Market Overview

OceanFirst Financial Corp. Announces Quarterly and Annual Financial Results

Share:

TOMS RIVER, N.J., Jan. 26, 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 $0.22 for the quarter ended December 31, 2016, as compared to $0.31 for the corresponding prior year quarter.  For the year ended December 31, 2016, diluted earnings per share were $0.98, as compared to $1.21 for the corresponding prior year period. 

The results of operations for the quarter and the year ended December 31, 2016 include merger related expenses, which decreased net income, net of tax benefit, by $4.5 million and $11.9 million, respectively.  Excluding this item, core earnings for the quarter and year ended December 31, 2016 were $10.6 million, or $0.38 per diluted share, and $35.0 million, or $1.49 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, certain other expenses incurred in the second quarter of 2016, and quantification of core earnings).

Highlights for the quarter are described below.

  • On November 30, 2016, the Company completed its acquisition of Ocean Shore Holding Company ("Ocean Shore"), which added $995.9 million to assets, $774.0 million to loans, and $875.1 million to deposits. The Company anticipates full integration of Ocean Shore's operations and systems in May 2017.
  • On October 15, 2016, the Bank completed the systems integration and rebranding effort related to the acquisition of Cape Bancorp, Inc. ("Cape"), which had been operated as a division of OceanFirst Bank since the closing on May 2, 2016.
  • Non-performing loans decreased 25.8%, to $13.6 million, at December 31, 2016, from $18.3 million at December 31, 2015. Non-performing loans as a percent of total loans receivable decreased to 0.35% at December 31, 2016, from 0.91% at December 31, 2015, the lowest level in the past 10 years.

Chairman and Chief Executive Officer Christopher D. Maher reflected on the Company's results, "With the Ocean Shore closing on November 30th and the full systems conversion and rebranding of Cape completed, we are pleased to include the stockholders, employees and customers of both organizations in the OceanFirst family."  Mr. Maher added, "Throughout 2017 we will be focused on effectively deploying excess liquidity and reducing operating expenses following the two acquisitions completed in 2016."

The Company continues to focus on organic growth while actively managing expense levels.  Expense reductions associated with the successful systems integration of Cape in the fourth quarter of 2016 will be fully realized in the first quarter of 2017. Initial cost savings were realized at the time of the Ocean Shore acquisition on November 30, 2016, with incremental savings expected after the second quarter of 2017 due to the anticipated systems integration.  The Company also expects to realize significant cost savings from the consolidation of branches.  The Company's Board of Directors has approved the elimination of 10 such branches in the legacy Cape and Ocean Shore market area by mid-year 2017, with an expected annualized cost savings of $3.6 million.  Further, the Company expects to consolidate other branches in its central New Jersey market area by the end of the year.  These initiatives will allow the Company to continue to invest in commercial banking and electronic delivery channels while meeting the efficiency targets established in connection with the recent acquisitions.

The Company also announced that the Board of Directors declared its eightieth consecutive quarterly cash dividend on common stock. The dividend for the quarter ended December 31, 2016 of $0.15 per share will be paid on February 17, 2017 to stockholders of record on February 6, 2017.

Results of Operations

On July 31, 2015, the Company completed its acquisition of Colonial American Bank ("Colonial American"), which added $142.4 million to assets, $121.2 million to loans, and $123.3 million to deposits.  Colonial American's results of operations are included in the consolidated results for the quarter and year ended December 31, 2016, but are only included in the results of operations for the period from August 1, 2015 through December 31, 2015.

On May 2, 2016, the Company completed its acquisition of Cape and its results of operations from May 2, 2016 through December 31, 2016 are included in the consolidated results for the quarter and year ended December 31, 2016, but are not included in the results of operations for the corresponding prior year periods.

On November 30, 2016, the Company completed its acquisition of Ocean Shore and its results of operations from December 1, 2016 through December 31, 2016 are included in the consolidated results for the quarter and year ended December 31, 2016, but are not included in the results of operations for the corresponding prior year periods.

Net income for the quarter ended December 31, 2016, was $6.1 million, or $0.22 per diluted share, as compared to $5.2 million, or $0.31 per diluted share, for the corresponding prior year period. Net income for the year ended December 31, 2016, was $23.0 million, or $0.98 per diluted share, as compared to $20.3 million, or $1.21 per diluted share, for the corresponding prior year period.  Net income for the quarter and year ended December 31, 2016 includes merger related expenses, net of tax benefit, of $4.5 million and $11.8 million, respectively, as compared to $441,000 and $1.3 million, respectively, for the same prior year periods.  Additionally, net income for the year ended December 31, 2016, includes an FHLB advance prepayment fee of $136,000, and a loss on the sale of investment securities available-for-sale of $12,000. Excluding these items, diluted earnings per share increased over the prior year period due to higher net interest income and other income partially offset by increases in operating expenses, provision for loan losses, and average diluted shares outstanding.

Excluding merger related expenses, diluted earnings per share decreased $0.02 from the prior linked quarter. Excluding the impact of Ocean Shore, net interest income decreased for the fourth quarter of 2016, as compared to the prior linked quarter, due to a reduction in average loans receivable.  This reduction was partly offset by the overall favorable impact of the Ocean Shore acquisition for the month of December.

