TOMS RIVER, N.J.--(BUSINESS WIRE)--
OceanFirst Financial Corp. (NASDAQ:OCFC), the holding company for
OceanFirst Bank, today announced that diluted earnings per share for
the quarter ended September 30, 2006 increased to $.42 from $.40 for
the corresponding prior year period and $.41 in the linked quarter.
For the nine months ended September 30, 2006 diluted earnings per
share was $1.18 as compared to $1.20 for the corresponding prior year
period. The Company also announced that its Board of Directors
declared a regular quarterly cash dividend of $.20 per share--covering
the three month period ended September 30, 2006--to be paid on
November 10, 2006, to shareholders of record on October 27, 2006.
In making today's announcement, John R. Garbarino, Chairman,
President and Chief Executive Officer said, "We are pleased to report
consecutive quarters of earnings growth achieved despite the adverse
interest rate environment. I am also pleased to announce our
thirty-ninth consecutive quarterly cash dividend reflective of
consistent delivery of solid earnings into our tenth year as a public
company."
Results of Operations
Net interest income for the three and nine months ended September
30, 2006 decreased to $14.5 million and $44.3 million, respectively,
as compared to $15.4 million and $45.5 million, respectively, in the
same prior year periods, reflecting a lower net interest margin partly
offset by higher levels of interest-earning assets. The net interest
margin decreased to 2.89% and 3.03%, respectively, for the three and
nine months ended September 30, 2006 from 3.28% and 3.32%,
respectively, in the same prior year periods. The yield on
interest-earning assets increased to 6.06% and 5.93%, respectively,
for the three and nine months ended September 30, 2006, as compared to
5.61% and 5.50%, respectively, for the same prior year periods. The
cost of interest-bearing liabilities increased to 3.47% and 3.18%,
respectively, for the three and nine months ended September 30, 2006,
as compared to 2.57% and 2.41%, respectively, in the same prior year
periods. The increased cost of interest-bearing liabilities is due to
the continued increase of interest rates on the short-term end of the
yield curve and intensified competition for deposits. Since September
30, 2005 the Board of Governors of the Federal Reserve increased the
federal funds borrowing rate 6 times for a total of 150 basis points.
Average interest-earning assets increased by $121.4 million and $118.3
million, respectively, for the three and nine months ended September
30, 2006, as compared to the same prior year periods. The growth was
concentrated in average loans receivable which grew $142.9 million, or
8.6%, for the three months ended September 30, 2006, as compared to
the same prior year period. For the nine months ended September 30,
2006 average loans receivable increased $151.1 million, or 9.4%, as
compared to the same prior year period. The loan growth was funded by
average borrowed funds which grew $107.3 million and average
interest-bearing deposits which grew $22.2 million for the three
months ended September 30, 2006, as compared to the same prior year
period. For the nine months ended September 30, 2006, average borrowed
funds increased $77.5 million and average interest-bearing deposits
increased $35.6 million as compared to the same prior year period.
Other income amounted to $6.6 million and $17.6 million for the
three and nine months ended September 30, 2006, respectively, as
compared to $6.3 million and $18.1 million, respectively, in the same
prior year periods. For the three and nine months ended September 30,
2006, the Company recorded gains of $3.5 million and $8.5 million,
respectively, on the sale of loans, as compared to gains of $3.5
million and $10.1 million, respectively, in the same prior year
periods. Loans sold for the three month period ended September 30,
2006 increased to $245.7 million from $212.4 million in the same prior
year period. Loans sold for the nine month period ended September 30,
2006 decreased to $505.5 million from $538.7 million in the same prior
year period. Most of the decline in sales volume for the nine month
period ended September 30, 2006 occurred at the Company's mortgage
banking subsidiary, Columbia Home Loans, LLC during the first quarter
of 2006. The decline experienced by Columbia in the first quarter of
2006 was partly reflective of declines experienced industry-wide.
Additionally, staff turnover in the wholesale alternative credit
channel adversely affected sales volume. In light of the continuing
pressure on volume and margins, Columbia implemented plans to
consolidate lending channels to a more centralized platform designed
to improve efficiency and reduce operating costs. The consolidation
also adversely impacted the volume of loan sales. During the second
quarter of 2006 Columbia re-established the wholesale alternative
credit channel and sales volume was restored to exceed prior year
levels, for the second and third quarter. Fees and service charges
increased $271,000, or 11.3%, and $878,000, or 12.6%, for the three
and nine months ended September 30, 2006, respectively, as compared to
the same prior year periods primarily related to fees from reverse
mortgage loans, a new emphasis for the Company, as well as fees from
title insurance and trust services.
