RED BANK, N.J., July 18, 2024 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:OCFC) (the "Company"), the holding company for OceanFirst Bank N.A. (the "Bank"), announced net income available to common stockholders of $23.4 million, or $0.40 per diluted share, for the three months ended June 30, 2024, a decrease from $26.8 million, or $0.45 per diluted share, for the corresponding prior year period, and $27.7 million, or $0.47 per diluted share, for the prior linked quarter. For the six months ended June 30, 2024, the Company reported net income available to common stockholders of $51.0 million, or $0.87 per diluted share, a decrease from $53.7 million, or $0.91 per diluted share, for the corresponding prior year period. Selected performance metrics are as follows (refer to "Selected Quarterly Financial Data" for additional information):

	For the Three Months Ended,						For the Six Months Ended,
Performance Ratios (Annualized):	June 30,		March 31,		June 30,		June 30,		June 30,
Performance Ratios (Annualized):	2024		2024		2023		2024		2023
Return on average assets	0.70	%	0.82	%	0.80	%	0.76	%	0.81	%
Return on average stockholders' equity	5.61		6.65		6.61		6.13		6.69
Return on average tangible stockholders' equity ^(a)	8.10		9.61		9.70		8.86		9.84
Return on average tangible common equity ^(a)	8.51		10.09		10.21		9.30		10.37
Efficiency ratio	62.86		59.56		62.28		61.17		61.53
Net interest margin	2.71		2.81		3.02		2.76		3.17

_{^(a) Return on average tangible stockholders' equity and return on average tangible common equity ("ROTCE") are non-GAAP ("generally accepted accounting principles") financial measures and exclude the impact of intangible assets and goodwill from both assets and stockholders' equity. ROTCE also excludes preferred stock from stockholders' equity. Refer to "Explanation of Non-GAAP Financial Measures," "Selected Quarterly Financial Data" and "Non-GAAP Reconciliation" tables for additional information regarding non-GAAP financial measures.}

Core earnings¹ for the three and six months ended June 30, 2024 were $22.7 million and $48.3 million, respectively, or $0.39 and $0.83 per diluted share, a decrease from $27.2 million and $59.9 million, or $0.46 and $1.01 per diluted share, for the corresponding prior year periods, and a decrease from $25.6 million, or $0.44 per diluted share, for the prior linked quarter.

Core earnings PTPP¹ for the three and six months ended June 30, 2024 was $32.7 million and $68.9 million, respectively, or $0.56 and $1.18 per diluted share, as compared to $37.6 million and $83.7 million, or $0.64 and $1.42 per diluted share, for the corresponding prior year periods, and $36.2 million, or $0.62 per diluted share, for the prior linked quarter. Selected performance metrics are as follows:

	For the Three Months Ended,									For the Six Months Ended,
	June 30,			March 31,			June 30,			June 30,			June 30,
Core Ratios¹(Annualized):		2024			2024			2023			2024			2023
Return on average assets		0.68	%		0.76	%		0.81	%		0.72	%		0.90	%
Return on average tangible stockholders' equity		7.86			8.91			9.84			8.38			10.98
Return on average tangible common equity		8.26			9.36			10.36			8.81			11.56
Efficiency ratio		63.47			61.05			61.94			62.24			59.13
Core diluted earnings per share	$	0.39		$	0.44		$	0.46		$	0.83		$	1.01
Core PTPP diluted earnings per share		0.56			0.62			0.64			1.18			1.42

Key developments for the recent quarter are described below:

Asset Quality: Asset quality metrics remain strong as criticized and classified assets, non-performing loans, and loans 30 to 89 days past due as a percentage of total loans receivable were 1.42%, 0.33%, and 0.10%, respectively. These metrics continue to reflect strong credit performance and remain low compared to pre-pandemic levels.
Capital Accretion: Common equity tier 1 capital ratio², book value and tangible book value per share were 11.2%, $28.67 and $18.93, respectively, and increased approximately 20 basis points, $0.35 and $0.30 from the prior linked quarter.³
Share repurchases: The Company repurchased 338,087 shares totaling $5.0 million. The Company has 1,638,524 shares available for repurchase under the authorized repurchase program.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company's results, "Our current quarter results reflected prudent balance sheet management and expense discipline. As rates are elevated and the yield curve remains inverted, net interest margin compressed during the quarter, but the pace of margin compression is slowing. Additionally, our credit quality continues to remain robust, we grew capital, and continued share repurchases during the quarter." Mr. Maher added, "The Company is well positioned to bolster shareholder value through growth in the second half of the year."

The Company's Board of Directors declared its 110th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on August 16, 2024 to common stockholders of record on August 5, 2024. The Company's Board of Directors also declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock. This dividend will be paid on August 15, 2024 to preferred stockholders of record on July 31, 2024.

¹ _{Core earnings and core earnings before income taxes and provision for credit losses ("PTPP or Pre-Tax-Pre-Provision"), and ratios derived therefrom, are non-GAAP financial measures. For the periods presented, core earnings exclude merger related expenses, net branch consolidation expense, net (gain) loss on equity investments, net loss on sale of investments, net gain on sale of trust business, Federal Deposit Insurance Corporation ("FDIC") special assessment, and the income tax effect of these items, (collectively referred to as "non-core" operations). PTPP excludes the aforementioned pre-tax "non-core" items along with income tax expense (benefit) and provision for credit losses. Refer to "Explanation of Non-GAAP Financial Measures", "Selected Quarterly Financial Data" and the "Non-GAAP Reconciliation" tables for additional information regarding non-GAAP financial measures.}

²_Estimated.

