What changed in this filing

/stocks — the workspaceLOADING

Item 4. Controls and Procedures

2024-10-31 compared with 2024-08-01 · 161 added, 131 removed, 876 unchanged (25% 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 June 30, 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 September 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)

June 30, December 31,

September 30, December 31,

Cash and due from banks $ 214,171 $ 153,718

Debt securities available-for-sale, at estimated fair value 911,753 753,892

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)

Debt securities held-to-maturity, net of allowance for securities credit losses of $ 902 at September 30, 2024 and $ 1,133 at December 31, 2023 (estimated fair value of $ 1,007,781 at September 30, 2024 and $ 1,068,438 at December 31, 2023)

1,075,131 1,159,735

1 unchanged sentence

Restricted equity investments, at cost 98,545 93,766

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

Loans receivable, net of allowance for loan credit losses of $ 69,066 at September 30, 2024 and $ 67,137 at December 31, 2023

9,963,598 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 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

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

Common stock, $ 0.01 par value, 150,000,000 shares authorized, 62,515,415 and 62,182,767 shares issued at September 30, 2024 and December 31, 2023, respectively;

and 58,397,094 and 59,447,684 shares outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,166,218 1,161,755

2 unchanged sentences

Unallocated common stock held by Employee Stock Ownership Plan ("ESOP") ( 2,852 ) ( 3,780 )

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

Treasury stock, 4,118,321 and 2,735,083 shares at September 30, 2024 and December 31, 2023, respectively

( 90,617 ) ( 69,106 )

8 unchanged sentences

(in thousands, except per share amounts)

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

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

2024 2023 2024 2023

52 unchanged sentences

(in thousands)

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

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

2024 2023 2024 2023

6 unchanged sentences

62 116 180 277

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

Unrealized gain (loss) on derivative hedges (net of tax expense of $ 267 and tax benefit of $ 133 in 2024 and tax benefit of $ 198 and $ 573 in 2023, respectively)

837 ( 622 ) ( 418 ) ( 1,798 )

1 unchanged sentence

254 246 849 1,066

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

Total other comprehensive income, net of tax 5,000 1,537 8,677 7,171

Total comprehensive income 30,186 22,069 86,905 83,484

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

comprehensive income (loss) attributable to non-controlling interest 70 ( 135 ) 72 ( 34 )

Comprehensive income attributable to OceanFirst Financial Corp.

6 unchanged sentences

(dollars in thousands, except per share amounts)

For the Three Months Ended June 30, 2024 and 2023

For the Three Months Ended September 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 )

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

2 unchanged sentences

— — — ( 11,822 ) — — — — ( 11,822 )

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

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

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

Net income — — — 25,116 — — — 70 25,186

4 unchanged sentences

— — — ( 11,657 ) — — — — ( 11,657 )

Exercise of stock options — — 48 — — — — — 48

Repurchase of 87,324 shares of common stock

1 unchanged sentence

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

Balance at September 30, 2024 $ 1 $ 613 $ 1,166,218 $ 632,476 $ ( 12,185 ) $ ( 2,852 ) $ ( 90,617 ) $ 854 $ 1,694,508

OceanFirst Financial Corp.

1 unchanged sentence

(dollars in thousands, except per share amounts)

For the Six Months Ended June 30, 2024 and 2023

For the Nine Months Ended September 30, 2024 and 2023

Stock Additional

6 unchanged sentences

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

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

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

Other comprehensive income, net of tax — — — — 7,171 — — — 7,171

6 unchanged sentences

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

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

— — — ( 35,210 ) — — — — ( 35,210 )

Exercise of stock options — — 48 — — — — — 48

Repurchase 1,383,238 shares of common stock

1 unchanged sentence

Preferred stock dividend — — — ( 3,012 ) — — — — ( 3,012 )

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

Balance at September 30, 2024 $ 1 $ 613 $ 1,166,218 $ 632,476 $ ( 12,185 ) $ ( 2,852 ) $ ( 90,617 ) $ 854 $ 1,694,508

See accompanying Notes to Unaudited Consolidated Financial Statements.

2 unchanged sentences

(dollars in thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities:

20 unchanged sentences

Increase in value of bank owned life insurance ( 4,796 ) ( 3,853 )

Net loss on sale of assets held for sale — 44

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

Net (gain) loss on sale of assets held for sale ( 855 ) 7

Decrease (increase) in interest and dividends receivable 3,053 ( 5,326 )

Deferred tax provision (benefit) 935 ( 93 )

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

Increase in other liabilities 29,644 18,640

Decrease (increase) in other assets 19,330 ( 22,350 )

