OceanFirst Financial Corp. Announces Growth In Deposits, Loans, Revenue And Earnings Per Share

TOMS RIVER, N.J., July 22, 2010 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (Nasdaq:OCFC) , the holding company for OceanFirst Bank, today announced that diluted earnings per share increased to $.27 for the quarter ended June 30, 2010 as compared to $.24 in the prior linked quarter and $.26 for the corresponding prior year period. Other growth highlights for the quarter ended June 30, 2010 include:
  • Deposits increased $158.9 million during the quarter of which $156.6 million was growth in core deposits, defined as all deposits excluding time deposits.
  • Loans receivable, net increased $27.3 million during the quarter of which $26.2 million was growth in commercial loans.
  • Total revenue (net interest income and total other income) increased to $23.3 million for the quarter ended June 30, 2010 as compared to $21.9 million for the prior linked quarter and $20.3 million for the corresponding prior year quarter.

The Company also announced that its Board of Directors declared the quarterly cash dividend on common stock of $.12 per share - covering the three month period ended June 30, 2010 - to be paid on August 13, 2010, to common shareholders of record on August 2, 2010. 

CEO John R. Garbarino reflected on the growth: "We are gratified with the across the board growth over both the linked and prior year periods. Our Company continues to maintain its strengthened capital position with Tangible Common Equity Capital of 8.78%. We are also pleased to declare our fifty-fourth consecutive quarterly common stock cash dividend, representing a current attractive yield for our shareholders."

Results of Operations

Net interest income for the three and six months ended June 30, 2010 increased to $19.7 million and $38.7 million, respectively, as compared to $16.2 million and $31.8 million, respectively, in the same prior year periods, reflecting a higher net interest margin and higher levels of interest-earning assets. The net interest margin increased to 3.78% and 3.77%, respectively, for the three and six months ended June 30, 2010 from 3.56% and 3.52%, respectively, in the same prior year periods.  The yield on interest-earning assets decreased to 4.96%, for both the three and six months ended June 30, 2010, as compared to 5.33% and 5.37%, respectively, in the same prior year periods. The cost of interest-bearing liabilities decreased to 1.31% and 1.33%, respectively, for the three and six months ended June 30, 2010, as compared to 2.00% and 2.08%, respectively, in the same prior year periods. Average interest-earning assets increased by $266.9 million and $242.0, respectively, for the three and six months ended June 30, 2010 as compared to the same prior year periods. The increase was in average mortgage-backed securities which increased $266.8 million and $249.0, respectively, for the three and six months ended June 30, 2010.

The provision for loan losses increased to $2.2 million and $4.4 million, respectively, for the three and six months ended June 30, 2010 as compared to $1.2 million and $2.0 million, respectively, for the corresponding prior year periods. The increased provision is primarily due to higher levels of non-performing loans and net charge-offs and partially due to higher loan balances.

Other income decreased to $3.6 million and $6.6 million, respectively, for the three and six months ended June 30, 2010 as compared to $4.2 million and $7.3 million, respectively, in the same prior year periods. Loan servicing income (loss) increased to income of $159,000 for the six months ended June 30, 2010 from a loss of $221,000 in the same prior year period due to an impairment to the loan servicing asset of $263,000 recognized in the first quarter of 2009.  Fees and service charges increased to $2.8 million and $5.4 million, respectively, for the three and six months ended June 30, 2010 as compared to $2.6 million and $5.1 million for the corresponding prior year periods. The increase was due to higher fees from merchant services, checking accounts and trust services partly offset by reduced fees from investment services. The net gain on sales of loans decreased to $502,000 and $1.0 million, respectively, for the three and six months ended June 30, 2010 as compared to $1.4 million and $2.0 million, respectively, for the corresponding prior year periods due to a decline in the volume of loans sold. The net loss from other real estate operations was $364,000 for the six months ended June 30, 2010 as compared to a gain of $5,000 in the same prior year period due to current period write-downs in the value of properties previously acquired.

