Exhibit 99.1
Company Contact:
Michael J. Fitzpatrick
Chief Financial Officer
OceanFirst Financial Corp.
Tel: (732) 240-4500, ext. 7506
Fax: (732) 349-5070
Email: Mfitzpatrick@oceanfirst.com
FOR IMMEDIATE RELEASE
OCEANFIRST FINANCIAL CORP.
ANNOUNCES THIRD QUARTER
FINANCIAL RESULTS AND 15% INCREASE
TO QUARTERLY DIVIDEND
TOMS RIVER, NEW JERSEY, October 26, 2016…OceanFirst Financial Corp. (NASDAQ:“OCFC”), (the “Company”), the holding company for OceanFirst Bank (the “Bank”), today announced that diluted earnings per share were $0.35 for the three months ended September 30, 2016, as compared to $0.28 for the corresponding prior year quarter. For the nine months ended September 30, 2016, diluted earnings per share were $0.77, as compared to $0.90 for the corresponding prior year period.
Merger related charges and deleveraging expenses adversely impacted quarterly operating results by $0.05 and year to date operating results by $0.34 after tax. On May 2, 2016, the Company completed its acquisition of Cape Bancorp, Inc. (“Cape”), which added $1.5 billion in total assets, including $1.2 billion in loans, and $1.2 billion in deposits. The results of operations for the three and nine months ended September 30, 2016 include merger related expenses of $1.3 million and $9.9 million, respectively. In connection with the acquisition, during the second quarter of 2016 the Bank deleveraged the combined balance sheet through the sale of lower-yielding investment securities and the prepayment of existing term borrowings in
OceanFirst Financial Corp. ● 975 Hooper Avenue ● Toms River, NJ 08753 ● 1.888.623.2633 ● oceanfirst.com ● NASDAQ: OCFC
order to improve the net interest margin, reduce interest rate sensitivity, and increase regulatory capital ratios. The implementation of this strategy resulted in an expense of $136,000 relating to the prepayment of Federal Home Loan Bank (“FHLB”) borrowings and a loss of $12,000 on the sale of investment securities available-for-sale. Excluding the after-tax impact of merger related expenses and deleveraging costs, core earnings for the three and nine months ended September 30, 2016 were $10.3 million, or $0.40 per diluted share, and $24.4 million, or $1.11 per diluted share, respectively. (Please refer to Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of these items.)
Highlights for the quarter are described below.
| • | Core earnings (as defined above) per share increased 25% for the three months ended September 30, 2016, as compared to the three months ended September 30, 2015, supporting a $0.02 increase in the quarterly dividend, to $0.15 per share. |
| • | Deposits increased $118.4 million for the quarter, an annualized growth rate of 14.8%, resulting in a loan to deposit ratio at September 30, 2016 of 91.1% and an average cost of deposits for the quarter ended September 30, 2016 of just 0.25%. |
| • | Cape’s core systems were fully integrated on October 15, 2016, providing for the realization of additional cost savings entering the first quarter of 2017. |
| • | Risk management activities related to recent acquisitions included selling 63 residential loans with a carrying value of $4.4 million and 72 SBA loans with a carrying value of $8.4 million, which represented the entire SBA portfolio. One additional pool of commercial loans was designated as held for sale with a targeted closing in the fourth quarter. |
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On July 13, 2016, the Company announced it had entered into a definitive agreement and plan of merger pursuant to which Ocean Shore Holding Company (“Ocean Shore”), the holding company and parent of Ocean City Home Bank, will merge with and into the Company in a transaction valued at approximately $145.6 million. Ocean City Home Bank is one of southern New Jersey’s oldest and largest community banks with approximately $1.0 billion in total assets, $807 million in total deposits and $791 million in net loans at June 30, 2016. Pending regulatory and shareholder approvals, the Company expects to close the transaction by the first quarter of 2017 and anticipates full integration of Ocean City Home Bank’s operations and systems in May 2017.
Chief Executive Officer and President Christopher D. Maher commented, “Our year over year growth in core earnings per share of 25%, augmented by the ongoing benefits of the Cape acquisition, was a key driver for the Board of Directors to increase the per share cash dividend by 15%. We achieved this earnings growth while also reducing our risk profile through the sale of high risk loans.” Mr. Maher added, “Our strong core deposit growth, low average deposit cost and conservative loan to deposit ratio support the exceptional value of our deposit franchise and provides a platform to fund future loan growth.”
The Company also announced that the Board of Directors declared its seventy-ninth consecutive quarterly cash dividend on common stock. The dividend for the quarter ended September 30, 2016 of $0.15 per share will be paid on November 18, 2016 to stockholders of record on November 7, 2016.
