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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________________ 
FORM 10-Q
 ________________________________________________  
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-11713
________________________________________________  
OceanFirst Financial Corp.
(Exact name of registrant as specified in its charter)
 ________________________________________________ 
Delaware22-3412577
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
110 West Front Street, Red Bank,NJ07701
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (732) 240-4500
________________________________________________  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per shareOCFCNASDAQ
Depositary Shares (each representing a 1/40th interest in a share of 7.0% Series A Non-Cumulative, perpetual preferred stock)OCFCPNASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No   .
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer Accelerated Filer 
Non-accelerated Filer Smaller Reporting Company 
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES      NO  .
As of May 3, 2021 there were 60,332,307 shares of the Registrant’s Common Stock, par value $0.01 per share, outstanding.


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OceanFirst Financial Corp.
INDEX TO FORM 10-Q
 
  PAGE
PART I.FINANCIAL INFORMATION
Item 1.Consolidated Financial Statements (unaudited)
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


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Summary
OceanFirst Financial Corp. is the holding company for OceanFirst Bank N.A. (the “Bank”), a regional bank serving business and retail customers throughout New Jersey and the metropolitan areas of Philadelphia and New York City. The term “Company” refers to OceanFirst Financial Corp., the Bank and all of their subsidiaries on a consolidated basis. The Company’s results of operations are primarily dependent on net interest income, which is the difference between the interest income earned on interest-earning assets, such as loans and investments, and the interest expense on its interest-bearing liabilities, such as deposits and borrowings. The Company also generates non-interest income such as income from bankcard services, trust and asset management products and services, deposit account services, bank owned life insurance, commercial loan swap income, and other fees. The Company’s operating expenses primarily consist of compensation and employee benefits, occupancy and equipment, marketing, Federal deposit insurance and regulatory assessments, data processing, check card processing, professional fees and other general and administrative expenses. The Company’s results of operations are also significantly affected by competition, general economic conditions including levels of unemployment and real estate values as well as changes in market interest rates, government policies and actions of regulatory agencies.
The Company has grown significantly through the acquisitions of Capital Bank of New Jersey (“Capital Bank”) on January 31, 2019 and Two River Bancorp (“Two River”) and Country Bank Holding Company, Inc. (“Country Bank”), each on January 1, 2020. These acquisitions added $2.56 billion in assets, $1.87 billion in loans and $2.04 billion in deposits.
Key developments relating to the Company’s financial results and corporate activities were as follows:

Loan and Deposit Growth: Total loan growth for the quarter was $116.4 million, reflecting record loan originations of $747.8 million. Deposits increased $75.2 million, as compared to the prior linked quarter.
Operations: The Company continues to expand its commercial banking activities with the hiring of nine commercial bankers. The additional lenders are expected to help fuel organic loan growth throughout the remainder of the year. Additionally, the Company consolidated four branches in April 2021 bringing the total number of branches consolidated to 57 over the past five years. These consolidations will increase the average branch size to $164 million and will help further offset operating expenses in the second quarter.
Net Interest Margin: Net interest margin for the quarter was 2.93%, as compared to 2.97% in the prior linked quarter. The total costs of deposits decreased to 0.37% from 0.45%, respectively.
Net income available to common stockholders was $31.7 million, or $0.53 per diluted share, for the quarter ended March 31, 2021 as compared to $16.5 million, or $0.27 per diluted share, for the corresponding prior year period. The dividends paid to preferred stockholders was $1.0 million for the quarter ended March 31, 2021. Net income available to common stockholders for the quarter ended March 31, 2021 included merger related expenses of $381,000, branch consolidation expenses of $1.0 million and net gain on equity investments of $8.3 million.
The Company remains well-capitalized with a stockholders’ equity to total assets ratio of 12.95% at March 31, 2021.
The Company’s Board of Directors declared a quarterly cash dividend of $0.17 per share. The dividend, related to the quarter ended March 31, 2021, will be paid on May 21, 2021 to common stockholders of record on May 10, 2021. The Board also declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock. This dividend will be paid on May 17, 2021 to preferred stockholders of record on April 30, 2021.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FINANCIAL SUMMARY(1)
At or for the Quarters Ended
(dollars in thousands, except per share amounts)March 31, 2021December 31, 2020March 31, 2020
SELECTED FINANCIAL CONDITION DATA:
Total assets$11,577,472 $11,448,313 $10,489,074 
Loans receivable, net of allowance for loan credit losses7,820,590 7,704,857 7,913,541 
Deposits9,502,812 9,427,616 7,892,067 
Stockholders’ equity1,498,719 1,484,130 1,409,834 
SELECTED OPERATING DATA:
Net interest income73,604 77,851 79,645 
Credit loss (benefit) expense(620)4,072 9,969 
Other income20,835 40,620 13,697 
Operating expenses51,683 70,916 62,796 
Net income32,697 33,064 16,533 
Net income available to common stockholders31,693 32,060 16,533 
Diluted earnings per share0.53 0.54 0.27 
SELECTED FINANCIAL RATIOS:
Stockholders’ equity per common share at end of period24.84 24.57 23.38 
Cash dividend per share0.17 0.17 0.17 
Dividend payout ratio per common share32.08 %31.48 %62.96 %
Stockholders’ equity to total assets12.95 12.96 13.44 
Return on average assets (2) (3)
1.12 1.09 0.64 
Return on average stockholders’ equity (2) (3)
8.59 8.65 4.70 
Net interest rate spread (4)
2.78 2.79 3.29 
Net interest margin (5)
2.93 2.97 3.52 
Operating expenses to average assets (2) (3)
1.83 2.40 2.44 
Efficiency ratio (3) (6)
54.73 59.86 67.28 
Loan to deposit ratio82.84 82.27 100.51 
ASSET QUALITY:
Non-performing loans$34,128 $36,410 $16,263 
Non-performing assets34,234 36,516 16,747 
Allowance for loan credit losses as a percent of total loans receivable (7) (9)
0.76 %0.78 %0.37 %
Allowance for loan credit losses as a percent of total non-performing loans (8) (9)
175.74 166.81 182.22 
Non-performing loans as a percent of total loans receivable (7) (8)
0.43 0.47 0.21 
Non-performing assets as a percent of total assets (8)
0.30 0.32 0.16 
(1) With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2) Ratios are annualized.
(3) Performance ratios include the net gain on equity investments, merger related expenses, and branch consolidation expenses of $6.9 million, or $5.2 million, net of tax expense, for the quarter ended March 31, 2021. Performance ratios include net gain on equity investments, gain on sale of Paycheck Protection Program (“PPP”) loans, Federal Home Loan Bank (“FHLB”) advance prepayment fees, merger related expenses, and branch consolidation expenses of $11.7 million, or $8.9 million, net of tax expense, for the quarter ended December 31, 2020. Performance ratios include merger related expenses, branch consolidation expenses, and Two River and Country Bank opening credit loss expense under the Current Expected Credit Loss (“CECL”) model of $13.6 million, or $10.4 million, net of tax benefit, for the quarter ended March 31, 2020.
(4) The net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities
(5) The net interest margin represents net interest income as a percentage of average interest-earning assets.
(6) Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.
(7) Total loans receivable excludes loans held-for-sale.
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(8) Non-performing assets consist of non-performing loans and real estate acquired through foreclosure. Non-performing loans consist of all loans 90 days or more past due and other loans in the process of foreclosure. It is the Company’s policy to cease accruing interest on all such loans and to reverse previously accrued interest.
(9) The loans acquired from prior bank acquisitions were recorded at fair value. The net credit mark on these loans, not reflected in the allowance for loan credit losses, was $25.7 million, $28.0 million, and $38.3 million at March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