³ _{Tangible book value per common share and tangible common equity to tangible assets are non-GAAP financial measures and exclude the impact of intangible assets, goodwill, and preferred equity from both stockholders' equity and total assets. Refer to "Explanation of Non-GAAP Financial Measures" and the "Non-GAAP Reconciliation" tables for additional information regarding non-GAAP financial measures.}

Results of Operations

The current quarter net interest income and margin were impacted by a mix-shift to and repricing of higher cost funding. Deposit betas increased modestly to 42%, from 40% in the prior linked quarter.⁴ Additionally, the current quarter provision for credit losses includes the impact of an additional $1.6 million charge-off on the single commercial real estate relationship that was previously moved to non-accrual and partially charged-off in 2023. The collateral related to the noted credit is currently under an agreement to sell, which is expected to occur during the third quarter.

⁴ _{Deposit beta measures the change in the interest rates paid for interest-bearing deposit accounts versus the change in the federal funds target rate. Represents the deposit beta for total deposits (interest-bearing and non-interest bearing) for the current rate cycle (since December 31, 2021).}

Net Interest Income and Margin

Three months ended June 30, 2024 vs. June 30, 2023

Net interest income decreased to $82.3 million, from $92.1 million, primarily reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 2.71%, from 3.02%, which included the impact of purchase accounting accretion and prepayment fees of 0.04% and 0.05%, respectively. Net interest margin decreased primarily due to the increase in cost of funds outpacing the increase in yield on average interest-earning assets.

Average interest-earning assets decreased by $46.3 million due to balance sheet contraction while the average yield for interest-earning assets increased to 5.25%, from 4.91%.

The cost of average interest-bearing liabilities increased to 3.14%, from 2.39%, primarily due to higher cost of deposits. The total cost of deposits (including non-interest bearing deposits) increased to 2.37%, from 1.52%. Average interest-bearing liabilities increased by $149.6 million, primarily due to an increase in total deposits, partly offset by a decrease in total borrowings.

Six months ended June 30, 2024 vs. June 30, 2023

Net interest income decreased to $168.5 million, from $190.9 million, reflecting the net impact of the higher interest rate environment. Net interest margin decreased to 2.76%, from 3.17%, which included the impact of purchase accounting accretion and prepayment fees of 0.04% for both periods.

Average interest-earning assets increased by $146.4 million, primarily driven by securities growth of $135.4 million, while the average yield increased to 5.25%, from 4.80%.

The cost of average interest-bearing liabilities increased to 3.09%, from 2.08%. The total cost of deposits (including non-interest bearing deposits) increased to 2.34%, from 1.21%. Average interest-bearing liabilities increased by $392.0 million. The drivers for the three month periods, described above, were also the drivers for the six month periods.

Three months ended June 30, 2024 vs. March 31, 2024

Net interest income decreased by $4.0 million, primarily due to an increase in cost of funds and lower average-interest earning assets. Net interest margin decreased to 2.71%, from 2.81%, which included the impact of purchase accounting accretion and prepayment fees of 0.04% for both periods.

Average interest-earning assets decreased by $146.6 million, primarily due to a decrease in loans. The yield on average interest-earning assets decreased to 5.25%, from 5.26%.

The total cost of average interest-bearing liabilities increased to 3.14%, from 3.03%, primarily due to higher cost of deposits. Total cost of deposits (including non-interest bearing deposits) increased to 2.37%, from 2.31%. Average interest-bearing liabilities decreased by $129.4 million, primarily due to decreases in brokered time deposits and high yield savings accounts, partly offset by an increase in borrowings.

Provision for Credit Losses

Provision for credit losses for the three and six months ended June 30, 2024 was $3.1 million and $3.7 million, respectively, as compared to $1.2 million and $4.2 million for the corresponding prior year periods, and $591,000 in the prior linked quarter. The current quarter provision was driven by the additional charge-off previously noted and changes in the external macro-economic forecasts, partly offset by lower loan balances.

Net loan charge-offs were $1.5 million and $1.8 million for the three and six months ended June 30, 2024, respectively, as compared to net loan charge-offs of $123,000 and $76,000 for the three and six months ended June 30, 2023. The current quarter includes the impact of an additional $1.6 million charge-off related to a single commercial real estate relationship, as previously noted. Net loan charge-offs were $349,000 in the prior linked quarter. Refer to "Asset Quality" section for further discussion.

Non-interest Income

Three months ended June 30, 2024 vs. June 30, 2023

Other income increased to $11.0 million, as compared to $8.9 million. Other income was favorably impacted by non-core operations related to net gains/losses on equity investments of $887,000 for the current quarter, and adversely impacted by non-core operations of $559,000 for the prior year quarter.

Excluding non-core operations, other income increased by $611,000, primarily driven by increases in the cash surrender value of bank owned life insurance of $544,000 and net gain on sale of loans of $387,000, partially offset by a decrease in fees and service charges of $587,000 on lower title activity and retail deposit fees.

Six months ended June 30, 2024 vs. June 30, 2023

Other income increased to $23.3 million, as compared to $11.0 million. The current period was favorably impacted by non-core operations of $4.0 million related to net gains on equity investments and sale of a portion of the Company's trust business. The prior year was adversely impacted by non-core operations of $8.1 million, primarily related to losses on sale of investments.

