EX-99.1 2 ex991-earningsreleasejanua.htm EXHIBIT 99.1

|  | Press Release

Company Contact:
Exhibit 99.1
Michael J. Fitzpatrick
Chief Financial Officer
OceanFirst Financial Corp.
Tel: (732) 240-4500, ext. 7506
Email: Mfitzpatrick@oceanfirst.com
FOR IMMEDIATE RELEASE
OCEANFIRST FINANCIAL CORP.
ANNOUNCES QUARTERLY AND ANNUAL
FINANCIAL RESULTS
RED BANK, NEW JERSEY, JANUARY 27, 2020…OceanFirst Financial Corp. (NASDAQ:”OCFC”), (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), today announced that net income was $23.5 million, or $0.47 per diluted share, for the quarter ended December 31, 2019, as compared to $26.7 million, or $0.55 per diluted share, for the corresponding prior year quarter. For the year ended December 31, 2019, net income was $88.6 million, or $1.75 per diluted share, as compared to $71.9 million, or $1.51 per diluted share, for the corresponding prior year period.
The results of operations for the quarter ended December 31, 2019 included merger related expenses, branch consolidation expenses, non-recurring professional fees, 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 decreased net income, net of tax benefit, by $2.3 million. The results of operations for the year ended December 31, 2019 included merger related expenses, branch consolidation expenses, 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 decreased net income, net of tax benefit, by $16.3 million. Excluding these items, core earnings for the quarter and year ended December 31, 2019 were $25.7 million, or $0.51 per diluted

share, and $104.8 million, or $2.07 per diluted share, respectively. (Please refer to the Non-GAAP Reconciliation table at the end of this document for further details).
Highlights for the quarter are described below:

• | Loan and deposit growth were both strong. Record loan originations of $504.4 million provided total loan growth of $124.5 million while deposits increased $107.9 million. The Company has a solid loan pipeline of $327.7 million at December 31, 2019, with strong contributions from the New York and Philadelphia markets.

• | On January 1, 2020, the Company completed its acquisitions of Two River Bancorp (“Two River”) and Country Bank Holding Company, Inc. (“Country Bank”). Two River added $1.1 billion to assets, $938 million to loans, and $942 million to deposits. Country Bank added $798 million to assets, $616 million to loans, and $654 million to deposits.

• | As a result of the Two River and Country Bank acquisitions on January 1, 2020, consolidated assets were $10.2 billion, loans were $7.8 billion, and deposits were $7.9 billion.

