What changed in this filing

/stocks — the workspaceLOADING

Item 4. Controls and Procedures

2023-08-03 compared with 2023-05-01 · 222 added, 169 removed, 789 unchanged (33% of the section changed)

3 unchanged sentences

Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

Disclosure controls and procedures are the controls and other procedures that are designed to ensure that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the SEC (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Disclosure controls and procedures are the controls and other procedures that are designed to ensure that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (“SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

(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, 2023 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, 2023 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 $ 457,747 $ 167,946

Debt securities available-for-sale, at estimated fair value 452,016 457,648

Debt securities held-to-maturity, net of allowance for securities credit losses of $ 1,043 at March 31, 2023 and $ 1,128 at December 31, 2022 (estimated fair value of $ 1,149,673 at March 31, 2023 and $ 1,110,041 at December 31, 2022)

Debt securities held-to-maturity, net of allowance for securities credit losses of $ 964 at June 30, 2023 and $ 1,128 at December 31, 2022 (estimated fair value of $ 1,109,756 at June 30, 2023 and $ 1,110,041 at December 31, 2022)

1,222,507 1,221,138

1 unchanged sentence

Restricted equity investments, at cost 105,305 109,278

Loans receivable, net of allowance for loan credit losses of $ 60,195 at March 31, 2023 and $ 56,824 at December 31, 2022

Loans receivable, net of allowance for loan credit losses of $ 61,791 at June 30, 2023 and $ 56,824 at December 31, 2022

10,030,106 9,868,718

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, 2023 and December 31, 2022

Common stock, $ 0.01 par value, 150,000,000 shares authorized, 62,219,644 and 61,877,686 shares issued at March 31, 2023 and December 31, 2022, respectively;

and 59,486,086 and 59,144,128 shares outstanding at March 31, 2023 and December 31, 2022, 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, 2023 and December 31, 2022

Common stock, $ 0.01 par value, 150,000,000 shares authorized, 62,155,942 and 61,877,686 shares issued at June 30, 2023 and December 31, 2022, respectively;

and 59,420,859 and 59,144,128 shares outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 1,159,394 1,154,821

2 unchanged sentences

Unallocated common stock held by Employee Stock Ownership Plan ("ESOP") ( 4,986 ) ( 6,191 )

Treasury stock, 2,733,558 shares at both March 31, 2023 and December 31, 2022

Treasury stock, 2,735,083 shares at both June 30, 2023 and December 31, 2022

( 69,106 ) ( 69,106 )

8 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,

2023 2022 2023 2022

(Unaudited) (Unaudited)

Interest income:

16 unchanged sentences

Net loss on equity investments ( 559 ) ( 8,078 ) ( 7,360 ) ( 10,864 )

Net loss from other real estate operations — ( 2 )

Net gain from other real estate operations — 50 — 48

Income from bank owned life insurance 1,182 1,422 2,463 3,525

32 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,

2023 2022 2023 2022

(Unaudited) (Unaudited)

Net income $ 27,882 $ 29,483 $ 55,781 $ 55,242

Other comprehensive income:

Net unrealized gain (loss) on debt securities (net of tax expense of $ 1,766 in 2023 and tax benefit of $ 3,928 in 2022)

Other comprehensive (loss) income:

Net unrealized gain (loss) on debt securities (net of tax expense of $ 92 and $ 1,858 in 2023 and tax benefit of $ 4,460 and $ 8,388 in 2022, respectively)

282 ( 13,996 ) 5,829 ( 26,368 )

Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense of $ 56 in 2023 and $ 65 in 2022)

Unrealized gain on derivative hedges (net of tax expense of $ 131 in 2023)

Reclassification adjustment for losses included in net income (net of tax expense of $ 201 in 2023 and benefit of $ 21 in 2022)

Total other comprehensive income (loss), net of tax 6,667 ( 12,349 )

Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense of $ 54 and $ 110 in 2023 and tax expense of $ 61 and $ 126 in 2022, respectively)

82 89 161 178

Unrealized loss on derivative hedges (net of tax benefit of $ 506 and $ 375 in 2023)

( 1,588 ) — ( 1,176 ) —

Reclassification adjustment for losses (gains) included in net income (net of tax expense of $ 61 and $ 262 in 2023 and benefit of $ 5 and $ 26 in 2022, respectively)

191 ( 16 ) 820 ( 82 )

Total other comprehensive (loss) income, net of tax ( 1,033 ) ( 13,923 ) 5,634 ( 26,272 )

Total comprehensive income 26,849 15,560 61,415 28,970

8 unchanged sentences

(dollars in thousands, except per share amounts)

For the Three Months Ended March 31, 2023 and 2022

For the Three Months Ended June 30, 2023 and 2022

Stock Additional

5 unchanged sentences

Stock Non-Controlling Interest Total

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

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

8 unchanged sentences

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

Balance at March 31, 2023 $ 1 $ 613 $ 1,158,007 $ 554,941 $ ( 29,315 ) $ ( 5,588 ) $ ( 69,106 ) $ 818 $ 1,610,371

Net income — — — 27,797 — — — 85 27,882

Other comprehensive loss, net of tax — — — — ( 1,033 ) — — — ( 1,033 )

Stock compensation — — 1,508 — — — — — 1,508

Allocation of ESOP stock — — ( 136 ) — — 602 — — 466

Cash dividend $ 0.20 per share

— — — ( 11,837 ) — — — — ( 11,837 )

Exercise of stock options — — 15 ( 30 ) — — — — ( 15 )

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

Distributions to non-controlling interest — — — — — — — ( 55 ) ( 55 )

Balance at June 30, 2023 $ 1 $ 613 $ 1,159,394 $ 569,867 $ ( 30,348 ) $ ( 4,986 ) $ ( 69,106 ) $ 848 $ 1,626,283

OceanFirst Financial Corp.

Consolidated Statements of Changes in Stockholders’ Equity

(dollars in thousands, except per share amounts)

For the Six Months Ended June 30, 2023 and 2022

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

(Loss) Income Employee

Plan Treasury

Stock Non-Controlling Interest Total

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

Balance at December 31, 2022 $ 1 $ 612 $ 1,154,821 $ 540,507 $ ( 35,982 ) $ ( 6,191 ) $ ( 69,106 ) $ 802 $ 1,585,464

Net income — — — 55,680 — — — 101 55,781

Other comprehensive income, net of tax — — — — 5,634 — — — 5,634

5 unchanged sentences

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

Balance at March 31, 2023 $ 1 $ 613 $ 1,158,007 $ 554,941 $ ( 29,315 ) $ ( 5,588 ) $ ( 69,106 ) $ 818 $ 1,610,371

Distributions to non-controlling interest — — — — — — — ( 55 ) ( 55 )

Balance at June 30, 2023 $ 1 $ 613 $ 1,159,394 $ 569,867 $ ( 30,348 ) $ ( 4,986 ) $ ( 69,106 ) $ 848 $ 1,626,283

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 for credit losses 4,242 3,105

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

Net write down of fixed assets held-for-sale to net realizable value 459 1,403

4 unchanged sentences

Proceeds from sales of residential loans held for sale 22,578 727

Mortgage loans originated for sale ( 5,056 ) ( 703 )

Residential loans originated for sale ( 26,035 ) ( 703 )

Increase in value of bank owned life insurance ( 2,463 ) ( 3,525 )

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

Net loss (gain) on sale of assets held for sale 44 ( 1,394 )

Increase in interest and dividends receivable ( 3,229 ) ( 1,578 )

1 unchanged sentence

Decrease (increase) in other assets 6,424 ( 55,494 )

(Decrease) increase in other liabilities ( 38,834 ) 39,272

Increase in other liabilities 18,640 106,082

Total adjustments 40,481 71,054

16 unchanged sentences

Purchases of restricted equity investments ( 101,449 ) ( 132,395 )

Proceeds from sale of other real estate owned — 160

Proceeds from sales of assets held-for-sale 328 6,100

Purchases of premises and equipment ( 4,717 ) ( 11,745 )

Net cash consideration received for acquisition — 38,609

Net cash used in investing activities ( 154,619 ) ( 673,802 )

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:

8 unchanged sentences

Dividends paid ( 25,600 ) ( 22,023 )

Distributions to non-controlling interest ( 55 ) ( 406 )

Net cash provided by financing activities 348,118 511,781

14 unchanged sentences

Accretion of unrealized loss on securities reclassified to held-to-maturity 272 304

Net loan recoveries ( 47 ) ( 92 )

Net loan charge-offs (recoveries) 123 ( 83 )

Transfer of loans receivable to loans held-for-sale — 12,011

Transfer of premises and equipment to assets held-for-sale 1,302 2,776

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.

