TOMS RIVER, N.J.--(BUSINESS WIRE)--Oct. 23, 2003--OceanFirst
Financial Corp. (NASDAQ:OCFC), the holding company for OceanFirst
Bank, today announced diluted earnings per share for the quarter ended
September 30, 2003 of $.41, a 17.1% increase over the $.35 per diluted
share for the same prior year quarter. For the nine months ended
September 30, 2003 diluted earnings per share increased 10.2% to
$1.19, from $1.08 for the corresponding prior year period. The Company
also announced that its Board of Directors had declared a regular
quarterly cash dividend of $.20 per share--covering the three month
period ended September 30, 2003--to be paid on November 14, 2003, to
shareholders of record on October 31, 2003.
In making today's announcement John R. Garbarino, Chairman,
President and Chief Executive Officer said, "On behalf of the Board of
Directors, I am pleased to announce our twenty-seventh consecutive
quarterly cash dividend. The dividend, along with yesterday's
announcement of our tenth stock repurchase program for 10% of
outstanding shares, reflects management's continuing strong commitment
to increasing shareholder value and leveraging the organization's
capital."
"Net income for the three months ended September 30, 2003 was
adversely affected by a declining net interest margin caused by the
historically low rate environment and unparalleled prepayment
activity. Despite this difficult operating environment, we continue to
successfully grow commercial loans and core deposits, increase
non-interest revenue and manage capital."
Results of Operations
Net interest income for the three and nine months ended September
30, 2003 decreased to $13.8 million and $44.1 million, respectively,
as compared to $15.6 million and $45.9 million, respectively, in the
same prior year periods. For each period in 2003, interest-earning
assets increased while the net interest margin declined as compared to
the same prior year periods. The net interest margin decreased to
3.31% and 3.54%, respectively, for the three and nine months ended
September 30, 2003 from 3.80% and 3.73%, respectively, in the same
prior year periods. The yield on interest-earning assets decreased to
5.44% and 5.82%, respectively, as compared to 6.65% and 6.70%,
respectively, for the same prior year periods. High prepayment levels
caused a decrease in the rate earned on interest earning assets and an
acceleration of the amortization of net premiums on mortgage-related
assets. The cost of interest-bearing liabilities decreased to 2.37%
and 2.53%, respectively for the three and nine months ended September
30, 2003, as compared to 3.15% and 3.27%, respectively, in the same
prior year periods. Funding costs benefited from the Company's focus
on lower cost core deposit growth. Core deposits (including
non-interest-bearing deposits) represented 65.7% and 63.4%,
respectively, of average deposits for the three and nine months ended
September 30, 2003 as compared to 58.0% and 55.3%, respectively, for
the same prior year periods.
Other income increased to $5.6 million and $13.1 million for the
three and nine months ended September 30, 2003, respectively, from
$1.3 and $6.9 million, respectively, in the same prior year periods.
Fees and service charges increased by $314,000, or 18.7%, and $1.2
million, or 25.4%, for the three and nine months ended September 30,
2003, respectively, as compared to the same prior year periods due to
the growth in commercial account services, retail core account
balances and trust fees, and the establishment of a captive subsidiary
to recognize fee income from private mortgage reinsurance. For the
three and nine months ended September 30, 2003, the Company recorded
gains of $3.3 million and $8.7 million on the sale of loans and
securities, as compared to gains of $1.3 million and $2.8 million in
the same prior year periods. For the nine months ended September 30,
2003, the gain on sales of loans and securities includes a gain of
$323,000 on the sale of equity securities. Loan servicing income for
the nine months ended September 30, 2003, was adversely affected by
the recognition of an impairment to the loan servicing asset of $2.2
million. For the three and nine months ended September 30, 2002, the
Company recognized impairments to the loan servicing asset for $1.9
million and $2.1 million, respectively.
