.1% for both the same prior year periods and 35.1% in the prior linked quarter. 

Financial Condition

Total assets increased by $201.2 million to $2,557.9 million at September 30, 2015, from $2,356.7 million at December 31, 2014, primarily due to $142.4 million of total assets from the Colonial acquisition.  Loans receivable, net, increased by $250.1 million, to $1,939.0 million at September 30, 2015, from $1,688.8 million at December 31, 2014, which included $121.2 million of loans acquired from Colonial, growth in commercial loans (excluding Colonial) of $106.9 million, and the purchase of two pools of performing, locally-originated, one-to-four family, non-conforming mortgage loans for $22.0 million.  The increase in loans receivable, net was partly offset by a decrease in total securities of $66.2 million.  As part of the Colonial acquisition, the Company has outstanding goodwill and core deposit intangible at September 30, 2015 of $1.8 million and $269,000, respectively.

Deposits increased by $247.6 million, to $1,967.8 million at September 30, 2015, from $1,720.1 million at December 31, 2014.  The increase in total deposits was primarily due to $123.3 million acquired from Colonial.  Excluding Colonial, business deposits increased $60.7 million demonstrating the value of relationship based lending.  The loan-to-deposit ratio at September 30, 2015 was 98.5%, a decrease as compared to 100.6% at June 30, 2015.  The deposit growth contributed to a decrease in FHLB advances of $72.2 million, to $233.0 million at September 30, 2015, from $305.2 million at December 31, 2014.  Stockholders' equity increased to $234.7 million at September 30, 2015, as compared to $218.3 million at December 31, 2014, due to stock consideration of $11.8 million issued for the purchase of Colonial and net income for the period, partly offset by the repurchase of 373,594 shares of common stock for $6.5 million (average cost per share of $17.28) and the cash dividend on common stock.  At September 30, 2015, there were 244,804 shares available for repurchase under the stock repurchase program adopted in July of 2014.  Tangible stockholders' equity per common share was $13.46 at September 30, 2015, as compared to $12.91 at December 31, 2014.

Asset Quality

The Company's non-performing loans totaled $24.4 million at September 30, 2015, a $6.1 million increase from December 31, 2014 and a $6.0 million increase from September 30, 2014.  Most of the increase was related to two well-seasoned loans, a $1.4 million residential mortgage loan and a $2.3 million commercial real estate loan, for which there are no expected losses.  The largest non-performing loan represents a $6.2 million relationship which the Bank expects to take title to in the fourth quarter and convert to other real estate owned.  Non-performing loans do not include $1.0 million of purchased credit impaired ("PCI") loans acquired from Colonial.  At September 30, 2015, the Company's allowance for loan losses was 0.85% of total loans, a decrease from 0.92% at June 30, 2015, and from 0.98% at September 30, 2014.  The decline in the loan coverage ratio from both the trailing quarter and the quarter ended September 30, 2014, was primarily a result of Colonial loans acquired at fair value, with no corresponding allowance.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, October 23, 2015 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 10073675 from one hour after the end of the call until January 23, 2016.  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 community bank with $2.6 billion in assets and 27 branches located in Ocean, Monmouth and Middlesex Counties, New Jersey.  The Bank delivers commercial and residential financing solutions, wealth management, and deposit services throughout the central New Jersey region and is the largest and oldest 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, 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 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, 2014 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)
 
 September 30, June 30, December 31, September 30,
  2015   2015   2014   2014 
ASSETS(unaudited) (unaudited)   (unaudited)
        
Cash and due from banks$50,576  $  40,359  $36,117  $27,657 
Securities available-for-sale, at estimated fair value 30,108   30,030   19,804    20,683 
Securities held-to-maturity, net (estimated fair value of $400,852 at September 30, 2015, $420,409 at June 30, 2015, $474,215 at December 31, 2014 and $493,059 at September 30, 2014, respectively)  392,932   414,625   469,417   486,819 
Federal Home Loan Bank of New York stock, at cost  15,970   18,740    19,170      14,785 
Loans receivable, net  1,938,972   1,772,879    1,688,846    1,632,026 
Mortgage loans held for sale          2,306     1,454       4,201         3,096 
Interest and dividends receivable    5,978     5,550           5,506            5,579 
Other real estate owned      3,262     3,357       4,664    6,466 
Premises and equipment, net    28,721      24,931        24,738         24,690 
Servicing asset  639       487               701     3,577 
Bank Owned Life Insurance   57,206       56,858         56,048   55,668 
Deferred tax asset    18,298   15,234   15,594         15,612 
Other assets 10,816       10,596   11,908      12,043 
Core deposit intangible          269    
Goodwill 1,845    
        
