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OceanFirst Financial Corp. Announces Quarterly and Annual Financial Results

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TOMS RIVER, N.J., Jan. 21, 2016 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ: OCFC), (the "Company"), the holding company for OceanFirst Bank (the "Bank"), today announced that diluted earnings per share increased to $0.31 for the quarter ended December 31, 2015, as compared to $0.30 for the corresponding prior year quarter.  For the year ended December 31, 2015, diluted earnings per share increased to $1.21, as compared to $1.19 for the prior year. 

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.  The results of operations for the quarter and year ended December 31, 2015 included non-recurring merger related expenses which decreased net income, net of tax benefit, by $441,000 and $1.3 million, respectively.  Excluding these items, core earnings for the quarter and year ended December 31, 2015 were $5.7 million, or $0.33 per diluted share, and $21.6 million, or $1.29 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 non-recurring merger related expenses.)

Highlights for the quarter are described below.

  • Commercial loans outstanding increased $29.8 million, an annualized growth rate of 12.8%, the tenth consecutive quarter of double digit percentage growth. Over the last year, commercial loans outstanding increased $155.2 million, or 21.1%, excluding Colonial.
  • Net interest margin improved to 3.37%, as compared to 3.26% in the trailing quarter and 3.27% in the prior year quarter.
  • On January 5, 2016, the Company announced it had entered into a definitive agreement and plan of merger pursuant to which Cape Bancorp, Inc. will merge with and into OceanFirst in a transaction valued at approximately $208.1 million. Cape is one of Southern New Jersey's largest community banks with 22 full-service banking centers, five loan offices and approximately $1.6 billion in total assets, $1.3 billion in total deposits and $1.1 billion in gross loans.

Chief Executive Officer and President Christopher D. Maher commented, "The Company delivered another quarter of solid earnings with the commercial loan team again providing strong organic growth and double-digit increases."  Mr. Maher added; "We are pleased to also report strong net interest margin in the fourth quarter as a driving contributor of our performance."

The Company also announced that the Board of Directors declared its seventy-sixth consecutive quarterly cash dividend on common stock.  The dividend for the quarter ended December 31, 2015 of $0.13 per share will be paid on February 12, 2016 to stockholders of record on February 1, 2016.

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".  Also, during the quarter the Bank opened a Remote Service Unit utilizing a Personal Teller Machine and an adjacent Deposit Production Office in an active adult community in Ocean County.  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 has received regulatory approval and is expected to close at the end of the first quarter of 2016.

Results of Operations

Net income for the quarter ended December 31, 2015 was $5.2 million, or $0.31 per diluted share, as compared to net income of $4.9 million, or $0.30 per diluted share, for the corresponding prior year period.  For the year ended December 31, 2015 net income totaled $20.3 million, or $1.21 per diluted share, as compared to net income of $19.9 million, or $1.19 per diluted share for the prior year.  Net income for the quarter and year ended December 31, 2015 includes non-recurring merger related expenses, net of tax benefit, of $441,000 and $1.3 million, respectively, which reduced diluted earnings per share by $0.02 and $0.08, 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 higher operating expenses.  