• | The Company anticipates full integration of operations and the elimination of eight duplicate branches in Two River’s market areas in May 2020, resulting in cost savings in future periods, and full integration of operations of Country Bank later in the year. The Bank also expects to consolidate an additional five branches independent of the acquisitions; bringing the total number of branches consolidated to 53 over the past four years.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “The Company delivered strong results for the year with continued growth in core earnings per share and the achievement of record annual core earnings of $104.8 million. With a solid loan pipeline, our prospects for continued organic loan growth in 2020 are bright.” Mr. Maher added, “With the addition of Two River and Country Bank on January 1, 2020, we welcome their stockholders, employees, and customers into the growing OceanFirst family.”
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The Company also announced that the Company’s Board of Directors declared its ninety-second consecutive quarterly cash dividend on common stock. The dividend, for the quarter ended December 31, 2019, of $0.17 per share will be paid on February 19, 2020 to stockholders of record on February 5, 2020.
Results of Operations
On January 31, 2018, the Company completed its acquisition of Sun Bancorp Inc. (“Sun”) and its results of operations are included in the consolidated results for the quarter and year ended December 31, 2019, but are excluded from the results of operations for the period from January 1, 2018 to January 31, 2018.
On January 31, 2019, the Company completed its acquisition of Capital Bank of New Jersey (“Capital Bank”) and its results of operations from February 1, 2019 through December 31, 2019 are included in the consolidated results for the quarter and year ended December 31, 2019, but are excluded from the results of operations for the corresponding prior year periods.
Net income for the quarter ended December 31, 2019, was $23.5 million, or $0.47 per diluted share, as compared to $26.7 million, or $0.55 per diluted share, for the corresponding prior year period. Net income for the year ended December 31, 2019, was $88.6 million, or $1.75 per diluted share, as compared to $71.9 million, or $1.51 per diluted share, for the corresponding prior year period. Net income for the quarter ended December 31, 2019 included merger related expenses, branch consolidation expenses, non-recurring professional fees, 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 decreased net income, net of tax benefit, by $2.3 million. Net income for the year ended December 31, 2019 included merger related expenses, branch consolidation expenses, 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 decreased net income, net of tax benefit, by $16.3 million. Net income for the quarter and year ended December 31, 2018 included merger related expenses, branch consolidation expenses, and reduction of income tax expense from the
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revaluation of deferred tax assets as a result of the Tax Cuts and Jobs Act (“Tax Reform”), which increased net income, net of tax benefit, by $696,000 for the quarter and decreased net income, net of tax benefit, by $22.2 million for the year. Excluding these items, net income for the quarter ended December 31, 2019 decreased over the prior year period, while net income for the year ended December 31, 2019 increased over the prior year period.
Net interest income for the quarter and year ended December 31, 2019 increase d to $63.4 million and $256.0 million, respectively, as compared to $61.8 million and $240.5 million, respectively, for the same prior year periods, reflecting an increase in interest-earning assets. Average interest-earning assets increase d by $601.0 million and $595.9 million for the quarter and year ended December 31, 2019, respectively, as compared to the same prior year periods. The averages for the quarter and year ended December 31, 2019, were favorably impacted by $332.1 million and $341.9 million, respectively, of interest-earning assets acquired from Capital Bank. The remaining increase in average interest-earning assets was due to organic growth. Average loans receivable, net, increase d by $639.1 million and $612.5 million for the quarter and year ended December 31, 2019, respectively, as compared to the same prior year periods. The increases attributable to the acquisition of Capital Bank were $248.4 million and $250.3 million, respectively. The remaining increase in average loans receivable, net, of $390.7 million and $362.2 million, respectively, was due to organic loan growth. The net interest margin for the quarter and year ended December 31, 2019 decreased to 3.48% and 3.62%, respectively, from 3.71% for the same prior year periods. For the quarter and the year ended December 31, 2019, the cost of average interest-bearing liabilities increased to 0.98% and 0.96%, respectively, from 0.80% and 0.70%, respectively, in the corresponding prior year periods. The total cost of deposits (including non-interest bearing deposits) was 0.64% and 0.61% for the quarter and year ended December 31, 2019, respectively, as compared to 0.48% and 0.39%, respectively, in the same prior year periods.
Net interest income for the quarter ended December 31, 2019, decrease d by $38,000, as compared to the prior linked quarter. The net interest margin decreased to 3.48% for the quarter ended December 31,
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2019, as compared to 3.55% for the prior linked quarter, while average interest-earning assets increase d by $125.9 million. The total cost of deposits (including non-interest bearing deposits) was 0.64% for the quarter ended December 31, 2019, as compared to 0.62% for the quarter ended September 30, 2019.
For the quarter and year ended December 31, 2019, the provision for loan losses was $355,000 and $1.6 million, respectively, as compared to $506,000 and $3.5 million, respectively, for the corresponding prior year periods, and $305,000 in the prior linked quarter. Net loan charge-offs were $139,000 and $1.4 million for the quarter and year ended December 31, 2019, respectively, as compared to net loan charge-offs of $750,000 and $2.6 million, respectively, in the corresponding prior year periods, and net loan recoveries of $196,000 in the prior linked quarter. Non-performing loans totaled $17.8 million at December 31, 2019, as compared to $17.5 million at September 30, 2019, and $17.4 million at December 31, 2018.
For the quarter and year ended December 31, 2019, other income increase d to $11.2 million and $42.2 million, respectively, as compared to $8.7 million and $34.8 million, respectively, for the corresponding prior year periods. The increases were partly due to the impact of the Capital Bank acquisition, which added $465,000 and $1.5 million to other income for the quarter and year ended December 31, 2019, respectively, as compared to the same prior year periods. Excluding the Capital Bank acquisition, the increase in other income for the quarter ended December 31, 2019 was primarily due to an increase in derivative fee income of $2.1 million, as compared to the corresponding prior year period. Excluding the Capital Bank acquisition, the increase in other income for the year ended December 31, 2019 was primarily due to an increase in derivative fee income of $4.6 million and a decrease in the loss from real estate operations of $3.5 million, partially offset by decreases in fees and service charges of $1.3 million, rental income of $810,000 received primarily for January and February 2018 on the Company’s executive office, and decrease in the gain on sales of loans of $653,000, mostly related to the sale of one non-performing commercial loan relationship during the first quarter of 2018.
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Operating expenses increase d to $47.6 million and $189.1 million for the quarter and year ended December 31, 2019, respectively, as compared to $39.1 million and $186.3 million, respectively, in the same prior year periods. Operating expenses for the quarter ended December 31, 2019 included $5.3 million of merger related expenses, branch consolidation expenses, and non-recurring professional fees, while operating expenses for the year ended December 31, 2019 included $22.8 million of merger related expenses, branch consolidation expenses, non-recurring professional fees, and compensation expense due to the retirement of an executive officer. This compares to $1.3 million and $30.1 million, respectively, of merger related and branch consolidation expenses, in the same prior year periods. Excluding the impact of merger related expenses, branch consolidation expenses, non-recurring professional fees, and compensation expense due to the retirement of an executive officer, the change in operating expenses over the prior year was due to the Capital Bank acquisition, which added $1.4 million and $6.3 million for the quarter and year ended December 31, 2019, respectively. Excluding the Capital Bank acquisition, the remaining increase in operating expenses for the quarter ended December 31, 2019 over the prior year period was primarily due to increases in compensation and employee benefits expense of $2.6 million, professional fees of $1.2 million, partially offset by decrease in Federal Deposit Insurance Company (“FDIC”) expense of $559,000, primarily as a result of assessment credits awarded by the FDIC. Excluding the Capital Bank acquisition, the remaining increase in operating expenses, for the year ended December 31, 2019 from the prior year period, was primarily due to increases in professional fees of $2.3 million, check card processing of $1.6 million, compensation and employee benefits expense of $1.3 million, and data processing of $1.0 million, partially offset by decreases in FDIC expense of $1.6 million, and occupancy of $1.1 million.
For the quarter ended December 31, 2019, operating expenses, excluding merger related expenses, branch consolidation expenses, and non-recurring professional fees, increase d $2.2 million, as compared to the prior linked quarter. The increase was primarily due to increases in compensation and employee benefits expense of $1.2 million, data processing of $680,000, and professional fees of $538,000.
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For the quarter ended December 31, 2019, operating expenses included $1.3 million of non-recurring professional fees associated with the restructuring of the Company’s retail online and mobile banking vendor contract. The restructured contractual terms are expected to result in an annual cost savings of 48%, or approximately $1.6 million annually, beginning in January 2020, and the earnback on the contract restructuring charge is anticipated to occur over the next ten months.
The provision for income taxes was $3.2 million and $18.8 million for the quarter and year ended December 31, 2019, respectively, as compared to $4.3 million and $13.6 million, respectively, for the same prior year periods. The effective tax rate was 11.9% and 17.5% for the quarter and year ended December 31, 2019, respectively, as compared to 13.8% and 15.9%, respectively, for the same prior year periods. The lower effective tax rate in the current year periods is primarily due to reduction in income tax expense of $2.2 million from the revaluation of state deferred tax assets as a result of a change in the New Jersey tax code. Excluding the impact of the New Jersey tax code change, the effective tax rate for the quarter and year ended December 31, 2019 was 20.2% and 19.6%. The lower effective tax rate in the prior year periods was primarily due to Tax Reform which required the Company to revalue its deferred tax asset, resulting in a tax benefit of $1.9 million, for the quarter and year ended December 31, 2018. The remaining variance is due to larger tax benefits from employee stock option exercises in the prior year periods.
Financial Condition
Total assets increase d by $730.0 million to $8.246 billion at December 31, 2019, from $7.516 billion at December 31, 2018, primarily as a result of the acquisition of Capital Bank, which added $494.7 million to total assets. Loans receivable, net, increase d by $628.5 million, to $6.208 billion at December 31, 2019, from $5.579 billion at December 31, 2018, primarily due to acquired loans of $307.8 million. As part of the acquisition of Capital Bank, the Company’s goodwill balance increase d to $374.6 million at December 31, 2019, from $338.4 million at December 31, 2018. Other assets increased by $95.4 million to $119.5 million at December 31, 2019, from $24.1 million at December 31, 2018, primarily due to
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consideration held in escrow in advance of the acquisition closings on January 1, 2020, of $47.0 million. The core deposit intangible decrease d to $15.6 million at December 31, 2019, from $17.0 million at December 31, 2018 due to amortization of core deposit intangible, partially offset by the increase from the acquisition of Capital Bank.
Deposits increase d by $514.2 million, to $6.329 billion at December 31, 2019, from $5.815 billion at December 31, 2018, primarily due to acquired deposits of $449.0 million. The loan-to-deposit ratio at December 31, 2019 was 98.1%, as compared to 96.0% at December 31, 2018.
Stockholders’ equity increase d to $1.153 billion at December 31, 2019, as compared to $1.039 billion at December 31, 2018. The acquisition of Capital Bank added $76.4 million to stockholders’ equity. On December 18, 2019, the Company announced the authorization of the Board of Directors of the 2019 Stock Repurchase Program to repurchase approximately 5% of the Company’s outstanding common stock up to an additional 2.5 million shares. This amount is in addition to the remaining 167,996 shares available under the existing 2017 Repurchase Program. During the year ended December 31, 2019, the Company repurchased 1.1 million shares under these repurchase programs at a weighted average cost of $23.12. Tangible stockholders’ equity per common share increased to $15.13 at December 31, 2019, as compared to $14.26 at December 31, 2018.
Asset Quality
The Company’s non-performing loans increased to $17.8 million at December 31, 2019, as compared to $17.4 million at December 31, 2018. Non-performing loans do not include $13.3 million of purchased credit-impaired (“PCI”) loans acquired in the Capital Bank, 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 $264,000 at December 31, 2019, as compared to $1.4 million at December 31, 2018.
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At December 31, 2019, the Company’s allowance for loan losses was 0.27% of total loans, a decrease from 0.30% at December 31, 2018. These ratios exclude existing fair value credit marks of $30.3 million at December 31, 2019 on loans acquired from the Acquisition Transactions, and $31.6 million at December 31, 2018 on loans acquired from Sun, Ocean Shore, Cape and Colonial American. These loans were acquired at fair value with no related allowance for loan losses. The allowance for loan losses as a percent of total non-performing loans was 94.41% at December 31, 2019, as compared to 95.19% at December 31, 2018.
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, non-recurring professional fees, compensation expense due to the retirement of an executive officer, the impact to income tax expense related to the revaluation of deferred tax assets as required under Tax Reform, 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.
Annual Meeting
The Company also announced today that its Annual Meeting of Stockholders will be held on Wednesday, May 20, 2020 at 9:00 a.m. Eastern time, at the OceanFirst Bank Administrative Offices located
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at 110 West Front Street, Red Bank, New Jersey. The record date for stockholders to vote at the Annual Meeting is April 3, 2020.
Conference Call
As previously announced, the Company will host an earnings conference call on Tuesday, January 28, 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 10137684 from one hour after the end of the call until April 28, 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 $10.2 billion regional bank operating throughout New Jersey, metropolitan Philadelphia and metropolitan New York City. OceanFirst Bank delivers commercial and residential financing solutions, wealth 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: 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, 2018, 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.
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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)

