updated 4/20/2011 5:16:07 PM ET 2011-04-20T21:16:07

TOMS RIVER, N.J., April 20, 2011 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (Nasdaq:OCFC), the holding company for OceanFirst Bank (the "Bank"), today announced that diluted earnings per share increased 16.7%, to $0.28, for the quarter ended March 31, 2011 from $0.24, for the corresponding prior year quarter. Additional highlights for the quarter included:

  • The net interest margin expanded on a linked quarter basis to 3.60% for the quarter ended March 31, 2011, as compared to 3.52% for the quarter ended December 31, 2010.
  • Non-performing loans decreased by $1.8 million, or 4.9%, at March 31, 2011 as compared to December 31, 2010 and represent 2.15% of total loans receivable.
  • Total revenue for the quarter ended March 31, 2011 (i.e., net interest income and total other income) increased 3.9% compared to the same prior year quarter as the balance sheet grew by 2.9% year over year.
  • Return on average stockholders' equity was 10.12% for the quarter ended March 31, 2011. The Company remains well-capitalized with the tangible common equity ratio increasing to 9.10% at March 31, 2011.

The Company also announced that the Board of Directors declared its fifty-seventh consecutive quarterly cash dividend on common stock. The dividend for the quarter ended March 31, 2011 was declared in the amount of $0.12 per share to be paid on May 13, 2011 to shareholders of record on May 2, 2011. 

Chairman and CEO John R. Garbarino observed, "Our strong earnings, healthy capital position and stabilizing credit metrics continue to provide a compelling value proposition for our shareholders."

Results of Operations

Net income for the three months ended March 31, 2011 was $5.1 million, or $0.28 per diluted share, as compared to net income of $4.4 million, or $0.24 per diluted share, for the corresponding prior year period. 

Net interest income for the quarter ended March 31, 2011 increased to $19.3 million, as compared to $19.0 million in the same prior year period, reflecting greater interest-earning assets partly offset by a lower year-over-year net interest margin. Average interest-earning assets increased $128.3 million, or 6.3%, to $2,149.0 million for the quarter ended March 31, 2011, as compared to the same prior year period. The increase in average interest-earning assets was primarily due to the increase in average investment securities and mortgage-backed securities, which together increased $98.2 million, or 27.0%, for the quarter ended March 31, 2011, as compared to the same prior year period. The net interest margin decreased to 3.60% for the quarter ended March 31, 2011 from 3.76% in the same prior year period due to the investment of strong deposit flows into interest-earning deposits and investment securities at a modest net interest spread. Additionally, high loan refinance volume caused yields on loans and mortgage-backed securities to reset downward. The yield on average interest-earning assets decreased to 4.52% for the quarter ended March 31, 2011, as compared to 4.96% in the same prior year period. The cost of average interest-bearing liabilities decreased to 1.04% for the quarter ended March 31, 2011, as compared to 1.35% in the same prior year period. The decrease in the cost of interest-bearing liabilities was partly offset by an increase of $99.6 million in average interest-bearing liabilities for the three months ended March 31, 2011, as compared to the same prior year period consisting of an increase in average interest-bearing deposits of $263.4 million and a decrease in average borrowed funds of $163.8 million. For the quarter ended March 31, 2011, the net interest margin increased from the prior linked quarter of 3.52%, primarily due to a decrease in the cost of transaction deposits. 

For the quarter ended March 31, 2011, the provision for loan losses decreased to $1.7 million, as compared to $2.2 million for the corresponding prior year period. The decreased provision is primarily due to lower levels of non-performing loans and partially due to lower loan balances, as compared to December 31, 2010. Additionally, net charge-offs for the quarter ended March 31, 2011, were comparable to the fourth quarter of 2010 and lower than the corresponding prior year quarter.
 

Other income increased to $3.5 million for the quarter ended March 31, 2011, as compared to $3.0 million in the same prior year period. Fees and service charges increased to $2.7 million for the quarter ended March 31, 2011, as compared to $2.6 million for the corresponding prior year period due to higher fees from merchant services and investment services. The net gain on sales of loans increased to $759,000 for the quarter ended March 31, 2011, as compared to $503,000 for the corresponding prior year period due to an increase in the volume of loans sold. The net loss from other real estate operations was $366,000 for the quarter ended March 31, 2011, as compared to a loss of $335,000 in the same prior year period due to write-downs in the value of properties previously acquired. 