(Decrease) increase in other liabilities ( 43,849 ) 66,016

Total adjustments ( 30,788 ) 74,771

8 unchanged sentences

Proceeds from sales of debt securities available-for-sale 2,121 1,300

Proceeds from sale of equity investments — 4,822

Proceeds from calls and sales of equity investments 11,256 4,822

Principal repayments on debt securities available-for-sale 78,413 —

6 unchanged sentences

Proceeds from disposal of premises and equipment 3,380 —

Net cash consideration paid for acquisition ( 1,000 ) —

Net cash provided by (used in) investing activities 114,998 ( 145,885 )

2 unchanged sentences

(dollars in thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from financing activities:

1 unchanged sentence

Increase in short-term borrowings 7,949 13,807

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

Net proceeds (repayment) of FHLB advances 43,224 ( 605,110 )

Net proceeds from other borrowings 222,662 —

33 unchanged sentences

(the “Bank”) and OceanFirst Risk Management, Inc.;

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

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

1 unchanged sentence

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

The results of operations for the three 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.

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

6 unchanged sentences

Average diluted shares outstanding 58,068 59,111 58,407 59,068

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.

For the three and nine months ended September 30, 2024, antidilutive stock options of 1,668,000 and 1,790,000 , respectively, were excluded from the earnings per share calculation.

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.

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 June 30, 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 September 30, 2024 and December 31, 2023 are as follows (in thousands):

Losses Estimated

Value Allowance for Securities Credit Losses

At June 30, 2024

At September 30, 2024

Debt securities available-for-sale:

28 unchanged sentences

Debt securities held-to-maturity:

State, municipal, and sovereign debt obligations $ 222,009 $ 251 $ ( 14,550 ) $ 207,710 $ ( 39 )

State and municipal debt obligations $ 222,009 $ 251 $ ( 14,550 ) $ 207,710 $ ( 39 )

Corporate debt securities 69,809 391 ( 3,941 ) 66,259 ( 987 )

8 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 and six months ended June 30, 2024 and 2023 (in thousands):

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

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, 2024 and 2023 (in thousands):

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

2024 2023 2024 2023

6 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 June 30, 2024, aggregated by credit quality indicator, are as follows (in thousands):

Under this approach, the amortized cost of debt securities held-to-maturity at September 30, 2024, aggregated by credit quality indicator, are as follows (in thousands):

Investment Grade Non-Investment Grade/Non-rated Total

As of June 30, 2024

As of September 30, 2024

State and municipal debt obligations $ 202,983 $ 839 $ 203,822

2 unchanged sentences

Total debt securities held-to-maturity $ 276,167 $ 14,830 $ 290,997

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.

There were no realized gains/losses and $ 106,000 of realized losses on sale of debt securities available-for-sale for the three and nine months ended September 30, 2024, respectively as compared to no realized gains/losses 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 June 30, 2024 by contractual maturity are shown below (in thousands):

June 30, 2024 Amortized

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

September 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 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.

At September 30, 2024, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $ 81.6 million, $ 58.3 million, and $ 252.0 million, respectively, and an estimated fair value of $ 80.0 million, $ 57.4 million, and $ 252.1 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 June 30, 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 September 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 June 30, 2024

At September 30, 2024

Debt securities available-for-sale:

2 unchanged sentences

Asset-backed securities 42,325 ( 40 ) 89,004 ( 107 ) 131,329 ( 147 )

Agency residential 143,284 ( 195 ) — — 143,284 ( 195 )

Agency commercial — — 96,970 ( 11,895 ) 96,970 ( 11,895 )

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 June 30, 2024 based on consideration of several factors.

The Company concluded that no debt securities were impaired at September 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 June 30, 2024 and December 31, 2023, the Company held equity investments of $ 104.1 million and $ 100.2 million, respectively.

At September 30, 2024 and December 31, 2023, the Company held equity investments of $ 95.7 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 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,

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

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

2024 2023 2024 2023

5 unchanged sentences

Loans Receivable, Net

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

June 30, December 31,

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

September 30, December 31,

Commercial real estate – investor $ 5,273,159 $ 5,353,974

16 unchanged sentences

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

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

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

Substandard :

7 unchanged sentences

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

June 30, 2024

September 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 and six months ended June 30, 2024 and 2023 was as follows (in thousands):

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

Real Estate –

4 unchanged sentences

Real Estate Other Consumer Total

For the three months ended June 30, 2024

For the three months ended September 30, 2024

Allowance for credit losses on loans

2 unchanged sentences

Charge-offs — — — ( 35 ) ( 89 ) ( 124 )

( 1,600 ) — — — — ( 1,600 )

Recoveries 123 4 2 29 54 212

Balance at end of period $ 31,050 $ 3,715 $ 9,684 $ 23,263 $ 1,354 $ 69,066

For the three months ended June 30, 2023

For the three months ended September 30, 2023

Allowance for credit losses on loans

2 unchanged sentences

Charge-offs ( 8,350 ) — — — ( 29 ) ( 8,379 )

— — ( 125 ) — ( 81 ) ( 206 )

