What changed in this filing

/stocks — the workspaceLOADING

Item 4. Controls and Procedures

2024-08-01 compared with 2024-05-02 · 195 added, 118 removed, 812 unchanged (28% of the section changed)

5 unchanged sentences

(b) Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2024 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, 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)

March 31, December 31,

June 30, December 31,

Cash and due from banks $ 181,198 $ 153,718

Debt securities available-for-sale, at estimated fair value 721,484 753,892

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)

Debt securities held-to-maturity, net of allowance for securities credit losses of $ 958 at June 30, 2024 and $ 1,133 at December 31, 2023 (estimated fair value of $ 1,003,850 at June 30, 2024 and $ 1,068,438 at December 31, 2023)

1,105,843 1,159,735

1 unchanged sentence

Restricted equity investments, at cost 92,679 93,766

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

Loans receivable, net of allowance for loan credit losses of $ 68,839 at June 30, 2024 and $ 67,137 at December 31, 2023

9,961,117 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 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

Preferred stock, $ 0.01 par value, $ 1,000 liquidation preference, 5,000,000 shares authorized, and 57,370 shares issued at both June 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value, 150,000,000 shares authorized, 62,512,415 and 62,182,767 shares issued at June 30, 2024 and December 31, 2023, respectively;

and 58,481,418 and 59,447,684 shares outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,164,813 1,161,755

2 unchanged sentences

Unallocated common stock held by Employee Stock Ownership Plan ("ESOP") ( 3,161 ) ( 3,780 )

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

Treasury stock, 4,030,997 and 2,735,083 shares at June 30, 2024 and December 31, 2023, respectively

( 89,217 ) ( 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,

2024 2023 2024 2023

(Unaudited) (Unaudited)

Interest income:

37 unchanged sentences

Net income 24,432 27,882 53,042 55,781

Net (loss) income attributable to non-controlling interest ( 57 ) 16

Net income attributable to non-controlling interest 59 85 2 101

Net income attributable to OceanFirst Financial Corp.

10 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,

2024 2023 2024 2023

(Unaudited) (Unaudited)

Net income $ 24,432 $ 27,882 $ 53,042 $ 55,781

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

Net unrealized gain on debt securities (net of tax expense of $ 710 and $ 1,344 in 2024 and $ 92 and $ 1,858 in 2023, respectively)

2,226 282 4,219 5,829

Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense of $ 40 and $ 82 in 2024 and $ 54 and $ 110 in 2023, respectively)

57 82 118 161

Unrealized loss on derivative hedges (net of tax benefit of $ 98 and $ 400 in 2024 and $ 506 and $ 375 in 2023, respectively)

( 306 ) ( 1,588 ) ( 1,255 ) ( 1,176 )

Reclassification adjustment for losses included in net income (net of tax expense of $ 81 and $ 190 in 2024 and $ 61 and $ 262 in 2023, respectively)

253 191 595 820

Total other comprehensive income (loss), net of tax 2,230 ( 1,033 ) 3,677 5,634

Total comprehensive income 26,662 26,849 56,719 61,415

comprehensive (loss) income attributable to non-controlling interest ( 57 ) 16

comprehensive income attributable to non-controlling interest 59 85 2 101

Comprehensive income attributable to OceanFirst Financial Corp.

6 unchanged sentences

(dollars in thousands, except per share amounts)

For the Three Months Ended March 31, 2024 and 2023

For the Three Months Ended June 30, 2024 and 2023

Stock Additional

5 unchanged sentences

Stock Non-Controlling Interest Total

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

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

Net income — — — 24,373 — — — 59 24,432

Other comprehensive income, net of tax — — — — 2,230 — — — 2,230

Stock compensation — — 1,591 — — — — — 1,591

Allocation of ESOP stock — — ( 60 ) — — 309 — — 249

Cash dividend $ 0.20 per share

— — — ( 11,703 ) — — — — ( 11,703 )

Repurchase of 338,087 shares of common stock

— — — — — — ( 4,963 ) — ( 4,963 )