Excluding non-core operations, other income increased by $241,000, primarily driven by increases in the cash surrender value of bank owned life insurance of $1.1 million, which included one-time death benefits in the current period, and net gain on sale of loans of $724,000. This was partially offset by a decrease in fees and service charges of $1.3 million, which was driven by the same factors as noted above.

Three months ended June 30, 2024 vs. March 31, 2024

Other income in the prior linked quarter was $12.3 million and was favorably impacted by non-core operations of $3.1 million related to net gains on equity investments and sale of a portion of the Company's trust business. Excluding non-core operations, other income increased by $897,000, primarily due to an increase in fees and service charges of $542,000, which was driven by higher title activity.

Non-interest Expense

Three months ended June 30, 2024 vs. June 30, 2023

Operating expenses decreased $4.3 million to $58.6 million, from $62.9 million. The primary drivers were decreases in professional fees of $2.9 million and compensation and employee benefits expenses of $1.1 million, which reflect the net realization of the Company's performance improvements initiatives and strategic investments made over the past year.

Six months ended June 30, 2024 vs. June 30, 2023

Operating expenses decreased to $117.3 million, as compared to $124.2 million. Operating expenses were adversely impacted by an FDIC special assessment in the current year of $418,000, and merger related and net branch consolidation expenses of $92,000 in the prior year period.

Excluding non-core operations, operating expenses decreased by $7.3 million. The primary drivers were decreases in professional fees of $5.3 million and compensation and employee benefits expenses of $2.2 million, which reflect the net realization of the Company's performance improvements initiatives and strategic investments made over the past year.

Three months ended June 30, 2024 vs. March 31, 2024

Operating expenses in the prior linked quarter were $58.7 million and included non-core operations of $418,000, related to an FDIC special assessment. Excluding non-core operations, operating expenses increased by $366,000.

Income Tax Expense

The provision for income taxes was $7.1 million and $17.7 million for the three and six months ended June 30, 2024, respectively, as compared to $9.0 million and $17.7 million for the same prior year periods, and $10.6 million for the prior linked quarter. The effective tax rate was 22.5% and 25.0% for the three and six months ended June 30, 2024, respectively, as compared to 24.4% and 24.0% for the same prior year periods, and 27.1% for the prior linked quarter. The prior linked quarter and current year's effective tax rates were negatively impacted by 3.0% and 1.6%, respectively, due to a non-recurring write-off of a deferred tax asset of $1.2 million.

Financial Condition

June 30, 2024 vs. December 31, 2023

Total assets decreased by $216.5 million to $13.32 billion, from $13.54 billion, primarily due to decreases in loans and debt securities. Total loans decreased by $175.3 million to $10.02 billion, from $10.19 billion, primarily due to a decrease in the total commercial portfolio of $165.3 million driven by loan payoffs and lower loan originations. The loan pipeline increased by $76.1 million to $259.1 million from $183.0 million. Held-to-maturity debt securities decreased by $53.9 million to $1.11 billion, from $1.16 billion, primarily due to principal repayments. Debt securities available-for-sale decreased $32.4 million to $721.5 million, from $753.9 million, primarily due to principal reductions and maturities. Other assets increased by $23.3 million to $203.0 million, from $179.7 million, primarily due to an increase in the market values of derivatives associated with customer interest rate swap programs.

Total liabilities decreased by $231.2 million to $11.65 billion, from $11.88 billion primarily related to lower deposits and a funding mix shift. Deposits decreased by $440.9 million to $9.99 billion, from $10.43 billion, primarily due to decreases in high-yield savings accounts of $283.1 million and interest bearing deposits of $243.9 million. Time deposits decreased to $2.37 billion, from $2.45 billion, representing 23.7% and 23.4% of total deposits, respectively, which was primarily related to planned runoff of brokered time deposits which decreased by $229.9 million, offset by increases in retail time deposits of $161.7 million. The loan-to-deposit ratio was 100.3%, as compared to 97.7%. Federal Home Loan Bank ("FHLB") advances decreased by $59.3 million to $789.3 million, from $848.6 million due to a mix shift in funding sources to other borrowings, which increased by $228.0 million to $424.5 million, from $196.5 million, as a result of lower cost funding availability.

Other liabilities increased by $31.4 million to $332.1 million, from $300.7 million, primarily due to an increase in the market values of derivatives associated with customer interest rate swaps and related collateral received from counterparties.

Capital levels remain strong and in excess of "well-capitalized" regulatory levels at June 30, 2024, including the Company's estimated common equity tier one capital ratio which increased to 11.2%, up approximately 35 basis points from December 31, 2023.

Total stockholders' equity increased to $1.68 billion, as compared to $1.66 billion, primarily reflecting net income, partially offset by capital returns comprising of share repurchases and dividends. For the six months ended June 30, 2024, the Company repurchased 1,295,914 shares totaling $20.1 million representing a weighted average cost of $15.35. The Company had 1,638,524 shares available for repurchase under the authorized repurchase program. Additionally, accumulated other comprehensive loss decreased by $3.7 million primarily due to increases in fair market value of available-for-sale debt securities, net of tax.

The Company actively monitors its goodwill as the challenging economic environment persists and continues to pressure the Company's stock price and industry valuations. The Company customarily performs its annual goodwill impairment assessment during the third quarter.