Operating expenses amounted to $11.1 million and $32.5 million for
the three and nine months ended September 30, 2003, respectively, as
compared to $9.9 million and $29.6 million, respectively, for the
corresponding prior year periods. The increase was principally due to
the higher loan related expenses and for the year-to-date, the costs
associated with the opening of the Bank's seventeenth branch office in
May 2002.
Financial Condition
Loans receivable net, increased by $16.0 million at September 30,
2003 as compared to December 31, 2002 as commercial loan growth was
partially offset by reductions in 1-4 family mortgage loans due to
sale activity. Commercial loans outstanding increased $29.9 million,
or 18.1% on an annualized basis.
Deposits decreased to $1,164.7 million at September 30, 2003 from
$1,184.8 million at December 31, 2002. Core deposits, however, the
Company's primary focus, grew $60.3 million while certificate balances
declined in the low interest rate environment.
Stockholders' equity decreased by $2.5 million to $132.8 million
at September 30, 2003 as compared to $135.3 million at December 31,
2002. For the year-to-date, 771,713 common shares were repurchased at
a total cost of $18.5 million. Under the 10% repurchase program
authorized by the Board of Directors in August 2002, 178,122 shares
remain to be purchased as of September 30, 2003. A new repurchase
program, the Company's eleventh, was announced on October 22, 2003.
Under this 10% repurchase program, an additional 1,341,818 shares are
available for repurchase. The cost of share repurchases was partly
offset by proceeds from stock option exercises and the related tax
benefits.
Asset Quality
The Company's non-performing assets totaled $2.6 million at
September 30, 2003 as compared to $2.8 million at December 31, 2002.
For the nine months ended September 30, 2003, the Company experienced
a net recovery of $36,000 through the allowance for loan losses.
OceanFirst Financial Corp.'s subsidiary, OceanFirst Bank, founded
in 1902, is a federally-chartered stock savings bank with $1.8 billion
in assets and seventeen branches located in Ocean, Monmouth and
Middlesex counties, New Jersey. The Bank is the largest and oldest
community-based financial institution headquartered in Ocean County,
New Jersey.
OceanFirst Financial Corp.'s press releases are available at no
charge by visiting us on the worldwide web at
http://www.oceanfirst.com.
Forward-Looking Statements
This news release contains certain forward-looking statements
which are based on certain assumptions and describe future plans,
strategies and expectations of the Company. These forward-looking
statements are generally identified by use of the words "believe,"
"expect," "intend," "anticipate," "estimate," "project," or similar
expressions. The Company's ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors
which could have a material adverse effect on the operations of the
Company and the subsidiaries include, but are not limited to, changes
in interest rates, general economic conditions, legislative/regulatory
changes, monetary and fiscal policies of the U.S. Government,
including policies of the U.S. Treasury and the Federal Reserve Board,
the quality or composition of the loan or investment portfolios,
demand for loan products, deposit flows, competition, demand for
financial services in the Company's market area and accounting
principles and guidelines. These risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements. The Company does not
undertake - and specifically disclaims any obligation - to publicly
release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after
the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
September 30, December 31, September 30,
2003 2002 2002
-------------- -------------- --------------
(Unaudited) (Unaudited)
ASSETS
------
Cash and due from
banks $ 42,117$ 17,192$ 34,861
Investment securities
available for sale 79,322 91,978 79,482
Federal Home Loan
Bank of New York
stock, at cost 19,950 18,700 18,440
Mortgage-backed
securities available
for sale 102,361 138,657 180,837
Loans receivable, net 1,351,866 1,335,898 1,299,987
Mortgage loans held for
sale 83,671 66,626 32,271
Interest and dividends
receivable 6,598 6,378 7,881
Real estate owned, net 264 141 359
Premises and equipment,
net 16,867 17,708 17,849
Servicing asset 7,121 7,907 6,995
Bank Owned Life Insurance 33,573 32,398 31,948
Other assets 10,884 10,115 9,836
