OceanFirst Financial Corp. Announces Second Quarter Earnings and Financial Results

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: Mfitzpatrick@oceanfirst.com

 

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):           
Commercial3.95% $169,093  $293,820  $219,269  $126,578  $212,712 
Residential real estate3.39  181,800  223,032  105,396  189,403  82,555 
Home equity loans and lines4.33  8,282  8,429  3,049  3,757  2,550 
Total3.67% $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:            
Commercial3.16% $216,979 (2)$266,882  $264,938  $315,405  $123,882  
Residential real estate3.37  242,137  148,675  226,492  156,308  120,771  
Home equity loans and lines4.37  12,128  10,666  12,961  10,498  14,256  
Total3.30% $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.

DEPOSITSAt
 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 checking3,022,887  2,647,487  2,539,428  2,400,331  2,342,913 
Money market deposit680,199  620,145  578,147  593,457  642,985 
Savings1,456,931  1,420,628  898,174  901,168  909,501 
Time deposits1,645,971  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 QUALITYJune 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-occupied4,582  4,219  4,811  4,537  4,818 
Commercial real estate - investor5,274  3,384  2,917  4,073  4,050 
Residential real estate6,568  5,920  7,181  5,953  5,747 
Home equity loans and lines3,034  2,533  2,733  2,683  2,974 
Total non-performing loans21,044  16,263  17,849  17,453  17,796 
Other real estate owned248  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 
Performing16,365  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 loans182.99  182.22  94.41  95.32  90.67 
Non-performing loans as a percent of total loans receivable0.25  0.21  0.29  0.29  0.30 
Non-performing assets as a percent of total assets0.19  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-OFFSFor 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 loans401  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 estate212  (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)                 
Commercial5,409,238  59,460  4.42  4,960,991  59,875  4.85  3,309,869  42,579  5.16 
Residential2,507,076  23,870  3.81  2,473,410  24,628  3.98  2,187,417  22,329  4.08 
Home Equity328,144  3,853  4.72  339,003  4,070  4.83  347,028  4,656  5.38 
Other76,382  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, net8,295,622  88,347  4.28  7,850,662  89,944  4.61  5,948,312  70,917  4.78 
Total interest-earning assets9,780,417  95,877  3.94  9,100,923  98,207  4.34  7,096,216  78,410  4.43 
Non-interest-earning assets1,334,169      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 market652,485  705  0.43  614,062  1,040  0.68  631,297  1,358  0.86 
Savings1,445,953  414  0.12  1,403,338  1,555  0.45  915,701  301  0.13 
Time deposits1,623,890  6,386  1.58  1,459,348  6,209  1.71  934,470  3,863  1.66 
Total6,688,959  12,305  0.74  6,284,541  13,936  0.89  4,986,009  9,762  0.79 
FHLB Advances476,598  1,946  1.64  631,329  2,824  1.80  404,951  2,320  2.30 
Securities sold under agreements to repurchase131,382  138  0.42  82,105  95  0.47  62,243  64  0.41 
Other borrowings220,948  2,821  5.14  118,851  1,707  5.78  99,591  1,427  5.75 
Total interest-bearing liabilities7,517,887  17,210  0.92  7,116,826  18,562  1.05  5,552,794  13,573  0.98 
Non-interest-bearing deposits2,018,044      1,687,582      1,302,147     
Non-interest-bearing liabilities124,997      113,477      82,793     
Total liabilities9,660,928      8,917,885      6,937,734     
Stockholders’ equity1,453,658      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)           
Commercial5,185,114  119,335  4.63  3,260,855  83,987  5.19 
Residential2,490,243  48,499  3.90  2,141,032  43,733  4.09 
Home Equity333,574  7,923  4.78  350,175  9,363  5.39 
Other81,930  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, net8,073,141  178,291  4.44  5,858,599  139,918  4.82 
Total interest-earning assets9,440,669  194,084  4.13  7,006,083  154,832  4.46 
Non-interest-earning assets1,283,029      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 market633,273  1,745  0.55  616,384  2,468  0.81 
Savings1,424,646  1,969  0.28  909,906  587  0.13 
Time deposits1,541,619  12,596  1.64  933,410  7,314  1.58 
Total6,486,750  26,241  0.81  4,977,762  18,401  0.75 
FHLB Advances553,963  4,770  1.73  372,499  4,160  2.25 
Securities sold under agreements to repurchase106,743  234  0.44  63,761  119  0.38 
Other borrowings169,900  4,527  5.36  99,569  2,927  5.93 
Total interest-bearing liabilities7,317,356  35,772  0.98  5,513,591  25,607  0.94 
Non-interest-bearing deposits1,852,813      1,257,041     
Non-interest-bearing liabilities119,237      69,443     
Total liabilities9,289,406      6,840,075     
Stockholders’ equity1,434,292      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 
Securities62,832  1,549  64,381 
Loans940,885  (813) 940,072 
Accrued interest receivable2,382    2,382 
Bank Owned Life Insurance22,440    22,440 
Deferred tax asset5,201  (1,624) 3,577 
Other assets18,662  (2,706) 15,956 
Core deposit intangible  12,130  12,130 
Total assets acquired1,103,504  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 
Securities144,460  39  144,499 
Loans614,285  4,123  618,408 
Accrued interest receivable1,779    1,779 
Deferred tax asset(3,254) (668) (3,922)
Other assets10,327  (1,937) 8,390 
Core deposit intangible  2,117  2,117 
Total assets acquired788,396  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.

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