What changed in this filing

/stocks — the workspaceLOADING

Item 4. Controls and Procedures

2024-05-02 compared with 2023-11-07 · 186 added, 273 removed, 744 unchanged (38% 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 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.

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 (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.

(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 September 30, 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 March 31, 2024 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)

September 30, December 31,

March 31, December 31,

Cash and due from banks $ 130,422 $ 153,718

Debt securities available-for-sale, at estimated fair value 744,944 753,892

Debt securities held-to-maturity, net of allowance for securities credit losses of $ 932 at September 30, 2023 and $ 1,128 at December 31, 2022 (estimated fair value of $ 1,047,342 at September 30, 2023 and $ 1,110,041 at December 31, 2022)

Debt securities held-to-maturity, net of allowance for securities credit losses of $ 1,058 at March 31, 2024 and $ 1,133 at December 31, 2023 (estimated fair value of $ 1,029,965 at March 31, 2024 and $ 1,068,438 at December 31, 2023)

1,128,666 1,159,735

1 unchanged sentence

Restricted equity investments, at cost 85,689 93,766

Loans receivable, net of allowance for loan credit losses of $ 63,877 at September 30, 2023 and $ 56,824 at December 31, 2022

Loans receivable, net of allowance for loan credit losses of $ 67,173 at March 31, 2024 and $ 67,137 at December 31, 2023

10,068,209 10,136,721

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 September 30, 2023 and December 31, 2022

Common stock, $ 0.01 par value, 150,000,000 shares authorized, 62,156,581 and 61,877,686 shares issued at September 30, 2023 and December 31, 2022, respectively;

and 59,421,498 and 59,144,128 shares outstanding at September 30, 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 March 31, 2024 and December 31, 2023

Common stock, $ 0.01 par value, 150,000,000 shares authorized, 62,505,408 and 62,182,767 shares issued at March 31, 2024 and December 31, 2023, respectively;

and 58,812,498 and 59,447,684 shares outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,163,282 1,161,755

2 unchanged sentences

Unallocated common stock held by Employee Stock Ownership Plan ("ESOP") ( 3,470 ) ( 3,780 )

Treasury stock, 2,735,083 and 2,733,558 shares at September 30, 2023 and December 31, 2022

Treasury stock, 3,692,910 and 2,735,083 shares at March 31, 2024 and December 31, 2023, respectively

( 84,254 ) ( 69,106 )

8 unchanged sentences

(in thousands, except per share amounts)

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2023 2022 2023 2022

(Unaudited) (Unaudited)

For the Three Months Ended March 31,

Interest income:

16 unchanged sentences

Net gain (loss) on equity investments 1,923 ( 6,801 )

Net gain from other real estate operations — — — 48

Income from bank owned life insurance 1,862 1,281

12 unchanged sentences

Amortization of core deposit intangible 844 1,027

Branch consolidation (benefit) expense, net — ( 346 ) 70 602

Branch consolidation expense, net — 70

Merger related expenses — 22

17 unchanged sentences

(in thousands)

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2023 2022 2023 2022

(Unaudited) (Unaudited)

For the Three Months Ended March 31,

Net income $ 28,610 $ 27,899

Other comprehensive income (loss):

Net unrealized gain (loss) on debt securities (net of tax expense of $ 572 and $ 2,430 in 2023 and tax benefit of $ 3,023 and $ 11,411 in 2022, respectively)

1,797 ( 9,490 ) 7,626 ( 35,858 )

Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense of $ 66 and $ 176 in 2023 and tax expense of $ 60 and $ 186 in 2022, respectively)

116 87 277 265

Unrealized loss on derivative hedges (net of tax benefit of $ 198 and $ 573 in 2023)

( 622 ) — ( 1,798 ) —

Reclassification adjustment for losses (gains) included in net income (net of tax expense of $ 78 and $ 340 in 2023 and tax benefit $ 26 in 2022, respectively)

246 — 1,066 ( 82 )

Total other comprehensive income (loss), net of tax 1,537 ( 9,403 ) 7,171 ( 35,675 )

Other comprehensive income:

Net unrealized gain on debt securities (net of tax expense of $ 634 in 2024 and $ 1,766 in 2023)

Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense of $ 42 in 2024 and $ 56 in 2023)

Unrealized (loss) gain on derivative hedges (net of tax benefit of $ 302 in 2024 and tax expense of $ 131 in 2023)

Reclassification adjustment for losses included in net income (net of tax expense of $ 109 in 2024 and $ 201 in 2023)

Total other comprehensive income, net of tax 1,447 6,667

Total comprehensive income 30,057 34,566

8 unchanged sentences

(dollars in thousands, except per share amounts)

For the Three Months Ended September 30, 2023 and 2022

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

(Loss) Income Employee

Plan Treasury

Stock Non-Controlling Interest Total

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

Net income — — — 38,611 — — — 193 38,804

Other comprehensive loss, net of tax — — — — ( 9,403 ) — — — ( 9,403 )