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Impact of COVID-19

On March 16, 2020, the Company announced a series of actions intended to help mitigate the impact of the COVID-19 virus outbreak on customers, employees and communities. The Company offers its Borrower Relief Programs to address the needs of customers who were current on their loan payments as of either December 31, 2019 or the date of the modification. In addition, in keeping with regulatory guidance under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, these loans are not considered troubled debt restructured (“TDR”) loans at March 31, 2021 and will not be reported as past due during the deferral period.

On December 27, 2020, the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 was signed into law, which contains provisions that directly impact financial institutions. The Act extends the PPP, which was originally established under the CARES Act, and provides the Company the ability to continue its Borrower Relief Program. In keeping with regulatory guidance under the CARES Act, these loan deferrals are not considered TDR loans at March 31, 2021 and the Company will not report them as past due during the deferral period.

Further, due to conditions caused by COVID-19, appraisals ordered in the current environment may not be indicative of the underlying loan collateral value. As such, the Company may require multiple valuation approaches (sales comparison approach, income approach, cost approach), as applicable. The Company will assess the individual facts and circumstances of COVID-19 related loan downgrades and, if a new appraisal is not necessary, an additional discount may be applied to an existing appraisal.

The Company also accepted and processed applications for loans under the PPP. At March 31, 2021, $109.7 million in PPP loans and $2.5 million in deferred fees remained on the balance sheet, which include $60.0 million of PPP loan originations during the quarter ended March 31, 2021.

For further discussion, refer to Part I, Item 1A in the December 31, 2020 Form 10-K - Risk Factors - Risk Related to the COVID-19 Pandemic.


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Analysis of Net Interest Income
Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rate earned or paid on them.
The following tables set forth certain information relating to the Company for the three months ended March 31, 2021 and March 31, 2020. The yields and costs are derived by dividing the income or expense by the average balance of the related assets or liabilities, respectively, for the periods shown except where noted otherwise. Average balances are derived from average daily balances. The yields and costs include certain fees and costs which are considered adjustments to yields.
 For the Three Months Ended
 March 31, 2021March 31, 2020
(dollars in thousands)Average BalanceInterestAverage
Yield/
Cost
Average BalanceInterestAverage
Yield/
Cost
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments$1,138,911 $277 0.10 %$63,726 $342 2.16 %
Securities (1)
1,311,683 6,689 2.07 1,186,535 7,921 2.68 
Loans receivable, net (2)
Commercial5,127,940 53,670 4.24 4,960,991 59,875 4.85 
Residential real estate2,327,838 20,069 3.45 2,473,410 24,628 3.98 
Home equity loans and lines275,943 3,523 5.18 339,003 4,070 4.83 
Other consumer50,964 646 5.14 87,478 1,371 6.30 
Allowance for loan credit losses, net of deferred loan fees(52,887)— — (10,220)— — 
Loans receivable, net7,729,798 77,908 4.09 7,850,662 89,944 4.61 
Total interest-earning assets10,180,392 84,874 3.38 9,100,923 98,207 4.34 
Non-interest-earning assets1,259,109 1,231,886 
Total assets$11,439,501 $10,332,809 
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking$3,711,976 4,311 0.47 %$2,807,793 5,132 0.74 %
Money market757,634 367 0.20 614,062 1,040 0.68 
Savings1,522,603 179 0.05 1,403,338 1,555 0.45 
Time deposits1,221,123 3,639 1.21 1,459,348 6,209 1.71 
Total7,213,336 8,496 0.48 6,284,541 13,936 0.89 
Federal Home Loan Bank ("FHLB") advances— — — 631,329 2,824 1.80 
Securities sold under agreements to repurchase129,444 95 0.30 82,105 95 0.47 
Other borrowings228,368 2,679 4.76 118,851 1,707 5.78 
Total borrowings357,812 2,774 3.14 832,285 4,626 2.24 
Total interest-bearing liabilities7,571,148 11,270 0.60 7,116,826 18,562 1.05 
Non-interest-bearing deposits2,212,273 1,687,582 
Non-interest-bearing liabilities160,500 113,477 
Total liabilities9,943,921 8,917,885 
Stockholders’ equity1,495,580 1,414,924 
Total liabilities and equity$11,439,501 $10,332,809 
Net interest income$73,604 $79,645 
Net interest rate spread (3)
2.78 %3.29 %
Net interest margin (4)
2.93 %3.52 %
Total cost of deposits (including non-interest-bearing deposits)0.37 %0.70 %
(1)Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank stock, and are recorded at average amortized cost net of allowance for securities credit losses.
(2)Amount is net of deferred loan fees and costs, undisbursed loan funds, discounts and premiums and allowance for loan credit losses, and includes loans held for sale and non-performing loans.
(3)Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(4)Net interest margin represents net interest income divided by average interest-earning assets.
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Comparison of Financial Condition at March 31, 2021 and December 31, 2020
Total assets increased $129.2 million, to $11.58 billion at March 31, 2021, from $11.45 billion at December 31, 2020. Cash and due from banks decreased $98.5 million, to $1.17 billion at March 31, 2021, from $1.27 billion at December 31, 2020. Total debt securities increased by $230.3 million at March 31, 2021, as compared to December 31, 2020, which was partly offset by a decrease in equity investments of $56.9 million due to sales. Loans receivable, net of allowance for loan credit losses, increased by $115.7 million, to $7.82 billion at March 31, 2021, from $7.70 billion at December 31, 2020.