Operating expenses decreased to $13.5 million and $40.2 million,
respectively, for the three and nine months ended September 30, 2006,
as compared to $14.2 million and $40.7 million, respectively, for the
corresponding prior year periods. The decrease in operating expenses
was due to reduced incentive plan accruals and loan related marketing
expense reductions.
Financial Condition
Loans receivable net, increased by $60.2 million, a 4.9%
annualized rate, at September 30, 2006 as compared to December 31,
2005. Deposits increased to $1,371.7 million at September 30, 2006
from $1,356.6 million at December 31, 2005. Federal Home Loan Bank
borrowings increased $48.3 million at September 30, 2006 as compared
to December 31, 2005 in order to fund loan growth. For the
year-to-date, the holding company issued Trust Preferred Securities
for $12.5 million, the proceeds of which were partly used to fund the
Company's continuing common stock repurchase program.
Stockholders' equity decreased by $1.8 million to $137.0 million
at September 30, 2006, as compared to $138.8 million at December 31,
2005. For the nine months ended September 30, 2006, 669,604 common
shares were repurchased at a total cost of $15.3 million. Under the 5%
repurchase program authorized by the Board of Directors in October
2005, 26,080 shares remained to be purchased as of September 30, 2006.
A new repurchase program, the Company's thirteenth, was announced on
July 19, 2006. Under this 5% repurchase program, an additional 615,883
shares are available for repurchase. The reduction in stockholders'
equity due to common stock repurchases was partly offset by net
income, proceeds from stock option exercises and related tax benefit,
and Employee Stock Ownership Plan amortization.
Asset Quality
The Company's non-performing assets totaled $4.0 million at
September 30, 2006 as compared to $1.9 million at December 31, 2005.
For the nine months ended September 30, 2006 the Company realized net
loan charge-offs of $150,000 as compared to net loan charge-offs of
$628,000 for the same prior year period.
Conference Call
As previously announced, the Company will host an earnings
conference call on Friday, October 20, 2006 at 11:00 a.m. Eastern
time. The direct dial number for the call is (877) 407-8035. For those
unable to participate in the conference call, a replay will be
available. To access the replay, dial (877) 660-6853, Account #286,
Conference ID #215336, from one hour after the end of the call until
midnight on Friday, October 27, 2006.
OceanFirst Financial Corp.'s subsidiary, OceanFirst Bank, founded
in 1902, is a federally-chartered stock savings bank with $2.1 billion
in assets and nineteen 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 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 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,
2006 2005 2005
------------- ------------ -------------
(Unaudited) (Unaudited)
ASSETS
-----------------------------
Cash and due from banks $ 36,967 $ 31,108 $ 31,614
Investment securities
available for sale 82,050 83,861 84,507
Federal Home Loan Bank of New
York stock, at cost 24,634 21,792 19,450
Mortgage-backed securities
available for sale 71,692 85,025 92,571
Loans receivable, net 1,714,760 1,654,544 1,618,304
Mortgage loans held for sale 62,206 32,044 66,240
Interest and dividends
receivable 8,366 7,089 7,360
Real estate owned, net 288 278 278
Premises and equipment, net 17,722 16,118 15,521
Servicing asset 9,565 9,730 9,671
Bank Owned Life Insurance 36,842 36,002 35,846
Intangible Assets 1,195 1,272 1,298
Other assets 6,877 6,494 6,893
------------ ------------ -------------
Total assets $ 2,073,164 $ 1,985,357 $ 1,989,553
============ ============ =============
LIABILITIES AND STOCKHOLDERS'
EQUITY
-----------------------------
Deposits $ 1,371,738 $ 1,356,568 $ 1,369,414
Securities sold under
agreements to repurchase
with retail customers 55,050 54,289 67,727
Securities sold under
agreements to repurchase
with the Federal Home Loan
