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 $26.7 million, or $0.46 per diluted share, for the quarter ended December 31, 2023, as compared to $52.3 million, or $0.89 per diluted share, for the corresponding prior year period, and $19.7 million, or $0.33 per diluted share, for the prior linked quarter. For the year ended December 31, 2023, the Company reported net income available to common stockholders of $100.0 million, or $1.70 per diluted share, as compared to $142.6 million, or $2.42 per diluted share, for the prior year. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information):

	For the Three Months Ended,									For the Year Ended,
Performance Ratios (Quarterly Ratios Annualized):	December 31,			September 30,			December 31,			December 31,			December 31,
	2023			2023			2022			2023			2022
Return on average assets	0.78	%		0.57	%		1.62	%		0.74	%		1.15	%
Return on average stockholders’ equity	6.41			4.75			13.25			6.13			9.24
Return on average tangible stockholders’ equity (a)	9.33			6.93			19.85			8.97			13.96
Return on average tangible common equity (a)	9.81			7.29			20.97			9.44			14.76
Efficiency ratio	60.38			63.37			44.56			61.71			53.80
Net interest margin	2.82			2.91			3.64			3.02			3.37

(a) Return on average tangible stockholders’ equity and return on average tangible common equity (“ROTCE”) are non-GAAP (“generally accepted accounting principles”) financial measures and exclude the impact of intangible assets and goodwill from both assets and stockholders’ equity. ROTCE also excludes preferred stock from stockholders’ equity. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

Core earnings1 for the quarter and year ended December 31, 2023 were $26.3 million and $104.7 million, respectively, or $0.45 and $1.78 per diluted share, a decrease from $39.5 million and $138.0 million, or $0.67 and $2.34 per diluted share, for the corresponding prior year periods, and an increase from $18.6 million, or $0.32 per diluted share, for the prior linked quarter.

Core earnings PTPP1 for the quarter and year ended December 31, 2023 were $37.9 million and $156.6 million, respectively, or $0.65 and $2.66 per diluted share, as compared to $56.5 million and $190.7 million, or $0.96 and $3.24 per diluted share, for the corresponding prior year periods, and $35.0 million, or $0.59 per diluted share, for the prior linked quarter. Selected performance metrics are as follows:

	For the Three Months Ended,												For the Year Ended,
	December 31,				September 30,				December 31,				December 31,				December 31,
Core Ratios1 (Quarterly Ratios Annualized):		2023				2023				2022				2023				2022
Return on average assets		0.77	%			0.54	%			1.22	%			0.78	%			1.11	%
Return on average tangible stockholders’ equity		9.20				6.54				15.01				9.39				13.50
Return on average tangible common equity		9.67				6.88				15.86				9.89				14.28
Efficiency ratio		60.02				64.29				50.78				60.61				54.21
Core diluted earnings per share	$	0.45			$	0.32			$	0.67			$	1.78			$	2.34
Core PTPP diluted earnings per share		0.65				0.59				0.96				2.66				3.24

Key developments for the recent quarter are described below:

• Deposits: Total deposits remained stable decreasing less than 1% for the quarter to $10.4 billion, and grew 8% for the year. Additionally, the loan-to-deposit ratio was 97.70% at December 31, 2023.
• Capital: The Company’s estimated common equity tier 1 capital ratio increased to 10.88%, as compared to 9.93% in the prior year. Book value and tangible book value per share were $27.96 and $18.35, respectively, increasing $1.15 and $1.27 from the prior year.2
• Expenses: Non-interest expense decreased by 7% to $60.2 million from the prior linked quarter and remained relatively flat compared to the prior year period. Non-interest expense included a $1.7 million FDIC special assessment charge in the current quarter.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “We are pleased to report on our current quarter results; rounding out the year positively and executing on our strategies to improve operating expenses, diversify and strengthen our deposit base, and bolster our capital position during a tumultuous year for the industry.” Mr. Maher added, “As we turn to 2024, the Company is well positioned to create shareholder value and will remain focused on high quality growth, expense discipline, and prudent balance sheet management.”

The Company’s Board of Directors declared its 108th consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on February 16, 2024 to common stockholders of record on February 5, 2024. The Company’s Board of Directors also declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock. This dividend will be paid on February 15, 2024 to preferred stockholders of record on January 31, 2024.

1 Core earnings and core earnings before income taxes and provision for credit losses (“PTPP or Pre-Tax-Pre-Provision”), and ratios derived therefrom, are non-GAAP financial measures. For the periods presented, core earnings exclude merger related expenses, net branch consolidation expense (benefit), net (gain) loss on equity investments, net loss on sale of investments, Federal Deposit Insurance Corporation (“FDIC”) special assessment, and the income tax effect of these items, (collectively referred to as “non-core” operations). PTPP excludes the aforementioned pre-tax “non-core” items along with income tax expense (benefit) and provision for credit losses (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 are non-GAAP financial measures and exclude the impact of intangible assets, goodwill, and preferred equity from both stockholders’ equity and total assets. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

Results of Operations

The current quarter results were impacted by the following matters. Net interest income and margin were adversely impacted by a continued mix-shift to and repricing of higher cost deposits that outpaced the increase in yields on interest-earning assets. Deposit betas increased modestly to 38%, from 35% in the prior linked quarter.3 Operating expenses included a special assessment charge of $1.7 million related to the Federal Deposit Insurance Corporation’s final rule to recover the loss to the Deposit Insurance Fund in 2023. Additionally, operating expenses reflect the net realization of the Company’s performance improvement initiatives and strategic investments made over the past year.

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).

Net Interest Income and Margin

Quarter ended December 31, 2023 vs. December 31, 2022

Net interest income decreased to $87.8 million, from $106.5 million, primarily reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 2.82%, from 3.64%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.10% for the respective quarters, net interest margin decreased to 2.77%, from 3.54%. Net interest margin decreased primarily due to the increase in cost of funds outpacing the increase in yield on average interest earning assets.

