TOMS RIVER, N.J., April 24, 2008 (PRIME NEWSWIRE) -- OceanFirst Financial Corp. (Nasdaq:OCFC), the holding company for OceanFirst Bank, today announced that diluted earnings per share increased to $.34 for the quarter ended March 31, 2008 from a loss of $.47 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 March 31, 2008 -- to be paid on May 16, 2008, to shareholders of record on May 2, 2008.
Discussing the results, CEO John R. Garbarino reflected on the dramatic improvement in earnings, both sequentially as well as over the prior year. "Driven by the recurring seasonal recognition of income from an equity investment, our net interest margin expanded handsomely to 3.14% from 2.83% in the linked quarter. The improvement was 19 basis points over the prior year quarter, as decreases in short-term interest rates benefited the Bank's operations. Absent the effect of the equity investment, the margin grew by 17 basis points for the quarter, contributing to the enhanced profitability of our core banking operations. We are also pleased to acknowledge the continued strength of our asset quality and our forty-fifth consecutive quarterly cash dividend."
Results of Operations
Net interest income for the quarter and year ended March 31, 2008 decreased to $14.2 million as compared to $14.4 million in the same prior year period, reflecting lower levels of interest-earning assets partly offset by a higher net interest margin. Average interest-earning assets decreased by $141.6 million for the three months ended March 31, 2008 as compared to the same prior year period. The decrease was concentrated in average loans receivable, which declined $109.8 million primarily due to the shuttering of Columbia Home Loans, LLC, the Company's mortgage banking subsidiary, in the fourth quarter of 2007. The net interest margin increased to 3.14% for the three months ended March 31, 2008 from 2.95% in the same prior year period. The yield on interest-earning assets decreased to 6.06%, as compared to 6.21% for the same prior year period. The asset yield for the current quarter benefited from $633,000 of income relating to an equity investment. The comparable benefit in the prior year period was $681,000. The cost of interest-bearing liabilities decreased to 3.19% for the three months ended March 31, 2008 as compared to 3.56% in the same prior year period.
Other income increased to income of $3.8 million for the three months ended March 31, 2008 as compared to a loss of $6.4 million in the same prior year period. The net gain on the sale of loans and lower of cost or market adjustment was $597,000 for the three months ended March 31, 2008 as compared to a net loss of $9.6 million for the three months ended March 31, 2007. The net loss for the quarter ended March 31, 2007 includes a $7.1 million charge taken by Columbia to reduce loans held for sale to their current fair market and a $4.0 million charge to supplement the reserve for repurchased loans. The reserve for repurchased loans, which is included in other liabilities in the Company's consolidated statement of financial condition, was $1.7 million at March 31, 2008 and there were no outstanding loan repurchase requests at that date. For the quarter ended March 31, 2008, the Company recognized a reversal of the provision for repurchased loans of $161,000 and charge-offs of $524,000 relating to a loan repurchase and a comprehensive negotiated settlement in lieu of a loan repurchase.
Operating expenses amounted to $11.6 million for the three months ended March 31, 2008, as compared to $15.1 million for the corresponding prior year period. The expense reduction is primarily due to the shuttering of Columbia in late 2007. Also, operating expenses for the three months ended March 31, 2007 included an expense of $1.0 million, representing a write-off of the previously established goodwill on the acquisition of Columbia. Operating expenses also benefited from a reduction in retirement plan expense. Operating expenses for the three months ended March 31, 2008 include costs relating to the opening of a new branch in Freehold, New Jersey.
Financial Condition
Loans receivable, net decreased by $19.3 million at March 31, 2008 as compared to December 31, 2007 partly due to increased prepayments due to refinancings and the Bank's decision to sell newly originated longer-term fixed-rate loans. At March 31, 2008, the Company was holding subprime loans with a gross principal balance of $6.1 million and a carrying value, net of reserves and lower of cost or market adjustment, of $3.7 million. Deposits decreased to $1,280.8 million at March 31, 2008 from $1,283.8 million at December 31, 2007 as the Bank moderated its pricing relating to certificates of deposit. Core deposits, defined as all deposits excluding time deposits, however, increased $20.2 million. Total Federal Home Loan Bank borrowings decreased to $375.2 million at March 31, 2008 from $405.0 million at December 31, 2007, primarily due to the reduction in loans receivable, net.
Asset Quality
The Company's non-performing loans totaled $10.6 million at March 31, 2008, an increase from $8.7 million at December 31, 2007. The increase is primarily related to one commercial real estate loan for $1.5 million that became non-performing during the first quarter. The loan, which is in the jurisdiction of the bankruptcy court, is fully secured by two properties whose anchor tenants are branches of a national bank. Non-performing loans at March 31, 2008 include $1.1 million of loans repurchased due to early payment default that were written down to market value on the date of repurchase and $3.1 million of loans previously held-for-sale that were also written down to market value. For the three months ended March 31, 2008, the Company realized net loan charge-offs of $104,000.
