OCFC OceanFirst Financial Corporation

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 $19.7 million, or $0.33 per diluted share, for the three months ended September 30, 2023, as compared to $37.6 million, or $0.64 per diluted share, for the corresponding prior year period, and $26.8 million, or $0.45 per diluted share, for the prior linked quarter. For the nine months ended September 30, 2023, the Company reported net income available to common stockholders of $73.3 million, or $1.24 per diluted share, as compared to $90.3 million, or $1.53 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 Nine Months Ended,
Performance Ratios (Annualized):	September 30,			June 30,			September 30,			September 30,			September 30,
	2023			2023			2022			2023			2022
Return on average assets	0.57	%		0.80	%		1.19	%		0.73	%		0.99	%
Return on average stockholders’ equity	4.75			6.61			9.68			6.03			7.87
Return on average tangible stockholders’ equity(a)	6.93			9.70			14.62			8.85			11.91
Return on average tangible common equity(a)	7.29			10.21			15.47			9.31			12.60
Efficiency ratio	63.37			62.28			53.10			62.15			57.90
Net interest margin	2.91			3.02			3.36			3.09			3.28

(a) Return on average tangible stockholders’ equity and return on average tangible common equity (“ROTCE”), which are non-GAAP (“generally accepted accounting principles”) financial measures, 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” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

Core earnings1 for the three and nine months ended September 30, 2023 were $18.6 million and $78.4 million, respectively, or $0.32 and $1.33 per diluted share, representing a decrease from $35.0 million and $98.4 million, or $0.60 and $1.67 per diluted share, for the corresponding prior year periods, and a decrease from $27.2 million, or $0.46 per diluted share, for the prior linked quarter.

Core earnings PTPP1 for the three and nine months ended September 30, 2023 were $35.0 million and $118.7 million, respectively, or $0.59 and $2.01 per diluted share, as compared to $47.5 million and $134.2 million, or $0.81 and $2.28 per diluted share, for the corresponding prior year periods, and $37.6 million, or $0.64 per diluted share, for the prior linked quarter. Selected performance metrics are as follows:

	For the Three Months Ended,												For the Nine Months Ended,
	September 30,				June 30,				September 30,				September 30,				September 30,
Core Ratios1(Annualized):		2023				2023				2022				2023				2022
Return on average assets		0.54	%			0.81	%			1.11	%			0.78	%			1.08	%
Return on average tangible stockholders’ equity		6.54				9.84				13.62				9.46				12.98
Return on average tangible common equity		6.88				10.36				14.40				9.96				13.73
Efficiency ratio		64.29				61.94				54.80				60.79				55.51
Core diluted earnings per share	$	0.32			$	0.46			$	0.60			$	1.33			$	1.67
Core PTPP diluted earnings per share		0.59				0.64				0.81				2.01				2.28

Key developments for the recent quarter are described below:

• Deposit Growth: Total deposits increased $375.6 million, or 4%, as compared to the prior linked quarter. The current quarter includes a reduction in brokered time deposits of $425.7 million and a loan-to-deposit ratio of 96.10%. The Company’s non-interest-bearing deposits declined modestly and represented 17% of the total deposits.
• Asset Quality: Asset quality metrics remains strong, despite the impact of a charge-off related to a single credit relationship announced on September 14, 2023. Criticized and classified loans, and non-performing loans both as a percent of total loans were 1.30% and 0.20%, respectively, at September 30, 2023.
• Strong Capital: The Company’s estimated common equity tier 1 capital ratio remained above “well-capitalized” levels, at 10.36% at September 30, 2023. Book value and tangible book value per share were $27.56 and $17.932, respectively, increasing $0.19 and $0.21 from the prior linked quarter.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased to report continued growth in deposits, a reduction on brokered deposits, and strengthened capital position. While our margin compressed, we remain focused on high quality growth and prudent management of the balance sheet for long-term market conditions.” Mr. Maher added, “Additionally, thank you to our exemplary employees who volunteered over 2,900 hours across 90 projects serving our communities during our second annual CommUNITYFirst day.”

The Company’s Board of Directors declared its 107th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on November 17, 2023 to common stockholders of record on November 6, 2023. 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 November 15, 2023 to preferred stockholders of record on October 31, 2023.

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 (benefit), net loss (gain) on equity investments, net loss on sale of investments, 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 (benefit). Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

2 Tangible book value per common share and tangible common equity to tangible assets, non-GAAP financial measures, 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 OperationsThe current quarter results were impacted by the following matters. Net interest income and margin were adversely impacted by a continued mix-shift and repricing to higher cost deposits that outpaced the repricing and increase in yields on interest-earning assets. Deposit betas increased modestly to 35%, from 29%3. Additionally, the current quarter results were impacted by an increase in non-performing loans due to a single commercial real estate credit relationship totaling $17 million, which was written down to an estimated realizable value of $8.8 million4. The credit was originated in June 2019 and is secured by an office building in Midtown Manhattan, New York City. The credit was also included in total delinquent loans 30 to 89 days at September 30, 2023. Lastly, the Company recognized one-time compensation and benefits expenses of $2.4 million attributable to severance and other program costs relating to the Company's performance improvement initiatives.

3 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).4 Refer to the previously filed Current Report on Form 8-K filed September 14, 2023 for additional information.

Net Interest Income and Margin

Three months ended September 30, 2023 vs. September 30, 2022

Net interest income decreased to $91.0 million, from $96.0 million, primarily reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 2.91%, from 3.36%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.06% and 0.08% for the respective three months, net interest margin decreased to 2.85%, from 3.28%. Net interest margin decreased primarily due to the increase in cost of funds outpacing the increase in yield on average interest earning assets in the current interest rate environment and elevated levels of on-balance sheet cash.

Average interest-earning assets increased by $1.06 billion, primarily driven by increases of $414.2 million in commercial loans and $405.2 million in deposits and short-term investments. The average yield for interest-earning assets increased to 5.08%, from 3.88%.

The cost of average interest-bearing liabilities increased to 2.71%, from 0.69%, due to higher cost of deposits and higher costs of Federal Home Loan Bank (“FHLB”) advances. The total cost of deposits (including non-interest bearing deposits) increased to 1.99%, from 0.36%.

