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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________________ 
FORM 10-Q
 ________________________________________________  
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-11713
________________________________________________  
OceanFirst Financial Corp.
(Exact name of registrant as specified in its charter)
 ________________________________________________ 
Delaware22-3412577
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
110 West Front Street, Red Bank,NJ07701
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (732) 240-4500
________________________________________________  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per shareOCFCNASDAQ
Depositary Shares (each representing a 1/40th interest in a share of 7.0% Series A Non-Cumulative, perpetual preferred stock)OCFCPNASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No   .
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer Accelerated Filer 
Non-accelerated Filer Smaller Reporting Company 
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES      NO  .
As of May 2, 2022 there were 59,390,241 shares of the Registrant’s Common Stock, par value $0.01 per share, outstanding.


OceanFirst Financial Corp.
INDEX TO FORM 10-Q
 
  PAGE
PART I.FINANCIAL INFORMATION
Item 1.Consolidated Financial Statements (unaudited)
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FINANCIAL SUMMARY(1)
At or for the Quarters Ended
(dollars in thousands, except per share amounts)March 31, 2022December 31, 2021March 31, 2021
SELECTED FINANCIAL CONDITION DATA:
Total assets$12,164,945 $11,739,616 $11,577,472 
Loans receivable, net of allowance for loan credit losses9,065,679 8,583,352 7,820,590 
Deposits10,056,233 9,732,816 9,502,812 
Stockholders’ equity1,519,334 1,516,553 1,498,719 
SELECTED OPERATING DATA:
Net interest income84,227 80,586 73,604 
Credit loss expense (benefit) 1,851 (1,573)(620)
Other income8,852 9,410 20,835 
Operating expenses57,495 64,834 51,683 
Net income 25,759 22,657 32,697 
Net income available to common stockholders24,755 21,653 31,693 
Diluted earnings per share0.42 0.37 0.53 
SELECTED FINANCIAL RATIOS:
Stockholders’ equity per common share at end of period25.58 25.63 24.84 
Cash dividend per share0.17 0.17 0.17 
Dividend payout ratio per common share40.48 %45.95 %32.08 %
Stockholders’ equity to total assets12.49 12.92 12.95 
Return on average assets (2) (3)
0.84 0.72 1.12 
Return on average stockholders’ equity (2) (3)
6.57 5.65 8.59 
Net interest rate spread (4)
3.08 2.88 2.78 
Net interest margin (5)
3.18 2.99 2.93 
Operating expenses to average assets (2) (3)
1.95 2.15 1.83 
Efficiency ratio (3) (6)
61.77 72.04 54.73 
Loans-to-deposits ratio90.60 88.60 82.84 
ASSET QUALITY:
Non-performing loans (8)
$26,925 $25,494 $42,758 
Non-performing assets (8)
27,031 25,600 42,864 
Allowance for loan credit losses as a percent of total loans receivable (7) (9)
0.56 %0.57 %0.76 %
Allowance for loan credit losses as a percent of total non-performing loans (8) (9)
187.92 191.61 140.27 
Non-performing loans as a percent of total loans receivable (7) (8)
0.30 0.30 0.54 
Non-performing assets as a percent of total assets (8)
0.22 0.22 0.37 
(1) With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2) Ratios are annualized.
(3) Performance ratios included net expenses related to merger related expenses, net branch consolidation expenses, and net loss on equity investments of $5.2 million, or $4.0 million, net of tax benefit, for the quarter ended March 31, 2022. Performance ratios included net expenses related to merger related expenses, net branch consolidation expenses, and net loss on equity investments of $9.0 million, or $6.8 million, net of tax benefit, for the quarter ended December 31, 2021. Performance ratios included net benefit related to merger related expenses, net branch consolidation expenses, and net gain on equity investments of $6.9 million, or $5.2 million, net of tax expense, for the quarter ended March 31, 2021.
(4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(6) Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.
(7) Total loans receivable excludes loans held-for-sale.
(8) Non-performing assets consist of non-performing loans and real estate acquired through foreclosure. Non-performing loans consist of all loans 90 days or more past due and other loans in the process of foreclosure. It is the Company’s policy to cease accruing interest on all such loans and to reverse previously accrued interest.
3

(9) Loans acquired from prior bank acquisitions were recorded at fair value. The net unamortized credit and purchased with credit deterioration (“PCD”) marks on these loans, not reflected in the allowance for loan credit losses, was $16.9 million, $18.9 million, and $25.7 million at March 31, 2022, December 31, 2021 and March 31, 2021, respectively.

4

Summary
OceanFirst Financial Corp. is the holding company for OceanFirst Bank N.A. (the “Bank”), a regional bank serving business and retail customers throughout New Jersey and the major metropolitan areas of Philadelphia, New York, Baltimore, Washington D.C., and Boston. The term “Company” refers to OceanFirst Financial Corp., the Bank and all of their subsidiaries on a consolidated basis. The Company’s results of operations are primarily dependent on net interest income, which is the difference between the interest income earned on interest-earning assets, such as loans and investments, and the interest expense on its interest-bearing liabilities, such as deposits and borrowings. The Company also generates non-interest income such as income from bankcard services, trust and asset management products and services, sales of loans and securities, deposit account services, bank owned life insurance, commercial loan swap income, gain on sale of loans and on equity investments, and other fees. The Company’s operating expenses primarily consist of compensation and employee benefits, occupancy and equipment, marketing, federal deposit insurance and regulatory assessments, data processing, check card processing, professional fees and other general and administrative expenses. The Company’s results of operations are also significantly affected by competition, general economic conditions, including levels of unemployment and real estate values, as well as changes in market interest rates, inflation, government policies and actions of regulatory agencies.
Key developments relating to the Company’s financial results and corporate activities for the quarter ended March 31, 2022 were as follows:

