OceanFirst Financial Corp. Announces Second Quarter Earnings and Financial Results
RED BANK, N.J., July 25, 2019 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:“OCFC”), (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), today announced that net income was $19.0 million, or $0.37 per diluted share, for the three months ended June 30, 2019, as compared to $15.7 million, or $0.32 per diluted share, for the corresponding prior year period. For the six months ended June 30, 2019, net income was $40.2 million, or $0.79 per diluted share, as compared to $21.1 million, or $0.45 per diluted share, for the corresponding prior year period.
The results of operations for the three and six months ended June 30, 2019 include merger related expenses, branch consolidation expenses and compensation expense due to the retirement of an executive officer, which decreased net income, net of tax benefit, by $7.0 million and $11.4 million, respectively. Excluding these items, core earnings for the three and six months ended June 30, 2019 were $26.0 million, or $0.51 per diluted share, and $51.6 million, or $1.02 per diluted share, respectively. (Please refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of merger related expenses, branch consolidation expenses, and compensation expense due to the retirement of an executive officer).
Highlights for the quarter are described below:
- The Bank’s expansion into metropolitan New York City and greater Philadelphia continues to progress with $43.6 million of closed loans and significant contributions to a record pipeline of $297.8 million as of June 30, 2019.
- The integration of Capital Bank of New Jersey’s (“Capital Bank”) operating systems was completed in June, with anticipated cost savings to be realized in the second half of the year.
- In conjunction with the integration of Capital Bank, three branches were consolidated in June. In addition, the Bank will be consolidating an additional four branches in the third quarter; bringing the total number of branches consolidated to 40 over the past three years.
Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “The second quarter results included strong core earnings of $26.0 million, along with a growing loan pipeline and improving asset quality.” Mr. Maher added, “With the full system integration of Capital Bank completed this quarter, we are pleased to offer enhanced financial solutions to our newest customers and expect to realize significant cost savings in the coming quarters.”
The Company announced that the Company’s Board of Directors declared its ninetieth consecutive quarterly cash dividend on common stock. The dividend, related to the three months ended June 30, 2019, of $0.17 per share will be paid on August 16, 2019 to stockholders of record on August 5, 2019.
Results of Operations
On January 31, 2018, the Company completed its acquisition of Sun Bancorp Inc. (“Sun”) and its results of operations are included in the consolidated results for the three and six months ended June 30, 2019, but are excluded from the results of operations for the period from January 1, 2018 to January 31, 2018.
On January 31, 2019, the Company completed its acquisition of Capital Bank and its results of operations from February 1, 2019 through June 30, 2019 are included in the consolidated results for the three and six months ended June 30, 2019, but are not included in the results of operations for the corresponding prior year periods.
Net income for the three months ended June 30, 2019, was $19.0 million, or $0.37 per diluted share, as compared to $15.7 million, or $0.32 per diluted share, for the corresponding prior year period. Net income for the six months ended June 30, 2019, was $40.2 million, or $0.79 per diluted share, as compared to $21.1 million, or $0.45 per diluted share, for the corresponding prior year period. Net income for the three and six months ended June 30, 2019 included merger related expenses, branch consolidation expenses, and compensation expense due to the retirement of an executive officer, which decreased net income, net of tax benefit, by $7.0 million and $11.4 million, respectively. Net income for the three and six months ended June 30, 2018 included merger related and branch consolidation expenses, which decreased net income, net of tax benefit, by $6.7 million and $21.3 million, respectively. Excluding these items, net income for the three and six months ended June 30, 2019, increased over the same prior year periods, primarily due to the acquisition of Capital Bank and the expense reductions driven by the integration of Sun in the second quarter of 2018.
Net interest income for the three and six months ended June 30, 2019 increased to $64.8 million and $129.2 million, respectively, as compared to $61.4 million and $117.2 million, respectively, for the same prior year periods, reflecting an increase in interest-earning assets. Average interest-earning assets increased by $492.8 million and $674.3 million for the three and six months ended June 30, 2019, respectively, as compared to the same prior year periods. The averages for the three and six months ended June 30, 2019 were favorably impacted by $401.8 million and $340.4 million, respectively, of interest-earning assets acquired from Capital Bank. Average loans receivable, net, increased by $522.3 million and $669.3 million for the three and six months ended June 30, 2019, respectively, as compared to the same prior year periods. The increases attributable to the acquisition of Capital Bank were $293.4 million and $245.9 million, respectively. The net interest margin for the three and six months ended June 30, 2019 decreased to 3.66% and 3.72%, respectively, from 3.73% in the same prior year periods. For the three and six months ended June 30, 2019, the cost of average interest-bearing liabilities increased to 0.98% and 0.94%, respectively, from 0.65% and 0.62%, respectively, in the corresponding prior year periods. The total cost of deposits (including non-interest bearing deposits) was 0.62% and 0.60% for the three and six months ended June 30, 2019, respectively, as compared to 0.35% and 0.34%, respectively, in the same prior year periods.
Net interest income for the three months ended June 30, 2019, increased by $449,000, as compared to the prior linked quarter, as average interest-earning assets increased by $181.3 million. The increase in average interest-earning assets over the prior linked quarter was primarily due to the inclusion of Capital Bank balances for the full quarter. The net interest margin decreased to 3.66% for the quarter ended June 30, 2019, as compared to 3.78% for the prior linked quarter. The total cost of deposits (including non-interest bearing deposits) was 0.62% for the three months ended June 30, 2019, as compared to 0.57% for three months ended March 31, 2019.
For the three and six months ended June 30, 2019, the provision for loan losses was $356,000 and $976,000, respectively, as compared to $706,000 and $2.1 million, respectively, for the corresponding prior year period, and $620,000 in the prior linked quarter. Net loan charge-offs were $926,000 and $1.4 million for the three and six months ended June 30, 2019, respectively, as compared to net loan charge-offs of $832,000 and $1.1 million in the corresponding prior year periods, and net loan charge-offs of $492,000 in the prior linked quarter. Non-performing loans totaled $17.8 million at June 30, 2019, as compared to $20.9 million at March 31, 2019 and $18.1 million at June 30, 2018.
For the three and six months ended June 30, 2019, other income increased to $9.9 million and $19.4 million, respectively, as compared to $8.9 million and $17.8 million, respectively, for the corresponding prior year periods. The increases were partly due to the impact of the Capital Bank acquisition, which added $312,000 and $557,000 to other income for the three and six months ended June 30, 2019, respectively, as compared to the same prior year periods. Excluding the Capital Bank acquisition, the increase in other income for the three months ended June 30, 2019 was primarily due to a decrease in the loss from real estate operations of $860,000, an increase in derivative fee income of $612,000, partially offset by decreases in fees and service charges of $724,000. Excluding the Capital Bank acquisition, the increase in other income for the six months ended June 30, 2019 was primarily due to a decrease in the loss from real estate operations of $1.3 million, an increase in derivative fee income of $1.1 million, an increase in bankcard services of $553,000, partially offset by decreases in fees and service charges of $1.0 million, rental income of $704,000 received primarily for January and February 2018 on the Company’s executive office, and the gain on sale of loans of $608,000 (mostly related to the sale of one non-performing commercial loan relationship during 2018).