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

Balance at June 30, 2024 $ 1 $ 613 $ 1,164,813 $ 620,021 $ ( 17,185 ) $ ( 3,161 ) $ ( 89,217 ) $ 784 $ 1,676,669

OceanFirst Financial Corp.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(dollars in thousands, except per share amounts)

For the Six Months Ended June 30, 2024 and 2023

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

(Loss) Income Employee

Plan Treasury

Stock Non-Controlling Interest Total

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

7 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

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

5 unchanged sentences

— — — ( 23,553 ) — — — — ( 23,553 )

Repurchase of 957,827 shares of common stock

Repurchase 1,295,914 shares of common stock

— — 29 — — — ( 20,111 ) — ( 20,082 )

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

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

Balance at June 30, 2024 $ 1 $ 613 $ 1,164,813 $ 620,021 $ ( 17,185 ) $ ( 3,161 ) $ ( 89,217 ) $ 784 $ 1,676,669

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 3,705 4,242

Net write down of fixed assets held-for-sale to net realizable value — 459

Net gain on sale of fixed assets ( 168 ) ( 26 )

5 unchanged sentences

Increase in value of bank owned life insurance ( 4,181 ) ( 2,463 )

Net loss on sale of assets held for sale — 44

Increase in interest and dividends receivable 898 ( 3,229 )

1 unchanged sentence

(Increase) decrease in other assets ( 23,414 ) 6,424

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

Increase in other liabilities 29,644 18,640

Total adjustments 16,786 40,481

14 unchanged sentences

Purchases of restricted equity investments ( 53,933 ) ( 101,449 )

Proceeds from sales of assets held-for-sale — 328

Purchases of premises and equipment ( 4,862 ) ( 4,717 )

Proceeds from disposal of premises and equipment 3,369 —

Net cash provided by (used in) investing activities 268,592 ( 154,619 )

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:

(Decrease) increase in deposits $ ( 440,854 ) $ 483,289

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

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

Increase in short-term borrowings 6,807 5,303

Net repayment of FHLB advances ( 59,299 ) ( 119,500 )

Net proceeds from other borrowings 227,495 —

4 unchanged sentences

Dividends paid ( 25,561 ) ( 25,600 )

Distributions to non-controlling interest — ( 55 )

Net cash (used in) provided by financing activities ( 310,940 ) 348,118

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

Net increase in cash and due from banks and restricted cash 27,480 289,761

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

12 unchanged sentences

Accretion of unrealized loss on securities reclassified to held-to-maturity 200 272

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

Net loan charge-offs 1,801 123

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

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

See accompanying Notes to Unaudited Consolidated Financial Statements.

11 unchanged sentences

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, 2024 are not necessarily indicative of the results of operations that may be expected for the full year 2024 or any other period.

The results of operations for the three and six months ended June 30, 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 months ended March 31, 2024 and 2023 (in thousands):

The following reconciles shares outstanding for basic and diluted earnings per share for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Weighted average shares outstanding 58,667 59,451 58,937 59,371

5 unchanged sentences

Average diluted shares outstanding 58,357 59,153 58,490 59,038

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.

For the three and six months ended June 30, 2024, antidilutive stock options of 1,680,000 for both periods 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.

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, 2024 and December 31, 2023 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, 2024 and December 31, 2023 are as follows (in thousands):

Losses Estimated

Value Allowance for Securities Credit Losses

At March 31, 2024

At June 30, 2024

Debt securities available-for-sale:

39 unchanged sentences

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, 2024 and 2023 (in thousands):

Three Months Ended March 31,

The following table presents the activity in the allowance for credit losses for debt securities held-to-maturity for the three and six months ended June 30, 2024 and 2023 (in thousands):

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

2024 2023 2024 2023

Allowance for securities credit losses

5 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 March 31, 2024, 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, 2024, aggregated by credit quality indicator, are as follows (in thousands):

Investment Grade Non-Investment Grade/Non-rated Total

As of March 31, 2024

As of June 30, 2024

State and municipal debt obligations $ 210,758 $ — $ 210,758

2 unchanged sentences

Total debt securities held-to-maturity $ 283,979 $ 13,957 $ 297,936

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.