Total assets$2,557,898  $2,395,100  $2,356,714  $ 2,308,701 
        
LIABILITIES AND STOCKHOLDERS' EQUITY        
Deposits$1,967,771  $1,761,675  $1,720,135  $ 1,781,227 
Securities sold under agreements to repurchase with retail customers   77,993   71,687   67,812   61,457 
Federal Home Loan Bank advances    233,006   295,616   305,238   205,196 
Other borrowings    27,500   27,500   27,500      27,500 
Advances by borrowers for taxes and insurance   7,808     7,845   6,323           6,716 
Other liabilities     9,132       9,242   11,447     7,955 
        
Total liabilities 2,323,210    2,173,565    2,138,455    2,090,051 
        
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 17,276,677, 16,722,632, 16,901,653 and 17,118,314 shares outstanding at September 30, 2015, June 30, 2015, December 31, 2014 and September 30, 2014, respectively 336   336   336    336 
Additional paid-in capital 269,332   267,248   265,260   264,948 
Retained earnings 226,115   223,644   217,714   214,952 
Accumulated other comprehensive loss  (6,326)  (6,587)  (7,109)  (7,189)
Less:  Unallocated common stock held by Employee Stock Ownership Plan (3,116)  (3,187)   (3,330)  (3,401)
Treasury stock, 16,290,095, 16,844,140, 16,665,119 and 16,448,458 shares at September 30, 2015, June 30, 2015, December 31, 2014 and September 30, 2014, respectively (251,653)   (259,919)  (254,612)  (250,996)
Common stock acquired by Deferred Compensation Plan    (311)    (309)            (304)  (302)
Deferred Compensation Plan Liability      311    309     304      302 
Total stockholders' equity 234,688     221,535   218,259    218,650 
        
Total liabilities and stockholders' equity$2,557,898  $2,395,100  $2,356,714  $ 2,308,701 



OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
  
 For the Three Months Ended,For the Nine Months Ended
 September 30,June 30,September 30,September 30,
 20152015201420152014
 -----------------------------------------(unaudited)------------------------------------------
Interest income:     
Loans$  19,976 $  18,548 $   17,944 $56,553 $  52,720 
Mortgage-backed securities    1,460    1,519    1,642    4,602    5,136 
Investment securities and other     534      509      556      1,560      1,929 
Total interest income   21,970    20,576    20,142    62,715    59,785 
      
Interest expense:      
Deposits   1,162    967    1,010    3,084    3,092 
Borrowed funds     1,233      1,176      1,032      3,490      2,369 
Total interest expense     2,395      2,143      2,042      6,574      5,461 
Net interest income    19,575     18,433     18,100     56,141    54,324 
      
Provision for loan losses     300      300      1,000      975      1,805 
Net interest income after provision for loan losses  19,275   18,133   17,100   55,166   52,519 
      
Other income:     
Bankcard services revenue   929    899    914    2,611    2,603 
Wealth management revenue   501    629    579    1,657    1,727 
Fees and service charges   2,091    2,059    2,379    6,042    6,484 
Loan servicing income   75    59    239    186    693 
Net gain on sale of loan servicing  —   30   —     111   
Net gain on sales of loans available for sale     260      185      226    637    577 
Net gain on sales of investment securities available for sale    —    —   591   —   938 
Net loss from other real estate operations   (59)   (72)    (24)   (111)    (164)
Income from Bank Owned Life Insurance   348    364    382    1,158    1,097 
Other      7       18     —     18      2 
Total other income     4,152      4,171      5,286    12,309    13,957 
      
Operating expenses:     
Compensation and employee benefits   8,269    7,700    7,746    23,508    23,562 
Occupancy   1,508    1,242    1,327    4,204    4,154 
Equipment     951      813      879      2,562    2,403 
Marketing   398    415    294    1,087    1,436 
Federal deposit insurance   541    506    534    1,545    1,618 
Data processing   1,193    1,101    1,111    3,382    3,168 
Check card processing   490    423    518    1,388    1,458 
Professional fees   390    539    704      1,324    1,602 
Other operating expense     1,369      1,469      1,318    4,005      3,967 
Amortization of core deposit intangible   8   —  —   8   
Merger related expense     1,030      184     —     1,264     
Total operating expenses   16,147    14,392    14,431    44,277    43,368 
      