For the three months ended June 30, 2019, other income increased by $367,000, as compared to the prior linked quarter. The increase was due to a full quarter of Capital Bank activity and an increase in bankcard services, partially offset by an increase in the loss from other real estate operations.
Operating expenses were flat at $50.9 million and decreased to $98.2 million for the three and six months ended June 30, 2019, respectively, as compared to $50.9 million and $107.7 million, respectively, in the same prior year periods. Operating expenses for the three and six months ended June 30, 2019 included $8.9 million and $14.3 million, respectively, of merger related expenses, branch consolidation expenses, and compensation expense due to the retirement of an executive officer, as compared to $8.4 million and $26.7 million, respectively, of merger related and branch consolidation expenses, in the same prior year periods. Excluding the impact of merger related expenses, branch consolidation expenses, and compensation expense due to the retirement of an executive officer, the change in operating expenses over the prior year was due to the Capital Bank acquisition, which added $1.9 million and $3.3 million for the three and six months ended June 30, 2019, respectively. Excluding the Capital Bank acquisition, the decrease in operating expenses for the three months ended June 30, 2019 over the prior year period was primarily due to decreases in compensation and employee benefits expense of $2.2 million, occupancy expenses and federal insurance premium, partially offset by increases in check card processing and marketing expenses. Excluding the Capital Bank acquisition, the remaining decrease in operating expenses, for the six months ended June 30, 2019 from the prior year period, was primarily due to decreases in compensation and employee benefits expense of $1.8 million, a decrease in federal insurance premium and a decrease in occupancy expense, partially offset by increases in marketing expenses of $611,000, and check card processing of $597,000.
For the three months ended June 30, 2019, operating expenses, excluding merger, branch consolidation expenses, and compensation expense due to the retirement of an executive officer increased by $206,000, as compared to the prior linked quarter. The increase was primarily due to a full quarter of Capital Bank which resulted in an increase of $435,000, as compared to the prior linked quarter.
The provision for income taxes was $4.5 million and $9.3 million for the three and six months ended June 30, 2019, respectively, as compared to $3.0 million and $4.0 million, respectively, for the same prior year periods. The effective tax rate was 19.0% and 18.8% for the three and six months ended June 30, 2019, respectively, as compared to 16.1% and 16.0%, respectively, for the same prior year periods. The lower effective tax rates in the prior year periods were primarily due to larger tax benefits from employee stock option exercises.
Financial Condition
Total assets increased by $512.9 million, to $8.029 billion at June 30, 2019, from $7.516 billion at December 31, 2018, primarily as a result of the acquisition of Capital Bank, which added $494.7 million to total assets. Loans receivable, net, increased by $364.7 million, to $5.944 billion at June 30, 2019, from $5.579 billion at December 31, 2018, due to acquired loans of $307.7 million. As part of the acquisition of Capital Bank, the Company’s goodwill balance increased to $374.6 million at June 30, 2019, from $338.4 million at December 31, 2018, and the core deposit intangible increased to $17.6 million, from $17.0 million at December 31, 2018.
Deposits increased by $372.9 million, to $6.187 billion at June 30, 2019, from $5.815 billion at December 31, 2018, primarily due to acquired deposits of $449.0 million. The loan-to-deposit ratio at June 30, 2019 was 96.1%, as compared to 96.0% at December 31, 2018.
Stockholders’ equity increased to $1.137 billion at June 30, 2019, as compared to $1.039 billion at December 31, 2018. The acquisition of Capital Bank added $76.4 million to stockholders’ equity. At June 30, 2019, there were 986,386 shares available for repurchase under the Company’s stock repurchase program. For the six months ended June 30, 2019, the Company repurchased 309,167 shares under the repurchase program at an average cost of $23.93. Tangible stockholders’ equity per common share increased to $14.57 at June 30, 2019, as compared to $14.26 at December 31, 2018.
Asset Quality
The Company’s non-performing loans increased to $17.8 million at June 30, 2019, as compared to $17.4 million at December 31, 2018. Non-performing loans do not include $13.4 million of purchased credit-impaired (“PCI”) loans acquired in the Capital Bank, Sun, Ocean Shore Holding Co. (“Ocean Shore”), Cape Bancorp, Inc. (“Cape”), and Colonial American Bank (“Colonial American”) acquisitions (“Acquisition Transactions”). The Company’s other real estate owned totaled $865,000 at June 30, 2019, as compared to $1.4 million at December 31, 2018.
At June 30, 2019, the Company’s allowance for loan losses was 0.27% of total loans, a decrease from 0.30% at December 31, 2018. These ratios exclude existing fair value credit marks of $36.0 million at June 30, 2019 on loans acquired from the Acquisition Transactions, and $31.6 million at December 31, 2018 on loans acquired from Sun, Ocean Shore, Cape and Colonial American. 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 90.67% at June 30, 2019, as compared to 95.19% at December 31, 2018.
Explanation of Non-GAAP Financial Measures
Reported amounts are presented in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding merger related expenses, branch consolidation expenses, compensation expense due to the retirement of an executive officer, and the impact to income tax expense related to the revaluation of deferred tax assets as required under Tax Reform, which can vary from period to period, provides a better comparison of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Please refer to Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.