-------------- -------------- --------------
Total assets $ 1,754,594$ 1,743,698$ 1,720,746
============== ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits $ 1,164,745$ 1,184,836$ 1,170,049
Securities sold under
agreements to repurchase
with retail customers 52,242 44,584 41,200
Securities sold under
agreements to repurchase
with the Federal Home
Loan Bank 100,000 140,000 155,000
Federal Home Loan Bank
advances 283,500 214,000 199,000
Advances by borrowers for
taxes and insurance 6,741 5,952 2,665
Other liabilities 14,542 19,021 14,701
-------------- -------------- --------------
Total liabilities 1,621,770 1,608,393 1,582,615
-------------- -------------- --------------
Stockholders' equity:
Preferred stock, $.01
par value, 5,000,000
shares authorized,
no shares issued - - -
Common stock, $.01 par
value, 55,000,000
shares authorized,
27,177,372 shares issued
and 13,418,183,
13,757,880 and 13,924,103
shares outstanding at
September 30, 2003,
December 31, 2002 and
September 30, 2002,
respectively 272 272 272
Additional paid-in
capital 188,526 184,934 183,761
Retained earnings 149,014 142,224 139,887
Accumulated other
comprehensive loss (4,236) (3,201) (1,897)
Less: Unallocated common
stock held by
Employee Stock
Ownership Plan (10,245) (11,248) (11,601)
Treasury stock,
13,759,189,
13,419,492 and
13,253,269 shares
at September 30,
2003, December
31, 2002 and
September 30,
2002, respectively (190,507) (177,676) (172,291)
-------------- -------------- --------------
Total stockholders'
equity 132,824 135,305 138,131
-------------- -------------- --------------
Total liabilities
and stockholders'
equity $ 1,754,594$ 1,743,698$ 1,720,746
============== ============== ==============
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
For the three For the nine
months ended months ended
September 30, September 30,
------------- --------------
2003 2002 2003 2002
------------- --------------
(Unaudited) (Unaudited)
Interest income:
Loans $21,159$23,993$66,058$71,222
Mortgage-backed securities 819 2,353 3,641 8,058
Investment securities and other 721 925 2,742 3,273
------- ------- ------- -------
Total interest income 22,699 27,271 72,441 82,553
------- ------- ------- -------
Interest expense:
Deposits 3,886 6,784 13,557 21,426
Borrowed funds 5,018 4,915 14,801 15,225
------- ------- ------- -------
Total interest expense 8,904 11,699 28,358 36,651
------- ------- ------- -------
Net interest income 13,795 15,572 44,083 45,902
Provision for loan losses 48 375 673 1,250
------- ------- ------- -------
Net interest income after
provision
for loan losses 13,747 15,197 43,410 44,652
------- ------- ------- -------
Other income:
Loan servicing loss (71) (2,047) (2,758) (2,091)
Fees and service charges 1,990 1,676 5,855 4,669
Net gain on sales of loans and
securities
available for sale 3,335 1,258 8,737 2,766
Net (loss) income from other real
estate
operations (3) (7) 106 67
Other 383 460 1,201 1,460
-------- ------- ------- -------
Total other income 5,634 1,340 13,141 6,871
------- ------- ------- -------
Operating expenses:
Compensation and employee
benefits 5,699 5,107 15,819 15,365
Occupancy 852 848 2,663 2,438
Equipment 633 561 1,809 1,679
Marketing 369 583 1,338 1,439
Federal deposit insurance 126 113 360 364
Data processing 702 595 2,234 1,908
General and administrative 2,676 2,092 8,265 6,393
------- ------- ------- -------
Total operating expenses 11,057 9,899 32,488 29,586
------- ------- ------- -------
Income before provision for
income taxes 8,324 6,638 24,063 21,937
Provision for income taxes 2,994 1,848 8,538 6,962
------- ------- ------- -------
Net income $ 5,330$ 4,790$15,525$14,975
======= ======= ======= =======
Basic earnings per share $ 0.43$ 0.38$ 1.25$ 1.16
======= ======= ======= =======
Diluted earnings per share $ 0.41$ 0.35$ 1.19$ 1.08
======= ======= ======= =======
Average basic shares outstanding 12,293 12,719 12,384 12,938
======= ======= ======= =======
Average diluted shares outstanding 13,072 13,666 13,080 13,822
======= ======= ======= =======
Cash earnings (1) $ 6,241$ 5,601$18,000$17,334
======= ======= ======= =======
Diluted cash earnings per share $ 0.48$ 0.41$ 1.38$ 1.25
======= ======= ======= =======
(1) Cash earnings are determined by adding (net of taxes) to reported
earnings the non-cash expenses stemming from the amortization and
appreciation of allocated shares in the company's stock-related
benefit plans and the amortization of intangible assets.