Loan and Deposit Growth: Loan growth for the quarter was $486.1 million, reflecting record loan originations of $1.02 billion and the purchase of residential loan pools of $161.7 million. The committed loan pipeline remains strong at $515.4 million. In addition, deposits increased $323.4 million during the first quarter, while cost of deposits decreased four basis points to 0.16%, from 0.20%, in the prior linked quarter. The loans-to-deposits ratio increased to 90.60%, from 88.60%, in the prior linked quarter.
Strengthening Net Interest Income and Margin: Net interest income increased by $3.6 million to $84.2 million, from $80.6 million, in the prior linked quarter. Net interest margin increased to 3.18%, as compared to 2.99% in the prior linked quarter, largely driven by the deployment of excess liquidity to fund interest earning assets.
Expense Management: Total operating expenses decreased to $57.5 million, from $64.8 million in the prior linked quarter, reflecting improving trends in the Bank’s cost reduction initiatives. These efforts improved the efficiency ratio to 61.77%, from 72.04%, in the prior linked quarter.
Branch Consolidations: The Company completed its consolidation of 10 branches during the first quarter for a total of 77 branches consolidated since 2013. Average deposits per branch totaled $264.6 million as of March 31, 2022.
Net income available to common stockholders for the quarter ended March 31, 2022 was $24.8 million, or $0.42 per diluted share, as compared to $31.7 million, or $0.53 per diluted share, for the corresponding prior year period. The dividends paid to preferred stockholders were $1.0 million for each of the quarters ended March 31, 2022 and 2021. Net income available to common stockholders for the quarter ended March 31, 2022 included merger related expenses, net branch consolidation expenses, and net loss on equity investments of $2.0 million, $402,000, and $2.8 million, respectively. Net income available to common stockholders for the quarter ended March 31, 2021 included merger related expenses, net branch consolidation expenses, and a net gain on equity investments of $381,000, $1.0 million, and $8.3 million, respectively.
The Company remains well-capitalized with a stockholders’ equity to total assets ratio of 12.49% at March 31, 2022.
The Company’s Board of Directors declared a quarterly cash dividend of $0.17 per share. The dividend, related to the quarter ended March 31, 2022, will be paid on May 20, 2022 to common stockholders of record on May 9, 2022. The Board also declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing a 1/40th interest in the Series A Preferred Stock. This dividend will be paid on May 16, 2022 to preferred stockholders of record on April 29, 2022.
5

Analysis of Net Interest Income
Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rate earned or paid on them. For the three months ended March 31, 2022 and 2021, interest income included net loan fees of $970,000 and $1.4 million, respectively.
The following tables set forth certain information relating to the Company for the three months ended March 31, 2022 and 2021. The yields and costs, which are annualized, are derived by dividing the income or expense by the average balance of the related assets or liabilities, respectively, for the periods shown except where noted otherwise. Average balances are derived from average daily balances. The yields and costs include certain fees and costs which are considered adjustments to yields.
 For the Three Months Ended March 31,
 20222021
(dollars in thousands)Average BalanceInterest
Average
Yield/
Cost (1)
Average BalanceInterest
Average
Yield/
Cost (1)
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments$88,826 $37 0.17 %$1,138,911 $277 0.10 %
Securities (2)
1,846,452 8,478 1.86 1,311,683 6,689 2.07 
Loans receivable, net (3)
Commercial6,037,639 58,355 3.92 5,127,940 53,670 4.24 
Residential real estate2,542,655 21,339 3.36 2,327,838 20,069 3.45 
Home equity loans and lines and other consumer (“other consumer”)257,024 2,774 4.38 326,907 4,169 5.17 
Allowance for loan credit losses, net of deferred loan costs and fees(40,457)— — (52,887)— — 
Loans receivable, net8,796,861 82,468 3.79 7,729,798 77,908 4.09 
Total interest-earning assets10,732,139 90,983 3.43 10,180,392 84,874 3.38 
Non-interest-earning assets1,215,071 1,259,109 
Total assets$11,947,210 $11,439,501 
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking$4,377,368 2,149 0.20 %$3,711,976 4,311 0.47 %
Money market788,063 318 0.16 757,634 367 0.20 
Savings1,609,415 125 0.03 1,522,603 179 0.05 
Time deposits767,709 1,449 0.77 1,221,123 3,639 1.21 
Total7,542,555 4,041 0.22 7,213,336 8,496 0.48 
Federal Home Loan Bank (“FHLB”) advances29,433 35 0.48 — — — 
Securities sold under agreements to repurchase117,623 42 0.14 129,444 95 0.30 
Other borrowings228,522 2,638 4.68 228,368 2,679 4.76 
Total borrowings375,578 2,715 2.93 357,812 2,774 3.14 
Total interest-bearing liabilities7,918,133 6,756 0.35 7,571,148 11,270 0.60 
Non-interest-bearing deposits2,401,797 2,212,273 
Non-interest-bearing liabilities99,441 160,500 
Total liabilities10,419,371 9,943,921 
Stockholders’ equity1,527,839 1,495,580 
Total liabilities and equity$11,947,210 $11,439,501 
Net interest income$84,227 $73,604 
Net interest rate spread (4)
3.08 %2.78 %
Net interest margin (5)
3.18 %2.93 %
Total cost of deposits (including non-interest-bearing deposits)0.16 %0.37 %
(1)Average yields and costs are annualized.
(2)Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost net of allowance for securities credit losses.
(3)Amount is net of deferred loan costs and fees, undisbursed loan funds, discounts and premiums and allowance for loan credit losses, and includes loans held for sale and non-performing loans.
(4)Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5)Net interest margin represents net interest income divided by average interest-earning assets.
6

Comparison of Financial Condition at March 31, 2022 and December 31, 2021
Total assets increased by $425.3 million to $12.16 billion at March 31, 2022, from $11.74 billion at December 31, 2021. Total loans increased by $486.1 million, to $9.11 billion at March 31, 2022, from $8.62 billion at December 31, 2021, primarily due to loan originations in commercial and residential real estate and purchases of $161.7 million of residential real estate loan pools. Total debt securities decreased by $61.5 million at March 31, 2022, as compared to December 31, 2021.