The Company's tangible common equity³ increased by $11.6 million to $1.11 billion. The Company's stockholders' equity to assets ratio was 12.59% at June 30, 2024, and tangible common equity to tangible assets ratio increased by 26 basis points during the quarter to 8.64%, primarily due to the drivers described above.

Book value per common share increased to $28.67, as compared to $27.96. Tangible book value per common share³ increased to $18.93, as compared to $18.35.

Asset Quality

June 30, 2024 vs. December 31, 2023

Overall asset quality metrics remained stable. The Company's non-performing loans increased to $33.4 million from $29.5 million and represented 0.33% and 0.29% of total loans, respectively. The allowance for loan credit losses as a percentage of total non-performing loans was 205.97%, as compared to 227.21%. The level of 30 to 89 days delinquent loans decreased to $9.7 million, from $19.2 million. Criticized and classified assets decreased to $142.6 million, from $146.9 million. The Company's allowance for loan credit losses was 0.69% of total loans, as compared to 0.66%. Refer to` "Provision for Credit Losses" section for further discussion.

The Company's asset quality, excluding purchased with credit deterioration ("PCD") loans, was as follows. Non-performing loans increased to $30.6 million, from $26.4 million. The allowance for loan credit losses as a percentage of total non-performing loans was 225.10%, as compared to 254.64%. The level of 30 to 89 days delinquent loans, excluding non-performing loans, decreased to $8.5 million, from $17.7 million. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $75.0 million, or 0.75% of total loans, as compared to $74.7 million, or 0.73% of total loans.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. The Company's management believes that the supplemental non-GAAP information, which consists of reported net income excluding non-core operations and in some instances excluding income taxes and provision for credit losses, and reporting equity and asset amounts excluding intangible assets, goodwill or preferred stock, all of 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. Refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, July 19, 2024 at 11:00 a.m. Eastern Time. The direct dial number for the call is (833) 470-1428, using the access code 619002. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (866) 813-9403, access code 217614, from one hour after the end of the call until August 16, 2024. 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 N.A., founded in 1902, is a $13.3 billion regional bank providing financial services throughout New Jersey and in the major metropolitan areas between Massachusetts and Virginia. OceanFirst Bank delivers commercial and residential financing, treasury management, trust and asset management, and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey. To learn more about OceanFirst, go to 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, inflation, general economic conditions, potential recessionary conditions, levels of unemployment in the Company's lending area, real estate market values in the Company's lending area, potential goodwill impairment, natural disasters, potential increases to flood insurance premiums, the current or anticipated impact of military conflict, terrorism or other geopolitical events, 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, the availability of low-cost funding, changes in liquidity, including the size and composition of the Company's deposit portfolio, and the percentage of uninsured deposits in the portfolio, changes in capital management and balance sheet strategies and the ability to successfully implement such strategies, competition, demand for financial services in the Company's market area, changes in consumer spending, borrowing and saving habits, changes in accounting principles, a failure in or breach of the Company's operational or security systems or infrastructure, including cyberattacks, the failure to maintain current technologies, failure to retain or attract employees, the effect of the Company's rating under the Community Reinvestment Act, the impact of pandemics on our operations and financial results and those of our customers 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, 2023, under Item 1A - Risk Factors and elsewhere, 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)

	June 30,		March 31,		December 31,		June 30,
	2024		2024		2023		2023
	(Unaudited)		(Unaudited)				(Unaudited)
Assets
Cash and due from banks	$	181,198	$	130,422	$	153,718	$	457,747
Debt securities available-for-sale, at estimated fair value		721,484		744,944		753,892		452,016
Debt securities held-to-maturity, net of allowance for securities credit losses of $958 at June 30, 2024, $1,058 at March 31, 2024, $1,133 at December 31, 2023 and $964 at June 30, 2023 (estimated fair value of $1,003,850 at June 30, 2024, $1,029,965 at March 31, 2024, $1,068,438 at December 31, 2023 and $1,109,756 at June 30, 2023)		1,105,843		1,128,666		1,159,735		1,222,507
Equity investments		104,132		103,201		100,163		96,452
Restricted equity investments, at cost		92,679		85,689		93,766		105,305
Loans receivable, net of allowance for loan credit losses of $68,839 at June 30, 2024, $67,173 at March 31, 2024, $67,137 at December 31, 2023 and $61,791 at June 30, 2023		9,961,117		10,068,209		10,136,721		10,030,106
Loans held-for-sale		2,062		4,702		5,166		4,200
Interest and dividends receivable		50,976		52,502		51,874		47,933
Premises and equipment, net		117,392		119,211		121,372		124,139
Bank owned life insurance		267,867		266,615		266,498		263,836
Assets held for sale		28		28		28		3,608
Goodwill		506,146		506,146		506,146		506,146
Core deposit intangible		7,859		8,669		9,513		11,476
Other assets		202,972		199,974		179,661		213,432
Total assets	$	13,321,755	$	13,418,978	$	13,538,253	$	13,538,903
Liabilities and Stockholders' Equity
Deposits	$	9,994,017	$	10,236,851	$	10,434,949	$	10,158,337
Federal Home Loan Bank advances		789,337		658,436		848,636		1,091,666
Securities sold under agreements to repurchase with customers		80,000		66,798		73,148		74,452
Other borrowings		424,490		425,722		196,456		195,925
Advances by borrowers for taxes and insurance		25,168		28,187		22,407		27,839
Other liabilities		332,074		337,147		300,712		364,401
Total liabilities		11,645,086		11,753,141		11,876,308		11,912,620
Stockholders' equity:
OceanFirst Financial Corp. stockholders' equity		1,675,885		1,665,112		1,661,163		1,625,435
Non-controlling interest		784		725		782		848
Total stockholders' equity		1,676,669		1,665,837		1,661,945		1,626,283
Total liabilities and stockholders' equity	$	13,321,755	$	13,418,978	$	13,538,253	$	13,538,903