Deposits increased $75.2 million, to $9.50 billion at March 31, 2021, from $9.43 billion at December 31, 2020. The loan-to-deposit ratio at March 31, 2021 was 82.8%, as compared to 82.3% at December 31, 2020.

Stockholders’ equity increased to $1.50 billion at March 31, 2021, as compared to $1.48 billion at December 31, 2020. For the quarter ended March 31, 2021, the Company repurchased 500,000 shares under its stock repurchase program at a weighted average cost of $19.94, and there were 1.5 million shares available for repurchase at March 31, 2021 under the existing repurchase program.

Comparison of Operating Results for the Three Months Ended March 31, 2021 and March 31, 2020
General
Net income available to common stockholders was $31.7 million, or $0.53 per diluted share, for the quarter ended March 31, 2021 as compared to $16.5 million, or $0.27 per diluted share, for the corresponding prior year period. The dividend paid to preferred stockholders was $1.0 million for the three months ended March 31, 2021. The current quarter results benefited from the modest release of credit loss expense and improved levels of operating expenses. Net income available to common stockholders for the quarter ended March 31, 2021 included merger related expenses of $381,000, branch consolidation expenses of $1.0 million and net gain on equity investments of $8.3 million. These items increased net income by $5.2 million, net of tax, for the quarter ended March 31, 2021. Net income available to common stockholders for the same prior year period included merger related expenses of $8.5 million, branch consolidation expenses of $2.6 million, and Two River and Country Bank opening credit loss expense under the CECL model of $2.4 million. These items decreased net income by $10.4 million, net of tax, for the quarter ended March 31, 2020.
Interest Income
Interest income for the quarter ended March 31, 2021 decreased to $84.9 million, as compared to $98.2 million in the corresponding prior year period. Average interest-earning assets increased by $1.08 billion for the quarter ended March 31, 2021, as compared to the same prior year period, primarily concentrated in interest-earning deposits. Average loans receivable, net of allowance for loan credit losses, decreased by $120.9 million for the quarter ended March 31, 2021, as compared to the same prior year period. For the quarter ended March 31, 2021, the yield on average interest-earning assets decreased to 3.38% from 4.34% in the corresponding prior year period.
Interest Expense
Interest expense for the quarter ended March 31, 2021 was $11.3 million, as compared to $18.6 million in the corresponding prior year period. Average interest-bearing liabilities increased $454.3 million for the quarter ended March 31, 2021, as compared to the same prior year period. For the quarter ended March 31, 2021, the cost of average interest-bearing liabilities decreased to 0.60%, from 1.05% in the corresponding prior year period. The total cost of deposits (including non-interest bearing deposits) was 0.37% for the quarter ended March 31, 2021, as compared to 0.70% in the same prior year period.
Net Interest Income
Net interest income for the quarter ended March 31, 2021 decreased to $73.6 million, as compared to $79.6 million for the same prior year period, reflecting a reduction in net interest margin, partly offset by an increase in interest-earning assets. The net interest margin for the quarter ended March 31, 2021 decreased to 2.93%, from 3.52% for the same prior year period. The net interest margin compression was primarily due to the excess balance sheet liquidity, driven by a strategic decision to accumulate liquidity entering the economic downturn, the lower interest rate environment, and to a lesser extent, the origination of low-yielding PPP loans.
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Credit Loss (Benefit) Expense
For the quarter ended March 31, 2021, the benefit for credit loss expense was $620,000, as compared to a provision for credit loss expense of $10.0 million for the corresponding prior year period. The benefit for credit loss expense for the quarter was significantly influenced by an improved economic outlook with expectations for strong GDP growth and improved employment levels. Net loan recoveries were $280,000 for the quarter ended March 31, 2021, as compared to net loan charge-offs of $1.2 million for the corresponding prior year period. Non-performing loans totaled $34.1 million at March 31, 2021, as compared to $16.3 million at March 31, 2020.
Other Income
For the quarter ended March 31, 2021, other income increased to $20.8 million as compared to $13.7 million for the corresponding prior year period. Other income for the quarter ended March 31, 2021 included $8.3 million of net gain on equity investments. The net gain on equity investments was primarily a result of several programs implemented by the Company in 2020 to invest excess liquidity in high quality equity securities with attractive dividend yields which were sold in January 2021. The remaining items in other income decreased by $1.1 million for the quarter ended March 31, 2021, as compared to the corresponding prior year period, was primarily due to decreases in commercial loan swap income of $2.9 million and fees and service charges of $1.1 million, partially offset by an increase in gain on sale of loans of $1.7 million, and referral fees of $662,000 related to the origination of PPP loans.
Operating Expenses
Operating expenses decreased to $51.7 million for the quarter ended March 31, 2021, as compared to $62.8 million in the same prior year period. Operating expenses for the quarter ended March 31, 2021 included $1.4 million of merger related and branch consolidation expenses, as compared to $11.1 million in the same prior year period. Excluding the impact of merger related and branch consolidation expenses, the $1.4 million decrease in operating expenses for the quarter ended March 31, 2021 was primarily due to decreases in compensation and benefits expense of $1.5 million and occupancy and equipment of $580,000, partially offset by an increase in federal deposit insurance expense of $1.2 million.