|  | December 31, 2019 |  | September 30, 2019 |  | December 31, 2018
|  | (Unaudited) |  | (Unaudited) |  |
Assets |  |  |  |  |  |
Cash and due from banks |  | $ | 120,544 |  |  | $ | 140,901 |  |  | $ | 120,792 |
Debt securities available-for-sale, at estimated fair value |  | 150,960 |  |  | 127,308 |  |  | 100,717 |
Debt securities held-to-maturity, net (estimated fair value of $777,290 at December 31, 2019, $826,964 at September 30, 2019, and $832,815 at December 31, 2018) |  | 768,873 |  |  | 819,253 |  |  | 846,810 |
Equity investments, at estimated fair value |  | 10,136 |  |  | 10,145 |  |  | 9,655 |
Restricted equity investments, at cost |  | 62,356 |  |  | 62,095 |  |  | 56,784 |
Loans receivable, net |  | 6,207,680 |  |  | 6,081,938 |  |  | 5,579,222 |
Loans held-for-sale |  | — |  |  | 110 |  |  | — |
Interest and dividends receivable |  | 21,674 |  |  | 21,739 |  |  | 19,689 |
Other real estate owned |  | 264 |  |  | 294 |  |  | 1,381 |
Premises and equipment, net |  | 102,691 |  |  | 103,721 |  |  | 111,209 |
Bank Owned Life Insurance |  | 237,411 |  |  | 236,190 |  |  | 222,482 |
Deferred tax asset |  | 50,067 |  |  | 66,148 |  |  | 63,377 |
Assets held for sale |  | 3,785 |  |  | 5,156 |  |  | 4,522 |
Other assets |  | 119,465 |  |  | 69,033 |  |  | 24,101 |
Core deposit intangible |  | 15,607 |  |  | 16,605 |  |  | 16,971 |
Goodwill |  | 374,632 |  |  | 374,537 |  |  | 338,442 |
Total assets |  | $ | 8,246,145 |  |  | $ | 8,135,173 |  |  | $ | 7,516,154 |
Liabilities and Stockholders’ Equity |  |  |  |  |  |
Deposits |  | $ | 6,328,777 |  |  | $ | 6,220,855 |  |  | $ | 5,814,569 |
Federal Home Loan Bank advances |  | 519,260 |  |  | 512,149 |  |  | 449,383 |
Securities sold under agreements to repurchase with retail customers |  | 71,739 |  |  | 65,067 |  |  | 61,760 |
Other borrowings |  | 96,801 |  |  | 96,667 |  |  | 99,530 |
Advances by borrowers for taxes and insurance |  | 13,884 |  |  | 16,230 |  |  | 14,066 |
Other liabilities |  | 62,565 |  |  | 79,677 |  |  | 37,488 |
Total liabilities |  | 7,093,026 |  |  | 6,990,645 |  |  | 6,476,796 |
Total stockholders’ equity |  | 1,153,119 |  |  | 1,144,528 |  |  | 1,039,358 |
Total liabilities and stockholders’ equity |  | $ | 8,246,145 |  |  | $ | 8,135,173 |  |  | $ | 7,516,154 |

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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

|  | For the Three Months Ended, |  | For the Year Ended
|  | December 31, |  | September 30, |  | December 31, |  | December 31,
|  | 2019 |  | 2019 |  | 2018 |  | 2019 |  | 2018
|  | |--------------------- (Unaudited) ---------------------| |  | (Unaudited) |  |
Interest income: |  |  |  |  |  |  |  |  |  |
Loans |  | $ | 70,298 |  |  | $ | 69,715 |  |  | $ | 65,320 |  |  | $ | 279,931 |  |  | $ | 249,549 |
Mortgage-backed securities |  | 3,552 |  |  | 3,761 |  |  | 3,947 |  |  | 15,300 |  |  | 16,034 |
Debt securities, equity investments and other |  | 3,225 |  |  | 3,411 |  |  | 3,091 |  |  | 13,563 |  |  | 11,071 |
Total interest income |  | 77,075 |  |  | 76,887 |  |  | 72,358 |  |  | 308,794 |  |  | 276,654 |
Interest expense: |  |  |  |  |  |  |  |  |  |
Deposits |  | 10,214 |  |  | 9,817 |  |  | 7,068 |  |  | 38,432 |  |  | 22,578 |
Borrowed funds |  | 3,507 |  |  | 3,678 |  |  | 3,449 |  |  | 14,391 |  |  | 13,574 |
Total interest expense |  | 13,721 |  |  | 13,495 |  |  | 10,517 |  |  | 52,823 |  |  | 36,152 |
Net interest income |  | 63,354 |  |  | 63,392 |  |  | 61,841 |  |  | 255,971 |  |  | 240,502 |
Provision for loan losses |  | 355 |  |  | 305 |  |  | 506 |  |  | 1,636 |  |  | 3,490 |
Net interest income after provision for loan losses |  | 62,999 |  |  | 63,087 |  |  | 61,335 |  |  | 254,335 |  |  | 237,012 |
Other income: |  |  |  |  |  |  |  |  |  |
Bankcard services revenue |  | 2,641 |  |  | 2,658 |  |  | 2,511 |  |  | 10,263 |  |  | 9,228 |
Trust and asset management revenue |  | 478 |  |  | 557 |  |  | 524 |  |  | 2,102 |  |  | 2,245 |
Fees and services charges |  | 4,710 |  |  | 4,679 |  |  | 4,910 |  |  | 18,500 |  |  | 19,461 |
Net gain on sales of loans |  | 1 |  |  | — |  |  | 14 |  |  | 16 |  |  | 668 |
Net unrealized (loss) gain on equity investments |  | (63 | ) |  | 89 |  |  | 83 |  |  | 267 |  |  | (199 | )
Net loss from other real estate operations |  | (95 | ) |  | (108 | ) |  | (837 | ) |  | (330 | ) |  | (3,812 | )
Income from Bank Owned Life Insurance |  | 1,375 |  |  | 1,431 |  |  | 1,292 |  |  | 5,420 |  |  | 5,105 |
Other |  | 2,184 |  |  | 2,237 |  |  | 251 |  |  | 5,927 |  |  | 2,131 |
Total other income |  | 11,231 |  |  | 11,543 |  |  | 8,748 |  |  | 42,165 |  |  | 34,827 |
Operating expenses: |  |  |  |  |  |  |  |  |  |
Compensation and employee benefits |  | 22,518 |  |  | 21,276 |  |  | 18,946 |  |  | 89,912 |  |  | 83,135 |
Occupancy |  | 4,071 |  |  | 4,159 |  |  | 4,333 |  |  | 17,159 |  |  | 17,915 |
Equipment |  | 1,775 |  |  | 2,062 |  |  | 2,315 |  |  | 7,719 |  |  | 8,319 |
Marketing |  | 840 |  |  | 562 |  |  | 940 |  |  | 3,469 |  |  | 3,415 |
Federal deposit insurance and regulatory assessments |  | 296 |  |  | 297 |  |  | 856 |  |  | 2,227 |  |  | 3,713 |
Data processing |  | 4,078 |  |  | 3,398 |  |  | 3,318 |  |  | 14,814 |  |  | 13,286 |
Check card processing |  | 1,557 |  |  | 1,639 |  |  | 1,305 |  |  | 5,956 |  |  | 4,209 |
Professional fees |  | 3,641 |  |  | 2,580 |  |  | 1,217 |  |  | 9,338 |  |  | 4,963 |
Other operating expense |  | 3,815 |  |  | 3,902 |  |  | 3,581 |  |  | 14,968 |  |  | 13,509 |
Amortization of core deposit intangible |  | 998 |  |  | 1,009 |  |  | 983 |  |  | 4,027 |  |  | 3,811 |
Branch consolidation expense |  | 268 |  |  | 1,696 |  |  | 240 |  |  | 9,050 |  |  | 3,151 |
Merger related expenses |  | 3,742 |  |  | 777 |  |  | 1,048 |  |  | 10,503 |  |  | 26,911 |
Total operating expenses |  | 47,599 |  |  | 43,357 |  |  | 39,082 |  |  | 189,142 |  |  | 186,337 |
Income before provision for income taxes |  | 26,631 |  |  | 31,273 |  |  | 31,001 |  |  | 107,358 |  |  | 85,502 |
Provision for income taxes |  | 3,181 |  |  | 6,302 |  |  | 4,269 |  |  | 18,784 |  |  | 13,570 |
Net income |  | $ | 23,450 |  |  | $ | 24,971 |  |  | $ | 26,732 |  |  | $ | 88,574 |  |  | $ | 71,932 |
Basic earnings per share |  | $ | 0.47 |  |  | $ | 0.50 |  |  | $ | 0.56 |  |  | $ | 1.77 |  |  | $ | 1.54 |
Diluted earnings per share |  | $ | 0.47 |  |  | $ | 0.49 |  |  | $ | 0.55 |  |  | $ | 1.75 |  |  | $ | 1.51 |
Average basic shares outstanding |  | 49,890 |  |  | 50,491 |  |  | 47,709 |  |  | 50,166 |  |  | 46,773 |
Average diluted shares outstanding |  | 50,450 |  |  | 50,966 |  |  | 48,411 |  |  | 50,746 |  |  | 47,657 |

