OceanFirst Financial Corp. Announces Second Quarter Earnings and Financial Results

About this update from Oceanfirst Financial Corp.

RED BANK, N.J. , July 23, 2020 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:“OCFC”), (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), today announced that net income was $18.6 million , or $0.31 per diluted share, for the three months ended June 30, 2020 , as compared to $19.0 million , or $0.37 per diluted share, for the corresponding prior year period. For the six months ended June 30, 2020 , net income was $35.2 million , or $0.58 per diluted share, as compared to $40.2 million , or $0.79 per diluted share, for the corresponding prior year period. The results of operations for the three months ended June 30, 2020 include merger related and branch consolidation expenses, which decreased net income, net of tax benefit, by $3.0 million . Results of operations for the six months ended June 30, 2020 include merger related expenses, branch consolidation expenses, and the Two River Bancorp (“Two River”) and Country Bank Holding Company, Inc. (“Country Bank”) opening credit loss expense under the Current Expected Credit Loss (“CECL”) model, which decreased net income, net of tax benefit, by $13.4 million . Excluding these items, core earnings for the three and six months ended June 30, 2020 were $21.6 million , or $0.36 per diluted share, and $48.6 million , or $0.81 per diluted share, respectively. (Please refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of merger related, branch consolidation, and the Two River and Country Bank opening credit loss expenses). The quarter and year to date results were also impacted by the COVID-19 outbreak, through both higher credit loss expense and increased operating expense. Highlights for the quarter are described below: Loans & Deposits: Drove record loan and deposit growth, including quarterly originations of $975 million , which included $504 million of Paycheck Protection Program (“PPP”) loans and total loan growth of $450 million after loan sales of $110 million . Deposits increased by $1.076 billion , driven by deposits from PPP borrowers of $504 million , ordinary course growth of $291 million , and short-term brokered deposits of $281 million . Capital: Bolstered a strong balance sheet with the addition of $181 million of subordinated notes and non-cumulative perpetual preferred stock. The increased capital further strengthened resources available to the Bank while credit metrics, including delinquencies, forbearances, and net charge-offs all evidenced significant positive trends. Operating Expenses: Improved operating leverage with the consolidation of thirteen branch locations, eight of which were driven by the completed integration of the Two River acquisition bringing the total number of branches consolidated over the past four years to 53. These consolidations increased the average branch size to $145 million and will help reduce operating expenses beginning in the third quarter. COVID-19: The Company’s second quarter results were adversely impacted by the COVID-19 pandemic, including an elevated credit loss provision of $9.6 million and an additional $1.1 million in operating expense. Chairman and Chief Executive Officer, Christopher D. Maher , commented on the Company’s results, “The second quarter results included strong loan and deposit growth as we continued to serve our communities at a very difficult time. We facilitated $504 million in PPP loans, assisting local businesses and supporting 57,000 jobs.” Mr. Maher added, “The continuing national health crisis may weigh on results in future quarters, but we are exceptionally proud of our customers in New Jersey , New York , and Pennsylvania , who have worked with public health experts to bring the local epidemic under control and to begin a responsible and sustainable restart of our regional economy. The second quarter capital raise and the integration of the Two River acquisition have placed our Company in an advantageous position to face the future.” The Company announced that the Company’s Board of Directors declared its ninety-fourth consecutive quarterly cash dividend on common stock. The dividend, related to the three months ended June 30, 2020 , of $0.17 per share will be paid on August 14, 2020 to stockholders of record on August 3, 2020 . Results of Operations On January 31, 2019 , the Company completed its acquisition of Capital Bank of New Jersey (“Capital Bank”) and its results of operations are included in the consolidated results for the three and six months ended June 30, 2020 , but are excluded from the results of operations for the period from January 1, 2019 to January 31, 2019 . On January 1, 2020 , the Company completed its acquisitions of Two River and Country Bank and their respective results of operations from January 1, 2020 through June 30, 2020 are included in the consolidated results for the three and six months ended June 30, 2020, but are not included in the results of operations for the corresponding prior year periods. Net income for the three months ended June 30, 2020 was $18.6 million , or $0.31 per diluted share, as compared to $19.0 million , or $0.37 per diluted share, for the corresponding prior year period. Net income for the six months ended June 30, 2020 was $35.2 million , or $0.58 per diluted share, as compared to $40.2 million , or $0.79 per diluted share, for the corresponding prior year period. Net income for the three months ended June 30, 2020 included merger related and branch consolidation expenses, which decreased net income, net of tax benefit, by $3.0 million . Net income for the six months ended June 30, 2020 included merger related expenses, branch consolidation expenses, and the Two River and Country Bank opening credit loss expense under the CECL model, which decreased net income, net of tax benefit, by $13.4 million . Net income for the three and six months ended June 30, 2019 included merger related expenses, branch consolidation expenses, and compensation expense due to the retirement of an executive officer, which decreased net income, net of tax benefit, by $7.0 million and $11.4 million, respectively. Excluding these items, net income for the three and six months ended June 30, 2020 was $21.6 million and $48.6 million , respectively, a decrease from $26.0 million and $51.6 million for the same prior year periods, respectively, primarily due to the adverse impact of the COVID-19 outbreak. Net interest income for the three and six months ended June 30, 2020 increased to $78.7 million , and $158.3 million , as compared to $64.8 million and $129.2 million for the same prior year periods, respectively, reflecting an increase in interest-earning assets, partly offset by a reduction in net interest margin. Average interest-earning assets increased by $2.684 billion and $2.435 billion for the three and six months ended June 30, 2020 , respectively, as compared to the same prior year periods. The averages for the three and six months ended June 30, 2020 were favorably impacted by $1.815 billion and $1.793 billion , respectively, of interest-earning assets acquired from Two River and Country Bank and $373.7 million and $186.8 million , respectively, of PPP loans. Average loans receivable, net, increased by $2.347 billion and $2.215 billion for the three and six months ended June 30, 2020 , respectively, as compared to the same prior year periods. The increases attributable to the acquisitions of Two River and Country Bank for the three and six months ended June 30, 2020 were $1.606 billion and $1.581 billion , respectively. The net interest margin for the three and six months ended June 30, 2020 decreased to 3.24% and 3.37%, respectively, from 3.66% and 3.72%, respectively, for the same prior year periods. The compression in net interest margin is primarily due to the lower interest rate environment, the origination of low-yielding PPP loans, and the excess balance sheet liquidity which the Company strategically accumulated entering the economic downturn. For the three months ended June 30, 2020 , the cost of average interest-bearing liabilities decreased to 0.92% from 0.98% in the corresponding prior year period. For the six months ended June 30, 2020 , the cost of average interest-bearing liabilities increased to 0.98% from 0.94%, in the corresponding prior year period. The total cost of deposits (including non-interest bearing deposits) was 0.57% and 0.63% for the three and six months ended June 30, 2020 , respectively, as compared to 0.62% and 0.60%, respectively, in the same prior year periods. Net interest income for the three months ended June 30, 2020 , decreased by $1.0 million , as compared to the prior linked quarter, as the net interest margin decreased to 3.24% as compared to 3.52% for the prior linked quarter. The yield on average interest-earning assets decreased to 3.94% from 4.34% in the prior linked quarter, primarily due to the lower interest rate environment, the origination of low-yielding PPP loans, and the excess balance sheet liquidity which the Company strategically accumulated entering the economic downturn. The total cost of deposits (including non-interest bearing deposits) was 0.57% for the three months ended June 30, 2020 , as compared to 0.70% for the three months ended March 31, 2020 . The decrease in total cost of deposits is primarily due to the repricing of deposits acquired from Two River and Country Bank and the growth in business deposits relating to PPP originations. For the three and six months ended June 30, 2020 , the credit loss expense was $9.6 million and $19.6 million , respectively, as compared to $356,000 and $976,000 , respectively, for the corresponding prior year periods, and $10.0 million in the prior linked quarter. Net loan recoveries were $232,000 for the quarter and net loan charge-offs were $922,000 for the six months ended June 30, 2020 , as compared to net loan charge-offs of $926,000 and $1.4 million in the corresponding prior year periods, and $1.2 million in the prior linked quarter. The prior linked quarter included $949,000 in charge-offs on the sale of higher risk residential loans. Non-performing loans totaled $21.0 million at June 30, 2020 , as compared to $16.3 million at March 31, 2020 and $17.8 million at June 30, 2019 . Credit expense for the three and six months ended June 30, 2020 was significantly influenced by economic conditions related to the COVID-19 outbreak and estimates of how those conditions may impact the Company’s customers. As a result of the COVID-19 outbreak, loans under forbearance totaled $1.5 billion at June 30, 2020 . The forbearance pool is expected to decrease substantially as borrowers are beginning to return to monthly payments. As of July 15, 2020 , borrowers with balances totaling $650 million have indicated to the Bank that they will return to regular monthly payments. Due to the U.S. government guarantee on PPP loans, there is no credit allowance on these loans. Refer to exhibits filed with the earnings release on Form 8-K for detailed information on credit loss expense and loans under forbearance agreements. For the three and six months ended June 30, 2020 , other income increased to $11.4 million and $25.1 million , respectively, as compared to $9.9 million and $19.4 million , respectively, for the corresponding prior year periods. Excluding the Two River and Country Bank acquisitions which added $692,000 , the increase in other income for the three months ended June 30, 2020 was due to an increase in commercial loan swap income of $1.9 million , and an increase in the net gain on sales of loans of $619,000 , partially offset by lower fees and service charges of $1.7 million , as compared to the corresponding prior year period. For the six months ended June 30, 2020 , excluding the Two River and Country Bank acquisitions which added $1.4 million , the increase in other income was due to the increase in commercial swap income of $5.5 million , and an increase in the net gain on sales of loans of $733,000 , partially offset by decreases in fees and service charges of $1.8 million . The waiver of certain fees during the COVID-19 pandemic may continue to suppress deposit fee income for the remainder of the public health crisis. For the three months ended June 30, 2020 , other