OceanFirst Financial Corp. Announces Third Quarter Financial Results

RED BANK, N.J., Oct. 24, 2022 (GLOBE NEWSWIRE) -- OceanFirst Financial Corp. (NASDAQ:“OCFC”) (the “Company”), the holding company for OceanFirst Bank N.A. (the “Bank”), announced net income available to common stockholders of $37.6 million, or $0.64 per diluted share, for the three months ended September 30, 2022, as compared to $28.0 million, or $0.47 per diluted share, for the prior linked quarter, and $23.2 million, or $0.39 per diluted share, for the corresponding prior year period. For the nine months ended September 30, 2022, the Company reported net income available to common stockholders of $90.3 million, or $1.53 per diluted share, as compared to $84.4 million, or $1.41 per diluted share, for the corresponding prior year period. Selected performance metrics are as follows (refer to “Selected Quarterly Financial Data” for additional information):

(a) Return on average tangible stockholders’ equity, a non-GAAP (“generally accepted accounting principles”) financial measure, excludes the impact of intangible assets and goodwill from both assets and stockholders’ equity. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

Core earnings1 for the three and nine months ended September 30, 2022 amounted to $35.0 million and $98.4 million, respectively, or $0.60 and $1.67 per diluted share, an increase from core earnings of $26.7 million and $82.7 million, or $0.45 and $1.38 per diluted share, for the corresponding prior year periods. Non-core operations, net of tax, had a favorable impact of $2.6 million, and an adverse impact of $8.1 million, for the three and nine months ended September 30, 2022, respectively. Non-core operations, net of tax, had an adverse impact of $3.6 million, and a favorable impact of $1.7 million, for the three and nine months ended September 30, 2021, respectively.

Core earnings for the three months ended September 30, 2022 increased $376,000 from $34.6 million, or $0.59 per diluted share, for the prior linked quarter. Non-core operations, net of tax, had an adverse impact of $6.7 million for the prior linked quarter.

Core earnings PTPP for the three and nine months ended September 30, 2022 were $47.5 million and $134.2 million, respectively, or $0.81 and $2.28 per diluted share, respectively. Selected performance metrics are as follows:

Key developments for the recent quarter are described below:

• Strengthening Net Interest Income and Margin: Net interest income increased by $5.2 million to $96.0 million, from $90.8 million in the prior linked quarter. Net interest margin increased to 3.36%, as compared to 3.29% in the prior linked quarter, largely driven by the impact of the rising rate environment on interest earning assets, and to a lesser extent an increase in loan balances, partly offset by an increased cost of funds and lower prepayment fees.
• Loan and Deposit Growth: Loan growth for the quarter was $293.9 million, reflecting originations of $543.8 million. The committed loan pipeline increased to $439.5 million as of September 30, 2022. Deposits grew by $128.0 million for the quarter and $226.7 million year-to-date.
• Interchange Fees: Effective July 1, 2022, the Bank became subject to the Durbin amendment, as contained in the Dodd-Frank Act, which imposes limitations on debit card interchange fees collected by banks with assets of $10 billion or more. As a result, bankcard services revenue was adversely impacted by $1.7 million. The Company is strategically positioned to absorb the decreased fee income and continue to grow earnings.
• Partners Bancorp Acquisition: The Company continues to work towards regulatory approval for the Partners Bancorp (“Partners”) acquisition. The one-year anniversary of the agreement to acquire Partners is November 4, 2022. If the transaction is not completed by that date, either party may (but is not obligated to) terminate the agreement without penalty.

1Core earnings and core earnings before income taxes and credit loss provision (“PTPP or Pre-Tax-Pre-Provision”), and ratios derived therefrom, are non-GAAP financial measures. For the periods presented, core earnings exclude merger related expenses, net branch consolidation (benefit) expense, net loss (gain) on equity investments, and the income tax effect of these items, (collectively referred to as “non-core” operations). PTPP excludes the aforementioned pre-tax “non-core” items along with income tax expense (benefit) and credit loss provision (benefit). Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Company’s results, “Our Company delivered another quarter of strong financial performance driven by expansion of net interest income and margin, continued organic loan and deposit growth, and disciplined expense management.” Mr. Maher added, “In addition to financial performance, I’m proud of our team’s continuing efforts to support our community. On October 6th, approximately 750 employees participated in our inaugural CommunityFirst day, providing service to over 100 different non-profits in the five primary states that OceanFirst serves.”