12

OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)

LOANS RECEIVABLE |  |  | At
|  |  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | December 31, 2018
Commercial: |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  |  | $ | 396,434 |  |  | $ | 406,580 |  |  | $ | 392,336 |  |  | $ | 383,686 |  |  | $ | 304,996 |
Commercial real estate - owner-occupied |  | 792,653 |  |  | 787,752 |  |  | 771,640 |  |  | 802,229 |  |  | 740,893 |
Commercial real estate - investor |  | 2,296,410 |  |  | 2,232,159 |  |  | 2,143,093 |  |  | 2,161,451 |  |  | 2,023,131 |
Total commercial |  |  | 3,485,497 |  |  | 3,426,491 |  |  | 3,307,069 |  |  | 3,347,366 |  |  | 3,069,020 |
Consumer: |  |  |  |  |  |  |  |  |  |  |
Residential real estate |  |  | 2,321,157 |  |  | 2,234,361 |  |  | 2,193,829 |  |  | 2,162,668 |  |  | 2,044,523 |
Home equity loans and lines |  |  | 318,576 |  |  | 330,446 |  |  | 341,972 |  |  | 351,303 |  |  | 353,609 |
Other consumer |  |  | 89,422 |  |  | 98,835 |  |  | 109,015 |  |  | 116,838 |  |  | 121,561 |
Total consumer |  |  | 2,729,155 |  |  | 2,663,642 |  |  | 2,644,816 |  |  | 2,630,809 |  |  | 2,519,693 |
Total loans |  |  | 6,214,652 |  |  | 6,090,133 |  |  | 5,951,885 |  |  | 5,978,175 |  |  | 5,588,713 |
Deferred origination costs, net |  | 9,880 |  |  | 8,441 |  |  | 8,180 |  |  | 7,360 |  |  | 7,086 |
Allowance for loan losses |  |  | (16,852 | ) |  | (16,636 | ) |  | (16,135 | ) |  | (16,705 | ) |  | (16,577 | )
Loans receivable, net |  |  | $ | 6,207,680 |  |  | $ | 6,081,938 |  |  | $ | 5,943,930 |  |  | $ | 5,968,830 |  |  | $ | 5,579,222 |
Mortgage loans serviced for others |  | $ | 50,042 |  |  | $ | 54,457 |  |  | $ | 90,882 |  |  | $ | 92,274 |  |  | $ | 95,100 |
| At December 31, 2019 Average Yield |  |  |  |  |  |  |  |  |  |
Loan pipeline (1): |  |  |  |  |  |  |  |  |  |  |
Commercial | 4.20 | % |  | $ | 219,269 |  |  | $ | 126,578 |  |  | $ | 212,712 |  |  | $ | 122,325 |  |  | $ | 129,839 |
Residential real estate | 3.56 |  |  | 105,396 |  |  | 189,403 |  |  | 82,555 |  |  | 63,598 |  |  | 49,800 |
Home equity loans and lines | 5.35 |  |  | 3,049 |  |  | 3,757 |  |  | 2,550 |  |  | 4,688 |  |  | 6,571 |
Total | 4.00 | % |  | $ | 327,714 |  |  | $ | 319,738 |  |  | $ | 297,817 |  |  | $ | 190,611 |  |  | $ | 186,210 |

| For the Three Months Ended |
| December 31, 2019 |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | December 31, 2018 |
| Average Yield |  |  |  |  |  |  |  |  |  |  |
Loan originations: |  |  |  |  |  |  |  |  |  |  |  |
Commercial | 4.05 | % |  | $ | 264,938 |  |  | $ | 315,405 |  |  | $ | 123,882 |  |  | $ | 172,233 |  |  | $ | 151,851 |  |
Residential real estate | 3.49 |  |  | 226,492 |  |  | 156,308 |  |  | 120,771 |  |  | 75,530 |  |  | 92,776 |  |
Home equity loans and lines | 5.27 |  |  | 12,961 |  |  | 10,498 |  |  | 14,256 |  |  | 13,072 |  |  | 15,583 |  |
Total | 3.83 | % |  | $ | 504,391 |  |  | $ | 482,211 |  |  | $ | 258,909 |  |  | $ | 260,835 |  | (2) | $ | 260,210 |  | (3)
Loans sold |  |  | $ | 110 |  |  | $ | — |  | (4) | $ | 403 |  | (4) | $ | 495 |  |  | $ | 728 |  | (4)

(1) | Loan pipeline includes loans approved but not funded.

(2) | Excludes purchased loans of $100.0 million for residential real estate.

(3) | Excludes purchased loans of $49.5 million for other consumer and $753,000 for residential real estate.

(4) | Excludes the sale of small business administration loans of $3.5 million, under-performing residential loans of $2.9 million, and under-performing commercial loans of $1.7 million for the three months ended September 30, 2019, June 30, 2019, and December 31, 2018, respectively.

DEPOSITS |  | At
|  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | December 31, 2018
Type of Account |  |  |  |  |  |  |  |  |  |
Non-interest-bearing |  | $ | 1,377,396 |  |  | $ | 1,406,194 |  |  | $ | 1,370,167 |  |  | $ | 1,352,520 |  |  | $ | 1,151,362 |
Interest-bearing checking |  | 2,539,428 |  |  | 2,400,331 |  |  | 2,342,913 |  |  | 2,400,192 |  |  | 2,350,106 |
Money market deposit |  | 578,147 |  |  | 593,457 |  |  | 642,985 |  |  | 666,067 |  |  | 569,680 |
Savings |  | 898,174 |  |  | 901,168 |  |  | 909,501 |  |  | 922,113 |  |  | 877,177 |
Time deposits |  | 935,632 |  |  | 919,705 |  |  | 921,921 |  |  | 949,593 |  |  | 866,244 |
|  | $ | 6,328,777 |  |  | $ | 6,220,855 |  |  | $ | 6,187,487 |  |  | $ | 6,290,485 |  |  | $ | 5,814,569 |

13

OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)

ASSET QUALITY | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | December 31, 2018
Non-performing loans: |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 207 |  |  | $ | 207 |  |  | $ | 207 |  |  | $ | 240 |  |  | $ | 1,587 |
Commercial real estate - owner-occupied | 4,811 |  |  | 4,537 |  |  | 4,818 |  |  | 4,565 |  |  | 501 |
Commercial real estate - investor | 2,917 |  |  | 4,073 |  |  | 4,050 |  |  | 4,115 |  |  | 5,024 |
Residential real estate | 7,181 |  |  | 5,953 |  |  | 5,747 |  |  | 8,611 |  |  | 7,389 |
Home equity loans and lines | 2,733 |  |  | 2,683 |  |  | 2,974 |  |  | 3,364 |  |  | 2,914 |
Total non-performing loans | 17,849 |  |  | 17,453 |  |  | 17,796 |  |  | 20,895 |  |  | 17,415 |
Other real estate owned | 264 |  |  | 294 |  |  | 865 |  |  | 1,594 |  |  | 1,381 |
Total non-performing assets | $ | 18,113 |  |  | $ | 17,747 |  |  | $ | 18,661 |  |  | $ | 22,489 |  |  | $ | 18,796 |
Purchased credit-impaired (“PCI”) loans | $ | 13,265 |  |  | $ | 13,281 |  |  | $ | 13,432 |  |  | $ | 16,306 |  |  | $ | 8,901 |
Delinquent loans 30 to 89 days | $ | 14,798 |  |  | $ | 19,905 |  |  | $ | 20,029 |  |  | $ | 21,578 |  |  | $ | 25,686 |
Troubled debt restructurings: |  |  |  |  |  |  |  |  |
Non-performing (included in total non-performing loans above) | $ | 6,566 |  |  | $ | 6,152 |  |  | $ | 6,815 |  |  | $ | 6,484 |  |  | $ | 3,595 |
Performing | 18,042 |  |  | 18,977 |  |  | 19,314 |  |  | 19,690 |  |  | 22,877 |
Total troubled debt restructurings | $ | 24,608 |  |  | $ | 25,129 |  |  | $ | 26,129 |  |  | $ | 26,174 |  |  | $ | 26,472 |
Allowance for loan losses | $ | 16,852 |  |  | $ | 16,636 |  |  | $ | 16,135 |  |  | $ | 16,705 |  |  | $ | 16,577 |
Allowance for loan losses as a percent of total loans receivable (1) | 0.27 | % |  | 0.27 | % |  | 0.27 | % |  | 0.28 | % |  | 0.30 | %
Allowance for loan losses as a percent of total non-performing loans | 94.41 |  |  | 95.32 |  |  | 90.67 |  |  | 79.95 |  |  | 95.19 |
Non-performing loans as a percent of total loans receivable | 0.29 |  |  | 0.29 |  |  | 0.30 |  |  | 0.35 |  |  | 0.31 |
Non-performing assets as a percent of total assets | 0.22 |  |  | 0.22 |  |  | 0.23 |  |  | 0.28 |  |  | 0.25 |

(1) | The loans acquired from 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 loan losses, was $30,260, $32,768, $36,026, $35,204, and $31,647 at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively.