Income before provision for income taxes   7,280    7,912    7,955    23,198    23,108 
Provision for income taxes     2,582      2,779      2,790      8,105      8,120 
Net income$    4,698 $    5,133 $    5,165 $15,093 $  14,988 
      
Basic earnings per share$    0.28 $   0.31 $    0.31 $  0.91 $    0.89 
Diluted earnings per share$    0.28 $    0.31 $    0.31 $  0.90 $    0.89 
      
Average basic shares outstanding   16,733    16,401    16,623    16,522    16,748 
Average diluted shares outstanding   16,953    16,593    16,704    16,746    16,865 


OceanFirst Financial Corp. 
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
  
 At September 30,At June 30,
At December 31,At September 30,
 2015201520142014
     
STOCKHOLDERS' EQUITY    
Stockholders' equity to total assets   9.18%   9.25%   9.26%   9.47%
Tangible stockholders' equity to total tangible assets (1) 9.10   9.25  9.26  9.47 
Common shares outstanding (in thousands)   17,277    16,723    16,902    17,118 
Stockholders' equity per common share$    13.58 $    13.25 $    12.91 $    12.77 
Tangible stockholders' equity per common share (1)   13.46    13.25    12.91    12.77 
     
ASSET QUALITY    
Non-performing loans:    
Real estate – one-to-four family$    5,481 $    4,288 $    3,115 $    3,759 
Commercial real estate   17,057    14,601    12,758    12,713 
Consumer   1,741    1,901    1,877    1,811 
Commercial and industrial     115      115      557      109 
Total non-performing loans   24,394    20,905    18,307    18,392 
Other real estate owned     3,262      3,357      4,664      6,466 
Total non-performing assets$  27,656 $  24,262 $  22,971 $    24,858 
     
Purchased credit impaired ("PCI") loans$    1,019  $  $ $ 
     
Delinquent loans 30 to 89 days$   8,025 $    7,258 $   8,960 $    10,407 
     
Troubled debt restructurings:    
  Non-performing (included in total non-performing loans above)$3,819 $    3,832 $    2,031 $2,611 
  Performing    26,935     27,618      21,462      21,712 
Total troubled debt restructurings$  30,754 $  31,450 $    23,493 $    24,323 
     
Allowance for loan losses$  16,638 $  16,534 $    16,317 $    16,310 
             
Allowance for loan losses as a percent of total loans receivable 0.85%  0.92% 0.95% 0.98%
     
Allowance for loan losses as a percent of total non-performing loans   68.21    79.09    89.13    88.68 
             
Non-performing loans as a percent of total loans receivable 1.24    1.16    1.06    1.11 
             
Non-performing assets as a percent of total assets 1.08  1.01  0.97  1.08 
     
WEALTH MANAGEMENT    
Assets under administration$  205,087 $216,533 $  225,234 $  224,421 
     


   For the Three Months Ended,   For the Nine Months Ended,
 September 30,June 30,September 30, September 30,
  2015  2015  2014   2015   2014 
PERFORMANCE RATIOS (ANNUALIZED)       
Return on average assets   0.75%   0.86%   0.88%     0.83%     0.87%
Return on average stockholders' equity   8.02    9.29    9.50     8.94     9.23 
Return on average tangible stockholders' equity (1)   8.07    9.29    9.50     8.96     9.23 
Net interest rate spread   3.16    3.15    3.18     3.15     3.26 
Net interest rate margin   3.26    3.23    3.27     3.24     3.33 
Operating expenses to average assets   2.56    2.40    2.47     2.44     2.52 
Efficiency ratio   68.05    63.67    61.71     64.69     63.51 
                  
(1) Tangible stockholders' equity at September 30, 2015 is calculated by excluding intangible assets relating to goodwill ($1,845,000) and core deposit intangible ($269,000).