OceanFirst Financial Corp.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
At Sept. 30, At Dec. 31, At Sept. 30,
2003 2002 2002
------------- ------------ ------------
STOCKHOLDERS' EQUITY
------------------------------
Stockholders' equity to total
assets 7.57% 7.76% 8.03%
Common shares outstanding (in
thousands) 13,418 13,758 13,924
Stockholders' equity per
common share $ 9.90$ 9.83$ 9.92
Tangible stockholders' equity
per common share 9.79 9.72 9.80
ASSET QUALITY
------------------------------
Allowance for loan losses $ 10,782$ 10,074$ 9,665
Nonperforming loans 2,324 2,688 2,780
Nonperforming assets 2,588 2,829 3,139
Allowance for loan losses as a
percent of total
loans receivable 0.75% 0.71% 0.72%
Allowance for loan losses as a
percent of
nonperforming loans 463.94 374.78 347.66
Nonperforming loans as a
percent of
total loans receivable 0.16 0.19 0.21
Nonperforming assets as a
percent of total assets 0.15 0.16 0.18
For the three For the nine
months ended months ended
September 30September 30
------------- -------------
2003 2002 2003 2002
------ ------ ------ ------
PERFORMANCE RATIOS (ANNUALIZED)
-------------------------------------------
Return on average assets 1.21% 1.11% 1.18% 1.16%
Return on average stockholders' equity 15.89 13.61 15.39 14.02
Interest rate spread 3.07 3.50 3.29 3.43
Interest rate margin 3.31 3.80 3.54 3.73
Operating expenses to average assets 2.50 2.29 2.48 2.28
Efficiency ratio 56.91 58.53 56.77 56.06
CASH EARNINGS
-------------
Although reported earnings and return on stockholders' equity are
traditional measures of performance, the Company believes that the
change in stockholders' equity or "cash earnings," and related return
measures are also a significant measure of a company's performance.
Cash earnings exclude the effects of various non-cash expenses, such
as the employee stock plans amortization expense and related tax
benefit, as well as the amortization of intangible assets. The
following table reconciles the Company's net income with cash
earnings. The table is a pro forma calculation which is not in
accordance with GAAP.
For the three For the nine
months ended months ended
September 30September 30
---------------- -----------------
2003 2002 2003 2002
-------- ------- -------- --------
Net income $5,330$4,790$15,525$14,975
Add: Employee stock plans
amortization
expense 1,011 918 2,775 2,736
Amortization of intangible
assets 26 26 78 78
Less: Tax benefit (1) (126) (133) (378) (455)
-------- ------- -------- --------
Cash earnings $6,241$5,601$18,000$17,334
======== ======= ======== ========
Basic cash earnings per share $.51 $0.44$1.45$1.34
======== ======= ======== ========
Diluted cash earnings per share $.48 $0.41$1.38$1.25
======== ======= ======== ========
(1) The Company does not receive any tax benefit for that portion of
employee stock plan amortization expense relating to the ESOP fair
market value adjustment.