Net interest income for the quarter and year ended December 31, 2016 increased to $35.8 million and $120.3 million, respectively, as compared to $20.7 million and $76.8 million for the same prior year periods, reflecting an increase in interest-earning assets and a higher net interest margin.  Average interest-earning assets increased $1.730 billion and $1.116 billion, respectively, for the quarter and year ended December 31, 2016, as compared to the same prior year periods.  The averages for the quarter and year ended December 31, 2016, were favorably impacted by $1.357 billion and $900.7 million, respectively, as a result of the interest-earning assets acquired from Ocean Shore, Cape and Colonial American ("Acquisition Transactions").  Average loans receivable, net, increased $1.323 billion and $956.7 million, respectively, for the quarter and the year ended December 31, 2016 as compared to the same prior year periods.  The increases attributable to the Acquisition Transactions were $1.280 billion and $843.6 million for the quarter and the year ended December 31, 2016, respectively.  The net interest margin increased to 3.40% and 3.47%, respectively, for the quarter and year ended December 31, 2016, from 3.34% and 3.28%, respectively, for the quarter and year ended December 31, 2015. The yield on average interest-earning assets increased to 3.79% and 3.85%, respectively, for the quarter and year ended December 31, 2016, from 3.74% and 3.66%, respectively, for the same prior year periods.  The yields on average interest-earning assets for the quarter and year ended December 31, 2016 benefited from the accretion of purchase accounting adjustments on the Acquisition Transactions of  $1.4 million and $4.5 million, respectively; the higher-yielding interest-earning assets acquired from Cape; and the higher interest rate environment in the fourth quarter of 2016.  For the quarter and the year ended December 31, 2016, the cost of average interest-bearing liabilities decreased to 0.48% and 0.47%, from 0.49% and 0.48%, respectively, in the corresponding prior year periods.  The total cost of deposits (including non-interest bearing deposits) was 0.26% and 0.25%, respectively, for the quarter and year ended December 31, 2016, as compared to 0.24% and 0.23%, respectively, for the corresponding prior year periods.

Net interest income for the quarter ended December 31, 2016 increased $1.8 million, as compared to the prior linked quarter, as average interest-earning assets increased $400.3 million, of which $317.8 million related to Ocean Shore.  The net interest margin decreased to 3.40% for the quarter ended December 31, 2016, from 3.56% for the prior linked quarter.  The yield on average interest-earning assets decreased to 3.79% for the quarter ended December 31, 2016, from 3.92% for the prior linked quarter due to increased average balances in lower yielding interest-earning deposits and short-term investments.  The cost of average interest-bearing liabilities increased to 0.48% for the quarter ended December 31, 2016, as compared to 0.43% for the prior linked quarter, due to a full quarter of interest expense on the September 2016 issuance of $35.0 million in subordinated notes at an all-in cost of 5.45% with a stated maturity of September 30, 2026.

For the quarter and year ended December 31, 2016, the provision for loan losses was $510,000 and $2.6 million, respectively, as compared to $300,000 and $1.3 million, respectively, for the corresponding prior year periods.  Net charge-offs were $944,000 and $4.2 million, respectively, for the quarter and the year ended December 31, 2016, as compared to $217,000 and $870,000, respectively, in the corresponding prior year periods.  The increase in net charge-offs for the quarter and the year ended December 31, 2016, was primarily due to fourth quarter and full-year charge-offs of $535,000 and $2.1 million, respectively, on loans sold, and to a lesser extent, first quarter charge-offs of $886,000 on two non-performing commercial loans.  Excluding charge-offs attributable to the loan sale, net charge-offs for the quarter totaled $409,000.  Non-performing loans totaled $13.6 million at December 31, 2016, as compared to $16.5 million at September 30, 2016, and $18.3 million at December 31, 2015.

For the quarter and the year ended December 31, 2016, other income increased to $6.3 million and $20.4 million, respectively, as compared to $4.1 million and $16.4 million, respectively, in the same prior year periods.  The increases from the prior periods were primarily due to the impact of the Ocean Shore and Cape acquisitions which added $1.6 million and $3.9 million to total other income for the quarter and the year ended December 31, 2016, respectively, as compared to the same prior year periods.  Excluding Ocean Shore and Cape, other income increased $529,000 and $133,000 for the quarter and year ended December 31, 2016, as compared to the same prior year periods.  For the quarter and the year ended December 31, 2016, other income included losses of $49,000 and $342,000, respectively, attributable to the operations of a hotel, golf and banquet facility acquired as Other Real Estate Owned ("OREO") in the fourth quarter of 2015.  The Bank is currently engaged in a sales process with qualified buyers for this property.

For the quarter ended December 31, 2016, other income, excluding the impact from Ocean Shore, increased $12,000, as compared to the prior linked quarter.

Operating expenses increased to $32.5 million and $102.9 million, respectively, for the quarter and the year ended December 31, 2016, as compared to $16.5 million and $60.8 million, respectively, in the same prior year periods.  Operating expenses for the quarter and the year ended December 31, 2016 include $6.6 million and $16.5 million, respectively, in merger related expenses, as compared to merger related expenses of $614,000 and $1.9 million, respectively, in the same prior year periods.  Excluding merger related expenses, the increases in operating expenses over the prior year were primarily due to the operations of Cape and Ocean Shore, which added $8.2 million and $20.5 million for the quarter and year-to-date, respectively; the investment in commercial lending which added expenses of $15,000 and $816,000 for the quarter and year-to-date, respectively; the addition of branches (excluding those acquired in the Acquisition Transactions) which added expenses of $176,000 and $1.2 million for the quarter and year-to-date, respectively: the amortization of the core deposit intangible which added expenses of $291,000 and $602,000 for the quarter and year-to-date, respectively; and the FHLB advance prepayment fee of $136,000.

For the quarter ended December 31, 2016, operating expenses, excluding merger related expenses, increased $2.1 million, as compared to the prior linked quarter.  The increase was primarily related to the additional expense from the operations of Ocean Shore of $1.3 million, as well as $363,000 in costs associated with the Bank's rebranding effort.