There were $ 4,000 of realized gains and $ 106,000 of realized losses on sale of debt securities available-for-sale for the three and six months ended June 30, 2024, respectively as compared to $ 0 and $ 697,000 of realized losses for the corresponding prior year periods.

These realized gains/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, 2024 by contractual maturity are shown below (in thousands):

March 31, 2024 Amortized

The amortized cost and estimated fair value of debt securities at June 30, 2024 by contractual maturity are shown below (in thousands):

June 30, 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 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.

At June 30, 2024, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $ 81.5 million, $ 60.5 million, and $ 276.0 million, respectively, and an estimated fair value of $ 78.4 million, $ 58.6 million, and $ 276.1 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 March 31, 2024 and December 31, 2023, segregated by the duration of the unrealized losses, are as follows (in thousands):

The estimated fair value and unrealized losses for debt securities available-for-sale and held-to-maturity at June 30, 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 March 31, 2024

At June 30, 2024

Debt securities available-for-sale:

2 unchanged sentences

Asset-backed securities 5,972 ( 28 ) 130,230 ( 274 ) 136,202 ( 302 )

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

Agency commercial — — 93,160 ( 15,955 ) 93,160 ( 15,955 )

28 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 March 31, 2024 based on consideration of several factors.

The Company concluded that debt securities were not impaired at June 30, 2024 based on consideration of several factors.

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

6 unchanged sentences

Equity Investments

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

At June 30, 2024 and December 31, 2023, the Company held equity investments of $ 104.1 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,

The realized and unrealized gains or losses on equity securities for the three and six months ended June 30, 2024 and 2023 are shown in the table below (in thousands):

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

2024 2023 2024 2023

Net gain (loss) on equity investments $ 887 $ ( 559 ) $ 2,810 $ ( 7,360 )

4 unchanged sentences

Loans Receivable, Net

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

March 31, December 31,

Loans receivable, net at June 30, 2024 and December 31, 2023 consisted of the following (in thousands):

June 30, December 31,

Commercial real estate – investor $ 5,324,994 $ 5,353,974

26 unchanged sentences

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

March 31, 2024

June 30, 2024

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, 2024 and 2023 was as follows (in thousands):

An analysis of the allowance for credit losses on loans for the three and six months ended June 30, 2024 and 2023 was as follows (in thousands):

Real Estate –

4 unchanged sentences

Real Estate Other Consumer Total

For the three months ended March 31, 2024

For the three months ended June 30, 2024

Allowance for credit losses on loans

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

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

Provision (benefit) for credit losses 2,462 ( 341 ) 272 642 83 3,118

Charge-offs (1)

2 unchanged sentences

Balance at end of period $ 27,853 $ 3,931 $ 7,915 $ 27,833 $ 1,307 $ 68,839

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

(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.

For the six months ended June 30, 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 1,597 ( 448 ) 1,041 651 662 3,503

Charge-offs (1)

( 1,646 ) — — — ( 395 ) ( 2,041 )

Recoveries 3 25 7 153 52 240

Balance at end of period $ 27,853 $ 3,931 $ 7,915 $ 27,833 $ 1,307 $ 68,839

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

(Benefit) provision 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

(1) Gross charge-offs for the three months ended June 30, 2024 of $ 1.6 million related to one commercial real estate relationship that originated in 2019.

Gross charge-offs for the six months ended June 30, 2024 of $ 2.0 million also included one commercial real estate relationship of $ 46,000 , originated in 2021, and the remaining $ 395,000 of consumer loan charge-offs originated prior to 2019.