Stock compensation — — 1,619 — — — — — 1,619

Allocation of ESOP stock — — ( 5 ) — — 606 — — 601

Cash dividend $ 0.20 per share

— — — ( 11,752 ) — — — — ( 11,752 )

Exercise of stock options — — 95 — — — — — 95

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

Distributions to non-controlling interest — — — ( 2 ) — — — ( 174 ) ( 176 )

Balance at September 30, 2022 $ 1 $ 612 $ 1,153,072 $ 499,967 $ ( 38,496 ) $ ( 6,797 ) $ ( 69,106 ) $ 963 $ 1,540,216

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

Net income (loss) — — — 20,667 — — — ( 135 ) 20,532

Other comprehensive income, net of tax — — — — 1,537 — — — 1,537

Stock compensation — — 1,574 — — — — — 1,574

Allocation of ESOP stock — — ( 99 ) — — 603 — — 504

Cash dividend $ 0.20 per share

— — — ( 11,822 ) — — — — ( 11,822 )

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

Balance at September 30, 2023 $ 1 $ 613 $ 1,160,869 $ 577,708 $ ( 28,811 ) $ ( 4,383 ) $ ( 69,106 ) $ 713 $ 1,637,604

OceanFirst Financial Corp.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(dollars in thousands, except per share amounts)

For the Nine Months Ended September 30, 2023 and 2022

For the Three Months Ended March 31, 2024 and 2023

Stock Additional

7 unchanged sentences

Net income — — — 27,883 — — — 16 27,899

Other comprehensive loss, net of tax — — — — ( 35,675 ) — — — ( 35,675 )

Other comprehensive income, net of tax — — — — 6,667 — — — 6,667

Stock compensation — — 1,828 — — — — — 1,828

3 unchanged sentences

Exercise of stock options — 1 1,297 ( 690 ) — — — — 608

Repurchase 373,223 shares of common stock

— — — — — — ( 7,396 ) — ( 7,396 )

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

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

Distributions to non-controlling interest — — — 6 — — — ( 588 ) ( 582 )

Balance at September 30, 2022 $ 1 $ 612 $ 1,153,072 $ 499,967 $ ( 38,496 ) $ ( 6,797 ) $ ( 69,106 ) $ 963 $ 1,540,216

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

Balance at December 31, 2023 $ 1 $ 613 $ 1,161,755 $ 592,542 $ ( 20,862 ) $ ( 3,780 ) $ ( 69,106 ) $ 782 $ 1,661,945

Net income (loss) — — — 76,347 — — — ( 34 ) 76,313

Net income — — — 28,667 — — — ( 57 ) 28,610

Other comprehensive income, net of tax — — — — 1,447 — — — 1,447

3 unchanged sentences

— — — ( 11,850 ) — — — — ( 11,850 )

Exercise of stock options — 1 1,312 ( 720 ) — — — — 593

Repurchase of 957,827 shares of common stock

— — 29 — — — ( 15,148 ) — ( 15,119 )

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

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

Balance at September 30, 2023 $ 1 $ 613 $ 1,160,869 $ 577,708 $ ( 28,811 ) $ ( 4,383 ) $ ( 69,106 ) $ 713 $ 1,637,604

Balance at March 31, 2024 $ 1 $ 613 $ 1,163,282 $ 608,355 $ ( 19,415 ) $ ( 3,470 ) $ ( 84,254 ) $ 725 $ 1,665,837

See accompanying Notes to Unaudited Consolidated Financial Statements.

2 unchanged sentences

(dollars in thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from operating activities:

12 unchanged sentences

Provision for credit losses 591 3,013

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

Net write down of fixed assets held-for-sale to net realizable value 459 1,427

Net gain on sale of fixed assets — ( 6 )

Net loss on sales of available-for-sale securities 110 697

Net loss on equity investments 5,908 7,502

Net (gain) loss on equity investments ( 1,923 ) 6,801

Net gain on sales of loans ( 357 ) ( 20 )

2 unchanged sentences

Increase in value of bank owned life insurance ( 1,862 ) ( 1,281 )

Net loss (gain) on sale of assets held for sale 7 ( 1,947 )

Increase in interest and dividends receivable ( 628 ) ( 2,638 )

Deferred tax benefit ( 93 ) ( 66 )

Increase in other assets ( 22,350 ) ( 84,582 )

Increase in other liabilities 66,016 185,927

Deferred tax provision (benefit) 1,422 ( 16 )

(Increase) decrease in other assets ( 20,997 ) 23,221

Increase (decrease) in other liabilities 35,789 ( 38,834 )

Total adjustments 17,502 ( 3,525 )

1 unchanged sentence

Cash flows from investing activities:

Net increase in loans receivable ( 210,412 ) ( 938,915 )

Proceeds from sale of loans — 13,388

Purchase of residential loan pool — ( 161,701 )