The provision for income taxes was $3.0 million and $12.2 million, respectively, for the quarter and year ended ended December 31, 2016, as compared to $2.8 million and $10.9 million, respectively, for the same prior year periods.  The effective tax rate was 33.0% and 34.5%, respectively, for the quarter and year ended December 31, 2016, as compared to 34.7% and 34.9%, respectively, for the same prior year periods and 34.4% in the prior linked quarter.  The variances in the effective tax rate were primarily due to the timing of non-deductible merger related expenses.

Financial Condition

Total assets increased by $2.574 billion to $5.167 billion at December 31, 2016, from $2.593 billion at December 31, 2015, primarily as a result of the acquisitions of Cape and Ocean Shore.  Cash and due from banks and interest-bearing deposits increased by $257.4 million, to $301.4 million at December 31, 2016, from $43.9 million at December 31, 2015.  The increase was primarily due to cash flows from a reduction in loans receivable (exclusive of acquired loans), deposit growth not utilized to reduce FHLB advances (exclusive of acquired deposits), and the issuance of subordinated notes.  Loans receivable, net, increased by $1.833 billion, to $3.803 billion at December 31, 2016, from $1.971 billion at December 31, 2015, due to acquired loans of $1.931 billion.  As part of the Acquisition Transactions, and the purchase of an existing retail branch in the Toms River market in the first quarter of 2016, at December 31, 2016, the Company had outstanding goodwill of $145.1 million and core deposit intangibles of $10.9 million.

Deposits increased by $2.271 billion, to $4.188 billion at December 31, 2016, from $1.917 billion at December 31, 2015, which include deposits of $2.140 billion acquired from Ocean Shore, Cape, and the purchase of an existing retail branch located in the Toms River market.  Excluding those acquired, deposits increased $130.7 million, while core deposits (all deposits excluding time deposits) increased $169.7 million.  The loan-to-deposit ratio at December 31, 2016 was 90.8%, as compared to 102.8% at December 31, 2015.  The deposit growth funded a decrease in FHLB advances of $73.9 million to $250.5 million at December 31, 2016 from $324.4 million at December 31, 2015.  The increase in other borrowings relates to the September 2016 issuance of $35.0 million in subordinated notes at an all-in cost of 5.45% with a stated maturity of September 30, 2026.

Stockholders' equity increased to $572.0 million at December 31, 2016, as compared to $238.4 million at December 31, 2015.  The acquisitions of Cape and Ocean Shore added $165.9 million and $152.3 million, respectively, to stockholders' equity.  At December 31, 2016, there were 154,804 shares available for repurchase under the Company's stock repurchase program adopted in July of 2014.  In the fourth quarter, the Company repurchased 90,000 shares under this plan at an average cost of $20.86 per share. Tangible stockholders' equity per common share decreased to $12.95 at December 31, 2016, as compared to $13.67 at December 31, 2015, due to the addition of intangible assets in the Ocean Shore and Cape acquisitions.

Asset Quality

The Company's non-performing loans decreased to $13.6 million at December 31, 2016, as compared to $18.3 million at December 31, 2015, partly due to the bulk sale of non-performing and under-performing loans in the third and fourth quarters.  Non-performing loans do not include $7.6 million of purchased credit-impaired ("PCI") loans acquired in the Acquisition Transactions.  The Company's OREO totaled $9.8 million at December 31, 2016, as compared to $8.8 million at December 31, 2015.  The amount includes $7.0 million relating to the hotel, golf and banquet facility located in New Jersey which the Company acquired in the fourth quarter of 2015.  At December 31, 2016, the Company's allowance for loan losses was 0.40% of total loans, a decrease from 0.84% at December 31, 2015.  These ratios exclude existing fair value credit marks of $26.0 million at December 31, 2016 on the Ocean Shore, Cape and Colonial American loans and $2.2 million at December 31, 2015 on the Colonial American 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 111.92% at December 31, 2016 as compared to 91.51% at December 31, 2015.

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, 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.

Annual Meeting

The Company also announced today that its Annual Meeting of Stockholders will be held on Friday, June 2,  2017 at 10:00 a.m. Eastern time,  at Navesink Country Club located at 50 Luffburrow Lane, Middletown,  New Jersey. The record date for stockholders to vote at the Annual Meeting is April 11, 2017.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, January 27, 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 10098553 from one hour after the end of the call until April 27, 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, 2015 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, 2016   September 30, 2016   December 31, 2015
    (unaudited)   (unaudited)    
Assets            
Cash and due from banks   $ 301,373     $ 311,583     $ 43,946  
Securities available-for-sale, at estimated fair value   12,224     2,497     29,902  
Securities held-to-maturity, net (estimated fair value of $596,413 at December 31, 2016, $478,727 at September 30, 2016, and $397,763 at December 31, 2015)   598,691     470,642     394,813  
Federal Home Loan Bank of New York stock, at cost   19,313     18,289     19,978  
Loans receivable, net   3,803,443     3,028,696     1,970,703  
Loans held-for-sale   1,551     21,679     2,697  
Interest and dividends receivable   11,989     9,396     5,860  
Other real estate owned   9,803     9,107     8,827  
Premises and equipment, net   71,385     51,243     28,419  
Servicing asset   228     259     589  
Bank Owned Life Insurance   132,172     106,433     57,549  
Deferred tax asset   38,787     39,391     16,807  
Other assets   10,105     11,543     10,900  
Core deposit intangible   10,924     3,722     256  
Goodwill   145,064     66,537     1,822  
Total assets   $ 5,167,052     $ 4,151,017     $ 2,593,068  
Liabilities and Stockholders' Equity            
Deposits   $ 4,187,750     $ 3,324,681     $ 1,916,678  
Securities sold under agreements to repurchase with retail customers   69,935     69,078     75,872  
Federal Home Loan Bank advances   250,498     251,146     324,385  
Other borrowings   56,559     56,399     22,500  
Advances by borrowers for taxes and insurance   14,030     8,287     7,121  
Other liabilities   16,242     24,182     8,066  
Total liabilities   4,595,014     3,733,773     2,354,622  
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 32,136,892, 25,850,956, and 17,286,557 shares outstanding at December 31, 2016, September 30, 2016, and December 31, 2015, respectively   336     336     336  
Additional paid-in capital   364,433     308,979     269,757  
Retained earnings   238,192     236,472     229,140  
Accumulated other comprehensive loss   (5,614 )   (5,611 )   (6,241 )
Less: Unallocated common stock held by Employee Stock Ownership Plan   (2,761 )   (2,832 )   (3,045 )
Treasury stock, 1,429,880, 7,715,816, and 16,280,215 shares at December 31, 2016, September 30, 2016, and December 31, 2015, respectively   (22,548 )   (120,100 )   (251,501 )
Common stock acquired by Deferred Compensation Plan   (313 )   (310 )   (314 )
Deferred Compensation Plan Liability   313     310     314  
Total stockholders' equity   572,038     417,244     238,446  
Total liabilities and stockholders' equity   $ 5,167,052     $ 4,151,017     $ 2,593,068  