NET CHARGE-OFFS |  | For the Three Months Ended
|  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | December 31, 2018 |
Net Charge-offs: |  |  |  |  |  |  |  |  |  |  |
Loan charge-offs |  | $ | (445 | ) |  | $ | (353 | ) |  | $ | (1,138 | ) |  | $ | (868 | ) |  | $ | (1,133 | ) |
Recoveries on loans |  | 306 |  |  | 549 |  |  | 212 |  |  | 376 |  |  | 383 |  |
Net loan (charge-offs) recoveries |  | $ | (139 | ) |  | $ | 196 |  |  | $ | (926 | ) | (1) | $ | (492 | ) |  | $ | (750 | ) | (1)
Net loan charge-offs to average total loans (annualized) |  | 0.01 | % |  | NM* |  |  | 0.06 | % |  | 0.03 | % |  | 0.05 | % |
Net charge-off detail - (loss) recovery: |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 163 |  |  | $ | 256 |  |  | $ | (58 | ) |  | $ | (58 | ) |  | $ | (871 | ) |
Residential mortgage and construction |  | (61 | ) |  | 12 |  |  | (728 | ) |  | (425 | ) |  | 210 |  |
Home equity loans and lines |  | (240 | ) |  | (10 | ) |  | (121 | ) |  | (4 | ) |  | (62 | ) |
Other consumer |  | (1 | ) |  | (62 | ) |  | (19 | ) |  | (5 | ) |  | (27 | ) |
Net loan (charge-offs) recoveries |  | $ | (139 | ) |  | $ | 196 |  |  | $ | (926 | ) | (1) | $ | (492 | ) |  | $ | (750 | ) | (1)

(1) | Included in net loan charge-offs for the three months ended June 30, 2019, and December 31, 2018 are $429 and $243, respectively, relating to under-performing loans sold.

* Not Meaningful
14

OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME

| For the Three Months Ended
| December 31, 2019 |  | September 30, 2019 |  | December 31, 2018
(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 | $ | 43,495 |  |  | $ | 196 |  |  | 1.79 | % |  | $ | 40,932 |  |  | $ | 264 |  |  | 2.56 | % |  | $ | 53,023 |  |  | $ | 236 |  |  | 1.77 | %
Securities (1) | 1,008,461 |  |  | 6,581 |  |  | 2.59 |  |  | 1,039,560 |  |  | 6,908 |  |  | 2.64 |  |  | 1,037,039 |  |  | 6,802 |  |  | 2.60 |
Loans receivable, net (2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial | 3,442,771 |  |  | 42,416 |  |  | 4.89 |  |  | 3,350,868 |  |  | 42,104 |  |  | 4.99 |  |  | 3,061,999 |  |  | 39,045 |  |  | 5.06 |
Residential | 2,309,741 |  |  | 22,469 |  |  | 3.89 |  |  | 2,225,837 |  |  | 21,527 |  |  | 3.87 |  |  | 2,036,024 |  |  | 20,688 |  |  | 4.06 |
Home Equity | 323,878 |  |  | 4,243 |  |  | 5.20 |  |  | 335,691 |  |  | 4,678 |  |  | 5.53 |  |  | 356,088 |  |  | 4,656 |  |  | 5.19 |
Other | 94,350 |  |  | 1,170 |  |  | 4.92 |  |  | 104,310 |  |  | 1,406 |  |  | 5.35 |  |  | 78,832 |  |  | 931 |  |  | 4.69 |
Allowance for loan loss net of deferred loan fees | (7,932 | ) |  | — |  |  | — |  |  | (8,381 | ) |  | — |  |  | — |  |  | (9,198 | ) |  | — |  |  | — |
Loans Receivable, net | 6,162,808 |  |  | 70,298 |  |  | 4.53 |  |  | 6,008,325 |  |  | 69,715 |  |  | 4.60 |  |  | 5,523,745 |  |  | 65,320 |  |  | 4.69 |
Total interest-earning assets | 7,214,764 |  |  | 77,075 |  |  | 4.24 |  |  | 7,088,817 |  |  | 76,887 |  |  | 4.30 |  |  | 6,613,807 |  |  | 72,358 |  |  | 4.34 |
Non-interest-earning assets | 977,413 |  |  |  |  |  |  | 984,421 |  |  |  |  |  |  | 890,304 |  |  |  |  |
Total assets | $ | 8,192,177 |  |  |  |  |  |  | $ | 8,073,238 |  |  |  |  |  |  | $ | 7,504,111 |  |  |  |  |
Liabilities and Stockholders’ Equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing checking | $ | 2,562,059 |  |  | 4,477 |  |  | 0.69 | % |  | $ | 2,467,879 |  |  | 4,311 |  |  | 0.69 | % |  | $ | 2,407,400 |  |  | 3,120 |  |  | 0.51 | %
Money market | 592,116 |  |  | 1,243 |  |  | 0.83 |  |  | 597,896 |  |  | 1,208 |  |  | 0.80 |  |  | 585,117 |  |  | 894 |  |  | 0.61 |
Savings | 899,051 |  |  | 308 |  |  | 0.14 |  |  | 905,605 |  |  | 300 |  |  | 0.13 |  |  | 878,617 |  |  | 263 |  |  | 0.12 |
Time deposits | 931,228 |  |  | 4,186 |  |  | 1.78 |  |  | 920,032 |  |  | 3,998 |  |  | 1.72 |  |  | 848,361 |  |  | 2,791 |  |  | 1.31 |
Total | 4,984,454 |  |  | 10,214 |  |  | 0.81 |  |  | 4,891,412 |  |  | 9,817 |  |  | 0.80 |  |  | 4,719,495 |  |  | 7,068 |  |  | 0.59 |
FHLB Advances | 412,073 |  |  | 2,075 |  |  | 2.00 |  |  | 394,124 |  |  | 2,208 |  |  | 2.22 |  |  | 354,296 |  |  | 1,930 |  |  | 2.16 |
Securities sold under agreements to repurchase | 68,257 |  |  | 85 |  |  | 0.49 |  |  | 62,296 |  |  | 73 |  |  | 0.46 |  |  | 60,901 |  |  | 43 |  |  | 0.28 |
Other borrowings | 96,712 |  |  | 1,347 |  |  | 5.53 |  |  | 96,578 |  |  | 1,397 |  |  | 5.74 |  |  | 99,431 |  |  | 1,476 |  |  | 5.89 |
Total interest-bearing liabilities | 5,561,496 |  |  | 13,721 |  |  | 0.98 |  |  | 5,444,410 |  |  | 13,495 |  |  | 0.98 |  |  | 5,234,123 |  |  | 10,517 |  |  | 0.80 |
Non-interest-bearing deposits | 1,393,002 |  |  |  |  |  |  | 1,396,259 |  |  |  |  |  |  | 1,177,321 |  |  |  |  |
Non-interest-bearing liabilities | 92,014 |  |  |  |  |  |  | 88,868 |  |  |  |  |  |  | 56,705 |  |  |  |  |
Total liabilities | 7,046,512 |  |  |  |  |  |  | 6,929,537 |  |  |  |  |  |  | 6,468,149 |  |  |  |  |
Stockholders’ equity | 1,145,665 |  |  |  |  |  |  | 1,143,701 |  |  |  |  |  |  | 1,035,962 |  |  |  |  |
Total liabilities and equity | $ | 8,192,177 |  |  |  |  |  |  | $ | 8,073,238 |  |  |  |  |  |  | $ | 7,504,111 |  |  |  |  |
Net interest income |  |  | $ | 63,354 |  |  |  |  |  |  | $ | 63,392 |  |  |  |  |  |  | $ | 61,841 |  |  |
Net interest rate spread (3) |  |  |  |  | 3.26 | % |  |  |  |  |  | 3.32 | % |  |  |  |  |  | 3.54 | %
Net interest margin (4) |  |  |  |  | 3.48 | % |  |  |  |  |  | 3.55 | % |  |  |  |  |  | 3.71 | %
Total cost of deposits (including non-interest-bearing deposits) |  |  |  |  | 0.64 | % |  |  |  |  |  | 0.62 | % |  |  |  |  |  | 0.48 | %