Premiums paid on purchased loan pool — ( 495 )

Net decrease (increase) in loans receivable 69,501 ( 120,505 )

Purchase of debt securities available-for-sale ( 6,628 ) ( 4,287 )

5 unchanged sentences

Proceeds from sale of equity investments — 661

Principal repayments on debt securities available-for-sale 12,491 —

Principal repayments on debt securities held-to-maturity 24,371 24,273

2 unchanged sentences

Purchases of restricted equity investments ( 12,773 ) ( 64,596 )

Proceeds from sale of other real estate owned — 160

Proceeds from sales of assets held-for-sale 969 7,676

Purchases of premises and equipment ( 680 ) ( 2,153 )

Purchases of operating lease equipment — ( 4,789 )

Net cash consideration received for acquisition — 38,609

Net cash used in investing activities ( 145,885 ) ( 909,178 )

Net cash provided by (used in) investing activities 120,603 ( 146,648 )

OceanFirst Financial Corp.

1 unchanged sentence

(dollars in thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from financing activities:

Increase in deposits $ 858,947 $ 227,192

Increase (decrease) in short-term borrowings 13,807 ( 22,480 )

(Decrease) increase in deposits $ ( 198,053 ) $ 317,973

(Decrease) increase in short-term borrowings ( 6,373 ) 1,814

Net (repayment) proceeds from FHLB advances ( 190,200 ) 135,400

Repayments of other borrowings — ( 35,076 )

Net proceeds from other borrowings 229,000 —

Increase in advances by borrowers for taxes and insurance 5,780 9,793

3 unchanged sentences

Dividends paid ( 12,854 ) ( 12,759 )

Distributions to non-controlling interest ( 55 ) ( 582 )

Net cash provided by financing activities 235,697 645,104

Net increase (decrease) in cash and due from banks and restricted cash 240,896 ( 54,076 )

Net cash (used in) provided by financing activities ( 190,011 ) 450,521

Net (decrease) increase in cash and due from banks and restricted cash ( 23,296 ) 328,247

Cash and due from banks and restricted cash at beginning of period 153,718 167,986

13 unchanged sentences

Net loan charge-offs (recoveries) 349 ( 47 )

Transfer of loans receivable to loans held-for-sale — 13,178

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

Transfer of securities from held-to-maturity to available-for-sale 500 —

See accompanying Notes to Unaudited Consolidated Financial Statements.

2 unchanged sentences

Basis of Presentation

The consolidated financial statements include:

the accounts of OceanFirst Financial Corp.

The consolidated financial statements include the accounts of:

OceanFirst Financial Corp.

(the “Company”);

2 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.

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

and a majority controlling interest in Trident Abstract Title Agency, LLC (“Trident”).

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 and nine months ended September 30, 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 months ended March 31, 2024 are not necessarily indicative of the results of operations that may be expected for the full year 2024 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.

5 unchanged sentences

Earnings per Share

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

The following reconciles shares outstanding for basic and diluted earnings per share for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Weighted average shares outstanding 59,207 59,291

5 unchanged sentences

Average diluted shares outstanding 58,791 58,918

For the three and nine months ended September 30, 2023, antidilutive stock options of 1,961,000 and 1,525,000 , respectively, were excluded from the earnings per share calculation.

For both the three and nine months ended September 30, 2022, antidilutive stock options of 1,552,000 were excluded from the earnings per share calculation.

For the three months ended March 31, 2024 and 2023, antidilutive stock options of 1,801,000 and 852,000 , 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 September 30, 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 March 31, 2024 and December 31, 2023 are as follows (in thousands):

Losses Estimated

Value Allowance for Credit Losses

At September 30, 2023

Value Allowance for Securities Credit Losses

At March 31, 2024

Debt securities available-for-sale:

2 unchanged sentences

Asset-backed securities 289,632 113 ( 1,619 ) 288,126 —

Agency commercial mortgage-backed securities (“MBS”) 109,827 — ( 20,095 ) 89,732 —

Mortgage-backed securities (“MBS”):

Agency residential 291,759 1,460 ( 12 ) 293,207 —

Agency commercial 109,352 — ( 16,063 ) 93,289 —

Total mortgage-backed securities 401,111 1,460 ( 16,075 ) 386,496 —

Total debt securities available-for-sale $ 768,392 $ 1,590 $ ( 25,038 ) $ 744,944 $ —

14 unchanged sentences

Asset-backed securities 295,796 — ( 4,252 ) 291,544 —

Agency commercial MBS 110,606 — ( 18,017 ) 92,589 —

Mortgage-backed securities:

Agency residential 298,107 183 ( 97 ) 298,193 —

Agency commercial 109,590 — ( 15,255 ) 94,335 —

Total mortgage-backed securities 407,697 183 ( 15,352 ) 392,528 —

Total debt securities available-for-sale $ 780,079 $ 194 $ ( 26,381 ) $ 753,892 $ —