Average interest-earning assets increased by $743.2 million, primarily driven by increases of $326.8 million in interest-earning deposits and short-term investments and $318.1 million in total loans. The yield on average interest earning assets increased to 5.16%, from 4.46%.

The cost of average interest-bearing liabilities increased to 2.91%, from 1.09%, primarily due to higher cost of deposits. The total cost of deposits (including non-interest bearing deposits) increased to 2.22%, from 0.53%.

Year ended December 31, 2023 vs. December 31, 2022

Net interest income decreased to $369.7 million, from $377.5 million, reflecting the net impact of the higher interest rate environment.

Net interest margin decreased to 3.02%, from 3.37%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.05% and 0.11% for the respective years, net interest margin decreased to 2.97%, from 3.26%.

Average interest-earning assets increased by $1.06 billion, primarily driven by increases in total loans of $693.2 million and interest-earning deposits and short-term investments of $254.6 million. The yield on average interest earning assets increased to 4.96%, from 3.85%.

The cost of average interest-bearing liabilities increased to 2.45%, from 0.65%, primarily due to higher cost of deposits and Federal Home Loan Bank (“FHLB”) advances. The total cost of deposits (including non-interest bearing deposits) increased to 1.68%, from 0.31%.

Quarter ended December 31, 2023 vs. September 30, 2023

Net interest income decreased by $3.2 million, reflecting a decrease in net interest margin to 2.82%, from 2.91%, 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 0.05% and 0.06% for the respective quarters, net interest margin decreased to 2.77%, from 2.85%.

Average interest-earning assets decreased by $35.7 million, while the yield on average interest-earning assets increased to 5.16%, from 5.08%.

The total cost of average interest-bearing liabilities increased to 2.91%, from 2.71%, primarily due to higher cost of deposits. Total cost of deposits (including non-interest bearing deposits) increased to 2.22%, from 1.99%. Average interest-bearing liabilities increased $30.6 million, primarily due to an increase in total deposits, partially offset by a decrease in FHLB advances.

Provision for Credit Losses

Provision for credit losses for the quarter and year ended December 31, 2023, was $3.2 million and $17.7 million, respectively, as compared to $3.6 million and $7.8 million for the corresponding prior year periods, and $10.3 million in the prior linked quarter. The current quarter provision was impacted by the net effect of credit rating migrations, declines in prepayment assumptions, and use of an external downside macro-economic forecast scenario.

Net loan charge-offs were $35,000 and $8.4 million for the quarter and year ended December 31, 2023, respectively. Net loan recoveries were $5,000 and $340,000 for the quarter and year ended December 31, 2022, respectively. Net loan charge-offs were $8.3 million in the prior linked quarter, which primarily related to a partial charge-off of $8.4 million on a single credit relationship. Refer to “Asset Quality” section for further discussion.

Non-interest Income

Quarter ended December 31, 2023 vs. December 31, 2022

Other income decreased to $11.9 million, as compared to $27.6 million. Other income was favorably impacted by non-core operations of $2.2 million and $17.2 million, for the respective quarters, related to net gains on equity investments, which included a $17.5 million unrealized gain on the Company’s investment in Auxilior Capital Partners, Inc. in the prior year.

Excluding non-core operations, other income decreased $679,000. The primary driver was a decrease in commercial loan swap income of $490,000, which was adversely impacted by the current interest rate environment resulting in lower swap volume.

Year ended December 31, 2023 vs. December 31, 2022

Other income decreased to $33.6 million, as compared to $59.1 million. Other income was adversely impacted by non-core operations of $4.4 million for the current year, primarily related to $5.3 million of losses related to the sale of investments in the first quarter. Other income for the prior year was favorably impacted by non-core operations of $9.7 million, primarily related to net gains on equity investments.

Excluding non-core operations, other income decreased $11.4 million. The primary drivers were decreases in commercial loan swap income of $6.3 million on lower volume, fees and service charges of $1.5 million primarily due to lower title activity, and bank owned life insurance of $1.3 million related to non-recurring death benefits recognized in the prior year. Additionally, bankcard services revenue decreased $3.3 million due to the Durbin Amendment, which became effective for the Company on July 1, 2022.

Quarter ended December 31, 2023 vs. September 30, 2023

Other income in the prior linked quarter was $10.8 million, which included non-core operations of $1.5 million related to net gains on equity investments. Excluding non-core operations, other income increased by $375,000 primarily due to gain on sales of loans.

Non-interest Expense

Quarter ended December 31, 2023 vs. December 31, 2022

Operating expenses increased to $60.2 million, as compared to $59.7 million. Operating expenses were adversely impacted by non-core items of $1.7 million from the FDIC special assessment in the current year and $387,000 from merger related and branch consolidation expenses in the prior year.

Excluding non-core operations, operating expenses decreased $815,000. The primary drivers were decreases in compensation and benefits of $1.8 million due to lower incentive compensation and professional fees of $1.8 million tied to the Company’s performance improvement initiatives and strategic investments. This was partly offset by increases in data processing expense of $1.8 million, partly driven by one-time recoveries recorded in the prior year, and federal deposit insurance and regulatory assessments of $799,000, primarily due to new assessment rates that went into effect on January 1, 2023.

Year ended December 31, 2023 vs. December 31, 2022

Operating expenses increased to $248.9 million, as compared to $234.9 million. Operating expenses for the years were adversely impacted by $1.8 million and $3.4 million of non-core operations, respectively.

Excluding non-core operations, operating expenses increased by $15.7 million. This was due to increases in professional fees of $5.3 million and compensation and benefits of $3.9 million related to the Company’s performance improvement initiatives and strategic investments, and related severance and other program costs. Additionally, there were increases in federal deposit insurance and regulatory assessments of $2.1 million and data processing expense of $1.7 million, which were driven by the same factors as the three months ended. Marketing expense also increased $1.3 million due to the Company’s enhanced digital strategy efforts, and other operating expenses included higher expenses of $1.1 million primarily related to real estate charges on assets sold during the period from assets held for sale.