Bank 34,000 59,000 59,000
Federal Home Loan Bank
advances 428,200 354,900 330,000
Other borrowings 17,500 5,000 5,000
Advances by borrowers for
taxes and insurance 8,788 7,699 8,517
Other liabilities 20,878 9,117 13,359
------------ ------------ -------------
Total liabilities 1,936,154 1,846,573 1,853,017
------------ ------------ -------------
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
12,349,245, 12,698,505, and
12,720,732 shares
outstanding at September
30, 2006, December 31, 2005
and September 30, 2005,
respectively 272 272 272
Additional paid-in capital 201,319 197,621 196,924
Retained earnings 168,069 164,613 162,450
Accumulated other
comprehensive loss (869) (1,223) (1,256)
Less: Unallocated common
stock held by Employee
Stock Ownership Plan (6,645) (7,472) (7,766)
Treasury stock,
14,828,127, 14,478,867,
and 14,456,640 shares at
September 30, 2006,
December 31, 2005 and
September 30, 2005,
respectively (225,136) (215,027) (214,088)
Common stock acquired by
Deferred Compensation Plan 1,517 1,383 1,365
Deferred Compensation Plan
Liability (1,517) (1,383) (1,365)
------------ ------------ -------------
Total stockholders'
equity 137,010 138,784 136,536
------------ ------------ -------------
Total liabilities and
stockholders' equity $ 2,073,164 $ 1,985,357 $ 1,989,553
============ ============ =============
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
For the three months For the nine months
ended September 30, ended September 30,
--------------------- ---------------------
2006 2005 2006 2005
--------------------- ---------------------
(Unaudited) (Unaudited)
Interest income:
Loans $ 27,825 $ 24,222 $ 79,051 $ 68,752
Mortgage-backed
securities 812 897 2,518 2,959
Investment securities and
other 1,679 1,209 5,102 3,799
--------- --------- --------- ---------
Total interest income 30,316 26,328 86,671 75,510
--------- --------- --------- ---------
Interest expense:
Deposits 8,939 6,056 24,040 16,074
Borrowed funds 6,918 4,862 18,343 13,921
--------- --------- --------- ---------
Total interest expense 15,857 10,918 42,383 29,995
--------- --------- --------- ---------
Net interest income 14,459 15,410 44,288 45,515
Provision for loan losses 50 100 100 350
--------- --------- --------- ---------
Net interest income
after provision for
loan losses 14,409 15,310 44,188 45,165
--------- --------- --------- ---------
Other income:
Loan servicing income 136 47 408 148
Fees and service charges 2,677 2,406 7,854 6,976
Net gain on sales of
loans and securities
available for sale 3,515 3,535 8,474 10,079
Net loss from other real
estate operations (60) - (60) -
Income from Bank Owned
Life Insurance 291 321 840 856
Other 44 5 55 47
--------- ---------- --------- ---------
Total other income 6,603 6,314 17,571 18,106
--------- --------- --------- ---------
Operating expenses:
Compensation and employee
benefits 7,497 8,206 22,752 23,219
Occupancy 1,244 1,109 3,564 3,284
Equipment 767 659 1,975 1,934
Marketing 531 750 1,230 2,213
Federal deposit insurance 133 126 400 379
Data processing 859 857 2,569 2,413
General and
administrative 2,483 2,485 7,735 7,276
--------- --------- --------- ---------
Total operating expenses 13,514 14,192 40,225 40,718
--------- --------- --------- ---------
Income before provision
for income taxes 7,498 7,432 21,534 22,553
Provision for income taxes 2,592 2,602 7,461 7,902
--------- --------- --------- ---------
Net income $ 4,906 $ 4,830 $ 14,073 $ 14,651
========= ========= ========= =========
Basic earnings per share $ 0.43 $ 0.41 $ 1.22 $ 1.24
========= ========= ========= =========
Diluted earnings per share $ 0.42 $ 0.40 $ 1.18 $ 1.20
========= ========= ========= =========
Average basic shares
outstanding 11,465 11,793 11,567 11,859
========= ========= ========= =========
Average diluted shares
outstanding 11,689 12,184 11,880 12,251
========= ========= ========= =========
Cash earnings (1) $ 5,576 $ 5,576 $ 16,227 $ 16,882
========= ========= ========= =========
Diluted cash earnings per