8 unchanged sentences

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 (“Trident”).

and a majority controlling interest in Trident.

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

1 unchanged sentence

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, 2023 are not necessarily indicative of the results of operations that may be expected for the full year 2023 or any other period.

The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results of operations that may be expected for the full year 2023 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 periods presented.

3 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 clients’ title insurance needs outside of New Jersey.

The acquisition is 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, of 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

Right-of-use (“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 of December 31, 2022, the Company finalized its review of the acquired assets and liabilities and did not record any further adjustments to the carrying value.

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, 2023 and 2022 (in thousands):

The following reconciles shares outstanding for basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Weighted average shares outstanding 59,451 59,300 59,371 59,302

5 unchanged sentences

Average diluted shares outstanding 59,153 58,995 59,038 58,975

For the three months ended March 31, 2023 and 2022, antidilutive stock options of 852,000 and 904,000 , respectively, were excluded from the earnings per share calculation.

For the three and six months ended June 30, 2023, antidilutive stock options of 1,986,000 and 1,540,000 , respectively, were excluded from the earnings per share calculation.

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.

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, 2023 and December 31, 2022 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, 2023 and December 31, 2022 are as follows (in thousands):

Losses Estimated

Value Allowance for Credit Losses

At March 31, 2023

At June 30, 2023

Debt securities available-for-sale:

5 unchanged sentences

Debt securities held-to-maturity:

State, municipal and sovereign debt obligations $ 254,311 $ 104 $ ( 19,342 ) $ 235,073 $ ( 56 )

State and municipal debt obligations $ 249,515 $ 90 $ ( 22,371 ) $ 227,234 $ ( 52 )

Corporate debt securities 54,948 51 ( 5,349 ) 49,650 ( 907 )

23 unchanged sentences

Total debt securities $ 1,727,968 $ 1,245 $ ( 161,524 ) $ 1,567,689 $ ( 1,128 )

There was no allowance for securities credit losses on debt securities available-for-sale at March 31, 2023 or December 31, 2022.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

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, 2023 and 2022 (in thousands):

Three Months Ended March 31,

There was no allowance for securities credit losses on debt securities available-for-sale at June 30, 2023 or December 31, 2022.

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, 2023 and 2022 (in thousands):

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

2023 2022 2023 2022

Allowance for securities credit losses

2 unchanged sentences

Total ending allowance balance $ ( 964 ) $ ( 1,293 ) $ ( 964 ) $ ( 1,293 )

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

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.

1 unchanged sentence

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 March 31, 2023, aggregated by credit quality indicator, are as follows (in thousands):

Under this approach, the amortized cost of debt securities held-to-maturity at June 30, 2023, aggregated by credit quality indicator, are as follows (in thousands):

Investment Grade Non-Investment Grade/Non-rated Total

As of March 31, 2023

State, municipal and sovereign debt obligations $ 254,311 $ — $ 254,311

As of June 30, 2023

State and municipal debt obligations $ 249,515 $ — $ 249,515

Corporate debt securities 40,408 14,540 54,948

3 unchanged sentences

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 debt securities held-to-maturity at March 31, 2023 and December 31, 2022 is as follows (in thousands):

March 31, December 31,

The carrying value of debt securities held-to-maturity at June 30, 2023 and December 31, 2022 is as follows (in thousands):

June 30, December 31,

Amortized cost $ 1,225,497 $ 1,224,564

3 unchanged sentences

Carrying value $ 1,222,507 $ 1,221,138

There was $ 697,000 and $ 87,000 of realized losses on sale of debt securities available-for-sale for the three months ended March 31, 2023 and 2022, respectively.

There were no realized losses and $ 697,000 of realized losses on sale of debt securities available-for-sale for the three and six months ended June 30, 2023, respectively, as compared to $ 21,000 and $ 108,000 for the corresponding prior year periods.

These realized losses on debt securities are presented within Other under Total other income of the Consolidated Statements of Income.