Conference Call
As previously announced, the Company will host an earnings conference call on Friday, July 26, 2019 at 11:00 a.m. Eastern Time. The direct dial number for the call is (888) 338-7143. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (877) 344-7529, Replay Conference Number 10132661 from one hour after the end of the call until October 24, 2019. 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 an $8.0 billion regional bank operating throughout New Jersey, metropolitan Philadelphia and metropolitan New York City. OceanFirst Bank delivers commercial and residential financing solutions, trust and asset 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, 2018, 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, except per share amounts)
| June 30, | March 31, | December 31, | June 30, | ||||||||||||
| 2019 | 2019 | 2018 | 2018 | ||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Assets | |||||||||||||||
| Cash and due from banks | $ | 148,327 | $ | 134,235 | $ | 120,792 | $ | 254,469 | |||||||
| Federal funds sold | — | 18,733 | — | — | |||||||||||
| Debt securities available-for-sale, at estimated fair value | 123,610 | 122,558 | 100,717 | 100,369 | |||||||||||
| Debt securities held-to-maturity, net (estimated fair value of $869,167 at June 30, 2019, $896,812 at March 31, 2019, $832,815 at December 31, 2018, and $906,989 at June 30, 2018) | 863,838 | 900,614 | 846,810 | 922,756 | |||||||||||
| Equity investments, at estimated fair value | 10,002 | 9,816 | 9,655 | 9,539 | |||||||||||
| Restricted equity investments, at cost | 59,425 | 55,663 | 56,784 | 66,981 | |||||||||||
| Loans receivable, net | 5,943,930 | 5,968,830 | 5,579,222 | 5,553,035 | |||||||||||
| Loans held-for-sale | — | — | — | 919 | |||||||||||
| Interest and dividends receivable | 22,106 | 22,294 | 19,689 | 19,669 | |||||||||||
| Other real estate owned | 865 | 1,594 | 1,381 | 7,854 | |||||||||||
| Premises and equipment, net | 105,853 | 113,226 | 111,209 | 113,782 | |||||||||||
| Bank Owned Life Insurance | 235,162 | 234,183 | 222,482 | 219,853 | |||||||||||
| Deferred tax asset | 66,259 | 66,689 | 63,377 | 59,283 | |||||||||||
| Assets held for sale | 4,198 | 4,522 | 4,522 | 10,269 | |||||||||||
| Other assets | 53,276 | 46,266 | 24,101 | 40,204 | |||||||||||
| Core deposit intangible | 17,614 | 18,629 | 16,971 | 18,949 | |||||||||||
| Goodwill | 374,592 | 375,096 | 338,442 | 338,972 | |||||||||||
| Total assets | $ | 8,029,057 | $ | 8,092,948 | $ | 7,516,154 | $ | 7,736,903 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||
| Deposits | $ | 6,187,487 | $ | 6,290,485 | $ | 5,814,569 | $ | 5,819,406 | |||||||
| Federal Home Loan Bank advances | 453,646 | 418,016 | 449,383 | 674,227 | |||||||||||
| Securities sold under agreements to repurchase with retail customers | 62,086 | 66,174 | 61,760 | 62,176 | |||||||||||
| Other borrowings | 96,533 | 99,579 | 99,530 | 99,428 | |||||||||||
| Advances by borrowers for taxes and insurance | 14,817 | 15,138 | 14,066 | 17,773 | |||||||||||
| Other liabilities | 77,193 | 76,393 | 37,488 | 51,325 | |||||||||||
| Total liabilities | 6,891,762 | 6,965,785 | 6,476,796 | 6,724,335 | |||||||||||
| Total stockholders’ equity | 1,137,295 | 1,127,163 | 1,039,358 | 1,012,568 | |||||||||||
| Total liabilities and stockholders’ equity | $ | 8,029,057 | $ | 8,092,948 | $ | 7,516,154 | $ | 7,736,903 | |||||||
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, | |||||||||||||||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||
| |-------------------- (Unaudited) --------------------| | |---------- (Unaudited) -----------| | ||||||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||
| Loans | $ | 70,917 | $ | 69,001 | $ | 63,135 | $ | 139,918 | $ | 119,732 | |||||||||||||||||||
| Mortgage-backed securities | 3,946 | 4,041 | 4,297 | 7,987 | 7,982 | ||||||||||||||||||||||||
| Debt securities, equity investments and other | 3,547 | 3,380 | 2,646 | 6,927 | 5,200 | ||||||||||||||||||||||||
| Total interest income | 78,410 | 76,422 | 70,078 | 154,832 | 132,914 | ||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||
| Deposits | 9,762 | 8,639 | 5,247 | 18,401 | 9,711 | ||||||||||||||||||||||||
| Borrowed funds | 3,811 | 3,395 | 3,384 | 7,206 | 6,046 | ||||||||||||||||||||||||
| Total interest expense | 13,573 | 12,034 | 8,631 | 25,607 | 15,757 | ||||||||||||||||||||||||
| Net interest income | 64,837 | 64,388 | 61,447 | 129,225 | 117,157 | ||||||||||||||||||||||||
| Provision for loan losses | 356 | 620 | 706 | 976 | 2,077 | ||||||||||||||||||||||||
| Net interest income after provision for loan losses | 64,481 | 63,768 | 60,741 | 128,249 | 115,080 | ||||||||||||||||||||||||
| Other income: | |||||||||||||||||||||||||||||
| Bankcard services revenue | 2,679 | 2,285 | 2,373 | 4,964 | 4,292 | ||||||||||||||||||||||||
| Trust and asset management revenue | 569 | 498 | 595 | 1,067 | 1,148 | ||||||||||||||||||||||||
| Fees and service charges | 4,595 | 4,516 | 5,140 | 9,111 | 9,816 | ||||||||||||||||||||||||
| Net gain on sales of loans | 7 | 8 | 6 | 15 | 623 | ||||||||||||||||||||||||
| Net unrealized gain (loss) on equity investments | 133 | 108 | (71 | ) | 241 | (212 | ) | ||||||||||||||||||||||
| Net loss from other real estate operations | (121 | ) | (6 | ) | (981 | ) | (127 | ) | (1,393 | ) | |||||||||||||||||||
| Income from Bank Owned Life Insurance | 1,293 | 1,321 | 1,335 | 2,614 | 2,476 | ||||||||||||||||||||||||
| Other | 724 | 782 | 486 | 1,506 | 1,044 | ||||||||||||||||||||||||
| Total other income | 9,879 | 9,512 | 8,883 | 19,391 | 17,794 | ||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||
| Compensation and employee benefits | 23,704 | 22,414 | 23,244 | 46,118 | 44,495 | ||||||||||||||||||||||||
| Occupancy | 4,399 | 4,530 | 4,572 | 8,929 | 9,139 | ||||||||||||||||||||||||
| Equipment | 1,936 | 1,946 | 2,034 | 3,882 | 3,937 | ||||||||||||||||||||||||
| Marketing | 1,137 | 930 | 893 | 2,067 | 1,454 | ||||||||||||||||||||||||
| Federal deposit insurance | 802 | 832 | 1,000 | 1,634 | 1,930 | ||||||||||||||||||||||||
| Data processing | 3,684 | 3,654 | 3,667 | 7,338 | 6,843 | ||||||||||||||||||||||||
| Check card processing | 1,322 | 1,438 | 1,116 | 2,760 | 2,105 | ||||||||||||||||||||||||
| Professional fees | 1,408 | 1,709 | 1,397 | 3,117 | 2,680 | ||||||||||||||||||||||||
| Other operating expense | 3,882 | 3,369 | 3,546 | 7,251 | 6,561 | ||||||||||||||||||||||||
| Amortization of core deposit intangible | 1,015 | 1,005 | 1,001 | 2,020 | 1,834 | ||||||||||||||||||||||||
| Branch consolidation expense | 6,695 | 391 | 1,719 | 7,086 | 1,544 | ||||||||||||||||||||||||
| Merger related expenses | 931 | 5,053 | 6,715 | 5,984 | 25,200 | ||||||||||||||||||||||||
| Total operating expenses | 50,915 | 47,271 | 50,904 | 98,186 | 107,722 | ||||||||||||||||||||||||