The Company’s Board of Directors declared its 103rd consecutive quarterly cash dividend on common stock. The quarterly cash dividend on common stock of $0.20 per share will be paid on November 18, 2022 to common stockholders of record on November 7, 2022. The Board previously 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 November 15, 2022 to preferred stockholders of record on October 31, 2022.

Results of Operations
On April 1, 2022, the Company completed its acquisition of a majority interest in Trident Abstract Title Agency, LLC (“Trident”) and its results of operations are included in the consolidated results for the three and nine months ended September 30, 2022, but are excluded from the results of operations for the period from January 1, 2021 to March 31, 2022. Refer to “Supplemental Information on Trident” for the impact of Trident on the Company’s consolidated results.

Net Interest Income and Margin
Net interest income for the three and nine months ended September 30, 2022 increased to $96.0 million and $271.0 million, respectively, as compared to $77.1 million and $224.8 million for the corresponding prior year periods, reflecting an increase in average interest-earning assets and net interest margin.

Net interest margin for the three and nine months ended September 30, 2022 increased to 3.36% and 3.28%, respectively, from 2.93% and 2.91% for the same prior year periods. Excluding the impact of purchase accounting accretion and prepayment fees of 0.08% and 0.18% for the three months ended September 30, 2022 and 2021, respectively, net interest margin increased to 3.28% from 2.75%. Excluding the impact of purchase accounting accretion and prepayment fees of 0.13% and 0.17% for the nine months ended September 30, 2022 and 2021, respectively, net interest margin increased to 3.15% from 2.74%. Net interest margin for both the three and nine months ended September 30, 2022 were positively impacted by the redeployment of excess cash into loans and the impact of the rising rate environment on interest earning assets, partly offset by an increased cost of funds and the growth in interest-bearing liabilities balances.

Average interest-earning assets increased by $865.6 million and $739.5 million for the three and nine months ended September 30, 2022, respectively, as compared to the same prior year periods, primarily due to loan and securities growth funded by the redeployment of excess cash. Average loans receivable, net of allowance for loan credit losses, increased by $1.65 billion and $1.38 billion for the three and nine months ended September 30, 2022, respectively, as compared to the same prior year periods.

For the three months ended September 30, 2022, the cost of average interest-bearing liabilities increased to 0.69% from 0.44% for the corresponding prior year period, as a result of higher costs associated with Federal Home Loan Bank (“FHLB”) advances and time deposits issued in an elevated rate environment in 2022. The total cost of deposits (including non-interest bearing deposits) was 0.36% for the three months ended September 30, 2022, as compared to 0.22% for the same prior year period.

For the nine months ended September 30, 2022, the cost of average interest-bearing liabilities decreased to 0.49% from 0.52% for the corresponding prior year period, as a result of downward repricing of deposits that began in the prior year and continued through the current year, partly offset by the recent pace of the rising rate environment in the current quarter and increased funding costs on FHLB advances. The total cost of deposits (including non-interest bearing deposits) was 0.24% for the nine months ended September 30, 2022, as compared to 0.28% for the same prior year period.

Net interest income for the three months ended September 30, 2022 increased by $5.2 million, as compared to the prior linked quarter, reflecting an increase in net interest margin to 3.36%, as compared to 3.29% for the prior linked quarter. Excluding the impact of purchase accounting accretion and prepayment fees of 0.08% and 0.17% for the three months ended September 30, 2022 and June 30, 2022, respectively, net interest margin increased to 3.28%, from 3.12%. The expansion in net interest margin was primarily attributable to the impact of the rising rate environment on interest earning assets and to a lesser extent loan growth, partly offset by increased costs of funds. Average interest-earning assets increased by $242.9 million for the quarter ended September 30, 2022, as compared to the prior linked quarter, primarily due to loan growth. The yield on average interest-earning assets increased to 3.88% for the three months ended September 30, 2022, from 3.60% in the prior linked quarter. The total cost of average interest-bearing liabilities was 0.69% for the three months ended September 30, 2022, as compared to 0.42% in the prior linked quarter, primarily due to the impact of brokered deposits issued in the prior linked quarter and increased rates on FHLB advances.

Credit Loss Expense (Benefit)
Credit loss expense for the three and nine months ended September 30, 2022 was $1.0 million and $4.1 million, respectively, as compared to a credit loss benefit of $3.2 million and $10.3 million for the corresponding prior year periods, and a credit loss expense of $1.3 million in the prior linked quarter. The credit loss expense for the three and nine months ended September 30, 2022 was influenced by loan growth, slowing prepayment rates, and increasingly uncertain macro-economic forecasts due to rising interest rates, inflation, and global economic headwinds, partly offset by positive trends in the Company’s criticized and classified assets.