9 unchanged sentences

Total debt securities $ 1,940,947 $ 1,747 $ ( 120,364 ) $ 1,822,330 $ ( 1,133 )

There was no allowance for securities credit losses on debt securities available-for-sale at September 30, 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 and nine months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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, 2024 and 2023 (in thousands):

Three Months Ended March 31,

Allowance for securities credit losses

Beginning balance $ ( 1,133 ) $ ( 1,128 )

Provision for credit loss benefit 32 59 196 233

Benefit for credit losses 75 85

Total ending allowance balance $ ( 1,058 ) $ ( 1,043 )

2 unchanged sentences

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 September 30, 2023, aggregated by credit quality indicator, are as follows (in thousands):

Under this approach, the amortized cost of debt securities held-to-maturity at March 31, 2024, aggregated by credit quality indicator, are as follows (in thousands):

Investment Grade Non-Investment Grade/Non-rated Total

As of September 30, 2023

As of March 31, 2024

State and municipal debt obligations $ 213,231 $ — $ 213,231

Corporate debt securities 53,047 13,536 66,583

Agency commercial MBS 83,323 — 83,323

Non-agency commercial MBS 20,608 — 20,608

Total debt securities held-to-maturity $ 286,886 $ 13,536 $ 300,422

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 debt securities held-to-maturity at September 30, 2023 and December 31, 2022 was as follows (in thousands):

September 30, December 31,

Amortized cost $ 1,192,166 $ 1,224,564

Allowance for securities credit losses ( 932 ) ( 1,128 )

Net loss on date of transfer from available-for-sale ( 13,556 ) ( 13,556 )

Accretion of net unrealized loss on securities reclassified as held-to-maturity 11,661 11,258

Carrying value $ 1,189,339 $ 1,221,138

There were $ 0 realized gains/losses and $ 697,000 of realized losses on sale of debt securities available-for-sale for the three and nine months ended September 30, 2023, respectively, as compared to realized gains of $ 131,000 and $ 23,000 for the corresponding prior year periods, respectively.

There were $ 110,000 and $ 697,000 of realized losses on sale of debt securities available-for-sale for the three months ended March 31, 2024 and 2023, respectively.

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

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

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

September 30, 2023 Amortized

The amortized cost and estimated fair value of debt securities at March 31, 2024 by contractual maturity are shown below (in thousands):

March 31, 2024 Amortized

Cost Estimated

5 unchanged sentences

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 September 30, 2023, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $ 80.4 million, $ 63.9 million, and $ 296.2 million, respectively, and an estimated fair value of $ 73.6 million, $ 59.6 million, and $ 290.4 million, respectively, were callable prior to the maturity date.

At March 31, 2024, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $ 77.4 million, $ 60.8 million, and $ 289.6 million, respectively, and an estimated fair value of $ 72.9 million, $ 59.0 million, and $ 288.1 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.

1 unchanged sentence

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 September 30, 2023 and December 31, 2022, 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 March 31, 2024 and December 31, 2023, 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 September 30, 2023

At March 31, 2024

Debt securities available-for-sale:

2 unchanged sentences

Asset-backed securities 9,291 ( 9 ) 216,864 ( 1,610 ) 226,155 ( 1,619 )

Agency commercial MBS — — 89,732 ( 20,095 ) 89,732 ( 20,095 )

Agency residential 23,921 ( 12 ) — — 23,921 ( 12 )

Agency commercial — — 93,289 ( 16,063 ) 93,289 ( 16,063 )

Total MBS 23,921 ( 12 ) 93,289 ( 16,063 ) 117,210 ( 16,075 )

Total debt securities available-for-sale 40,027 ( 60 ) 371,918 ( 24,978 ) 411,945 ( 25,038 )

13 unchanged sentences

Asset-backed securities — — 291,544 ( 4,252 ) 291,544 ( 4,252 )

Agency commercial MBS 8,782 ( 1,675 ) 83,807 ( 16,342 ) 92,589 ( 18,017 )

Agency residential 169,000 ( 97 ) — — 169,000 ( 97 )

Agency commercial — — 94,335 ( 15,255 ) 94,335 ( 15,255 )

Total MBS 169,000 ( 97 ) 94,335 ( 15,255 ) 263,335 ( 15,352 )

Total debt securities available-for-sale 171,376 ( 264 ) 451,856 ( 26,117 ) 623,232 ( 26,381 )

Debt securities held-to-maturity:

State, municipal, and sovereign debt obligations 133,492 ( 11,952 ) 97,135 ( 12,988 ) 230,627 ( 24,940 )

State and municipal debt obligations 6,671 ( 23 ) 191,511 ( 14,527 ) 198,182 ( 14,550 )

Corporate debt securities 3,084 ( 473 ) 58,386 ( 3,468 ) 61,470 ( 3,941 )

5 unchanged sentences

Total debt securities $ 295,809 $ ( 1,823 ) $ 1,301,465 $ ( 118,541 ) $ 1,597,274 $ ( 120,364 )

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

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

The Company concluded that debt securities were not impaired at March 31, 2024 based on consideration of several factors.

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

There were no defaults on principal or interest payments, and no interest payments were deferred.

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 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 securities sales.

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

Additionally, 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.

1 unchanged sentence

Equity Investments

At September 30, 2023 and December 31, 2022, the Company held equity investments of $ 97.9 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 nine months ended September 30, 2023 and 2022 are shown in the table below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

At March 31, 2024 and December 31, 2023, the Company held equity investments of $ 103.2 million and $ 100.2 million, respectively.

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

The realized and unrealized gains or losses on equity securities for the three months ended March 31, 2024 and 2023 are shown in the table below (in thousands):

Three Months Ended March 31,

Net gain (loss) on equity investments $ 1,923 $ ( 6,801 )

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

Net losses recognized on equity investments sold — ( 4,608 )

Unrealized gains (losses) recognized on equity investments still held $ 1,923 $ ( 2,193 )

2 unchanged sentences

Loans Receivable, Net

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

September 30, December 31,

Loans receivable, net at March 31, 2024 and December 31, 2023 consisted of the following (in thousands):

March 31, December 31,

Commercial real estate – investor $ 5,322,755 $ 5,353,974

26 unchanged sentences

2024 2023 2022 2021 2020 2019 and prior Revolving lines of credit Total

September 30, 2023

March 31, 2024

Commercial real estate - investor

20 unchanged sentences

Pass 5,247 31,232 19,401 20,089 12,440 126,222 29,339 243,970

Special Mention — — — — — 298 — 298

Substandard — — — — — 1,591 — 1,591

35 unchanged sentences

Notes to Unaudited Consolidated Financial Statements (Continued)

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

An analysis of the allowance for credit losses on loans for the three months ended March 31, 2024 and 2023 was as follows (in thousands):

Real Estate –

4 unchanged sentences

Real Estate Other Consumer Total

For the three months ended September 30, 2023

For the three months ended March 31, 2024

Allowance for credit losses on loans

Balance at beginning of period $ 27,899 $ 4,354 $ 6,867 $ 27,029 $ 988 $ 67,137

Provision (benefit) for credit losses 9,602 119 604 95 ( 63 ) 10,357

(Benefit) provision for credit losses ( 865 ) ( 107 ) 769 9 579 385

Charge-offs (1)

2 unchanged sentences

Balance at end of period $ 26,990 $ 4,251 $ 7,641 $ 27,104 $ 1,187 $ 67,173

For the three months ended September 30, 2022

Allowance for credit losses on loans

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

Provision (benefit) for credit losses 82 ( 1,047 ) 554 1,618 1 1,208

Charge-offs ( 3 ) — — — ( 2 ) ( 5 )

Recoveries 3 48 69 44 93 257

Balance at end of period $ 22,690 $ 4,022 $ 5,863 $ 19,858 $ 1,088 $ 53,521

For the nine months ended September 30, 2023

For the three months ended March 31, 2023

Allowance for credit losses on loans

5 unchanged sentences

Balance at end of period $ 22,451 $ 4,116 $ 5,827 $ 26,928 $ 873 $ 60,195

For the nine months ended September 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 ( 2,865 ) ( 2,003 ) 720 8,612 ( 128 ) 4,336

Charge-offs ( 3 ) ( 18 ) — ( 56 ) ( 358 ) ( 435 )

Recoveries 54 159 104 147 306 770

Balance at end of period $ 22,690 $ 4,022 $ 5,863 $ 19,858 $ 1,088 $ 53,521

(1) Gross charge-offs for the three and nine months ended September 30, 2023 of $ 8.4 million and $ 8.6 million, respectively, primarily related to one commercial relationship, which was originated in 2019 and had a partial charge-off of $ 8.4 million in the third quarter of 2023 to its estimated realizable value of $ 8.8 million.

The remainder of the charge-offs were related to loans that were originated in and prior to 2018.

(1) Gross charge-offs for the three months ended March 31, 2024 of $ 441,000 included one commercial real estate loan of $ 46,000 , which was originated in 2021.

The remainder of the charge-offs were related to loans that were originated prior to 2019.

Gross charge-offs for the three months ended March 31, 2023 of $ 10,000 related to loans that were originated 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 September 30, 2023 and December 31, 2022, the Company had collateral dependent loans with an amortized cost balance as follows:

commercial real estate - investor of $ 15.1 million and $ 4.6 million, respectively, commercial real estate - owner occupied of $ 240,000 and $ 4.0 million, respectively, and commercial and industrial of $ 1.1 million 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 $ 2.7 million and $ 858,000 at September 30, 2023 and December 31, 2022, 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 September 30, 2023 and December 31, 2022 (in thousands):

September 30, December 31,

At March 31, 2024 and December 31, 2023, the Company had collateral dependent loans with an amortized cost balance as follows:

commercial real estate - investor of $ 16.0 million and $ 15.2 million, respectively, commercial real estate - owner occupied of $ 3.4 million and $ 352,000 , respectively, and commercial and industrial of $ 567,000 and $ 304,000 , 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 $ 2.3 million and $ 2.6 million at March 31, 2024 and December 31, 2023, respectively.