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(in thousands)
LOANS RECEIVABLE
---------------- At September 30, At December 31,
2003 2002
---------------- ---------------
Real estate:
One- to four-family $1,105,153$1,101,904
Commercial real estate, multi-
family and land 166,734 142,726
Construction 10,802 11,079
Consumer 78,758 80,218
Commercial 83,874 77,968
---------------- ---------------
Total loans 1,445,321 1,413,895
Loans in process (2,920) (3,531)
Deferred origination costs, net 3,923 2,239
Unearned discount (5) (5)
Allowance for loan losses (10,782) (10,074)
---------------- ---------------
Total loans, net 1,435,537 1,402,524
Less: mortgage loans held for sale 83,671 66,626
---------------- ---------------
Loans receivable, net $1,351,866$1,335,898
================ ===============
Mortgage loans serviced for others $ 713,173$ 680,165
Loan pipeline 271,846 307,662
For the three For the nine
months ended months ended
September 30September 30
------------------ -----------------
2003 2002 2003 2002
-------- -------- -------- --------
Loan originations $357,015$223,665$956,178$639,811
Loans sold 161,940 88,964 479,489 302,250
Net charge-offs (recovery) 28 (458) (36) 1,924
DEPOSITS
-------- At September 30, At December 31,
2003 2002
Type of Account ---------------- ---------------
---------------
Non-interest bearing $ 108,608$ 86,290
NOW 254,135 260,762
Money market deposit 137,875 123,960
Savings 265,713 234,995
Time deposits 398,414 478,829
Type of Account ---------------- ---------------
$1,164,745$1,184,836
================ ===============
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
FOR THE QUARTER ENDED
SEPTEMBER 30,
-----------------------------
2003
-----------------------------
AVERAGE
AVERAGE YIELD/
BALANCE INTEREST COST
----------- -------- --------
(Dollars in thousands)
Assets
Interest-earnings assets:
Interest-earning deposits
and short term investments $9,918$24 .97%
Investment securities 86,924 454 2.09
FHLB stock 19,544 243 4.97
Mortgage-backed securities 118,649 819 2.76
Loans receivable, net (1) 1,433,215 21,159 5.91
----------- --------
Total interest-earning
assets 1,668,250 22,699 5.44
--------
Non-interest earning assets 98,647
-----------
Total assets $1,766,897
===========
Liabilities and Stockholders'
Equity
Interest-bearing liabilities:
Transaction deposits $665,099 987 .59
Time deposits 405,096 2,899 2.86
----------- --------
Total 1,070,195 3,886 1.45
Borrowed funds 433,780 5,018 4.63
----------- --------
Total interest-bearing
liabilities 1,503,975 8,904 2.37
--------
Non-interest-bearing deposits 111,012
Non-interest bearing liabilities 17,711
-----------
Total liabilities 1,632,698
Stockholders' equity 134,199
-----------
Total liabilities and
stockholders' equity $1,766,897
===========
Net interest income $13,795
========
Net interest rate spread (2) 3.07%
=====
Net interest margin (3) 3.31%
=====
FOR THE QUARTER ENDED
SEPTEMBER 30,
----------------------------
2002
----------------------------
AVERAGE
AVERAGE YIELD/
BALANCE INTEREST COST
----------- -------- -------
(Dollars in thousands)
Assets
Interest-earnings assets:
Interest-earning deposits
and short term investments $30,714$129 1.68%
Investment securities 86,456 608 2.81
FHLB stock 18,704 188 4.02
Mortgage-backed securities 166,140 2,353 5.67
Loans receivable, net (1) 1,338,229 23,993 7.17
----------- -------- -------
Total interest-earning
assets 1,640,243 27,271 6.65
-------- -------
Non-interest earning assets 86,531
-----------
Total assets $1,726,774
===========
Liabilities and Stockholders'
Equity
Interest-bearing liabilities:
Transaction deposits $599,665 2,241 1.49
Time deposits 494,668 4,543 3.67