Conference Call
As previously announced, the Company will host an earnings conference call on Thursday, April 24, 2008 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#281342, from one hour after the end of the call until midnight on May 1, 2008.
OceanFirst Financial Corp.'s subsidiary, OceanFirst Bank, founded in 1902, is a federally-chartered stock savings bank with $1.9 billion in assets and twenty-one 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)
March 31, Dec. 31, March 31,
2008 2007 2007
---------- ---------- ----------
(Unaudited) (Unaudited)
ASSETS
------
Cash and due from banks $ 32,728 $ 27,547 $ 34,955
Investment securities
available for sale 53,191 57,625 72,005
Federal Home Loan Bank of
New York stock, at cost 21,627 22,941 25,319
Mortgage-backed securities
available for sale 50,263 54,137 64,936
Loans receivable, net 1,656,613 1,675,919 1,705,425
Mortgage loans held for
sale 4,707 6,072 60,972
Interest and dividends
receivable 6,625 6,915 8,329
Real estate owned, net 933 438 709
Premises and equipment, net 18,574 17,882 17,899
Servicing asset 8,498 8,940 9,873
Bank Owned Life Insurance 38,764 38,430 37,450
Intangible Assets -- -- 74
Other assets 12,948 10,653 10,339
---------- ---------- ----------
Total assets $1,905,471 $1,927,499 $2,048,285
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits $1,280,809 $1,283,790 $1,352,931
Securities sold under
agreements to repurchase
with retail customers 73,365 69,807 61,784
Securities sold under
agreements to repurchase
with the Federal Home Loan
Bank -- 12,000 19,000
Federal Home Loan Bank
advances 375,200 393,000 443,200
Other borrowings 27,500 27,500 17,500
Advances by borrowers for
taxes and insurance 8,818 7,588 9,007
Other liabilities 16,526 9,508 19,570
---------- ---------- ----------
Total liabilities 1,782,218 1,803,193 1,922,992
---------- ---------- ----------
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
12,362,098 and
12,346,465 and
12,318,370 shares
outstanding at March 31,
2008, December 31, 2007
and March 31, 2007,
respectively 272 272 272
Additional paid-in
capital 203,557 203,532 202,438
Retained earnings 156,537 154,929 155,574
Accumulated other
comprehensive loss (6,258) (3,211) (503)
Less: Unallocated common
stock held by
Employee Stock
Ownership Plan (5,287) (5,360) (6,117)
Treasury stock,
14,815,274 and
14,830,907 and
14,859,002 shares
at March 31, 2008,
December 31, 2007
and March 31,2007,
respectively (225,568) (225,856) (226,371)
Common stock acquired by
Deferred Compensation Plan 510 1,307 1,414
Deferred Compensation Plan
Liability (510) (1,307) (1,414)
---------- ---------- ----------
Total stockholders' equity 123,253 124,306 125,293
---------- ---------- ----------
Total liabilities and
stockholders' equity $1,905,471 $1,927,499 $2,048,285
========== ========== ==========
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
For the three months
ended March 31,
-----------------------
2008 2007
-----------------------
(Unaudited)
Interest income:
Loans $ 25,003 $ 27,344
Mortgage-backed securities 611 724
Investment securities and other 1,908 2,304
-------- --------
Total interest income 27,522 30,372
-------- --------
Interest expense:
Deposits 7,864 9,329
Borrowed funds 5,423 6,635
-------- --------
Total interest expense 13,287 15,964
-------- --------
Net interest income 14,235 14,408
Provision for loan losses 375 340
-------- --------
Net interest income after
provision for loan losses 13,860 14,068
-------- --------
Other income (loss):
Loan servicing income 90 122
Fees and service charges 2,767 2,798
Net gain (loss) and lower of cost
or market adjustment on sales of
loans and securities available
for sale 597 (9,583)
Net loss from other real estate
operations (21) (19)
Income from Bank Owned Life Insurance 334 305
Other 3 5
-------- --------
Total other income (loss) 3,770 (6,372)
-------- --------
Operating expenses:
Compensation and employee benefits 5,935 7,859
Occupancy 1,201 1,206
Equipment 511 553
Marketing 393 316
Federal deposit insurance 309 136
Data processing 849 907
General and administrative 2,436 3,099
Goodwill impairment -- 1,014
-------- --------
Total operating expenses 11,634 15,090
-------- --------
Income (loss) before provision
(benefit) for income taxes 5,996 (7,394)
Provision (benefit) for income taxes 1,990 (1,972)
-------- --------
Net income (loss) $ 4,006 $ (5,422)
======== ========
Basic earnings (loss) per share $ 0.34 $ (0.47)
======== ========
Diluted earnings (loss) per share $ 0.34 $ (0.47)
======== ========
Average basic shares outstanding 11,653 11,486
======== ========
Average diluted shares outstanding 11,706 11,486
======== ========