Provision for Income Taxes
The provision for income taxes was $10.7 million for the quarter ended March 31, 2021, as compared to $4.0 million for the same prior year period. The effective tax rate was 24.6% for the quarter ended March 31, 2021, as compared to 19.7% for the same prior year period. The higher effective tax rate for the current year period, as compared to the prior year period, is primarily due to the impact of a New Jersey tax code change and a higher allocation of taxable income to New York.
Liquidity and Capital Resources
The Company’s primary sources of funds are deposits, principal and interest payments on loans and mortgage-backed securities, FHLB advances, access to the Federal Reserve discount window, other borrowings, including subordinated debt, and to a lesser extent, investment maturities and proceeds from the sale of loans. While scheduled amortization of loans is a predictable source of funds, deposit flows and loan prepayments are greatly influenced by interest rates, economic conditions and competition. The Company has other sources of liquidity if a need for additional funds arises, including various lines of credit at multiple banks.
At March 31, 2021 and December 31, 2020, the Bank had no outstanding overnight borrowings from the FHLB. The Bank utilizes overnight borrowings from time-to-time to fund short-term liquidity needs. There were no FHLB advances at March 31, 2021 and December 31, 2020.
The Company’s cash needs for the quarter ended March 31, 2021 were primarily satisfied by the sale of equity investments, an increase in deposits, principal repayments on debt securities held-to-maturity, and proceeds from maturities and calls of debt securities. The cash was principally utilized for purchases of debt and equity securities and loan originations. The Company’s cash needs for the three months ended March 31, 2020 were primarily satisfied by the net proceeds from FHLB advances, principal payments on mortgage-backed securities, proceeds from maturities and calls of debt investment securities, and acquired cash from acquisitions. The cash was principally utilized for loan originations, to fund short-term borrowing maturities, to fund deposit outflows, and repurchase of stock.
In the normal course of business, the Bank routinely enters into various off-balance-sheet commitments, primarily relating to the origination and sale of loans. At March 31, 2021, outstanding commitments to originate loans totaled $344.3 million and outstanding undrawn lines of credit totaled $1.10 billion, of which $725.8 million were commitments to commercial borrowers
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and $377.7 million were commitments to consumer borrowers and residential construction borrowers. The Company expects to have sufficient funds available to meet current commitments in the normal course of business.
Time deposits scheduled to mature in one year or less totaled $745.3 million at March 31, 2021. Based upon historical experience, management is optimistic about its ability to retain a significant portion of its maturing time deposits.
The Company has a detailed contingency funding plan and comprehensive reporting of funding trends on a monthly and quarterly basis which are reviewed by management. Management also monitors cash on a daily basis to determine the liquidity needs of the Bank. Additionally, management performs multiple liquidity stress test scenarios on a quarterly basis. The Bank continues to maintain significant liquidity under all stress scenarios. In response to COVID-19, management identified additional sources of contingent liquidity, including expanded borrowing capacity with the FHLB, the Federal Reserve and existing correspondent bank relationships. The Company strengthened balance sheet liquidity entering the economic downturn.
Under the Company’s stock repurchase program, shares of OceanFirst Financial Corp. common stock may be purchased in the open market and through other privately-negotiated transactions, from time-to-time, depending on market conditions. The repurchased shares are held as treasury stock for general corporate purposes. The Company determined to recommence repurchases under its existing stock repurchase plan in February 2021. For the quarter ended March 31, 2021, the Company repurchased 500,000 shares of common stock. At March 31, 2021, there were 1,519,145 shares available to be repurchased under the stock repurchase program authorized in December of 2019.
Cash dividends on common stock declared and paid during the first three months of March 31, 2021 were $10.2 million, as compared to $10.3 million for the same prior year period. On April 29, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.17 per common share. The dividend is payable on May 21, 2021 to common stockholders of record at the close of business on May 10, 2021.
Cash dividends on preferred stock declared and paid during the first three months of March 31, 2021 were $1.0 million. The Company also declared a quarterly cash dividend of $0.4375 per depositary share, representing 1/40th interest in the Series A Preferred Stock, payable on May 17, 2021 to preferred stockholders of record on April 30, 2021.
The primary sources of liquidity specifically available to OceanFirst Financial Corp., the holding Company of OceanFirst Bank, are capital distributions from the Bank, the issuance of preferred and common stock, and debt. For the three months ended March 31, 2021, the Company received a dividend payment of $10.0 million from the Bank. The Company’s ability to continue to pay dividends will be largely dependent upon capital distributions from the Bank, which may be adversely affected by capital restraints imposed by the applicable regulations. The Company cannot predict whether the Bank will be permitted under applicable regulations to pay a dividend to the Company. If applicable regulations or regulatory bodies prevent the Bank from paying a dividend to the Company, the Company may not have the liquidity necessary to pay a dividend in the future or pay a dividend at the same rate as historically paid or be able to meet current debt obligations. Additionally, regulations of the Federal Reserve may prevent the Company from either paying or increasing the cash dividend to common stockholders. At March 31, 2021, OceanFirst Financial Corp. held $164.5 million in cash.