Recoveries 2 3 13 17 73 108

Balance at end of period $ 25,735 $ 4,464 $ 6,562 $ 26,264 $ 852 $ 63,877

For the six months ended June 30, 2024

For the nine months ended September 30, 2024

Allowance for credit losses on loans

2 unchanged sentences

Charge-offs ( 1,646 ) — — ( 35 ) ( 484 ) ( 2,165 )

( 1,646 ) — — — ( 395 ) ( 2,041 )

Recoveries 126 29 9 182 106 452

Balance at end of period $ 31,050 $ 3,715 $ 9,684 $ 23,263 $ 1,354 $ 69,066

For the six months ended June 30, 2023

For the nine months ended September 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)

Provision (benefit) for credit losses 13,010 38 974 1,700 ( 322 ) 15,400

( 8,350 ) ( 6 ) ( 128 ) — ( 111 ) ( 8,595 )

1 unchanged sentence

Balance at end of period $ 25,735 $ 4,464 $ 6,562 $ 26,264 $ 852 $ 63,877

(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 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 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.

The following tables summarize gross charge-offs by vintage (in thousands):

2023 2021 2019 and prior Total

For the three months ended September 30, 2024

Residential real estate $ ( 33 ) $ — $ ( 2 ) $ ( 35 )

Other consumer — — ( 89 ) ( 89 )

Total charge-offs $ ( 33 ) $ — $ ( 91 ) $ ( 124 )

For the nine months ended September 30, 2024

Commercial real estate – investor (1)

$ — $ ( 46 ) $ ( 1,600 ) $ ( 1,646 )

Residential real estate ( 33 ) — ( 2 ) ( 35 )

Other consumer — — ( 484 ) ( 484 )

Total charge-offs $ ( 33 ) $ ( 46 ) $ ( 2,086 ) $ ( 2,165 )

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,

2019 2018 and prior Total

For the three months ended September 30, 2023

Commercial real estate – investor (1)

$ ( 8,350 ) $ — $ ( 8,350 )

Other consumer — ( 29 ) ( 29 )

Total charge-offs $ ( 8,350 ) $ ( 29 ) $ ( 8,379 )

For the nine months ended September 30, 2023

Commercial real estate – investor (1)

$ ( 8,350 ) $ — $ ( 8,350 )

Commercial real estate – owner occupied — ( 6 ) ( 6 )

Commercial and industrial — ( 128 ) ( 128 )

Other consumer — ( 111 ) ( 111 )

Total charge-offs $ ( 8,350 ) $ ( 245 ) $ ( 8,595 )

(1) Gross charge-offs of $ 1.6 million and $ 8.4 million primarily related to a single commercial relationship which had partial charge-offs during the nine months ended September 30, 2024 and the three and nine months ended September 30, 2023.

This was resolved via sale of collateral during the current quarter.

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

commercial real estate - investor of $ 7.1 million and $ 15.2 million, respectively, commercial real estate - owner occupied of $ 3.7 million and $ 352,000 , respectively, and commercial and industrial of $ 122,000 and $ 304,000 , respectively.

In addition, the Company had collateral dependent residential and consumer loans with an amortized cost balance of $ 5.9 million and $ 2.6 million at September 30, 2024 and December 31, 2023, respectively.

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

September 30, December 31,

Commercial real estate – investor (1)

$ 12,478 $ 20,820

Commercial real estate – owner occupied 4,368 351

Commercial and industrial 122 304

Residential real estate 9,108 5,542

1 unchanged sentence

$ 28,139 $ 29,548

(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):

(1) December 31, 2023 includes the exposure of $ 8.8 million of the single commercial real estate relationship resolved during the quarter.

At September 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 September 30, 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 September 30, 2024 and December 31, 2023 by loan portfolio segment (in thousands):

Past Due 60-89

Past Due 90 Days or Greater Past Due Total

Past Due 90 Days or Greater

Past Due Total

Past Due Loans Not

Past Due Total

June 30, 2024

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

(1) December 31, 2023 includes the exposure of $ 8.8 million of the single commercial real estate relationship resolved during the quarter.

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 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.

As of September 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 September 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):

The following table presents loans modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 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 %

For the three months ended September 30, 2024

$ — $ — $ — $ — $ — — %

For the three months ended June 30, 2023

For the three months ended September 30, 2023

Residential real estate $ 65 $ — $ — $ — $ 65 — %

1 unchanged sentence

$ 65 $ — $ 170 $ — $ 235 — %

For the six months ended June 30, 2024

For the nine months ended September 30, 2024

Commercial real estate – investor $ — $ 4,878 $ 7,000 $ — $ 11,878 0.23 %

3 unchanged sentences

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

For the six months ended June 30, 2023

For the nine months ended September 30, 2023

Residential real estate $ 723 $ — $ — $ — $ 723 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 June 30, 2024 and since adoption of the standard for June 30, 2023 (in thousands):

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

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

June 30, 2024

September 30, 2024

Commercial real estate – investor $ 19,645 $ — $ — $ 19,645

3 unchanged sentences

$ 22,716 $ 147 $ — $ 22,863

June 30, 2023

September 30, 2023

Residential real estate $ 583 $ — $ 140 (1)

1 unchanged sentence

$ 993 $ — $ 140 $ 1,133

(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.