Deposits increased by $323.4 million to $10.06 billion at March 31, 2022, from $9.73 billion at December 31, 2021. Total deposits, excluding time deposits, increased by $211.1 million to $9.17 billion at March 31, 2022, from $8.96 billion at December 31, 2021, due to organic growth in all deposit categories. Time deposits increased to $887.3 million at March 31, 2022, from $775.0 million at December 31, 2021 primarily due to an increase in brokered time deposits, which were less costly than comparable term FHLB advances. The loans-to-deposit ratio at March 31, 2022 was 90.6%, as compared to 88.6% at December 31, 2021. FHLB advances increased to $75.0 million at March 31, 2022 from $0 at December 31, 2021 to fund loan growth. Other borrowings decreased by $34.7 million to $194.4 million at March 31, 2022, from $229.1 million at December 31, 2021, primarily due to the extinguishment of $35.0 million of subordinated debt.

Stockholders’ equity was $1.52 billion at March 31, 2022 and December 31, 2021 as net income of $25.8 million for the quarter was primarily offset by increased accumulated other comprehensive loss of $12.3 million, common and preferred stock dividends of $11.0 million, and repurchases of common stock. Accumulated other comprehensive loss increased by $12.3 million to $15.2 million at March 31, 2022 from $2.8 million at December 31, 2021, primarily due to unrealized losses on debt securities available-for-sale, which were impacted by higher interest rates. For the quarter ended March 31, 2022, the Company repurchased 100,444 shares under its stock repurchase programs at a weighted average cost of $21.35 and there were 3,207,217 shares available for repurchase at March 31, 2022 under the existing repurchase programs. Stockholders’ equity per common share decreased to $25.58 at March 31, 2022, as compared to $25.63 at December 31, 2021.

Comparison of Operating Results for the Three Months Ended March 31, 2022 and March 31, 2021
General
Net income available to common stockholders for the quarter ended March 31, 2022 was $24.8 million, or $0.42 per diluted share, as compared to $31.7 million, or $0.53 per diluted share, for the corresponding prior year period. Net income available to common stockholders for the quarter ended March 31, 2022 included merger related expenses, net branch consolidation expenses, and net loss on equity investments of $2.0 million, $402,000, and $2.8 million, respectively. These items decreased net income by $4.0 million, net of tax, for the quarter ended March 31, 2022. Net income available to common stockholders for the quarter ended March 31, 2021 included merger related expenses, net branch consolidation expenses, and a net gain on equity investments of $381,000, $1.0 million, and $8.3 million, respectively. These items increased net income by $5.2 million, net of tax, for the quarter ended March 31, 2021.
Interest Income
Interest income for the quarter ended March 31, 2022 increased to $91.0 million, as compared to $84.9 million for the corresponding prior year period. Average interest-earning assets increased by $551.7 million for the quarter ended March 31, 2022, as compared to the same prior year period, primarily due to loan and securities growth, which was primarily funded by the redeployment of excess cash. Average loans receivable, net of allowance for loan credit losses, increased by $1.07 billion for the quarter ended March 31, 2022, as compared to the same prior year period. For the quarter ended March 31, 2022, the yield on average interest-earning assets increased to 3.43%, from 3.38% for the corresponding prior year period, primarily due to the deployment of lower-yielding cash into higher-yielding loans and securities.
Interest Expense
Interest expense for the quarter ended March 31, 2022 was $6.8 million, as compared to $11.3 million in the corresponding prior year period. For the quarter ended March 31, 2022, the cost of average interest-bearing liabilities decreased to 0.35%, from 0.60% for the corresponding prior year period, as a result of the downward repricing of deposits. The total cost of deposits (including non-interest bearing deposits) was 0.16% for the quarter ended March 31, 2022, as compared to 0.37%, for the same prior year period. This was partially offset by an increase in average interest-bearing liabilities by $347.0 million for the quarter ended March 31, 2022, as compared to the same prior year period, primarily due to growth in all deposit categories, except time deposits.
7