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

At June 30, 2024 and December 31, 2023, the Company had collateral dependent loans with an amortized cost balance as follows:

commercial real estate - investor of $ 14.3 million and $ 15.2 million, respectively, commercial real estate - owner occupied of $ 4.1 million and $ 352,000 , respectively, and commercial and industrial of $ 434,000 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,

In addition, the Company had collateral dependent residential and consumer loans with an amortized cost balance of $ 4.5 million and $ 2.6 million at June 30, 2024 and December 31, 2023, respectively.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The following table presents the recorded investment in non-accrual loans, by loan portfolio segment as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, December 31,

Commercial real estate – investor (1)

5 unchanged sentences

$ 33,422 $ 29,548

(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):

(1) Includes the remaining exposure of $ 7.2 million and $ 8.8 million, respectively, on a single commercial real estate relationship located in a central business district (“CBD”).

At June 30, 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 June 30, 2024 and December 31, 2023, there were no loans that were past due 90 days or greater and still accruing interest.

The following table presents the aging of the recorded investment in past due loans as of June 30, 2024 and December 31, 2023 by loan portfolio segment (in thousands):

Past Due 60-89

2 unchanged sentences

Past Due Total

March 31, 2024

June 30, 2024

Commercial real estate – investor (1)

13 unchanged sentences

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

(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)

(1) Includes the remaining exposure of $ 7.2 million and $ 8.8 million, respectively, on a single commercial real estate relationship noted above.

Loan Modifications to Borrowers Experiencing Financial Difficulty

4 unchanged sentences

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

As of June 30, 2024 and December 31, 2023, loans with modifications to borrowers experiencing financial difficulty totaled $ 23.7 million and $ 8.9 million, respectively.

There were no outstanding commitments to lend additional funds to such borrowers with loan modifications as of June 30, 2024 or December 31, 2023.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

The following table presents loans modifications made to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024 and 2023 (in thousands):

Term Extension Interest Rate Reduction 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 June 30, 2024

Commercial real estate – investor $ — $ 4,878 $ 7,000 $ — $ 11,878 0.22 %

$ — $ 4,878 $ 7,000 $ — $ 11,878 0.12 %

For the three months ended June 30, 2023

Residential real estate $ 223 $ — $ — $ — $ 223 0.01 %

Other consumer 200 — — — 200 0.08

$ 423 $ — $ — $ — $ 423 — %

For the six months ended June 30, 2024

Commercial real estate – investor $ — $ 4,878 $ 7,000 $ — $ 11,878 0.22 %

Commercial real estate – owner occupied — — — 2,994 2,994 0.35

2 unchanged sentences

$ 129 $ 4,878 $ 7,148 $ 2,994 $ 15,149 0.15 %

For the three months ended March 31, 2023

For the six months ended June 30, 2023

Residential real estate $ 658 $ — $ — $ — $ 658 0.02 %

3 unchanged sentences

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.

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):

The following table provides the performance of loans modified to borrowers experiencing financial difficulty during the twelve months ended June 30, 2024 and since adoption of the standard for June 30, 2023 (in thousands):

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

March 31, 2024

June 30, 2024

Commercial real estate – investor $ 19,651 $ — $ — $ 19,651

3 unchanged sentences

$ 22,971 $ 147 $ — $ 23,118

March 31, 2023

June 30, 2023

Residential real estate $ 515 $ — $ 143 (1)

1 unchanged sentence

$ 755 $ — $ 143 $ 898

(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.

(1) Represents one residential loan that defaulted during the three months ended June 30, 2023, which had been modified since the adoption of the standard.

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

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,

The major types of deposits at June 30, 2024 and December 31, 2023 were as follows (in thousands):

Type of Account June 30, December 31,

Non-interest-bearing $ 1,632,521 $ 1,657,119

4 unchanged sentences

Total deposits $ 9,994,017 $ 10,434,949

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.

Included in time deposits at June 30, 2024 and December 31, 2023 was $ 422.6 million and $ 412.0 million, respectively, of deposits of $250,000 or more.

Time deposits also include brokered deposits of $ 401.6 million and $ 631.5 million at June 30, 2024 and December 31, 2023, respectively.

Borrowed Funds

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

March 31, December 31,

Borrowed funds at June 30, 2024 and December 31, 2023 were as follows (in thousands):

June 30, December 31,

FHLB advances $ 789,337 $ 848,636

2 unchanged sentences

Total borrowed funds $ 1,293,827 $ 1,118,240

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.