As of March 31, 2021 and December 31, 2020, the Company and the Bank satisfy all regulatory capital requirements currently applicable as follows (dollars in thousands):
ActualFor capital adequacy
purposes
To be well-capitalized
under prompt
corrective action
As of March 31, 2021AmountRatioAmountRatioAmountRatio
Bank:
Tier 1 capital (to average assets)$968,486 8.90 %$435,143 4.00 %$543,929 5.00 %
Common equity Tier 1 (to risk-weighted assets)
968,486 12.09 560,545 7.00 
(1)
520,506 6.50 
Tier 1 capital (to risk-weighted assets)968,486 12.09 680,662 8.50 
(1)
640,623 8.00 
Total capital (to risk-weighted assets)1,029,255 12.85 840,818 10.50 
(1)
800,779 10.00 
Company:
Tier 1 capital (to average assets)$1,019,971 9.86 %$413,609 4.00 %N/AN/A
Common equity Tier 1 (to risk-weighted assets)
893,043 11.09 563,570 7.00 
(1)
N/AN/A
Tier 1 capital (to risk-weighted assets)1,019,971 12.67 684,334 8.50 
(1)
N/AN/A
Total capital (to risk-weighted assets)1,244,228 15.45 845,354 10.50 
(1)
N/AN/A
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ActualFor capital adequacy
purposes
To be well-capitalized
under prompt
corrective action
As of December 31, 2020 AmountRatioAmountRatioAmountRatio
Bank:
Tier 1 capital (to average assets)$942,122 8.48 %$444,648 4.00 %$555,810 5.00 %
Common equity Tier 1 (to risk-weighted assets)
942,122 12.11 544,625 7.00 
(1)
505,724 6.50 
Tier 1 capital (to risk-weighted assets)942,122 12.11 661,331 8.50 
(1)
622,429 8.00 
Total capital (to risk-weighted assets)1,004,480 12.91 816,938 10.50 
(1)
778,036 10.00 
Company:
Tier 1 capital (to average assets)$998,273 9.44 %$423,028 4.00 %N/AN/A
Common equity Tier 1 (to risk-weighted assets)
871,385 11.05 552,075 7.00 
(1)
N/AN/A
Tier 1 capital (to risk-weighted assets)998,273 12.66 670,377 8.50 
(1)
N/AN/A
Total capital (to risk-weighted assets)1,230,370 15.60 828,113 10.50 
(1)
N/AN/A
(1)Includes the Capital Conservation Buffer of 2.50%.
The Bank satisfies the criteria to be “well-capitalized” under the Prompt Corrective Action Regulations.
At March 31, 2021 and December 31, 2020, the Company maintained a stockholders’ equity to total assets ratio of 12.95% and 12.96%, respectively.
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Off-Balance-Sheet Arrangements and Contractual Obligations
In the normal course of operations, the Company engages in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded in the financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used for general corporate purposes or for customer needs. Corporate purpose transactions are used to help manage credit, interest rate and liquidity risk or to optimize capital. Customer transactions are used to manage customers’ requests for funding. These financial instruments and commitments include undrawn lines of credit and commitments to extend credit. 
The Company enters into loan sale agreements with investors in the normal course of business. The loan sale agreements generally require the Company to repurchase loans previously sold in the event of a violation of various representations and warranties customary to the mortgage banking industry. The Company is also obligated to repurchase loans previously sold under certain circumstances under a loss sharing arrangement with the FHLB relating to loans sold into the Mortgage Partnership Finance program. As a result of the COVID-19 pandemic, some of these loans were placed on forbearance and the Company may be required to repurchase them in future periods. In the opinion of management, the potential exposure related to the loan sale agreements and loans sold to the FHLB is adequately provided for in the reserve for repurchased loans and loss sharing obligations included in other liabilities. At each of March 31, 2021 and December 31, 2020, the reserve for repurchased loans and loss sharing obligations was $1.2 million.
The following table shows the contractual obligations of the Company by expected payment period as of March 31, 2021 (in thousands):
Contractual ObligationsTotalLess than
One Year
More than 1 year to 3 yearsMore than 3 years to 5 yearsMore than
5 years
Debt obligations$362,641 $134,663 $431 $483 $227,064 
Commitments to fund undrawn lines of credit
Commercial725,835 725,835 — — — 
Consumer/construction377,656 377,656 — — — 
Commitments to originate loans344,329 344,329 — — — 
Commitments to fund undrawn lines of credit and commitments to originate loans are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company’s exposure to credit risk is represented by the contractual amount of the instruments.
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Non-Performing Assets
The following table sets forth information regarding the Company’s non-performing assets, consisting of non-performing loans and other real estate owned. It is the policy of the Company to cease accruing interest on loans 90 days or more past due or in the process of foreclosure.
March 31, 2021December 31, 2020
 (dollars in thousands)
Non-performing loans:
Commercial and industrial$1,616 $1,551 
Commercial real estate – owner occupied11,676 13,054 
Commercial real estate – investor12,366 10,660 
Residential real estate6,398 8,642 
Home equity loans and lines2,072 2,503 
Total non-performing loans34,128 36,410 
Other real estate owned106 106 
Total non-performing assets$34,234 $36,516 
Purchased with credit deterioration (“PCD”) loans (1)
$44,421 $48,488 
Delinquent loans 30-89 days$16,477 $34,683 
Allowance for loan credit losses as a percent of total loans0.76 %0.78 %
Allowance for loan credit losses as a percent of total non-performing loans175.74 166.81 
Non-performing loans as a percent of total loans0.43 0.47 
Non-performing assets as a percent of total assets0.30 0.32 
(1)     PCD loans are not included in non-performing loans or delinquent loans totals.