     
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(in thousands)
 
LOANS RECEIVABLE    
 September 30,
2015
June 30,
2015
December 31,
2014
September 30,
2014
     
Real estate:    
One-to-four family$  789,517 $  749,416 $  742,090 $  741,671 
Commercial real estate, multi-family and land   804,063    698,286    649,951    599,917 
Residential construction   51,580    52,428    47,552    41,143 
Consumer   194,306    192,351    199,349    199,842 
Commercial and industrial   129,379    111,229      83,946      79,608 
Total loans 1,968,845  1,803,710    1,722,888    1,662,181 
     
Loans in process   (14,145)   (16,073)   (16,731)   (14,180)
Deferred origination costs, net   3,216    3,230    3,207    3,431 
Allowance for loan losses    (16,638)    (16,534)    (16,317)    (16,310)
     
Total loans, net 1,941,278  1,774,333    1,693,047    1,635,122 
     
Less:  mortgage loans held for sale   2,306    1,454      4,201      3,096 
Loans receivable, net$1,938,972 $1,772,879 $1,688,846 $1,632,026 
      
Mortgage loans serviced for others $  164,488 $  173,090 $    197,791 $  796,771 
Loan pipeline:Average Yield    
Commercial   4.11%$  71,944 $  58,613 $  46,864 $  42,403 
Construction/permanent   4.17    16,357    9,309    12,674    15,019 
One-to-four family   3.71    23,537    17,545    20,072    18,364 
Consumer   4.40    8,859    8,059       4,585     10,367 
Total   4.06 $  120,697 $  93,526 $    84,195 $   86,153 


  For the Three Months Ended,For the Nine Months Ended
  September 30,June 30,September 30,September 30,
   2015  2015  2014  2015   2014 
Loan originations:       
Commercial   4.05%$  70,378 $  52,037 $    66,728 $  191,851  $166,119 
Construction/permanent   4.09    11,867    11,737    10,622      36,172     34,201 
One-to-four family   3.89    24,127    35,524    22,855    92,995     82,845 
Consumer  4.45      13,841      13,259      10,403      38,163       39,675 
Total   4.07 $120,213 $112,557 $  110,608 $  359,181  $322,840 
        
Loans sold $  11,063 $  16,788 $    9,803 $    38,830  $  31,009 
Net charge-offs    196    185    5,626    654     6,425 


DEPOSITS    
 September 30,
2015
June 30,
2015
December 31,
2014
September 30,
2014
Type of Account    
Non-interest-bearing$362,079 $    328,175 $    279,944 $    277,136 
Interest-bearing checking   883,940    794,310    836,120    888,008 
Money market deposit   151,657    123,017    95,663    110,721 
Savings   310,009    306,079    301,190    294,059 
Time deposits     260,086      210,094      207,218      211,303 
 $1,967,771 $  1,761,675 $  1,720,135 $  1,781,227 


OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
  
 FOR THE THREE MONTHS ENDED,
 SEPTEMBER 30, 2015JUNE 30, 2015SEPTEMBER 30, 2014
  AVERAGE
BALANCE

INTEREST
AVERAGE YIELD/
COST
AVERAGE
BALANCE

INTEREST
AVERAGE YIELD/
COST
AVERAGE
BALANCE

INTEREST
AVERAGE YIELD/
COST
 (dollars in thousands)
Assets         
Interest-earning assets:         
Interest-earning deposits and short-term  investments$    55,047 $    17    0.12%$    28,636 $    6    0.08%$   56,523 $    17  0.12%
Securities (1) and FHLB stock   468,707    1,977    1.69    490,760    2,022    1.65    529,116    2,181    1.65 
Loans receivable, net (2)   1,875,458    19,976    4.26    1,762,995    18,548    4.21    1,631,680    17,944    4.40 
Total interest-earning assets   2,399,212    21,970    3.66    2,282,391    20,576    3.61    2,217,319    20,142    3.63 
Non-interest-earning assets     122,269        112,445        117,509   
Total assets$2,521,481   $2,394,836   $2,334,828   
Liabilities and Stockholders' Equity         
Interest-bearing liabilities:         
Transaction deposits$1,319,106    383    0.12 $1,273,717    238    0.07 $1,279,313      262    0.08 
Time deposits     244,325      779    1.28      212,160      729    1.37      213,627       748    1.40 
Total   1,563,431    1,162    0.30    1,485,877    967    0.26    1,492,940    1,010    0.27 
Borrowed funds     355,639    1,233    1.39      365,804    1,176    1.29      325,897      1,032    1.27 
Total interest-bearing liabilities   1,919,070    2,395    0.50    1,851,681    2,143    0.46    1,818,837      2,042    0.45 
Non-interest-bearing deposits      354,411      307,528      279,144   
Non-interest-bearing liabilities      13,827        14,707        19,436   
Total liabilities   2,287,308      2,173,916      2,117,417   
Stockholders' equity     234,173        220,920        217,411   
Total liabilities and stockholders' equity$2,521,481   $2,394,836   $2,334,828   
Net interest income $  19,575   $  18,433   $  18,100  
Net interest rate spread (3)     3.16%     3.15%     3.18%
Net interest margin (4)     3.26%     3.23%     3.27%