Net Interest Income and Margin
Net interest income for the quarter ended March 31, 2022, increased to $84.2 million, as compared to $73.6 million for the corresponding prior year period, reflecting an increase in net interest margin. Net interest margin for the quarter ended March 31, 2022 increased to 3.18%, from 2.93% for the same prior year period. The net interest margin expansion was primarily attributable to the decrease in excess balance sheet liquidity used to fund loan and securities growth.
Provision/Benefit for Credit Losses
For the quarter ended March 31, 2022, the credit loss expense was $1.9 million, as compared to a credit loss benefit of $620,000, for the corresponding prior year period. The credit loss expense for the quarter ended March 31, 2022 was driven by slowing prepayment rate assumptions primarily impacting the residential real estate portfolio. In addition, strong loan portfolio growth, and macro-economic forecast uncertainty related to the Russia-Ukraine war was partly offset by positive trends in the Bank’s criticized and classified assets and favorable employment outlook. Net loan recoveries were $92,000 for the quarter ended March 31, 2022, as compared to $280,000 for the corresponding prior year period. Non-performing loans totaled $26.9 million at March 31, 2022, as compared to $42.8 million at March 31, 2021, primarily due to loans that returned to accrual status and partly due to loans that were paid off.
Non-interest Income
For the quarter ended March 31, 2022, other income decreased to $8.9 million, as compared to $20.8 million for the corresponding prior year period. Other income for the quarters ended March 31, 2022 and 2021 included a net loss on equity investments of $2.8 million and a net gain on equity investments of $8.3 million, respectively. The remaining decrease of $910,000 was primarily due to decreases in net gain on sales of loans of $1.7 million and Paycheck Protection Program loan origination referral fees of $662,000 in the prior year, partly offset by an increase in commercial loan swap income of $1.7 million.
Non-interest Expense
Operating expenses increased to $57.5 million for the quarter ended March 31, 2022, as compared to $51.7 million in the same prior year period. Operating expenses for the quarters ended March 31, 2022 and 2021 included $2.4 million and $1.4 million, respectively, of merger related and net branch consolidation expenses. The remaining increase of $4.8 million in operating expenses for the quarter ended March 31, 2022, as compared to the corresponding prior year period, was primarily due to increases in compensation and benefits expense of $2.3 million, relating to the commercial banking strategy and the commercial banking hires in expansion markets of Boston and Baltimore as well as additional hires in New Jersey, New York and Philadelphia, data processing expense of $1.7 million, relating to the Company’s migration to a new core banking system, and occupancy expense of $683,000.
Income Tax Expense
The provision for income taxes was $8.0 million for the quarter ended March 31, 2022, as compared to $10.7 million for the same prior year period. The effective tax rate was 23.6% for the quarter ended March 31, 2022, as compared to 24.6% for the same prior year period.
8

Liquidity and Capital Resources
The primary sources of liquidity specifically available to OceanFirst Financial Corp. are dividends from the Bank, proceeds from sale of investments, and the issuance of preferred and common stock, and debt. For the three months ended March 31, 2022, the holding company received a dividend payment of $20.0 million from the Bank. At March 31, 2022, OceanFirst Financial Corp. held $45.1 million in cash.
The Bank’s primary sources of funds are deposits, principal and interest payments on loans, FHLB advances, access to the Federal Reserve discount window, other borrowings, investment maturities, and proceeds from the sale of loans and investments. While scheduled amortization of loans and securities are predictable sources of funds, deposit flows, loan prepayments, and loan and investment sales are greatly influenced by interest rates, economic conditions, and competition. The Bank has other sources of liquidity if a need for additional funds arises, including various lines of credit at multiple financial institutions.
At March 31, 2022, the Bank had $75.0 million outstanding in overnight borrowings from the FHLB, as compared to $0 at December 31, 2021. The Bank utilizes overnight borrowings from time-to-time to fund short-term liquidity needs. There were no FHLB term advances at March 31, 2022 and December 31, 2021.
During the quarter ended March 31, 2022, the Company redeemed $35.0 million of subordinated debt due September 30, 2026. The debt carried an interest rate of 4.14% based on a floating rate of three months LIBOR plus 392 basis points.
The Company’s cash needs for the quarter ended March 31, 2022 were primarily satisfied by the increase in deposits, proceeds from FHLB advances, principal repayments on debt securities held-to-maturity, and proceeds from maturities and calls of debt securities. The cash was principally utilized for loan originations, purchases of residential loan pools, purchases of debt and equity securities, and redemption of subordinated debt. The Company’s cash needs for the quarter ended March 31, 2021 were primarily satisfied by the sale of equity investments, an increase in deposits, principal repayments on debt securities held-to-maturity, and proceeds from maturities and calls of debt securities. The cash was principally utilized for purchases of debt and equity securities and loan originations.
In the normal course of business, the Bank routinely enters into various off-balance-sheet commitments, primarily relating to the origination and sale of loans. At March 31, 2022, outstanding commitments to originate loans totaled $515.4 million and outstanding undrawn lines of credit totaled $1.63 billion, of which $1.27 billion were commitments to commercial and commercial construction borrowers and $356.0 million were commitments to consumer borrowers and residential construction borrowers. Commitments to fund undrawn lines of credit and commitments to originate loans are agreements to lend to a customer as long as there is no violation of any condition established in the existing contracts. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company’s exposure to credit risk is represented by the contractual amount of the instruments.
Time deposits scheduled to mature in one year or less totaled $528.6 million at March 31, 2022.
At March 31, 2022, the Company also had various contractual obligations, which included debt obligations of $387.2 million, including finance lease obligations of $1.9 million, and an additional $14.7 million in operating lease obligations included in other liabilities. The Company expects to have sufficient funds available to meet current commitments in the normal course of business.
The Company has a detailed contingency funding plan and obtains comprehensive reporting of funding trends on a monthly and quarterly basis, which are reviewed by management. Management also monitors cash on a daily basis to determine the liquidity needs of the Company and the Bank. Additionally, management performs multiple liquidity stress test scenarios on a quarterly basis. The Company and Bank continue to maintain significant liquidity under all stress scenarios.
Under the Company’s stock repurchase program, shares of OceanFirst Financial Corp. common stock may be purchased in the open market and through other privately-negotiated transactions, from time-to-time, depending on market conditions. The repurchased shares are held as treasury stock for general corporate purposes. For the three months ended March 31, 2022, the Company repurchased 100,444 shares of its common stock at a total cost of $2.1 million. For the three months ended March 31, 2021, the Company repurchased 500,000 shares of its common stock at a total cost of $10.0 million. At March 31, 2022, there were 3,207,217 shares available to be repurchased under the stock repurchase programs authorized.
Cash dividends on common stock declared and paid during the first three months of March 31, 2022 were $10.0 million, as compared to $10.2 million for the same prior year period. On April 28, 2022, the Company’s Board of Directors declared a
9