Operating expenses increased to $13.3 million and $26.0 million, respectively, for the three and six months ended June 30, 2010, as compared to $13.2 million and $25.0 million, respectively, for the corresponding prior year periods.  Compensation and employee benefits costs increased due to higher incentive compensation and stock plan expense. The increase was also due to the reduction in mortgage loan closings from prior year levels. Higher loan closings in the prior year increased deferred loan expense which is reflected as a reduction to compensation expense. Occupancy expense decreased by $486,000 and $497,000, respectively, from the prior periods due to a $556,000 charge in the second quarter of 2009 relating to all remaining lease obligations of Columbia Home Loans, LLC ("Columbia"), the Company's mortgage banking subsidiary which was shuttered in the fourth quarter of 2007. Federal deposit insurance expense decreased by $719,000 and $587,000, respectively, from the prior periods due to a special assessment of $869,000 in the second quarter of 2009.

Dividends on preferred stock and discount accretion totaled $538,000 and $1.0 million, respectively, for the three and six months ended June 30, 2009 as compared to no amounts in the current year periods. The preferred stock was redeemed on December 30, 2009.

Financial Condition

Mortgage-backed securities available for sale increased to $360.0 million at June 30, 2010 as compared to $213.6 million at December 31, 2009. The increase is due to purchases of $162.8 million in mortgage-backed securities, all of which were issued by U.S. government sponsored enterprises. Loans receivable, net increased by $38.2 million at June 30, 2010 as compared to December 31, 2009 primarily due to increased commercial and commercial real estate lending. At June 30, 2010, the Company was holding subprime loans with a gross principal balance of $1.9 million and a carrying value, net of write-offs and lower of cost or market adjustment of $1.5 million. Deposits increased to $1,540.0 million at June 30, 2010 from $1,364.2 million at December 31, 2009. The growth was concentrated in core deposits, which increased $181.8 million. Time deposits decreased $6.1 million as the Bank continued to moderate its pricing for this product. Federal Home Loan Bank advances increased to $370.0 million at June 30, 2010 from $333.0 million at December 31, 2009. The increases in core deposits and Federal Home Loan Bank advances were primarily used to fund the increase in mortgage-backed securities. Stockholders' equity increased to $194.8 million at June 30, 2010 as compared to $183.5 million at December 31, 2009 due to net income and a reduction in accumulated other comprehensive loss partly offset by the cash dividend on common stock.

Asset Quality

The Company's non-performing loans totaled $29.2 million at June 30, 2010, an increase from $28.3 million at December 31, 2009. The increase was concentrated in one-to-four family and consumer loans partly offset by a decrease in non-performing commercial real estate loans. The overall increase is reflective of the weak economic environment. Non-performing loans at June 30, 2010 include $650,000 of loans repurchased due to early payment default that were written down to market value on the date of repurchase and $2.4 million of loans previously held for sale that were also written down to market value. For the six months ended June 30, 2010, the Company realized net loan charge-offs of $2.0 million. Of this amount, $1.1 million are net charge-offs relating to loans originated by Columbia.

The reserve for repurchased loans, which is included in other liabilities in the Company's consolidated statements of financial condition, was $809,000 at June 30, 2010, as compared to $819,000 at December 31, 2009. There was no provision for repurchased loans and one charge-off of $10,000 during the six months ended June 30, 2010. At June 30, 2010, there is one outstanding loan repurchase request on a loan with a principal balance of $250,000 which the Company is evaluating. There are also seven claims from one loan investor relating to loans with principal balances totaling $2.8 million that the Company believes are covered by a settlement agreement and release between Columbia and the loan investor executed in August 2007. The Company intends to vigorously contest these claims and believes there are valid defenses, including the settlement and release agreement.

Conference Call

As previously announced, the Company will host an earnings conference call on Friday, July 23, 2010 at 11:00 a.m. Eastern time. The direct dial number for the call is (877) 317-6789. 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 442062, from one hour after the end of the call until August 2, 2010. 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, founded in 1902, is a federally-chartered stock savings bank with $2.2 billion in assets and twenty-three branches located in Ocean, Monmouth and Middlesex Counties, New Jersey. The Bank is the largest and oldest community-based financial institution headquartered in Ocean County, New Jersey.

OceanFirst Financial Corp.'s press releases are available by visiting us at www.oceanfirst.com.