Net interest income for the quarter and the year ended December 31, 2015 increased to $20.7 million and $76.8 million, respectively, as compared to $18.0 million and $72.3 million, respectively, for the same prior year periods, reflecting an increase in interest-earning assets, and a net interest margin that was higher for the quarter, but lower for the year.  Average interest-earning assets increased $250.9 million and $160.2 million, respectively, for the quarter and year ended December 31, 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 $116.6 million and $51.2 million, respectively, for the quarter and year ended December 31, 2015. Average loans receivable, net, increased $325.3 million and $222.7 million, respectively, for the quarter and year ended December 31, 2015, as compared to the same prior year periods.  The increases attributable to Colonial were $106.6 million and $46.8 million for the quarter and the year, respectively.  The net interest margin increased to 3.37% from 3.27% for the quarter ended December 31, 2015, as compared to the same prior year period.  The net interest margin decreased to 3.28% from 3.31% for the year ended December 31, 2015, as compared to the prior year.  The yield on average interest-earning assets increased to 3.77% and 3.66%, respectively, for the quarter and year ended December 31, 2015, as compared to 3.64% and 3.65%, respectively, for the same prior year periods.  The yield on average interest-earning assets and the net interest margin for the quarter and year ended December 31, 2015 benefited from $201,000 and $262,000, respectively, in loan prepayment fees, as compared to $77,000 and $155,000, respectively, in the prior year periods.  The cost of average interest-bearing liabilities increased to 0.50% and 0.48% for the quarter and year ended December 31, 2015, respectively, as compared to 0.45% and 0.42%, respectively, in the prior year periods.  In anticipation of a rising interest rate environment, the Company has extended its borrowed funds into higher-costing longer-term maturities.  Since December 31, 2013, the Bank has extended $197.4 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 December 31, 2015.  The total cost of deposits (including non-interest bearing deposits) was 0.23% for the year ended December 31, 2015, unchanged compared to the prior year.

Net interest income for the quarter ended December 31, 2015 increased $1.1 million, as compared to the prior linked quarter.  The net interest margin increased to 3.37% for the quarter ended December 31, 2015, from 3.26% for the prior linked quarter and average interest-earning assets increased by $58.6 million.  The yield on average interest-earning assets increased to 3.77% for the quarter ended December 31, 2015, from 3.66% for the prior linked quarter, while the cost of average interest-bearing liabilities was unchanged at 0.50%.  The net interest margin benefited from the higher-yielding interest-earning assets acquired from Colonial and from an increase of $201,000 of loan prepayment fees.

For the quarter and the year ended December 31, 2015, the provision for loan losses was $300,000 and $1.3 million, respectively, as compared to $825,000 and $2.6 million, respectively, for the corresponding prior year periods.  Net charge-offs decreased to $870,000, for the year ended December 31, 2015, as compared to net charge-offs of $7.2 million in the corresponding prior year period.  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 quarter and year ended December 31, 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 $216,000 for the quarter ended December 31, 2015, as compared to $196,000 for the quarter ended September 30, 2015. Non-performing loans decreased by $6.1 million at December 31, 2015, as compared to September 30, 2015 primarily due to the transfer of a loan to a hotel, golf and banquet facility in New Jersey to other real estate owned.  The facility is currently under contract for sale, subject to due diligence and customary closing conditions.  If executed under the existing terms of the contract, no charge-off is expected.   

For the quarter and the year ended December 31, 2015, other income decreased to $4.1 million and $16.4 million, respectively, as compared to $4.6 million and $18.6 million, respectively, in the same prior year periods.  The decrease from the prior year quarter was primarily due to the 2014 sale of servicing rights on a majority of residential mortgage loans serviced for the Federal agencies at a gain of $408,000.  The decrease in other income for the year ended December 31, 2015 was $2.2 million, as compared to the prior year.  The 2014 amount includes gains on sales of equity securities of $1.0 million.  The sale of loan servicing rights reduced other income by $845,000 in 2015, including the reduced gains on the sale of servicing rights and the reduction in loan servicing income.  Fees and service charges declined $465,000 due to the sector wide impact of the consumer shift away from deposit overdrafts.

Operating expenses increased to $16.5 million and $60.8 million, respectively, for the quarter and year ended December 31, 2015, as compared to $14.4 million and $57.8 million, respectively, in the same prior year periods.  Operating expenses for the quarter and year ended December 31, 2015 include $614,000 and $1.9 million, respectively, in non-recurring merger related expenses relating to the acquisition of Colonial.  The Company believes that all merger expenses related to Colonial have been recorded at December 31, 2015.  Additionally, operating expenses attributable to Colonial for the quarter and year ended December 31, 2015 were $597,000 and $1.1 million, respectively.  Approximately $172,000 of the fourth quarter expenses were associated with operating duplicate systems.  These expenses have been eliminated entering 2016.  Compensation and employee benefits expense increased $573,000 for the quarter ended December 31, 2015, as compared to the same prior year period.  The increase was primarily due to higher salary expense associated with the Colonial acquisition, personnel increases in commercial lending, and the opening of two new branches.  Compensation and employee benefits expenses for the year ended December 31, 2015 increased $519,000 over 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 quarter ended December 31, 2015, operating expenses increased compared to the prior linked quarter by $768,000, excluding merger related expenses.  The increase was primarily due to a full quarter of expense associated with Colonial; the full impact of opening a new branch in the third quarter; growth in data processing costs and higher professional fees primarily relating to non-recurring items. 