| Income before provision for income taxes | 23,445 | 26,009 | 18,720 | 49,454 | 25,152 | ||||||||||||||||||||||||
| Provision for income taxes | 4,465 | 4,836 | 3,018 | 9,301 | 4,023 | ||||||||||||||||||||||||
| Net income | $ | 18,980 | $ | 21,173 | $ | 15,702 | $ | 40,153 | $ | 21,129 | |||||||||||||||||||
| Basic earnings per share | $ | 0.37 | $ | 0.43 | $ | 0.33 | $ | 0.80 | $ | 0.46 | |||||||||||||||||||
| Diluted earnings per share | $ | 0.37 | $ | 0.42 | $ | 0.32 | $ | 0.79 | $ | 0.45 | |||||||||||||||||||
| Average basic shares outstanding | 50,687 | 49,526 | 47,718 | 50,115 | 45,805 | ||||||||||||||||||||||||
| Average diluted shares outstanding | 51,290 | 50,150 | 48,704 | 50,728 | 46,786 | ||||||||||||||||||||||||
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
| LOANS RECEIVABLE | At | ||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial: | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | 392,336 | $ | 383,686 | $ | 304,996 | $ | 343,121 | $ | 338,436 | |||||||||||||||||||||||||||||||||||||||||
| Commercial real estate - owner - occupied | 771,640 | 802,229 | 740,893 | 735,289 | 717,061 | ||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate - investor | 2,143,093 | 2,161,451 | 2,023,131 | 2,019,859 | 2,076,930 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | 3,307,069 | 3,347,366 | 3,069,020 | 3,098,269 | 3,132,427 | ||||||||||||||||||||||||||||||||||||||||||||||
| Consumer: | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential real estate | 2,193,829 | 2,162,668 | 2,044,523 | 2,020,155 | 2,013,389 | ||||||||||||||||||||||||||||||||||||||||||||||
| Home equity loans and lines | 341,972 | 351,303 | 353,609 | 359,094 | 365,448 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other consumer | 109,015 | 116,838 | 121,561 | 74,555 | 50,952 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | 2,644,816 | 2,630,809 | 2,519,693 | 2,453,804 | 2,429,789 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total loans | 5,951,885 | 5,978,175 | 5,588,713 | 5,552,073 | 5,562,216 | ||||||||||||||||||||||||||||||||||||||||||||||
| Deferred origination costs, net | 8,180 | 7,360 | 7,086 | 8,707 | 7,510 | ||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | (16,135 | ) | (16,705 | ) | (16,577 | ) | (16,821 | ) | (16,691 | ) | |||||||||||||||||||||||||||||||||||||||||
| Loans receivable, net | $ | 5,943,930 | $ | 5,968,830 | $ | 5,579,222 | $ | 5,543,959 | $ | 5,553,035 | |||||||||||||||||||||||||||||||||||||||||
| Mortgage loans serviced for others | $ | 90,882 | $ | 92,274 | $ | 95,100 | $ | 106,369 | $ | 105,116 | |||||||||||||||||||||||||||||||||||||||||
| At June 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Yield | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan pipeline (1): | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | 4.90 | % | $ | 212,712 | $ | 122,325 | $ | 129,839 | $ | 137,519 | $ | 166,178 | |||||||||||||||||||||||||||||||||||||||
| Residential real estate | 3.74 | 82,555 | 63,598 | 49,800 | 64,841 | 64,259 | |||||||||||||||||||||||||||||||||||||||||||||
| Home equity loans and lines | 5.33 | 2,550 | 4,688 | 6,571 | 11,030 | 9,240 | |||||||||||||||||||||||||||||||||||||||||||||
| Total | 4.58 | % | $ | 297,817 | $ | 190,611 | $ | 186,210 | $ | 213,390 | $ | 239,677 | |||||||||||||||||||||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Yield | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan originations: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | 4.44 | % | $ | 123,882 | $ | 172,233 | $ | 151,851 | $ | 136,764 | $ | 67,297 | ||||||||||||||||||||||||||||||||||||||||||
| Residential real estate | 3.93 | 120,771 | 75,530 | 92,776 | 124,419 | 109,357 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Home equity loans and lines | 5.46 | 14,256 | 13,072 | 15,583 | 17,892 | 20,123 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 4.26 | % | $ | 258,909 | $ | 260,835 | (2) | $ | 260,210 | (3) | $ | 279,075 | (4) | $ | 196,777 | (6) | ||||||||||||||||||||||||||||||||||||||
| Loans sold | $ | 403 | (5) | $ | 495 | $ | 728 | (5) | $ | 1,349 | (5) | $ | 422 | |||||||||||||||||||||||||||||||||||||||||
| (1) | Loan pipeline includes pending loan applications and loans approved but not funded. | |||
| (2) | Excludes purchased loans of $100.0 million for residential real estate. | |||
| (3) | Excludes purchased loans of $49.5 million for other consumer and $753,000 for residential real estate. | |||
| (4) | Excludes purchased loans of $25.0 million for other consumer. | |||
| (5) | Excludes the sale of under-performing residential loans of $2.9 million, under-performing commercial loans of $1.7 million and under-performing residential loans of $5.1 million for the three months ended June 30, 2019, December 31, 2018, and September 30, 2018, respectively. | |||
| (6) | Excludes purchased loans of $23.6 million for commercial, $49.0 million for residential real estate, and $49.1 million for other consumer. |
| DEPOSITS | At | ||||||||||||||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||||||||||||||||||||||||
| Type of Account | |||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing | $ | 1,370,167 | $ | 1,352,520 | $ | 1,151,362 | $ | 1,196,875 | $ | 1,195,980 | |||||||||||||||||||||||||||||||||||
| Interest-bearing checking | 2,342,913 | 2,400,192 | 2,350,106 | 2,332,215 | 2,265,971 | ||||||||||||||||||||||||||||||||||||||||
| Money market deposit | 642,985 | 666,067 | 569,680 | 584,250 | 574,269 | ||||||||||||||||||||||||||||||||||||||||
| Savings | 909,501 | 922,113 | 877,177 | 887,799 | 903,777 | ||||||||||||||||||||||||||||||||||||||||
| Time deposits | 921,921 | 949,593 | 866,244 | 853,111 | 879,409 | ||||||||||||||||||||||||||||||||||||||||
| $ | 6,187,487 | $ | 6,290,485 | $ | 5,814,569 | $ | 5,854,250 | $ | 5,819,406 | ||||||||||||||||||||||||||||||||||||
OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||
| ASSET QUALITY | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||||||||||||
| Non-performing loans: | |||||||||||||||||||||||||||||
| Commercial and industrial | $ | 207 | $ | 240 | $ | 1,587 | $ | 1,727 | $ | 1,947 | |||||||||||||||||||
| Commercial real estate - owner-occupied | 4,818 | 4,565 | 501 | 511 | 522 | ||||||||||||||||||||||||
| Commercial real estate - investor | 4,050 | 4,115 | 5,024 | 8,082 | 6,364 | ||||||||||||||||||||||||
| Residential real estate | 5,747 | 8,611 | 7,389 | 6,390 | 6,858 | ||||||||||||||||||||||||
| Home equity loans and lines | 2,974 | 3,364 | 2,914 | 2,529 | 2,415 | ||||||||||||||||||||||||
| Total non-performing loans | 17,796 | 20,895 | 17,415 | 19,239 | 18,106 | ||||||||||||||||||||||||
| Other real estate owned | 865 | 1,594 | 1,381 | 6,231 | 7,854 | ||||||||||||||||||||||||