Forward-Looking Statements

This news release contains certain forward-looking statements 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," or similar expressions. 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 the subsidiaries include, but are not limited to, changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, 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 and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake - and specifically disclaims any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
       
  June 30, December 31, June 30,
  2010 2009 2009
  (Unaudited)   (Unaudited)
       
ASSETS      
       
Cash and due from banks $   30,952  $ 23,016  $ 22,423
Investment securities available for sale   38,958  37,267  31,890
Federal Home Loan Bank of New York stock, at cost  21,404  19,434  16,188
Mortgage-backed securities available for sale   359,974  213,622  89,436
Loans receivable, net 1,667,472  1,629,284  1,643,704
Mortgage loans held for sale  2,945  5,658  13,475
Interest and dividends receivable  6,949  6,059  6,411
Real estate owned, net    2,607  2,613  1,348
Premises and equipment, net  21,721  22,088  21,216
Servicing asset  5,795  6,515  6,817
Bank Owned Life Insurance  40,374  39,970  39,566
Other assets     20,531      24,502    17,111
       
  Total assets $2,219,682  $2,030,028 $1,909,585
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Deposits $1,539,972  $1,364,199 $1,364,570
Securities sold under agreements to repurchase  with retail customers    72,433    64,573    77,246
Federal Home Loan Bank advances  370,000  333,000  258,000
Other borrowings  27,500  27,500  27,500
Due to brokers --  40,684 --
Advances by borrowers for taxes and insurance  8,267  7,453  8,716
Other liabilities    6,682     9,083     11,644
       
 Total liabilities  2,024,854  1,846,492   1,747,676
       
Stockholders' equity:  Preferred stock, $.01 par value, $1,000 liquidation preference,  5,000,000 shares authorized, no shares issued at June 30, 2010  and December 31, 2009, 38,263 shares issued at June 30, 2009       --       --        37,285
 Common stock, $.01 par value, 55,000,000 shares authorized,  33,566,772, 33,566,772 and 27,177,372 shares issued and  18,822,556, 18,821,956 and 12,371,768 shares outstanding  at June 30, 2010, December 31, 2009 and June 30, 2009,  respectively           336          336          272
 Additional paid-in capital  260,138  260,130  205,949
 Retained earnings  168,038  163,063  162,088
 Accumulated other comprehensive loss   (4,597)  (10,753)  (13,356)
 Less: Unallocated common stock held by Employee Stock  Ownership Plan      (4,630)     (4,776)      (4,923)
Treasury stock, 14,744,216, 14,744,816 and 14,805,604 shares at June 30, 2010, December 31,  2009 and June 30, 2009, respectively         (224,457)      (224,464)       (225,406)
 Common stock acquired by Deferred Compensation Plan      947   986    970
 Deferred Compensation Plan Liability     (947)    (986)     (970)
 Total stockholders' equity    194,828   183,536   161,909
 Total liabilities and stockholders' equity $2,219,682   $2,030,028  $1,909,585
 
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
         
  For the three months For the six months
  Ended June 30,  Ended June 30, 
  2010 2009 2010 2009
  (Unaudited) (Unaudited)
         
Interest income:        
 Loans $22,226 $22,791 $44,209 $45,963
 Mortgage-backed securities   3,185  873  5,947  1,641
 Investment securities and other  396  552  726    1,002
  Total interest income 25,807 24,216  50,882  48,606
         
Interest expense:         
 Deposits  3,480  4,777  6,911  9,873
 Borrowed funds  2,630  3,285  5,305   6,918
 Total interest expense  6,110  8,062  12,216  16,791
   Net interest income   19,697   16,154    38,666    31,815
         
Provision for loan losses  2,200  1,200  4,400   2,000
   Net interest income after provision    for loan losses   17,497   14,954    34,266    29,815
         
Other income:        
 Loan servicing income (loss)  113  9  159   (221)
 Fees and service charges  2,801  2,585  5,358  5,103
 Net gain on sales of loans and securities available for sale  502  1,352  1,005  2,025
 Net (loss) gain from other real estate operations  (28)  6   (364)  5
 Income from Bank Owned Life Insurance  208  201  404  431
 Other   2   2   4   6
 Total other income   3,598   4,155   6,566   7,349
         
Operating expenses:        
 Compensation  7,051  5,738  13,581  11,565
 Occupancy  1,328  1,814  2,792  3,289
 Equipment  537  501  1,012  950
 Marketing  523  380  827  704
 Federal deposit insurance  686  1,405  1,320  1,907
 Data processing  833  858  1,662  1,693
 Legal  267  520  563  1,097
 Check card processing  309  254  626  505
 Accounting and audit  179  171  322  331
 General and administrative   1,547   1,599   3,256   2,982
 Total operating expenses 13,260 13,240  25,961  25,023
         