Quarter ended December 31, 2023 vs. September 30, 2023

Excluding non-core operations, operating expenses decreased by $6.0 million. This was primarily due to decreases in compensation and benefits expense of $3.4 million and professional fees of $2.4 million due to the Company’s improvement initiatives and strategic investments noted above.

Income Tax Expense

The provision for income taxes was $8.6 million and $32.7 million for the quarter and year ended December 31, 2023, respectively, as compared to $17.4 million and $46.6 million, for the same prior year periods, and $6.5 million for the prior linked quarter. The effective tax rate was 23.6% and 23.9% for the quarter and year ended December 31, 2023, respectively, as compared to 24.6% and 24.0% for the same prior year periods, and 23.9% for the prior linked quarter.

Financial Condition

December 31, 2023 vs. December 31, 2022        

Total assets increased by $434.4 million to $13.54 billion, from $13.10 billion, primarily due to purchases of available-for-sale debt securities and loan growth. Available-for-sale debt securities increased by $296.2 million to $753.9 million, from $457.6 million, primarily due to purchases of variable-rate mortgage-backed securities in the fourth quarter of 2023. Total loans increased by $276.5 million to $10.19 billion, from $9.92 billion, due to loan originations and growth.

Other assets decreased by $41.4 million to $179.7 million, from $221.1 million, primarily due to a decrease in market values associated with customer interest rate swap programs.

Total liabilities increased by $357.9 million to $11.88 billion, from $11.52 billion. Deposits increased by $759.7 million to $10.43 billion, from $9.68 billion. Time deposits increased by $903.4 million to $2.45 billion, from $1.54 billion, or 23.4% and 15.9% of total deposits, respectively. Retail time deposits increased $1.13 billion, while brokered time deposits decreased $242.0 million. The loans-to-deposit ratio was 97.7%, as compared to 102.5%. FHLB advances decreased by $362.5 million to $848.6 million, from $1.21 billion due to mix shift in funding sources from FHLB advances to deposits.

Other liabilities decreased by $45.4 million to $300.7 million, from $346.2 million, primarily due to a decrease in the market values associated with customer interest rate swaps and related collateral received from counterparties.

Total stockholders’ equity increased to $1.66 billion, as compared to $1.59 billion, primarily reflecting net income, net of dividends, for the year ended December 31, 2023. Additionally, accumulated other comprehensive loss decreased by $15.1 million primarily due to increases in fair market value of available-for-sale debt securities, net of tax.

The Company's estimated common equity tier 1 capital ratio increased to 10.88%, which included an estimated 30 bps improvement due to balance sheet optimization efforts completed in the fourth quarter.

For the year ended December 31, 2023, the Company did not repurchase shares under its stock repurchase program. There were 2,934,438 shares available for repurchase at December 31, 2023 under the existing repurchase program. Book value per common share increased to $27.96, as compared to $26.81. Tangible book value per common share2 increased to $18.35, as compared to $17.08.

Asset Quality

December 31, 2023 vs. December 31, 2022

The Company’s non-performing loans increased to $29.5 million from $23.3 million and represented 0.29% and 0.23% of total loans, respectively. The increase in non-performing loans was primarily driven by the remaining exposure of $8.8 million on a single credit relationship reported in the prior quarter.

The allowance for loan credit losses as a percentage of total non-performing loans was 227.21%, as compared to 244.25%. The level of 30 to 89 days delinquent loans increased to $19.2 million, from $14.1 million. The Company’s allowance for loan credit losses was 0.66% 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 $26.4 million, from $19.3 million. The allowance for loan credit losses as a percentage of total non-performing loans was 254.64%, as compared to 294.10%. The level of 30 to 89 days delinquent loans, excluding non-performing loans, increased to $17.7 million, from $10.5 million. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $74.7 million, or 0.73% of total loans, as compared to $68.2 million, or 0.69% of total loans.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding non-core operations and in some instances excluding income taxes and provision for credit losses, and reporting equity and asset amounts excluding intangible assets, goodwill or preferred stock, 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 that 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.

Annual Meeting

The Company also announced today that its Annual Meeting of Stockholders will be held on Tuesday, May 21, 2024 at 8:00 a.m. Eastern Time. The record date for stockholders to vote at the Annual Meeting is Monday, March 25, 2024. Additional information regarding virtual access to the meeting will be distributed prior to the meeting.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, January 19, 2024 at 11:00 a.m. Eastern Time. The direct dial number for the call is 1-833-470-1428, toll free, using the access code 040735. For those unable to participate in the conference call, a replay will be available. To access the replay, dial 1-866-813-9403, access code 247218, from one hour after the end of the call until February 16, 2024. The conference call will also be 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, 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 effect of our rating under the Community Reinvestment Act, 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)