| Total non-performing assets | $ | 18,661 | $ | 22,489 | $ | 18,796 | $ | 25,470 | $ | 25,960 | |||||||||||||||||||
| Purchased credit-impaired (“PCI”) loans | $ | 13,432 | $ | 16,306 | $ | 8,901 | $ | 9,700 | $ | 12,995 | |||||||||||||||||||
| Delinquent loans 30 to 89 days | $ | 20,029 | $ | 21,578 | $ | 25,686 | $ | 26,691 | $ | 36,010 | |||||||||||||||||||
| Troubled debt restructurings: | |||||||||||||||||||||||||||||
| Non-performing (included in total non-performing loans above) | $ | 6,815 | $ | 6,484 | $ | 3,595 | $ | 3,568 | $ | 4,190 | |||||||||||||||||||
| Performing | 19,314 | 19,690 | 22,877 | 24,230 | 24,272 | ||||||||||||||||||||||||
| Total troubled debt restructurings | $ | 26,129 | $ | 26,174 | $ | 26,472 | $ | 27,798 | $ | 28,462 | |||||||||||||||||||
| Allowance for loan losses | $ | 16,135 | $ | 16,705 | $ | 16,577 | $ | 16,821 | $ | 16,691 | |||||||||||||||||||
| Allowance for loan losses as a percent of total loans receivable (1) | 0.27 | % | 0.28 | % | 0.30 | % | 0.30 | % | 0.30 | % | |||||||||||||||||||
| Allowance for loan losses as a percent of total non-performing loans | 90.67 | 79.95 | 95.19 | 87.43 | 92.18 | ||||||||||||||||||||||||
| Non-performing loans as a percent of total loans receivable | 0.30 | 0.35 | 0.31 | 0.35 | 0.33 | ||||||||||||||||||||||||
| Non-performing assets as a percent of total assets | 0.23 | 0.28 | 0.25 | 0.34 | 0.34 | ||||||||||||||||||||||||
| (1) | The loans acquired from Capital Bank, Sun, 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 $36,026, $35,204, $31,647, $34,357, and $37,679 at June 30, 2019, March 31, 2019, December 31, 2018, September 30, 2018, and June 30, 2018, respectively. |
| NET CHARGE-OFFS | For the Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||||||||||||||||||||||||
| Net Charge-offs: | |||||||||||||||||||||||||||||||||||||||||||||
| Loan charge-offs | $ | (1,138 | ) | $ | (868 | ) | $ | (1,133 | ) | $ | (891 | ) | $ | (1,284 | ) | ||||||||||||||||||||||||||||||
| Recoveries on loans | 212 | 376 | 383 | 114 | 452 | ||||||||||||||||||||||||||||||||||||||||
| Net loan charge-offs | $ | (926 | ) | (1) | $ | (492 | ) | $ | (750 | ) | (1) | $ | (777 | ) | (1) | $ | (832 | ) | |||||||||||||||||||||||||||
| Net loan charge-offs to average total loans (annualized) |
0.06 | % | 0.03 | % | 0.05 | % | 0.06 | % | 0.06 | % | |||||||||||||||||||||||||||||||||||
| Net charge-off detail - (loss) recovery: | |||||||||||||||||||||||||||||||||||||||||||||
| Commercial | $ | (58 | ) | $ | (58 | ) | $ | (871 | ) | $ | (246 | ) | $ | (846 | ) | ||||||||||||||||||||||||||||||
| Residential real estate | (728 | ) | (425 | ) | 210 | (478 | ) | (20 | ) | ||||||||||||||||||||||||||||||||||||
| Home equity loans and lines | (121 | ) | (4 | ) | (62 | ) | (35 | ) | 31 | ||||||||||||||||||||||||||||||||||||
| Other consumer | (19 | ) | (5 | ) | (27 | ) | (18 | ) | 3 | ||||||||||||||||||||||||||||||||||||
| Net loan charge-offs | $ | (926 | ) | (1) | $ | (492 | ) | $ | (750 | ) | (1) | $ | (777 | ) | (1) | $ | (832 | ) | |||||||||||||||||||||||||||
| (1) | Included in net loan charge-offs for the three months ended June 30 2019, December 31, 2018 and September 30, 2018 are $429, $243 and $430, respectively, relating to under-performing loans sold. | |||
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2019 | March 31, 2019 | June 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
| Average | Average | Average | |||||||||||||||||||||||||||||||||||||||||||||
| Average | Yield/ | Average | Yield/ | Average | Yield/ | ||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | Balance | Interest | Cost | Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning deposits and short-term investments | $ | 67,214 | $ | 372 | 2.22 | % | $ | 79,911 | $ | 467 | 2.37 | % | $ | 58,091 | $ | 280 | 1.93 | % | |||||||||||||||||||||||||||||
| Securities (1) | 1,080,690 | 7,121 | 2.64 | 1,067,150 | 6,954 | 2.64 | 1,119,354 | 6,663 | 2.39 | ||||||||||||||||||||||||||||||||||||||
| Loans receivable, net (2) | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | 3,309,869 | 42,579 | 5.16 | 3,211,296 | 41,408 | 5.23 | 3,109,313 | 38,805 | 5.01 | ||||||||||||||||||||||||||||||||||||||
| Residential | 2,187,417 | 22,329 | 4.08 | 2,094,131 | 21,404 | 4.09 | 1,951,075 | 19,642 | 4.04 | ||||||||||||||||||||||||||||||||||||||
| Home Equity | 347,028 | 4,656 | 5.38 | 353,358 | 4,707 | 5.40 | 369,054 | 4,564 | 4.96 | ||||||||||||||||||||||||||||||||||||||
| Other | 113,153 | 1,353 | 4.80 | 119,185 | 1,482 | 5.04 | 7,604 | 124 | 6.54 | ||||||||||||||||||||||||||||||||||||||
| Allowance for loan loss net of deferred loan fees | (9,155 | ) | — | — | (10,083 | ) | — | — | (11,076 | ) | — | — | |||||||||||||||||||||||||||||||||||
| Loans Receivable, net | 5,948,312 | 70,917 | 4.78 | 5,767,887 | 69,001 | 4.85 | 5,425,970 | 63,135 | 4.67 | ||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 7,096,216 | 78,410 | 4.43 | 6,914,948 | 76,422 | 4.48 | 6,603,415 | 70,078 | 4.26 | ||||||||||||||||||||||||||||||||||||||
| Non-interest-earning assets | 972,683 | 924,368 | 929,553 | ||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 8,068,899 | $ | 7,839,316 | $ | 7,532,968 | |||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing checking | $ | 2,504,541 | 4,240 | 0.68 | % | $ | 2,508,669 | 3,745 | 0.61 | % | $ | 2,372,777 | 2,028 | 0.34 | % | ||||||||||||||||||||||||||||||||
| Money market | 631,297 | 1,358 | 0.86 | 623,868 | 1,157 | 0.75 | 597,770 | 694 | 0.47 | ||||||||||||||||||||||||||||||||||||||
| Savings | 915,701 | 301 | 0.13 | 904,047 | 286 | 0.13 | 907,570 | 267 | 0.12 | ||||||||||||||||||||||||||||||||||||||
| Time deposits | 934,470 | 3,863 | 1.66 | 932,341 | 3,451 | 1.50 | 902,091 | 2,258 | 1.00 | ||||||||||||||||||||||||||||||||||||||
| Total | 4,986,009 | 9,762 | 0.79 | 4,968,925 | 8,639 | 0.71 | 4,780,208 | 5,247 | 0.44 | ||||||||||||||||||||||||||||||||||||||
| FHLB Advances | 404,951 | 2,320 | 2.30 | 339,686 | 1,839 | 2.20 | 376,527 | 1,900 | 2.02 | ||||||||||||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | 62,243 | 64 | 0.41 | 65,295 | 55 | 0.34 | 64,446 | 44 | 0.27 | ||||||||||||||||||||||||||||||||||||||
| Other borrowings | 99,591 | 1,427 | 5.75 | 99,517 | 1,501 | 6.12 | 99,383 | 1,440 | 5.81 | ||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities |
5,552,794 | 13,573 | 0.98 | 5,473,423 | 12,034 | 0.89 | 5,320,564 | 8,631 | 0.65 | ||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing deposits | 1,302,147 | 1,211,934 | 1,149,764 | ||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing liabilities | 82,793 | 55,975 | 51,262 | ||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 6,937,734 | 6,741,332 | 6,521,590 | ||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 1,131,165 | 1,097,984 | 1,011,378 | ||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 8,068,899 | $ | 7,839,316 | $ | 7,532,968 | |||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 64,837 | $ | 64,388 | $ | 61,447 | |||||||||||||||||||||||||||||||||||||||||