 Income before provision for income taxes  7,835  5,869  14,871  12,141
Provision for income taxes    2,884    2,270    5,515    4,589
 Net income   4,951   3,599   9,356  7,552
Dividends on preferred stock and warrant accretion     --     538        --     996
 Net income available to common stockholders $  4,951 $ 3,061 $  9,356 $  6,556
         
Basic earnings per share $   0.27 $    0.26 $    0.52 $   0.56
Diluted earnings per share $   0.27 $   0.26 $    0.51 $    0.56
         
Average basic shares outstanding 18,135 11,710  18,133  11,703
Average diluted shares outstanding 18,183 11,757  18,182  11,750
         
See accompanying Notes to Unaudited Consolidated Financial Statements.
 
OceanFirst Financial Corp.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
       
  At June 30, 2010 At December 31, 2009 At June 30, 2009
       
STOCKHOLDERS' EQUITY      
Stockholders' equity to total assets   8.78%   9.04%   8.48%
Common shares outstanding (in thousands)  18,823  18,822  12,372
Stockholders' equity per common share  $10.35  $9.75  $10.09
Tangible stockholders' equity per common share  10.35  9.75  10.09
       
ASSET QUALITY      
Non-performing loans:       
 Real estate – one-to-four family  $21,246  $19,142  $12,290
 Commercial real estate  2,831  5,152  5,361
 Construction  368  368  67
 Consumer  3,789  3,031  2,517
 Commercial    979    627    702
 Total non-performing loans  29,213  28,320  20,937
REO, net   2,607   2,613    1,348
 Total non-performing assets  $31,820  $30,933   $22,285
       
Delinquent loans 30 to 89 days  $18,424  $15,528   $19,616
       
Allowance for loan losses   $17,146  $14,723   $12,758
Allowance for loan losses as a percent of total  loans receivable     1.02%     0.89%     0.77%
Allowance for loan losses as a percent of      
 non-performing loans  58.69  51.99  60.94
Non-performing loans as a percent of      
 total loans receivable  1.73  1.72  1.26
Non-performing assets as a percent of total  Assets    1.43    1.52    1.17
  For the three months ended For the six months ended
  June 30, June 30,
   2010   2009    2010  2009
PERFORMANCE RATIOS (ANNUALIZED)        
Return on average assets  0.90%  0.76%  0.87%  0.80%
Return on average stockholders' equity  10.54  9.15  10.08  9.79
Interest rate spread  3.65  3.33  3.63  3.29
Interest rate margin  3.78  3.56  3.77  3.52
Operating expenses to average assets  2.42  2.78  2.40  2.64
Efficiency ratio  56.92  65.19  57.40  63.89
 
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(in thousands)
     
LOANS RECEIVABLE    
  At June 30, 2010 December 31, 2009
     
Real estate:    
 One-to-four family   $  957,208  $  954,736
 Commercial real estate, multi-family and land  425,877  396,883
 Construction  10,527  9,241
Consumer  214,178  217,290
Commercial    77,876    70,214
 Total loans  1,685,666  1,648,364
     
 Loans in process   (2,996)   (3,466)
 Deferred origination costs, net   4,893   4,767
 Allowance for loan losses    (17,146)     (14,723)
     
 Total loans, net  1,670,417  1,634,942
     
Less: mortgage loans held for sale   2,945   5,658
 Loans receivable, net  $1,667,472  $1,629,284
     
Mortgage loans serviced for others  $   925,265  $   952,871
Loan pipeline  116,288   90,320
     
  For the three months ended June 30, For the six months ended June 30,
  2010  2009 2010 2009
         
Loan originations  $110,694  $198,437 $218,362  $325,686
Loans sold    20,870  82,670    50,153  131,108
Net charge-offs      686  461    1,977     907
     
DEPOSITS    
  At June 30, 2010 At December 31, 2009
Type of Account    
     
Non-interest bearing  $ 136,517     $ 107,721
Interest-bearing checking  748,776  615,347
Money market deposit  105,354  96,886
Savings  243,228  232,081
Time deposits    306,097   312,164
   $1,539,972  $1,364,199
 