Net loan recoveries were $252,000 and $386,000 for the three months ended September 30, 2022 and 2021, respectively. Net loan recoveries were $335,000 and $442,000 for the nine months ended September 30, 2022 and 2021, respectively. Net loan charge-offs were $9,000 in the prior linked quarter. Refer to “Asset Quality” section for further discussion.

Non-interest Income
For the three months ended September 30, 2022, other income increased to $15.2 million, as compared to $9.9 million for the corresponding prior year period. For the nine months ended September 30, 2022, other income decreased to $31.5 million, as compared to $42.5 million for the corresponding prior year period.

Other income for the three and nine months ended September 30, 2022 was impacted by non-core operations of $3.4 million related to gains on equity investments and $7.5 million related to net losses on equity investments, respectively. The nine months ended September 30, 2022 included $11.3 million of net unrealized losses, mostly on preferred stock equity investments, primarily due to the impact of the rising interest rate environment. The preferred stock equity investments carry a weighted average yield of 5.1% and an amortized cost of $73.3 million at September 30, 2022. Other income for the three and nine months ended September 30, 2021 was impacted by non-core operations of $466,000 related to net losses on equity investments and $8.4 million related to net gains on equity investments, respectively.

Excluding non-core operations noted above, other income increased by $1.4 million for the three months ended September 30, 2022, as compared to the corresponding prior year period. This increase was primarily due to the acquisition of a majority interest in Trident, which added $3.3 million of title-related fees and service charges. This increase was partly offset by a decrease in income from bankcard services of $1.9 million, primarily as a result of the Durbin amendment, which became effective for the Company on July 1, 2022.

Excluding non-core operations noted above, other income increased by $4.9 million for the nine months ended September 30, 2022, as compared to the corresponding prior year period. The increase was primarily due to the impact of Trident, which added $7.8 million of title-related fees and services charges, and an increase in commercial loan swap income of $3.8 million. These increases were partly offset by decreases in net gain on sale of loans of $2.8 million, income from bankcard services of $2.3 million primarily as a result of the Durbin amendment, fees and service charges of $849,000, and Paycheck Protection Program (“PPP”) loan origination referral fees of $800,000.

Excluding non-core operations of $8.1 million related to net losses on equity investments in the prior linked quarter, other income for the three months ended September 30, 2022 decreased by $3.8 million, primarily due to decreases in income from bankcard services of $1.8 million primarily as a result of the Durbin amendment, fees and service charges of $1.3 million due to seasonality and market conditions impacting Trident’s performance, and commercial loan swap income of $823,000.

Non-interest Expense
Operating expenses increased to $59.0 million and $175.2 million for the three and nine months ended September 30, 2022, respectively, as compared to $58.7 million and $162.0 million for the same prior year periods. Operating expenses for the three and nine months ended September 30, 2022 were favorably impacted by $48,000 and adversely impacted by $3.1 million of non-core operations, respectively. Operating expenses were adversely impacted by non-core operations for the three and nine months ended September 30, 2021 of $4.2 million and $6.1 million, respectively.

Excluding non-core operations, operating expenses increased by $4.6 million for the three months ended September 30, 2022, as compared to the corresponding prior year period. This increase was partly due to the acquisition of a majority interest in Trident, which added $2.8 million of expenses for the three months ended September 30, 2022, and increases, excluding Trident, in compensation and benefits expense of $1.8 million primarily related to increased employee medical benefit claims, and data processing expense of $1.2 million, as a result of the migration to a new core banking system. These increases were partly offset by a decrease in professional fees of $615,000.

Excluding non-core operations, operating expenses increased by $16.2 million for the nine months ended September 30, 2022, as compared to the corresponding prior year period. This increase was partly due to the impact of Trident, which added $6.0 million of expenses and increases, excluding Trident, in compensation and benefits expense of $5.3 million partly relating to the commercial banking strategy and commercial banking hires in expansion markets of Boston and Baltimore, data processing expense of $4.6 million as a result of the migration to a new core banking system, and federal deposit insurance and regulatory assessments of $1.0 million as a result of a higher assessment base and multiplier. These increases were partly offset by a decrease in amortization of core deposit intangible by $551,000.