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,
    2016   2016   2015   2016   2015
    |--------------------- (unaudited) ---------------------|   (unaudited)    
Interest income:                    
Loans   $ 36,799     $ 34,607     $ 21,143     $ 122,962     $ 77,694  
Mortgage-backed securities   1,874     1,700     1,449     6,697     6,051  
Investment securities and other   1,231     1,000     557     3,766     2,118  
Total interest income   39,904     37,307     23,149     133,425     85,863  
Interest expense:                    
Deposits   2,392     2,083     1,217     7,517     4,301  
Borrowed funds   1,758     1,289     1,244     5,646     4,733  
Total interest expense   4,150     3,372     2,461     13,163     9,034  
Net interest income   35,754     33,935     20,688     120,262     76,829  
Provision for loan losses   510     888     300     2,623     1,275  
Net interest income after provision for loan losses   35,244     33,047     20,388     117,639     75,554  
Other income:                    
Bankcard services revenue   1,424     1,347     926     4,833     3,537  
Wealth management revenue   545     608     530     2,324     2,187  
Fees and services charges   3,273     2,916     2,082     10,508     8,124  
Loan servicing income   73     26     82     250     268  
Net gain on sale of loan servicing                   111  
Net gain on sales of loans available-for-sale   290     347     185     986     822  
Net loss on sales of investment securities available-for-sale               (12 )    
Net loss from other real estate operations   (74 )   (63 )   (38 )   (856 )   (149 )
Income from Bank Owned Life Insurance   710     659     343     2,230     1,501  
Other   16     56     8     149     25  
Total other income   6,257     5,896     4,118     20,412     16,426  
Operating expenses:                    
Compensation and employee benefits   13,649     13,558     8,438     47,105     31,946  
Occupancy   2,380     2,315     1,518     8,332     5,722  
Equipment   1,499     1,452     1,162     5,104     3,725  
Marketing   609     479     428     1,882     1,516  
Federal deposit insurance   830     743     528     2,825     2,072  
Data processing   2,291     2,140     1,349     7,577     4,731  
Check card processing   662     623     427     2,210     1,815  
Professional fees   969     681     541     2,848     1,865  
Other operating expense   2,640     1,543     1,481     7,676     5,484  
Amortization of core deposit intangible   304     181     13     623     21  
Federal Home Loan Bank advance prepayment fee               136      
Merger related expenses   6,632     1,311     614     16,534     1,878  
Total operating expenses   32,465     25,026     16,499     102,852     60,775  
Income before provision for income taxes   9,036     13,917     8,007     35,199     31,205  
Provision for income taxes   2,984     4,789     2,777     12,153     10,883  
Net income   $ 6,052     $ 9,128     $ 5,230     $ 23,046     $ 20,322  
Basic earnings per share   $ 0.22     $ 0.36     $ 0.31     $ 1.00     $ 1.22  
Diluted earnings per share   $ 0.22     $ 0.35     $ 0.31     $ 0.98     $ 1.21  
Average basic shares outstanding   27,461     25,435     16,867     23,093     16,600  
Average diluted shares outstanding   28,128     25,889     17,126     23,526     16,811  


OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
       
LOANS RECEIVABLE     At
      December 31,
2016
  September 30,
2016
  June 30,
2016
  March 31,
2016
  December 31,
2015
                       
Commercial:                      
Commercial and industrial     $ 152,810     $ 185,633     $ 222,355     $ 141,364     $ 144,788  
Commercial real estate - owner- occupied     534,365     493,157     523,662     308,666     307,509  
Commercial real estate - investor     1,134,507     1,014,699     1,011,354     536,754     510,936  
Total commercial     1,821,682     1,693,489     1,757,371     986,784     963,233  
Consumer:                      
Residential mortgage     1,651,695     1,061,752     1,090,781     792,753     791,249  
Residential construction     65,408     46,813     48,266     54,259     50,757  
Home equity loans and lines     289,110     251,421     258,398     190,621     192,368  
Other consumer     1,566     1,273     1,586     570     792  
Total consumer     2,007,779     1,361,259     1,399,031     1,038,203     1,035,166  
Total loans     3,829,461     3,054,748     3,156,402     2,024,987     1,998,399  
Loans in process     (14,249 )   (13,842 )   (13,119 )   (15,033 )   (14,206 )
Deferred origination costs, net     3,414     3,407     3,441     3,253     3,232  
Allowance for loan losses     (15,183 )   (15,617 )   (16,678 )   (16,214 )   (16,722 )
Loans receivable, net     $ 3,803,443     $ 3,028,696     $ 3,130,046     $ 1,996,993     $ 1,970,703  
                       