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
     
  FOR THE  THREE MONTHS ENDED JUNE 30,
  2010 2009
    AVERAGE BALANCE     INTEREST AVERAGE YIELD/ COST   AVERAGE BALANCE     INTEREST AVERAGE YIELD/ COST
   (Dollars in thousands)
Assets            
Interest-earning assets:            
 Investment securities (1) $ 55,975 $ 141  1.01% $ 55,822 $ 288  2.06%
 FHLB stock  24,189  255  4.22   17,117  264  6.17
 Mortgage-backed securities (1)  360,030  3,185  3.54  93,215  873  3.75
 Loans receivable, net (2)  1,643,066   22,226   5.41  1,650,217   22,791  5.52
 Total interest-earning assets  2,083,260   25,807   4.96  1,816,371   24,216  5.33
Non-interest-earning assets   110,944       85,951    
 Total assets $2,194,204     $1,902,322    
Liabilities and Stockholders' Equity            
Interest-bearing liabilities:            
 Transaction deposits $1,031,378  2,063   .80 $ 885,946  2,504  1.13
 Time deposits   305,179   1,417  1.86   353,608   2,273  2.57
 Total  1,336,557  3,480  1.04  1,239,554  4,777  1.54
 Borrowed funds   530,071   2,630  1.98   375,891   3,285  3.50
 Total interest-bearing liabilities  1,866,628    6,110  1.31  1,615,445   8,062  2.00
Non-interest-bearing deposits   126,745      111,895    
Non-interest-bearing liabilities   12,900       17,668    
 Total liabilities  2,006,273      1,745,008    
Stockholders' equity   187,931       157,314    
  Total liabilities and stockholders' equity $2,194,204     $1,902,322    
Net interest income    $19,697     $16,154  
Net interest rate spread (3)      3.65%      3.33%
Net interest margin (4)      3.78%      3.56%
   
  FOR THE SIX MONTHS ENDED JUNE 30,
  2010 2009
    AVERAGE BALANCE     INTEREST AVERAGE YIELD/ COST   AVERAGE BALANCE     INTEREST AVERAGE YIELD/ COST
   (Dollars in Thousands)
Assets            
Interest-earning assets:            
 Investment securities (1) $ 55,973 $ 268  .96% $ 55,978 $ 589  2.10%
 FHLB stock  24,236  458   3.78  18,104  413  4.56
 Mortgage-backed securities (1)  333,924  5,947  3.56  84,899  1,641  3.87
 Loans receivable, net (2)  1,638,013  44,209   5.40  1,651,158   45,963  5.57
 Total interest-earning assets  2,052,146  50,882   4.96  1,810,139   48,606  5.37
Non-interest-earning assets   109,330       85,903    
 Total assets $2,161,476     $1,896,042    
Liabilities and Stockholders' Equity            
Interest-bearing liabilities:            
 Transaction deposits $ 998,499  4,046  .81 $ 865,581  5,157  1.19
 Time deposits   305,702   2,865  1.87   356,854   4,716  2.64
 Total  1,304,201  6,911  1.06  1,222,435  9,873  1.62
 Borrowed funds   533,795   5,305  1.99   393,447   6,918  3.52
 Total interest-bearing liabilities  1,837,996  12,216  1.33  1,615,882   16,791  2.08
Non-interest-bearing deposits  120,131      108,629    
Non-interest-bearing liabilities   17,694       17,308    
 Total liabilities  1,975,821      1,741,819    
Stockholders' equity   185,655       154,223    
  Total liabilities and stockholders' equity $2,161,476     $1,896,042    
Net interest income    $38,666     $31,815  
Net interest rate  spread  (3)      3.63%      3.29%
Net interest margin (4)      3.77%      3.52%

(1) Amounts are recorded at average amortized cost.

(2) Amount is net of deferred loan fees, undisbursed loan funds, discounts and premiums and estimated loss allowances and includes loans held for sale and non-performing loans.

(3) Net interest rate  spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average interest-earning assets.
CONTACT:  OceanFirst Financial Corp.          Michael J. Fitzpatrick, Chief Financial Officer          (732)240-4500, ext. 7506          Fax: (732)349-5070          Mfitzpatrick@oceanfirst.com

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March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX