What changed in this filing

/stocks — the workspaceLOADING

Item 4. Controls and Procedures

2022-08-04 compared with 2022-05-05 · 296 added, 155 removed, 725 unchanged (38% of the section changed)

5 unchanged sentences

(b) Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

OceanFirst Financial Corp.

1 unchanged sentence

(dollars in thousands, except per share amounts)

March 31, December 31,

June 30, December 31,

Cash and due from banks $ 189,019 $ 204,949

Debt securities available-for-sale, at estimated fair value 507,276 568,255

Debt securities held-to-maturity, net of allowance for securities credit losses of $ 1,380 at March 31, 2022 and $ 1,467 at December 31, 2021 (estimated fair value of $ 1,050,892 at March 31, 2022 and $ 1,152,744 at December 31, 2021)

Debt securities held-to-maturity, net of allowance for securities credit losses of $ 1,293 at June 30, 2022 and $ 1,467 at December 31, 2021 (estimated fair value of $ 987,532 at June 30, 2022 and $ 1,152,744 at December 31, 2021)

1,068,034 1,139,193

1 unchanged sentence

Restricted equity investments, at cost 76,047 53,195

Loans receivable, net of allowance for loan credit losses of $ 50,598 at March 31, 2022 and $ 48,850 at December 31, 2021

Loans receivable, net of allowance for loan credit losses of $ 52,061 at June 30, 2022 and $ 48,850 at December 31, 2021

9,380,688 8,583,352

17 unchanged sentences

Stockholders’ equity:

Preferred stock, $ 0.01 par value, $ 1,000 liquidation preference, 5,000,000 shares authorized, and 57,370 shares issued at both March 31, 2022 and December 31, 2021

Common stock, $ 0.01 par value, 150,000,000 shares authorized, 61,849,762 and 61,535,381 shares issued at March 31, 2022 and December 31, 2021, respectively;

and 59,388,983 and 59,175,046 shares outstanding at March 31, 2022 and December 31, 2021, respectively

Preferred stock, $ 0.01 par value, $ 1,000 liquidation preference, 5,000,000 shares authorized, and 57,370 shares issued at both June 30, 2022 and December 31, 2021

Common stock, $ 0.01 par value, 150,000,000 shares authorized, 61,863,794 and 61,535,381 shares issued at June 30, 2022 and December 31, 2021, respectively;

and 59,130,236 and 59,175,046 shares outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 1,151,363 1,146,781

2 unchanged sentences

Unallocated common stock held by Employee Stock Ownership Plan ("ESOP") ( 7,403 ) ( 8,615 )

Treasury stock, 2,460,779 and 2,360,335 shares at March 31, 2022 and December 31, 2021, respectively

Treasury stock, 2,733,558 and 2,360,335 shares at June 30, 2022 and December 31, 2021, respectively

( 69,106 ) ( 61,710 )

OceanFirst Financial Corp.

stockholders’ equity 1,520,488 1,516,553

Non-controlling interest 944 —

Total stockholders’ equity 1,521,432 1,516,553

4 unchanged sentences

(in thousands, except per share amounts)

For the Three Months Ended March 31,

For the Three Months Ended June 30, For the Six Months Ended June 30,

2022 2021 2022 2021

(Unaudited) (Unaudited)

Interest income:

16 unchanged sentences

Net (loss) gain on equity investments ( 8,078 ) 576 ( 10,864 ) 8,863

Net loss from other real estate operations ( 2 ) ( 8 )

Net gain (loss) from other real estate operations 50 ( 1 ) 48 ( 9 )

Income from bank owned life insurance 1,422 1,716 3,525 3,131

19 unchanged sentences

Net income 29,483 30,555 55,242 63,252

Net income attributable to non-controlling interest 522 — 522 —

Net income attributable to OceanFirst Financial Corp.

28,961 30,555 54,720 63,252

Dividends on preferred shares 1,004 1,004 2,008 2,008

8 unchanged sentences

(in thousands)

For the Three Months Ended March 31,

For the Three Months Ended June 30, For the Six Months Ended June 30,

2022 2021 2022 2021

(Unaudited) (Unaudited)

Net income $ 29,483 $ 30,555 $ 55,242 $ 63,252

Other comprehensive (loss) income:

Net unrealized loss on debt securities (net of tax benefit of $ 3,928 in 2022 and $ 112 in 2021)

Other comprehensive loss:

Net unrealized loss on debt securities (net of tax benefit of $ 4,460 and $ 8,388 in 2022 and ta x benefit of $ 102 and $ 214 in 2021, respectively)

( 13,996 ) ( 387 ) ( 26,368 ) ( 803 )

Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense of $ 65 in 2022 and $ 73 in 2021)

Reclassification adjustment for losses included in net income (net of tax benefit of $ 21 in 2022)

Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense o f $ 61 and $ 126 in 2022 and tax expense of $ 70 and $ 143 in 2021)

89 101 178 208

Reclassification adjustment for gains included in net income (net of tax benefit of $ 5 and $ 26 in 2022)

( 16 ) — ( 82 ) —

Total other comprehensive loss, net of tax ( 13,923 ) ( 286 ) ( 26,272 ) ( 595 )

Total comprehensive income 15,560 30,269 28,970 62,657

comprehensive income attributable to non-controlling interest 522 — 522 —

Comprehensive income attributable to OceanFirst Financial Corp.

15,038 30,269 28,448 62,657

Dividends on preferred shares 1,004 1,004 2,008 2,008

4 unchanged sentences

(dollars in thousands, except per share amounts)

For the Three Months Ended March 31, 2022 and 2021

For the Three Months Ended June 30, 2022 and 2021

Stock Additional

4 unchanged sentences

Plan Treasury

Balance at December 31, 2020 $ 1 $ 609 $ 1,137,715 $ 378,268 $ 621 $ ( 7,433 ) $ ( 25,651 ) $ 1,484,130

Stock Non-Controlling Interest Total

Balance at March 31, 2021 $ 1 $ 610 $ 1,142,290 $ 398,280 $ 312 $ ( 7,129 ) $ ( 35,645 ) $ — $ 1,498,719

Net income — — — 30,555 — — — — 30,555

8 unchanged sentences

Preferred stock dividend — — — ( 1,004 ) — — — — ( 1,004 )

Balance at June 30, 2021 $ 1 $ 611 $ 1,143,907 $ 417,658 $ 26 $ ( 6,824 ) $ ( 46,590 ) $ — $ 1,508,789

Balance at March 31, 2022 $ 1 $ 612 $ 1,149,503 $ 456,251 $ ( 15,170 ) $ ( 8,009 ) $ ( 63,854 ) $ — $ 1,519,334

Net income — — — 28,961 — — — 522 29,483

Other comprehensive loss, net of tax — — — — ( 13,923 ) — — — ( 13,923 )

Stock compensation — — 1,848 — — — — — 1,848

Allocation of ESOP stock — — ( 30 ) — — 606 — — 576

Cash dividend $ 0.17 per share

— — — ( 10,022 ) — — — — ( 10,022 )

Exercise of stock options — — 42 ( 80 ) — — — — ( 38 )

Repurchase 272,779 shares of common stock

— — — — — — ( 5,252 ) — ( 5,252 )

Preferred stock dividend — — — ( 1,004 ) — — — — ( 1,004 )

Acquisition of Trident Abstract Title Agency, LLC (“Trident”) — — — — — — — 836 836

Distributions to non-controlling interest — — — 8 — — — ( 414 ) ( 406 )

Balance at June 30, 2022 $ 1 $ 612 $ 1,151,363 $ 474,114 $ ( 29,093 ) $ ( 7,403 ) $ ( 69,106 ) $ 944 $ 1,521,432

See accompanying Notes to Unaudited Consolidated Financial Statements.

OceanFirst Financial Corp.

Consolidated Statements of Changes in Stockholders’ Equity

(dollars in thousands, except per share amounts)

For the Six Months Ended June 30, 2022 and 2021

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

(Loss) Income Employee

Plan Treasury

Stock Non-Controlling Interest Total

Balance at December 31, 2020 $ 1 $ 609 $ 1,137,715 $ 378,268 $ 621 $ ( 7,433 ) $ ( 25,651 ) $ — $ 1,484,130

9 unchanged sentences

Preferred stock dividend — — — ( 2,008 ) — — — — ( 2,008 )

Balance at March 31, 2022 $ 1 $ 612 $ 1,149,503 $ 456,251 $ ( 15,170 ) $ ( 8,009 ) $ ( 63,854 ) $ 1,519,334

Balance at June 30, 2021 $ 1 $ 611 $ 1,143,907 $ 417,658 $ 26 $ ( 6,824 ) $ ( 46,590 ) $ — $ 1,508,789

Balance at December 31, 2021 $ 1 $ 611 $ 1,146,781 $ 442,306 $ ( 2,821 ) $ ( 8,615 ) $ ( 61,710 ) $ — $ 1,516,553

Net income — — — 54,720 — — — 522 55,242

Other comprehensive loss, net of tax — — — — ( 26,272 ) — — — ( 26,272 )

Stock compensation — — 3,400 — — — — — 3,400

Allocation of ESOP stock — — 35 — — 1,212 — — 1,247

Cash dividend $ 0.34 per share

— — — ( 20,015 ) — — — — ( 20,015 )

Exercise of stock options — 1 1,147 ( 897 ) — — — — 251

Repurchase 373,223 shares of common stock

— — — — — — ( 7,396 ) — ( 7,396 )

Preferred stock dividend — — — ( 2,008 ) — — — — ( 2,008 )

Acquisition of Trident — — — — — — — 836 836

Distributions to non-controlling interest — — — 8 — — — ( 414 ) ( 406 )

Balance at June 30, 2022 $ 1 $ 612 $ 1,151,363 $ 474,114 $ ( 29,093 ) $ ( 7,403 ) $ ( 69,106 ) $ 944 $ 1,521,432

See accompanying Notes to Unaudited Consolidated Financial Statements.

2 unchanged sentences

(dollars in thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from operating activities:

12 unchanged sentences

Provision (benefit) for credit losses 3,105 ( 7,080 )

Net gain on sale of other real estate owned ( 54 ) —

Net write down of fixed assets held-for-sale to net realizable value 1,403 552

Net gain on sale of fixed assets ( 63 ) ( 1 )

Net loss (gain) on equity securities 10,864 ( 8,863 )

3 unchanged sentences

Increase in value of bank owned life insurance ( 3,525 ) ( 3,131 )

Net (gain) loss on sale of assets held for sale ( 1,200 ) 22

Net gain on sale of assets held for sale ( 1,394 ) ( 318 )

(Increase) decrease in interest and dividends receivable ( 1,578 ) 7,255

1 unchanged sentence

(Increase) decrease in other assets ( 55,494 ) 35,683

Increase (decrease) in other liabilities 39,272 ( 21,610 )

Increase in other liabilities 106,082 424

Total adjustments 71,054 75,550

17 unchanged sentences

Purchases of restricted equity investments ( 132,395 ) ( 1,287 )

Proceeds from sale of other real estate owned 160 —

Proceeds from sales of assets held-for-sale 6,100 2,601

Purchases of premises and equipment ( 11,745 ) ( 15,250 )

Net cash consideration received for acquisition 38,609 —

Net cash used in investing activities ( 673,802 ) ( 301,752 )

2 unchanged sentences

(dollars in thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from financing activities:

Increase in deposits $ 323,641 $ 75,694

Increase (decrease) in deposits $ 99,068 $ ( 11,452 )

(Decrease) increase in short-term borrowings ( 13,274 ) 13,021

Proceeds from FHLB advances 75,002 —

Net proceeds from FHLB advances 488,750 —

Repayments of other borrowings ( 35,052 ) ( 7,557 )

4 unchanged sentences

Dividends paid ( 22,023 ) ( 22,333 )

Net cash provided by financing activities 353,433 57,378

Distributions to non-controlling interest ( 406 ) —

Net cash provided by (used in) financing activities 511,781 ( 44,622 )

Net decrease in cash and due from banks and restricted cash ( 35,725 ) ( 207,572 )

16 unchanged sentences

Transfer of premises and equipment to assets held-for-sale 2,776 533

Non-cash assets acquired:

Other current assets $ 238 $ —

Premises and equipment 18 —

Right of use (“ROU”) asset 779 —

Other assets 81 —

Total non-cash assets acquired $ 1,116 $ —

Liabilities assumed:

Lease liability $ 779 $ —

Other liabilities 43,937 —

Total liabilities assumed $ 44,716 $ —

See accompanying Notes to Unaudited Consolidated Financial Statements.

3 unchanged sentences

The consolidated financial statements include the accounts of OceanFirst Financial Corp.

(the “Company”) and its wholly-owned subsidiaries, OceanFirst Bank N.A.

(the “Bank”) and OceanFirst Risk Management, Inc., and the Bank’s direct and indirect wholly-owned subsidiaries, OceanFirst REIT Holdings, Inc., OceanFirst Management Corp., OceanFirst Realty Corp.

Casaba Real Estate Holdings Corporation, CBNJ Investments Corp., Country Property Holdings, Inc., and TRCB Investment Corp.

(the “Company”), its wholly-owned subsidiaries, OceanFirst Bank N.A.

(the “Bank”) and OceanFirst Risk Management, Inc., the Bank’s direct and indirect wholly-owned subsidiaries, OceanFirst REIT Holdings, Inc., OceanFirst Management Corp., OceanFirst Realty Corp., Casaba Real Estate Holdings Corporation, and Country Property Holdings, Inc;

and a majority controlling interest in Trident Abstract Title Agency, LLC.

Certain other subsidiaries were dissolved in 2022 and are included in the consolidated financial statements for previous periods.

All significant intercompany accounts and transactions have been eliminated in consolidation.

The interim consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations that may be expected for the full year 2022 or any other period.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and the results of operations for the period.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results of operations that may be expected for the full year 2022 or any other period.

Actual results could differ from these estimates.

2 unchanged sentences

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements

Business Combinations

Trident Acquisition

On April 1, 2022, the Company completed its acquisition of a majority controlling interest of 60 % in Trident.

Trident provides commercial and residential title services throughout New Jersey;

and through strategic alliances can also service client’s title insurance needs outside of New Jersey.

The acquisition is expected to be complimentary to the Company’s existing consumer and commercial lending business.

Total consideration paid was $ 7.1 million and goodwill from the transaction amounted to $ 5.8 million.

The acquisition was accounted for under the acquisition method of accounting.

Under this method of accounting, the purchase price has been allocated to the respective assets acquired and liabilities assumed based upon their estimated fair values.

The excess of consideration paid over the estimated fair value of the net assets acquired, excluding the net assets attributable to the non-controlling interest, has been recorded as goodwill.

The Company consolidated Trident’s assets, liabilities and components of comprehensive income within its consolidated results.

Thus, the consolidated results include amounts attributable to the Company and the non-controlling interest.

Amounts attributable to the non-controlling interest are presented separately as a single line on the Consolidated Statements of Income (net income attributable to non-controlling interest) and the Consolidated Statements of Financial Condition (non-controlling interest in stockholders’ equity).

Amounts attributed to the non-controlling interest are based upon the ownership interest in Trident that the Company does not own.

For further discussion on the accounting for this arrangement refer to Note 11 Variable Interest Entity, to this Form 10-Q.

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed by the Company at the date of the acquisition for Trident, net of total consideration paid (in thousands):

At April 1, 2022

Total purchase price:

Assets acquired:

Cash and cash equivalents $ 45,693

Other current assets 238

Premises and equipment 18

ROU asset 779

Other assets 81

Total assets acquired 46,809

Liabilities assumed:

Lease liability 779

Other liabilities 43,937

Total liabilities assumed 44,716

Net assets acquired $ 2,093

Net assets attributable to non-controlling interest $ 836

Goodwill recorded $ 5,827

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.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

Earnings per Share

The following reconciles shares outstanding for basic and diluted earnings per share for the three months ended March 31, 2022 and 2021 (in thousands):

The following reconciles shares outstanding for basic and diluted earnings per share for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Weighted average shares outstanding 59,300 60,133 59,302 60,216

5 unchanged sentences

Average diluted shares outstanding 58,995 59,966 58,975 60,040

For the three months ended March 31, 2022 and 2021, antidilutive stock options of 904,000 and 1,672,000 , respectively, were excluded from the earnings per share calculations .

For the three and six months ended June 30, 2022, antidilutive stock options of 1,577,000 and 1,573,000 , respectively, were excluded from the earnings per share calculation.

For the three and six months ended June 30, 2021, antidilutive stock options of 1,589,000 and 1,666,000 , respectively, were excluded from the earnings per share calculation.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The amortized cost, estimated fair value, and allowance for securities credit losses of debt securities available-for-sale and held-to-maturity at March 31, 2022 and December 31, 2021 are as follows (in thousands):

The amortized cost, estimated fair value, and allowance for securities credit losses of debt securities available-for-sale and held-to-maturity at June 30, 2022 and December 31, 2021 are as follows (in thousands):

Losses Estimated

Value Allowance for Credit Losses

At March 31, 2022

At June 30, 2022

Debt securities available-for-sale:

31 unchanged sentences

Total debt securities $ 1,713,422 $ 20,242 $ ( 12,665 ) $ 1,720,999 $ ( 1,467 )

There was no allowance for securities credit losses on debt securities available-for-sale at June 30, 2022 or December 31, 2021.

The unrealized losses across security classes were due to interest rate movements.

In addition, the asset-backed securities, which are largely comprised of collateralized-loan obligations, and the corporate debt securities were also impacted by credit spread widening across the fixed income markets.

All of these securities are rated investment grade.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

There was no allowance for securities credit losses on debt securities available-for-sale at March 31, 2022 or December 31, 2021.

The following table presents the activity in the allowance for credit losses for debt securities held-to-maturity for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

The following table presents the activity in the allowance for credit losses for debt securities held-to-maturity for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Allowance for securities credit losses

Beginning balance $ ( 1,380 ) $ ( 1,717 ) $ ( 1,467 ) $ ( 1,715 )

Benefit (provision) for credit loss expense 87 ( 2 )

Credit loss benefit 87 108 174 106

Total ending allowance balance $ ( 1,293 ) $ ( 1,609 ) $ ( 1,293 ) $ ( 1,609 )

The Company monitors the credit quality of debt securities held-to-maturity on a quarterly basis through the use of internal credit analysis supplemented by external credit ratings.

Credit ratings of BBB- or Baa3 or higher are considered as investment grade.

Where multiple ratings are available, the Company considers the lowest rating when determining the allowance for securities credit losses.

Under this approach, the amortized cost of debt securities held-to-maturity at June 30, 2022, aggregated by credit quality indicator, are as follows (in thousands):

Investment Grade Non-Investment Grade/Non-rated Total

As of June 30, 2022

State, municipal and sovereign debt obligations $ 266,455 $ 2,018 $ 268,473

Corporate debt securities 46,340 15,872 62,212

Non-agency commercial MBS 32,007 — 32,007

Total debt securities held-to-maturity $ 344,802 $ 17,890 $ 362,692

During 2021 and 2013, the Bank transferred $ 12.7 million and $ 536.0 million, respectively, of previously designated available-for-sale securities to a held-to-maturity designation at estimated fair value.

The securities transferred had an unrealized net loss of $ 209,000 and $ 13.3 million at the time of transfer in 2021 and 2013, respectively, which continues to be reflected in accumulated other comprehensive loss on the Consolidated Statement of Financial Condition, net of subsequent amortization, which is being recognized over the life of the securities.

The carrying value of the debt securities held-to-maturity at March 31, 2022 and December 31, 2021 is as follows (in thousands):

March 31, December 31,

The carrying value of the debt securities held-to-maturity at June 30, 2022 and December 31, 2021 is as follows (in thousands):

June 30, December 31,

Amortized cost $ 1,071,911 $ 1,143,548

3 unchanged sentences

Carrying value $ 1,068,034 $ 1,139,193

There was $ 87,000 of realized losses on debt securities for the three months ended March 31, 2022.

There were no realized gains or losses on debt securities for the three months ended March 31, 2021.

The amortized cost and estimated fair value of debt securities at March 31, 2022 by contractual maturity are shown below (in thousands).

March 31, 2022 Amortized

There were $ 21,000 and $ 108,000 of realized losses on debt securities for the three and six months ended June 30, 2022.

There were no realized gains or losses on debt securities for the three and six months ended June 30, 2021.

The amortized cost and estimated fair value of debt securities at June 30, 2022 by contractual maturity are shown below (in thousands).

June 30, 2022 Amortized

Cost Estimated

4 unchanged sentences

$ 763,311 $ 716,035

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

Actual maturities may differ from contractual maturities in instances where issuers have the right to call or prepay obligations with or without call or prepayment penalties.

At March 31, 2022, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $ 63.1 million, $ 87.6 million, and $ 303.4 million, respectively, and an estimated fair value of $ 61.8 million, $ 85.4 million, and $ 297.1 million, respectively, were callable prior to the maturity date.

At June 30, 2022, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $ 61.1 million, $ 87.2 million, and $ 296.2 million, respectively, and an estimated fair value of $ 58.0 million, $ 83.4 million, and $ 279.0 million, respectively, were callable prior to the maturity date.

Mortgage-backed securities are excluded from the above table since their effective lives are expected to be shorter than the contractual maturity date due to principal prepayments.

The estimated fair value of securities pledged for the ability to draw on FHLB advances, access to the Federal Reserve discount window, and other borrowings and for other purposes required by law amounted to $ 1.09 billion and $ 1.14 billion at March 31, 2022 and December 31, 2021, respectively, which includes $ 114.6 million and $ 142.9 million at March 31, 2022 and December 31, 2021, respectively, pledged as collateral for securities sold under agreements to repurchase.

The estimated fair value of securities pledged for the ability to draw on FHLB advances, access to the Federal Reserve discount window, and other borrowings and for other purposes required by law amounted to $ 941.9 million and $ 1.14 billion at June 30, 2022 and December 31, 2021, respectively, which includes $ 110.6 million and $ 142.9 million at June 30, 2022 and December 31, 2021, respectively, pledged as collateral for securities sold under agreements to repurchase.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The estimated fair value and unrealized losses for debt securities available-for-sale and held-to-maturity at March 31, 2022 and December 31, 2021, segregated by the duration of the unrealized losses, are as follows (in thousands):

The estimated fair value and unrealized losses for debt securities available-for-sale and held-to-maturity at June 30, 2022 and December 31, 2021, segregated by the duration of the unrealized losses, are as follows (in thousands):

Less than 12 months 12 months or longer Total

4 unchanged sentences

Value Unrealized

At March 31, 2022

At June 30, 2022

Debt securities available-for-sale:

7 unchanged sentences

Corporate debt securities 6,904 ( 224 ) 35,308 ( 3,023 ) 42,212 ( 3,247 )

Mortgage-backed securities:

Agency residential 453,637 ( 38,586 ) 158,125 ( 20,367 ) 611,762 ( 58,953 )

1 unchanged sentence

Non-agency commercial 30,388 ( 1,619 ) — — 30,388 ( 1,619 )

Total mortgage-backed securities 500,533 ( 25,965 ) 173,263 ( 13,933 ) 673,797 ( 39,898 )

Total MBS 484,025 ( 40,205 ) 160,408 ( 20,402 ) 644,433 ( 60,607 )

Total debt securities held-to-maturity 692,515 ( 60,263 ) 210,800 ( 25,034 ) 903,315 ( 85,297 )

10 unchanged sentences

Corporate debt securities 38,304 ( 1,279 ) — — 38,304 ( 1,279 )

Mortgage-backed securities:

Agency residential 445,399 ( 5,822 ) 50,133 ( 1,358 ) 495,532 ( 7,180 )

1 unchanged sentence

Non-agency commercial 10,722 ( 104 ) — — 10,722 ( 104 )

Total mortgage-backed securities 458,376 ( 5,967 ) 51,019 ( 1,361 ) 509,395 ( 7,328 )

Total MBS 458,376 ( 5,967 ) 51,019 ( 1,361 ) 509,395 ( 7,328 )

Total debt securities held-to-maturity 572,009 ( 8,309 ) 55,402 ( 1,462 ) 627,411 ( 9,771 )

Total debt securities $ 1,016,605 $ ( 11,203 ) $ 55,402 $ ( 1,462 ) $ 1,072,007 $ ( 12,665 )

The Company concluded that debt securities were not impaired at March 31, 2022 based on a consideration of several factors.

The Company concluded that debt securities were not impaired at June 30, 2022 based on a consideration of several factors.

The Company noted that each issuer made all the contractually due payments when required.

1 unchanged sentence

Based on management’s analysis of each individual security, the issuers appear to have the ability to meet debt service requirements over the life of the security.

Furthermore, the change in net unrealized losses were primarily due to changes in the general interest rate environment and not credit quality.

Furthermore, the change in net unrealized losses were primarily due to changes in the general credit and interest rate environment and not credit quality.

Historically, the Company has not utilized securities sales as a source of liquidity and the Company’s liquidity plans include adequate sources of liquidity outside the securities portfolio.

The Company monitors the credit quality of debt securities held-to-maturity on a quarterly basis through the use of internal credit analysis supplemented by external credit ratings.

Credit ratings of BBB- or Baa3 or higher are considered as investment

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The amortized cost of debt securities held-to-maturity at March 31, 2022, aggregated by credit quality indicator are as follows (in thousands):

Investment Grade Non-Investment Grade/Non-rated Total

As of March 31, 2022

State, municipal and sovereign debt obligations $ 272,250 $ — $ 272,250

Corporate debt securities 48,211 15,987 64,198

Non-agency commercial MBS 32,057 — 32,057

Total debt securities held-to-maturity $ 352,518 $ 15,987 $ 368,505

Equity Investments

At March 31, 2022 and December 31, 2021, the Company held equity investments of $ 93.9 million and $ 101.2 million, respectively.

At June 30, 2022 and December 31, 2021, the Company held equity investments of $ 75.3 million and $ 101.2 million, respectively.

The equity investments primarily comprised of select financial services institutions’ common and preferred stocks and, to a lesser extent, other equity investments in funds and other financial institutions.

The realized and unrealized gains or losses on equity securities for the three months ended March 31, 2022 and 2021 are shown in the table below (in thousands):

Three Months Ended March 31,

The realized and unrealized gains or losses on equity securities for the three and six months ended June 30, 2022 and 2021 are shown in the table below (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net (loss) gain on equity investments $ ( 8,078 ) $ 576 $ ( 10,864 ) $ 8,863

Net gains recognized on equity securities sold 1,582 8,123

Net (losses) gains recognized on equity securities sold ( 231 ) — 1,351 8,123

Unrealized (loss) gain recognized on equity securities still held $ ( 7,847 ) $ 576 $ ( 12,215 ) $ 740

2 unchanged sentences

Loans Receivable, Net

Loans receivable, net at March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

March 31, December 31,

Loans receivable, net at June 30, 2022 and December 31, 2021 consisted of the following (in thousands):

June 30, December 31,

Commercial real estate – investor $ 4,808,965 $ 4,378,061

10 unchanged sentences

Total loans receivable, net $ 9,380,688 $ 8,583,352

(1) The commercial and industrial loans balance at March 31, 2022 and December 31, 2021 includes Paycheck Protection Program loans of $ 15.0 million and $ 22.9 million, respectively.

(1) The commercial and industrial loans balance at June 30, 2022 and December 31, 2021 includes Paycheck Protection Program loans of $ 6.5 million and $ 22.9 million, respectively.

The Company categorizes all loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:

current financial information, historical payment experience, credit documentation, and current economic trends, among other factors.

Generally, risk ratings for loans on forbearance pursuant to the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, extended by the Coronavirus Response and Relief Supplemental Appropriations (“CRRSA”) Act of 2021, were not re-evaluated until the initial 90-day forbearance period ended.

At that time, risk ratings were updated with an emphasis on industries that were heavily impacted by the pandemic, as well as individual borrower liquidity, and other measures of resiliency as described below.

The Company evaluates risk ratings on an ongoing basis and as such, adversely rated loans will be re-evaluated as government restrictions ease and businesses resume normal operations.

The Company evaluates risk ratings on an ongoing basis.

The Company uses the following definitions for risk ratings:

2 unchanged sentences

Loans classified as Special Mention have a potential weakness that deserves management’s close attention.

This includes borrowers that have been negatively affected by the pandemic but demonstrate some degree of liquidity.

This liquidity may or may not be adequate to resume operations.

If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank’s credit position at some future date.

2 unchanged sentences

Loans so classified have a well-defined weakness or weaknesses that jeopardize the collection or the liquidation of the debt.

This includes borrowers whose operations were negatively affected by the pandemic and whom, in the assessment, do not have adequate liquidity available to resume operations at levels sufficient to service their current debt levels.

They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

4 unchanged sentences

2022 2021 2020 2019 2018 2017 and prior Revolving lines of credit Total

March 31, 2022

June 30, 2022

Commercial real estate - investor

58 unchanged sentences

Notes to Unaudited Consolidated Financial Statements (Continued)

An analysis of the allowance for credit losses on loans for the three months ended March 31, 2022 and 2021 is as follows (in thousands):

An analysis of the allowance for credit losses on loans for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands):

Real Estate –

3 unchanged sentences

Industrial Residential

Real Estate Other Consumer Unallocated Total

For the three months ended

March 31, 2022

Real Estate Other Consumer Total

For the three months ended June 30, 2022

Allowance for credit losses on loans

4 unchanged sentences

Balance at end of period $ 22,608 $ 5,021 $ 5,240 $ 18,196 $ 996 $ 52,061

For the three months ended

March 31, 2021

For the three months ended June 30, 2021

Allowance for credit losses on loans

Balance at beginning of period $ 36,922 $ 7,827 $ 2,541 $ 11,280 $ 1,406 $ 59,976

Credit loss (benefit) expense ( 3,583 ) ( 1,483 ) 1,871 ( 2,462 ) ( 219 ) ( 5,876 )

Charge-offs ( 311 ) — ( 33 ) — ( 76 ) ( 420 )

Recoveries 9 6 25 — 156 196

Balance at end of period $ 33,037 $ 6,350 $ 4,404 $ 8,818 $ 1,267 $ 53,876

For the six months ended June 30, 2022

Allowance for credit losses on loans

Balance at beginning of period $ 25,504 $ 5,884 $ 5,039 $ 11,155 $ 1,268 $ 48,850

Credit loss (benefit) expense ( 2,947 ) ( 956 ) 166 6,994 ( 129 ) 3,128

Charge-offs — ( 18 ) — ( 56 ) ( 356 ) ( 430 )

Recoveries 51 111 35 103 213 513

Balance at end of period $ 22,608 $ 5,021 $ 5,240 $ 18,196 $ 996 $ 52,061

For the six months ended June 30, 2021

Allowance for credit losses on loans

Balance at beginning of period $ 26,703 $ 15,054 $ 5,390 $ 11,818 $ 1,770 $ 60,735

Credit loss expense (benefit) 6,566 ( 8,740 ) ( 1,004 ) ( 2,797 ) ( 940 ) ( 6,915 )

3 unchanged sentences

A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral and therefore, non-accruing.

At March 31, 2022 and December 31, 2021, the Company had collateral dependent loans with an amortized cost balance as follows:

commercial real estate - investor of $ 3.6 million for each period, commercial real estate - owner occupied of $ 9.6 million and $ 11.9 million, respectively, and commercial and industrial of $ 2.8 million and $ 277,000 , respectively.

In addition, the Company had residential and consumer loans collateralized by residential real estate, which are in the process of foreclosure, with an amortized cost balance of $ 440,000 and $ 438,000 at March 31, 2022 and December 31, 2021, respectively.

At both March 31, 2022 and December 31, 2021, the amount of foreclosed residential real estate property held by the Company was $ 106,000 .

The following table presents the recorded investment in non-accrual loans, by loan portfolio segment as of March 31, 2022 and December 31, 2021 (in thousands):

March 31, December 31,

At June 30, 2022 and December 31, 2021, the Company had collateral dependent loans with an amortized cost balance as follows:

commercial real estate - investor of $ 2.6 million and $ 3.6 million, respectively, commercial real estate - owner occupied of $ 2.2 million and $ 11.9 million, respectively, and commercial and industrial of $ 364,000 and $ 277,000 , respectively.

In addition, the Company had residential and consumer loans collateralized by residential real estate, which are in the process of foreclosure, with an amortized cost balance of $ 261,000 and $ 438,000 at June 30, 2022 and December 31, 2021, respectively.

At June 30, 2022 and December 31, 2021, the amount of foreclosed residential real estate property held by the Company was $ 0 and $ 106,000 , respectively.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The following table presents the recorded investment in non-accrual loans, by loan portfolio segment as of June 30, 2022 and December 31, 2021 (in thousands):

June 30, December 31,

Commercial real estate – investor $ 2,609 $ 3,614

4 unchanged sentences

$ 20,753 $ 25,494

At March 31, 2022 and December 31, 2021, the non-accrual loans were included in the allowance for credit loss calculation and the Company did not recognize or accrue interest income on these loans.

At March 31, 2022, there were no loans that were 90 days or greater past due and still accruing.

At June 30, 2022 and December 31, 2021, the non-accrual loans were included in the allowance for credit loss calculation and the Company did not recognize or accrue interest income on these loans.

At June 30, 2022, there were no loans that were 90 days or greater past due and still accruing.

At December 31, 2021, there was one loan for $ 46,000 that was 90 days or greater past due and still accruing interest that was fully paid on January 14, 2022.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The following table presents the aging of the recorded investment in past due loans as of March 31, 2022 and December 31, 2021 by loan portfolio segment (in thousands):

The following table presents the aging of the recorded investment in past due loans as of June 30, 2022 and December 31, 2021 by loan portfolio segment (in thousands):

Past Due 60-89

2 unchanged sentences

Past Due Total

March 31, 2022

June 30, 2022

Commercial real estate – investor $ 1,667 $ 978 $ 1,582 $ 4,227 $ 4,804,738 $ 4,808,965

15 unchanged sentences

For these loans, the Bank retains its security interest in the real estate collateral.

At March 31, 2022 and December 31, 2021, TDR loans totaled $ 19.6 million and $ 23.6 million, respectively.

At March 31, 2022 and December 31, 2021, there were $ 11.9 million and $ 11.3 million, respectively, of TDR loans included in the non-accrual loan totals.

At March 31, 2022 and December 31, 2021, the Company had no specific reserves allocated to loans that were classified as TDR loans.

At June 30, 2022 and December 31, 2021, TDR loans totaled $ 17.4 million and $ 23.6 million, respectively.

At June 30, 2022 and December 31, 2021, there were $ 10.5 million and $ 11.3 million, respectively, of TDR loans included in the non-accrual loan totals.

At June 30, 2022 the Company had a $ 744,000 specific reserve allocated to a loan that was classified as a TDR loan.

At December 31, 2021, the Company had no specific reserves allocated to loans that were classified as TDR loans.

Non-accrual loans which become TDR loans are generally returned to accrual status after six months of performance.

In addition to the TDR loans included in non-accrual loans, the Company also has TDR loans classified as accruing loans which totaled $ 7.7 million and $ 12.3 million at March 31, 2022 and December 31, 2021, respectively.

The following table presents information about TDR loans which occurred during the three months ended March 31, 2022 and 2021 (dollars in thousands):

In addition to the TDR loans included in non-accrual loans, the Company also has TDR loans classified as accruing loans, which totaled $ 6.9 million and $ 12.3 million at June 30, 2022 and December 31, 2021, respectively.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The following table presents information about TDR loans which occurred during the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

Number of Loans Pre-modification

1 unchanged sentence

Recorded Investment

Three months ended March 31, 2022

Three months ended June 30, 2022

Troubled debt restructurings:

None None None

Three months ended June 30, 2021

Troubled debt restructurings:

Commercial real estate – investor 1 $ 4,903 $ 4,903

Residential real estate 3 244 336

Six months ended June 30, 2022

Troubled debt restructurings:

Commercial and industrial 1 $ 65 $ 65

Other consumer 3 991 1,109

Three months ended March 31, 2021

Six months ended June 30, 2021

Troubled debt restructurings:

Commercial real estate – investor 1 $ 4,903 $ 4,903

Residential real estate 3 244 336

Other consumer 2 26 33

There were no TDR loans that defaulted during the three months ended March 31, 2022 and 2021, which were modified within the preceding year.

In response to the COVID-19 pandemic and its economic impact on customers, short-term modification programs that comply with the CARES Act, extended by the CRRSA Act, were implemented to provide temporary payment relief to those borrowers directly impacted by COVID-19.

The Bank’s Commercial Borrower Relief Program allowed for the deferral of principal and interest or principal only.

All payments received will first be applied to all accrued and unpaid interest and the balance, if any, of unpaid principal, then to fees, expenses and other amounts due to the Bank.