quarterly cash dividend of $0.17 per common share. The dividend is payable on May 20, 2022 to common stockholders of record at the close of business on May 9, 2022.
Cash dividends on preferred stock declared and paid during the first three months of March 31, 2022 and 2021 were $1.0 million for both periods. The Company’s Board of Directors also declared a quarterly cash dividend of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock, payable on May 16, 2022 to preferred stockholders of record on April 29, 2022.
The Company’s ability to continue to pay dividends will be largely dependent upon capital distributions from the Bank, which may be adversely affected by capital restraints imposed by applicable regulations. The Company cannot predict whether the Bank will be permitted under applicable regulations to pay a dividend to the Company. If applicable regulations or regulatory bodies prevent the Bank from paying a dividend to the Company, the Company may not have the liquidity necessary to pay a dividend in the future or pay a dividend at the same rate as historically paid or be able to meet current debt obligations. Additionally, regulations of the Federal Reserve may prevent the Company from either paying or increasing the cash dividend to common stockholders.
As of March 31, 2022 and December 31, 2021, the Company and the Bank satisfy all regulatory capital requirements currently applicable as follows (dollars in thousands):
ActualFor capital adequacy
purposes
To be well-capitalized
under prompt
corrective action
As of March 31, 2022AmountRatioAmountRatioAmountRatio
Bank:
Tier 1 capital (to average assets)$1,045,703 9.24 %$452,600 4.00 %$565,750 5.00 %
Common equity Tier 1 (to risk-weighted assets)
1,045,703 11.15 656,368 7.00 
(1)
609,484 6.50 
Tier 1 capital (to risk-weighted assets)1,045,703 11.15 797,018 8.50 
(1)
750,135 8.00 
Total capital (to risk-weighted assets)1,099,803 11.73 984,552 10.50 
(1)
937,668 10.00 
Company:
Tier 1 capital (to average assets)$1,066,349 9.42 %$453,009 4.00 %N/AN/A
Common equity Tier 1 (to risk-weighted assets)
938,751 9.91 662,817 7.00 
(1)
N/AN/A
Tier 1 capital (to risk-weighted assets)1,066,349 11.26 804,849 8.50 
(1)
N/AN/A
Total capital (to risk-weighted assets)1,246,146 13.16 994,226 10.50 
(1)
N/AN/A
ActualFor capital adequacy
purposes
To be well-capitalized
under prompt
corrective action
As of December 31, 2021AmountRatioAmountRatioAmountRatio
Bank:
Tier 1 capital (to average assets)$1,027,660 9.08 %$452,669 4.00 %$565,836 5.00 %
Common equity Tier 1 (to risk-weighted assets)
1,027,660 11.62 619,178 7.00 
(1)
574,951 6.50 
Tier 1 capital (to risk-weighted assets)1,027,660 11.62 751,860 8.50 
(1)
707,633 8.00 
Total capital (to risk-weighted assets)1,079,766 12.21 928,768 10.50 
(1)
884,541 10.00 
Company:
Tier 1 capital (to average assets)$1,044,518 9.22 %$453,087 4.00 %N/AN/A
Common equity Tier 1 (to risk-weighted assets)
917,088 10.26 625,801 7.00 
(1)
N/AN/A
Tier 1 capital (to risk-weighted assets)1,044,518 11.68 759,902 8.50 
(1)
N/AN/A
Total capital (to risk-weighted assets)1,257,372 14.06 938,702 10.50 
(1)
N/AN/A
(1)Includes the Capital Conservation Buffer of 2.50%.
The Company and the Bank satisfied the criteria to be “well-capitalized” under the Prompt Corrective Action Regulations.
At March 31, 2022 and December 31, 2021, the Company maintained a stockholders’ equity to total assets ratio of 12.49% and 12.92%, respectively.
10

Non-Performing Assets
The following table sets forth information regarding the Company’s non-performing assets, consisting of non-performing loans and other real estate owned. It is the policy of the Company to cease accruing interest on loans 90 days or more past due or in the process of foreclosure.
March 31,December 31,
20222021
 (dollars in thousands)
Non-performing loans:
Commercial real estate – investor$3,575 $3,614 
Commercial real estate – owner occupied9,632 11,904 
Commercial and industrial2,830 277 
Residential real estate7,047 6,114 
Other consumer3,841 3,585 
Total non-performing loans26,925 25,494 
Other real estate owned106 106 
Total non-performing assets$27,031 $25,600 
PCD loans
$37,032 $41,817 
Delinquent loans 30-89 days$18,691 $14,546 
Allowance for loan credit losses as a percent of total loans0.56 %0.57 %
Allowance for loan credit losses as a percent of total non-performing loans
187.92 191.61 
Non-performing loans as a percent of total loans receivable0.30 0.30 
Non-performing assets as a percent of total assets0.22 0.22 
The Company’s non-performing loans totaled $26.9 million at March 31, 2022, as compared to $25.5 million at December 31, 2021. Included in the non-performing loans total was $11.9 million and $11.3 million of troubled debt restructuring (“TDR”) loans at March 31, 2022 and December 31, 2021, respectively. Included in non-performing loans total was $3.7 million and $6.5 million of PCD loans at March 31, 2022 and December 31, 2021, respectively. At March 31, 2022, the allowance for loan credit losses totaled $50.6 million, or 0.56% of total loans, as compared to $48.9 million, or 0.57% of total loans, at December 31, 2021. These ratios exclude existing net unamortized credit and PCD marks on acquired loans of $16.9 million and $18.9 million at March 31, 2022 and December 31, 2021, respectively. 