The amortized cost and estimated fair value of debt securities at March 31, 2023 by contractual maturity are shown below (in thousands):

March 31, 2023 Amortized

The amortized cost and estimated fair value of debt securities at June 30, 2023 by contractual maturity are shown below (in thousands):

June 30, 2023 Amortized

Cost Estimated

4 unchanged sentences

$ 683,778 $ 636,455

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, 2023, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $ 60.4 million, $ 80.3 million, and $ 296.2 million, respectively, and an estimated fair value of $ 56.1 million, $ 76.7 million, and $ 281.8 million, respectively, were callable prior to the maturity date.

At June 30, 2023, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $ 64.0 million, $ 82.3 million, and $ 296.2 million, respectively, and an estimated fair value of $ 57.6 million, $ 78.0 million, and $ 284.8 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 and unrealized losses for debt securities available-for-sale and held-to-maturity at March 31, 2023 and December 31, 2022, segregated by the duration of the unrealized losses, are as follows (in thousands):

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 June 30, 2023 and December 31, 2022, 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, 2023

At June 30, 2023

Debt securities available-for-sale:

5 unchanged sentences

Debt securities held-to-maturity:

State, municipal and sovereign debt obligations 29,809 ( 284 ) 195,955 ( 19,058 ) 225,764 ( 19,342 )

State and municipal debt obligations 29,552 ( 368 ) 191,803 ( 22,003 ) 221,355 ( 22,371 )

Corporate debt securities 5,532 ( 576 ) 39,686 ( 4,773 ) 45,218 ( 5,349 )

21 unchanged sentences

Total debt securities $ 669,487 $ ( 39,222 ) $ 812,090 $ ( 122,302 ) $ 1,481,577 $ ( 161,524 )

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The Company concluded that debt securities were not impaired at March 31, 2023 based on a consideration of several factors.

The Company concluded that debt securities were not impaired at June 30, 2023 based on consideration of several factors.

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

3 unchanged sentences

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 securities sales.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

Equity Investments

At March 31, 2023 and December 31, 2022, the Company held equity investments of $ 101.0 million and $ 102.0 million, respectively.

The equity investments primarily comprised of select financial services institutions’ preferred stocks, investments in funds and other financial institutions.

The realized and unrealized gains or losses on equity securities for the three months ended March 31, 2023 and 2022 are shown in the table below (in thousands):

Three Months Ended March 31,

At June 30, 2023 and December 31, 2022, the Company held equity investments of $ 96.5 million and $ 102.0 million, respectively.

The equity investments are primarily comprised of select financial services institutions’ preferred stocks, investments in funds and other financial institutions.

The realized and unrealized gains or losses on equity securities for the three and six months ended June 30, 2023 and 2022 are shown in the table below (in thousands):

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

2023 2022 2023 2022

Net loss on equity investments $ ( 559 ) $ ( 8,078 ) $ ( 7,360 ) $ ( 10,864 )

Net (losses) gains recognized on equity investments sold ( 854 ) ( 231 ) ( 5,462 ) 1,351

Unrealized losses recognized on equity investments still held $ ( 2,193 ) $ ( 4,368 )

Unrealized gains (losses) recognized on equity investments still held $ 295 $ ( 7,847 ) $ ( 1,898 ) $ ( 12,215 )

OceanFirst Financial Corp.

1 unchanged sentence

Loans Receivable, Net

Loans receivable, net at March 31, 2023 and December 31, 2022 consisted of the following (in thousands):

March 31, December 31,

Loans receivable, net at June 30, 2023 and December 31, 2022 consisted of the following (in thousands):

June 30, December 31,

Commercial real estate – investor $ 5,319,686 $ 5,171,952

26 unchanged sentences

2023 2022 2021 2020 2019 2018 and prior Revolving lines of credit Total

March 31, 2023

June 30, 2023

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, 2023 and 2022 was as follows (in thousands):

An analysis of the allowance for credit losses on loans for the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

Real Estate –

4 unchanged sentences

Real Estate Other Consumer Total

For the three months ended March 31, 2023

For the three months ended June 30, 2023

Allowance for credit losses on loans

5 unchanged sentences

Balance at end of period $ 24,481 $ 4,342 $ 5,945 $ 26,152 $ 871 $ 61,791

For the three months ended March 31, 2022

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

(1) Gross charge-offs for the three months ended March 31, 2023, related to loans that originated prior to 2018.

For the six months ended June 30, 2023

Allowance for credit losses on loans

Balance at beginning of period $ 21,070 $ 4,423 $ 5,695 $ 24,530 $ 1,106 $ 56,824

Provision (benefit) for credit losses 3,408 ( 81 ) 370 1,605 ( 259 ) 5,043

Charge-offs (1)

— ( 6 ) ( 128 ) — ( 82 ) ( 216 )

Recoveries 3 6 8 17 106 140

Balance at end of period $ 24,481 $ 4,342 $ 5,945 $ 26,152 $ 871 $ 61,791

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

(Benefit) provision for credit losses ( 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

(1) Gross charge-offs for the three and six months ended June 30, 2023 of $ 206,000 and $ 216,000 , respectively, related to loans that were originated in and prior to 2018.

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, is classified as non-accruing.

At March 31, 2023 and December 31, 2022, the Company had collateral dependent loans with an amortized cost balance as follows:

At June 30, 2023 and December 31, 2022, the Company had collateral dependent loans with an amortized cost balance as follows:

commercial real estate - investor of $ 7.3 million and $ 4.6 million, respectively, commercial real estate - owner occupied of $ 565,000 and $ 4.0 million, respectively, and commercial and industrial of $ 199,000 and $ 160,000 , 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 $ 1.5 million and $ 858,000 at March 31, 2023 and December 31, 2022, respectively.

The following table presents the recorded investment in non-accrual loans, by loan portfolio segment as of March 31, 2023 and December 31, 2022 (in thousands):

March 31, December 31,

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 $ 1.6 million and $ 858,000 at June 30, 2023 and December 31, 2022, respectively.

The following table presents the recorded investment in non-accrual loans, by loan portfolio segment as of June 30, 2023 and December 31, 2022 (in thousands):

June 30, December 31,

Commercial real estate – investor $ 13,000 $ 10,483

4 unchanged sentences

$ 22,758 $ 23,265

At March 31, 2023 and December 31, 2022, 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, 2023, there were no loans that were past due 90 days or greater and still accruing interest.

At December 31, 2022, there was one Paycheck Protection Program (“PPP”) loan for $ 14,000 that was past due 90 days or greater and still accruing interest.

Per SBA guidelines, the SBA will pay accrued interest through the deferral period up to a maximum of 120 days past due.

Given these servicing guidelines, PPP loans that are 90 to 120 days past due will be reported as accruing loans.

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, 2023 and December 31, 2022 by loan portfolio segment (in thousands):

At June 30, 2023 and December 31, 2022, 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, 2023, there were no loans that were past due 90 days or greater and still accruing interest.

At December 31, 2022, there was one Paycheck Protection Program (“PPP”) loan for $ 14,000 that was past due 90 days or greater and still accrued interest, which subsequently became current.

Per Small Business Administration (“SBA”) guidelines, the SBA will pay accrued interest through the deferral period up to a maximum of 120 days past due.

Given these servicing guidelines, PPP loans that are 90 to 120 days past due will be reported as accruing loans.

The following table presents the aging of the recorded investment in past due loans as of June 30, 2023 and December 31, 2022 by loan portfolio segment (in thousands):

Past Due 60-89

2 unchanged sentences

Past Due Total

March 31, 2023

June 30, 2023

Commercial real estate – investor $ — $ — $ 3,958 $ 3,958 $ 5,315,728 $ 5,319,686

11 unchanged sentences

$ 8,095 $ 6,052 $ 11,581 $ 25,728 $ 9,892,326 $ 9,918,054

The Company modified certain loans to borrowers experiencing financial difficulty.

These modifications may have included a reduction in interest rate, an extension in term, principal forgiveness and/or other than insignificant payment delay.

At March 31, 2023, loans with modifications to borrowers experiencing financial difficulty totaled $ 475,000 , which included residential real estate of $ 435,000 and other consumer of $ 40,000 .

The Company adopted Accounting Standards Update (“ASU”) 2022-02 on January 1, 2023.

Since adoption, the Company has modified certain loans to borrowers experiencing financial difficulty.

These modifications may include a reduction in interest rate, an extension in term, principal forgiveness and/or other than insignificant payment delay.

At June 30, 2023, loans with modifications to borrowers experiencing financial difficulty totaled $ 898,000 related to term extensions, which included residential real estate of $ 658,000 and other consumer of $ 240,000 .