		December 31, 2023			September 30, 2023			December 31, 2022
		(Unaudited)			(Unaudited)
Assets
Cash and due from banks		$	153,718		$	408,882		$	167,946
Debt securities available-for-sale, at estimated fair value			753,892			453,208			457,648
Debt securities held-to-maturity, net of allowance for securities credit losses of $1,133 at December 31, 2023, $932 at September 30, 2023, and $1,128 at December 31, 2022 (estimated fair value of $1,068,438 at December 31, 2023, $1,047,342 at September 30, 2023, and $1,110,041 at December 31, 2022)			1,159,735			1,189,339			1,221,138
Equity investments			100,163			97,908			102,037
Restricted equity investments, at cost			93,766			82,484			109,278
Loans receivable, net of allowance for loan credit losses of $67,137 at December 31, 2023, $63,877 at September 30, 2023, and $56,824 at December 31, 2022			10,136,721			10,068,156			9,868,718
Loans held-for-sale			5,166			—			690
Interest and dividends receivable			51,874			50,030			44,704
Premises and equipment, net			121,372			122,646			126,705
Bank owned life insurance			266,498			265,071			261,603
Assets held for sale			28			3,004			2,719
Goodwill			506,146			506,146			506,146
Core deposit intangible			9,513			10,489			13,497
Other assets			179,661			240,820			221,067
Total assets		$	13,538,253		$	13,498,183		$	13,103,896
Liabilities and Stockholders’ Equity
Deposits		$	10,434,949		$	10,533,929		$	9,675,206
Federal Home Loan Bank advances			848,636			606,056			1,211,166
Securities sold under agreements to repurchase with customers			73,148			82,981			69,097
Other borrowings			196,456			196,183			195,403
Advances by borrowers for taxes and insurance			22,407			29,696			21,405
Other liabilities			300,712			411,734			346,155
Total liabilities			11,876,308			11,860,579			11,518,432
Stockholders’ equity:
OceanFirst Financial Corp. stockholders’ equity			1,661,163			1,636,891			1,584,662
Non-controlling interest			782			713			802
Total stockholders’ equity			1,661,945			1,637,604			1,585,464
Total liabilities and stockholders’ equity		$	13,538,253		$	13,498,183		$	13,103,896

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

		For the Three Months Ended										For the Year Ended
		December 31,			September 30,				December 31,			December 31,
		2023				2023			2022				2023			2022
		|--------------------- (Unaudited) ---------------------|										(Unaudited)
Interest income:
Loans		$	137,110		$	133,931			$	117,046		$	521,865			$	390,386
Debt securities			15,444			15,223				10,951			59,273				34,407
Equity investments and other			7,880			9,256				2,280			26,836				6,382
Total interest income			160,434			158,410				130,277			607,974				431,175
Interest expense:
Deposits			59,467			53,287				13,425			172,018				31,021
Borrowed funds			13,143			14,127				10,364			66,225				22,677
Total interest expense			72,610			67,414				23,789			238,243				53,698
Net interest income			87,824			90,996				106,488			369,731				377,477
Provision for credit losses			3,153			10,283				3,647			17,678				7,768
Net interest income after provision for credit losses			84,671			80,713				102,841			352,053				369,709
Other income:
Bankcard services revenue			1,531			1,507				1,437			5,912				9,219
Trust and asset management revenue			610			662				551			2,529				2,386
Fees and service charges			5,315			5,178				5,776			21,254				22,802
Net gain on sales of loans			309			66				10			428				358
Net gain (loss) on equity investments			2,176			1,452				17,187			(3,732	)			9,685
Net gain from other real estate operations			—			—				—			—				48
Income from bank owned life insurance			1,427			1,390				1,697			5,280				6,578
Commercial loan swap income			29			11				519			741				7,065
Other			464			496				374			1,212				953
Total other income			11,861			10,762				27,551			33,624				59,094
Operating expenses:
Compensation and employee benefits			32,126			35,534				33,943			135,802				131,915
Occupancy			5,218			5,466				5,027			21,188				20,817
Equipment			1,172			1,172				1,131			4,650				4,987
Marketing			1,112			1,183				705			4,238				2,947
Federal deposit insurance and regulatory assessments			4,386			2,557				1,924			11,157				7,359
Data processing			6,430			6,086				4,629			24,835				23,095
Check card processing			991			1,154				1,243			4,640				4,971
Professional fees			2,858			5,258				4,697			18,297				12,993
Amortization of core deposit intangible			976			987				1,159			3,984				4,718
Branch consolidation expense, net			—			—				111			70				713
Merger related expenses			—			—				276			22				2,735
Other operating expense			4,920			5,087				4,883			20,029				17,631
Total operating expenses			60,189			64,484				59,728			248,912				234,881
Income before provision for income taxes			36,343			26,991				70,664			136,765				193,922
Provision for income taxes			8,591			6,459				17,353			32,700				46,565
Net income			27,752			20,532				53,311			104,065				147,357
Net income (loss) attributable to non-controlling interest			70			(135	)			39			36				754
Net income attributable to OceanFirst Financial Corp.			27,682			20,667				53,272			104,029				146,603
Dividends on preferred shares			1,004			1,004				1,004			4,016				4,016
Net income available to common stockholders		$	26,678		$	19,663			$	52,268		$	100,013			$	142,587
Basic earnings per share		$	0.46		$	0.33			$	0.89		$	1.70			$	2.43
Diluted earnings per share		$	0.46		$	0.33			$	0.89		$	1.70			$	2.42
Average basic shares outstanding			59,120			59,104				58,584			58,948				58,730
Average diluted shares outstanding			59,123			59,111				58,751			58,957				58,878

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

LOANS RECEIVABLE				At
				December 31, 2023				September 30,2023				June 30,2023				March 31,2023				December 31,2022
Commercial:
Commercial real estate - investor				$	5,353,974			$	5,334,279			$	5,319,686			$	5,296,661			$	5,171,952
Commercial real estate - owner-occupied					943,891				957,216				981,618				986,366				997,367
Commercial and industrial					666,532				652,119				620,284				622,201				622,372
Total commercial					6,964,397				6,943,614				6,921,588				6,905,228				6,791,691
Consumer:
Residential real estate					2,979,534				2,928,259				2,906,556				2,881,811				2,861,991
Home equity loans and lines and other consumer (“other consumer”)					250,664				251,698				255,486				252,773				264,372
Total consumer					3,230,198				3,179,957				3,162,042				3,134,584				3,126,363
Total loans					10,194,595				10,123,571				10,083,630				10,039,812				9,918,054
Deferred origination costs (fees), net					9,263				8,462				8,267				7,332				7,488
Allowance for loan credit losses					(67,137	)			(63,877	)			(61,791	)			(60,195	)			(56,824	)
Loans receivable, net				$	10,136,721			$	10,068,156			$	10,030,106			$	9,986,949			$	9,868,718
Mortgage loans serviced for others				$	68,217			$	52,796			$	50,820			$	50,421			$	51,736
	At December 31, 2023 Average Yield
Loan pipeline (1):
Commercial	8.61	%		$	124,707			$	50,756			$	39,164			$	236,550			$	114,232
Residential real estate	7.14				49,499				66,682				58,022				61,258				36,958
Other consumer	8.50				8,819				13,795				18,621				20,589				14,890
Total	8.21	%		$	183,025			$	131,233			$	115,807			$	318,397			$	166,080