share $ 0.48 $ 0.46 $ 1.37 $ 1.38
========= ========= ========= =========
(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 At At
September December September
30, 2006 31, 2005 30, 2005
---------- --------- ----------
STOCKHOLDERS' EQUITY
--------------------------------------
Stockholders' equity to total assets 6.61% 6.99% 6.86%
Common shares outstanding (in
thousands) 12,349 12,699 12,721
Stockholders' equity per common share $11.09 $10.93 $10.73
Tangible stockholders' equity per
common share 11.00 10.83 10.63
ASSET QUALITY
--------------------------------------
Allowance for loan losses $10,411 $10,460 $10,410
Nonperforming loans 3,699 1,595 1,424
Nonperforming assets 3,987 1,873 1,702
Allowance for loan losses as a percent
of total
loans receivable 0.58% 0.62% 0.61%
Allowance for loan losses as a percent
of
nonperforming loans 281.45 655.80 731.04
Nonperforming loans as a percent of
total loans receivable 0.21 0.09 0.08
Nonperforming assets as a percent of
total assets 0.19 0.09 0.09
For the three months ended For the nine months ended
September 30, September 30,
2006 2005 2006 2005
-------------- ------------ ----------- -------------
PERFORMANCE
RATIOS
(ANNUALIZED)
---------------
Return on
average assets 0.94% 0.98% 0.92% 1.01%
Return on
average
stockholders'
equity 14.79 14.33 14.00 14.47
Interest rate
spread 2.59 3.04 2.75 3.09
Interest rate
margin 2.89 3.28 3.03 3.32
Operating
expenses to
average assets 2.58 2.87 2.62 2.81
Efficiency
ratio 64.16 65.33 65.03 64.00
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 30, September 30,
------------------------------------
2006 2005 2006 2005
-------- -------- -------- --------
Net income $4,906 $4,830 $14,073 $14,651
Add: Employee stock plans
amortization Expense 771 832 2,490 2,526
Amortization of intangible
assets 26 26 78 78
Less: Tax benefit (1) (127) (112) (414) (373)
-------- -------- -------- --------
Cash earnings $5,576 $5,576 $16,227 $16,882
======== ======== ======== ========
Basic cash earnings per share $0.49 $0.47 $1.40 $1.42
======== ======== ======== ========
Diluted cash earnings per share $0.48 $0.46 $1.37 $1.38
======== ======== ======== ========
(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 At December
September 31, 2005
30, 2006
----------- -----------
Real estate:
One- to four-family $1,235,443 $1,187,226
Commercial real estate, multi-
family and land 302,149 281,585
Construction 18,690 22,739
Consumer 180,601 146,911
Commercial 48,509 61,637
---------- ----------
Total loans 1,785,392 1,700,098
Loans in process (3,644) (7,646)
Deferred origination costs, net 5,629 4,596
Allowance for loan losses (10,411) (10,460)
---------- ----------
Total loans, net 1,776,966 1,686,588
Less: mortgage loans held for sale 62,206 32,044
---------- ----------
Loans receivable, net $1,714,760 $1,654,544
========== ==========
Mortgage loans serviced for others $ 948,749 $ 910,272
Loan pipeline 254,786 293,934
For the three months For the nine months
ended September 30, ended September 30,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Loan originations $ 331,465 $ 368,427 $ 926,105 $1,015,606
Loans sold 245,658 212,392 505,457 538,700
Net charge-offs 326 204 150 628
DEPOSITS
-------------------------------------------
At September At December
30, 2006 31, 2005
------------ ------------
Type of Account
-------------------------------------------
Non-interest bearing $ 122,714 $ 120,188
Interest-bearing checking 385,390 381,787
Money market deposit 108,022 125,169
Savings 209,032 242,689
Time deposits 546,580 486,735
----------- -----------
$ 1,371,738 $ 1,356,568
=========== ===========
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
FOR THE QUARTERS ENDED SEPTEMBER 30,
-----------------------------------------------------
2006 2005
-------------------------- --------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
-----------------------------------------------------
(Dollars in thousands)
Assets
Interest-
earnings
assets:
Interest-
earning
deposits and
short-term