OceanFirst Financial Corp. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts)

	For the Three Months Ended,								For the Six Months Ended,
	June 30,		March 31,			June 30,			June 30,		June 30,
	2024			2024			2023		2024			2023
	\|---------------------- (Unaudited) ----------------------\|								\|---------- (Unaudited) -----------\|
Interest income:
Loans	$	136,049	$	137,121		$	129,104		$	273,170	$	250,824
Debt securities		19,039		19,861			14,320			38,900		28,606
Equity investments and other		4,338		4,620			6,672			8,958		9,700
Total interest income		159,426		161,602			150,096			321,028		289,130
Interest expense:
Deposits		60,071		59,855			37,934			119,926		59,264
Borrowed funds		17,092		15,523			20,053			32,615		38,955
Total interest expense		77,163		75,378			57,987			152,541		98,219
Net interest income		82,263		86,224			92,109			168,487		190,911
Provision for credit losses		3,114		591			1,229			3,705		4,242
Net interest income after provision for credit losses		79,149		85,633			90,880			164,782		186,669
Other income:
Bankcard services revenue		1,571		1,416			1,544			2,987		2,874
Trust and asset management revenue		419		526			645			945		1,257
Fees and service charges		5,015		4,473			5,602			9,488		10,761
Net gain on sales of loans		420		357			33			777		53
Net gain (loss) on equity investments		887		1,923			(559	)		2,810		(7,360	)
Income from bank owned life insurance		1,726		1,862			1,182			3,588		2,463
Commercial loan swap income		241		138			—			379		701
Other		706		1,591			481			2,297		252
Total other income		10,985		12,286			8,928			23,271		11,001
Operating expenses:
Compensation and employee benefits		33,136		32,759			34,222			65,895		68,142
Occupancy		5,175		5,199			5,265			10,374		10,504
Equipment		1,068		1,130			1,101			2,198		2,306
Marketing		1,175		990			961			2,165		1,943
Federal deposit insurance and regulatory assessments		2,685		3,135			2,465			5,820		4,214
Data processing		6,018		5,956			6,165			11,974		12,319
Check card processing		1,075		1,050			1,214			2,125		2,495
Professional fees		2,161		2,732			5,083			4,893		10,181
Amortization of core deposit intangible		810		844			994			1,654		2,021
Branch consolidation expense, net		—		—			—			—		70
Merger related expenses		—		—			—			—		22
Other operating expense		5,317		4,877			5,460			10,194		10,022
Total operating expenses		58,620		58,672			62,930			117,292		124,239
Income before provision for income taxes		31,514		39,247			36,878			70,761		73,431
Provision for income taxes		7,082		10,637			8,996			17,719		17,650
Net income		24,432		28,610			27,882			53,042		55,781
Net income (loss) attributable to non-controlling interest		59		(57	)		85			2		101
Net income attributable to OceanFirst Financial Corp.		24,373		28,667			27,797			53,040		55,680
Dividends on preferred shares		1,004		1,004			1,004			2,008		2,008
Net income available to common stockholders	$	23,369	$	27,663		$	26,793		$	51,032	$	53,672
Basic earnings per share	$	0.40	$	0.47		$	0.45		$	0.87	$	0.91
Diluted earnings per share	$	0.40	$	0.47		$	0.45		$	0.87	$	0.91
Average basic shares outstanding		58,356		58,789			59,147			58,489		58,988
Average diluted shares outstanding		58,357		58,791			59,153			58,490		59,038

OceanFirst Financial Corp. SELECTED LOAN AND DEPOSIT DATA (dollars in thousands)

LOANS RECEIVABLE			At
			June 30,			March 31,			December 31,			September 30,			June 30,
				2024			2024			2023			2023			2023
Commercial:
Commercial real estate - investor			$	5,324,994		$	5,322,755		$	5,353,974		$	5,334,279		$	5,319,686
Commercial real estate - owner-occupied				857,710			914,582			943,891			957,216			981,618
Commercial and industrial				616,400			677,176			666,532			652,119			620,284
Total commercial				6,799,104			6,914,513			6,964,397			6,943,614			6,921,588
Consumer:
Residential real estate				2,977,698			2,965,276			2,979,534			2,928,259			2,906,556
Home equity loans and lines and other consumer ("other consumer")				242,526			245,859			250,664			251,698			255,486
Total consumer				3,220,224			3,211,135			3,230,198			3,179,957			3,162,042
Total loans				10,019,328			10,125,648			10,194,595			10,123,571			10,083,630
Deferred origination costs (fees), net				10,628			9,734			9,263			8,462			8,267
Allowance for loan credit losses				(68,839	)		(67,173	)		(67,137	)		(63,877	)		(61,791	)
Loans receivable, net			$	9,961,117		$	10,068,209		$	10,136,721		$	10,068,156		$	10,030,106
Mortgage loans serviced for others			$	104,136		$	89,555		$	68,217		$	52,796		$	50,820
	At June 30, 2024 Average Yield
Loan pipeline ⁽¹⁾:
Commercial	7.88	%	$	166,206		$	66,167		$	124,707		$	50,756		$	39,164
Residential real estate	6.96			80,330			57,340			49,499			66,682			58,022
Other consumer	8.81			12,586			13,030			8,819			13,795			18,621
Total	7.64	%	$	259,122		$	136,537		$	183,025		$	131,233		$	115,807