	For the Three Months Ended
	December 31,						September 30,			June 30,			March 31,			December 31,
	2023						2023			2023			2023			2022
	Average Yield
Loan originations:
Commercial	7.68	%		$	94,294		$	90,263		$	197,732		$	200,504		$	539,949
Residential real estate	7.05				113,227			92,299			100,542			65,580			101,530	(2)
Other consumer	8.19				16,971			17,019			22,487			15,927			42,624
Total	7.40	%		$	224,492		$	199,581		$	320,761		$	282,011		$	684,103
Loans sold				$	20,138		$	15,404		$	18,664		$	3,861		$	2,340

(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.

DEPOSITS		At
		December 31, 2023			September 30,2023			June 30,2023			March 31,2023			December 31,2022
Type of Account
Non-interest-bearing		$	1,657,119		$	1,827,381		$	1,854,136		$	1,984,197		$	2,101,308
Interest-bearing checking			3,911,766			3,708,874			3,537,834			3,697,223			3,829,683
Money market			1,021,805			860,025			770,440			615,993			714,386
Savings			1,398,837			1,484,000			1,229,897			1,308,715			1,487,809
Time deposits (1)			2,445,422			2,653,649			2,766,030			2,386,967			1,542,020
Total deposits		$	10,434,949		$	10,533,929		$	10,158,337		$	9,993,095		$	9,675,206

(1)	Includes brokered time deposits of $631.5 million, $995.5 million, $1.42 billion, $1.24 billion, and $873.4 million at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.

OceanFirst Financial Corp.ASSET QUALITY(dollars in thousands)

ASSET QUALITY (1)	December 31, 2023				September 30,2023				June 30,2023				March 31,2023				December 31,2022
Non-performing loans:
Commercial real estate - investor	$	20,820			$	20,723			$	13,000			$	13,643			$	10,483
Commercial real estate - owner-occupied		351				240				565				251				4,025
Commercial and industrial		304				1,120				199				162				331
Residential real estate		5,542				5,624				6,174				5,650				5,969
Other consumer		2,531				2,391				2,820				2,731				2,457
Total non-performing loans	$	29,548			$	30,098			$	22,758			$	22,437			$	23,265
Delinquent loans 30 to 89 days	$	19,202			$	20,591			$	3,136			$	11,232			$	14,148
Modifications to borrowers experiencing financial difficulty(2)
Non-performing (included in total non-performing loans above)	$	6,420			$	6,679			$	6,882			$	6,556			$	6,361
Performing		15,361				7,645				7,516				7,619				7,530
Total modification to borrowers experiencing financial difficulty(2)	$	21,781			$	14,324			$	14,398			$	14,175			$	13,891
Allowance for loan credit losses	$	67,137			$	63,877			$	61,791			$	60,195			$	56,824
Allowance for loan credit losses as a percent of total loans receivable(3)		0.66	%			0.63	%			0.61	%			0.60	%			0.57	%
Allowance for loan credit losses as a percent of total non-performing loans(3)		227.21				212.23				271.51				268.28				244.25
Non-performing loans as a percent of total loans receivable		0.29				0.30				0.23				0.22				0.23
Non-performing assets as a percent of total assets		0.22				0.22				0.17				0.17				0.18
Supplemental PCD and non-performing loans
PCD loans, net of allowance for loan credit losses	$	16,122			$	18,640			$	18,872			$	20,513			$	27,129
Non-performing PCD loans		3,183				3,177				3,171				3,929				3,944
Delinquent PCD and non-performing loans 30 to 89 days		1,516				13,007				1,976				2,248				3,657
PCD modifications to borrowers experiencing financial difficulty(2)		771				750				755				758				765
Asset quality, excluding PCD loans(4)
Non-performing loans		26,365				26,921				19,587				18,508				19,321
Delinquent loans 30 to 89 days (excludes non-performing loans)		17,686				7,584				1,160				8,984				10,491
Modification to borrowers experiencing financial difficulty(2)		21,010				13,574				13,643				13,417				13,126
Allowance for loan credit losses as a percent of total non-performing loans(3)		254.64	%			237.28	%			315.47	%			325.24	%			294.10	%
Non-performing loans as a percent of total loans receivable		0.26				0.27				0.19				0.18				0.19
Non-performing assets as a percent of total assets		0.19				0.20				0.14				0.14				0.15

(1)	At December 31, 2023 and September 30, 2023, non-performing loans included the remaining exposure of $8.8 million on a commercial real estate relationship that was partially 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 the 2022 period, the balances represent only 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 $7.5 million, $8.8 million, $9.8 million, $10.5 million, and $11.4 million at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.
(4)	All balances and ratios exclude PCD loans.

NET LOAN (CHARGE-OFFS) RECOVERIES		For the Three Months Ended
		December 31, 2023				September 30,2023				June 30,2023				March 31,2023				December 31,2022
Net loan (charge-offs) recoveries:
Loan charge-offs		$	(98	)		$	(8,379	)		$	(206	)		$	(10	)		$	(138	)
Recoveries on loans			63				108				83				57				143
Net loan (charge-offs) recoveries		$	(35	)		$	(8,271	)		$	(123	)		$	47			$	5
Net loan (charge-offs) recoveries to average total loans (annualized)			—	%			0.33	%			—	%		NM*				NM*
Net loan (charge-offs) recoveries detail:
Commercial		$	9			$	(8,332	)		$	(117	)		$	—			$	(46	)
Residential real estate			9				17				9				8				9
Other consumer			(53	)			44				(15	)			39				42
Net loan (charge-offs) recoveries		$	(35	)		$	(8,271	)		$	(123	)		$	47			$	5

* Not meaningful as amounts are net loan recoveries.