In response to the COVID-19 pandemic and its economic impact on customers, short-term modification programs that comply with the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, extended by the Coronavirus Response and Relief Supplemental Appropriations (“CRRSA”) Act of 2021, were implemented to provide temporary payment relief to those borrowers directly impacted by COVID-19. The Bank’s Commercial Borrower Relief Program allowed for the deferral of principal and interest or principal only. All payments received will first be applied to all accrued and unpaid interest and the balance, if any, of unpaid principal, then to fees, expenses and other amounts due to the Bank. Monthly payments will continue until the maturity date when all then unpaid principal, interest, fees, and all other charges are due and payable to the Bank. The Consumer Borrower Relief Program allowed for the deferral of principal and interest. The deferred payments along with interest accrued during the deferral period are due and payable on the maturity date. Provided these loans were current as of December 31, 2019 or the date of the modification, these loans are not considered TDR loans at March 31, 2022 and will not be reported as past due during the deferral period.

The Company classifies loans and other assets in accordance with regulatory guidelines. The table below excludes any loans held-for-sale (in thousands):
March 31,December 31,
20222021
Special Mention$91,611 $91,607 
Substandard114,030 148,557 
The decrease in substandard loans was primarily due to improved profitability of borrowers and their ability to service their loans.
11

Critical Accounting Policies

Note 1 to the Company’s Audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”), as supplemented by this report, contains a summary of significant accounting policies. Various elements of these accounting policies, by their nature, are subject to estimation techniques, valuation assumptions and other subjective assessments. Certain assets are carried in the consolidated statements of financial condition at estimated fair value or the lower of cost or estimated fair value. Policies with respect to the methodology used to determine the allowance for credit losses is a critical accounting policy and estimate because of its importance to the presentation of the Company’s financial condition and results of operations. The critical accounting policy involves a higher degree of complexity and requires management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions, and estimates could result in material differences in the results of operations or financial condition. The critical accounting policy and its application is reviewed periodically, and at least annually, with the Audit Committee of the Board of Directors.

Impact of New Accounting Pronouncements

Accounting Pronouncements Adopted in 2022
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes” as part of an initiative to reduce complexity in accounting standards for income taxes. The amendments also improve consistent application of and simplify generally accepted accounting principles for other areas of Topic 740 by clarifying and amending existing guidance. This update was effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2021. The adoption of this standard did not have a material impact on the Company’s financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In March 2022, FASB issued ASU 2022-01 “Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method”, which made targeted improvements to the optional hedge accounting model with the objective of improving hedge accounting to better portray the economic results of an entity’s risk management activities in its financial statements. This update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2022. Early adoption is permitted for any entity that has adopted the amendments in ASU 2017-12 for the corresponding period. The Company currently does not apply fair value hedge accounting; however the Company is currently evaluating the potential impact of this standard to the consolidated financial statements.

In March 2022, FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures”. The amendments in this ASU were issued to (1) eliminate accounting guidance for TDRs by creditors, while enhancing disclosure requirements for loan refinancings and restructurings when a borrower is experiencing financial difficulty; (2) require disclosures of current period gross write-offs by year of origination for financing receivables and net investments in leases. For entities that have adopted the amendments in ASU 2016-13, Measurement of Credit Losses on Financial Instruments, this update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2022. Early adoption is permitted. The amendments in this ASU should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, where there is an option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The Company is currently evaluating the impact of this standard to the consolidated financial statements.
Private Securities Litigation Reform Act Safe Harbor Statement
In addition to historical information, this quarterly report 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 OceanFirst Financial Corp. (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 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, those items discussed in the Company’s 2021 Form 10-K under Item 1A - Risk Factors, as supplemented by the Company’s subsequent filings with the Securities and Exchange Commission (the “SEC”) and elsewhere therein and the following: changes in interest rates, general economic conditions, inflation, public health crises (such as the governmental, social and economic effects of the novel coronavirus), 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 current or anticipated impact of military conflict, terrorism or other geopolitical events, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory
12

changes (particularly with respect to the novel coronavirus), monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and 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, changes in accounting principles and guidelines and the Bank’s ability to successfully integrate acquired operations.
Given its ongoing and dynamic nature, it is difficult to predict the continuing impact of the COVID-19 outbreak on the Company’s business. The extent of such impact will depend on future developments, which are highly uncertain, including when COVID-19 can be fully controlled and abated. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, the Company could be subject to any of the following risks, any of which could have a material, adverse effect on its business, financial condition, liquidity, and results of operations: the demand for the Bank’s products and services may decline, making it difficult to grow assets and income; if the economy worsens, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; the Company’s allowance for credit losses may increase if borrowers experience financial difficulties, which will adversely affect the Company’s net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to the Bank; if legislation or governmental or regulatory action is enacted limiting the amount of ATM fees or surcharges the Bank may receive or on its ability to charge overdraft or other fees, it could adversely impact the Company’s financial results; the Company’s cyber security risks would be increased as the result of an increased use of the Bank’s online banking platform or an increase in the number of employees working remotely; and Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.
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.
13

Item 3.    Quantitative and Qualitative Disclosures About Market Risk
The Company’s interest rate sensitivity is monitored through the use of interest rate risk (“IRR”) modeling. The following table sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at March 31, 2022, which were estimated by the Company, based upon certain assumptions, to reprice or mature in each of the future time periods shown. At March 31, 2022, the Company’s one-year gap was positive 10.82% as compared to positive 14.15% at December 31, 2021.
The table is intended to provide an approximation of the projected repricing of assets and liabilities at March 31, 2022 on the basis of contractual maturities, anticipated prepayments, scheduled rate adjustments, and the rate sensitivity of non-maturity deposits within a three month period and subsequent selected time intervals.
 