The Company’s non-performing loans totaled $34.1 million at March 31, 2021, as compared to $36.4 million at December 31, 2020. Included in the non-performing loans total was $4.8 million and $5.2 million of TDR loans at March 31, 2021 and December 31, 2020, respectively. Non-performing loans do not include $44.4 million and $48.5 million of acquired PCD loans at March 31, 2021 and December 31, 2020, respectively. At March 31, 2021, the allowance for loan credit losses totaled $60.0 million, or 0.76% of total loans, as compared to $60.7 million, or 0.78% of total loans at December 31, 2020. These ratios exclude existing unamortized credit and PCD marks on acquired loans of $25.7 million and $28.0 million at March 31, 2021 and December 31, 2020, respectively. 

In response to the COVID-19 pandemic and its economic impact on customers, short-term modification programs that comply with the CARES Act were implemented to provide temporary payment relief to those borrowers directly impacted by COVID-19. The Commercial Borrower Relief Program allowed for the deferral of principal and interest or principal only. For principal and interest deferrals as well as principal only deferrals, all payments received will first be applied to all accrued and unpaid interest and the balance, if any, on account of unpaid principal, then to fees, expenses and other amounts due to the Bank. Monthly payments will continue until the maturity date when all then unpaid principal, interest, fees, and all other charges are due and payable to the Bank. The Consumer Borrower Relief Program allowed for the deferral of principal and interest. The deferred payments along with interest accrued during the deferral period are due and payable on the maturity date. Provided these loans were current as of either year end or the date of the modification, these loans are not considered TDR loans at March 31, 2021 and will not be reported as past due during the deferral period.

The Company classifies loans and other assets in accordance with regulatory guidelines. The table below excludes any loans held-for-sale (in thousands):
March 31, 2021December 31, 2020
Special Mention$150,221 $165,843 
Substandard189,087 194,477 
The decrease in special mention and substandard loans was primarily due to the improvement in the Bank’s borrowers’ ability to service their loans.
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Critical Accounting Policies
Note 1 to the Company’s Audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”), as supplemented by this report, contains a summary of significant accounting policies. Various elements of these accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. These judgments and policies involve a higher degree of complexity and require management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions and estimates could result in material differences in the results of operations or financial condition. Certain assets are carried in the consolidated statements of financial condition at fair value or the lower of cost or estimated fair value. Policies with respect to the methodology used to determine the allowance for credit losses is the most critical accounting policy because it is important to the presentation of the Company’s financial condition and results of operations. These critical accounting policies and their application are reviewed periodically, and at least annually, with the Audit Committee of the Board of Directors.
Private Securities Litigation Reform Act Safe Harbor Statement
In addition to historical information, this quarterly report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which are based on certain assumptions and describe future plans, strategies and expectations of OceanFirst Financial Corp. (the “Company”). These forward-looking statements are generally identified by use of the words “believe”, “expect”, “intend”, “anticipate”, “estimate”, “project”, “will”, “should”, “may”, “view”, “opportunity”, “potential”, or similar expressions or expressions of confidence.
The Company’s ability to predict results or the actual effect of plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, those items discussed in the Company’s 2020 Form 10-K under Item 1A - Risk Factors, as supplemented by the Company’s subsequent filings with the Securities and Exchange Commission (the “SEC”) and elsewhere therein and the following: changes in interest rates, general economic conditions, public health crises (such as the governmental, social and economic effects of the novel coronavirus), levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters and increases to flood insurance premiums, increased defaults as a result of economic disruptions caused by the novel coronavirus, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes (particularly with respect to the novel coronavirus), monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and Board of Governors of the Federal Reserve System (the “FRB”), the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area, changes in accounting principles and guidelines and the Bank’s ability to successfully integrate acquired operations.
Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on the Company’s business. The extent of such impact will depend on future developments, which are highly uncertain, including when COVID-19 can be controlled and abated, the timing of inoculation against the virus and whether the gradual reopening of businesses will result in a meaningful increase in economic activity. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, the Company could be subject to any of the following risks, any of which could have a material, adverse effect on its business, financial condition, liquidity, and results of operations: the demand for the Bank’s products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen, and higher levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; the Company’s allowance for loan credit losses may increase if borrowers experience financial difficulties, which will adversely affect the Company’s net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to the Bank; if legislation or governmental or regulatory action is enacted limiting the amount of ATM fees or surcharges the Bank may receive or on its ability to charge overdraft or other fees, it could adversely impact the Company’s financial results; the Company’s cyber security risks would be increased as the result of an increased use of the Bank’s online banking platform or an increase in the number of employees working remotely; and FDIC premiums may increase if the agency experiences additional resolution costs.
These risks and uncertainties are further discussed in the Company’s 2020 Form 10-K under Item 1A - Risk Factors and elsewhere therein and in subsequent securities filings and should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
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Item 3.    Quantitative and Qualitative Disclosures About Market Risk
The Company’s interest rate sensitivity is monitored through the use of interest rate risk (“IRR”) modeling. The following table sets forth the amounts of interest-earning assets and interest-bearing liabilities outstanding at March 31, 2021, which were anticipated by the Company, based upon certain assumptions, to reprice or mature in each of the future time periods shown.

At March 31, 2021, the Company’s one-year gap was positive 22.82% as compared to positive 18.05% at December 31, 2020.
 