OceanFirst Financial Corp.ANALYSIS OF NET INTEREST INCOME

	For the Three Months Ended
	December 31, 2023										September 30, 2023										December 31, 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	$	396,843			$	5,423		5.42	%		$	470,825			$	6,440		5.43	%		$	70,023			$	634		3.59	%
Securities(2)		1,863,136				17,901		3.81				1,873,450				18,039		3.82				1,764,764				12,597		2.83
Loans receivable, net(3)
Commercial		6,937,191				105,260		6.02				6,923,743				103,069		5.91				6,715,896				88,991		5.26
Residential real estate		2,957,671				27,934		3.78				2,918,612				26,765		3.67				2,841,073				24,532		3.45
Other consumer		250,300				3,916		6.21				252,126				4,097		6.45				262,911				3,523		5.32
Allowance for loan credit losses, net of deferred loan costs and fees		(56,001	)			—		—				(53,959	)			—		—				(48,776	)			—		—
Loans receivable, net		10,089,161				137,110		5.40				10,040,522				133,931		5.30				9,771,104				117,046		4.76
Total interest-earning assets		12,349,140				160,434		5.16				12,384,797				158,410		5.08				11,605,891				130,277		4.46
Non-interest-earning assets		1,243,967										1,252,416										1,228,520
Total assets	$	13,593,107									$	13,637,213									$	12,834,411
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing checking	$	3,908,517				19,728		2.00	%		$	3,692,500				14,938		1.61	%		$	3,989,403				4,911		0.49	%
Money market		941,859				7,520		3.17				832,729				5,698		2.71				738,637				917		0.49
Savings		1,446,935				5,193		1.42				1,391,811				3,311		0.94				1,539,175				285		0.07
Time deposits		2,596,706				27,026		4.13				2,867,921				29,340		4.06				1,486,410				7,312		1.95
Total		8,894,017				59,467		2.65				8,784,961				53,287		2.41				7,753,625				13,425		0.69
FHLB advances		615,172				7,470		4.82				701,343				8,707		4.93				632,207				6,475		4.06
Securities sold under agreements to repurchase		80,181				387		1.91				76,620				261		1.35				88,191				41		0.18
Other borrowings(4)		321,369				5,286		6.53				317,210				5,159		6.45				195,167				3,848		7.82
Total borrowings		1,016,722				13,143		5.13				1,095,173				14,127		5.12				915,565				10,364		4.49
Total interest-bearing liabilities		9,910,739				72,610		2.91				9,880,134				67,414		2.71				8,669,190				23,789		1.09
Non-interest-bearing deposits		1,739,499										1,841,198										2,221,884
Non-interest-bearing liabilities(4)		292,170										272,982										378,481
Total liabilities		11,942,408										11,994,314										11,269,555
Stockholders’ equity		1,650,699										1,642,899										1,564,856
Total liabilities and equity	$	13,593,107									$	13,637,213									$	12,834,411
Net interest income					$	87,824									$	90,996									$	106,488
Net interest rate spread(5)								2.25	%									2.37	%									3.37	%
Net interest margin(6)								2.82	%									2.91	%									3.64	%
Total cost of deposits (including non-interest-bearing deposits)								2.22	%									1.99	%									0.53	%

		For the Year Ended
		December 31, 2023										December 31, 2022
(dollars in thousands)		AverageBalance				Interest			AverageYield/Cost			AverageBalance				Interest			AverageYield/Cost
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments		$	327,539			$	17,084		5.22	%		$	72,913			$	1,106		1.52	%
Securities (2)			1,905,413				69,025		3.62				1,792,598				39,683		2.21
Loans receivable, net (3)
Commercial			6,903,731				400,459		5.80				6,386,755				287,044		4.49
Residential real estate			2,911,246				105,796		3.63				2,724,398				91,432		3.36
Other consumer			255,359				15,610		6.11				256,912				11,910		4.64
Allowance for loan credit losses, net of deferred loan costs and fees			(53,477	)			—		—				(44,446	)			—		—
Loans receivable, net			10,016,859				521,865		5.21				9,323,619				390,386		4.19
Total interest-earning assets			12,249,811				607,974		4.96				11,189,130				431,175		3.85
Non-interest-earning assets			1,237,218										1,200,725
Total assets		$	13,487,029									$	12,389,855
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing checking		$	3,795,502				52,898		1.39	%		$	4,063,716				11,344		0.28	%
Money market			794,387				18,656		2.35				764,837				2,234		0.29
Savings			1,364,333				9,227		0.68				1,597,648				758		0.05
Time deposits			2,440,829				91,237		3.74				1,167,499				16,685		1.43
Total			8,395,051				172,018		2.05				7,593,700				31,021		0.41
FHLB advances			944,219				46,000		4.87				389,750				10,365		2.66
Securities sold under agreements to repurchase			75,140				931		1.24				101,377				159		0.16
Other borrowings (4)			307,368				19,294		6.28				203,117				12,153		5.98
Total borrowings			1,326,727				66,225		4.99				694,244				22,677		3.27
Total interest-bearing liabilities			9,721,778				238,243		2.45				8,287,944				53,698		0.65
Non-interest-bearing deposits			1,869,735										2,319,657
Non-interest-bearing liabilities (4)			262,883										239,861
Total liabilities			11,854,396										10,847,462
Stockholders’ equity			1,632,633										1,542,393
Total liabilities and equity		$	13,487,029									$	12,389,855
Net interest income						$	369,731									$	377,477
Net interest rate spread (5)									2.51	%									3.20	%
Net interest margin (6)									3.02	%									3.37	%
Total cost of deposits (including non-interest-bearing deposits)									1.68	%									0.31	%

(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)