| Net interest rate spread (3) | 3.45 | % | 3.59 | % | 3.61 | % | |||||||||||||||||||||||||||||||||||||||||
| Net interest margin (4) | 3.66 | % | 3.78 | % | 3.73 | % | |||||||||||||||||||||||||||||||||||||||||
| Total cost of deposits (including non-interest-bearing deposits) | 0.62 | % | 0.57 | % | 0.35 | % | |||||||||||||||||||||||||||||||||||||||||
| For the Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2019 | June 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average | Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average | Yield/ | Average | Yield/ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning deposits and short-term investments | $ | 73,527 | $ | 839 | 2.30 | % | $ | 54,195 | $ | 488 | 1.82 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Securities (1) | 1,073,957 | 14,075 | 2.64 | 1,088,237 | 12,694 | 2.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans receivable, net (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | 3,260,855 | 83,987 | 5.19 | 2,942,062 | 72,195 | 4.95 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential | 2,141,032 | 43,733 | 4.09 | 1,897,736 | 38,679 | 4.11 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Home Equity | 350,175 | 9,363 | 5.39 | 355,641 | 8,707 | 4.94 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 116,153 | 2,835 | 4.92 | 4,547 | 151 | 6.70 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan loss net of deferred loan fees | (9,616 | ) | — | — | (10,683 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loans Receivable, net | 5,858,599 | 139,918 | 4.82 | 5,189,303 | 119,732 | 4.65 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 7,006,083 | 154,832 | 4.46 | 6,331,735 | 132,914 | 4.23 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-earning assets | 948,658 | 858,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 7,954,741 | $ | 7,189,737 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing checking | $ | 2,518,062 | 8,032 | 0.64 | % | $ | 2,318,751 | 3,786 | 0.33 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Money market | 616,384 | 2,468 | 0.81 | 562,050 | 1,244 | 0.45 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings | 909,906 | 587 | 0.13 | 866,535 | 462 | 0.11 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | 933,410 | 7,314 | 1.58 | 861,687 | 4,219 | 0.99 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 4,977,762 | 18,401 | 0.75 | 4,609,023 | 9,711 | 0.42 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| FHLB Advances | 372,499 | 4,160 | 2.25 | 349,474 | 3,413 | 1.97 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | 63,761 | 119 | 0.38 | 71,649 | 84 | 0.24 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other borrowings | 99,569 | 2,927 | 5.93 | 89,796 | 2,549 | 5.72 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 5,513,591 | 25,607 | 0.94 | 5,119,942 | 15,757 | 0.62 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing deposits | 1,257,041 | 1,077,218 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-bearing liabilities | 69,443 | 53,140 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 6,840,075 | 6,250,300 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 1,114,666 | 939,437 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 7,954,741 | $ | 7,189,737 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 129,225 | $ | 117,157 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest rate spread (3) | 3.52 | % | 3.61 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin (4) | 3.72 | % | 3.73 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total cost of deposits (including non-interest-bearing deposits) | 0.60 | % | 0.34 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and 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. | |||
| Certain amounts previously reported have been reclassified to conform to the current year’s presentation. | ||||
OceanFirst Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share amounts)
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||||||||
| Selected Financial Condition Data: | |||||||||||||||||||||||||||||
| Total assets | $ | 8,029,057 | $ | 8,092,948 | $ | 7,516,154 | $ | 7,562,589 | $ | 7,736,903 | |||||||||||||||||||
| Debt securities available-for-sale, at estimated fair value | 123,610 | 122,558 | 100,717 | 100,015 | 100,369 | ||||||||||||||||||||||||
| Debt securities held-to-maturity, net | 863,838 | 900,614 | 846,810 | 883,540 | 922,756 | ||||||||||||||||||||||||
| Equity investments, at estimated fair value | 10,002 | 9,816 | 9,655 | 9,519 | 9,539 | ||||||||||||||||||||||||
| Restricted equity investments, at cost | 59,425 | 55,663 | 56,784 | 57,143 | 66,981 | ||||||||||||||||||||||||
| Loans receivable, net | 5,943,930 | 5,968,830 | 5,579,222 | 5,543,959 | 5,553,035 | ||||||||||||||||||||||||
| Deposits | 6,187,487 | 6,290,485 | 5,814,569 | 5,854,250 | 5,819,406 | ||||||||||||||||||||||||
| Federal Home Loan Bank advances | 453,646 | 418,016 | 449,383 | 456,806 | 674,227 | ||||||||||||||||||||||||
| Securities sold under agreements to repurchase and other borrowings | 158,619 | 165,753 | 161,290 | 160,517 | 161,604 | ||||||||||||||||||||||||
| Stockholders’ equity | 1,137,295 | 1,127,163 | 1,039,358 | 1,029,844 | 1,012,568 | ||||||||||||||||||||||||
| For the Three Months Ended, | |||||||||||||||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||||||||||||||||||||||||
| Selected Operating Data: | |||||||||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 78,410 | $ | 76,422 | $ | 72,358 | $ | 71,382 | $ | 70,078 | |||||||||||||||||||||||||||||||||||
| Interest expense | 13,573 | 12,034 | 10,517 | 9,878 | 8,631 | ||||||||||||||||||||||||||||||||||||||||
| Net interest income | 64,837 | 64,388 | 61,841 | 61,504 | 61,447 | ||||||||||||||||||||||||||||||||||||||||
| Provision for loan losses | 356 | 620 | 506 | 907 | 706 | ||||||||||||||||||||||||||||||||||||||||
| Net interest income after provision for loan losses | 64,481 | 63,768 | 61,335 | 60,597 | 60,741 | ||||||||||||||||||||||||||||||||||||||||
| Other income | 9,879 | 9,512 | 8,748 | 8,285 | 8,883 | ||||||||||||||||||||||||||||||||||||||||
| Operating expenses | 43,289 | 41,827 | 37,794 | 37,503 | 42,470 | ||||||||||||||||||||||||||||||||||||||||
| Branch consolidation expense | 6,695 | 391 | 240 | 1,368 | 1,719 | ||||||||||||||||||||||||||||||||||||||||
| Merger related expenses | 931 | 5,053 | 1,048 | 662 | 6,715 | ||||||||||||||||||||||||||||||||||||||||
| Income before provision for income taxes | 23,445 | 26,009 | 31,001 | 29,349 | 18,720 | ||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 4,465 | 4,836 | 4,269 | 5,278 | 3,018 | ||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 18,980 | $ | 21,173 | $ | 26,732 | $ | 24,071 | $ | 15,702 | |||||||||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 0.37 | $ | 0.42 | $ | 0.55 | $ | 0.50 | $ | 0.32 | |||||||||||||||||||||||||||||||||||
| Net accretion/amortization of purchase accounting adjustments included in net interest income | $ | 3,663 | $ | 4,027 | $ | 3,918 | $ | 4,036 | $ | 4,883 | |||||||||||||||||||||||||||||||||||
(continued)
| At or For the Three Months Ended | |||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||||||||||
| Selected Financial Ratios and Other Data(1): | |||||||||||||||||||||||||||||||
| Performance Ratios (Annualized): | |||||||||||||||||||||||||||||||
| Return on average assets (2) | 0.94 | % | 1.10 | % | 1.41 | % | 1.26 | % | 0.84 | % | |||||||||||||||||||||
| Return on average stockholders’ equity (2) | 6.73 | 7.82 | 10.24 | 9.36 | 6.23 | ||||||||||||||||||||||||||
| Return on average tangible stockholders’ equity (2) (3) | 10.32 | 11.97 | 15.60 | 14.39 | 9.64 | ||||||||||||||||||||||||||
| Stockholders’ equity to total assets | 14.16 | 13.93 | 13.83 | 13.62 | 13.09 | ||||||||||||||||||||||||||
| Tangible stockholders’ equity to tangible assets (3) | 9.76 | 9.53 | 9.55 | 9.35 | 8.87 | ||||||||||||||||||||||||||
| Net interest rate spread | 3.45 | 3.59 | 3.54 | 3.51 | 3.61 | ||||||||||||||||||||||||||
| Net interest margin | 3.66 | 3.78 | 3.71 | 3.67 | 3.73 | ||||||||||||||||||||||||||
| Operating expenses to average assets (2) | 2.53 | 2.45 | 2.07 | 2.07 | 2.71 | ||||||||||||||||||||||||||
| Efficiency ratio (2) (4) | 68.14 | 63.97 | 55.37 | 56.65 | 72.38 | ||||||||||||||||||||||||||
| Loans to deposits | 96.06 | 94.89 | 95.95 | 94.70 | 95.42 | ||||||||||||||||||||||||||
| For the Six Months Ended June 30, | ||||||||||
| 2019 | 2018 | |||||||||
| Performance Ratios (Annualized): | ||||||||||
| Return on average assets (2) | 1.02 | % | 0.59 | % | ||||||
| Return on average stockholders’ equity (2) | 7.26 | 4.54 | ||||||||
| Return on average tangible stockholders’ equity (2) (3) | 11.13 | 6.91 | ||||||||
| Net interest rate spread | 3.52 | 3.61 | ||||||||
| Net interest margin | 3.72 | 3.73 | ||||||||
| Operating expenses to average assets (2) | 2.49 | 3.02 | ||||||||
| Efficiency ratio (2) (4) | 66.07 | 79.82 | ||||||||
(continued)
| At or For the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, |
September 30, |
June 30, | |||||||||||||||||||||||||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||||||||||||||||||||||||
| Trust and Asset Management: | |||||||||||||||||||||||||||||||||||||||||||||
| Wealth assets under administration | $ | 199,554 | $ | 200,130 | $ | 184,476 | $ | 209,796 | $ | 210,690 | |||||||||||||||||||||||||||||||||||
| Nest Egg | 9,755 | 4,052 | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Per Share Data: | |||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends per common share | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.15 | $ | 0.15 | |||||||||||||||||||||||||||||||||||
| Stockholders’ equity per common share at end of period | 22.24 | 22.00 | 21.68 | 21.29 | 20.97 | ||||||||||||||||||||||||||||||||||||||||
| Tangible stockholders’ equity per common share at end of period (3) | 14.57 | 14.32 | 14.26 | 13.93 | 13.56 | ||||||||||||||||||||||||||||||||||||||||
| Common shares outstanding at end of period | 51,131,804 | 51,233,944 | 47,951,168 | 48,382,370 | 48,283,500 | ||||||||||||||||||||||||||||||||||||||||
| Number of full-service customer facilities: | 60 | 63 | 59 | 59 | 59 | ||||||||||||||||||||||||||||||||||||||||
| Quarterly Average Balances | |||||||||||||||||||||||||||||||||||||||||||||
| Total securities | $ | 1,080,690 | $ | 1,067,150 | $ | 1,037,039 | $ | 1,080,784 | $ | 1,119,354 | |||||||||||||||||||||||||||||||||||
| Loans, receivable, net | 5,948,312 | 5,767,887 | 5,523,745 | 5,534,086 | 5,425,970 | ||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 7,096,216 | 6,914,948 | 6,613,807 | 6,652,224 | 6,603,415 | ||||||||||||||||||||||||||||||||||||||||
| Total assets | 8,068,899 | 7,839,316 | 7,504,111 | 7,568,630 | 7,532,968 | ||||||||||||||||||||||||||||||||||||||||
| Interest-bearing transaction deposits | 4,051,539 | 4,036,584 | 3,871,134 | 3,775,398 | 3,878,117 | ||||||||||||||||||||||||||||||||||||||||
| Time deposits | 934,470 | 932,341 | 848,361 | 864,264 | 902,091 | ||||||||||||||||||||||||||||||||||||||||
| Total borrowed funds | 566,785 | 504,498 | 514,628 | 636,310 | 540,356 | ||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 5,552,794 | 5,473,423 | 5,234,123 | 5,275,972 | 5,320,564 | ||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | 1,302,147 | 1,211,934 | 1,177,321 | 1,210,650 | 1,149,764 | ||||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 1,131,165 | 1,097,984 | 1,035,962 | 1,020,736 | 1,011,378 | ||||||||||||||||||||||||||||||||||||||||
| Total deposits | 6,288,156 | 6,180,859 | 5,896,816 | 5,850,312 | 5,929,972 | ||||||||||||||||||||||||||||||||||||||||
| Quarterly Yields | |||||||||||||||||||||||||||||||||||||||||||||
| Total securities | 2.64 | % | 2.64 | % | 2.60 | % | 2.46 | % | 2.39 | % | |||||||||||||||||||||||||||||||||||
| Loans, receivable, net | 4.78 | 4.85 | 4.69 | 4.62 | 4.67 | ||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 4.43 | 4.48 | 4.34 | 4.26 | 4.26 | ||||||||||||||||||||||||||||||||||||||||
| Interest-bearing transaction deposits | 0.58 | 0.52 | 0.44 | 0.34 | 0.31 | ||||||||||||||||||||||||||||||||||||||||
| Time deposits | 1.66 | 1.50 | 1.31 | 1.17 | 1.00 | ||||||||||||||||||||||||||||||||||||||||
| Borrowed funds | 2.70 | 2.73 | 2.66 | 2.54 | 2.51 | ||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 0.98 | 0.89 | 0.80 | 0.74 | 0.65 | ||||||||||||||||||||||||||||||||||||||||
| Net interest spread | 3.45 | 3.59 | 3.54 | 3.51 | 3.61 | ||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 3.66 | 3.78 | 3.71 | 3.67 | 3.73 | ||||||||||||||||||||||||||||||||||||||||
| Total deposits | 0.62 | 0.57 | 0.48 | 0.39 | 0.35 | ||||||||||||||||||||||||||||||||||||||||
| (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, branch consolidation expenses, compensation expense due to the retirement of an executive officer and the impact to income tax expense related to Tax Reform. Refer to Other Items - Non-GAAP Reconciliation for impact of these items. | |||
| (3) | Tangible stockholders’ equity and tangible assets exclude intangible assets relating to goodwill and core deposit intangible. | |||
| (4) | Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income. | |||
OceanFirst Financial Corp.