Mortgage loans serviced for others     $ 137,881     $ 143,657     $ 145,903     $ 152,653     $ 158,244  
  At December 31, 2016
Average Yield
                   
Loan pipeline (1):                      
Commercial 4.82 %   $ 99,060     $ 64,976     $ 48,897     $ 57,571     $ 53,785  
Residential mortgage and construction 3.91     38,486     39,252     30,520     28,528     31,860  
Home equity loans and lines 4.51     6,522     5,099     5,594     8,082     5,481  
Total 4.56     $ 144,068     $ 109,327     $ 85,011     $ 94,181     $ 91,126  


  For the Three Months Ended,
  December 31,   September 30,   June 30,   March 31,   December 31,
  2016   2016   2016   2016   2015
  Average Yield                    
Loan originations:                      
Commercial 4.14 %   $ 105,062   (4 ) $ 63,310     $ 59,543     $ 58,005     $ 72,534  
Residential mortgage and construction 3.69     62,087     41,170     40,295     34,361     43,616  
Home equity loans and lines 4.49     11,790     11,007     10,067     10,915     10,431  
Total 4.00     $ 178,939     $ 115,487     $ 109,905     $ 103,281     $ 126,581  
Loans sold     $ 12,098   (3 ) $ 17,787   (2 ) $ 10,303     $ 8,901     $ 9,784  

(1) Loan pipeline includes pending loan applications and loans approved but not funded
(2) Excludes the sale of  under-performing loans of $12.8 million
(3) Excludes the sale of  under-performing loans of $21.0 million
(4) Includes purchased loans totaling $24.6 million

     
DEPOSITS   At
    December 31,
2016
  September 30,
2016
  June 30,
2016
  March 31,
2016
  December 31,
2015
Type of Account                    
Non-interest-bearing   $ 782,504     $ 512,957     $ 554,709     $ 351,743     $ 337,143  
Interest-bearing checking   1,626,713     1,451,083     1,310,290     860,468     859,927  
Money market deposit   458,911     400,054     366,942     163,885     153,196  
Savings   672,519     489,173     489,132     327,845     310,989  
Time deposits   647,103     471,414     485,189     267,420     255,423  
    $ 4,187,750     $ 3,324,681     $ 3,206,262     $ 1,971,361     $ 1,916,678  


OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
 
  December 31,
2016
  September 30,
2016
  June 30,
2016
  March 31,
2016
  December 31,
2015
ASSET QUALITY                  
Non-performing loans:                  
Commercial and industrial $ 441     $ 1,152     $ 964     $ 909     $ 123  
Commercial real estate - owner-occupied 2,414     5,213     4,363     4,354     7,684  
Commercial real estate - investor 521     1,675     1,675     940     3,112  
Residential mortgage 8,126     7,017     7,102     8,788     5,779  
Home equity loans and lines 2,064     1,450     1,226     1,202     1,574  
Other consumer                 2  
Total non-performing loans 13,566     16,507     15,330     16,193     18,274  
Other real estate owned 9,803     9,107     9,791     9,029     8,827  
Total non-performing assets $ 23,369     $ 25,614     $ 25,121     $ 25,222     $ 27,101  
Purchased credit-impaired ("PCI") loans $ 7,575     $ 5,836     $ 9,673     $ 376     $ 461  
Delinquent loans 30 to 89 days $ 22,598     $ 8,553     $ 15,643     $ 6,996     $ 9,087  
Troubled debt restructurings:                  
Non-performing (included in total non-performing loans above) $ 3,471     $ 3,520     $ 2,990     $ 4,775     $ 4,918  
Performing 27,042     26,396     28,173     26,689     26,344  
Total troubled debt restructurings $ 30,513     $ 29,916     $ 31,163     $ 31,464     $ 31,262  
Allowance for loan losses $ 15,183     $ 15,617     $ 16,678     $ 16,214     $ 16,722  
Allowance for loan losses as a percent of total loans receivable (1) 0.40 %   0.51 %   0.53 %   0.80 %   0.84 %
Allowance for loan losses as a percent of total non-performing loans 111.92     94.61     108.79     100.13     91.51  
Non-performing loans as a percent of total loans receivable 0.35     0.54     0.48     0.80     0.91  
Non-performing assets as a percent of total assets 0.45     0.62     0.62     0.97     1.05  

(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 $25,973, $17,051, $27,281, $2,013, and $2,202 at December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively.

NET CHARGE-OFFS

    For the three months ended
    December 31,   September 30,   June 30,   March 31,   December 31,
    2016   2016   2016   2016   2015
Net Charge-offs:                    
Loan charge-offs   $ (979 )   $ (2,116 )   $ (223 )   $ (1,172 )   $ (236 )
Recoveries on loans   35     167     25     101     19  
Net loan charge-offs   $ (944 )   $ (1,949 )   $ (198 )   $ (1,071 )   $ (217 )
Net loan charge-offs to average total loans (annualized)   0.11 %   0.25 %   0.03 %   0.21 %   0.04 %
Net charge-off detail - (loss) recovery:                    
Commercial   $ (510 )   $ (1,707 )   $ (84 )   $ (1,073 )   $ 12  
Residential mortgage and construction   (233 )   (161 )   (69 )   (24 )   (117 )
Home equity loans and lines   (194 )   (83 )   (45 )   28     (109 )
Other consumer   (7 )   2         (2 )   (3 )
Net loans charged-off   $ (944 )   $ (1,949 )   $ (198 )   $ (1,071 )   $ (217 )

Note:  Included in net loan charge-offs for the three months ended December 31, 2016 and September 30, 2016 are $535 and $1,627 relating to  under-performing loans sold or held-for-sale, respectively.


OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
 
  For the Three Months Ended
  December 31, 2016   September 30, 2016   December 31, 2015
(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 $ 359,804     $ 484     0.54 %   $ 168,045     $ 139     0.33 %   $ 41,227     $ 16     0.15 %
Securities (1) and FHLB stock 545,302     2,621     1.91     533,809     2,561     1.91     456,486     1,990     1.73  
Loans receivable, net (2)                                  
Commercial 1,717,502     21,016     4.87     1,723,520     20,970     4.84     943,116     11,154     4.69  
Residential 1,314,667     12,857     3.89     1,118,435     10,874     3.87     836,722     7,953     3.77  
Home Equity 262,372     2,907     4.41     255,919     2,745     4.27     193,314     2,028     4.16  
Other 1,149     19     6.58     1,163     18     6.16     544     8     5.83  
Allowance for loan loss net of deferred loan fees (12,987 )           (13,346 )           (13,597 )        
Loans Receivable, net 3,282,703     36,799     4.46     3,085,691     34,607     4.46     1,960,099     21,143     4.28  
Total interest-earning assets 4,187,809     39,904     3.79     3,787,545     37,307     3.92     2,457,812     23,149     3.74  
Non-interest-earning assets 368,965             316,290             129,297          
Total assets $ 4,556,774             $ 4,103,835             $ 2,587,109          
Liabilities and Stockholders' Equity:                                  
Interest-bearing liabilities:                                  
Interest-bearing checking $ 1,538,706     723     0.19 %   $ 1,425,350     583     0.16 %   $ 909,962     278     0.12 %
Money market 424,613     312     0.29     386,490     295     0.30     152,416     76     0.20  
Savings 549,032     74     0.05     488,749     49     0.04     309,037     27     0.03  
Time deposits 527,817     1,283     0.97     477,496     1,156     0.96     256,378     836     1.29  
Total 3,040,168     2,392     0.31     2,778,085     2,083     0.30     1,627,793     1,218     0.30  
Securities sold under agreements to repurchase 72,063     24     0.13     68,540     24     0.14     78,892     29     0.15  
FHLB Advances 250,829     1,120     1.78     264,213     1,067     1.61     252,812     1,041     1.63  
Other borrowings 56,397     614     4.33     26,207     198     3.01     25,467     174     2.71  
Total interest-bearing liabilities 3,419,457     4,150     0.48     3,137,045     3,372     0.43     1,984,964     2,461     0.49  
Non-interest-bearing deposits 622,882             521,088             349,473          
Non-interest-bearing Liabilities 42,773             31,536             16,174          
Total liabilities 4,085,112             3,689,669             2,350,611          
Stockholders' equity 471,662             414,166             236,498          
Total liabilities and equity $ 4,556,774             $ 4,103,835             $ 2,587,109          
Net interest income     $ 35,754             $ 33,935             $ 20,688      
Net interest rate spread (3)         3.31 %           3.49 %           3.25 %
Net interest margin (4)         3.40 %           3.56 %           3.34 %
Total cost of deposits (including non-interest-bearing deposits)         0.26 %           0.25 %           0.24 %

(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.

    (continued)
     
    For the Years Ended
    December 31, 2016   December 31, 2015
(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   $ 154,830     $ 693     0.45 %   $ 38,371     $ 44     0.11 %
Securities (1) and FHLB stock   524,152     9,770     1.86     481,306     8,125     1.69  
Loans receivable, net (2)                        
Commercial   1,472,421     70,768     4.81     840,531     38,186     4.54  
Residential   1,085,991     41,996     3.87     804,404     31,423     3.91  
Home Equity   236,769     10,139     4.28     194,383     8,054     4.14  
Other   957     59     6.17     482     31     6.43  
Allowance for loan loss net of deferred loan fees   (13,280 )           (13,639 )        
Loans Receivable, net   2,782,858     122,962     4.42     1,826,161     77,694     4.25  
Total interest-earning assets   3,461,840     133,425     3.85     2,345,838     85,863     3.66  
Non-interest-earning assets   269,622             119,035          
Total assets   $ 3,731,462             $ 2,464,873          
Liabilities and Stockholders' Equity:                        
Interest-bearing liabilities:                        
Interest-bearing checking   $ 1,266,135     2,114     0.17 %   $ 875,325     952     0.11 %
Money market   316,977     858     0.27     129,775     187     0.14  
Savings   447,484     191     0.04     306,151     102     0.03  
Time deposits   422,026     4,354     1.03     229,786     3,060     1.33  
Total   2,452,622     7,517     0.31     1,541,037     4,301     0.28  
Securities sold under agreements to repurchase   75,227     102     0.14     73,029     103     0.14  
FHLB Advances   266,981     4,471     1.67     253,864     3,849     1.52  
Other borrowings   32,029     1,073     3.35     26,967     781     2.90  
Total interest-bearing liabilities   2,826,859     13,163     0.47     1,894,897     9,034     0.48  
Non-interest-bearing deposits   497,166             327,216          
Non-interest-bearing Liabilities   28,454             14,851          
Total liabilities   3,352,479             2,236,964          
Stockholders' equity   378,983             227,909          
Total liabilities and equity   $ 3,731,462             $ 2,464,873          
Net interest income       $ 120,262             $ 76,829      
Net interest rate spread (3)           3.38 %           3.18 %
Net interest margin (4)           3.47 %           3.28 %
Total cost of deposits (including non-interest-bearing deposits)           0.25 %           0.23 %

(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)
 
    December 31,   September 30,   June 30,   March 31,   December 31,
    2016   2016   2016   2016   2015
                     