		December 31, 2023			September 30,2023			June 30,2023			March 31,2023			December 31,2022
Selected Financial Condition Data:
Total assets		$	13,538,253		$	13,498,183		$	13,538,903		$	13,555,175		$	13,103,896
Debt securities available-for-sale, at estimated fair value			753,892			453,208			452,016			452,195			457,648
Debt securities held-to-maturity, net of allowance for securities credit losses			1,159,735			1,189,339			1,222,507			1,245,424			1,221,138
Equity investments			100,163			97,908			96,452			101,007			102,037
Restricted equity investments, at cost			93,766			82,484			105,305			115,750			109,278
Loans receivable, net of allowance for loan credit losses			10,136,721			10,068,156			10,030,106			9,986,949			9,868,718
Deposits			10,434,949			10,533,929			10,158,337			9,993,095			9,675,206
Federal Home Loan Bank advances			848,636			606,056			1,091,666			1,346,566			1,211,166
Securities sold under agreements to repurchase and other borrowings			269,604			279,164			270,377			266,601			264,500
Total stockholders’ equity			1,661,945			1,637,604			1,626,283			1,610,371			1,585,464

		For the Three Months Ended
		December 31, 2023			September 30,2023				June 30,2023				March 31,2023				December 31,2022
Selected Operating Data:
Interest income		$	160,434		$	158,410			$	150,096			$	139,034			$	130,277
Interest expense			72,610			67,414				57,987				40,232				23,789
Net interest income			87,824			90,996				92,109				98,802				106,488
Provision for credit losses			3,153			10,283				1,229				3,013				3,647
Net interest income after provision for credit losses			84,671			80,713				90,880				95,789				102,841
Other income (excluding activity related to debt and equity investments)			9,685			9,310				9,487				9,571				10,364
Net gain (loss) on equity investments			2,176			1,452				(559	)			(2,193	)			17,187
Net loss on sale of investments			—			—				—				(5,305	)			—
Operating expenses (excluding FDIC special assessment, merger related and branch consolidation expense, net)			58,526			64,484				62,930				61,217				59,341
FDIC special assessment			1,663			—				—				—				—
Branch consolidation expense, net			—			—				—				70				111
Merger related expenses			—			—				—				22				276
Income before provision for income taxes			36,343			26,991				36,878				36,553				70,664
Provision for income taxes			8,591			6,459				8,996				8,654				17,353
Net income			27,752			20,532				27,882				27,899				53,311
Net income (loss) attributable to non-controlling interest			70			(135	)			85				16				39
Net income attributable to OceanFirst Financial Corp.		$	27,682		$	20,667			$	27,797			$	27,883			$	53,272
Net income available to common stockholders		$	26,678		$	19,663			$	26,793			$	26,879			$	52,268
Diluted earnings per share		$	0.46		$	0.33			$	0.45			$	0.46			$	0.89
Net accretion/amortization of purchase accounting adjustments included in net interest income		$	1,604		$	1,745			$	1,152			$	1,237			$	2,278

		At or For the Three Months Ended
		December 31, 2023			September 30,2023			June 30,2023			March 31,2023			December 31,2022
Selected Financial Ratios and Other Data (1) (2):
Performance Ratios (Annualized):
Return on average assets (3)		0.78	%		0.57	%		0.80	%		0.82	%		1.62	%
Return on average tangible assets (3) (4)		0.81			0.59			0.83			0.86			1.68
Return on average stockholders' equity (3)		6.41			4.75			6.61			6.77			13.25
Return on average tangible stockholders' equity (3) (4)		9.33			6.93			9.70			10.00			19.85
Return on average tangible common equity (3) (4)		9.81			7.29			10.21			10.53			20.97
Stockholders' equity to total assets		12.28			12.13			12.01			11.88			12.10
Tangible stockholders' equity to tangible assets (4)		8.80			8.64			8.51			8.37			8.47
Tangible common equity to tangible assets (4)		8.38			8.21			8.09			7.95			8.03
Net interest rate spread		2.25			2.37			2.52			2.94			3.37
Net interest margin		2.82			2.91			3.02			3.34			3.64
Operating expenses to average assets		1.76			1.88			1.87			1.88			1.85
Efficiency ratio (5)		60.38			63.37			62.28			60.78			44.56
Loans-to-deposits		97.70			96.10			99.30			100.50			102.50

		At or For the Year Ended December 31,
		2023			2022
Performance Ratios:
Return on average assets (3)		0.74	%		1.15	%
Return on average tangible assets (3) (4)		0.77			1.20
Return on average stockholders' equity (3)		6.13			9.24
Return on average tangible stockholders' equity (3) (4)		8.97			13.96
Return on average tangible common equity (3) (4)		9.44			14.76
Net interest rate spread		2.51			3.20
Net interest margin		3.02			3.37
Operating expenses to average assets		1.85			1.90
Efficiency ratio (5)		61.71			53.80