Excluding non-core operations, operating expenses for the three months ended September 30, 2022 increased $1.1 million as compared to the prior linked quarter, primarily due to increases in compensation and benefits of $971,000, primarily related to increased employee medical benefit claims, and occupancy expense of $530,000.

Income Tax Expense
The provision for income taxes was $12.3 million and $29.2 million for the three and nine months ended September 30, 2022, respectively, as compared to $7.4 million and $28.1 million for the same prior year periods, and $8.9 million for the prior linked quarter. The effective tax rate was 24.1% and 23.7% for the three and nine months ended September 30, 2022, respectively, as compared to 23.3% and 24.3% for the same prior year periods, respectively, and 23.3% for the prior linked quarter.

Financial Condition
Total assets increased by $943.8 million to $12.68 billion at September 30, 2022, from $11.74 billion at December 31, 2021. Total loans increased by $1.10 billion to $9.72 billion at September 30, 2022, from $8.62 billion at December 31, 2021, due to strong loan originations. Total debt securities decreased by $209.4 million at September 30, 2022, as compared to December 31, 2021, primarily due to principal repayments and maturities, and to a lesser extent, an increase in unrealized losses driven by the rising rate environment. Other assets increased by $81.1 million to $228.1 million at September 30, 2022 from $147.0 million at December 31, 2021, primarily due to an increase in market values associated with customer interest rate swap programs.

Total liabilities increased by $920.2 million to $11.14 billion at September 30, 2022, from $10.22 billion at December 31, 2021. Deposits increased by $226.7 million to $9.96 billion at September 30, 2022, from $9.73 billion at December 31, 2021. Total deposits, excluding time deposits, decreased by $402.7 million to $8.56 billion at September 30, 2022, from $8.96 billion at December 31, 2021, due to the net runoff of interest-bearing checking balances. Time deposits increased to $1.40 billion at September 30, 2022, from $775.0 million at December 31, 2021, primarily due to an increase in brokered time deposits. The loans-to-deposit ratio at September 30, 2022 was 97.6%, as compared to 88.6% at December 31, 2021.

FHLB advances increased to $514.2 million at September 30, 2022 from $0 at December 31, 2021 to fund liquidity needs. Other borrowings decreased by $34.2 million to $194.9 million at September 30, 2022, from $229.1 million at December 31, 2021, primarily due to the extinguishment of $35.0 million of subordinated debt in March 2022. Other liabilities increased by $230.9 million to $352.9 million at September 30, 2022, from $122.0 million at December 31, 2021, primarily due to an increase in the market values associated with customer interest rate swap programs and related collateral received from counterparties.

Stockholders’ equity increased to $1.54 billion at September 30, 2022, as compared to $1.52 billion at December 31, 2021. Accumulated other comprehensive loss increased by $35.7 million to $38.5 million at September 30, 2022 from $2.8 million at December 31, 2021, primarily due to unrealized losses on debt securities available-for-sale which were adversely impacted by the rising interest rate environment. For the nine months ended September 30, 2022, the Company repurchased 373,223 shares totaling $7.4 million under its stock repurchase program at a weighted average cost of $19.82. There were 2,934,438 shares available for repurchase at September 30, 2022 under the existing repurchase program. Stockholders’ equity per common share increased to $26.04 at September 30, 2022, as compared to $25.63 at December 31, 2021. Tangible common equity per common share2 increased to $16.30 at September 30, 2022, as compared to $15.93 at December 31, 2021.

2Tangible common equity per common share, a non-GAAP financial measure, excludes the impact of intangible assets, goodwill, and preferred equity from stockholders’ equity. Refer to “Explanation of Non-GAAP Financial Measures” and the “Non-GAAP Reconciliation” tables for additional information regarding non-GAAP financial measures.

Asset Quality
The Company’s non-performing loans decreased to $21.5 million at September 30, 2022, as compared to $25.5 million at December 31, 2021. The Company’s non-performing loans, excluding $3.0 million and $6.5 million of non-performing purchased with credit deterioration (“PCD”) loans from prior bank acquisitions at September 30, 2022 and December 31, 2021, respectively, decreased to $18.5 million at September 30, 2022, as compared to $18.9 million at December 31, 2021. The allowance for loan credit losses as a percentage of total non-performing loans was 248.96% at September 30, 2022, as compared to 191.61% at December 31, 2021. The allowance for loan credit losses as a percentage of total non-performing loans, excluding PCD loans, was 290.01% at September 30, 2022, as compared to 257.81% at December 31, 2021. The level of 30 to 89 days delinquent loans improved to $11.8 million at September 30, 2022, from $14.5 million at December 31, 2021. The level of 30 to 89 days delinquent loans, excluding non-performing and PCD loans, improved to $10.4 million at September 30, 2022, from $13.5 million at December 31, 2021.