15

(continued)

|  | For the Year Ended
|  | December 31, 2019 |  | December 31, 2018
(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 |  | $ | 57,742 |  |  | $ | 1,299 |  |  | 2.25 | % |  | $ | 49,683 |  |  | $ | 896 |  |  | 1.80 | %
Securities (1) |  | 1,048,779 |  |  | 27,564 |  |  | 2.63 |  |  | 1,073,454 |  |  | 26,209 |  |  | 2.44 |
Loans receivable, net (2) |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | 3,329,396 |  |  | 168,507 |  |  | 5.06 |  |  | 3,012,521 |  |  | 149,965 |  |  | 4.98 |
Residential |  | 2,204,931 |  |  | 87,729 |  |  | 3.98 |  |  | 1,965,395 |  |  | 79,805 |  |  | 4.06 |
Home Equity |  | 339,896 |  |  | 18,284 |  |  | 5.38 |  |  | 357,137 |  |  | 17,991 |  |  | 5.04 |
Other |  | 107,672 |  |  | 5,411 |  |  | 5.03 |  |  | 35,424 |  |  | 1,788 |  |  | 5.05 |
Allowance for loan loss net of deferred loan fees |  | (8,880 | ) |  | — |  |  | — |  |  | (9,972 | ) |  | — |  |  | — |
Loans Receivable, net |  | 5,973,015 |  |  | 279,931 |  |  | 4.69 |  |  | 5,360,505 |  |  | 249,549 |  |  | 4.66 |
Total interest-earning assets |  | 7,079,536 |  |  | 308,794 |  |  | 4.36 |  |  | 6,483,642 |  |  | 276,654 |  |  | 4.27 |
Non-interest-earning assets |  | 964,920 |  |  |  |  |  |  | 880,836 |  |  |  |  |
Total assets |  | $ | 8,044,456 |  |  |  |  |  |  | $ | 7,364,478 |  |  |  |  |
Liabilities and Stockholders’ Equity: |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing checking |  | $ | 2,517,068 |  |  | 16,820 |  |  | 0.67 | % |  | $ | 2,336,917 |  |  | 9,219 |  |  | 0.39 | %
Money market |  | 605,607 |  |  | 4,919 |  |  | 0.81 |  |  | 571,997 |  |  | 2,818 |  |  | 0.49 |
Savings |  | 906,086 |  |  | 1,195 |  |  | 0.13 |  |  | 877,179 |  |  | 990 |  |  | 0.11 |
Time deposits |  | 929,488 |  |  | 15,498 |  |  | 1.67 |  |  | 858,978 |  |  | 9,551 |  |  | 1.11 |
Total |  | 4,958,249 |  |  | 38,432 |  |  | 0.78 |  |  | 4,645,071 |  |  | 22,578 |  |  | 0.49 |
FHLB Advances |  | 387,925 |  |  | 8,441 |  |  | 2.18 |  |  | 382,464 |  |  | 7,885 |  |  | 2.06 |
Securities sold under agreements to repurchase |  | 64,525 |  |  | 276 |  |  | 0.43 |  |  | 66,340 |  |  | 168 |  |  | 0.25 |
Other borrowings |  | 98,095 |  |  | 5,674 |  |  | 5.78 |  |  | 94,644 |  |  | 5,521 |  |  | 5.83 |
Total interest-bearing liabilities |  | 5,508,794 |  |  | 52,823 |  |  | 0.96 |  |  | 5,188,519 |  |  | 36,152 |  |  | 0.70 |
Non-interest-bearing deposits |  | 1,325,836 |  |  |  |  |  |  | 1,135,602 |  |  |  |  |
Non-interest-bearing liabilities |  | 80,028 |  |  |  |  |  |  | 56,098 |  |  |  |  |
Total liabilities |  | 6,914,658 |  |  |  |  |  |  | 6,380,219 |  |  |  |  |
Stockholders’ equity |  | 1,129,798 |  |  |  |  |  |  | 984,259 |  |  |  |  |
Total liabilities and equity |  | $ | 8,044,456 |  |  |  |  |  |  | $ | 7,364,478 |  |  |  |  |
Net interest income |  |  |  | $ | 255,971 |  |  |  |  |  |  | $ | 240,502 |  |  |
Net interest rate spread (3) |  |  |  |  |  | 3.40 | % |  |  |  |  |  | 3.57 | %
Net interest margin (4) |  |  |  |  |  | 3.62 | % |  |  |  |  |  | 3.71 | %
Total cost of deposits (including non-interest-bearing deposits) |  |  |  |  |  | 0.61 | % |  |  |  |  |  | 0.39 | %

(1) | Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost.

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

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

(4) | Net interest margin represents net interest income divided by average interest-earning assets.

Certain amounts previously reported have been reclassified to conform to the current year’s presentation.
16

OceanFirst Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(dollars in thousands, except per share amounts)

|  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | December 31, 2018
Selected Financial Condition Data: |  |  |  |  |  |  |  |  |  |
Total assets |  | $ | 8,246,145 |  |  | $ | 8,135,173 |  |  | $ | 8,029,057 |  |  | $ | 8,092,948 |  |  | $ | 7,516,154 |
Debt securities available-for-sale, at estimated fair value |  | 150,960 |  |  | 127,308 |  |  | 123,610 |  |  | 122,558 |  |  | 100,717 |
Debt securities held-to-maturity, net |  | 768,873 |  |  | 819,253 |  |  | 863,838 |  |  | 900,614 |  |  | 846,810 |
Equity investments, at estimated fair value |  | 10,136 |  |  | 10,145 |  |  | 10,002 |  |  | 9,816 |  |  | 9,655 |
Restricted equity investments, at cost |  | 62,356 |  |  | 62,095 |  |  | 59,425 |  |  | 55,663 |  |  | 56,784 |
Loans receivable, net |  | 6,207,680 |  |  | 6,081,938 |  |  | 5,943,930 |  |  | 5,968,830 |  |  | 5,579,222 |
Deposits |  | 6,328,777 |  |  | 6,220,855 |  |  | 6,187,487 |  |  | 6,290,485 |  |  | 5,814,569 |
Federal Home Loan Bank advances |  | 519,260 |  |  | 512,149 |  |  | 453,646 |  |  | 418,016 |  |  | 449,383 |
Securities sold under agreements to repurchase and other borrowings |  | 168,540 |  |  | 161,734 |  |  | 158,619 |  |  | 165,753 |  |  | 161,290 |
Stockholders’ equity |  | 1,153,119 |  |  | 1,144,528 |  |  | 1,137,295 |  |  | 1,127,163 |  |  | 1,039,358 |