		At or For the Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
			2023				2023				2023				2023				2022
Trust and Asset Management:
Wealth assets under administration and management (“AUA/M”)		$	335,769			$	336,913			$	339,890			$	333,436			$	324,066
Nest Egg AUA/M			401,420				385,317				397,927				400,227				403,538
Total AUA/M			737,189				722,230				737,817				733,663				727,604
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			27.96				27.56				27.37				27.07				26.81
Tangible book value per common share at end of period (4)			18.35				17.93				17.72				17.42				17.08
Common shares outstanding at end of period			59,447,684				59,421,498				59,420,859				59,486,086				59,144,128
Preferred shares outstanding at end of period			57,370				57,370				57,370				57,370				57,370
Number of full-service customer facilities:			39				38				38				38				38
Quarterly Average Balances
Total securities		$	1,863,136			$	1,873,450			$	1,931,032			$	1,955,399			$	1,764,764
Loans receivable, net			10,089,161				10,040,522				10,010,785				9,924,905				9,771,104
Total interest-earning assets			12,349,140				12,384,797				12,250,055				12,010,044				11,605,891
Total goodwill and core deposit intangible			516,289				517,282				518,265				519,282				520,400
Total assets			13,593,107				13,637,213				13,467,721				13,244,593				12,834,411
Time deposits			2,596,706				2,867,921				2,458,872				1,826,662				1,486,410
Total deposits (including non-interest-bearing deposits)			10,633,516				10,626,159				9,993,010				9,793,256				9,975,509
Total borrowings			1,016,722				1,095,173				1,603,126				1,600,845				915,565
Total interest-bearing liabilities			9,910,739				9,880,134				9,722,910				9,365,594				8,669,190
Non-interest bearing deposits			1,739,499				1,841,198				1,873,226				2,028,507				2,221,884
Stockholders’ equity			1,650,699				1,642,899				1,626,693				1,609,677				1,564,856
Tangible stockholders’ equity (4)			1,134,410				1,125,617				1,108,428				1,090,395				1,044,456
Quarterly Yields and Costs
Total securities			3.81	%			3.82	%			3.47	%			3.40	%			2.83	%
Loans receivable, net			5.40				5.30				5.17				4.96				4.76
Total interest-earning assets			5.16				5.08				4.91				4.68				4.46
Time deposits			4.13				4.06				3.57				2.88				1.95
Total cost of deposits (including non-interest-bearing deposits)			2.22				1.99				1.52				0.88				0.53
Total borrowed funds			5.13				5.12				5.02				4.79				4.49
Total interest-bearing liabilities			2.91				2.71				2.39				1.74				1.09
Net interest spread			2.25				2.37				2.52				2.94				3.37
Net interest margin			2.82				2.91				3.02				3.34				3.64

(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
		December 31, 2023				September 30,2023				June 30,2023				March 31,2023				December 31,2022
Core Earnings:
Net income available to common stockholders (GAAP)		$	26,678			$	19,663			$	26,793			$	26,879			$	52,268
(Less) add non-recurring and non-core items:
Net (gain) loss on equity investments (1)			(2,176	)			(1,452	)			559				2,193				(17,187	)
Net loss on sale of investments (1)			—				—				—				5,305				—
FDIC special assessment			1,663				—				—				—				—
Merger related expenses			—				—				—				22				276
Branch consolidation expense, net			—				—				—				70				111
Income tax expense (benefit) on items			129				351				(162	)			(1,797	)			4,060
Core earnings (Non-GAAP)		$	26,294			$	18,562			$	27,190			$	32,672			$	39,528
Income tax expense		$	8,591			$	6,459			$	8,996			$	8,654			$	17,353
Provision for credit losses			3,153				10,283				1,229				3,013				3,647
Less: income tax expense (benefit) on non-core items			129				351				(162	)			(1,797	)			4,060
Core earnings PTPP (Non-GAAP)		$	37,909			$	34,953			$	37,577			$	46,136			$	56,468
Core diluted earnings per share		$	0.45			$	0.32			$	0.46			$	0.55			$	0.67
Core earnings PTPP diluted earnings per share		$	0.65			$	0.59			$	0.64			$	0.78			$	0.96
Core Ratios (Annualized):
Return on average assets			0.77	%			0.54	%			0.81	%			1.00	%			1.22	%
Return on average tangible stockholders’ equity			9.20				6.54				9.84				12.15				15.01
Return on average tangible common equity			9.67				6.88				10.36				12.80				15.86
Efficiency ratio			60.02				64.29				61.94				56.49				50.78

(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 Years Ended December 31,
			2023				2022
Core Earnings:
Net income available to common stockholders (GAAP)		$	100,013			$	142,587
(Less) add non-recurring and non-core items:
Net gain on equity investments (1)			(876	)			(9,685	)
Net loss on sale of investments (1)			5,305				—
FDIC special assessment			1,663				—
Merger related expenses			22				2,735
Branch consolidation expense, net			70				713
Income tax (benefit) expense on items			(1,479	)			1,611
Core earnings (Non-GAAP)		$	104,718			$	137,961
Income tax expense		$	32,700			$	46,565
Credit loss provision			17,678				7,768
Less: income tax (benefit) expense on non-core items			(1,479	)			1,611
Core earnings PTPP (Non-GAAP)		$	156,575			$	190,683
Core diluted earnings per share		$	1.78			$	2.34
Core earnings PTPP diluted earnings per share		$	2.66			$	3.24
Core Ratios:
Return on average assets			0.78	%			1.11	%
Return on average tangible stockholders’ equity			9.39				13.50
Return on average tangible common equity			9.89				14.28
Efficiency ratio			60.61				54.21

(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.

		December 31,				September 30,				June 30,				March 31,				December 31,
			2023				2023				2023				2023				2022
Tangible Equity:
Total stockholders' equity		$	1,661,945			$	1,637,604			$	1,626,283			$	1,610,371			$	1,585,464
Less:
Goodwill			506,146				506,146				506,146				506,146				506,146
Core deposit intangible			9,513				10,489				11,476				12,470				13,497
Tangible stockholders’ equity			1,146,286				1,120,969				1,108,661				1,091,755				1,065,821
Less:
Preferred stock			55,527				55,527				55,527				55,527				55,527
Tangible common equity		$	1,090,759			$	1,065,442			$	1,053,134			$	1,036,228			$	1,010,294
Tangible Assets:
Total assets		$	13,538,253			$	13,498,183			$	13,538,903			$	13,555,175			$	13,103,896
Less:
Goodwill			506,146				506,146				506,146				506,146				506,146
Core deposit intangible			9,513				10,489				11,476				12,470				13,497
Tangible assets		$	13,022,594			$	12,981,548			$	13,021,281			$	13,036,559			$	12,584,253
Tangible stockholders' equity to tangible assets			8.80	%			8.64	%			8.51	%			8.37	%			8.47	%
Tangible common equity to tangible assets			8.38	%			8.21	%			8.09	%			7.95	%			8.03	%

Company Contact:

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