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

Of the $ 475,000 of loans with modifications to borrowers experiencing financial difficulty, $ 337,000 were current, and one loan for $ 138,000 was 30 days past due (which became current subsequent to March 31, 2023).

No loans that were modified to borrowers experiencing financial difficulty since adoption had a payment default during the three months ended March 31, 2023.

Prior to the adoption of ASU 2022-02 on January 1, 2023, the Company classified certain loans as troubled debt restructuring (“TDR”) loans when credit terms to a borrower in financial difficulty were modified, in accordance with ASC 310-40.

With the adoption of ASU 2022-02 as of January 1, 2023, the Company has ceased to recognize or measure for new TDRs but those existing at December 31, 2022 will remain until settled.

At March 31, 2023 and December 31, 2022, TDR loans totaled $ 13.7 million and $ 13.9 million, respectively.

At March 31, 2023 and December 31, 2022, there were $ 6.3 million and $ 6.4 million, respectively, of TDR loans included in the non-accrual loan totals.

At March 31, 2023 and December 31, 2022 the Company had $ 513,000 and $ 590,000 , respectively, of specific reserve allocated to one loan that was classified as a TDR loan.

Of the $ 898,000 loans with modifications to borrowers experiencing financial difficulty, $ 755,000 were current and one residential loan of $ 143,000 had a payment default during the three and six months ended June 30, 2023.

Prior to the adoption of ASU 2022-02, the Company classified certain loans as troubled debt restructuring (“TDR”) loans when credit terms to a borrower in financial difficulty were modified in accordance with ASC 310-40.

Since adoption of this ASU, the Company has ceased to recognize or measure for new TDRs but those existing at December 31, 2022 remain until settled.

At June 30, 2023 and December 31, 2022, TDR loans totaled $ 13.5 million and $ 13.9 million, respectively.

At June 30, 2023 and December 31, 2022, there were $ 6.2 million and $ 6.4 million, respectively, of TDR loans included in the non-accrual loan totals.

At June 30, 2023 and December 31, 2022, the Company had $ 436,000 and $ 590,000 , respectively, of specific reserve allocated to one loan that was classified as a TDR loan.

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 $ 7.4 million and $ 7.5 million at March 31, 2023 and December 31, 2022, respectively.

The following table presents information about TDR loans which occurred during the three months ended March 31, 2022 (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 $ 7.3 million and $ 7.5 million at June 30, 2023 and December 31, 2022, 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 (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

Six months ended June 30, 2022

Troubled debt restructurings:

Commercial and industrial 1 $ 65 $ 65

Other consumer 3 991 1,109

There were no TDR loans that defaulted during the three months ended March 31, 2023 and 2022, which were modified within the preceding year.

Consumer 3 991 1,109

There were no TDR loans that defaulted during the three and six months ended June 30, 2023 and 2022, which were modified within the preceding year.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The major types of deposits at March 31, 2023 and December 31, 2022 were as follows (in thousands):

Type of Account March 31, December 31,

The major types of deposits at June 30, 2023 and December 31, 2022 were as follows (in thousands):

Type of Account June 30, December 31,

Non-interest-bearing $ 1,854,136 $ 2,101,308

4 unchanged sentences

Total deposits $ 10,158,337 $ 9,675,206

Included in time deposits at March 31, 2023 and December 31, 2022 was $ 257.1 million and $ 117.7 million, respectively, in deposits of $250,000 or more.

Time deposits also include brokered deposits of $ 1.24 billion and $ 873.4 million at March 31, 2023 and December 31, 2022, respectively.

Included in time deposits at June 30, 2023 and December 31, 2022 was $ 310.6 million and $ 117.7 million, respectively, in deposits of $250,000 or more.

Time deposits also include brokered deposits of $ 1.42 billion and $ 873.4 million at June 30, 2023 and December 31, 2022, respectively.

Borrowed Funds

Borrowed funds at March 31, 2023 and December 31, 2022 were as follows (in thousands):

March 31, December 31,

Borrowed funds at June 30, 2023 and December 31, 2022 were as follows (in thousands):

June 30, December 31,

FHLB advances $ 1,091,666 $ 1,211,166

2 unchanged sentences

Total borrowed funds $ 1,362,043 $ 1,475,666

The Company had no FHLB overnight advances or borrowings from the Federal Reserve Bank (“FRB”) Discount Window or Bank Term Funding Program at March 31, 2023 and December 31, 2022.