At March 31, 20213 Months
or Less
More than
3 Months to
1 Year
More than
1 Year to
3 Years
More than
3 Years to
5 Years
More than
5 Years
Total
(dollars in thousands)      
Interest-earning assets: (1)
Interest-earning deposits and short-term investments$892,817 $935 $2,425 $— $— $896,177 
Debt securities260,294 193,546 378,665 229,376 291,219 1,353,100 
Equity investments— — — — 50,159 50,159 
Restricted equity investments— — — — 52,199 52,199 
Loans receivable (2)
2,086,681 1,789,639 2,357,314 1,024,286 657,792 7,915,712 
Total interest-earning assets3,239,792 1,984,120 2,738,404 1,253,662 1,051,369 10,267,347 
Interest-bearing liabilities:
Interest-bearing checking accounts1,325,348 169,565 433,608 359,164 1,335,447 3,623,132 
Money market deposit accounts74,189 54,688 128,083 104,901 420,598 782,459 
Savings accounts159,727 114,349 293,030 238,336 763,086 1,568,528 
Time deposits255,552 489,599 304,466 46,312 14,829 1,110,758 
FHLB advances— — — — — — 
Securities sold under agreements to repurchase and other borrowings238,080 198 431 122,991 941 362,641 
Total interest-bearing liabilities2,052,896 828,399 1,159,618 871,704 2,534,901 7,447,518 
Interest sensitivity gap (3)
$1,186,896 $1,155,721 $1,578,786 $381,958 $(1,483,532)$2,819,829 
Cumulative interest sensitivity gap$1,186,896 $2,342,617 $3,921,403 $4,303,361 $2,819,829 $2,819,829 
Cumulative interest sensitivity gap as a percent of total interest-earning assets11.56 %22.82 %38.19 %41.91 %27.46 %27.46 %
(1)Interest-earning assets are included in the period in which the balances are expected to be redeployed and/or repriced as a result of anticipated prepayments, scheduled rate adjustments, and contractual maturities.
(2)For purposes of the gap analysis, loans receivable includes loans held for sale and non-performing loans gross of the allowance for loan credit losses unamortized discounts and deferred loan fees.
(3)Interest sensitivity gap represents the difference between interest-earning assets and interest-bearing liabilities.
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Additionally, the table below sets forth the Company’s exposure to IRR as measured by the change in economic value of equity (“EVE”) and net interest income under varying rate shocks as of March 31, 2021 and December 31, 2020. All methods used to measure interest rate sensitivity involve the use of assumptions, which may tend to oversimplify the manner in which actual yields and costs respond to changes in market interest rates. The Company’s interest rate sensitivity should be reviewed in conjunction with the financial statements and notes thereto contained in the 2020 Form 10-K.
 
 March 31, 2021December 31, 2020
Change in Interest Rates in Basis Points (Rate Shock)Economic Value of EquityNet Interest IncomeEconomic Value of EquityNet Interest Income
Amount% ChangeEVE RatioAmount% ChangeAmount% ChangeEVE RatioAmount% Change
(dollars in thousands)          
300$2,135,781 31.6 %19.4 %$345,402 17.1 %$1,890,335 38.5 %17.3 %$340,098 16.2 %
2002,000,867 23.2 17.9 329,626 11.7 1,752,255 28.4 15.7 325,436 11.2 
1001,831,006 12.8 16.1 312,951 6.1 1,578,917 15.7 13.9 309,644 5.8 
Static1,623,437 — 14.0 294,985 — 1,365,119 — 11.8 292,572 — 
(100)1,336,840 (17.7)11.4 281,029 (4.7)1,074,346 (21.3)9.2 284,763 (2.7)
The interest rate sensitivity at March 31, 2021 and December 31, 2020, continue to be impacted by the loan and debt securities portfolio growth as well as a cash liquidity position that remains elevated.

Item 4.    Controls and Procedures
(a) Disclosure Controls and Procedures
The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective. Disclosure controls and procedures are the controls and other procedures that are designed to ensure that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the SEC (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

(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, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
March 31, 2021December 31, 2020
 (Unaudited) 
Assets
Cash and due from banks$1,173,665 $1,272,134 
Debt securities available-for-sale, at estimated fair value 268,511 183,302 
Debt securities held-to-maturity, net of allowance for securities credit losses of $1,717 at March 31, 2021 and $1,715 at December 31, 2020 (estimated fair value of $1,099,745 at March 31, 2021 and $968,466 at December 31, 2020)
1,082,326 937,253 
Equity investments, at estimated fair value50,159 107,079 
Restricted equity investments, at cost52,199 51,705 
Loans receivable, net of allowance for loan credit losses of $59,976 at March 31, 2021 and $60,735 at December 31, 2020
7,820,590 7,704,857 
Loans held-for-sale43,175 45,524 
Interest and dividends receivable32,819 35,269 
Other real estate owned106 106 
Premises and equipment, net110,093 107,094 
Bank owned life insurance264,548 265,253 
Assets held for sale5,340 5,782 
Goodwill500,319 500,319 
Core deposit intangible22,273 23,668 
Other assets151,349 208,968 
Total assets$11,577,472 $11,448,313 
Liabilities and Stockholders’ Equity
Deposits$9,502,812 $9,427,616 
Securities sold under agreements to repurchase with retail customers134,465 128,454 
Other borrowings228,176 235,471 
Advances by borrowers for taxes and insurance20,980 17,296 
Other liabilities192,320 155,346 
Total liabilities10,078,753 9,964,183 
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, 2021 and December 31, 2020
1 1 
Common stock, $0.01 par value, 150,000,000 shares authorized, 61,478,355 and 61,040,894 shares issued at March 31, 2021 and December 31, 2020, respectively; and 60,329,504 and 60,392,043 shares outstanding at March 31, 2021 and December 31, 2020, respectively
610 609 
Additional paid-in capital1,142,290 1,137,715 
Retained earnings398,280 378,268 
Accumulated other comprehensive income 312 621 
Less: Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")(7,129)(7,433)
Treasury stock, 1,148,851 and 648,851 shares at March 31, 2021 and December 31, 2020, respectively
(35,645)(25,651)
Total stockholders’ equity1,498,719 1,484,130 
Total liabilities and stockholders’ equity$11,577,472 $11,448,313 