Nine months ended September 30, 2023 vs. September 30, 2022

Net interest income increased to $281.9 million, from $271.0 million, reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 3.09%, from 3.28%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.13% for the respective nine months, net interest margin decreased to 3.04%, from 3.15%.

Average interest-earning assets increased by $1.17 billion, primarily driven by loan growth of $819.7 million. The cost of average interest-bearing liabilities increased to 2.29%, from 0.49%. The total cost of deposits (including non-interest bearing deposits) increased to 1.48%, from 0.24%. The yield on average interest earning assets increased to 4.90% from 3.64%. The drivers for the three months ended were also the drivers for the nine months ended September 30, 2023.

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

Net interest income decreased by $1.1 million, reflecting a decrease in net interest margin to 2.91%, from 3.02%, as the increase in cost of funds outpaced the increase in yield of average interest earning assets. Excluding the impact of purchase accounting accretion and prepayment fees of 0.06% and 0.05% for the respective three months, net interest margin decreased to 2.85%, from 2.97%. The compression in net interest margin was primarily attributable to higher cost of deposits and the impact of excess cash held.

Average interest-earning assets increased by $134.7 million, primarily due to elevated levels of cash held. The yield on average interest-earning assets increased to 5.08%, from 4.91%.

The total cost of average interest-bearing liabilities increased to 2.71%, from 2.39%, and the total cost of deposits (including non-interest bearing deposits) increased to 1.99%, from 1.52%. Average interest-bearing liabilities increased $157.2 million, which included a mix-shift from FHLB advances to time deposits.

Provision for Credit LossesProvision for credit losses for the three and nine months ended September 30, 2023 was $10.3 million and $14.5 million, respectively, as compared to $1.0 million and $4.1 million for the corresponding prior year periods, and $1.2 million in the prior linked quarter. The current quarter provision included the net impact of the $8.4 million charge-off noted above and, to a lesser extent, elevated risks and uncertainty in macro-economic conditions in a downside forecast scenario.

Net loan charge-offs were $8.3 million for both the three and nine months ended September 30, 2023, respectively, as compared to net loan recoveries of $252,000 and $335,000 for the three and nine months ended September 30, 2022, respectively. Net loan charge-offs were $123,000 in the prior linked quarter. Refer to “Asset Quality” section for further discussion.

Non-interest Income

Three months ended September 30, 2023 vs. September 30, 2022        

Other income decreased to $10.8 million, as compared to $15.2 million. Other income was favorably impacted by non-core operations of $1.5 million and $3.4 million, for the respective quarters, primarily related to net gains on equity investments.

Excluding non-core operations, other income decreased $2.5 million. The primary drivers were decreases in commercial loan swap income of $1.5 million and fees and service charges of $1.1 million, which were adversely impacted by the current interest rate environment resulting in lower swap volume and mortgage activity.

Nine months ended September 30, 2023 vs. September 30, 2022

Other income decreased to $21.8 million, as compared to $31.5 million. Other income was adversely impacted by non-core operations of $6.6 million and $7.5 million, for the respective periods, primarily related to net losses on equity investments. The current year’s non-core operations also included $5.3 million of losses related to the sale of investments in the first quarter.

Excluding non-core operations, other income decreased $10.7 million. The primary drivers were decreases in commercial loan swap income on lower volume of $5.8 million, fees and service charges of $1.1 million on lower title activity, and income from bank owned life insurance of $1.0 million on non-recurring death benefits recognized in the prior year. Additionally, bankcard services revenue decreased $3.4 million, due to the Durbin Amendment which became effective for the Company on July 1, 2022.

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

Other income in the prior linked quarter was $8.9 million and included non-core operations of $559,000 primarily related to net losses on preferred stock equity investments. Excluding non-core operations, other income decreased by $177,000.

Non-interest Expense

Three months ended September 30, 2023 vs. September 30, 2022

Operating expenses increased by $5.4 million from $59.0 million to $64.5 million. This was due to increases in professional fees of $2.8 million and $2.4 million in compensation and employee benefits expenses related to the Company’s ongoing investments to improve profitability and operational efficiencies, and one-time related severance and other program costs. The increase in compensation and benefits expense were partly offset by decreased employee medical benefit claims. The current quarter also included increases to federal deposit insurance and regulatory assessments of $800,000 primarily due to new assessment rates that went into effect on January 1, 2023.

Nine months ended September 30, 2023 vs. September 30, 2022

Operating expenses increased to $188.7 million, as compared to $175.2 million. Operating expenses for the periods were adversely impacted by $92,000 and $3.1 million of non-core operations, respectively.

Excluding non-core operations, operating expenses increased by $16.5 million. This was due to increases in professional fees of $7.1 million and federal deposit insurance and regulatory assessments of $1.3 million that were driven by the same factors for the three months ended. The increase in compensation and benefits expense of $5.7 million was due to the $2.4 million increase noted above and merit-related increases.

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

Operating expenses increased $1.6 million primarily due to an increase in compensation and benefits expense of $1.3 million.

Income Tax ExpenseThe provision for income taxes was $6.5 million and $24.1 million for the three and nine months ended September 30, 2023, respectively, as compared to $12.3 million and $29.2 million for the same prior year periods, and $9.0 million for the prior linked quarter. The effective tax rate was 23.9% and 24.0% for the three and nine months ended September 30, 2023, respectively, as compared to 24.1% and 23.7% for the same prior year periods, and 24.4% for the prior linked quarter.

Financial Condition

September 30, 2023 vs. December 31, 2022

Total assets increased by $394.3 million to $13.50 billion, from $13.10 billion, primarily due to higher cash balances and loan growth. Cash and due from banks increased $240.9 million to $408.9 million, from $167.9 million as the Company maintained elevated levels of on-balance sheet cash from net deposit inflows. Total loans increased by $205.5 million to $10.12 billion, from $9.92 billion, due to loan originations.