The Company had no FHLB overnight advances or borrowings from the Federal Reserve Bank (“FRB”) Discount Window or Bank Term Funding Program at June 30, 2023 and December 31, 2022.

Pledged assets

1 unchanged sentence

Loans Debt securities Total

March 31, 2023

June 30, 2023

FHLB and FRB $ 7,147,408 $ 15,037 $ 7,162,445

52 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, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, 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, 2023

June 30, 2023

Items measured on a recurring basis:

23 unchanged sentences

9,635 — — 9,635

(1) As of March 31, 2023 and December 31, 2022, primarily consists of $ 43.6 million and $ 37.1 million, respectively, of equity investments measured under the measurement alternative.

This included no unrealized gains or losses for the three months ended March 31, 2023 as a result of observable price changes in the investment and $ 20.0 million of unrealized gains for the year ended December 31, 2022.

(2) As of March 31, 2023 and December 31, 2022, equity investments of $ 46.6 million and $ 40.1 million, respectively, included $ 3.0 million for both periods, of certain equity investment funds measured at NAV per share (or its equivalent) as a practical expedient to fair value and these equity investments have not been classified in the fair value hierarchy levels.

(1) As of June 30, 2023 and December 31, 2022, primarily consists of $ 43.6 million and $ 37.1 million, respectively, of equity investments measured under the measurement alternative.

This included no unrealized gains or losses for the six months ended June 30, 2023 as a result of observable price changes in the investment and $ 20.0 million of unrealized gains for the year ended December 31, 2022.

(2) As of June 30, 2023 and December 31, 2022, equity investments of $ 47.0 million and $ 40.1 million, respectively, included $ 3.4 million and $ 3.0 million of certain equity investment funds measured at NAV per share (or its equivalent) as a practical expedient to fair value and these equity investments have not been classified in the fair value hierarchy levels.

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

4 unchanged sentences

The following table reconciles 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 March 31,

For the Six Months Ended June 30,

Beginning balance $ 2,718

2 unchanged sentences

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

There were no assets in Level 3 that were recognized at fair value on a recurring basis or transfers into or out of Level 3 for the three months ended March 31, 2023.

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

There were no assets in Level 3 that were recognized at fair value on a recurring basis or transfers into or out of Level 3 for the three and six months ended June 30, 2023.

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

Assets and Liabilities Disclosed at Fair Value

19 unchanged sentences

Each loan category is further segmented into fixed and adjustable rate interest terms.

Fair value of performing and non-performing loans was estimated by discounting the future cash flows, net of estimated prepayments, at a rate for which similar loans would be originated to new borrowers with similar terms.

The fair value of loans was measured using the exit price notion.

Fair value of performing and non-performing loans, which is based on an exit price notion, was estimated by discounting the future cash flows, net of estimated prepayments, at market discount rates that reflect the credit and interest rate risk inherent in the loan.

Deposits Other than Time Deposits

10 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, 2023 and December 31, 2022 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, 2023 and December 31, 2022 are presented in the following tables (in thousands):

Fair Value Measurements at Reporting Date Using:

2 unchanged sentences

Inputs Level 3

March 31, 2023

June 30, 2023

Financial Assets:

5 unchanged sentences

Deposits other than time deposits (1)

7,392,307 — 7,392,307 —

Time deposits 2,766,030 — 2,731,216 —

9 unchanged sentences

Deposits other than time deposits (1)

8,133,186 — 8,133,186 —

Time deposits 1,542,020 — 1,504,601 —

1 unchanged sentence

Securities sold under agreements to repurchase with customers 69,097 69,097 — —

(1) The estimated fair value of non-maturity deposits does not consider any inherent value and represents amount payable on demand.

However, non-maturity deposits do contain significant inherent value to the Company, particularly when overnight funding costs are greater than the deposit costs.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.

1 unchanged sentence

Because a limited market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other significant unobservable inputs.

These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.

Changes in assumptions could significantly affect the estimates.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.

Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.

20 unchanged sentences

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

The Company recognized losses of $ 22,000 and gains of $ 37,000 in commercial loan swap income resulting from the fair value adjustment for the three months ended March 31, 2023 and 2022, respectively.