The provision for income taxes was $2.8 million and $10.9 million, respectively, for the quarter and year ended December 31, 2015, as compared to $2.5 million and $10.6 million, respectively, for the same prior year periods.  The effective tax rate was 34.7% and 34.9%, respectively, for the quarter and the year ended December 31, 2015, as compared to 33.6% and 34.8%, respectively, for the same prior year periods and 35.5% in the prior linked quarter.  The increases in the effective tax rate over the prior year periods were primarily due to non-deductible merger related expenses.

Financial Condition

Total assets increased by $236.4 million to $2,593.1 million at December 31, 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 $281.9 million, to $1,970.7 million at December 31, 2015, from $1,688.8 million at December 31, 2014, which included $121.2 million of loans acquired from the Colonial acquisition, growth in commercial loans (excluding Colonial) of $155.2 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 $64.5 million.  As part of the Colonial acquisition, the Company has outstanding goodwill and core deposit intangible at December 31, 2015 of $1.8 million and $256,000, respectively.

Deposits increased by $196.5 million, to $1,916.7 million at December 31, 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 $26.2 million demonstrating the value of relationship based lending.  Deposits decreased $51.1 million, as compared to the prior linked quarter, partly due to seasonality as the Bank experienced a large increase in deposits in the third quarter.  The loan-to-deposit ratio at December 31, 2015 was 102.8%, an increase as compared to 98.5% at September 30, 2015 and 98.2% at December 31, 2014.  Funding sources will benefit from the expected first quarter 2016 closing on the purchase of an existing retail branch located in the Toms River market. 

Stockholders' equity increased to $238.4 million at December 31, 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 year, 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 December 31, 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 $13.67 at December 31, 2015, as compared to $12.91 at December 31, 2014.

Asset Quality

The Company's non-performing loans totaled $18.3 million at December 31, 2015, unchanged compared to December 31, 2014.  Non-performing loans do not include $461,000 of purchased credit impaired ("PCI") loans acquired from Colonial.  The Company's other real estate owned totaled $8.8 million at December 31, 2015, a $4.2 million increase from December 31, 2014.  The amount at December 31, 2015 includes $7.0 million relating to a hotel, golf and banquet facility located in New Jersey which the Company acquired in the fourth quarter of 2015.  At December 31, 2015, the Company's allowance for loan losses was 0.84% of total loans, a decline from 0.85% at September 30, 2015 and 0.95% at December 31, 2014.  The decline in the loan coverage ratio from the prior year was primarily a result of Colonial loans acquired at fair value, with no corresponding allowance.  The allowance for loan losses as a percent of total non-performing loans was 91.51% at December 31, 2015, an increase from 68.21% at September 30, 2015 and 89.13% in the prior year.

Annual Meeting

The Company also announced today that its Annual Meeting of Stockholders will be held on Thursday, June 2, 2016 at 10:00 a.m. Eastern time, at Jack Baker's Lobster Shanty located at 83 Channel Drive, Point Pleasant Beach, New Jersey.  The record date for stockholders to vote at the Annual Meeting is April 11, 2016.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, January 22, 2016 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 10078024 from one hour after the end of the call until April 22, 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 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 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)
 
 December 31, September 30, December 31,
  2015   2015   2014 
ASSETS  (unaudited)  
      