|  | For the Three Months Ended
|  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | December 31, 2018
Selected Operating Data: |  |  |  |  |  |  |  |  |  |
Interest income |  | $ | 77,075 |  |  | $ | 76,887 |  |  | $ | 78,410 |  |  | $ | 76,422 |  |  | $ | 72,358 |
Interest expense |  | 13,721 |  |  | 13,495 |  |  | 13,573 |  |  | 12,034 |  |  | 10,517 |
Net interest income |  | 63,354 |  |  | 63,392 |  |  | 64,837 |  |  | 64,388 |  |  | 61,841 |
Provision for loan losses |  | 355 |  |  | 305 |  |  | 356 |  |  | 620 |  |  | 506 |
Net interest income after provision for loan losses |  | 62,999 |  |  | 63,087 |  |  | 64,481 |  |  | 63,768 |  |  | 61,335 |
Other income |  | 11,231 |  |  | 11,543 |  |  | 9,879 |  |  | 9,512 |  |  | 8,748 |
Operating expenses |  | 43,589 |  |  | 40,884 |  |  | 43,289 |  |  | 41,827 |  |  | 37,794 |
Branch consolidation expenses |  | 268 |  |  | 1,696 |  |  | 6,695 |  |  | 391 |  |  | 240 |
Merger related expenses |  | 3,742 |  |  | 777 |  |  | 931 |  |  | 5,053 |  |  | 1,048 |
Income before provision for income taxes |  | 26,631 |  |  | 31,273 |  |  | 23,445 |  |  | 26,009 |  |  | 31,001 |
Provision for income taxes |  | 3,181 |  |  | 6,302 |  |  | 4,465 |  |  | 4,836 |  |  | 4,269 |
Net income |  | $ | 23,450 |  |  | $ | 24,971 |  |  | $ | 18,980 |  |  | $ | 21,173 |  |  | $ | 26,732 |
Diluted earnings per share |  | $ | 0.47 |  |  | $ | 0.49 |  |  | $ | 0.37 |  |  | $ | 0.42 |  |  | $ | 0.55 |
Net accretion/amortization of purchase accounting adjustments included in net interest income |  | $ | 3,501 |  |  | $ | 2,769 |  |  | $ | 3,663 |  |  | $ | 4,027 |  |  | $ | 3,918 |

17

(continued)

|  | At or For the Three Months Ended
|  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | December 31, 2018
Selected Financial Ratios and Other Data(1): |  |  |  |  |  |  |  |  |  |
Performance Ratios (Annualized): |  |  |  |  |  |  |  |  |  |
Return on average assets (2) |  | 1.14 | % |  | 1.23 | % |  | 0.94 | % |  | 1.10 | % |  | 1.41 | %
Return on average tangible assets (2) (3) |  | 1.19 |  |  | 1.29 |  |  | 0.99 |  |  | 1.15 |  |  | 1.48 |
Return on average stockholders' equity (2) |  | 8.12 |  |  | 8.66 |  |  | 6.73 |  |  | 7.82 |  |  | 10.24 |
Return on average tangible stockholders' equity (2) (3) |  | 12.33 |  |  | 13.18 |  |  | 10.32 |  |  | 11.97 |  |  | 15.60 |
Stockholders' equity to total assets |  | 13.98 |  |  | 14.07 |  |  | 14.16 |  |  | 13.93 |  |  | 13.83 |
Tangible stockholders' equity to tangible assets (3) |  | 9.71 |  |  | 9.73 |  |  | 9.76 |  |  | 9.53 |  |  | 9.55 |
Net interest rate spread |  | 3.26 |  |  | 3.32 |  |  | 3.45 |  |  | 3.59 |  |  | 3.54 |
Net interest margin |  | 3.48 |  |  | 3.55 |  |  | 3.66 |  |  | 3.78 |  |  | 3.71 |
Operating expenses to average assets (2) |  | 2.31 |  |  | 2.13 |  |  | 2.53 |  |  | 2.45 |  |  | 2.07 |
Efficiency ratio (2) (4) |  | 63.82 |  |  | 57.86 |  |  | 68.14 |  |  | 63.97 |  |  | 55.37 |
Loans to deposits |  | 98.09 |  |  | 97.77 |  |  | 96.06 |  |  | 94.89 |  |  | 95.95 |

|  | At or For the Year Ended December 31,
|  | 2019 |  | 2018
Performance Ratios: |  |  |  |
Return on average assets (2) |  | 1.10 | % |  | 0.98 | %
Return on average tangible assets (2) (3) |  | 1.16 |  |  | 1.02 |
Return on average stockholders' equity (2) |  | 7.84 |  |  | 7.31 |
Return on average tangible stockholders' equity (2) (3) |  | 11.96 |  |  | 11.16 |
Net interest rate spread |  | 3.40 |  |  | 3.57 |
Net interest margin |  | 3.62 |  |  | 3.71 |
Operating expenses to average assets (2) |  | 2.35 |  |  | 2.53 |
Efficiency ratio (2) (4) |  | 63.44 |  |  | 67.68 |

18

(continued)

|  | At or For the Three Months Ended
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31,
|  | 2019 |  | 2019 |  | 2019 |  | 2019 |  | 2018
Wealth Management: |  |  |  |  |  |  |  |  |  |
Assets under administration |  | $ | 195,415 |  |  | $ | 194,137 |  |  | $ | 199,554 |  |  | $ | 200,130 |  |  | $ | 184,476 |
Nest Egg |  | 34,865 |  |  | 23,946 |  |  | 9,755 |  |  | 4,052 |  |  | — |
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 |  | 22.88 |  |  | 22.57 |  |  | 22.24 |  |  | 22.00 |  |  | 21.68 |
Tangible stockholders’ equity per common share at end of period (3) |  | 15.13 |  |  | 14.86 |  |  | 14.57 |  |  | 14.32 |  |  | 14.26 |
Common shares outstanding at end of period |  | 50,405,048 |  |  | 50,700,586 |  |  | 51,131,804 |  |  | 51,233,944 |  |  | 47,951,168 |
Number of full-service customer facilities: |  | 56 |  |  | 56 |  |  | 60 |  |  | 63 |  |  | 59 |
Quarterly Average Balances |  |  |  |  |  |  |  |  |  |
Total securities |  | $ | 1,008,461 |  |  | $ | 1,039,560 |  |  | $ | 1,080,690 |  |  | $ | 1,067,150 |  |  | $ | 1,037,039 |
Loans receivable, net |  | 6,162,808 |  |  | 6,008,325 |  |  | 5,948,312 |  |  | 5,767,887 |  |  | 5,523,745 |
Total interest-earning assets |  | 7,214,764 |  |  | 7,088,817 |  |  | 7,096,216 |  |  | 6,914,948 |  |  | 6,613,807 |
Total assets |  | 8,192,177 |  |  | 8,073,238 |  |  | 8,068,899 |  |  | 7,839,316 |  |  | 7,504,111 |
Interest-bearing transaction deposits |  | 4,053,226 |  |  | 3,971,380 |  |  | 4,051,539 |  |  | 4,036,584 |  |  | 3,871,134 |
Time deposits |  | 931,228 |  |  | 920,032 |  |  | 934,470 |  |  | 932,341 |  |  | 848,361 |
Total borrowed funds |  | 577,042 |  |  | 552,998 |  |  | 566,785 |  |  | 504,498 |  |  | 514,628 |
Total interest-bearing liabilities |  | 5,561,496 |  |  | 5,444,410 |  |  | 5,552,794 |  |  | 5,473,423 |  |  | 5,234,123 |
Non-interest bearing deposits |  | 1,393,002 |  |  | 1,396,259 |  |  | 1,302,147 |  |  | 1,211,934 |  |  | 1,177,321 |
Stockholder’s equity |  | 1,145,665 |  |  | 1,143,701 |  |  | 1,131,165 |  |  | 1,097,984 |  |  | 1,035,962 |
Total deposits |  | 6,377,456 |  |  | 6,287,671 |  |  | 6,288,156 |  |  | 6,180,859 |  |  | 5,896,816 |
Quarterly Yields |  |  |  |  |  |  |  |  |  |
Total securities |  | 2.59 | % |  | 2.64 | % |  | 2.64 | % |  | 2.64 | % |  | 2.60 | %
Loans receivable, net |  | 4.53 |  |  | 4.60 |  |  | 4.78 |  |  | 4.85 |  |  | 4.69 |
Total interest-earning assets |  | 4.24 |  |  | 4.30 |  |  | 4.43 |  |  | 4.48 |  |  | 4.34 |
Interest-bearing transaction deposits |  | 0.59 |  |  | 0.58 |  |  | 0.58 |  |  | 0.52 |  |  | 0.44 |
Time deposits |  | 1.78 |  |  | 1.72 |  |  | 1.66 |  |  | 1.50 |  |  | 1.31 |
Borrowed funds |  | 2.41 |  |  | 2.64 |  |  | 2.70 |  |  | 2.73 |  |  | 2.66 |
Total interest-bearing liabilities |  | 0.98 |  |  | 0.98 |  |  | 0.98 |  |  | 0.89 |  |  | 0.80 |
Net interest spread |  | 3.26 |  |  | 3.32 |  |  | 3.45 |  |  | 3.59 |  |  | 3.54 |
Net interest margin |  | 3.48 |  |  | 3.55 |  |  | 3.66 |  |  | 3.78 |  |  | 3.71 |
Total deposits |  | 0.64 |  |  | 0.62 |  |  | 0.62 |  |  | 0.57 |  |  | 0.48 |

(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, 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 and the impact to income tax expense related to Tax Reform. Refer to Other Items - Non-GAAP Reconciliation for impact of these items.