Selected Financial Condition Data:                    
Total assets   $ 5,167,052     $ 4,151,017     $ 4,047,493     $ 2,588,447     $ 2,593,068  
Securities available-for-sale, at estimated fair value   12,224     2,497     12,509     30,085     29,902  
Securities held-to-maturity, net   598,691     470,642     513,721     375,616     394,813  
Federal Home Loan Bank of New York stock   19,313     18,289     21,128     16,645     19,978  
Loans receivable, net   3,803,443     3,028,696     3,130,046     1,996,993     1,970,703  
Loans held-for-sale   1,551     21,679     5,310     3,386     2,697  
Deposits   4,187,750     3,324,681     3,206,262     1,971,360     1,916,678  
Federal Home Loan Bank advances   250,498     251,146     312,603     251,917     324,385  
Securities sold under agreements to repurchase and other borrowings   126,494     125,477     90,173     106,413     98,372  
Stockholders' equity   572,038     417,244     409,258     241,076     238,446  


    For the Three Months Ended
    December 31,   September 30,   June 30,   March 31,   December 31,
    2016   2016   2016   2016   2015
Selected Operating Data:                    
Interest income   $ 39,904     $ 37,307     $ 33,141     $ 23,073     $ 23,149  
Interest expense   4,150     3,372     3,127     2,514     2,461  
Net interest income   35,754     33,935     30,014     20,559     20,688  
Provision for loan losses   510     888     662     563     300  
Net interest income after provision for loan losses   35,244     33,047     29,352     19,996     20,388  
Other income   6,257     5,896     4,883     3,376     4,118  
Operating expenses   25,833     23,715     21,457     15,314     15,885  
Merger related expenses   6,632     1,311     7,189     1,402     614  
Income before provision for income taxes   9,036     13,917     5,589     6,656     8,007  
Provision for income taxes   2,984     4,789     1,928     2,451     2,777  
Net income   $ 6,052     $ 9,128     $ 3,661     $ 4,205     $ 5,230  
Diluted earnings per share   $ 0.22     $ 0.35     $ 0.16     $ 0.25     $ 0.31  
Net accretion/amortization of purchase accounting adjustments included in net interest income   $ 1,385     $ 1,637     $ 1,267     $ 164     $ 177  


(continued)
     
    At or For the Three Months Ended
    December 31,   September 30,   June 30,   March 31,   December 31,
    2016   2016   2016   2016   2015
Selected Financial Ratios and Other Data(1):                    
                     
Performance Ratios (Annualized):                    
Return on average assets (2)   0.53 %   0.88 %   0.40 %   0.65 %   0.80 %
Return on average stockholders' equity (2)   5.10     8.77     3.79     7.05     8.77  
Return on average tangible stockholders' equity (2) (3)   6.48     10.58     4.32     7.59     8.86  
Stockholders' equity to total assets   11.07     10.05     10.11     9.31     9.19  
Tangible stockholders' equity to tangible assets (3)   8.30     8.50     8.51     9.23     9.12  
Net interest rate spread   3.31     3.49     3.47     3.25     3.25  
Net interest margin   3.40     3.56     3.57     3.34     3.35  
Operating expenses to average assets (2)   2.83     2.43     3.16     2.58     2.53  
Efficiency ratio (2) (4)   77.28     62.83     82.09     69.84     66.51  


    At or For the Years Ended December 31,
    2016   2015
Performance Ratios:        
Return on average assets (2)   0.62 %   0.82 %
Return on average stockholders' equity (2)   6.08     8.92  
Return on average tangible stockholders' equity (2) (3)   7.13     8.96  
Net interest rate spread   3.38     3.18  
Net interest margin   3.47     3.28  
Operating expenses to average assets (2)   2.76     2.47  
Efficiency ratio (2) (4)   73.11     65.17  


(continued)
     
    At or For the Three Months Ended
    December 31,   September 30,   June 30,   March 31,   December 31,
    2016   2016   2016   2016   2015
Wealth Management:                    
Assets under administration   $ 218,336     $ 221,612     $ 221,277     $ 203,723     $ 229,039  
Per Share Data:                    
Cash dividends per common share   $ 0.15     $ 0.13     $ 0.13     $ 0.13     $ 0.13  
Stockholders' equity per common share at end of  period   17.80     16.14     15.89     13.89     13.79  
Tangible stockholders' equity per common share at end of period (3)   12.95     13.42     13.14     13.75     13.67  
Number of full-service customer facilities:   61     50     50     28     27  
Quarterly Average Balances                    
Total securities   $ 545,302     $ 533,809     $ 571,463     $ 445,696     $ 456,486  
Loans, receivable, net   3,282,703     3,085,691     2,772,518     1,981,101     1,960,099  
Total interest-earning assets   4,187,809     3,787,545     3,384,548     2,475,298     2,457,812  
Total assets   4,556,774     4,103,835     3,647,102     2,605,017     2,587,109  
Interest-bearing transaction deposits   2,512,351     2,300,589     1,899,266     1,372,357     1,371,415  
Time deposits   527,817     477,496     417,301     263,722     256,378  
Total borrowed funds   379,289     358,960     386,578     372,240     357,171  
Total interest-bearing liabilities   3,419,457     3,137,045     2,703,145     2,008,319     1,984,964  
Non-interest bearing deposits   622,882     521,088     529,230     343,371     349,473  
Stockholder's equity   471,662     414,166     388,694     239,999     236,498  
Total deposits   3,663,050     3,299,173     2,845,797     1,979,450     1,977,266  
Quarterly Yields                    
Total securities   1.91 %   1.91 %   1.82 %   1.81 %   1.73 %
Loans, receivable, net   4.46     4.46     4.43     4.27     4.28  
Total interest-earning assets   3.79     3.92     3.94     3.75     3.74  
Interest-bearing transaction deposits   0.18     0.16     0.15     0.12     0.11  
Time deposits   0.97     0.96     1.01     1.33     1.29  
Borrowed funds   1.84     1.43     1.41     1.34     1.38  
Total interest-bearing liabilities   0.48     0.43     0.47     0.50     0.49  
Net interest spread   3.31     3.49     3.47     3.25     3.25  
Net interest margin   3.40     3.56     3.57     3.34     3.34  
Total deposits   0.26     0.25     0.25     0.26     0.24  
                     