Cash and due from banks$43,946  $50,576  $36,117 
Securities available-for-sale, at estimated fair value 29,902   30,108   19,804 
Securities held-to-maturity, net (estimated fair value of $397,763 at December 31, 2015, $400,852 at September 30, 2015, and $474,215 at December 31, 2014, respectively) 394,813   392,932   469,417 
Federal Home Loan Bank of New York stock, at cost 19,978   15,970   19,170 
Loans receivable, net 1,970,703   1,938,972   1,688,846 
Mortgage loans held for sale 2,697   2,306   4,201 
Interest and dividends receivable 5,860   5,978   5,506 
Other real estate owned 8,827   3,262   4,664 
Premises and equipment, net 28,419   28,721   24,738 
Servicing asset 589   639   701 
Bank Owned Life Insurance 57,549   57,206   56,048 
Deferred tax asset 17,016   18,298   15,594 
Other assets 10,691   10,816   11,908 
Core deposit intangible 256   269    
Goodwill   1,822     1,845    
      
Total assets$2,593,068  $2,557,898  $2,356,714 
      
LIABILITIES AND STOCKHOLDERS' EQUITY
     
      
Deposits$1,916,678  $1,967,771  $1,720,135 
Securities sold under agreements to repurchase with retail customers  75,872   77,993   67,812 
Federal Home Loan Bank advances   324,385     233,006     305,238 
Other borrowings   22,500     27,500     27,500 
Advances by borrowers for taxes and insurance   7,121     7,808     6,323 
Other liabilities     8,066       9,132       11,447 
      
Total liabilities 2,354,622   2,323,210   2,138,455 
      
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 17,286,557, 17,276,677, and 16,901,653, shares outstanding at December 31, 2015, September 30, 2015, and December 31, 2014, respectively 336   336   336 
Additional paid-in capital   269,757     269,332     265,260 
Retained earnings   229,140     226,115     217,714 
Accumulated other comprehensive loss   (6,241)    (6,326)    (7,109)
Less: Unallocated common stock held by Employee Stock Ownership Plan (3,045)  (3,116)  (3,330)
Treasury stock, 16,280,215, 16,290,095, and 16,665,119 shares at December 31, 2015, September 30, 2015, and December 31, 2014, respectively (251,501)  (251,653)  (254,612)
Common stock acquired by Deferred Compensation Plan   (314)    (311)    (304)
Deferred Compensation Plan Liability     314       311       304 
Total stockholders' equity 238,446    234,688   218,259 
      
Total liabilities and stockholders' equity$2,593,068  $2,557,898  $2,356,714 


OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
 
 For the Three Months Ended,For the Years Ended
 December 31,September 30,December 31,   December 31,
  2015  2015  2014  2015  2014 
 (unaudited) 
Interest income:     
Loans$  21,143 $  19,976 $   17,843 $77,694 $  70,564 
Mortgage-backed securities   1,449    1,460    1,709    6,051    6,845 
Investment securities and other     557      534      515  2,118      2,444 
Total interest income   23,149    21,970    20,067  85,863    79,853 
      
Interest expense:     
Deposits   1,217    1,162    1,010    4,301    4,103 
Borrowed funds     1,244      1,233      1,033      4,733    3,402 
Total interest expense     2,461      2,395      2,043      9,034      7,505 
                
Net interest income 20,688  19,575  18,024  76,829  72,348 
      
Provision for loan losses     300      300      825      1,275      2,630 
Net interest income after provision for loan losses 20,388  19,275  17,199  75,554  69,718 
      
Other income:     
Bankcard services revenue   926    929    875    3,537    3,478 
Wealth management revenue   530    501    553    2,187    2,280 
Fees and service charges   2,082    2,091    2,107    8,124    8,589 
Loan servicing income   82    75    123    268    816 
Net gain on sale of loan servicing       408      111    408 
Net gain on sales of loans available for sale     185      260      194    822    772 
Net gain on sales of investment securities available for sale           93      1,031 
Net loss from other real estate operations   (38)   (59)   (226)   (149)   (390)
Income from Bank Owned Life Insurance   343    348    380    1,501    1,477 
Other      8       7       113      25       116 
Total other income     4,118      4,152      4,620    16,426    18,577 
      