Monthly payments will continue until the maturity date when all then unpaid principal, interest, fees, and all other charges are due and payable to the Bank.

The Consumer Borrower Relief Program allowed for the deferral of principal and interest.

The deferred payments along with

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

interest accrued during the deferral period are due and payable on the maturity date.

Provided these loans were current as of either December 31, 2019 or the date of the modification, these loans are not considered TDR loans at March 31, 2022 and 2021 and will not be reported as past due during the deferral period.

The major types of deposits at March 31, 2022 and December 31, 2021 were as follows (in thousands):

Type of Account March 31, December 31,

There were no TDR loans that defaulted during the three and six months ended June 30, 2022, which were modified within the preceding year.

There was one TDR commercial real estate - investor loan for $ 923,000 that defaulted during the three and six months ended June 30, 2021, which was modified within the preceding year and the loan was subsequently paid in full as of June 30, 2022.

The major types of deposits at June 30, 2022 and December 31, 2021 were as follows (in thousands):

Type of Account June 30, December 31,

Non-interest-bearing $ 2,312,126 $ 2,412,056

4 unchanged sentences

Total deposits $ 9,831,484 $ 9,732,816

Included in time deposits at March 31, 2022 and December 31, 2021 was $ 104.6 million and $ 145.4 million, respectively, in deposits of $250,000 or more.

Included in time deposits at June 30, 2022 and December 31, 2021 was $ 90.3 million and $ 145.4 million, respectively, in deposits of $250,000 or more.

Time deposits also include brokered deposits of $ 887.6 million and $ 25.0 million at June 30, 2022 and December 31, 2021, respectively.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

Borrowed Funds

Borrowed funds at March 31, 2022 and December 31, 2021 were as follows (in thousands):

March 31, December 31,

Borrowed funds at June 30, 2022 and December 31, 2021 were as follows (in thousands):

June 30, December 31,

FHLB advances $ 488,750 $ —

2 unchanged sentences

Total borrowed funds $ 788,899 $ 347,910

At March 31, 2022, there was $ 75.0 million outstanding in overnight borrowings from the FHLB, as compared to $ 0 at December 31, 2021.

There were no FHLB term advances at March 31, 2022 and December 31, 2021.

During the three months ended March 31, 2022, the Company redeemed $ 35.0 million of subordinated debt due September 30, 2026.

At June 30, 2022, there was $ 488.8 million outstanding in overnight borrowings from the FHLB, as compared to $ 0 at December 31, 2021.

There were no FHLB term advances at June 30, 2022 and December 31, 2021.

In March 2022, the Company redeemed $ 35.0 million of subordinated debt due September 30, 2026.

The debt carried an interest rate of 4.14 % based on a floating rate of three months LIBOR plus 392 basis points.

43 unchanged sentences

Fair value is based on independent appraisals (Level 3).

The following table summarizes financial assets and financial liabilities measured at fair value as of March 31, 2022 and December 31, 2021, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

The following table summarizes financial assets and financial liabilities measured at fair value as of June 30, 2022 and December 31, 2021, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

Fair Value Measurements at Reporting Date Using:

2 unchanged sentences

Inputs Level 3

March 31, 2022

June 30, 2022

Items measured on a recurring basis:

8 unchanged sentences

13,306 — 13,306

Other real estate owned

Loans measured for impairment based on the fair value of the underlying collateral (1)

13 unchanged sentences

16,233 — — 16,233

(1) Primarily consists of commercial loans, which are collateral dependent.

The amounts are based on independent appraisals, which may be adjusted by management for qualitative factors, such as economic factors and estimated liquidation expenses.

The range may vary but is generally 0 % to 8 % on the discount for costs to sell and 0 % to 10 % on appraisal adjustments.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The following table reconciles, for the three months ended March 31, 2022 and 2021, the beginning and ending balances for equity investments available-for-sale that are recognized at fair value on a recurring basis, in the Consolidated Statements of Financial Condition, using significant unobservable inputs (in thousands):

For the Three Months Ended March 31,

Equity Investments

The following table reconciles, for the three and six months ended June 30, 2022 and 2021, the beginning and ending balances for equity investments that are recognized at fair value on a recurring basis, in the Consolidated Statements of Financial Condition, using significant unobservable inputs (in thousands):

For the Three Months Ended June 30, For the Six Months Ended June 30,

2022 2021 2022 2021

Beginning balance $ — $ 7,938 $ 2,718 $ 2,540

Total gains included in earnings — 40 — 438

Purchases — 40 — 5,040

Transfers out of Level 3 — — ( 2,718 ) —

1 unchanged sentence

The Company recognizes transfers between levels of the valuation hierarchy at the end of the applicable reporting periods.

During the three months ended March 31, 2022, the Company executed its right to convert $ 2.7 million preferred stock into common stock, which resulted in a transfer from Level 3 into Level 1.

There were no transfers into or out of Level 3 assets and liabilities in the fair value hierarchy for the three months ended March 31, 2021.

There were no transfers into or out of Level 3 for the three months ended June 30, 2022.

During the six months ended June 30, 2022, the Company executed its right to convert $ 2.7 million preferred stock into common stock, which resulted in a transfer from Level 3 into Level 1.

There were no transfers into or out of Level 3 assets and liabilities in the fair value hierarchy for the three and six months ended June 30, 2021.

Assets and Liabilities Disclosed at Fair Value

33 unchanged sentences

Fair value estimates are based on discounting contractual cash flows using rates which approximate the rates offered for borrowings of similar remaining maturities.

The book value and estimated fair value of the Company’s significant financial instruments not recorded at fair value as of March 31, 2022 and December 31, 2021 are presented in the following tables (in thousands):

The book value and estimated fair value of the Company’s significant financial instruments not recorded at fair value as of June 30, 2022 and December 31, 2021 are presented in the following tables (in thousands):

Fair Value Measurements at Reporting Date Using:

2 unchanged sentences

Inputs Level 3

March 31, 2022

June 30, 2022

Financial Assets:

36 unchanged sentences

The Company utilizes certain derivative financial instruments to enhance its ability to manage interest rate risk that exists as part of its ongoing business operations.

The derivative financial instruments entered into by the Company are an economic hedge of a derivative offering to Bank customers.

The derivative financial instruments entered into by the Company are an economic hedge of a derivative offering to its customers.

The Company does not use derivative financial instruments for trading purposes.

9 unchanged sentences

however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by FASB ASC Topic 820, Fair Value Measurements.

For the three months ended March 31, 2022 and 2021, the Company recognized a gain of $ 37,000 and $ 64,000 , respectively, in commercial loan swap income resulting from fair value adjustments.

The notional amount of derivatives not designated as hedging instruments was $ 1.10 billion and $ 938.7 million at March 31, 2022 and December 31, 2021, respectively.

The Company recognized a gain of $ 0 and $ 37,000 in commercial loan swap income resulting from the fair value adjustment for the three and six months ended June 30, 2022, respectively, as compared to a loss of $ 23,000 and a gain of $ 41,000 for the three and six months ended June 30, 2021, respectively.

The notional amount of derivatives not designated as hedging instruments was $ 1.24 billion and $ 938.7 million at June 30, 2022 and December 31, 2021, respectively.

The table below presents the fair value of derivatives not designated as hedging instruments as well as their location on the consolidated statements of financial condition (in thousands):

Balance Sheet Location March 31, December 31,

Balance Sheet Location June 30, December 31,

Other assets $ 74,082 $ 22,787

3 unchanged sentences

This requirement is dependent on certain specified credit measures.

The amount of collateral posted with third parties was $ 257,000 and $ 19.8 million at March 31, 2022 and December 31, 2021, respectively.

The amount of collateral posted with third parties is deemed to be sufficient to collateralize both the fair market value change as well as any additional amounts that may be required as a result of a change in the specified credit measures.

The aggregate fair value of all derivative financial instruments in a liability position with credit measure contingencies and entered into with third parties was $ 45.6 million and $ 22.9 million at March 31, 2022 and December 31, 2021, respectively.

The amount of collateral posted with third parties was $ 40,000 and $ 19.8 million at June 30, 2022 and December 31, 2021, respectively.

The amount of collateral received from third parties was $ 69.1 million and $ 0 at June 30, 2022 and December 31, 2021, respectively.

The amount of collateral posted with third parties and received from third parties is deemed to be sufficient to collateralize both the fair market value change as well as any additional amounts that may be required as a result of a change in the specified credit measures.

The aggregate fair value of all derivative financial instruments in a liability position with credit measure contingencies and entered into with third parties was $ 74.1 million and $ 22.9 million at June 30, 2022 and December 31, 2021, respectively.

OceanFirst Financial Corp.

3 unchanged sentences

The Company has one existing finance lease, which has a lease term through 2029.

The following table represents the classification of the Company’s right-of-use (“ROU”) assets and lease liabilities on the consolidated statements of financial condition (in thousands):

March 31, December 31,

The following table represents the classification of the Company’s right-of-use assets and lease liabilities on the consolidated statements of financial condition (in thousands):

June 30, December 31,

Lease ROU Assets Classification

7 unchanged sentences

Total lease liabilities $ 23,020 $ 19,886

(1) Operating lease liabilities excludes liabilities for future rent and estimated lease termination payments related to closed branches of $ 8.6 million and $ 8.2 million as of March 31, 2022 and December 31, 2021, respectively.

(1) Operating lease liabilities excludes liabilities for future rent and estimated lease termination payments related to closed branches of $ 8.5 million and $ 8.2 million as of June 30, 2022 and December 31, 2021, respectively.

The calculated amount of the ROU assets and lease liabilities are impacted by the lease term and the discount rate used to calculate the present value of the minimum lease payments.

5 unchanged sentences

For the finance lease, the Company utilized its incremental borrowing rate at lease inception.

March 31, December 31,

June 30, December 31,

Weighted-Average Remaining Lease Term

7 unchanged sentences

The following table represents lease expenses and other lease information (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Lease Expense

11 unchanged sentences

All other costs are included in occupancy expense.

The Company sold two branches, including owned premises and equipment, all deposits associated with the branches, and selected performing loans in December 2021.

The Company also consolidated four branches in early 2021, nine branches in late 2021, and 10 branches and one deposit gathering location in early 2022.

These plans have resulted in a shortened estimated useful life for premises and equipment and accelerated recognition of lease expenses, including the gains or losses related to subsequent sales or lease terminations, associated with these locations, totaling $ 62,000 and $ 980,000 , for the three months ended March 31, 2022 and 2021, respectively, which is presented in branch consolidation expense, net, and is excluded from the table above.

Other operating expenses related to these closures totaled $ 340,000 and $ 31,000 , for the three months ended March 31, 2022 and 2021, respectively, and are presented in branch consolidation expense, net.

Future minimum payments for the finance lease and operating leases with initial or remaining terms of one year or more as of March 31, 2022 were as follows (in thousands):

Future minimum payments for the finance lease and operating leases with initial or remaining terms of one year or more as of June 30, 2022 were as follows (in thousands):

Finance Lease Operating Leases

For the Twelve Months Ending March 31,

For the Twelve Months Ending June 30,

2023 $ 307 $ 4,174

9 unchanged sentences

Notes to Unaudited Consolidated Financial Statements (Continued)

Subsequent Event

On April 1, 2022, the Company completed its previously announced agreement to acquire a majority interest of 60 % in Trident Abstract Title Agency, LLC (“Trident”).

Trident provides commercial and residential title services throughout New Jersey;

and through strategic alliances can also service client’s title insurance needs outside of New Jersey.

The acquisition is expected to be complimentary to the Company’s existing consumer and commercial lending business.

The purchase price was $ 7.1 million and estimated goodwill from the transaction amounted to $ 5.7 million.

Variable Interest Entity

On April 1, 2022, the Company acquired a 60 % ownership in Trident, and held a variable interest in the entity.

Trident meets the definition of a variable interest entity (“VIE”) under ASC 810, Consolidation, for which the Company is considered the primary beneficiary (i.e.

the party that has a controlling financial interest).

In accordance with ASC 810, Consolidation, the Company has consolidated Trident’s assets and liabilities.

For further discussion on the acquisition of Trident refer to Note 2 Business Combinations, to this Form 10-Q.

The summarized financial information for the Company’s consolidated VIE consisted of the following (in thousands):

As of June 30, 2022

Cash and cash equivalents $ 45,795

Other assets 1,139

Total assets 46,934

Other liabilities 44,566

Net assets $ 2,368

OTHER INFORMATION

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 4. Controls and Procedures