OceanFirst Financial Corp.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
At At At
March 31, Dec. 31, March 31,
2008 2007 2007
--------- -------- ---------
STOCKHOLDERS' EQUITY
--------------------
Stockholders' equity to
total assets 6.47% 6.45% 6.12%
Common shares outstanding
(in thousands) 12,362 12,346 12,318
Stockholders' equity per
common share $9.97 $10.07 $10.17
Tangible stockholders'
equity per common share 9.97 10.07 10.17
ASSET QUALITY
-------------
Allowance for loan losses $10,739 $10,468 $10,577
Nonperforming loans 10,550 8,741 18,197
Nonperforming assets 11,483 9,179 18,906
Allowance for loan losses
as a percent of total
loans receivable 0.64% 0.62% 0.60%
Allowance for loan losses
as a percent of
nonperforming loans 101.79 119.76 58.12
Nonperforming loans as a
percent of total loans
receivable 0.63 0.52 1.03
Nonperforming assets as a
percent of total assets 0.60 0.48 0.92
For the three months ended
March 31,
--------------------------
2008 2007
---- ----
PERFORMANCE RATIOS
(ANNUALIZED)
------------------------
Return on average assets 0.84% (1.05)%
Return on average
stockholders' equity 12.98 (16.60)
Interest rate spread 2.87 2.65
Interest rate margin 3.14 2.95
Operating expenses to
average assets 2.44 2.94
Efficiency ratio 64.62 187.78
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(in thousands)
LOANS RECEIVABLE
----------------
At March 31, At Dec. 31,
2008 2007
---------- ----------
Real estate:
One- to four-family $1,071,720 $1,084,687
Commercial real estate,
multi-family and land 322,451 326,707
Construction 10,067 10,816
Consumer 210,743 213,282
Commercial 53,947 54,279
---------- ----------
Total loans 1,668,928 1,689,771
Loans in process (2,080) (2,452)
Deferred origination
costs, net 5,211 5,140
Allowance for loan losses (10,739) (10,468)
---------- ----------
Total loans, net 1,661,320 1,681,991
Less: mortgage loans held for
sale 4,707 6,072
---------- ----------
Loans receivable, net $1,656,613 $1,675,919
========== ==========
Mortgage loans serviced for
others $1,015,217 $1,026,070
Loan pipeline 81,407 74,808
For the three months ended
March 31,
-----------------------------
2008 2007
---- ----
Loan originations $88,984 $267,146
Loans sold 28,007 161,252
Net charge-offs 104 1
DEPOSITS
-------- At March 31, At Dec. 31,
2008 2007
----------- ----------
Type of Account
---------------
Non-interest bearing $ 110,085 $ 103,656
Interest-bearing checking 458,497 454,666
Money market deposit 85,479 84,287
Savings 195,876 187,095
Time deposits 430,872 454,086
---------- ----------
$1,280,809 $1,283,790
========== ==========
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
FOR THE QUARTER ENDED MARCH 31,
----------------------------------------------------
2008 2007
------------------------- -------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
----------------------------------------------------
(Dollars in thousands)
Assets
Interest-
earning assets:
Interest-
earning
deposits
and short-
term
investments $ 7,967 $ 61 3.06% $ 8,286 $ 108 5.21%
Investment
securities(1) 62,617 1,366 8.73 75,571 1,748 9.25
FHLB stock 21,974 481 8.76 25,790 448 6.95
Mortgage-
backed
securities(1) 52,599 611 4.65 67,335 724 4.30
Loans
receivable,
net(2) 1,670,071 25,003 5.99 1,779,880 27,344 6.15
---------- ------- ---- ---------- ------- ----
Total
interest-
earning
assets 1,815,228 27,522 6.06 1,956,862 30,372 6.21
------- ---- ------- ----
Non-interest-
earning assets 95,146 99,227
---------- ----------
Total
assets $1,910,374 $2,056,089
========== ==========
Liabilities and
Stockholders'
Equity
Interest-bearing
liabilities:
Transaction
deposits $ 740,380 3,290 1.78 721,882 3,657 2.03
Time deposits 443,418 4,574 4.13 520,412 5,672 4.36
---------- ------- ---- ---------- ------- ----
Total 1,183,798 7,864 2.66 1,242,294 9,329 3.00
Borrowed funds 482,503 5,423 4.50 549,721 6,635 4.83
---------- ------- ---- ---------- ------- ----
Total
interest-
bearing
liabilities 1,666,301 13,287 3.19 1,792,015 15,964 3.56
------- ---- ------- ----
Non-interest-
bearing
deposits 104,437 113,007
Non-interest-
bearing
liabilities 16,143 20,382
---------- ----------
Total
liabilities 1,786,881 1,925,404
Stockholders'
equity 123,493 130,685
---------- ----------
Total
liabilities
and
stockholders'
equity $1,910,374 $2,056,089
========== ==========
Net interest
income $14,235 $14,408
======= =======
Net interest
rate spread(3) 2.87% 2.65%
==== ====
Net interest
margin(4) 3.14% 2.95%
==== ====
(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.
CONTACT: OceanFirst Financial Corp.Michael J. Fitzpatrick, Chief Financial Officer
(732)240-4500, ext. 7506
Fax: (732)349-5070
Mfit[email protected]