The Company recognized gains of $ 22,000 and $ 0 in commercial loan swap income resulting from the fair value adjustment for the three and six months ended June 30, 2023, respectively, as compared to gains of $ 0 and $ 37,000 for the corresponding prior year periods.

Derivatives Designated as Hedging Instruments

During the fourth quarter of 2022, the Company entered into a three-year interest rate swap intended to add stability to its net interest income and to manage its exposure to future interest rate movements associated with a pool of floating rate commercial loans.

The swap requires the Company to pay variable-rate amounts indexed to one-month term SOFR to the counterparty in exchange for the receipt of fixed-rate amounts at 4.0 % from the counterparty.

The swap requires the Company to pay variable-rate amounts indexed to one-month term Secured Overnight Financing Rate (“SOFR”) to the counterparty in exchange for the receipt of fixed-rate amounts at 4.0 % from the counterparty.

The swap was designated and qualified as a cash flow hedge, under ASC Topic 815, Derivatives and Hedging.

3 unchanged sentences

The table below presents the effect on the Company’s accumulated other comprehensive income/loss (“AOCI” or “AOCL”) attributable to the cash flow hedge derivative, net of tax, and the related gains/(losses) reclassified from AOCI into income (in thousands):

For the Three Months Ended March 31,

AOCL balance at beginning of period, net of tax $ ( 25 )

Unrealized gains recognized in OCI 412

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

AOCI (AOCL) balance at beginning of period, net of tax $ 488 $ ( 25 )

Unrealized losses recognized in OCI ( 1,588 ) ( 1,176 )

Losses reclassified from AOCI into interest income 191 292

AOCI balance at end of period, net of tax $ 488

During the next twelve months, the Company estimates that an additional $ 640,000 will be reclassified as a reduction to interest income.

AOCL balance at end of period, net of tax $ ( 909 ) $ ( 909 )

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

During the next twelve months, the Company estimates that an additional $ 1.2 million will be reclassified as a reduction to interest income.

The table below presents the notional amount and fair value of derivatives designated and not designated as hedging instruments, as well as their location on the Consolidated Statements of Financial Condition (in thousands):

1 unchanged sentence

Other assets Other liabilities

As of March 31, 2023

As of June 30, 2023

Derivatives Not Designated as Hedging Instruments

13 unchanged sentences

This requirement is dependent on certain specified credit measures.

The amount of collateral posted with third parties was $ 40,000 at both March 31, 2023 and December 31, 2022.

The amount of collateral received from third parties was $ 89.0 million and $ 104.5 million at March 31, 2023 and December 31, 2022, respectively.

The amount of collateral posted with third parties was $ 0 and $ 40,000 at June 30, 2023 and December 31, 2022, respectively.

The amount of collateral received from third parties was $ 112.5 million and $ 104.5 million at June 30, 2023 and December 31, 2022, 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 $ 91.7 million and $ 113.5 million at March 31, 2023 and December 31, 2022, respectively.

The aggregate fair value of all derivative financial instruments in a liability position with credit measure contingencies and entered into with third parties was $ 110.9 million and $ 113.5 million at June 30, 2023 and December 31, 2022, respectively.

The interest rate derivatives which the Company executes with the commercial borrowers are collateralized by the borrowers’ commercial real estate financed by the Company.

5 unchanged sentences

The following table represents the classification of the Company’s ROU assets and lease liabilities on the Consolidated Statements of Financial Condition (in thousands):

March 31, December 31,

June 30, December 31,

Lease ROU Assets Classification

7 unchanged sentences

Total lease liabilities $ 22,891 $ 21,987

(1) Operating lease liabilities excludes liabilities for future rent and estimated lease termination payments related to closed branches of $ 7.2 million and $ 7.7 million at March 31, 2023 and December 31, 2022, respectively.

(1) Operating lease liabilities excludes liabilities for future rent and estimated lease termination payments related to closed branches of $ 6.8 million and $ 7.7 million at June 30, 2023 and December 31, 2022, 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,

2023 2022 2023 2022

Lease Expense

27 unchanged sentences

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 at March 31, 2023 and December 31, 2022 consisted of the following (in thousands):

March 31, 2023 December 31, 2022

The summarized financial information for the Company’s consolidated VIE at June 30, 2023 and December 31, 2022 consisted of the following (in thousands):

June 30, 2023 December 31, 2022

Cash and cash equivalents $ 37,022 $ 30,062

8 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