Total liabilities increased by $342.1 million to $11.86 billion, from $11.52 billion. Deposits increased by $858.7 million to $10.53 billion, from $9.68 billion. Time deposits increased to $2.65 billion, from $1.54 billion, or 25.2% and 15.9% of total deposits, respectively. Brokered time deposits increased $122.1 million and retail time deposits increased $988.0 million. The loan-to-deposit ratio was 96.10%, as compared to 102.50%. FHLB advances decreased by $605.1 million to $606.1 million, from $1.21 billion.

Other liabilities increased by $65.6 million to $411.7 million, from $346.2 million, primarily due to an increase in the market values associated with customer interest rate swaps and related collateral received from counterparties.

Total stockholders’ equity increased to $1.64 billion, as compared to $1.59 billion, primarily reflecting net income net of dividends for the nine months ended September 30, 2023. Additionally, accumulated other comprehensive loss decreased by $7.2 million primarily due to increases in fair market value of available-for-sale debt securities, net of tax.

The Company completed its annual goodwill impairment test as of August 31, 2023. Based on a quantitative assessment, the Company concluded that goodwill was not impaired. However, the Company continues to monitor its goodwill as further and continued negative industry and economic trends and decline in the Company’s stock price may result in a re-evaluation before the next required annual test.

For the nine months ended September 30, 2023, the Company did not repurchase shares under its stock repurchase program. There were 2,934,438 shares available for repurchase at September 30, 2023 under the existing repurchase program. Book value per common share increased to $27.56, as compared to $26.81. Tangible book value per common share2 increased to $17.93, as compared to $17.08.

Asset Quality

September 30, 2023 vs. December 31, 2022

At September 30, 2023, non-performing loans and 30 to 89 days delinquent loans included the remaining exposure of $8.8 million on the commercial real estate relationship that was charged-off during the period.

The Company’s non-performing loans increased to $30.1 million from $23.3 million and represented 0.30% and 0.23% of total loans, respectively. The allowance for loan credit losses as a percentage of total non-performing loans was 212.23%, as compared to 244.25%. The level of 30 to 89 days delinquent loans increased to $20.6 million, from $14.1 million. The Company’s allowance for loan credit losses was 0.63% of total loans, as compared to 0.57%. Refer to “Provision for Credit Losses” section for further discussion.

The Company’s asset quality excluding purchased with credit deterioration (“PCD”) loans were as follows. Non-performing loans increased to $26.9 million, from $19.3 million. The allowance for loan credit losses as a percentage of total non-performing loans was 237.28%, as compared to 294.10%. The level of 30 to 89 days delinquent loans, excluding non-performing loans, decreased to $7.6 million, from $10.5 million. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $72.6 million, or 0.72% of total loans, as compared to $68.2 million, or 0.69% of total loans.

Explanation of Non-GAAP Financial MeasuresReported 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, 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 CallAs previously announced, the Company will host an earnings conference call on Friday, October 20, 2023 at 11:00 a.m. Eastern Time. The direct dial number for the call is (833) 470-1428, using the access code 472846. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (808) 304-5227, access code 728904, from one hour after the end of the call until November 19, 2023. 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 $13.5 billion regional bank providing financial services throughout New Jersey and in the major metropolitan markets of Philadelphia, New York, Baltimore, and Boston. 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 Bank’s lending area, real estate market values in the Bank’s lending area, potential goodwill impairment, future 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, changes in liquidity, including the size and composition of the Company’s deposit portfolio, including the percentage of uninsured deposits in the portfolio, 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 impact of the COVID-19 pandemic or any other pandemic 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, 2022, 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)
		September 30,			June 30,			December 31,			September 30,
			2023			2023			2022			2022
		(Unaudited)			(Unaudited)						(Unaudited)
Assets
Cash and due from banks		$	408,882		$	457,747		$	167,946		$	170,668
Debt securities available-for-sale, at estimated fair value			453,208			452,016			457,648			470,300
Debt securities held-to-maturity, net of allowance for securities credit losses of $932 at September 30, 2023, $964 at June 30, 2023, $1,128 at December 31, 2022, and $1,234 at September 30, 2022 (estimated fair value of $1,047,342 at September 30, 2023, $1,109,756 at June 30, 2023, $1,110,041 at December 31, 2022, and $905,426 at September 30, 2022)			1,189,339			1,222,507			1,221,138			1,027,712
Equity investments			97,908			96,452			102,037			81,722
Restricted equity investments, at cost			82,484			105,305			109,278			77,556
Loans receivable, net of allowance for loan credit losses of $63,877 at September 30, 2023, $61,791 at June 30, 2023, $56,824 at December 31, 2022 and $53,521 at September 30, 2022			10,068,156			10,030,106			9,868,718			9,672,488
Loans held-for-sale			—			4,200			690			3,549
Interest and dividends receivable			50,030			47,933			44,704			38,388
Premises and equipment, net			122,646			124,139			126,705			127,868
Bank owned life insurance			265,071			263,836			261,603			261,118
Assets held for sale			3,004			3,608			2,719			3,216
Goodwill			506,146			506,146			506,146			506,146
Core deposit intangible			10,489			11,476			13,497			14,656
Other assets			240,820			213,432			221,067			228,066
Total assets		$	13,498,183		$	13,538,903		$	13,103,896		$	12,683,453
Liabilities and Stockholders’ Equity
Deposits		$	10,533,929		$	10,158,337		$	9,675,206		$	9,959,469
Federal Home Loan Bank advances			606,056			1,091,666			1,211,166			514,200
Securities sold under agreements to repurchase with customers			82,981			74,452			69,097			96,289
Other borrowings			196,183			195,925			195,403			194,914
Advances by borrowers for taxes and insurance			29,696			27,839			21,405			25,457
Other liabilities			411,734			364,401			346,155			352,908
Total liabilities			11,860,579			11,912,620			11,518,432			11,143,237
Stockholders’ equity:
OceanFirst Financial Corp. stockholders’ equity			1,636,891			1,625,435			1,584,662			1,539,253
Non-controlling interest			713			848			802			963
Total stockholders’ equity			1,637,604			1,626,283			1,585,464			1,540,216
Total liabilities and stockholders’ equity		$	13,498,183		$	13,538,903		$	13,103,896		$	12,683,453