Operating expenses:     
Compensation and employee benefits   8,438    8,269    7,865    31,946    31,427 
Occupancy   1,518    1,508    1,356    5,722    5,510 
Equipment     1,162      951      875      3,725    3,278 
Marketing   428    398    359    1,516    1,795 
Federal deposit insurance   528    541    510    2,072    2,128 
Data processing   1,349    1,193    1,071    4,731    4,239 
Check card processing   427    490    476    1,815    1,934 
Professional fees   541    390    665      1,865    2,267 
Other operating expense     1,481      1,369      1,219    5,484      5,186 
Amortization of core deposit intangible   13    8      21   
Merger related expense     614      1,030          1,878     
Total operating expenses   16,499    16,147    14,396    60,775    57,764 
      
Income before provision for income taxes   8,007    7,280    7,423    31,205    30,531 
Provision for income taxes     2,777      2,582      2,491    10,883    10,611 
Net income$    5,230 $    4,698 $    4,932 $20,322 $  19,920 
      
Basic earnings per share$    0.31 $    0.28 $    0.30 $  1.22 $    1.19 
Diluted earnings per share$    0.31 $    0.28 $    0.30 $  1.21 $    1.19 
      
Average basic shares outstanding   16,867    16,733    16,504    16,600    16,687 
Average diluted shares outstanding   17,126    16,953    16,597    16,811    16,797 


OceanFirst Financial Corp.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
 
 At December 31,
2015
At September 30,
2015
At December 31,
2014
STOCKHOLDERS' EQUITY   
Stockholders' equity to total assets   9.19%   9.18%   9.26%
Tangible stockholders' equity to total tangible assets (1) 9.12  9.10  9.26 
Common shares outstanding (in thousands)   17,287    17,277    16,902 
Stockholders' equity per common share$    13.79 $    13.58 $    12.91 
Tangible stockholders' equity per common share (1)   13.67    13.46    12.91 
    
ASSET QUALITY   
Non-performing loans:   
Real estate – one-to-four family$    5,779 $    5,481 $    3,115 
Commercial real estate   10,796    17,057    12,758 
Consumer   1,576    1,741    1,877 
Commercial and industrial     123      115      557 
Total non-performing loans   18,274    24,394    18,307 
Other real estate owned     8,827      3,262      4,664 
Total non-performing assets$  27,101 $  27,656 $  22,971 
    
Purchased credit impaired ("PCI") loans$    461 $    1,019   $ 
    
Delinquent loans 30 to 89 days$    9,087 $    8,025 $    8,960 
    
Troubled debt restructurings:   
Non-performing (included in total non-performing loans above)$4,918 $  3,819 $ 2,031 
Performing    26,344     26,935      21,462 
Total troubled debt restructurings$  31,262 $  30,754 $    23,493 
    
Allowance for loan losses$16,722 $  16,638 $    16,317 
Allowance for loan losses as a percent of total loans receivable 0.84% 0.85% 0.95%
Allowance for loan losses as a percent of total   
non-performing loans   91.51    68.21    89.13 
Non-performing loans as a percent of total   
loans receivable   0.91    1.24    1.06 
Non-performing assets as a percent of total assets 1.05  1.08  0.97 
    
WEALTH MANAGEMENT   
Assets under administration$  229,039 $  205,087 $  225,234 

 

 For the Three Months Ended, For Years Ended,
 December 31,September 30,December 31, December 31,
  2015  2015  2014   2015   2014 
PERFORMANCE RATIOS (ANNUALIZED)       
Return on average assets   0.81%   0.75%   0.84%    0.82%    0.86%
Return on average stockholders' equity   8.85    8.02    9.06     8.92     9.18 
Return on average tangible stockholders' equity (1)   8.93    8.07    9.06     8.96     9.18 
Net interest rate spread   3.27    3.16    3.19     3.18     3.23 
Net interest rate margin   3.37    3.26    3.27     3.28     3.31 
Operating expenses to average assets   2.55    2.56    2.46     2.47     2.50 
Efficiency ratio   66.51    68.05    63.58     65.17   63.53 
 
(1) Tangible stockholders' equity at December 31, 2015 is calculated by excluding intangible assets relating to goodwill and core deposit intangible.


OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(in thousands)
 
LOANS RECEIVABLE   
 December 31,
2015
September 30,
2015
December 31,
2014
    
Real estate:   
One-to-four family$793,946 $789,517 $742,090 
Commercial real estate, multi-family and land 818,445  804,063  649,951 
Residential construction 50,757  51,580  47,552 
Consumer 193,160  194,306  199,349 
Commercial and industrial 144,788  129,379  83,946 
Total loans 2,001,096  1,968,845  1,722,888 
    
Loans in process (14,206) (14,145) (16,731)
Deferred origination costs, net 3,232  3,216  3,207 
Allowance for loan losses (16,722) (16,638) (16,317)
    
Total loans, net 1,973,400  1,941,278  1,693,047 
    
Less:  mortgage loans held for sale 2,697  2,306  4,201 
Loans receivable, net$1,970,703 $1,938,972 $1,688,846 
     
Mortgage loans serviced for others $158,244 $164,488 $197,791 
Loan pipeline: Average Yield        
Commercial 4.27%$53,785 $71,944 $46,864 
Construction/permanent 4.13  14,278  16,357  12,674 
One-to-four family 3.92  17,582  23,537  20,072 
Consumer 4.43  5,481  8,859  4,585 
Total 4.19 $91,126 $120,697 $84,195 


  For the Three Months Ended,For the Years Ended 
  December 31,September 30,December 31,December 31, 
   2015  2015  2014  2015   2014  
Loan originations:        
Commercial  4.31%$  72,534 $    70,378 $    77,739 $  264,385  $243,858  
Construction/permanent  4.15    12,386    11,867    16,355      48,558     50,556  
One-to-four family  3.69    31,230    24,127    24,971    124,225     107,816  
Consumer  4.31      10,431      13,841      12,395  48,594       52,070  
Total  4.14 $126,581 $  120,213 $  131,460 $  485,762  $454,300  
         
Loans sold $    9,784 $    11,063 $    8,147 $    48,614  $39,156 (1)  
Net charge-offs    216    196    818    870     7,243 (2)  
 
(1) Loans sold for the year ended December 31, 2014 excludes $23.1 million relating to the bulk sale of non-performing loans.
(2) Net charge-offs for the year ended December 31, 2014 includes $5.0 million relating to the bulk sale of non-performing loans.


DEPOSITS    
 December 31,
2015
September 30,
2015
December 31,
2014
 
Type of Account    
Non-interest-bearing$  337,143 $  362,079 $    279,944  
Interest-bearing checking   859,927    883,940    836,120  
Money market deposit   153,196    151,657    95,663  
Savings   310,989    310,009    301,190  
Time deposits     255,423      260,086      207,218  
 $  1,916,678 $  1,967,771 $  1,720,135  



OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
 
 FOR THE THREE MONTHS ENDED,
 DECEMBER 31, 2015SEPTEMBER 30, 2015DECEMBER 31, 2014
 AVERAGE
BALANCE
INTERESTAVERAGE
YIELD/
COST
AVERAGE
BALANCE
INTERESTAVERAGE
YIELD/
COST
AVERAGE
BALANCE
INTERESTAVERAGE
YIELD/
COST
 (dollars in thousands)
Assets         
Interest-earning assets:         
Interest-earning deposits and short-term  investments$41,227 $16  0.16%$55,047 $17  0.12%$45,414 $17  0.15%
Securities (1) and FHLB stock 456,486  1,990  1.74  468,707  1,977  1.69  526,661  2,207  1.68 
Loans receivable, net (2) 1,960,099  21,143  4.31  1,875,458  19,976  4.26  1,634,799  17,843  4.37 
Total interest-earning assets 2,457,812  23,149  3.77  2,399,212  21,970  3.66  2,206,874  20,067  3.64 
Non-interest-earning assets   129,297      122,269      130,663   
Total assets$2,587,109   $2,521,481   $2,337,537   
Liabilities and Stockholders' Equity         
Interest-bearing liabilities:         
Transaction deposits$1,371,421  381  0.11 $1,319,106  383  0.12 $1,304,075  255  0.08 
Time deposits   256,372    836  1.30    244,325    779  1.28    209,844    755  1.44 
Total 1,627,793  1,217  0.30  1,563,431  1,162  0.30  1,513,919  1,010  0.27 
Borrowed funds   357,170  1,244  1.39    355,639  1,233  1.39    305,787    1,033  1.35 
Total interest-bearing liabilities 1,984,963  2,461  0.50  1,919,070  2,395  0.50  1,819,706    2,043  0.45 
Non-interest-bearing deposits 349,473    354,411    285,825   
Non-interest-bearing liabilities   16,175      13,827      14,204   
Total liabilities 2,350,611    2,287,308    2,119,735   
Stockholders' equity   236,498      234,173      217,802   
Total liabilities and stockholders' equity$2,587,109   $2,521,481   $2,337,537   
Net interest income $  20,688   $  19,575   $  18,024  
Net interest rate spread (3)     3.27%     3.16%     3.19%
Net interest margin (4)     3.37%     3.26%     3.27%


 FOR THE YEARS ENDED,
 DECEMBER 31, 2015DECEMBER 31, 2014
 AVERAGE
BALANCE
INTERESTAVERAGE
YIELD/
COST
AVERAGE
BALANCE
INTERESTAVERAGE
YIELD/
COST
 (dollars in thousands)
Assets      
Interest-earning assets:      
Interest-earning deposits and short-term  investments$38,371 $44  0.11%$39,549 $41  0.10%
Securities (1) and FHLB stock   481,306    8,125    1.69    542,609    9,248    1.70 
Loans receivable, net (2)   1,826,161    77,694    4.25    1,603,434    70,564    4.40 
Total interest-earning assets   2,345,838    85,863    3.66    2,185,592    79,853    3.65 
Non-interest-earning assets     119,035        120,677   
Total assets$  2,464,873   $  2,306,269   
Liabilities and Stockholders' Equity      
Interest-bearing liabilities:      
Transaction deposits$  1,311,252    1,241    0.09 $  1,278,078      1,129    0.09 
Time deposits     229,785      3,060    1.33      213,566      2,974    1.39 
Total   1,541,037    4,301    0.28    1,491,644    4,103    0.28 
Borrowed funds     353,860      4,733    1.34      311,570      3,402    1.09 
Total interest-bearing liabilities   1,894,897      9,034    0.48    1,803,214      7,505    0.42 
Non-interest-bearing deposits   327,216      257,058   
Non-interest-bearing liabilities     14,851        29,082   
Total liabilities   2,236,964      2,089,354   
Stockholders' equity     227,909        216,915   
Total liabilities and stockholders' equity$  2,464,873   $  2,306,269   
Net interest income $  76,829   $  72,348  
Net interest rate spread (3)     3.18%     3.23%
Net interest margin (4)     3.28%     3.31%


(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,
December 31, 2015
 Year ended,
December 31, 2015
Net income$  5,230  $  20,322 
Add:  Non-core merger related expenses   614     1,878 
Less:  Income tax benefit on non-core expenses     (173)      (556)
Core earnings$  5,671  $  21,644 
Core diluted earnings per share$    0.33  $    1.29 

 

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  (3,597)(1)  121,466  
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                       935    935  
Other assets   8,823    (230)   8,593  
Core deposit intangible                     277    277  
Goodwill           1,822      1,822  
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 $1,205,000; 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 quarter and the year ended December 31, 2015 is $177,000 and $317,000, respectively, 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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