----------- -------- -------
Total 1,094,333 6,784 2.48
Borrowed funds 392,189 4,915 4.99
----------- -------- -------
Total interest-bearing
liabilities 1,486,522 11,699 3.15
-------- -------
Non-interest-bearing deposits 83,611
Non-interest bearing liabilities 15,891
-----------
Total liabilities 1,586,024
Stockholders' equity 140,750
-----------
Total liabilities and
stockholders' equity $1,726,774
===========
Net interest income $15,572
========
Net interest rate spread (2) 3.50%
=======
Net interest margin (3) 3.80%
=======
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
2003
----------------------------
AVERAGE
AVERAGE YIELD/
BALANCE INTEREST COST
-------------------- -------
(Dollars in thousands)
Assets
Interest-earnings assets:
Interest-earning deposits
and short term investments $13,096$108 1.10%
Investment securities 89,705 1,884 2.80
FHLB stock 19,324 750 5.17
Mortgage-backed securities 124,045 3,641 3.91
Loans receivable, net (1) 1,414,011 66,058 6.23
----------- -------- -------
Total interest-earning assets 1,660,181 72,441 5.82
-------- -------
Non-interest earning assets 88,129
-----------
Total assets $1,748,310
===========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Transaction deposits $645,383 3,825 .79
Time deposits 430,194 9,732 3.02
----------- -------- -------
Total 1,075,577 13,557 1.68
Borrowed funds 421,149 14,801 4.69
----------- -------- -------
Total interest-bearing liabilities 1,496,726 28,358 2.53
-------- -------
Non-interest-bearing deposits 100,162
Non-interest bearing liabilities 16,917
-----------
Total liabilities 1,613,805
Stockholders' equity 134,505
-----------
Total liabilities and stockholders'
equity $1,748,310
===========
Net interest income $44,083
========
Net interest rate spread (2) 3.29%
=======
Net interest margin (3) 3.54%
=======
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------
2002
----------------------------
AVERAGE
AVERAGE YIELD/
BALANCE INTEREST COST
------------ -------- -------
(Dollars in thousands)
Assets
Interest-earnings assets:
Interest-earning deposits
and short term investments $11,968$149 1.66%
Investment securities 86,241 2,414 3.73
FHLB stock 21,022 710 4.50
Mortgage-backed securities 188,007 8,058 5.71
Loans receivable, net (1) 1,335,701 71,222 7.11
----------- -------- -------
Total interest-earning assets 1,642,939 82,553 6.70
-------- -------
Non-interest earning assets 84,694
-----------
Total assets $1,727,633
===========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Transaction deposits $554,739 6,493 1.56
Time deposits 511,818 14,933 3.89
----------- -------- -------
Total 1,066,557 21,426 2.68
Borrowed funds 426,037 15,225 4.76
----------- -------- -------
Total interest-bearing liabilities 1,492,594 36,651 3.27
-------- -------
Non-interest-bearing deposits 78,442
Non-interest bearing liabilities 14,232
-----------
Total liabilities 1,585,268
Stockholders' equity 142,365
-----------
Total liabilities and stockholders'
equity $1,727,633
===========
Net interest income $45,902
========
Net interest rate spread (2) 3.43%
=======
Net interest margin (3) 3.73%
=======
(1) 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.
(2) Net interest rate spread represents the difference between the
yield on interest-earning assets and the cost of interest-bearing
liabilities.
(3) Net interest margin represents net interest income divided by
average interest-earning assets.
CONTACT: The Foristall Company, Inc.
Thomas F. Curtin, 610-398-3022
Fax: 610-530-7781
[email protected]
or
OceanFirst Financial Corp.
Chief Financial Officer
Michael J. Fitzpatrick, 732-240-4500, Ext. 7506
Fax: 732-349-5070
[email protected]
SOURCE: OceanFirst Financial Corp.