Operating expenses increased by 3.4%, to $13.1 million for the quarter ended March 31, 2011, as compared to $12.7 million for the corresponding prior year period. The increase was primarily due to compensation and employee benefits costs, which increased by $512,000, or 7.8%, to $7.0 million for the quarter ended March 31, 2011, as compared to the corresponding prior year period. Occupancy expense decreased by $269,000 for the quarter ended March 31, 2011, as compared to the corresponding prior year period due to a $184,000 benefit from the negotiated settlement of the remaining office lease obligation at Columbia Home Loans, LLC ("Columbia"), the Company's mortgage banking subsidiary, which was shuttered in the fourth quarter of 2007.  Federal deposit insurance expense for the quarter ended March 31, 2011 increased by $107,000 from the corresponding prior year period primarily due to higher deposit balances. 

The provision for income taxes was $2.9 million for the quarter ended March 31, 2011, as compared to $2.6 million for the same prior year period. The effective tax rate decreased to 35.9% for the quarter ended March 31, 2011, as compared to 37.4% in the same prior year period. 

Financial Condition

Total assets increased by $12.0 million, or 0.5%, to $2,263.3 million at March 31, 2011, from $2,251.3 million at December 31, 2010. Investment securities available for sale increased by 36.3%, to $125.2 million at March 31, 2011, as compared to $91.9 million at December 31, 2010, due to purchases of government agency securities. Mortgage-backed securities available for sale increased by 2.0%, to $348.0 million at March 31, 2011, as compared to $341.2 million at December 31, 2010, due to purchases of mortgage-backed securities and collateralized mortgage obligations issued by U.S. government sponsored enterprises. Loans receivable, net decreased by $24.5 million, or 1.5%, to $1,636.3 million at March 31, 2011, from $1,660.8 million at December 31, 2010, primarily due to sales and prepayments of one-to-four family loans.  

Deposits decreased by $18.2 million, or 1.1%, to $1,645.8 million at March 31, 2011 from $1,664.0 million at December 31, 2010. The decline was concentrated in time deposits, which decreased $12.0 million, as the Bank continued to moderate its pricing for this product. Partly as a result of the decrease in deposits, Federal Home Loan Bank advances increased $25.7 million, to $290.7 million at March 31, 2011 from $265.0 million at December 31, 2010. Stockholders' equity increased 2.4%, to $206.0 million at March 31, 2011, as compared to $201.3 million at December 31, 2010, primarily 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 $35.7 million at March 31, 2011, a $1.8 million decrease from $37.5 million at December 31, 2010, primarily due to a decrease of $1.2 million relating to commercial real estate loans. Non-performing loans at March 31, 2011 include $661,000 of loans repurchased due to early payment default that were written down to market value on the date of repurchase and $1.3 million of loans previously held for sale that were also written down to market value. Net loan charge-offs decreased to $970,000 for the three months ended March 31, 2011, as compared to $1.3 million for the corresponding prior year period. For the quarter ended March 31, 2011 net charge-offs included $121,000 of 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 March 31, 2011, unchanged from December 31, 2010. There was no provision for repurchased loans and no charge-offs during the quarter ended March 31, 2011. At March 31, 2011, there were two outstanding loan repurchase requests on loans with a total principal balance of $302,000 which the Company is contesting. 

Conference Call

As previously announced, the Company will host an earnings conference call on Thursday, April 21, 2011 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 449666, from one hour after the end of the call until May 3, 2011. 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 savings bank with $2.3 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 within the meaning of the Private Securities 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 the subsidiaries include, but are not limited to, changes in interest rates, general economic conditions, levels of unemployment in the Bank's lending area, 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 are further discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2010 and should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake – and specifically disclaims any obligation – to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

OceanFirst Financial Corp .
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
       
  March 31, 2011 December 31, 2010 March 31, 2010
  (unaudited)   (unaudited)
ASSETS      
       
Cash and due from banks $  31,362  $    31,455  $  20,884
Investment securities available for sale  125,240    91,918  39,177
Federal Home Loan Bank of New York stock, at cost  18,370  16,928  27,906
Mortgage-backed securities available for sale  347,966   341,175  367,189
Loans receivable, net 1,636,251  1,660,788  1,640,149
Mortgage loans held for sale  2,926  6,674  1,668
Interest and dividends receivable  6,760  6,446  6,818
Real estate owned, net   1,914   2,295  2,864
Premises and equipment, net  22,449  22,488  21,862
Servicing asset  5,466  5,653  6,147
Bank Owned Life Insurance  41,062  40,815  40,166
Other assets  23,517   24,695    24,403
       