OceanFirst Financial Corp.CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts)
		For the Three Months Ended,												For the Nine Months Ended,
		September 30,				June 30,				September 30,				September 30,				September 30,
			2023				2023				2022				2023				2022
		|---------------------- (Unaudited) ----------------------|												|---------- (Unaudited) -----------|
Interest income:
Loans		$	133,931			$	129,104			$	100,141			$	384,755			$	273,340
Debt securities			15,223				14,320				8,479				43,829				23,456
Equity investments and other			9,256				6,672				1,879				18,956				4,102
Total interest income			158,410				150,096				110,499				447,540				300,898
Interest expense:
Deposits			53,287				37,934				9,238				112,551				17,596
Borrowed funds			14,127				20,053				5,296				53,082				12,313
Total interest expense			67,414				57,987				14,534				165,633				29,909
Net interest income			90,996				92,109				95,965				281,907				270,989
Provision for credit losses			10,283				1,229				1,016				14,525				4,121
Net interest income after provision for credit losses			80,713				90,880				94,949				267,382				266,868
Other income:
Bankcard services revenue			1,507				1,544				1,509				4,381				7,782
Trust and asset management revenue			662				645				568				1,919				1,835
Fees and service charges			5,178				5,602				6,320				15,939				17,026
Net gain on sales of loans			66				33				168				119				348
Net gain (loss) on equity investments			1,452				(559	)			3,362				(5,908	)			(7,502	)
Net gain from other real estate operations			—				—				—				—				48
Income from bank owned life insurance			1,390				1,182				1,356				3,853				4,881
Commercial loan swap income			11				—				1,471				712				6,546
Other			496				481				396				748				579
Total other income			10,762				8,928				15,150				21,763				31,543
Operating expenses:
Compensation and employee benefits			35,534				34,222				34,124				103,676				97,972
Occupancy			5,466				5,265				5,288				15,970				15,790
Equipment			1,172				1,101				1,150				3,478				3,856
Marketing			1,183				961				655				3,126				2,242
Federal deposit insurance and regulatory assessments			2,557				2,465				1,757				6,771				5,435
Data processing			6,086				6,165				6,560				18,405				18,466
Check card processing			1,154				1,214				1,231				3,649				3,728
Professional fees			5,258				5,083				2,502				15,439				8,296
Amortization of core deposit intangible			987				994				1,171				3,008				3,559
Branch consolidation (benefit) expense, net			—				—				(346	)			70				602
Merger related expenses			—				—				298				22				2,459
Other operating expense			5,087				5,460				4,607				15,109				12,748
Total operating expenses			64,484				62,930				58,997				188,723				175,153
Income before provision for income taxes			26,991				36,878				51,102				100,422				123,258
Provision for income taxes			6,459				8,996				12,298				24,109				29,212
Net income			20,532				27,882				38,804				76,313				94,046
Net (loss) income attributable to non-controlling interest			(135	)			85				193				(34	)			715
Net income attributable to OceanFirst Financial Corp.			20,667				27,797				38,611				76,347				93,331
Dividends on preferred shares			1,004				1,004				1,004				3,012				3,012
Net income available to common stockholders		$	19,663			$	26,793			$	37,607			$	73,335			$	90,319
Basic earnings per share		$	0.33			$	0.45			$	0.64			$	1.24			$	1.54
Diluted earnings per share		$	0.33			$	0.45			$	0.64			$	1.24			$	1.53
Average basic shares outstanding			59,104				59,147				58,681				59,037				58,777
Average diluted shares outstanding			59,111				59,153				58,801				59,068				58,918

OceanFirst Financial Corp.SELECTED LOAN AND DEPOSIT DATA(dollars in thousands)
LOANS RECEIVABLE				At
				September 30,				June 30,				March 31,				December 31,				September 30,
					2023				2023				2023				2022				2022
Commercial:
Commercial real estate - investor				$	5,334,279			$	5,319,686			$	5,296,661			$	5,171,952			$	5,007,637
Commercial real estate - owner-occupied					957,216				981,618				986,366				997,367				983,784
Commercial and industrial					652,119				620,284				622,201				622,372				652,620
Total commercial					6,943,614				6,921,588				6,905,228				6,791,691				6,644,041
Consumer:
Residential real estate					2,928,259				2,906,556				2,881,811				2,861,991				2,813,209
Home equity loans and lines and other consumer ("other consumer")					251,698				255,486				252,773				264,372				261,510
Total consumer					3,179,957				3,162,042				3,134,584				3,126,363				3,074,719
Total loans					10,123,571				10,083,630				10,039,812				9,918,054				9,718,760
Deferred origination costs (fees), net					8,462				8,267				7,332				7,488				7,249
Allowance for loan credit losses					(63,877	)			(61,791	)			(60,195	)			(56,824	)			(53,521	)
Loans receivable, net				$	10,068,156			$	10,030,106			$	9,986,949			$	9,868,718			$	9,672,488
Mortgage loans serviced for others				$	52,796			$	50,820			$	50,421			$	51,736			$	53,869
	At September 30, 2023 Average Yield
Loan pipeline(1):
Commercial	7.85	%		$	50,756			$	39,164			$	236,550			$	114,232			$	339,487
Residential real estate	7.11				66,682				58,022				61,258				36,958				80,591
Other consumer	7.87				13,795				18,621				20,589				14,890				19,395
Total	7.48	%		$	131,233			$	115,807			$	318,397			$	166,080			$	439,473

	For the Three Months Ended
	September 30,						June 30,			March 31,		December 31,			September 30,
	2023							2023			2023		2022			2022
	Average Yield
Loan originations:
Commercial	8.11	%		$	90,263		$	197,732		$	200,504	$	539,949		$	356,726
Residential real estate	6.69				92,299			100,542			65,580		101,530	(2)		129,808
Other consumer	7.96				17,019			22,487			15,927		42,624			57,254
Total	7.44	%		$	199,581		$	320,761		$	282,011	$	684,103		$	543,788
Loans sold				$	15,404		$	18,664		$	3,861	$	2,340		$	9,425	(3)

(1)	Loan pipeline includes loans approved but not funded.
(2)	Excludes residential real estate loan pool purchases of $9.9 million for the three months ended December 31, 2022.
(3)	Excludes the sale of a small business administration loan of $1.2 million for the three months ended September 30, 2022.

      

DEPOSITS	At
	September 30,			June 30,			March 31,			December 31,			September 30,
		2023			2023			2023			2022			2022
Type of Account
Non-interest-bearing	$	1,827,381		$	1,854,136		$	1,984,197		$	2,101,308		$	2,325,547
Interest-bearing checking		3,708,874			3,537,834			3,697,223			3,829,683			3,909,864
Money market		860,025			770,440			615,993			714,386			749,229
Savings		1,484,000			1,229,897			1,308,715			1,487,809			1,570,472
Time deposits(1)		2,653,649			2,766,030			2,386,967			1,542,020			1,404,357
Total deposits	$	10,533,929		$	10,158,337		$	9,993,095		$	9,675,206		$	9,959,469

(1)	Includes brokered time deposits of $995.5 million, $1.42 billion, $1.24 billion, $873.4 million, and $828.7 million at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, respectively.

OceanFirst Financial Corp.ASSET QUALITY(dollars in thousands)
ASSET QUALITY(1)	September 30,				June 30,				March 31,				December 31,				September 30,
		2023				2023				2023				2022				2022
Non-performing loans:
Commercial real estate - investor	$	20,723			$	13,000			$	13,643			$	10,483			$	9,866
Commercial real estate - owner-occupied		240				565				251				4,025				1,976
Commercial and industrial		1,120				199				162				331				321
Residential real estate		5,624				6,174				5,650				5,969				5,958
Other consumer		2,391				2,820				2,731				2,457				3,377
Total non-performing loans	$	30,098			$	22,758			$	22,437			$	23,265			$	21,498
Delinquent loans 30 to 89 days	$	20,591			$	3,136			$	11,232			$	14,148			$	11,846
Modifications to borrowers experiencing financial difficulty(2)
Non-performing (included in total non-performing loans above)	$	6,679			$	6,882			$	6,556			$	6,361			$	10,047
Performing		7,645				7,516				7,619				7,530				6,065
Total modifications to borrowers experiencing financial difficulty(2)	$	14,324			$	14,398			$	14,175			$	13,891			$	16,112
Allowance for loan credit losses	$	63,877			$	61,791			$	60,195			$	56,824			$	53,521
Allowance for loan credit losses as a percent of total loans receivable(3)		0.63	%			0.61	%			0.60	%			0.57	%			0.55	%
Allowance for loan credit losses as a percent of total non-performing loans(3)		212.23				271.51				268.28				244.25				248.96
Non-performing loans as a percent of total loans receivable		0.30				0.23				0.22				0.23				0.22
Non-performing assets as a percent of total assets		0.22				0.17				0.17				0.18				0.17
Supplemental PCD and non-performing loans
PCD loans, net of allowance for loan credit losses	$	18,640			$	18,872			$	20,513			$	27,129			$	29,249
Non-performing PCD loans		3,177				3,171				3,929				3,944				3,043
Delinquent PCD and non-performing loans 30 to 89 days		13,007				1,976				2,248				3,657				1,434
PCD modifications to borrowers experiencing financial difficulty(2)		750				755				758				765				715
Asset quality, excluding PCD loans(4)
Non-performing loans		26,921				19,587				18,508				19,321				18,455
Delinquent loans 30 to 89 days (excludes non-performing loans)		7,584				1,160				8,984				10,491				10,412
Modifications to borrowers experiencing financial difficulty(2)		13,574				13,643				13,417				13,126				15,397
Allowance for loan credit losses as a percent of total non-performing loans(3)		237.28	%			315.47	%			325.24	%			294.10	%			290.01	%
Non-performing loans as a percent of total loans receivable		0.27				0.19				0.18				0.19				0.19
Non-performing assets as a percent of total assets		0.20				0.14				0.14				0.15				0.15

(1)	At September 30, 2023, non-performing loans and 30 to 89 days delinquent loans included the remaining exposure of $8.8 million on the commercial real estate relationship that was charged-off during the quarter ended September 30, 2023.
(2)	For periods in 2023, 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. For periods in 2022, the balances only include 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 $8.8 million, $9.8 million, $10.5 million, $11.4 million and $13.6 million at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, respectively.
(4)	All balances and ratios exclude PCD loans.

NET LOAN (CHARGE-OFFS) RECOVERIES	For the Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
		2023				2023				2023				2022				2022
Net loan (charge-offs) recoveries:
Loan charge-offs	$	(8,379	)		$	(206	)		$	(10	)		$	(138	)		$	(5	)
Recoveries on loans		108				83				57				143				257
Net loan (charge-offs) recoveries	$	(8,271	)		$	(123	)		$	47			$	5			$	252
Net loan (charge-offs) recoveries to average total loans (annualized)		0.33	%			—	%		NM*				NM*				NM*
Net loan (charge-offs) recoveries detail:
Commercial	$	(8,332	)		$	(117	)		$	—			$	(46	)		$	117
Residential real estate		17				9				8				9				44
Other consumer		44				(15	)			39				42				91
Net loan (charge-offs) recoveries	$	(8,271	)		$	(123	)		$	47			$	5			$	252

* Not meaningful as amounts are net loan recoveries.

OceanFirst Financial Corp.ANALYSIS OF NET INTEREST INCOME
	For the Three Months Ended
	September 30,										June 30,										September 30,
		2023										2023										2022
(dollars in thousands)	AverageBalance				Interest			AverageYield/Cost(1)			AverageBalance				Interest			AverageYield/Cost(1)			AverageBalance				Interest			AverageYield/Cost(1)
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments	$	470,825			$	6,440		5.43	%		$	308,238			$	4,283		5.57	%		$	65,648			$	336		2.03	%
Securities(2)		1,873,450				18,039		3.82				1,931,032				16,709		3.47				1,748,687				10,022		2.27
Loans receivable, net(3)
Commercial		6,923,743				103,069		5.91				6,912,698				99,350		5.76				6,509,515				74,309		4.53
Residential real estate		2,918,612				26,765		3.67				2,895,629				25,936		3.58				2,791,067				22,818		3.27
Other consumer		252,126				4,097		6.45				255,785				3,818		5.99				256,638				3,014		4.66
Allowance for loan credit losses, net of deferred loan costs and fees		(53,959	)			—		—				(53,327	)			—		—				(44,773	)			—		—
Loans receivable, net		10,040,522				133,931		5.30				10,010,785				129,104		5.17				9,512,447				100,141		4.18
Total interest-earning assets		12,384,797				158,410		5.08				12,250,055				150,096		4.91				11,326,782				110,499		3.88
Non-interest-earning assets		1,252,416										1,217,666										1,191,173
Total assets	$	13,637,213									$	13,467,721									$	12,517,955
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking	$	3,692,500				14,938		1.61	%		$	3,718,289				11,964		1.29	%		$	3,873,968				2,671		0.27	%
Money market		832,729				5,698		2.71				694,311				3,678		2.12				793,230				721		0.36
Savings		1,391,811				3,311		0.94				1,248,312				389		0.12				1,603,147				187		0.05
Time deposits		2,867,921				29,340		4.06				2,458,872				21,903		3.57				1,467,297				5,659		1.53
Total		8,784,961				53,287		2.41				8,119,784				37,934		1.87				7,737,642				9,238		0.47
FHLB Advances		701,343				8,707		4.93				1,246,914				15,406		4.96				352,392				2,208		2.49
Securities sold under agreements to repurchase		76,620				261		1.35				71,752				192		1.07				96,147				35		0.14
Other borrowings(4)		317,210				5,159		6.45				284,460				4,455		6.28				194,755				3,053		6.22
Total borrowings		1,095,173				14,127		5.12				1,603,126				20,053		5.02				643,294				5,296		3.27
Total interest-bearing liabilities		9,880,134				67,414		2.71				9,722,910				57,987		2.39				8,380,936				14,534		0.69
Non-interest-bearing deposits		1,841,198										1,873,226										2,328,700
Non-interest-bearing liabilities(4)		272,982										244,892										266,564
Total liabilities		11,994,314										11,841,028										10,976,200
Stockholders’ equity		1,642,899										1,626,693										1,541,755
Total liabilities and equity	$	13,637,213									$	13,467,721									$	12,517,955
Net interest income					$	90,996									$	92,109									$	95,965
Net interest rate spread(5)								2.37	%									2.52	%									3.19	%
Net interest margin(6)								2.91	%									3.02	%									3.36	%
Total cost of deposits (including non-interest-bearing deposits)								1.99	%									1.52	%									0.36	%

	For the Nine Months Ended September 30,
		2023										2022
(dollars in thousands)	AverageBalance				Interest			AverageYield/Cost(1)			AverageBalance				Interest			AverageYield/Cost(1)
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments	$	304,184			$	11,661		5.13	%		$	73,886			$	472		0.85	%
Securities(2)		1,919,660				51,124		3.56				1,801,978				27,086		2.01
Loans receivable, net(3)
Commercial		6,892,456				295,199		5.73				6,275,836				198,054		4.22
Residential real estate		2,895,601				77,862		3.59				2,685,080				66,899		3.32
Other consumer		257,063				11,694		6.08				254,891				8,387		4.40
Allowance for loan credit losses, net of deferred loan costs and fees		(52,626	)			—		—				(42,987	)			—		—
Loans receivable, net		9,992,494				384,755		5.15				9,172,820				273,340		3.98
Total interest-earning assets		12,216,338				447,540		4.90				11,048,684				300,898		3.64
Non-interest-earning assets		1,234,942										1,191,358
Total assets	$	13,451,280									$	12,240,042
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking	$	3,757,417				33,171		1.18	%		$	4,088,759				6,433		0.21	%
Money market		744,689				11,136		2.00				773,666				1,317		0.23
Savings		1,336,497				4,034		0.40				1,617,354				473		0.04
Time deposits		2,388,299				64,210		3.59				1,060,027				9,373		1.18
Total		8,226,902				112,551		1.83				7,539,806				17,596		0.31
FHLB Advances		1,055,106				38,530		4.88				308,043				3,890		1.69
Securities sold under agreements to repurchase		73,441				544		0.99				105,821				117		0.15
Other borrowings(4)		302,649				14,008		6.19				205,796				8,306		5.40
Total borrowings		1,431,196				53,082		4.96				619,660				12,313		2.66
Total interest-bearing liabilities		9,658,098				165,633		2.29				8,159,466				29,909		0.49
Non-interest-bearing deposits		1,913,624										2,352,606
Non-interest-bearing liabilities(4)		253,014										193,147
Total liabilities		11,824,736										10,705,219
Stockholders’ equity		1,626,544										1,534,823
Total liabilities and equity	$	13,451,280									$	12,240,042
Net interest income					$	281,907									$	270,989
Net interest rate spread(5)								2.61	%									3.15	%
Net interest margin(6)								3.09	%									3.28	%
Total cost of deposits (including non-interest-bearing deposits)								1.48	%									0.24	%

(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 2023 periods, the average balances of derivative cash collateral have been reclassified from non-interest bearing liabilities to other borrowings.
(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)
		September 30,			June 30,			March 31,			December 31,			September 30,
			2023			2023			2023			2022			2022
Selected Financial Condition Data:
Total assets		$	13,498,183		$	13,538,903		$	13,555,175		$	13,103,896		$	12,683,453
Debt securities available-for-sale, at estimated fair value			453,208			452,016			452,195			457,648			470,300
Debt securities held-to-maturity, net of allowance for securities credit losses			1,189,339			1,222,507			1,245,424			1,221,138			1,027,712
Equity investments			97,908			96,452			101,007			102,037			81,722
Restricted equity investments, at cost			82,484			105,305			115,750			109,278			77,556
Loans receivable, net of allowance for loan credit losses			10,068,156			10,030,106			9,986,949			9,868,718			9,672,488
Deposits			10,533,929			10,158,337			9,993,095			9,675,206			9,959,469
Federal Home Loan Bank advances			606,056			1,091,666			1,346,566			1,211,166			514,200
Securities sold under agreements to repurchase and other borrowings			279,164			270,377			266,601			264,500			291,203
Total stockholders’ equity			1,637,604			1,626,283			1,610,371			1,585,464			1,540,216

		For the Three Months Ended,
		September 30,				June 30,				March 31,				December 31,			September 30,
			2023				2023				2023				2022			2022
Selected Operating Data:
Interest income		$	158,410			$	150,096			$	139,034			$	130,277		$	110,499
Interest expense			67,414				57,987				40,232				23,789			14,534
Net interest income			90,996				92,109				98,802				106,488			95,965
Provision for credit losses			10,283				1,229				3,013				3,647			1,016
Net interest income after provision for credit losses			80,713				90,880				95,789				102,841			94,949
Other income (excluding activity related to debt and equity investments)			9,310				9,487				9,571				10,364			11,788
Net gain (loss) on equity investments			1,452				(559	)			(2,193	)			17,187			3,362
Net loss on sale of investments			—				—				(5,305	)			—			—
Operating expenses (excluding merger related and branch consolidation expense (benefit), net)			64,484				62,930				61,217				59,341			59,045
Branch consolidation expense (benefit), net			—				—				70				111			(346	)
Merger related expenses			—				—				22				276			298
Income before provision for income taxes			26,991				36,878				36,553				70,664			51,102
Provision for income taxes			6,459				8,996				8,654				17,353			12,298
Net income			20,532				27,882				27,899				53,311			38,804
Net (loss) income attributable to non-controlling interest			(135	)			85				16				39			193
Net income attributable to OceanFirst Financial Corp.		$	20,667			$	27,797			$	27,883			$	53,272		$	38,611
Net income available to common stockholders		$	19,663			$	26,793			$	26,879			$	52,268		$	37,607
Diluted earnings per share		$	0.33			$	0.45			$	0.46			$	0.89		$	0.64
Net accretion/amortization of purchase accounting adjustments included in net interest income		$	1,745			$	1,152			$	1,237			$	2,278		$	2,004

		At or For the Three Months Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
		2023			2022			2023			2022			2022
Selected Financial Ratios and Other Data(1) (2):
Performance Ratios (Annualized):
Return on average assets(3)		0.57	%		0.80	%		0.82	%		1.62	%		1.19	%
Return on average tangible assets(3) (4)		0.59			0.83			0.86			1.68			1.24
Return on average stockholders’ equity(3)		4.75			6.61			6.77			13.25			9.68
Return on average tangible stockholders’ equity(3) (4)		6.93			9.70			10.00			19.85			14.62
Return on average tangible common equity(3) (4)		7.29			10.21			10.53			20.97			15.47
Stockholders’ equity to total assets		12.13			12.01			11.88			12.10			12.14
Tangible stockholders’ equity to tangible assets(4)		8.64			8.51			8.37			8.47			8.38
Tangible common equity to tangible assets(4)		8.21			8.09			7.95			8.03			7.92
Net interest rate spread		2.37			2.52			2.94			3.37			3.19
Net interest margin		2.91			3.02			3.34			3.64			3.36
Operating expenses to average assets		1.88			1.87			1.88			1.85			1.87
Efficiency ratio(5)		63.37			62.28			60.78			44.56			53.10
Loan-to-deposit ratio		96.10			99.30			100.50			102.50			97.60

		For the Nine Months Ended September 30,
		2023			2022
Performance Ratios (Annualized):
Return on average assets(3)		0.73	%		0.99	%
Return on average tangible assets(3) (4)		0.76			1.03
Return on average stockholders’ equity(3)		6.03			7.87
Return on average tangible stockholders’ equity(3) (4)		8.85			11.91
Return on average tangible common equity(3) (4)		9.31			12.60
Net interest rate spread		2.61			3.15
Net interest margin		3.09			3.28
Operating expenses to average assets		1.88			1.91
Efficiency ratio(5)		62.15			57.90

		At or For the Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
			2023				2023				2023				2022				2022
Trust and Asset Management:
Wealth assets under administration and management (“AUA/M”)		$	336,913			$	339,890			$	333,436			$	324,066			$	273,815
Nest Egg AUA/M			385,317				397,927				400,227				403,538				402,256
Total AUA/M			722,230				737,817				733,663				727,604				676,071
Per Share Data:
Cash dividends per common share		$	0.20			$	0.20			$	0.20			$	0.20			$	0.20
Book value per common share at end of period			27.56				27.37				27.07				26.81				26.04
Tangible book value per common share at end of period(4)			17.93				17.72				17.42				17.08				16.30
Common shares outstanding at end of period			59,421,498				59,420,859				59,486,086				59,144,128				59,138,507
Preferred shares outstanding at end of period			57,370				57,370				57,370				57,370				57,370
Number of full-service customer facilities:			38				38				38				38				38
Quarterly Average Balances
Total securities		$	1,873,450			$	1,931,032			$	1,955,399			$	1,764,764			$	1,748,687
Loans receivable, net			10,040,522				10,010,785				9,924,905				9,771,104				9,512,447
Total interest-earning assets			12,384,797				12,250,055				12,010,044				11,605,891				11,326,782
Total goodwill and core deposit intangible			517,282				518,265				519,282				520,400				521,566
Total assets			13,637,213				13,467,721				13,244,593				12,834,411				12,517,955
Time deposits			2,867,921				2,458,872				1,826,662				1,486,410				1,467,297
Total deposits (including non-interest-bearing deposits)			10,626,159				9,993,010				9,793,256				9,975,509				10,066,342
Total borrowings			1,095,173				1,603,126				1,600,845				915,565				643,294
Total interest-bearing liabilities			9,880,134				9,722,910				9,365,594				8,669,190				8,380,936
Non-interest bearing deposits			1,841,198				1,873,226				2,028,507				2,221,884				2,328,700
Stockholders' equity			1,642,899				1,626,693				1,609,677				1,564,856				1,541,755
Tangible stockholders’ equity(4)			1,125,617				1,108,428				1,090,395				1,044,456				1,020,189
Quarterly Yields and Costs
Total securities			3.82	%			3.47	%			3.40	%			2.83	%			2.27	%
Loans receivable, net			5.30				5.17				4.96				4.76				4.18
Total interest-earning assets			5.08				4.91				4.68				4.46				3.88
Time deposits			4.06				3.57				2.88				1.95				1.53
Total cost of deposits (including non-interest-bearing deposits)			1.99				1.52				0.88				0.53				0.36
Total borrowed funds			5.12				5.02				4.79				4.49				3.27
Total interest-bearing liabilities			2.71				2.39				1.74				1.09				0.69
Net interest spread			2.37				2.52				2.94				3.37				3.19
Net interest margin			2.91				3.02				3.34				3.64				3.36