The Company’s allowance for loan credit losses was 0.55% of total loans at September 30, 2022, as compared to 0.57% at December 31, 2021. The allowance for loan credit losses plus the unamortized credit and PCD marks amounted to $67.1 million, or 0.69% of total loans, at September 30, 2022, as compared to $67.8 million, or 0.79% of total loans at December 31, 2021.

Explanation of Non-GAAP Financial Measures
Reported amounts are presented in accordance with GAAP. The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding non-core operations and in some instances excluding income taxes and credit loss provision, and reporting equity and asset amounts excluding intangible assets and goodwill, which can vary from period to period, provides a better comparison of period-to-period operating performance. In addition, a non-GAAP table has been presented excluding the results associated with the acquisition of a majority interest in Trident for better comparison period over period. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.

Conference Call
As previously announced, the Company will host an earnings conference call on Tuesday, October 25, 2022 at 11:00 a.m. Eastern Time. The direct dial number for the call is (844) 200-6205, using the access code 225620. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (866) 813-9403, access code 477430, from one hour after the end of the call until January 26, 2023. The conference call, as well as the replay, are also available (listen-only) by internet webcast at www.oceanfirst.com in the Investor Relations section.

OceanFirst Financial Corp.’s subsidiary, OceanFirst Bank N.A., founded in 1902, is a $12.7 billion regional bank providing financial services throughout New Jersey and in the major metropolitan markets of Philadelphia, New York, Baltimore, and Boston. OceanFirst Bank delivers commercial and residential financing, treasury management, trust and asset management, and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey. To learn more about OceanFirst, go to www.oceanfirst.com.

Forward-Looking Statements

In addition to historical information, this news release 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 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 future 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: management plans relating to the proposed transaction with Partners Bancorp (the “Transaction”); the ability to complete the Transaction; the ability to obtain any regulatory, stockholder or other approvals, authorizations or consents; the expected timing of the completion of the Transaction; any statements of the plans and objectives of management for future operations, products or services, including the execution of integration plans relating to the Transaction; the impact of the COVID-19 or any other pandemic on our operations and financial results and those of our customers, changes in interest rates, inflation, general economic conditions, 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, the current or anticipated impact of military conflict, terrorism or other geopolitical events, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, 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, accounting principles, a failure in or breach of the Company’s operational or security systems or infrastructure, including cyberattacks; and guidelines and the Bank’s ability to successfully integrate acquired operations. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, under Item 1A - Risk Factors and elsewhere, and 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.

OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)

OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)

(1) Loan pipeline includes loans approved but not funded.
(2) Excludes residential real estate loan pool purchases of $161.7 million, $82.2 million and $219.7 million for the three months ended March 31, 2022, December 31, 2021 and September 30, 2021, respectively.
(3) Excludes the sale of a small business administration loan of $1.2 million for the three months ended September 30, 2022
(4) Excludes the sale of higher risk commercial loans of $12.0 million for the three months ended March 31, 2022.

OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)

(1) Loans acquired from prior bank acquisitions were recorded at fair value. The net unamortized credit and PCD marks on these loans, not reflected in the allowance for loan credit losses, was $13.6 million, $15.5 million, $16.9 million, $18.9 million and $21.3 million at September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, respectively.
(2) All balances and ratios exclude PCD loans.

* Not meaningful as amounts are net loan recoveries.

OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME

(1) Average yields and costs are annualized.
(2) 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.
(3) Amount is net of deferred loan costs and fees, undisbursed loan funds, discounts and premiums and allowance for loan credit losses, and includes loans held for sale and non-performing loans.
(4) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average interest-earning assets.

OceanFirst Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share amounts)

(1) With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2) Performance ratios for each period are presented on a GAAP basis and include non-core operations. Refer to “Non-GAAP Reconciliation.”
(3) Ratios for each period are based on net income available to common stockholders.
(4) Tangible stockholders’ equity and tangible assets exclude intangible assets related to goodwill and core deposit intangible. Tangible common equity excludes goodwill, core deposit intangible and preferred equity. Refer to “Non-GAAP Reconciliation.”
(5) Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.

OceanFirst Financial Corp.
OTHER ITEMS
(dollars in thousands, except per share amounts)

NON-GAAP RECONCILIATION