The following table presents the recorded investment in non-accrual loans, by loan portfolio segment as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, December 31,

Commercial real estate – investor (1)

5 unchanged sentences

$ 35,011 $ 29,548

(1) At September 30, 2023, non-performing loans included the remaining exposure of $ 8.8 million on a commercial real estate relationship that was partially charged-off during the three months ended September 30, 2023.

At September 30, 2023 and December 31, 2022, 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 September 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 September 30, 2023 and December 31, 2022 by loan portfolio segment (in thousands):

(1) At March 31, 2024 and December 31, 2023, non-performing loans included the remaining exposure of $ 8.8 million on a commercial real estate relationship that was partially charged-off during the year ended December 31, 2023.

At March 31, 2024 and December 31, 2023, 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, 2024 and December 31, 2023, there were no loans that were past due 90 days or greater and still accruing interest.

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, 2024 and December 31, 2023 by loan portfolio segment (in thousands):

Past Due 60-89

2 unchanged sentences

Past Due Total

September 30, 2023

March 31, 2024

Commercial real estate – investor (1)

7 unchanged sentences

Commercial real estate – investor (1)

$ 978 $ 684 $ 15,201 $ 16,863 $ 5,337,111 $ 5,353,974

Commercial real estate – owner occupied 335 352 293 980 942,911 943,891

3 unchanged sentences

$ 17,206 $ 1,996 $ 20,886 $ 40,088 $ 10,154,507 $ 10,194,595

(1) At September 30, 2023, 60-89 days past due loans included the remaining exposure of $ 8.8 million on a commercial real estate relationship that was partially charged-off during the three months ended September 30, 2023.

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 September 30, 2023, loans with modifications to borrowers experiencing financial difficulty totaled $ 1.1 million related to term extensions and interest rate reductions, which included residential real estate loans of $ 723,000 and other consumer loans of $ 410,000 .

(1) At March 31, 2024 and December 31, 2023, 90 days or greater past due loans included the remaining exposure of $ 8.8 million on a commercial real estate relationship that was partially charged-off during the year ended December 31, 2023.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

Loan Modifications to Borrowers Experiencing Financial Difficulty

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

Since adoption, the Company has modified and may modify in the future 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.

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off.

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount, and the allowance for credit losses is subsequently adjusted by an amount equal to the total loss rate as applied to the reduced amortized cost basis.

As of March 31, 2024 and December 31, 2023, loans with modifications to borrowers experiencing financial difficulty totaled $ 12.0 million and $ 8.9 million, respectively.

There were no outstanding commitments to lend additional funds to such borrowers with loan modifications as of March 31, 2024 or December 31, 2023.

The following table presents loans modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2024 and 2023 (in thousands):

Term Extension Combination of Term Extension and Interest Rate Reduction Other Than Insignificant Payment Delay Total % of Total by Loan Portfolio Segment

For the three months ended March 31, 2024

Commercial real estate – owner occupied $ — $ — $ 2,994 $ 2,994 0.33 %

Residential real estate 129 — — 129 —

Other consumer — 148 — 148 0.06

$ 129 $ 148 $ 2,994 $ 3,271 — %

For the three months ended March 31, 2023

Residential real estate $ 435 $ — $ — $ 435 0.02 %

Other consumer 40 — — 40 0.02

$ 475 $ — $ — $ 475 — %

The modifications during the periods presented had an insignificant financial effect on the Company.

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 $ 1.1 million loans with modifications to borrowers experiencing financial difficulty, $ 994,000 were current and one residential loan of $ 140,000 had a payment default during the three and nine months ended September 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 September 30, 2023 and December 31, 2022, TDR loans totaled $ 13.2 million and $ 13.9 million, respectively.

At September 30, 2023 and December 31, 2022, there were $ 5.8 million and $ 6.4 million, respectively, of TDR loans included in the non-accrual loan totals.

At September 30, 2023 and December 31, 2022, the Company had $ 354,000 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 September 30, 2023 and December 31, 2022, respectively.