investments $8,960 $117 5.22% $8,846 $76 3.44%
Investment
securities (1) 83,917 1,212 5.78 85,978 887 4.13
FHLB stock 25,940 350 5.40 19,596 246 5.02
Mortgage-backed
securities (1) 74,679 812 4.35 100,549 897 3.57
Loans
receivable,
net (2) 1,806,060 27,825 6.16 1,663,158 24,222 5.83
-------------------------- --------------------------
Total interest-
earning assets 1,999,556 30,316 6.06 1,878,127 26,328 5.61
--------------- ---------------
Non-interest-
earning assets 99,144 99,493
----------- -----------
Total assets $2,098,700 $1,977,620
=========== ===========
Liabilities and
Stockholders'
Equity
Interest-bearing
liabilities:
Transaction
deposits $703,986 3,039 1.73 $749,488 2,193 1.17
Time deposits 557,093 5,900 4.24 489,411 3,863 3.16
-------------------------- --------------------------
Total 1,261,079 8,939 2.84 1,238,899 6,056 1.96
Borrowed funds 567,003 6,918 4.88 459,736 4,862 4.23
-------------------------- --------------------------
Total interest-
bearing
liabilities 1,828,082 15,857 3.47 1,698,635 10,918 2.57
--------------- ---------------
Non-interest-
bearing
deposits 124,998 127,718
Non-interest-
bearing
liabilities 12,896 16,468
----------- -----------
Total
liabilities 1,965,976 1,842,821
Stockholders'
equity 132,724 134,799
----------- -----------
Total
liabilities
and
stockholders'
equity $2,098,700 $1,977,620
=========== ===========
Net interest
income $14,459 $15,410
======== ========
Net interest
rate spread (3) 2.59% 3.04%
======= =======
Net interest
margin (4) 2.89% 3.28%
======= =======
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------
2006 2005
-------------------------- --------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
-----------------------------------------------------
(Dollars in thousands)
Assets
Interest-
earnings
assets:
Interest-
earning
deposits and
short-term
investments $8,706 $315 4.82% $12,231 $269 2.93%
Investment
securities (1) 84,480 3,880 6.12 86,272 2,882 4.45
FHLB stock 24,289 907 4.98 19,921 648 4.34
Mortgage-backed
securities (1) 79,506 2,518 4.22 111,288 2,959 3.55
Loans
receivable,
net (2) 1,751,643 79,051 6.02 1,600,564 68,752 5.73
-------------------------- --------------------------
Total interest-
earning assets 1,948,624 86,671 5.93 1,830,276 75,510 5.50
--------------- ---------------
Non-interest-
earning assets 96,516 101,048
----------- -----------
Total assets $2,045,140 $1,931,324
=========== ===========
Liabilities and
Stockholders'
Equity
Interest-bearing
liabilities:
Transaction
deposits $717,194 8,544 1.59 $733,548 5,526 1.00
Time deposits 531,557 15,496 3.89 479,624 10,548 2.93
-------------------------- --------------------------
Total 1,248,751 24,040 2.57 1,213,172 16,074 1.77
Borrowed funds 526,266 18,343 4.65 448,787 13,921 4.14
-------------------------- --------------------------
Total interest-
bearing
liabilities 1,775,017 42,383 3.18 1,661,959 29,995 2.41
--------------- ---------------
Non-interest-
bearing
deposits 124,508 119,236
Non-interest-
bearing
liabilities 11,563 15,117
----------- -----------
Total
liabilities 1,911,088 1,796,312
Stockholders'
equity 134,052 135,012
----------- -----------
Total
liabilities
and
stockholders'
equity $2,045,140 $1,931,324
=========== ===========
Net interest
income $44,288 $45,515
======== ========
Net interest
rate spread (3) 2.75% 3.09%
======= =======
Net interest
margin (4) 3.03% 3.32%
======= =======
(1) Amounts are recorded at average amortized cost.
(2) Amount is net of deferred loan fees, undisbursed loan funds,
discounts and premiums and estimated loss allowances and includes
loans held for sale and non-performing loans.
(3) Net interest rate spread represents the difference between the
yield on interest -earning assets and the cost of
interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by
average interest -earning assets.
Source: OceanFirst Financial Corp.
Contact: OceanFirst Financial Corp.
Michael J. Fitzpatrick, 732-240-4500, ext. 7506
Chief Financial Officer
Fax: 732-349-5070
[email protected]