income decreased by $2.3 million , as compared to the prior linked quarter. The decrease was primarily due to lower fees and service charges of $1.6 million and lower commercial loan swap income of $1.6 million , partially offset by an increase in the net gain on sale of loans of $583,000 . Operating expenses increased to $55.9 million and $118.7 million for the three and six months ended June 30, 2020 , respectively, as compared to $50.9 million and $98.2 million , respectively, in the same prior year periods. Operating expenses for the three and six months ended June 30, 2020 included $3.9 million and $15.1 million , respectively, of merger related and branch consolidation expenses, as compared to $8.9 million and $14.3 million of merger related expenses, branch consolidation expenses, and compensation expense due to the retirement of an executive officer, respectively, in the same prior year periods. Excluding the impact of merger related expenses, branch consolidation expenses, and compensation expense due to the retirement of an executive officer, the change in operating expenses over the prior year was due to the Two River and Country Bank acquisitions, which added $7.6 million and $16.1 million , respectively, for the three and six months ended June 30, 2020 . The remaining increase in operating expenses for the three months ended June 30, 2020 was primarily due to a Federal Home Loan Bank (“FHLB”) prepayment penalty fee of $924,000 and expenses related to COVID-19 of $1.1 million . The increase in operating expenses for the six months ended June 30, 2020 was primarily due to a FHLB prepayment penalty fee of $924,000 and expenses related to COVID-19 of $2.1 million . For the three months ended June 30, 2020 , operating expenses increased by $324,000 , as compared to the prior linked quarter, excluding merger related and branch consolidation expenses. The increase was due to a FHLB prepayment penalty fee of $924,000 . The provision for income taxes was $5.9 million and $9.9 million for the three and six months ended June 30, 2020 , respectively, as compared to $4.5 million and $9.3 million , respectively, for the same prior year periods. The effective tax rate was 24.0% and 22.0% for the three and six months ended June 30, 2020 , respectively, as compared to 19.0% and 18.8%, respectively, for the same prior year periods. The higher effective tax rate in the current year period is primarily due to the impact of a New Jersey tax code change and a higher allocation of taxable income to New York due to the acquisition of Country Bank . Financial Condition Total assets increased by $3.099 billion , to $11.345 billion at June 30, 2020 , from $8.246 billion at December 31, 2019 , primarily as a result of the acquisitions of Two River and Country Bank , which added $2.031 billion to total assets. Cash and due from banks increased by $600.5 million , to $721.0 million at June 30, 2020 , from $120.5 million at December 31, 2019 , due to the Company’s decision to build liquidity during the economic downturn and the cash received from the issuance of subordinated notes and non-cumulative perpetual preferred stock as described below. Loans receivable, net of allowance for credit losses, increased by $2.128 billion , to $8.335 billion at June 30, 2020 , from $6.208 billion at December 31, 2019 , due to acquired loans from Two River and Country Bank of $1.558 billion coupled with strong organic loan growth. As part of the acquisitions of Two River and Country Bank , the Company’s goodwill balance increased to $501.5 million at June 30, 2020 , from $374.6 million at December 31, 2019 and the core deposit intangible increased to $26.7 million , from $15.6 million . Other assets increased by $57.1 million to $226.6 million at June 30, 2020 , from $169.5 million at December 31, 2019 , primarily due to the increase in swap positions. Deposits increased by $2.639 billion , to $8.968 billion at June 30, 2020 , from $6.329 billion at December 31, 2019 , primarily due to acquired deposits from Two River and Country Bank of $1.594 billion . The loan-to-deposit ratio at June 30, 2020 was 93.4%, as compared to 98.2% at December 31, 2019 . The deposit growth funded a decrease in FHLB advances of $175.9 million to $343.4 million at June 30, 2020 , from $519.3 million at December 31, 2019 . The increase in other borrowings of $150.0 million to $246.8 million at June 30, 2020 , from $96.8 million at December 31, 2019 , primarily resulted from the May 2020 issuance of $125.0 million in subordinated notes at an initial rate of 5.25% and a stated maturity of May 15, 2030 . Other liabilities increased by $76.0 million to $138.5 million at June 30, 2020 , from $62.6 million at December 31, 2019 , primarily due to the increase in swap positions. Stockholders’ equity increased to $1.476 billion at June 30, 2020 , as compared to $1.153 billion at December 31, 2019 . The acquisitions of Two River and Country Bank added $261.4 million to stockholders’ equity. During the three months ended June 30, 2020 , the Company raised $55.7 million from the issuance of 7.0% fixed-to-floating rate non-cumulative perpetual preferred stock, with a par value of $0.01 and a liquidation price of $1,000 per share. Under the Company’s stock repurchase program, there were 2,019,145 shares available for repurchase at June 30, 2020 . The Company suspended its repurchase activity on February 28, 2020 . For the six months ended June 30, 2020 , the Company repurchased 648,851 shares under the repurchase program at a weighted average cost of $22.83 . Tangible common stockholders’ equity per common share increased to $14.79 at June 30, 2020 , as compared to $14.62 at March 31, 2020 . Asset Quality The Company’s non-performing loans increased to $21.0 million at June 30, 2020 , as compared to $17.8 million at December 31, 2019 . Non-performing loans do not include $61.7 million of purchased with credit deterioration (“PCD”) loans acquired in the Two River, Country Bank , Capital Bank , Sun Bancorp, Inc. (“Sun”), Ocean Shore Holding Co. (“Ocean Shore”), Cape Bancorp, Inc. (“Cape”), and Colonial American Bank (“Colonial American”) acquisitions (“Acquisition Transactions”). The Company’s other real estate owned totaled $248,000 at June 30, 2020 , as compared to $264,000 at December 31, 2019 . At June 30, 2020 , the Company had outstanding loans under forbearance of $1.5 billion . As of July 15, 2020 , customers with balances totaling $650 million have indicated to the Bank that they will return to regular monthly payments. Refer to exhibits filed with the earnings release on Form 8-K for detailed information on credit loss expense and loans subject to forbearance. At June 30, 2020 , the Company’s allowance for credit losses was 0.46% of total loans, an increase from 0.27% at December 31, 2019 . The allowance for credit losses as a percentage of total non-performing loans was 183.0% at June 30, 2020 , as compared to 94.4% at December 31, 2019 . Explanation of Non-GAAP Financial Measures Reported amounts are presented in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding merger related expenses, branch consolidation expenses, Two River and Country Bank opening credit loss expense under the CECL model, non-recurring professional fees, compensation expense due to the retirement of an executive officer, and reduction in income tax expense from the revaluation of state deferred tax assets as a result of a change in the New Jersey tax code, which can vary from period to period, provides a better comparison of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Please refer to Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items. Conference Call As previously announced, the Company will host an earnings conference call on Friday, July 24, 2020 at 11:00 a.m. Eastern Time . The direct dial number for the call is (888) 338-7143. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (877) 344-7529, Replay Conference Number 10145712 from one hour after the end of the call until October 30, 2020 . 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 $11.3 billion regional bank operating throughout New Jersey , metropolitan Philadelphia and metropolitan New York City. OceanFirst Bank delivers commercial and residential financing solutions, trust and asset management and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey . OceanFirst Financial Corp.’s press releases are available by visiting us at www.oceanfirst.com . Forward-Looking Statements In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: the impact of the COVID-19 pandemic on our operations and financial results and those of our customers, changes in interest rates, general economic conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters and increases to flood insurance premiums, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System , the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area, accounting principles and guidelines and the Bank’s ability to successfully integrate acquired operations. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 , 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. Company Contact: Michael J. Fitzpatrick Chief Financial Officer OceanFirst Financial Corp. Tel: (732) 240-4500, ext. 7506 Email: [email protected] OceanFirst Financial Corp . CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (dollars in thousands, except per share amounts) June 30 , 2020 March 31 , 2020 December 31 , 2019 June 30 , 2019 (Unaudited) (Unaudited) (Unaudited) Assets Cash and due from banks $ 721,049 $ 256,470 $ 120,544 $ 148,327 Debt securities available-for-sale, at estimated fair value 153,239 153,738 150,960 123,610 Debt securities held-to-maturity, net of allowance for credit losses of $2,446 at June 30, 2020 and $2,529 at March 31, 2020 (estimated fair value of $895,897 at June 30, 2020 , $928,582 at March 31, 2020 , $777,290 at December 31, 2019 and $869,167 at June 30, 2019 ) 867,959 914,255 768,873 863,838 Equity investments, at estimated fair value 13,830 14,409 10,136 10,002 Restricted equity investments, at cost 68,091 81,005 62,356 59,425 Loans receivable, net of allowance for credit losses of $38,509 at June 30, 2020 , $29,635 at March 31, 2020 , $16,852 at December 31, 2019 and $16,135 at June 30, 2019 8,335,480 7,913,541 6,207,680 5,943,930 Loans held-for-sale 21,799 17,782 — — Interest and dividends receivable 37,811 27,930 21,674 22,106 Other real estate owned 248 484 264 865 Premises and equipment, net 100,576 104,560 102,691 105,853 Bank Owned Life Insurance 262,637 261,270 237,411 235,162 Assets held for sale 7,828 3,785 3,785 4,198 Goodwill 501,472 500,093 374,632 374,592 Core deposit intangible 26,732 28,276 15,607 17,614 Other assets 226,614 211,476 169,532 119,535 Total assets $ 11,345,365 $ 10,489,074 $ 8,246,145 $ 8,029,057 Liabilities and Stockholders’ Equity Deposits $ 8,967,754 $ 7,892,067 $ 6,328,777 $ 6,187,487 Federal Home Loan Bank advances 343,392 825,824 519,260 453,646 Securities sold under agreements to repurchase with retail customers 152,821 90,175 71,739 62,086 Other borrowings 246,840 120,213 96,801 96,533 Advances by borrowers for taxes and insurance 19,582 24,931 13,884 14,817 Other liabilities 138,542 126,030 62,565 77,193 Total liabilities 9,868,931 9,079,240 7,093,026 6,891,762 Total stockholders’ equity 1,476,434 1,409,834 1,153,119 1,137,295 Total liabilities and stockholders’ equity $ 11,345,365 $ 10,489,074 $ 8,246,145 $ 8,029,057 OceanFirst Financial Corp . CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share amounts) For the Three Months Ended, For the Six Months Ended, June 30 , 2020 March 31 , 2020 June 30 , 2019 June 30 , 2020 June 30 , 2019 |-------------------- (Unaudited) --------------------| |---------- (Unaudited) -----------| Interest income: Loans $ 88,347 $ 89,944 $ 70,917 $ 178,291 $ 139,918 Mortgage-backed securities 3,593 3,844 3,946 7,437 7,987 Debt securities, equity investments and other 3,937 4,419 3,547 8,356 6,927 Total interest income 95,877 98,207 78,410 194,084 154,832 Interest expense: Deposits 12,305 13,936 9,762 26,241 18,401 Borrowed funds 4,905 4,626 3,811 9,531 7,206 Total interest expense 17,210 18,562 13,573 35,772 25,607 Net interest income 78,667 79,645 64,837 158,312 129,225 Credit loss expense 9,649 9,969 356 19,618 976 Net interest income after credit loss expense 69,018 69,676 64,481 138,694 128,249 Other income: Bankcard services revenue 2,741 2,481 2,679 5,222 4,964 Trust and asset management revenue 555 515 569 1,070 1,067 Fees and service charges 3,253 4,873 4,595 8,126 9,111 Net gain on sales of loans 756 173 7 929 15 Net gain on equity investments 148 155 133 303 241 Net loss from other real estate operations (52 ) (150 ) (121 ) (202 ) (127 ) Income from Bank Owned Life Insurance 1,521 1,575 1,293 3,096 2,614 Commercial loan swap income 2,489 4,050 612 6,539 1,084 Other 19 25 112 44 422 Total other income 11,430 13,697 9,879 25,127 19,391 Operating expenses: Compensation and employee benefits 27,935 29,885 23,704 57,820 46,118 Occupancy 5,268 5,276 4,399 10,544 8,929 Equipment 1,982 1,943 1,936 3,925 3,882 Marketing 753 769 1,137 1,522 2,067 Federal deposit insurance and regulatory assessments 1,133 667 802 1,800 1,634 Data processing 4,149 4,177 3,684 8,326 7,338 Check card processing 1,290 1,276 1,322 2,566 2,760 Professional fees 2,683 2,302 1,408 4,985 3,117 Other operating expense 5,262 3,802 3,882 9,064 7,251 Amortization of core deposit intangible 1,544 1,578 1,015 3,122 2,020 Branch consolidation expense 863 2,594 6,695 3,457 7,086 Merger related expenses 3,070 8,527 931 11,597 5,984 Total operating expenses 55,932 62,796 50,915 118,728 98,186 Income before provision for income taxes 24,516 20,577 23,445 45,093 49,454 Provision for income taxes 5,878 4,044 4,465 9,922 9,301 Net income $ 18,638 $ 16,533 $ 18,980 $ 35,171 $ 40,153 Basic earnings per share $ 0.31 $ 0.28 $ 0.37 $ 0.59 $ 0.80 Diluted earnings per share $ 0.31 $ 0.27 $ 0.37 $ 0.58 $ 0.79 Average basic shares outstanding 59,877 59,876 50,687 59,881 50,115 Average diluted shares outstanding 59,999 60,479 51,290 60,122 50,728 OceanFirst Financial Corp. SELECTED LOAN AND DEPOSIT DATA (dollars in thousands) LOANS RECEIVABLE At June 30 , 2020 March 31 , 2020 December 31 , 2019 September 30 , 2019 June 30 , 2019 Commercial: Commercial and industrial $ 910,762 $ 502,760 $ 396,434 $ 406,580 $ 392,336 Commercial real estate - owner - occupied 1,199,742 1,220,983 792,653 787,752 771,640 Commercial real estate - investor 3,449,160 3,331,662 2,296,410 2,232,159 2,143,093 Total commercial 5,559,664 5,055,405 3,485,497 3,426,491 3,307,069 Consumer: Residential real estate 2,426,277 2,458,641 2,321,157 2,234,361 2,193,829 Home equity loans and lines 320,627 335,624 318,576 330,446 341,972 Other consumer 71,721 82,920 89,422 98,835 109,015 Total consumer 2,818,625 2,877,185 2,729,155 2,663,642 2,644,816 Total loans 8,378,289 7,932,590 6,214,652 6,090,133 5,951,885 Deferred origination (fees) costs, net (4,300 ) 10,586 9,880 8,441 8,180 Allowance for credit losses (38,509 ) (29,635 ) (16,852 ) (16,636 ) (16,135 ) Loans receivable, net $ 8,335,480 $ 7,913,541 $ 6,207,680 $ 6,081,938 $ 5,943,930 Mortgage loans serviced for others $ 101,840 $ 51,399 $ 50,042 $ 54,457 $ 90,882 At June 30, 2020 Average Yield Loan pipeline (1): Commercial 3.95 % $ 169,093 $ 293,820 $ 219,269 $ 126,578 $ 212,712 Residential real estate 3.39 181,800 223,032 105,396 189,403 82,555 Home equity loans and lines 4.33 8,282 8,429 3,049 3,757 2,550 Total 3.67 % $ 359,175 $ 525,281 $ 327,714 $ 319,738 $ 297,817 For the Three Months Ended June 30 , 2020 March 31 , 2020 December 31 , 2019 September 30 , 2019 June 30 , 2019 Average Yield Loan originations: Commercial 3.16 % $ 216,979 (2) $ 266,882 $ 264,938 $ 315,405 $ 123,882 Residential real estate 3.37 242,137 148,675 226,492 156,308 120,771 Home equity loans and lines 4.37 12,128 10,666 12,961 10,498 14,256 Total 3.30 % $ 471,244 $ 426,223 $ 504,391 $ 482,211 $ 258,909 Loans sold $ 104,600 (3) $ 7,500 (3) $ 110 $ — (3) $ 403 (3) (1) Loan pipeline includes loans approved but not funded.(2) Excludes loans originated through the Paycheck Protection Program of $504 million .(3) Excludes the sale of under-performing commercial loans of $4.9 million for the three months ended June 30, 2020 , under-performing residential loans of $4.0 million and commercial loans of $5.1 million for the three months ended March 31, 2020 , small business administration loans of $3.5 million for the three months ended September 30, 2019 and under-performing residential loans of $2.9 million for the three months ended June 30, 2019 . DEPOSITS At June 30 , 2020 March 31 , 2020 December 31 , 2019 September 30 , 2019 June 30 , 2019 Type of Account Non-interest-bearing $ 2,161,766 $ 1,783,216 $ 1,377,396 $ 1,406,194 $ 1,370,167 Interest-bearing checking 3,022,887 2,647,487 2,539,428 2,400,331 2,342,913 Money market deposit 680,199 620,145 578,147 593,457 642,985 Savings 1,456,931 1,420,628 898,174 901,168 909,501 Time deposits 1,645,971 1,420,591 935,632 919,705 921,921 $ 8,967,754 $ 7,892,067 $ 6,328,777 $ 6,220,855 $ 6,187,487 OceanFirst Financial Corp. ASSET QUALITY (dollars in thousands) ASSET QUALITY June 30 , 2020 March 31 , 2020 December 31 , 2019 September 30 , 2019 June 30 , 2019 Non-performing loans: Commercial and industrial $ 1,586 $ 207 $ 207 $ 207 $ 207 Commercial real estate - owner-occupied 4,582 4,219 4,811 4,537 4,818 Commercial real estate - investor 5,274 3,384 2,917 4,073 4,050 Residential real estate 6,568 5,920 7,181 5,953 5,747 Home equity loans and lines 3,034 2,533 2,733 2,683 2,974 Total non-performing loans 21,044 16,263 17,849 17,453 17,796 Other real estate owned 248 484 264 294 865 Total non-performing assets $ 21,292 $ 16,747 $ 18,113 $ 17,747 $ 18,661 Purchased with credit deterioration (“PCD”) loans (1) $ 61,694 $ 59,783 $ 13,265 $ 13,281 $ 13,432 Delinquent loans 30 to 89 days $ 13,640 $ 48,905 $ 14,798 $ 19,905 $ 20,029 Troubled debt restructurings: Non-performing (included in total non-performing loans above) $ 6,189 $ 6,249 $ 6,566 $ 6,152 $ 6,815 Performing 16,365 16,102 18,042 18,977 19,314 Total troubled debt restructurings $ 22,554 $ 22,351 $ 24,608 $ 25,129 $ 26,129 Allowance for credit losses $ 38,509 $ 29,635 $ 16,852 $ 16,636 $ 16,135 Allowance for credit losses as a percent of total loans receivable (2) 0.46 % 0.37 % 0.27 % 0.27 % 0.27 % Allowance for credit losses as a percent of total non-performing loans 182.99 182.22 94.41 95.32 90.67 Non-performing loans as a percent of total loans receivable 0.25 0.21 0.29 0.29 0.30 Non-performing assets as a percent of total assets 0.19 0.16 0.22 0.22 0.23 (1) PCD loans are not included in non-performing loans or delinquent loans totals.(2) The loans acquired from Two River, Country Bank , Capital Bank , Sun, Ocean Shore, Cape, and Colonial American were recorded at fair value. The net credit mark on these loans, not reflected in the allowance for credit losses, was $35,439 , $38,272 , $30,260 , $32,768 , and $36,026 at June 30, 2020 , March 31, 2020 , December 31, 2019 , September 30, 2019 , and June 30, 2019 , respectively. NET CHARGE-OFFS For the Three Months Ended June 30 , 2020 March 31 , 2020 December 31 , 2019 September 30 , 2019 June 30 , 2019 Net recoveries (charge-offs): Loan charge-offs $ (169 ) $ (1,384 ) $ (445 ) $ (353 ) $ (1,138 ) Recoveries on loans 401 230 306 549 212 Net loan recoveries (charge-offs) $ 232 $ (1,154 ) (1) $ (139 ) $ 196 $ (926 ) (1) Net loan charge-offs to average total loans (annualized) NM* 0.06 % 0.01 % NM* 0.06 % Net charge-off detail - recovery (loss): Commercial $ 30 $ 59 $ 163 $ 256 $ (58 ) Residential real estate 212 (1,112 ) (61 ) 12 (728 ) Home equity loans and lines (3 ) (36 ) (240 ) (10 ) (121 ) Other consumer (7 ) (65 ) (1 ) (62 ) (19 ) Net loan recoveries (charge-offs) $ 232 $ (1,154 ) (1) $ (139 ) $ 196 $ (926 ) (1) (1) Included in net loan charge-offs for the three months ended March 31, 2020 and June 30, 2019 are $949 and $429 , respectively, relating to under-performing loans sold.* Not Meaningful OceanFirst Financial Corp. ANALYSIS OF NET INTEREST INCOME For the Three Months Ended June 30, 2020 March 31, 2020 June 30, 2019 (dollars in thousands) Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Assets: Interest-earning assets: Interest-earning deposits and short-term investments $ 354,016 $ 115 0.13 % $ 63,726 $ 342 2.16 % $ 67,214 $ 372 2.22 % Securities (1) 1,130,779 7,415 2.64 1,186,535 7,921 2.68 1,080,690 7,121 2.64 Loans receivable, net (2) Commercial 5,409,238 59,460 4.42 4,960,991 59,875 4.85 3,309,869 42,579 5.16 Residential 2,507,076 23,870 3.81 2,473,410 24,628 3.98 2,187,417 22,329 4.08 Home Equity 328,144 3,853 4.72 339,003 4,070 4.83 347,028 4,656 5.38 Other 76,382 1,164 6.13 87,478 1,371 6.30 113,153 1,353 4.80 Allowance for credit losses net of deferred loan fees (25,218 ) — — (10,220 ) — — (9,155 ) — — Loans Receivable, net 8,295,622 88,347 4.28 7,850,662 89,944 4.61 5,948,312 70,917 4.78 Total interest-earning assets 9,780,417 95,877 3.94 9,100,923 98,207 4.34 7,096,216 78,410 4.43 Non-interest-earning assets 1,334,169 1,231,886 972,683 Total assets $ 11,114,586 $ 10,332,809 $ 8,068,899 Liabilities and Stockholders’ Equity: Interest-bearing liabilities: Interest-bearing checking $ 2,966,631 4,800 0.65 % $ 2,807,793 5,132 0.74 % $ 2,504,541 4,240 0.68 % Money market 652,485 705 0.43 614,062 1,040 0.68 631,297 1,358 0.86 Savings 1,445,953 414 0.12 1,403,338 1,555 0.45 915,701 301 0.13 Time deposits 1,623,890 6,386 1.58 1,459,348 6,209 1.71 934,470 3,863 1.66 Total 6,688,959 12,305 0.74 6,284,541 13,936 0.89 4,986,009 9,762 0.79 FHLB Advances 476,598 1,946 1.64 631,329 2,824 1.80 404,951 2,320 2.30 Securities sold under agreements to repurchase 131,382 138 0.42 82,105 95 0.47 62,243 64 0.41 Other borrowings 220,948 2,821 5.14 118,851 1,707 5.78 99,591 1,427 5.75 Total interest-bearing liabilities 7,517,887 17,210 0.92 7,116,826 18,562 1.05 5,552,794 13,573 0.98 Non-interest-bearing deposits 2,018,044 1,687,582 1,302,147 Non-interest-bearing liabilities 124,997 113,477 82,793 Total liabilities 9,660,928 8,917,885 6,937,734 Stockholders’ equity 1,453,658 1,414,924 1,131,165 Total liabilities and equity $ 11,114,586 $ 10,332,809 $ 8,068,899 Net interest income $ 78,667 $ 79,645 $ 64,837 Net interest rate spread (3) 3.02 % 3.29 % 3.45 % Net interest margin (4) 3.24 % 3.52 % 3.66 % Total cost of deposits (including non-interest-bearing deposits) 0.57 % 0.70 % 0.62 % For the Six Months Ended June 30, 2020 June 30, 2019 (dollars in thousands) Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Assets: Interest-earning assets: Interest-earning deposits and short-term investments $ 208,871 $ 457 0.44 % $ 73,527 $ 839 2.30 % Securities (1) 1,158,657 15,336 2.66 1,073,957 14,075 2.64 Loans receivable, net (2) Commercial 5,185,114 119,335 4.63 3,260,855 83,987 5.19 Residential 2,490,243 48,499 3.90 2,141,032 43,733 4.09 Home Equity 333,574 7,923 4.78 350,175 9,363 5.39 Other 81,930 2,534 6.22 116,153 2,835 4.92 Allowance for credit losses net of deferred loan fees (17,720 ) — — (9,616 ) — — Loans Receivable, net 8,073,141 178,291 4.44 5,858,599 139,918 4.82 Total interest-earning assets 9,440,669 194,084 4.13 7,006,083 154,832 4.46 Non-interest-earning assets 1,283,029 948,658 Total assets $ 10,723,698 $ 7,954,741 Liabilities and Stockholders’ Equity: Interest-bearing liabilities: Interest-bearing checking $ 2,887,212 9,931 0.69 % $ 2,518,062 8,032 0.64 % Money market 633,273 1,745 0.55 616,384 2,468 0.81 Savings 1,424,646 1,969 0.28 909,906 587 0.13 Time deposits 1,541,619 12,596 1.64 933,410 7,314 1.58 Total 6,486,750 26,241 0.81 4,977,762 18,401 0.75 FHLB Advances 553,963 4,770 1.73 372,499 4,160 2.25 Securities sold under agreements to repurchase 106,743 234 0.44 63,761 119 0.38 Other borrowings 169,900 4,527 5.36 99,569 2,927 5.93 Total interest-bearing liabilities 7,317,356 35,772 0.98 5,513,591 25,607 0.94 Non-interest-bearing deposits 1,852,813 1,257,041 Non-interest-bearing liabilities 119,237 69,443 Total liabilities 9,289,406 6,840,075 Stockholders’ equity 1,434,292 1,114,666 Total liabilities and equity $ 10,723,698 $ 7,954,741 Net interest income $ 158,312 $ 129,225 Net interest rate spread (3) 3.15 % 3.52 % Net interest margin (4) 3.37 % 3.72 % Total cost of deposits (including non-interest-bearing deposits) 0.63 % 0.60 % (1) Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost net of allowance for credit losses.(2) Amount is net of deferred loan fees, undisbursed loan funds, discounts and premiums and estimated credit loss allowances and includes loans held for sale and non-performing loans.(3) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.(4) Net interest margin represents net interest income divided by average interest-earning assets. OceanFirst Financial Corp. SELECTED QUARTERLY FINANCIAL DATA (in thousands, except per share amounts) June 30 , March 31 , December 31 , September 30 , June 30 , 2020 2020 2019 2019 2019 Selected Financial Condition Data: Total assets $ 11,345,365 $ 10,489,074 $ 8,246,145 $ 8,135,173 $ 8,029,057 Debt securities available-for-sale, at estimated fair value 153,239 153,738 150,960 127,308 123,610 Debt securities held-to-maturity, net of allowance for credit losses 867,959 914,255 768,873 819,253 863,838 Equity investments, at estimated fair value 13,830 14,409 10,136 10,145 10,002 Restricted equity investments, at cost 68,091 81,005 62,356 62,095 59,425 Loans receivable, net of allowance for credit losses 8,335,480 7,913,541 6,207,680 6,081,938 5,943,930 Deposits 8,967,754 7,892,067 6,328,777 6,220,855 6,187,487 Federal Home Loan Bank advances 343,392 825,824 519,260 512,149 453,646 Securities sold under agreements to repurchase and other borrowings 399,661 210,388 168,540 161,734 158,619 Stockholders’ equity 1,476,434 1,409,834 1,153,119 1,144,528 1,137,295 For the Three Months Ended, June 30 , March 31 , December 31 , September 30 , June 30 , 2020 2020 2019 2019 2019 Selected Operating Data: Interest income $ 95,877 $ 98,207 $ 77,075 $ 76,887 $ 78,410 Interest expense 17,210 18,562 13,721 13,495 13,573 Net interest income 78,667 79,645 63,354 63,392 64,837 Credit loss expense 9,649 9,969 355 305 356 Net interest income after credit loss expense 69,018 69,676 62,999 63,087 64,481 Other income 11,430 13,697 11,231 11,543 9,879 Operating expenses (excluding branch consolidation and merger related expenses) 51,999 51,675 43,589 40,884 43,289 Branch consolidation expense 863 2,594 268 1,696 6,695 Merger related expenses 3,070 8,527 3,742 777 931 Income before provision for income taxes 24,516 20,577 26,631 31,273 23,445 Provision for income taxes 5,878 4,044 3,181 6,302 4,465 Net income $ 18,638 $ 16,533 $ 23,450 $ 24,971 $ 18,980 Diluted earnings per share $ 0.31 $ 0.27 $ 0.47 $ 0.49 $ 0.37 Net accretion/amortization of purchase accounting adjustments included in net interest income $ 5,536 $ 5,533 $ 3,501 $ 2,769 $ 3,663 At or For the Three Months Ended June 30 , March 31 , December 31 , September 30 , June 30 , 2020 2020 2019 2019 2019 Selected Financial Ratios and Other Data(1): Performance Ratios (Annualized): Return on average assets (2) 0.67 % 0.64 % 1.14 % 1.23 % 0.94 % Return on average tangible assets (2) (3) 0.71 0.68 1.19 1.29 0.99 Return on average stockholders’ equity (2) 5.16 4.70 8.12 8.66 6.73 Return on average tangible stockholders’ equity (2) (3) 8.10 7.50 12.33 13.18 10.32 Stockholders’ equity to total assets 13.01 13.44 13.98 14.07 14.16 Tangible stockholders’ equity to tangible assets (3) 8.77 8.85 9.71 9.73 9.76 Tangible common stockholders’ equity to tangible assets (3) 8.25 8.85 9.71 9.73 9.76 Net interest rate spread 3.02 3.29 3.26 3.32 3.45 Net interest margin 3.24 3.52 3.48 3.55 3.66 Operating expenses to average assets (2) 2.02 2.44 2.31 2.13 2.53 Efficiency ratio (2) (4) 62.08 67.28 63.82 57.86 68.14 Loans to deposits 93.43 100.51 98.20 97.90 96.19 For the Six Months Ended June 30 , 2020 2019 Performance Ratios (Annualized): Return on average assets (2) 0.66 % 1.02 % Return on average tangible assets (2) (3) 0.69 1.07 Return on average stockholders’ equity (2) 4.93 7.26 Return on average tangible stockholders’ equity (2) (3) 7.81 11.13 Net interest rate spread 3.15 3.52 Net interest margin 3.37 3.72 Operating expenses to average assets (2) 2.23 2.49 Efficiency ratio (2) (4) 64.72 66.07 At or For the Three Months Ended June 30 , March 31 , December 31 , September 30 , June 30 , 2020 2020 2019 2019 2019 Trust and Asset Management: Wealth assets under administration $ 224,042 $ 173,856 $ 195,415 $ 194,137 $ 199,554 Nest Egg 57,383 43,528 34,865 23,946 9,755 Per Share Data: Cash dividends per common share $ 0.17 $ 0.17 $ 0.17 $ 0.17 $ 0.17 Stockholders’ equity per common share at end of period 24.47 23.38 22.88 22.57 22.24 Tangible common stockholders’ equity per common share at end of period (3) 14.79 14.62 15.13 14.86 14.57 Common shares outstanding at end of period 60,343,077 60,311,717 50,405,048 50,700,586 51,131,804 Preferred shares outstanding at end of period 57,370 — — — — Number of full-service customer facilities: 62 75 56 56 60 Quarterly Average Balances Total securities $ 1,130,779 $ 1,186,535 $ 1,008,461 $ 1,039,560 $ 1,080,690 Loans receivable, net 8,295,622 7,850,662 6,162,808 6,008,325 5,948,312 Total interest-earning assets 9,780,417 9,100,923 7,214,764 7,088,817 7,096,216 Total assets 11,114,586 10,332,809 8,192,177 8,073,238 8,068,899 Interest-bearing transaction deposits 5,065,069 4,825,193 4,053,226 3,971,380 4,051,539 Time deposits 1,623,890 1,459,348 931,228 920,032 934,470 Total borrowed funds 828,928 832,285 577,042 552,998 566,785 Total interest-bearing liabilities 7,517,887 7,116,826 5,561,496 5,444,410 5,552,794 Non-interest bearing deposits 2,018,044 1,687,582 1,393,002 1,396,259 1,302,147 Stockholders’ equity 1,453,658 1,414,924 1,145,665 1,143,701 1,131,165 Total deposits 8,707,003 7,972,123 6,377,456 6,287,671 6,288,156 Quarterly Yields Total securities 2.64 % 2.68 % 2.59 % 2.64 % 2.64 % Loans receivable, net 4.28 4.61 4.53 4.60 4.78 Total interest-earning assets 3.94 4.34 4.24 4.30 4.43 Interest-bearing transaction deposits 0.47 0.64 0.59 0.58 0.58 Time deposits 1.58 1.71 1.78 1.72 1.66 Borrowed funds 2.38 2.24 2.41 2.64 2.70 Total interest-bearing liabilities 0.92 1.05 0.98 0.98 0.98 Net interest spread 3.02 3.29 3.26 3.32 3.45 Net interest margin 3.24 3.52 3.48 3.55 3.66 Total deposits 0.57 0.70 0.64 0.62 0.62 (1) With the exception of end of quarter ratios, all ratios are based on average daily balances.(2) Performance ratios for each period include merger related expenses, branch consolidation expenses, opening credit loss expense, non-recurring professional fees, compensation expense due to the retirement of an executive officer, the reduction in income tax expense from the revaluation of state deferred tax assets as a result of a change in the New Jersey tax code. Refer to Other Items - Non-GAAP Reconciliation for impact of these items.