	For the Three Months Ended
	June 30,				March 31,		December 31,		September 30,		June 30,
	2024				2024		2023		2023		2023
	Average Yield
Loan originations:
Commercial	7.98	%	$	56,053	$	123,010	$	94,294	$	90,263	$	197,732
Residential real estate	6.74			121,388		78,270		113,227		92,299		100,542
Other consumer	8.99			16,970		11,405		16,971		17,019		22,487
Total	7.29	%	$	194,411	$	212,685	$	224,492	$	199,581	$	320,761
Loans sold			$	45,045	$	29,965	$	20,138	$	15,404	$	18,664

⁽¹⁾ _{Loan pipeline includes loans approved but not funded.}

DEPOSITS	At
	June 30,		March 31,		December 31,		September 30,		June 30,
	2024		2024		2023		2023		2023
Type of Account
Non-interest-bearing	$	1,632,521	$	1,639,828	$	1,657,119	$	1,827,381	$	1,854,136
Interest-bearing checking		3,667,837		3,865,699		3,911,766		3,708,874		3,537,834
Money market		1,210,312		1,150,979		1,021,805		860,025		770,440
Savings		1,115,688		1,260,309		1,398,837		1,484,000		1,229,897
Time deposits⁽¹⁾		2,367,659		2,320,036		2,445,422		2,653,649		2,766,030
Total deposits	$	9,994,017	$	10,236,851	$	10,434,949	$	10,533,929	$	10,158,337

⁽¹⁾	_{Includes brokered time deposits of $401.6 million, $543.4 million, $631.5 million, $995.5 million, and $1.42 billion at June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023, respectively.}

OceanFirst Financial Corp. ASSET QUALITY (dollars in thousands)

ASSET QUALITY ⁽¹⁾	June 30,			March 31,			December 31,			September 30,			June 30,
ASSET QUALITY ⁽¹⁾		2024			2024			2023			2023			2023
Non-performing loans:
Commercial real estate - investor	$	19,761		$	21,507		$	20,820		$	20,723		$	13,000
Commercial real estate - owner-occupied		4,081			3,355			351			240			565
Commercial and industrial		434			567			304			1,120			199
Residential real estate		7,213			7,181			5,542			5,624			6,174
Other consumer		1,933			2,401			2,531			2,391			2,820
Total non-performing loans	$	33,422		$	35,011		$	29,548		$	30,098		$	22,758
Delinquent loans 30 to 89 days	$	9,655		$	17,534		$	19,202		$	20,591		$	3,136
Modifications to borrowers experiencing financial difficulty ⁽²⁾
Non-performing (included in total non-performing loans above)	$	8,677		$	9,075		$	6,420		$	6,679		$	6,882
Performing		27,184			15,619			15,361			7,645			7,516
Total modifications to borrowers experiencing financial difficulty⁽²⁾	$	35,861		$	24,694		$	21,781		$	14,324		$	14,398
Allowance for loan credit losses	$	68,839		$	67,173		$	67,137		$	63,877		$	61,791
Allowance for loan credit losses as a percent of total loans receivable ⁽³⁾		0.69	%		0.66	%		0.66	%		0.63	%		0.61	%
Allowance for loan credit losses as a percent of total non-performing loans ⁽³⁾		205.97			191.86			227.21			212.23			271.51
Non-performing loans as a percent of total loans receivable		0.33			0.35			0.29			0.30			0.23
Non-performing assets as a percent of total assets		0.25			0.26			0.22			0.22			0.17
Supplemental PCD and non-performing loans
PCD loans, net of allowance for loan credit losses	$	16,058		$	16,700		$	16,122		$	18,640		$	18,872
Non-performing PCD loans		2,841			3,525			3,183			3,177			3,171
Delinquent PCD and non-performing loans 30 to 89 days		1,188			2,088			1,516			13,007			1,976
PCD modifications to borrowers experiencing financial difficulty ⁽²⁾		759			764			771			750			755
Asset quality, excluding PCD loans ⁽⁴⁾
Non-performing loans		30,581			31,486			26,365			26,921			19,587
Delinquent loans 30 to 89 days (excludes non-performing loans)		8,467			15,446			17,686			7,584			1,160
Modifications to borrowers experiencing financial difficulty ⁽²⁾		35,102			23,930			21,010			13,574			13,643
Allowance for loan credit losses as a percent of total non-performing loans ⁽³⁾		225.10	%		213.34	%		254.64	%		237.28	%		315.47	%
Non-performing loans as a percent of total loans receivable		0.31			0.31			0.26			0.27			0.19
Non-performing assets as a percent of total assets		0.23			0.23			0.19			0.20			0.14

⁽¹⁾	_{At June 30, 2024, non-performing loans included the remaining exposure of $7.2 million on the single commercial real estate relationship discussed in "Results of Operations".}
⁽²⁾	_{Balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings.}
⁽³⁾	_{Loans acquired from prior bank acquisitions were recorded at fair value. The net unamortized credit and PCD marks on these loans, not reflected in the allowance for loan credit losses, was $6.1 million, $7.0 million, $7.5 million, $8.8 million and $9.8 million at June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023 and June 30, 2023, respectively.}
⁽⁴⁾	_{All balances and ratios exclude PCD loans.}