(1) Represents one residential loan that defaulted during the three and nine months ended September 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 June 30, 2024 and December 31, 2023 were as follows (in thousands):

Type of Account June 30, December 31,

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

Type of Account September 30, December 31,

Non-interest-bearing $ 1,638,447 $ 1,657,119

4 unchanged sentences

Total deposits $ 10,116,167 $ 10,434,949

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.

Included in time deposits at September 30, 2024 and December 31, 2023 was $ 451.1 million and $ 412.0 million, respectively, of deposits of $250,000 or more.

Time deposits also include brokered deposits of $ 201.0 million and $ 631.5 million at September 30, 2024 and December 31, 2023, respectively.

Borrowed Funds

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

June 30, December 31,

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

September 30, December 31,

FHLB advances $ 891,860 $ 848,636

2 unchanged sentences

Total borrowed funds $ 1,392,950 $ 1,118,240

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.

At September 30, 2024, there were $ 831.9 million of FHLB term advances and $ 60.0 million outstanding in overnight borrowings from the FHLB, as compared to $ 848.6 million and $ 0 at December 31, 2023, respectively.

At September 30, 2024, there were $ 419.9 million of other borrowings as compared to $ 196.5 million at December 31, 2023 as a result of lower-cost funding availability.

Pledged assets

1 unchanged sentence

Loans Debt securities Total

June 30, 2024

September 30, 2024

FHLB and FRB $ 7,399,276 $ 1,131,698 $ 8,530,974

53 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 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):

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

June 30, 2024

September 30, 2024

Items measured on a recurring basis:

23 unchanged sentences

18,509 — — 18,509

(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.

(1) As of September 30, 2024 and December 31, 2023, equity investments included $ 46.2 million and $ 43.6 million, respectively, of equity investments measured under the measurement alternative.

This included no unrealized gains or losses for the nine months ended September 30, 2024 and the year ended December 31, 2023.

(2) As of September 30, 2024 and December 31, 2023, equity investments included $ 3.9 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 and six months ended June 30, 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 nine months ended September 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 June 30, 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 September 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

June 30, 2024

September 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 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.

The Company recognized losses of $ 25,000 and $ 14,000 in commercial loan swap income resulting from the fair value adjustments for the three and nine months ended September 30, 2024, respectively, as compared to losses of $ 2,000 and $ 2,000 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 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 )

AOCL balance at beginning of period, net of tax $ ( 776 ) $ ( 909 ) $ ( 36 ) $ ( 25 )

Unrealized gains (losses) recognized in OCI 837 ( 622 ) ( 418 ) ( 1,798 )

Losses reclassified from AOCI into interest income 253 246 768 538

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.

AOCI (AOCL) balance at end of period, net of tax $ 314 $ ( 1,285 ) $ 314 $ ( 1,285 )

During the next twelve months ending September 30, 2025, the Company estimates that an additional $ 174,000 will be reclassified as an addition to interest income.

OceanFirst Financial Corp.

3 unchanged sentences

Other assets Other liabilities

As of June 30, 2024

As of September 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 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 was $ 0 at both September 30, 2024 and December 31, 2023.

The amount of collateral received from third parties was $ 55.8 million and $ 88.3 million at September 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 $ 104.3 million and $ 87.8 million at June 30, 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 $ 67.4 million and $ 87.8 million at September 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):

June 30, December 31,

September 30, December 31,

Lease ROU Assets Classification

7 unchanged sentences

Total lease liabilities $ 19,320 $ 21,703

(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.

(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 September 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.

June 30, December 31,

September 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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

28 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 June 30, 2024 and December 31, 2023 consisted of the following (in thousands):

June 30, 2024 December 31, 2023

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

September 30, 2024 December 31, 2023

Cash and cash equivalents $ 26,936 $ 22,151

3 unchanged sentences

Net assets $ 2,133 $ 1,954

OceanFirst Financial Corp.

Notes to Unaudited Consolidated Financial Statements (Continued)

Subsequent Events

On October 1, 2024, the Company completed the acquisition of Spring Garden Capital Group, LLC (“Spring Garden”) for a purchase price of $ 68 million.

The transaction will be complementary to the Company’s existing products and will expand the Company’s specialty finance offerings.

OTHER INFORMATION

3 unchanged sentences

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

What changed 10-Q

Item 4. Controls and Procedures