At June 30, 2024, there were $ 684.8 million of short-term advances and $ 104.5 million outstanding in overnight borrowings from the FHLB, as compared to $ 848.6 million and $ 0 at December 31, 2023, respectively.

At June 30, 2024, there were $ 424.5 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

March 31, 2024

June 30, 2024

FHLB and FRB $ 7,371,979 $ 1,164,150 $ 8,536,129

5 unchanged sentences

Total pledged assets $ 7,255,671 $ 1,154,974 $ 8,410,645

The securities pledged, which collateralize the repurchase agreements are delivered to the lender, with whom each transaction is executed, or to a third-party custodian.

The lender, who may sell, loan or otherwise dispose of such securities to other parties in the normal course of their operations, agrees to resell to the Company substantially the same securities at the maturity of the repurchase agreements.

The securities that collateralize the repurchase agreements are delivered to the lender, with whom each transaction is executed, to a third-party custodian, or held at the Company.

The lender agrees to resell to the Company substantially the same securities at the maturity of the repurchase agreements.

OceanFirst Financial Corp.

44 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 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):

The following table summarizes financial assets and financial liabilities measured at fair value as of June 30, 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

March 31, 2024

June 30, 2024

Items measured on a recurring basis:

23 unchanged sentences

18,509 — — 18,509

(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.

(1) As of June 30, 2024 and December 31, 2023, equity investments of $ 48.5 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 six months ended June 30, 2024 and the year ended December 31, 2023.

(2) As of June 30, 2024 and December 31, 2023, equity investments of $ 48.5 million and $ 47.0 million, respectively, included $ 3.8 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.

1 unchanged sentence

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.

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, 2024 and 2023.

OceanFirst Financial Corp.

36 unchanged sentences

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):

The book value and estimated fair value of the Company’s significant financial instruments not recorded at fair value as of June 30, 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

March 31, 2024

June 30, 2024

Financial Assets:

50 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 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.

The Company recognized losses of $ 2,000 and gains $ 11,000 in commercial loan swap income resulting from the fair value adjustments for the three and six months ended June 30, 2024, respectively, as compared to gains of $ 22,000 and $ 0 for the corresponding prior year periods.

Derivatives Designated as Hedging Instruments

6 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 March 31,

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

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

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

2024 2023 2024 2023

(AOCL) AOCI balance at beginning of period, net of tax $ ( 726 ) $ 488 $ ( 36 ) $ ( 25 )

Unrealized losses recognized in OCI ( 306 ) ( 1,588 ) ( 1,255 ) ( 1,176 )

Losses reclassified from AOCI into interest income 256 191 515 292

(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.

AOCL balance at end of period, net of tax $ ( 776 ) $ ( 909 ) $ ( 776 ) $ ( 909 )

During the next twelve months ending June 30, 2025, the Company estimates that an additional $ 934,000 will be reclassified as a reduction to interest income.

OceanFirst Financial Corp.

3 unchanged sentences

Other assets Other liabilities

As of March 31, 2024

As of June 30, 2024

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 $ 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 was $ 0 at both June 30, 2024 and December 31, 2023.

The amount of collateral received from third parties was $ 104.3 million and $ 88.3 million at June 30, 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 $ 105.1 million and $ 87.8 million at March 31, 2024 and December 31, 2023, 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 $ 104.3 million and $ 87.8 million at June 30, 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.

5 unchanged sentences

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,

June 30, December 31,

Lease ROU Assets Classification

7 unchanged sentences

Total lease liabilities $ 20,315 $ 21,703

(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.

(1) Operating lease liabilities excludes liabilities for future rent and estimated lease termination payments related to closed branches of $ 4.8 million and $ 5.9 million at June 30, 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.

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,

2024 2023 2024 2023

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

March 31, 2024 December 31, 2023

The summarized financial information for the Company’s consolidated VIE at June 30, 2024 and December 31, 2023 consisted of the following (in thousands):

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 36,121 $ 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