Total assets $2,263,283 $2,251,330  $2,199,233
       
LIABILITIES AND STOCKHOLDERS' EQUITY

 
     
Deposits $1,645,788 $1,663,968  $1,381,108
Securities sold under agreements to repurchase with retail customers  

 75,514
 

 67,864
 

 67,969
Federal Home Loan Bank advances  290,700  265,000  521,100
Other borrowings  27,500  27,500  27,500
Advances by borrowers for taxes and insurance  7,855  6,947  8,047
Other liabilities    9,940    18,800   6,328
       
Total liabilities  2,057,297   2,050,079  2,012,052
       
Stockholders' equity:      
Common stock, $.01 par value, 55,000,000 shares authorized, 33,566,772 shares issued and 18,844,232, 18,822,556 and 18,821,956 shares outstanding at March 31, 2011, December 31, 2010 and March 31, 2010, respectively  

 

 

 336
 

 

 

 336
 

 

 

 336
Additional paid-in capital  260,760  260,739  259,837
Retained earnings  177,624  174,677  165,277
Accumulated other comprehensive loss      (4,124)     (5,560)  (9,102)
Less: Unallocated common stock held by Employee Stock Ownership Plan  

  (4,411)
 

    (4,484)
 

  (4,703)
Treasury stock, 14,722,540, 14,744,216 and 14,744,816 shares at March 31, 2011, December 31, 2010 and March 31, 2010, respectively  

 (224,199)
 

     (224,457)
 

   (224,464)
Common stock acquired by Deferred Compensation Plan  950   946  943
Deferred Compensation Plan Liability        (950)       (946)      (943)
Total stockholders' equity   205,986    201,251   187,181
Total liabilities and stockholders' equity $2,263,283 $2,251,330   $2,199,233
 
OceanFirst Financial Corp .
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
     
  For the three months

ended March 31,
  2011 2010
  (unaudited)
     
Interest income:    
Loans  $21,164  $21,984
Mortgage-backed securities   2,563  2,762
Investment securities and other    564      330
Total interest income    24,291  25,076
     
Interest expense:     
Deposits  2,909  3,432
Borrowed funds   2,045    2,674
Total interest expense      4,954    6,106
 

Net interest income
 

   19,337
 

 18,970
     
Provision for loan losses   1,700    2,200
Net interest income after provision for loan losses  

   17,637
 

 16,770
     
Other income:    
Loan servicing income  96      46
Fees and service charges  2,722  2,557
Net gain on sales of loans available for sale  759  503
Net loss from other real estate operations  (366)   (335)
Income from Bank Owned Life Insurance  248  196
Other       --    1
Total other income     3,459   2,968
     
Operating expenses:    
Compensation and employee benefits    7,042  6,530
Occupancy  1,195  1,464
Equipment  647  476
Marketing  336  304
Federal deposit insurance  741  634
Data processing  883  830
Legal  256  296
Check card processing  320  317
Accounting and audit  140  143
General and administrative    1,568    1,708
Total operating expenses    13,128  12,702
     
Income before provision for income taxes   7,968  7,036
Provision for income taxes    2,862   2,632
Net income  $  5,106  $ 4,404
     
Basic earnings per share  $ 0.28  $ 0.24
Diluted earnings per share  $ 0.28  $ 0.24
     
Average basic shares outstanding  18,162  18,132
Average diluted shares outstanding  18,211  18,180
 
OceanFirst Financial Corp.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
       
       
  At March 31, 2011 At December 31, 2010 At March 31, 2010
       
STOCKHOLDERS' EQUITY      
Stockholders' equity to total assets   9.10%   8.94%   8.51%
Common shares outstanding (in thousands)  18,844  18,823  18,822
Stockholders' equity per common share  $10.93  $10.69  $9.94
Tangible stockholders' equity per common share  10.93  10.69  9.94
       
ASSET QUALITY      
Non-performing loans:       
Real estate – one-to-four family  $26,278  $26,577  $22,633
Commercial real estate  4,651  5,849  4,844
Construction  368  368  368
Consumer  4,272  4,626  3,992
Commercial   117   117   466
Total non-performing loans  35,686  37,537  32,303
REO, net    1,914   2,295    2,864
Total non-performing assets  $37,600  $39,832  $35,167
       