(3) Tangible common stockholders’ equity and tangible assets exclude intangible assets relating to goodwill and core deposit intangible. Tangible common stockholders’ equity also excludes preferred equity.(4) Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income. OceanFirst Financial Corp. OTHER ITEMS (dollars in thousands, except per share amounts) NON-GAAP RECONCILIATION For the Three Months Ended June 30 , March 31 , December 31 , September 30 , June 30 , 2020 2020 2019 2019 2019 Core earnings: Net income $ 18,638 $ 16,533 $ 23,450 $ 24,971 $ 18,980 Non-recurring items: Add: Merger related expenses 3,070 8,527 3,742 777 931 Branch consolidation expenses 863 2,594 268 1,696 6,695 Two River & Country Bank opening credit loss expense under the CECL model — 2,447 — — — Non-recurring professional fees — — 1,274 750 — Compensation expense due to the retirement of an executive officer — — — — 1,256 Income tax benefit related to change in New Jersey tax code — — (2,205 ) — — Less: Income tax expense on items (966 ) (3,121 ) (793 ) (663 ) (1,867 ) Core earnings $ 21,605 $ 26,980 $ 25,736 $ 27,531 $ 25,995 Core diluted earnings per share $ 0.36 $ 0.45 $ 0.51 $ 0.54 $ 0.51 Core ratios (Annualized): Return on average assets 0.78 % 1.05 % 1.25 % 1.35 % 1.29 % Return on average tangible assets 0.82 1.11 1.31 1.42 1.36 Return on average tangible stockholders’ equity 9.39 12.25 13.53 14.53 14.14 Efficiency ratio 57.71 55.36 56.73 53.56 56.26 For the Six Months Ended June 30 , 2020 2019 Core earnings: Net income $ 35,171 $ 40,153 Non-recurring items: Add: Merger related expenses 11,597 5,984 Branch consolidation expenses 3,457 7,086 Two River & Country Bank opening credit loss expense under the CECL model 2,447 — Compensation expense due to the retirement of an executive officer — 1,256 Less: Income tax expense on items (4,087 ) (2,906 ) Core earnings $ 48,585 $ 51,573 Core diluted earnings per share $ 0.81 $ 1.02 Core ratios (Annualized): Return on average assets 0.91 % 1.31 % Return on average tangible assets 0.96 1.37 Return on average tangible stockholders’ equity 10.79 14.29 Efficiency ratio 56.52 56.43 COMPUTATION OF TOTAL TANGIBLE EQUITY TO TOTAL TANGIBLE ASSETS June 30 , March 31 , December 31 , September 30 , June 30 , 2020 2020 2019 2019 2019 Total stockholders’ equity $ 1,476,434 $ 1,409,834 $ 1,153,119 $ 1,144,528 $ 1,137,295 Less: Goodwill 501,472 500,093 374,632 374,537 374,592 Core deposit intangible 26,732 28,276 15,607 16,605 17,614 Tangible stockholders’ equity $ 948,230 $ 881,465 $ 762,880 $ 753,386 $ 745,089 Total assets $ 11,345,365 $ 10,489,074 $ 8,246,145 $ 8,135,173 $ 8,029,057 Less: Goodwill 501,472 500,093 374,632 374,537 374,592 Core deposit intangible 26,732 28,276 15,607 16,605 17,614 Tangible assets $ 10,817,161 $ 9,960,705 $ 7,855,906 $ 7,744,031 $ 7,636,851 Tangible stockholders’ equity to tangible assets 8.77 % 8.85 % 9.71 % 9.73 % 9.76 % COMPUTATION OF TOTAL TANGIBLE COMMON EQUITY TO TOTAL TANGIBLE ASSETS June 30 , March 31 , December 31 , September 30 , June 30 , 2020 2020 2019 2019 2019 Total stockholders’ equity $ 1,476,434 $ 1,409,834 $ 1,153,119 $ 1,144,528 $ 1,137,295 Less: Goodwill 501,472 500,093 374,632 374,537 374,592 Core deposit intangible 26,732 28,276 15,607 16,605 17,614 Preferred stock 55,711 — — — — Tangible common stockholders’ equity $ 892,519 $ 881,465 $ 762,880 $ 753,386 $ 745,089 Total assets $ 11,345,365 $ 10,489,074 $ 8,246,145 $ 8,135,173 $ 8,029,057 Less: Goodwill 501,472 500,093 374,632 374,537 374,592 Core deposit intangible 26,732 28,276 15,607 16,605 17,614 Tangible assets $ 10,817,161 $ 9,960,705 $ 7,855,906 $ 7,744,031 $ 7,636,851 Tangible common stockholders’ equity to tangible assets 8.25 % 8.85 % 9.71 % 9.73 % 9.76 % ACQUISITION DATE - FAIR VALUE BALANCE SHEET The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of the acquisition for Two River, net of the total consideration paid (in thousands): At January 1, 2020 Two River Book Value Purchase Accounting Adjustments Estimated Fair Value Total Purchase Price: $ 197,050 Assets acquired: Cash and cash equivalents $ 51,102 $ — $ 51,102 Securities 62,832 1,549 64,381 Loans 940,885 (813 ) 940,072 Accrued interest receivable 2,382 — 2,382 Bank Owned Life Insurance 22,440 — 22,440 Deferred tax asset 5,201 (1,624 ) 3,577 Other assets 18,662 (2,706 ) 15,956 Core deposit intangible — 12,130 12,130 Total assets acquired 1,103,504 8,536 1,112,040 Liabilities assumed: Deposits (939,132 ) (2,618 ) (941,750 ) Other liabilities (58,935 ) (67 ) (59,002 ) Total liabilities assumed (998,067 ) (2,685 ) (1,000,752 ) Net assets acquired $ 105,437 $ 5,851 $ 111,288 Goodwill recorded in the merger $ 85,762 The calculation of goodwill is subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available. As the Company finalizes its review of the acquired assets and liabilities, certain adjustments to recorded carrying values may be required. The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of the acquisition for Country Bank , net of the total consideration paid (in thousands): At January 1, 2020 Country Bank Book Value Purchase Accounting Adjustments Estimated Fair Value Total Purchase Price: $ 112,836 Assets acquired: Cash and cash equivalents $ 20,799 $ — $ 20,799 Securities 144,460 39 144,499 Loans 614,285 4,123 618,408 Accrued interest receivable 1,779 — 1,779 Deferred tax asset (3,254 ) (668 ) (3,922 ) Other assets 10,327 (1,937 ) 8,390 Core deposit intangible — 2,117 2,117 Total assets acquired 788,396 3,674 792,070 Liabilities assumed: Deposits (649,399 ) (3,254 ) (652,653 ) Other liabilities (69,244 ) 2,018 (67,226 ) Total liabilities assumed (718,643 ) (1,236 ) (719,879 ) Net assets acquired $ 69,753 $ 2,438 $ 72,191 Goodwill recorded in the merger $ 40,645 The calculation of goodwill is subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available. As the Company finalizes its review of the acquired assets and liabilities, certain adjustments to recorded carrying values may be required. Source: OceanFirst Financial Corp.

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