OTHER ITEMS
(dollars in thousands, except per share amounts)
NON-GAAP RECONCILIATION
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||||||||||||||||||||||||
| Core earnings: | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 18,980 | $ | 21,173 | $ | 26,732 | $ | 24,071 | $ | 15,702 | |||||||||||||||||||||||||||||||||||
| Non-recurring items: | |||||||||||||||||||||||||||||||||||||||||||||
| Add: Merger related expenses | 931 | 5,053 | 1,048 | 662 | 6,715 | ||||||||||||||||||||||||||||||||||||||||
| Branch consolidation expenses | 6,695 | 391 | 240 | 1,368 | 1,719 | ||||||||||||||||||||||||||||||||||||||||
| Compensation expense due to the retirement of an executive officer | 1,256 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Income tax benefit related to Tax Reform | — | — | (1,854 | ) | — | — | |||||||||||||||||||||||||||||||||||||||
| Less: Income tax expense on items | (1,867 | ) | (1,039 | ) | (130 | ) | (426 | ) | (1,771 | ) | |||||||||||||||||||||||||||||||||||
| Core earnings | $ | 25,995 | $ | 25,578 | $ | 26,036 | $ | 25,675 | $ | 22,365 | |||||||||||||||||||||||||||||||||||
| Core diluted earnings per share | $ | 0.51 | $ | 0.51 | $ | 0.54 | $ | 0.53 | $ | 0.46 | |||||||||||||||||||||||||||||||||||
| Core ratios (Annualized): | |||||||||||||||||||||||||||||||||||||||||||||
| Return on average assets | 1.29 | % | 1.32 | % | 1.38 | % | 1.35 | % | 1.19 | % | |||||||||||||||||||||||||||||||||||
| Return on average tangible stockholders’ equity | 14.14 | 14.46 | 15.19 | 15.35 | 13.73 | ||||||||||||||||||||||||||||||||||||||||
| Efficiency ratio | 56.26 | 56.60 | 53.54 | 53.74 | 60.39 | ||||||||||||||||||||||||||||||||||||||||
| For the Six Months Ended June 30, | |||||||||||||||
| 2019 | 2018 | ||||||||||||||
| Core earnings: | |||||||||||||||
| Net income | $ | 40,153 | $ | 21,129 | |||||||||||
| Non-recurring items: | |||||||||||||||
| Add: Merger related expenses | 5,984 | 25,200 | |||||||||||||
| Branch consolidation expenses | 7,086 | 1,544 | |||||||||||||
| Compensation expense due to the retirement of an executive officer | 1,256 | — | |||||||||||||
| Less: Income tax expense on items | (2,906 | ) | (5,435 | ) | |||||||||||
| Core earnings | $ | 51,573 | $ | 42,438 | |||||||||||
| Core diluted earnings per share | $ | 1.02 | $ | 0.91 | |||||||||||
| Core ratios (Annualized): | |||||||||||||||
| Return on average assets | 1.31 | % | 1.19 | % | |||||||||||
| Return on average tangible stockholders’ equity | 14.29 | 13.89 | |||||||||||||
| Efficiency ratio | 56.43 | 60.01 | |||||||||||||
(continued)
COMPUTATION OF TOTAL TANGIBLE EQUITY TO TOTAL TANGIBLE ASSETS
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||||||||||||
| Total stockholders’ equity | $ | 1,137,295 | $ | 1,127,163 | $ | 1,039,358 | $ | 1,029,844 | $ | 1,012,568 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Goodwill | 374,592 | 375,096 | 338,442 | 338,104 | 338,972 | ||||||||||||||||||||||||
| Core deposit intangible | 17,614 | 18,629 | 16,971 | 17,954 | 18,949 | ||||||||||||||||||||||||
| Tangible stockholders’ equity | $ | 745,089 | $ | 733,438 | $ | 683,945 | $ | 673,786 | $ | 654,647 | |||||||||||||||||||
| Total assets | $ | 8,029,057 | $ | 8,092,948 | $ | 7,516,154 | $ | 7,562,589 | $ | 7,736,903 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Goodwill | 374,592 | 375,096 | 338,442 | 338,104 | 338,972 | ||||||||||||||||||||||||
| Core deposit intangible | 17,614 | 18,629 | 16,971 | 17,954 | 18,949 | ||||||||||||||||||||||||
| Tangible assets | $ | 7,636,851 | $ | 7,699,223 | $ | 7,160,741 | $ | 7,206,531 | $ | 7,378,982 | |||||||||||||||||||
| Tangible stockholders’ equity to tangible assets | 9.76 | % | 9.53 | % | 9.55 | % | 9.35 | % | 8.87 | % | |||||||||||||||||||
(continued)
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 Capital Bank, net of the total consideration paid (in thousands):
| At January 31, 2019 | |||||||||||||||||||||||||
| Purchase | |||||||||||||||||||||||||
| Capital Bank | Accounting | Estimated | |||||||||||||||||||||||
| Book Value | Adjustments | Fair Value | |||||||||||||||||||||||
| Total Purchase Price: | $ | 76,834 | |||||||||||||||||||||||
| Assets acquired: | |||||||||||||||||||||||||
| Cash and cash equivalents | $ | 59,748 | $ | — | $ | 59,748 | |||||||||||||||||||
| Securities | 103,798 | (23 | ) | 103,775 | |||||||||||||||||||||
| Loans | 312,320 | (4,617 | ) | 307,703 | |||||||||||||||||||||
| Accrued interest receivable | 1,387 | 3 | 1,390 | ||||||||||||||||||||||
| Bank Owned Life Insurance | 10,460 | — | 10,460 | ||||||||||||||||||||||
| Deferred tax asset | 1,605 | 2,239 | 3,844 | ||||||||||||||||||||||
| Other assets | 9,384 | (4,277 | ) | 5,107 | |||||||||||||||||||||
| Core deposit intangible | — | 2,662 | 2,662 | ||||||||||||||||||||||
| Total assets acquired | 498,702 | (4,013 | ) | 494,689 | |||||||||||||||||||||
| Liabilities assumed: | |||||||||||||||||||||||||
| Deposits | (448,792 | ) | (226 | ) | (449,018 | ) | |||||||||||||||||||
| Other liabilities | (827 | ) | (4,183 | ) | (5,010 | ) | |||||||||||||||||||
| Total liabilities assumed | (449,619 | ) | (4,409 | ) | (454,028 | ) | |||||||||||||||||||
| Net assets acquired | $ | 49,083 | $ | (8,422 | ) | $ | 40,661 | ||||||||||||||||||
| Goodwill recorded in the merger | $ | 36,173 | |||||||||||||||||||||||
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
Email: Mfitzpatrick@oceanfirst.com
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