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

Number of Loans Pre-modification

Recorded Investment Post-modification

Recorded Investment

Three months ended September 30, 2022

Troubled debt restructurings:

The following table provides the performance of loans modified to borrowers experiencing financial difficulty during the twelve months ended March 31, 2024 and since adoption of the standard for March 31, 2023 (in thousands):

Current 60 - 89 Days past due 90 Days or Greater past due Total

March 31, 2024

Commercial real estate – investor $ 7,758 $ — $ — $ 7,758

Commercial real estate – owner occupied 2,994 — — 2,994

Residential real estate 258 — 153 (1)

Other consumer 419 — — 419

Nine months ended September 30, 2022

Troubled debt restructurings:

Commercial and industrial 1 65 65

$ 11,429 $ — $ 153 $ 11,582

March 31, 2023

Residential real estate $ 297 $ 138 $ — $ 435

Other consumer 40 — — 40

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

$ 337 $ 138 $ — $ 475

(1) Represents one residential loan that defaulted during the period and had been modified within the previous 12 months.

There were no such loans that defaulted during the three months ended March 31, 2023.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

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

Type of Account September 30, December 31,

The major types of deposits at March 31, 2024 and December 31, 2023 were as follows (in thousands):

Type of Account March 31, December 31,

Non-interest-bearing $ 1,639,828 $ 1,657,119

4 unchanged sentences

Total deposits $ 10,236,851 $ 10,434,949

Included in time deposits at September 30, 2023 and December 31, 2022 was $ 381.4 million and $ 117.7 million, respectively, of deposits of $250,000 or more.

Time deposits also include brokered deposits of $ 995.5 million and $ 873.4 million at September 30, 2023 and December 31, 2022, respectively.

Included in time deposits at March 31, 2024 and December 31, 2023 was $ 373.9 million and $ 412.0 million, respectively, of deposits of $250,000 or more.

Time deposits also include brokered deposits of $ 543.4 million and $ 631.5 million at March 31, 2024 and December 31, 2023, respectively.

Borrowed Funds

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

September 30, December 31,

Borrowed funds at March 31, 2024 and December 31, 2023 were as follows (in thousands):

March 31, December 31,

FHLB advances $ 658,436 $ 848,636

2 unchanged sentences

Total borrowed funds $ 1,150,956 $ 1,118,240

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

At March 31, 2024, there were $ 608.6 million of short-term advances and $ 49.8 million outstanding in overnight borrowings from the FHLB, as compared to $ 848.6 million and $ 0 at December 31, 2023, respectively.

At March 31, 2024, there were $ 425.7 million of other borrowings as compared to $ 196.5 million at December 31, 2023 due to a shift in funding sources from FHLB to other borrowings.

Pledged assets

1 unchanged sentence

Loans Debt securities Total

September 30, 2023

March 31, 2024

FHLB and FRB $ 7,336,405 $ 1,244,634 $ 8,581,039

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Equity investments without readily determinable fair values are carried at cost less impairment, if any, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer (measurement alternative).

Certain equity investments without readily

Certain equity investments without readily determinable fair values are measured at net asset value (“NAV”) per share as a practical expedient, which are excluded from the fair value hierarchy levels in the table below.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

determinable fair values are measured at net asset value (“NAV”) per share as a practical expedient, which are excluded from the fair value hierarchy levels in the table below.

Interest Rate Derivatives

4 unchanged sentences

Fair value is generally based on independent appraisals (Level 3), which may be adjusted by management for qualitative factors, such as economic factors and estimated liquidation expenses.

The following table summarizes financial assets and financial liabilities measured at fair value as of September 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):

The following table summarizes financial assets and financial liabilities measured at fair value as of March 31, 2024 and December 31, 2023, 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

September 30, 2023

March 31, 2024

Items measured on a recurring basis:

23 unchanged sentences

18,509 — — 18,509

(1) As of September 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 nine months ended September 30, 2023 and $ 20.0 million of unrealized gains for the year ended December 31, 2022.

(2) As of September 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, respectively, 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 March 31, 2024 and December 31, 2023, equity investments of $ 48.4 million and $ 47.0 million, respectively, included $ 44.7 million and $ 43.6 million, respectively, of equity investments measured under the measurement alternative.

This included no unrealized gains or losses for the three months ended March 31, 2024 and the year ended December 31, 2023.

(2) As of March 31, 2024 and December 31, 2023, equity investments of $ 48.4 million and $ 47.0 million, respectively, included $ 3.7 million and $ 3.4 million, respectively, 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.

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

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, 2024 and 2023.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

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 Nine Months Ended September 30,

Beginning balance $ 2,718

Transfers out of Level 3 ( 2,718 )

Ending balance $ —

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 and nine months ended September 30, 2023.

During the nine months ended September 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

4 unchanged sentences

Debt securities classified as held-to-maturity are carried at amortized cost, as the Company has the positive intent and ability to hold these debt securities to maturity.

The Company determines the fair value of the debt securities utilizing Level 2 and, infrequently, Level 3 inputs.

The Company determines the fair value of the debt securities utilizing Level 2 inputs.

Most of the Company’s debt securities are fixed income instruments that are not quoted on an exchange, but are bought and sold in active markets.