(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 expenses.  Refer to Other Items - Non-GAAP Reconciliation for impact of merger related 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
    December 31,   September 30,   June 30,   March 31,   December 31,
    2016   2016   2016   2016   2015
Core earnings:                    
Net income   $ 6,052     $ 9,128     $ 3,661     $ 4,205     $ 5,230  
Add:  Merger related expenses   6,632     1,311     7,189     1,402     614  
Loss on sale of investment securities available for sale           12          
Federal Home Loan Bank prepayment fee           136          
Less:  Income tax benefit on items   (2,108 )   (172 )   (2,311 )   (171 )   (173 )
Core earnings   $ 10,576     $ 10,267     $ 8,687     $ 5,436     $ 5,671  
Core diluted earnings per share   $ 0.38     $ 0.40     $ 0.38     $ 0.32     $ 0.33  
                     
Core ratios:                    
Return on average assets   0.92 %   1.00 %   0.96 %   0.84 %   0.87 %
Return on average tangible stockholder's equity   11.33     11.90     10.26     9.19     9.60  

COMPUTATION OF TOTAL TANGIBLE EQUITY TO TOTAL TANGIBLE ASSETS

    December 31,   September 30,   June 30,   March 31,   December 31,
    2016   2016   2016   2016   2015
Total stockholders' equity   $ 572,038     $ 417,244     $ 409,258     $ 241,076     $ 238,446  
Less:                    
Goodwill   145,064     66,537     67,102     2,081     1,822  
Core deposit intangible   10,924     3,722     3,903     310     256  
Tangible stockholders' equity   $ 416,050     $ 346,985     $ 338,253     $ 238,685     $ 236,368  
                     
Total assets   $ 5,167,052     $ 4,151,017     $ 4,047,493     $ 2,588,447     $ 2,593,068  
Less:                    
Goodwill   145,064     66,537     67,102     2,081     1,822  
Core deposit intangible   10,924     3,722     3,903     310     256  
Tangible assets   $ 5,011,064     $ 4,080,758     $ 3,976,488     $ 2,586,056     $ 2,590,990  
Tangible stockholders' equity to tangible assets   8.30 %   8.50 %   8.51 %   9.23 %   9.12 %

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 Cape, net of the total consideration paid (in thousands):

    At May 2, 2016
(in thousands)   Cape
Book Value
  Purchase
Accounting
Adjustments
      Estimated
Fair Value
Total Purchase Price:               $ 196,403  
Assets acquired:                
Cash and cash equivalents   $ 30,025     $         $ 30,025  
Securities and Federal Home Loan Bank Stock   218,577     361         218,938  
Loans:   1,169,568             1,156,807  
Specific credit fair value on credit impaired loans       (5,859 )        
General credit fair value       (20,545 )        
Interest rate fair value       1,888          
Reverse allowance for loan losses       9,931          
Reverse net deferred fees, premiums and discounts       1,824          
Premises and equipment   27,972     (1,973 )       25,999  
Other real estate owned   2,343     (408 )       1,935  
Deferred tax asset   9,407     10,993         20,400  
Other assets   61,793             61,793  
Core deposit intangible   831     2,887         3,718  
Total assets acquired   1,520,516     (901 )       1,519,615  
Liabilities assumed:                
Deposits   (1,247,688 )   (679 )       (1,248,367 )
Borrowings   (123,587 )   (879 )       (124,466 )
Other liabilities   (7,611 )   (5,398 )       (13,009 )
Total liabilities assumed   (1,378,886 )   (6,956 )       (1,385,842 )
Net assets acquired   $ 141,630     $ (7,857 )       133,773  
Goodwill recorded in the merger               $ 62,630  

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.

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 Ocean Shore, net of the total consideration paid (in thousands):

    At November 30, 2016
(in thousands)   Ocean Shore
Book Value
Purchase
Accounting
Adjustments
  Estimated
Fair Value
Total Purchase Price:         $ 180,732  
Assets acquired:          
Cash and cash equivalents   $ 60,871   $     $ 60,871  
Securities and Federal Home Loan Bank Stock   94,109   24     94,133  
Loans:   790,396       774,046  
Specific credit fair value on credit impaired loans     (2,062 )    
General credit fair value     (8,127 )    
Interest rate fair value     (5,779 )    
Reverse allowance for loan losses     3,265      
Reverse net deferred fees, premiums and discounts     (3,647 )    
Premises and equipment   11,696   3,372     15,068  
Other real estate owned   1,090       1,090  
Deferred tax asset   5,587   2,210     7,797  
Other assets   35,369       35,369  
Core deposit intangible   348   7,158     7,506  
Total assets acquired   999,466   (3,586 )   995,880  
Liabilities assumed:          
Deposits   (874,301 ) (772 )   (875,073 )
Borrowings   (3,694 )     (3,694 )
Other liabilities   (17,629 ) 891     (16,738 )
Total liabilities assumed   (895,624 ) 119     (895,505 )
Net assets acquired   $ 103,842   $ (3,467 )   100,375  
Goodwill recorded in the merger         $ 80,357  

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

Primary Logo

View Comments and Join the Discussion!