Delinquent loans 30 to 89 days   $18,191  $14,421  $11,478
       
Allowance for loan losses   $20,430  $19,700  $15,632
Allowance for loan losses as a percent of total loans receivable  

  1.23%
 

  1.17%
 

   0.94%
Allowance for loan losses as a percent of  non-performing loans  57.25  52.48   48.39
Non-performing loans as a percent of total loans receivable  2.15  2.23  1.95
Non-performing assets as a percent of total assets  1.66  1.77  1.60
   
  For the three months ended
  March 31,
    2011  2010
PERFORMANCE RATIOS (ANNUALIZED)    
Return on average assets     0.90%  0.83%
Return on average stockholders' equity  10.12  9.61
Interest rate spread  3.48  3.61
Interest rate margin  3.60  3.76
Operating expenses to average assets  2.32  2.39
Efficiency ratio  57.59  57.90
 
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(in thousands)
     
LOANS RECEIVABLE    
  At March 31, 2011 At December 31, 2010
     
Real estate:    
One-to-four family   $ 933,261  $ 955,063
Commercial real estate, multi-family and land  434,888  435,127
Construction  11,318  13,748
Consumer  202,608  205,725
Commercial     75,951    76,692
Total loans  1,658,026  1,686,355
     
Loans in process   (3,187)  (4,055)
Deferred origination costs, net   4,768   4,862
Allowance for loan losses    (20,430)    (19,700)
     
Total loans, net  1,639,177  1,667,462
     
Less: mortgage loans held for sale   2,926   6,674
Loans receivable, net  $1,636,251  $1,660,788
     
Mortgage loans serviced for others  $ 905,163  $ 913,778
Loan pipeline  73,464   84,113
   
  For the three months ended

March 31,
  2011 2010
     
Loan originations  $102,949 $107,668
Loans sold   40,218  29,283
Net charge-offs  970  1,291
     
DEPOSITS    
  At March 31, 2011 At December 31, 2010
Type of Account    
Non-interest-bearing  $ 137,545    $ 126,429
Interest-bearing-checking  904,658  920,324
Money market deposit  111,203  108,421
Savings  219,274  223,650
Time deposits    273,108   285,144
   $1,645,788  $1,663,968
 
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
             
  FOR THE THREE MONTHS ENDED MARCH 31,
  2011 2010
  AVERAGE

BALANCE
INTEREST AVERAGE YIELD/

COST
AVERAGE

BALANCE
INTEREST AVERAGE YIELD/

COST
  (Dollars in thousands)
Assets            
Interest-earning assets:            
Interest-earning deposits and short-term investments  

 $ 21,996
 

$ 15
 

 .27%
 

$ --
 

$ --
 

 --%
Investment securities (1)   126,090   299   .95    55,971   126   .90
FHLB stock  17,534  250  5.70  24,284  204  3.36
Mortgage-backed securities (1)  335,602  2,563  3.05  307,528  2,762  3.59
Loans receivable, net (2)  1,647,750  21,164    5.14  1,632,904   21,984  5.39
Total interest-earning assets  2,148,972  24,291   4.52  2,020,687   25,076  4.96
Non-interest-earning assets   112,969       107,697    
Total assets $2,261,941     $2,128,384    
Liabilities and Stockholders' Equity            
Interest-bearing liabilities:            
Transaction deposits $1,255,244  1,665  .53 $ 965,181  1,984  .82
Time deposits   279,566   1,244  1.78   306,230   1,448  1.89
Total  1,534,810  2,909  .76  1,271,411  3,432  1.08
Borrowed funds   373,792   2,045  2.19   537,561   2,674  1.99
Total interest-bearing liabilities  1,908,602   4,954  1.04  1,808,972   6,106  1.35
Non-interest-bearing deposits  130,227      113,518    
Non-interest-bearing liabilities   21,358       22,540    
Total liabilities  2,060,187      1,945,030    
Stockholders' equity   201,754       183,354    
Total liabilities and stockholders' equity $2,261,941     $2,128,384    
Net interest income    $19,337     $18,970  
Net interest rate spread (3)      3.48%      3.61%
Net interest margin (4)      3.60%      3.76%
             
(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:  Michael J. Fitzpatrick
          Chief Financial Officer
          OceanFirst Financial Corp.
          Tel:  (732) 240-4500, ext. 7506
          Fax: (732) 349-5070
          Email: Mfitzpatrick@oceanfirst.com

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