4 unchanged sentences

Management reviews this documentation, makes inquiries of the third-party pricing service and decides as to the level of the valuation inputs.

Based on the Company’s review of the available documentation from the third-party pricing service, management concluded that Level 2 inputs were utilized for all securities except for certain debt securities where management utilized Level 3 inputs, such as broker or dealer quotes with limited levels of activity and price transparency.

Based on the Company’s review of the available documentation from the third-party pricing service, management concluded that Level 2 inputs were utilized for all securities.

Restricted Equity Investments

The fair value for Federal Home Loan Bank of New York, Federal Reserve Bank stock, and Atlantic Community Bankers Bank is its carrying value since this is the amount for which it could be redeemed.

The fair value of these investments, which are primarily Federal Home Loan Bank of New York and Federal Reserve Bank stock, is its carrying value since this is the amount for which it could be redeemed.

There is no active market for this stock and the Company is required to maintain a minimum investment as stipulated by the respective entities.

4 unchanged sentences

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.

Loans held for sale are carried at the lower of unpaid principal balance, net, or estimated fair value on an aggregate basis.

Estimated fair value is generally determined based on bid quotations from secondary markets.

Deposits Other than Time Deposits

The fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, and interest-bearing checking accounts and money market accounts is, by definition, equal to the amount payable on demand.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

insensitivity of the majority of these deposits to interest rate changes creates a significant inherent value which is not reflected in the fair value reported.

The related insensitivity of the majority of these deposits to interest rate changes creates a significant inherent value which is not reflected in the fair value reported.

Time Deposits

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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 September 30, 2023 and December 31, 2022 are presented in the following tables (in thousands):

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The book value and estimated fair value of the Company’s significant financial instruments not recorded at fair value as of March 31, 2024 and December 31, 2023 are presented in the following tables (in thousands):

Fair Value Measurements at Reporting Date Using:

2 unchanged sentences

Inputs Level 3

September 30, 2023

March 31, 2024

Financial Assets:

25 unchanged sentences

These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.

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,

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

current economic conditions, risk characteristics of various financial instruments and other significant unobservable inputs.

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.

22 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 $ 2,000 and $ 2,000 in commercial loan swap income resulting from the fair value adjustment for the three and nine months ended September 30, 2023, respectively, as compared to gains of $ 19,000 and $ 56,000 for the corresponding prior year periods.

The Company recognized gains of $ 13,000 and losses of $ 22,000 in commercial loan swap income resulting from the fair value adjustments for the three months ended March 31, 2024 and 2023, respectively.

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.

During 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 Secured Overnight Financing Rate (“SOFR”) to the counterparty in exchange for the receipt of fixed-rate amounts at 4.0 % from the counterparty.

4 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):

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

AOCL balance at beginning of period, net of tax $ ( 36 ) $ ( 25 )

Unrealized losses recognized in OCI ( 622 ) ( 1,798 )

Unrealized (losses) gains recognized in OCI ( 949 ) 412

Losses reclassified from AOCI into interest income 259 101

AOCL balance at end of period, net of tax $ ( 1,285 ) $ ( 1,285 )

(AOCL) AOCI balance at end of period, net of tax $ ( 726 ) $ 488

During the twelve months ending March 31, 2025, the Company estimates that an additional $ 932,000 will be reclassified as a reduction to interest income.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

During the next twelve months ending September 30, 2024, the Company estimates that an additional $ 1.4 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 September 30, 2023

As of March 31, 2024

Derivatives Not Designated as Hedging Instruments

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This requirement is dependent on certain specified credit measures.

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

The amount of collateral received from third parties was $ 142.3 million and $ 104.5 million at September 30, 2023 and December 31, 2022, respectively.

The amount of collateral posted with third parties was $ 0 at both March 31, 2024 and December 31, 2023.

The amount of collateral received from third parties was $ 106.2 million and $ 88.3 million at March 31, 2024 and December 31, 2023, 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 $ 138.8 million and $ 113.5 million at September 30, 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 $ 105.1 million and $ 87.8 million at March 31, 2024 and December 31, 2023, 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.

4 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 ROU assets and lease liabilities on the Consolidated Statements of Financial Condition (in thousands):

September 30, December 31,

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,

Lease ROU Assets Classification

7 unchanged sentences

Total lease liabilities $ 20,680 $ 21,703

(1) Operating lease liabilities excludes liabilities for future rent and estimated lease termination payments related to closed branches of $ 6.3 million and $ 7.7 million at September 30, 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 $ 5.7 million and $ 5.9 million at March 31, 2024 and December 31, 2023, 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.

September 30, December 31,

March 31, 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 September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Lease Expense

27 unchanged sentences

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

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

September 30, 2023 December 31, 2022

The summarized financial information for the Company’s consolidated VIE at March 31, 2024 and December 31, 2023 consisted of the following (in thousands):

March 31, 2024 December 31, 2023

Cash and cash equivalents $ 23,365 $ 22,151

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