 FOR THE NINE MONTHS ENDED,
 SEPTEMBER 30, 2015SEPTEMBER 30, 2014
 AVERAGE
BALANCE

INTEREST
AVERAGE YIELD/
COST
AVERAGE
BALANCE
 
INTEREST
AVERAGE YIELD/
COST
 (dollars in thousands)
Assets      
Interest-earning assets:      
Interest-earning deposits and short-term  investments$ 37,409 $29    0.10%$    37,572 $    27   0.10%
Securities (1) and FHLB stock   489,671    6,133    1.67    547,983    7,038    1.71 
Loans receivable, net (2)   1,781,023    56,553    4.23    1,592,864    52,720    4.41 
Total interest-earning assets   2,308,103    62,715    3.62    2,178,419    59,785    3.66 
Non-interest-earning assets     115,577        117,313   
Total assets$  2,423,680   $  2,295,732   
Liabilities and Stockholders' Equity      
Interest-bearing liabilities:      
Transaction deposits$  1,290,891    859    0.09 $  1,286,412      873    0.09 
Time deposits     220,827      2,225    1.34      214,821      2,219    1.38 
Total   1,511,718    3,084    0.27    1,501,233    3,092    0.27 
Borrowed funds      352,743      3,490    1.32      313,519      2,369    1.01 
Total interest-bearing liabilities   1,864,461      6,574    0.47    1,814,752      5,461    0.40 
Non-interest-bearing deposits   319,797      247,469   
Non-interest-bearing liabilities     14,407        16,895   
Total liabilities   2,198,665      2,079,116   
Stockholders' equity    225,015        216,616   
Total liabilities and stockholders' equity$ 2,423,680   $ 2,295,732   
Net interest income $  56,141   $  54,324  
Net interest rate spread (3)     3.15%      3.26%
Net interest margin (4)     3.24%     3.33%
           
(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. 
OTHER ITEMS
(in thousands, except per share amounts)
NON-GAAP RECONCILIATION      
       
Core earnings:  Three months ended,
September 30, 2015
 Nine months ended,
September 30, 2015
 
Net income  $4,698  $15,093  
Add:  Non-core merger related expenses   1,030   1,264  
Less:  Income tax benefit on non-core expenses   (316)  (360) 
Core earnings  $5,412  $15,997  
Core diluted earnings per share  $0.32  $0.96  
       
ACQUISITION DATE – FAIR VALUE BALANCE SHEET 
The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of the acquisition for Colonial, net of the total consideration paid (in thousands): 
 At July 31, 2015 

Assets acquired:
Colonial
Book Value
Purchase
Accounting Adjustments
Estimated
Fair Value
 
Securities$6,758 $   $6,758  
Loans, gross 125,063     (3,867)(1)     121,196  
Allowance for loan losses (1,578)    1,578       
Other real estate owned 405     (148)    257  
Deferred tax asset – recognition of net operating loss carryforward      2,292     2,292  
– relating to purchase accounting adjustments      952     952  
Other assets 8,823          8,823  
Core deposit intangible      277     277  
Goodwill      1,845     1,845  
Total assets acquired 139,471     2,929     142,400  
     
Liabilities assumed:    
Deposits 123,103     243     123,346  
Federal Home Loan Bank advances 6,800          6,800  
Other liabilities 309          309  
Total liabilities assumed 130,212     243     130,455  
Net assets acquired$9,259 $   2,686    $11,945  
     
(1) Includes a general credit fair value deduction of $1,722,000; a fair value deduction on credit-impaired loans of $1,475,000; an interest rate fair value benefit of $980,000; and further credited by the write-off of Colonial's capitalized loan origination costs of $1,650,000. 
  
Included in net interest income for the three months ended September 30, 2015 is $140,000 of net accretion/amortization relating to the purchase accounting adjustments.  
  
The calculation of goodwill is subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available.  As the Company finalizes its review of the acquired assets and liabilities, certain adjustments to the recorded carrying values may be required. 

 

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
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