(3) | Tangible stockholders’ equity and tangible assets exclude intangible assets relating to goodwill and core deposit intangible.

(4) | Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.

19

OceanFirst Financial Corp.
OTHER ITEMS
(dollars in thousands, except per share amounts)
NON-GAAP RECONCILIATION

|  | For the Three Months Ended
|  | December 31, 2019 |  | September 30, 2019 |  | June 30, 2019 |  | March 31, 2019 |  | December 31, 2018
Core earnings: |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 23,450 |  |  | $ | 24,971 |  |  | $ | 18,980 |  |  | $ | 21,173 |  |  | $ | 26,732 |
Non-recurring items: |  |  |  |  |  |  |  |  |  |
Add: Merger related expenses |  | 3,742 |  |  | 777 |  |  | 931 |  |  | 5,053 |  |  | 1,048 |
Branch consolidation expenses |  | 268 |  |  | 1,696 |  |  | 6,695 |  |  | 391 |  |  | 240 |
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 | ) |  | — |  |  | — |  |  | — |  |  | — |
Income tax benefit related to Tax Reform |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,854 | )
Less: Income tax (benefit) expense on items |  | (793 | ) |  | (663 | ) |  | (1,867 | ) |  | (1,039 | ) |  | (130 | )
Core earnings |  | $ | 25,736 |  |  | $ | 27,531 |  |  | $ | 25,995 |  |  | $ | 25,578 |  |  | $ | 26,036 |
Core diluted earnings per share |  | $ | 0.51 |  |  | $ | 0.54 |  |  | $ | 0.51 |  |  | $ | 0.51 |  |  | $ | 0.54 |
Core ratios (annualized): |  |  |  |  |  |  |  |  |  |
Return on average assets |  | 1.25 | % |  | 1.35 | % |  | 1.29 | % |  | 1.32 | % |  | 1.38 | %
Return on average tangible assets |  | 1.31 |  |  | 1.42 |  |  | 1.36 |  |  | 1.39 |  |  | 1.45 |
Return on average tangible stockholders’ equity |  | 13.53 |  |  | 14.53 |  |  | 14.14 |  |  | 14.46 |  |  | 15.19 |
Efficiency ratio |  | 56.73 |  |  | 53.56 |  |  | 56.26 |  |  | 56.60 |  |  | 53.54 |

|  | For the Years Ended December 31,
|  | 2019 |  | 2018
Core earnings: |  |  |  |
Net income |  | $ | 88,574 |  |  | $ | 71,932 |
Non-recurring items: |  |  |  |
Add: Merger related expenses |  | 10,503 |  |  | 26,911 |
Branch consolidation expenses |  | 9,050 |  |  | 3,151 |
Non-recurring professional fees |  | 2,024 |  |  | — |
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 | ) |  | — |
Income tax benefit related to Tax Reform |  | — |  |  | (1,854 | )
Less: Income tax (benefit) expense on items |  | (4,362 | ) |  | (5,991 | )
Core earnings |  | $ | 104,840 |  |  | $ | 94,149 |
Core diluted earnings per share |  | $ | 2.07 |  |  | $ | 1.98 |
Core ratios: |  |  |  |
Return on average assets |  | 1.30 | % |  | 1.28 | %
Return on average tangible assets |  | 1.37 |  |  | 1.34 |
Return on average tangible stockholders’ equity |  | 14.16 |  |  | 14.61 |
Efficiency ratio |  | 55.78 |  |  | 56.76 |

20

(continued)
COMPUTATION OF TOTAL TANGIBLE EQUITY TO TOTAL TANGIBLE ASSETS

|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31,
|  | 2019 |  | 2019 |  | 2019 |  | 2019 |  | 2018
Total stockholders’ equity |  | $ | 1,153,119 |  |  | $ | 1,144,528 |  |  | $ | 1,137,295 |  |  | $ | 1,127,163 |  |  | $ | 1,039,358 |
Less: |  |  |  |  |  |  |  |  |  |
Goodwill |  | 374,632 |  |  | 374,537 |  |  | 374,592 |  |  | 375,096 |  |  | 338,442 |
Core deposit intangible |  | 15,607 |  |  | 16,605 |  |  | 17,614 |  |  | 18,629 |  |  | 16,971 |
Tangible stockholders’ equity |  | $ | 762,880 |  |  | $ | 753,386 |  |  | $ | 745,089 |  |  | $ | 733,438 |  |  | $ | 683,945 |
Total assets |  | $ | 8,246,145 |  |  | $ | 8,135,173 |  |  | $ | 8,029,057 |  |  | $ | 8,092,948 |  |  | $ | 7,516,154 |
Less: |  |  |  |  |  |  |  |  |  |
Goodwill |  | 374,632 |  |  | 374,537 |  |  | 374,592 |  |  | 375,096 |  |  | 338,442 |
Core deposit intangible |  | 15,607 |  |  | 16,605 |  |  | 17,614 |  |  | 18,629 |  |  | 16,971 |
Tangible assets |  | $ | 7,855,906 |  |  | $ | 7,744,031 |  |  | $ | 7,636,851 |  |  | $ | 7,699,223 |  |  | $ | 7,160,741 |
Tangible stockholders’ equity to tangible assets |  | 9.71 | % |  | 9.73 | % |  | 9.76 | % |  | 9.53 | % |  | 9.55 | %

21

(continued)
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 Capital Bank, net of the total consideration paid (in thousands):

|  | At January 31, 2019
(in thousands) |  | Capital Bank Book Value |  | Purchase Accounting Adjustments |  | Estimated Fair Value
Total Purchase Price: |  |  |  |  |  | $ | 76,834 |
Assets acquired: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 59,748 |  |  | $ | — |  |  | $ | 59,748 |
Securities |  | 103,798 |  |  | (23 | ) |  | 103,775 |
Loans |  | 312,320 |  |  | (4,542 | ) |  | 307,778 |
Accrued interest receivable |  | 1,387 |  |  | 3 |  |  | 1,390 |
Bank Owned Life Insurance |  | 10,460 |  |  | — |  |  | 10,460 |
Deferred tax asset |  | 1,605 |  |  | 2,362 |  |  | 3,967 |
Other assets |  | 9,384 |  |  | (4,404 | ) |  | 4,980 |
Core deposit intangible |  | — |  |  | 2,662 |  |  | 2,662 |
Total assets acquired |  | 498,702 |  |  | (3,942 | ) |  | 494,760 |
Liabilities assumed: |  |  |  |  |  |
Deposits |  | (448,792 | ) |  | (226 | ) |  | (449,018 | )
Other liabilities |  | (827 | ) |  | (4,294 | ) |  | (5,121 | )
Total liabilities assumed |  | (449,619 | ) |  | (4,520 | ) |  | (454,139 | )
Net assets acquired |  | $ | 49,083 |  |  | $ | (8,462 | ) |  | $ | 40,621 |
Goodwill recorded in the merger |  |  |  |  |  | $ | 36,213 |

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 the recorded carrying values may be required.
On January 1, 2020, the Company completed its acquisitions of Two River Bancorp (“Two River”) and Country Bank Holding Company, Inc. (“Country Bank”). The following table summarizes the estimated assets acquired and liabilities assumed at the date of acquisition (dollars in millions).

|  | At January 1, 2020
|  | OceanFirst Financial Corp. |  | Two River |  | Country Bank |  | Consolidated
Total assets |  | $ | 8,246 |  |  | $ | 1,109 |  |  | $ | 798 |  |  | $ | 10,153 |
Loans |  | 6,208 |  |  | 938 |  |  | 616 |  |  | 7,762 |
Deposits |  | 6,329 |  |  | 942 |  |  | 654 |  |  | 7,925 |
Shares issued |  | 50,405,048 |  |  | 5,818,687 |  |  | 4,418,000 |  |  | 60,641,735 |
Total transaction value |  | N/A |  |  | $ | 197 |  |  | $ | 113 |  |  | N/A |

22