At March 31, 20223 Months
or Less
More than
3 Months to
1 Year
More than
1 Year to
3 Years
More than
3 Years to
5 Years
More than
5 Years
Total
(dollars in thousands)      
Interest-earning assets:
Interest-earning deposits and short-term investments$46,956$2,422$1,483$$$50,861
Debt securities445,703193,651298,644257,575472,5331,668,106
Equity investments25030,64132,08730,91093,888
Restricted equity investments56,70456,704
Loans receivable (1)
2,397,9141,007,9392,140,6391,656,6831,905,8019,108,976
Total interest-earning assets2,890,8231,204,0122,471,4071,946,3452,465,94810,978,535
Interest-bearing liabilities:
Interest-bearing checking accounts1,540,606208,953482,827391,0901,664,2694,287,745
Money market deposit accounts50,87655,166128,310355,225222,011811,588
Savings accounts111,869132,046298,312233,645848,8791,624,751
Time deposits174,700370,194298,22630,24513,951887,316
FHLB advances75,00275,002
Securities sold under agreements to repurchase and other borrowings187,267141465123,636669312,178
Total interest-bearing liabilities2,140,320766,5001,208,1401,133,8412,749,7797,998,580
Interest sensitivity gap (2)
$750,503$437,512$1,263,267$812,504$(283,831)$2,979,955
Cumulative interest sensitivity gap$750,503$1,188,015$2,451,282$3,263,786$2,979,955$2,979,955
Cumulative interest sensitivity gap as a percent of total interest-earning assets6.84 %10.82 %22.33 %29.73 %27.14 %27.14 %
(1)For purposes of the gap analysis, loans receivable includes loans held for sale and non-performing loans gross of the allowance for loan credit losses, unamortized discounts and deferred loan costs and fees.
(2)Interest sensitivity gap represents the difference between interest-earning assets and interest-bearing liabilities.

Certain shortcomings are inherent in gap analysis. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features which restrict changes in interest rates both on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, loan prepayment rates and average lives of deposits would likely deviate significantly from those assumed in the calculation. Finally, the ability of many borrowers to service their adjustable-rate loans may be impaired in the event of an interest rate increase.
14

Additionally, the table below sets forth the Company’s exposure to IRR as measured by the change in economic value of equity (“EVE”) and net interest income under varying rate shocks as of March 31, 2022 and December 31, 2021. All methods used to measure interest rate sensitivity involve the use of assumptions, which may tend to oversimplify the manner in which actual yields and costs respond to changes in market interest rates. The Company’s interest rate sensitivity should be reviewed in conjunction with the financial statements and notes thereto contained in the 2021 Form 10-K.
 
 March 31, 2022December 31, 2021
Change in Interest Rates in Basis Points (Rate Shock)Economic Value of EquityNet Interest IncomeEconomic Value of EquityNet Interest Income
Amount% ChangeEVE RatioAmount% ChangeAmount% ChangeEVE RatioAmount% Change
(dollars in thousands)          
300$1,770,119 4.7 %16.2 %$376,201 7.6 %$1,817,134 24.5 %16.7 %$346,723 10.3 %
2001,775,649 5.0 15.8 367,951 5.3 1,738,602 19.1 15.6 336,816 7.1 
1001,753,575 3.7 15.2 359,026 2.7 1,621,984 11.1 14.2 325,960 3.7 
Static1,690,769 — 14.3 349,511 — 1,459,706 — 12.5 314,395 — 
(100)1,576,895 (6.7)12.9 334,858 (4.2)1,230,947 (15.7)10.3 299,994 (4.6)
The change in interest rate sensitivity quarter over quarter was impacted by the deployment of cash into loans, an increase in overnight borrowings, shorter-term time deposits, and a significant increase in market interest rates.
As is the case with the gap calculation, certain shortcomings are inherent in the methodology used in the EVE and net interest income IRR measurements. The model requires the making of certain assumptions which may tend to oversimplify the manner in which actual yields and costs respond to changes in market interest rates. First, the model assumes that the composition of the Company’s interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured. Second, the model assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Third, the model does not take into account the Company’s business or strategic plans. Accordingly, although the above measurements provide an indication of the Company’s IRR exposure at a particular point in time, such measurements are not intended to provide a precise forecast of the effect of changes in market interest rates on the Company’s EVE and net interest income, and can be expected to differ from actual results.

Item 4.    Controls and Procedures
(a) Disclosure Controls and Procedures
The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective. Disclosure controls and procedures are the controls and other procedures that are designed to ensure that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the SEC (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

15

OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
March 31,December 31,
20222021
 (Unaudited) 
Assets
Cash and due from banks$210,919 $204,949 
Debt securities available-for-sale, at estimated fair value546,470 568,255 
Debt securities held-to-maturity, net of allowance for securities credit losses of $1,380 at March 31, 2022 and $1,467 at December 31, 2021 (estimated fair value of $1,050,892 at March 31, 2022 and $1,152,744 at December 31, 2021)
1,099,514 1,139,193 
Equity investments93,888 101,155 
Restricted equity investments, at cost56,704 53,195 
Loans receivable, net of allowance for loan credit losses of $50,598 at March 31, 2022 and $48,850 at December 31, 2021
9,065,679 8,583,352 
Interest and dividends receivable33,353 32,606 
Other real estate owned106 106 
Premises and equipment, net126,767 125,828 
Bank owned life insurance259,121 259,207 
Assets held for sale5,676 6,229 
Goodwill500,319 500,319 
Core deposit intangible17,005 18,215 
Other assets149,424 147,007 
Total assets$12,164,945 $11,739,616 
Liabilities and Stockholders’ Equity
Deposits$10,056,233 $9,732,816 
Federal Home Loan Bank (“FHLB”) advances75,002  
Securities sold under agreements to repurchase with customers117,782 118,769 
Other borrowings194,396 229,141 
Advances by borrowers for taxes and insurance25,398 20,305 
Other liabilities176,800 122,032 
Total liabilities10,645,611 10,223,063 
Stockholders’ equity:
Preferred stock, $0.01 par value, $1,000 liquidation preference, 5,000,000 shares authorized, and 57,370 shares issued at both March 31, 2022 and December 31, 2021
1 1 
Common stock, $0.01 par value, 150,000,000 shares authorized, 61,849,762 and 61,535,381 shares issued at March 31, 2022 and December 31, 2021, respectively; and 59,388,983 and 59,175,046 shares outstanding at March 31, 2022 and December 31, 2021, respectively
612 611 
Additional paid-in capital1,149,503 1,146,781 
Retained earnings456,251 442,306 
Accumulated other comprehensive loss(15,170)(2,821)
Less: Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")(8,009)(8,615)
Treasury stock, 2,460,779 and 2,360,335 shares at March 31, 2022 and December 31, 2021, respectively
(63,854)(61,710)
Total stockholders’ equity1,519,334 1,516,553 
Total liabilities and stockholders’ equity$12,164,945 $11,739,616 

See accompanying Notes to Unaudited Consolidated Financial Statements.
16

OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
 For the Three Months Ended March 31,
 20222021
 (Unaudited)
Interest income:
Loans$82,468 $77,908 
Debt securities7,504 5,355 
Equity investments and other1,011 1,611 
Total interest income90,983 84,874 
Interest expense:
Deposits4,041 8,496 
Borrowed funds2,715 2,774 
Total interest expense6,756 11,270 
Net interest income84,227 73,604 
Credit loss expense (benefit) 1,851 (620)
Net interest income after credit loss expense (benefit) 82,376 74,224 
Other income:
Bankcard services revenue2,963 3,052 
Trust and asset management revenue609 599 
Fees and service charges3,060 3,737 
Net gain on sales of loans177 1,916 
Net (loss) gain on equity investments(2,786)8,287 
Net loss from other real estate operations(2)(8)
Income from bank owned life insurance2,103 1,415 
Commercial loan swap income2,781 1,111 
Other(53)726 
Total other income8,852 20,835 
Operating expenses:
Compensation and employee benefits30,695 28,366 
Occupancy5,744 5,061 
Equipment1,370 1,578 
Marketing616 434 
Federal deposit insurance and regulatory assessments1,890 1,864 
Data processing5,736 4,031 
Check card processing982 1,372 
Professional fees3,322 2,837 
Amortization of core deposit intangible1,210 1,395 
Branch consolidation expense, net402 1,011 
Merger related expenses1,965 381 
Other operating expense3,563 3,353 
Total operating expenses57,495 51,683 
Income before provision for income taxes33,733 43,376 
Provision for income taxes7,974 10,679 
Net income25,759 32,697 
Dividends on preferred shares1,004 1,004 
Net income available to common stockholders$24,755 $31,693 
Basic earnings per share$0.42 $0.53 
Diluted earnings per share$0.42 $0.53 
Average basic shares outstanding58,739 59,840 
Average diluted shares outstanding58,943 60,101 

See accompanying Notes to Unaudited Consolidated Financial Statements.
17

OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
 
 For the Three Months Ended March 31,
 20222021
 (Unaudited)
Net income$25,759 $32,697 
Other comprehensive (loss) income:
Net unrealized loss on debt securities (net of tax benefit of $3,928 in 2022 and $112 in 2021)
(12,372)(416)
Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense of $65 in 2022 and $73 in 2021)
89 107 
Reclassification adjustment for losses included in net income (net of tax benefit of $21 in 2022)
(66) 
Total other comprehensive loss, net of tax(12,349)(309)
Total comprehensive income 13,410 32,388 
Less: Dividends on preferred shares1,004 1,004 
Comprehensive income available to common stockholders$12,406 $31,384 
See accompanying Notes to Unaudited Consolidated Financial Statements.
18


OceanFirst Financial Corp.
Consolidated Statements of Changes in Stockholders’ Equity
(dollars in thousands, except per share amounts)
(Unaudited)
For the Three Months Ended March 31, 2022 and 2021
Preferred
Stock
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Employee
Stock
Ownership
Plan
Treasury
Stock
Total
Balance at December 31, 2020$1 $609 $1,137,715 $378,268 $621 $(7,433)$(25,651)$1,484,130 
Net income— — — 32,697 — — — 32,697 
Other comprehensive loss, net of tax— — — — (309)— — (309)
Stock compensation— — 1,237 — — — — 1,237 
Allocation of ESOP stock— — 48 — — 304 — 352 
Cash dividend $0.17 per share
— — — (10,152)— — — (10,152)
Exercise of stock options— 1 3,290 (1,529)— — — 1,762 
Repurchase 500,000 shares of common stock
— — — — — — (9,994)(9,994)
Preferred stock dividend— — — (1,004)— — — (1,004)
Balance at March 31, 2021$1 $610 $1,142,290 $398,280 $312 $(7,129)$(35,645)$1,498,719 
Balance at December 31, 2021$1 $611 $1,146,781 $442,306 $(2,821)$(8,615)$(61,710)$1,516,553 
Net income— — — 25,759 — — — 25,759 
Other comprehensive loss, net of tax— — — — (12,349)— — (12,349)
Stock compensation— — 1,552 — — — — 1,552 
Allocation of ESOP stock— — 65 — — 606 — 671 
Cash dividend $0.17 per share
— — — (9,993)— — — (9,993)
Exercise of stock options— 1 1,105 (817)— — — 289 
Repurchase 100,444 shares of common stock
— — — — — — (2,144)(2,144)
Preferred stock dividend— — — (1,004)— — — (1,004)
Balance at March 31, 2022$1 $612 $1,149,503 $456,251 $(15,170)$(8,009)$(63,854)$1,519,334 

See accompanying Notes to Unaudited Consolidated Financial Statements.