(1)	With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2)	Performance ratios for each period are presented on a GAAP basis and include non-core operations. Refer to “Non-GAAP Reconciliation.”
(3)	Ratios for each period are based on net income available to common stockholders.
(4)	Tangible stockholders’ equity and tangible assets exclude intangible assets related to goodwill and core deposit intangible. Tangible common equity (also referred to as “tangible book value”) excludes goodwill, core deposit intangible and preferred equity. Refer to “Non-GAAP Reconciliation.”
(5)	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
		September 30,				June 30,				March 31,				December 31,				September 30,
			2023				2023				2023				2022				2022
Core Earnings:
Net income available to common stockholders (GAAP)		$	19,663			$	26,793			$	26,879			$	52,268			$	37,607
(Less) add non-recurring and non-core items:
Net (gain) loss on equity investments(1)			(1,452	)			559				2,193				(17,187	)			(3,362	)
Net loss on sale of investments(1)			—				—				5,305				—				—
Merger related expenses			—				—				22				276				298
Branch consolidation expense (benefit), net			—				—				70				111				(346	)
Income tax expense (benefit) on items			351				(162	)			(1,797	)			4,060				824
Core earnings (Non-GAAP)		$	18,562			$	27,190			$	32,672			$	39,528			$	35,021
Income tax expense		$	6,459			$	8,996			$	8,654			$	17,353			$	12,298
Provision for credit losses			10,283				1,229				3,013				3,647				1,016
Less: income tax expense (benefit) on non-core items			351				(162	)			(1,797	)			4,060				824
Core earnings PTPP (Non-GAAP)		$	34,953			$	37,577			$	46,136			$	56,468			$	47,511
Core earnings diluted earnings per share		$	0.32			$	0.46			$	0.55			$	0.67			$	0.60
Core earnings PTPP diluted earnings per share		$	0.59			$	0.64			$	0.78			$	0.96			$	0.81
Core Ratios (Annualized):
Return on average assets			0.54	%			0.81	%			1.00	%			1.22	%			1.11	%
Return on average tangible stockholders’ equity			6.54				9.84				12.15				15.01				13.62
Return on average tangible common equity			6.88				10.36				12.80				15.86				14.40
Efficiency ratio			64.29				61.94				56.49				50.78				54.80

(1)

The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on equity investments ($4.6 million) and other ($697,000), respectively, for the three months ended March 31, 2023.

		For the Nine Months Ended September 30,
			2023				2022
Core Earnings:
Net income available to common stockholders (GAAP)		$	73,335			$	90,319
Add (less) non-recurring and non-core items:
Net loss on equity investments(1)			1,300				7,502
Net loss on sale of investments(1)			5,305				—
Merger related expenses			22				2,459
Branch consolidation expense, net			70				602
Income tax benefit on items			(1,608	)			(2,449	)
Core earnings (Non-GAAP)		$	78,424			$	98,433
Income tax expense		$	24,109			$	29,212
Credit loss provision			14,525				4,121
Less: income tax benefit on non-core items			(1,608	)			(2,449	)
Core earnings PTPP (Non-GAAP)		$	118,666			$	134,215
Core diluted earnings per share		$	1.33			$	1.67
Core earnings PTPP diluted earnings per share		$	2.01			$	2.28
Core Ratios (Annualized):
Return on average assets			0.78	%			1.08	%
Return on average tangible stockholders’ equity			9.46				12.98
Return on average tangible common equity			9.96				13.73
Efficiency ratio			60.79				55.51

(1)

The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securities are reported within net gain (loss) on equity investments ($4.6 million) and other ($697,000), respectively, for the three months ended March 31, 2023.

		September 30,				June 30,				March 31,				December 31,				September 30,
			2023				2023				2023				2022				2022
Tangible Equity:
Total stockholders' equity		$	1,637,604			$	1,626,283			$	1,610,371			$	1,585,464			$	1,540,216
Less:
Goodwill			506,146				506,146				506,146				506,146				506,146
Core deposit intangible			10,489				11,476				12,470				13,497				14,656
Tangible stockholders' equity			1,120,969				1,108,661				1,091,755				1,065,821				1,019,414
Less:
Preferred stock			55,527				55,527				55,527				55,527				55,527
Tangible common equity		$	1,065,442			$	1,053,134			$	1,036,228			$	1,010,294			$	963,887
Tangible Assets:
Total assets		$	13,498,183			$	13,538,903			$	13,555,175			$	13,103,896			$	12,683,453
Less:
Goodwill			506,146				506,146				506,146				506,146				506,146
Core deposit intangible			10,489				11,476				12,470				13,497				14,656
Tangible assets		$	12,981,548			$	13,021,281			$	13,036,559			$	12,584,253			$	12,162,651
Tangible stockholders' equity to tangible assets			8.64	%			8.51	%			8.37	%			8.47	%			8.38	%
Tangible common equity to tangible assets			8.21	%			8.09	%			7.95	%			8.03	%			7.92	%

Company Contact:                                                                                      

Patrick S. BarrettChief Financial OfficerOceanFirst Financial Corp. Tel: (732) 240-4500, ext. 27507Email: pbarrett@oceanfirst.com