NET LOAN CHARGE-OFFS	For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
		2024			2024			2023			2023			2023
Net loan charge-offs:
Loan charge-offs ⁽¹⁾	$	(1,600	)	$	(441	)	$	(98	)	$	(8,379	)	$	(206	)
Recoveries on loans		148			92			63			108			83
Net loan charge-offs	$	(1,452	)	$	(349	)	$	(35	)	$	(8,271	)	$	(123	)
Net loan charge-offs to average total loans (annualized)		0.06	%		0.01	%		—	%		0.33	%		—	%
Net loan charge-offs detail:
Commercial	$	(1,576	)	$	(35	)	$	9		$	(8,332	)	$	(117	)
Residential real estate		87			66			9			17			9
Other consumer		37			(380	)		(53	)		44			(15	)
Net loan charge-offs	$	(1,452	)	$	(349	)	$	(35	)	$	(8,271	)	$	(123	)

⁽¹⁾ _{The three months ended June 30, 2024 and September 30, 2023 includes charge-offs related to a single commercial real estate relationship of $1.6 million and $8.4 million, respectively.}

OceanFirst Financial Corp. ANALYSIS OF NET INTEREST INCOME

	For the Three Months Ended
	June 30, 2024							March 31, 2024							June 30, 2023
(dollars in thousands)	Average Balance			Interest		Average Yield/ Cost ⁽¹⁾		Average Balance			Interest		Average Yield/ Cost ⁽¹⁾		Average Balance			Interest		Average Yield/ Cost ⁽¹⁾
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments	$	132,574		$	1,770	5.37	%	$	163,192		$	2,226	5.49	%	$	308,238		$	4,283	5.57	%
Securities ⁽²⁾		2,058,711			21,607	4.22			2,098,421			22,255	4.27			1,931,032			16,709	3.47
Loans receivable, net ⁽³⁾
Commercial		6,845,988			102,620	6.03			6,925,048			104,421	6.06			6,912,698			99,350	5.76
Residential real estate		2,978,749			29,072	3.90			2,974,468			28,596	3.85			2,895,629			25,936	3.58
Other consumer		246,024			4,357	7.12			248,396			4,104	6.65			255,785			3,818	5.99
Allowance for loan credit losses, net of deferred loan costs and fees		(58,270	)		—	—			(59,141	)		—	—			(53,327	)		—	—
Loans receivable, net		10,012,491			136,049	5.46			10,088,771			137,121	5.46			10,010,785			129,104	5.17
Total interest-earning assets		12,203,776			159,426	5.25			12,350,384			161,602	5.26			12,250,055			150,096	4.91
Non-interest-earning assets		1,237,442							1,206,336							1,217,666
Total assets	$	13,441,218						$	13,556,720						$	13,467,721
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing checking	$	3,862,060			21,043	2.19	%	$	3,925,965			20,795	2.13	%	$	3,718,289			11,964	1.29	%
Money market		1,183,429			10,482	3.56			1,092,003			9,172	3.38			694,311			3,678	2.12
Savings		1,164,203			2,604	0.90			1,355,718			4,462	1.32			1,248,312			389	0.12
Time deposits		2,337,458			25,942	4.46			2,414,063			25,426	4.24			2,458,872			21,903	3.57
Total		8,547,150			60,071	2.83			8,787,749			59,855	2.74			8,119,784			37,934	1.87
FHLB Advances		711,801			8,746	4.94			644,818			7,771	4.85			1,246,914			15,406	4.96
Securities sold under agreements to repurchase		72,305			478	2.66			68,500			411	2.41			71,752			192	1.07
Other borrowings ⁽⁴⁾		541,266			7,868	5.85			500,901			7,341	5.89			284,460			4,455	6.28
Total borrowings		1,325,372			17,092	5.19			1,214,219			15,523	5.14			1,603,126			20,053	5.02
Total interest-bearing liabilities		9,872,522			77,163	3.14			10,001,968			75,378	3.03			9,722,910			57,987	2.39
Non-interest-bearing deposits		1,626,165							1,634,583							1,873,226
Non-interest-bearing liabilities⁽⁴⁾		268,078							247,129							244,892
Total liabilities		11,766,765							11,883,680							11,841,028
Stockholders' equity		1,674,453							1,673,040							1,626,693
Total liabilities and equity	$	13,441,218						$	13,556,720						$	13,467,721
Net interest income				$	82,263						$	86,224						$	92,109
Net interest rate spread ⁽⁵⁾						2.11	%						2.23	%						2.52	%
Net interest margin ⁽⁶⁾						2.71	%						2.81	%						3.02	%
Total cost of deposits (including non-interest-bearing deposits)						2.37	%						2.31	%						1.52	%