See accompanying Notes to Unaudited Consolidated Financial Statements.
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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
 For the Three Months Ended March 31,
 20212020
 (Unaudited)
Interest income:
Loans$77,908 $89,944 
Debt securities5,355 6,772 
Equity investments and other1,611 1,491 
Total interest income84,874 98,207 
Interest expense:
Deposits8,496 13,936 
Borrowed funds2,774 4,626 
Total interest expense11,270 18,562 
Net interest income73,604 79,645 
Credit loss (benefit) expense(620)9,969 
Net interest income after credit loss (benefit) expense74,224 69,676 
Other income:
Bankcard services revenue3,052 2,481 
Trust and asset management revenue599 515 
Fees and service charges3,737 4,873 
Net gain on sales of loans1,916 173 
Net gain on equity investments8,287 155 
Net loss from other real estate operations(8)(150)
Income from bank owned life insurance1,415 1,575 
Commercial loan swap income1,111 4,050 
Other726 25 
Total other income20,835 13,697 
Operating expenses:
Compensation and employee benefits28,366 29,885 
Occupancy5,061 5,276 
Equipment1,578 1,943 
Marketing434 769 
Federal deposit insurance and regulatory assessments1,864 667 
Data processing4,031 4,177 
Check card processing1,372 1,276 
Professional fees2,837 2,302 
Other operating expense3,353 3,802 
Amortization of core deposit intangible1,395 1,578 
Branch consolidation expense1,011 2,594 
Merger related expenses381 8,527 
Total operating expenses51,683 62,796 
Income before provision for income taxes43,376 20,577 
Provision for income taxes10,679 4,044 
Net income32,697 16,533 
Dividends on preferred shares1,004  
Net income available to common stockholders$31,693 $16,533 
Basic earnings per share$0.53 $0.28 
Diluted earnings per share$0.53 $0.27 
Average basic shares outstanding59,840 59,876 
Average diluted shares outstanding60,101 60,479 
See accompanying Notes to Unaudited Consolidated Financial Statements.
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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
 
 For the Three Months Ended March 31,
 20212020
 (Unaudited)
Net income$32,697 $16,533 
Other comprehensive (loss) income:
Unrealized (loss) gain on debt securities (net of tax benefit of $112 in 2021 and net tax expense of $586 in 2020)
(416)2,149 
Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense of $73 in 2021 and $84 in 2020)
107 115 
Reclassification adjustment for gains included in net income (net of tax benefit of $173 in 2020)
 (547)
Total other comprehensive (loss) income(309)1,717 
Total comprehensive income32,388 18,250 
Less: Dividends on preferred shares1,004  
Comprehensive income available to common stockholders$31,384 $18,250 
See accompanying Notes to Unaudited Consolidated Financial Statements.
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OceanFirst Financial Corp.
Consolidated Statements of Changes in Stockholders’ Equity
(dollars in thousands, except per share amounts)
(Unaudited)
For the Three Months Ended March 31, 2021 and March 31, 2020
Preferred
Stock
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Employee
Stock
Ownership
Plan
Treasury
Stock
Total
Balance at Balance at December 31, 2019$ $519 $840,691 $358,668 $(1,208)$(8,648)$(36,903)$1,153,119 
Net income— — — 16,533 — — — 16,533 
Other comprehensive income, net of tax— — — — 1,717 — — 1,717 
Stock compensation— 2 1,106 — — — — 1,108 
Effect of adopting Accounting Standards Update(“ASU”) No. 2016-13— — — (4)— — — (4)
Allocation of ESOP stock— — 43 — — 304 — 347 
Cash dividend $0.17 per share
— — — (10,274)— — — (10,274)
Exercise of stock options— 2 1,305 (650)— — — 657 
Purchase 648,851 shares of common stock
— — — — — — (14,814)(14,814)
Acquisition of Two River Bancorp— 42 122,501 — — — 26,066 148,609 
Acquisition of Country Bank Holding Company, Inc.— 44 112,792 — — — — 112,836 
Balance at March 31, 2020$ $609 $1,078,438 $364,273 $509 $(8,344)$(25,651)$1,409,834 
Balance at December 31, 2020$1 $609 $1,137,715 $378,268 $621 $(7,433)$(25,651)$1,484,130 
Net income— — — 32,697 — — — 32,697 
Other comprehensive loss, net of tax— — — — (309)— — (309)
Stock compensation— — 1,237 — — — — 1,237 
Allocation of ESOP stock— — 48 — — 304 — 352 
Cash dividend $0.17 per share
— — — (10,152)— — — (10,152)
Exercise of stock options— 1 3,290 (1,529)— — — 1,762 
Purchase 500,000 shares of common stock
— — — — — — (9,994)(9,994)
Preferred stock dividend— — — (1,004)— — — (1,004)
Balance at March 31, 2021$1 $610 $1,142,290 $398,280 $312 $(7,129)$(35,645)$1,498,719 
See accompanying Notes to Unaudited Consolidated Financial Statements.
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OceanFirst Financial Corp.
Consolidated Statements of Cash Flows
(dollars in thousands)
 For the Three Months Ended March 31,
 20212020
 (Unaudited)
Cash flows from operating activities:
Net income$32,697 $16,533 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment2,064 2,126 
Allocation of ESOP stock352 347 
Stock compensation1,237