	For the Six Months Ended June 30,
		2024							2023
(dollars in thousands)	Average Balance			Interest		Average Yield/ Cost ⁽¹⁾		Average Balance			Interest		Average Yield/ Cost ⁽¹⁾
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments	$	147,883		$	3,995	5.43	%	$	219,482		$	5,221	4.80	%
Securities ⁽²⁾		2,078,566			43,863	4.24			1,943,148			33,085	3.43
Loans receivable, net ⁽³⁾
Commercial		6,885,518			207,041	6.05			6,876,553			192,130	5.63
Residential real estate		2,976,608			57,668	3.87			2,883,904			51,097	3.54
Other consumer		247,210			8,461	6.88			259,573			7,597	5.90
Allowance for loan credit losses, net of deferred loan costs and fees		(58,705	)		—	—			(51,948	)		—	—
Loans receivable, net		10,050,631			273,170	5.46			9,968,082			250,824	5.07
Total interest-earning assets		12,277,080			321,028	5.25			12,130,712			289,130	4.80
Non-interest-earning assets		1,221,889							1,226,061
Total assets	$	13,498,969						$	13,356,773
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing checking	$	3,894,013			41,838	2.16	%	$	3,790,413			18,234	0.97	%
Money market		1,137,716			19,653	3.47			699,940			5,437	1.57
Savings		1,259,960			7,066	1.13			1,308,381			723	0.11
Time deposits		2,375,760			51,369	4.35			2,144,514			34,870	3.28
Total		8,667,449			119,926	2.78			7,943,248			59,264	1.50
FHLB Advances		678,309			16,517	4.90			1,234,919			29,824	4.87
Securities sold under agreements to repurchase		70,403			889	2.54			71,825			282	0.79
Other borrowings ⁽⁴⁾		521,084			15,209	5.87			295,248			8,849	6.04
Total borrowings		1,269,796			32,615	5.17			1,601,992			38,955	4.90
Total interest-bearing liabilities		9,937,245			152,541	3.09			9,545,240			98,219	2.08
Non-interest-bearing deposits		1,630,374							1,950,437
Non-interest-bearing liabilities ⁽⁴⁾		257,603							242,864
Total liabilities		11,825,222							11,738,541
Stockholders' equity		1,673,747							1,618,232
Total liabilities and equity	$	13,498,969						$	13,356,773
Net interest income				$	168,487						$	190,911
Net interest rate spread ⁽⁵⁾						2.16	%						2.72	%
Net interest margin ⁽⁶⁾						2.76	%						3.17	%
Total cost of deposits (including non-interest-bearing deposits)						2.34	%						1.21	%

⁽¹⁾	_{Average yields and costs are annualized.}
⁽²⁾	_{Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost, net of allowance for securities credit losses.}
⁽³⁾	_{Amount is net of deferred loan costs and fees, undisbursed loan funds, discounts and premiums and allowance for loan credit losses, and includes loans held for sale and non-performing loans.}
⁽⁴⁾	_{For the three and six months ended June 30, 2023, includes reclassifications to conform with current period presentation.}
⁽⁵⁾	_{Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.}
⁽⁶⁾	_{Net interest margin represents net interest income divided by average interest-earning assets.}

OceanFirst Financial Corp. SELECTED QUARTERLY FINANCIAL DATA (in thousands, except per share amounts)

	June 30,		March 31,		December 31,		September 30,		June 30,
	2024		2024		2023		2023		2023
Selected Financial Condition Data:
Total assets	$	13,321,755	$	13,418,978	$	13,538,253	$	13,498,183	$	13,538,903
Debt securities available-for-sale, at estimated fair value		721,484		744,944		753,892		453,208		452,016
Debt securities held-to-maturity, net of allowance for securities credit losses		1,105,843		1,128,666		1,159,735		1,189,339		1,222,507
Equity investments		104,132		103,201		100,163		97,908		96,452
Restricted equity investments, at cost		92,679		85,689		93,766		82,484		105,305
Loans receivable, net of allowance for loan credit losses		9,961,117		10,068,209		10,136,721		10,068,156		10,030,106
Deposits		9,994,017		10,236,851		10,434,949		10,533,929		10,158,337
Federal Home Loan Bank advances		789,337		658,436		848,636		606,056		1,091,666
Securities sold under agreements to repurchase and other borrowings		504,490		492,520		269,604		279,164		270,377
Total stockholders' equity		1,676,669		1,665,837		1,661,945		1,637,604		1,626,283

	For the Three Months Ended,
	June 30,		March 31,			December 31,		September 30,			June 30,
	2024			2024		2023			2023			2023
Selected Operating Data:
Interest income	$	159,426	$	161,602		$	160,434	$	158,410		$	150,096
Interest expense		77,163		75,378			72,610		67,414			57,987
Net interest income		82,263		86,224			87,824		90,996			92,109
Provision for credit losses		3,114		591			3,153		10,283			1,229
Net interest income after provision for credit losses		79,149		85,633			84,671		80,713			90,880
Other income (excluding activity related to debt and equity investments and sale of trust business)		10,098		9,201			9,685		9,310			9,487
Net gain (loss) on equity investments		887		1,923			2,176		1,452			(559	)
Net gain on sale of trust business		—		1,162			—		—			—
Operating expenses (excluding FDIC special assessment)		58,620		58,254			58,526		64,484			62,930
FDIC special assessment		—		418			1,663		—			—
Income before provision for income taxes		31,514		39,247			36,343		26,991			36,878
Provision for income taxes		7,082		10,637			8,591		6,459			8,996
Net income		24,432		28,610			27,752		20,532			27,882
Net income (loss) attributable to non-controlling interest		59		(57	)		70		(135	)		85
Net income attributable to OceanFirst Financial Corp.	$	24,373	$	28,667		$	27,682	$	20,667		$	27,797
Net income available to common stockholders	$	23,369	$	27,663		$	26,678	$	19,663		$	26,793
Diluted earnings per share	$	0.40	$	0.47		$	0.46

OceanFirst Financial Corp. Announces Second Quarter Financial Results