Results of Operations
On July 31, 2015, the Company completed its acquisition of Colonial American Bank (“Colonial American”), which added $142.4 million to assets, $121.2 million to loans, and
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$123.3 million to deposits. Colonial American’s results of operations are included in the consolidated results for the three and nine months ended September 30, 2016, but for 2015 Colonial American is only included in the results of operations for the period from August 1, 2015 through September 30, 2015.
On May 2, 2016, the Company completed its acquisition of Cape and its results of operations from May 2, 2016 through September 30, 2016 are included in the consolidated results for the three and nine months ended September 30, 2016, but are excluded from the results of operations for the corresponding prior year periods.
Net income for the three months ended September 30, 2016, was $9.1 million, or $0.35 per diluted share, as compared to net income of $4.7 million, or $0.28 per diluted share, for the corresponding prior year period. Net income for the nine months ended September 30, 2016, was $17.0 million, or $0.77 per diluted share, as compared to net income of $15.1 million, or $0.90 per diluted share for the corresponding prior year period. Net income for the three and nine months ended September 30, 2016 includes merger related expenses of $1.3 million and $9.9 million, respectively, as compared to merger related expenses of $1.0 million and $1.3 million, respectively, for the same prior year periods. Additionally, net income for the nine months ended September 30, 2016, includes a FHLB prepayment fee of $136,000, and a loss on the sale of investment securities available-for-sale of $12,000. Excluding these items, diluted earnings per share increased over the prior year periods due to higher net interest income and other income partially offset by higher operating expenses and provision for loan losses.
Excluding merger related expenses, the FHLB prepayment fee and loss on sale of investment securities, diluted earnings per share increased $0.02 from the prior linked quarter primarily due to the favorable impact of the Cape acquisition.
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Net interest income for the three and nine months ended September 30, 2016, increased to $33.9 million and $84.5 million, respectively, as compared to $19.6 million and $56.1 million for the same prior year periods, reflecting an increase in interest-earning assets and a higher net interest margin. Average interest-earning assets increased $1,388.3 million and $909.8 million, respectively, for the three and nine month ended September 30, 2016, as compared to the same prior year periods. The averages for the three and nine months ended September 30, 2016, were favorably impacted by $1,233.7 million and $776.7 million, respectively, as a result of the interest-earning assets acquired from Cape and Colonial American (“Acquisition Transactions”). Average loans receivable, net, increased $1,210.2 million and $833.9 million, respectively, for the three and nine months ended September 30, 2016, as compared to the same prior year periods. The increases attributable to the Acquisition Transactions were $1,198.7 million and $723.9 million for the three and nine months ended September 30, 2016, respectively. The net interest margin increased to 3.56% and 3.51%, respectively, for the three and nine months ended September 30, 2016, as compared to 3.24% and 3.25%, respectively for the three and nine months ended September 30, 2015. The yield on average interest-earning assets increased to 3.92% and 3.88%, respectively, for the three and nine months ended September 30, 2016, as compared to 3.63% for both the same prior year periods. The yields on average interest-earning assets for the three and nine months ended September 30, 2016 benefited from the accretion of purchase accounting adjustments on the Acquisition Transactions of $1.6 million and $3.1 million, respectively; the higher-yielding interest-earning assets acquired from Cape; and the change in the average balance sheet mix in favor of higher-yielding loans receivable at the expense of lower-yielding securities. For the three and nine months ended September 30, 2016, the cost of average interest-bearing liabilities decreased to 0.43% and 0.46%, respectively, from
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0.50% and 0.47%, respectively, in the prior year periods benefitting from the change in mix in favor of lower-cost deposits at the expense of higher-cost borrowings. The total cost of deposits (including non-interest bearing deposits) was 0.25% for both the three and nine months ended September 30, 2016, as compared to 0.24% and 0.23% for the corresponding prior year periods.
Net interest income for the three months ended September 30, 2016 increased $3.9 million, as compared to the prior linked quarter, as average interest-earning assets increased $403.0 million, of which $261.9 million related to Cape. The net interest margin decreased to 3.56%, for the three months ended September 30, 2016, from 3.57% for the prior linked quarter. The yield on average interest-earning assets decreased to 3.92% for the three months ended September 30, 2016, from 3.94% for the prior linked quarter, while the cost of average interest-bearing liabilities decreased to 0.43% for the three months ended September 30, 2016, as compared to 0.47% for the prior linked quarter.
For the three and nine months ended September 30, 2016, the provision for loan losses was $888,000 and $2.1 million, respectively, as compared to $300,000 and $975,000, respectively, for the corresponding prior year periods. Net charge-offs were $1.9 million and $3.2 million, respectively, for the three and nine months ended September 30, 2016, as compared to net charge-offs of $196,000 and $654,000, respectively, in the corresponding prior year periods. The increase in net charge-offs for the three and nine months ended September 30, 2016, was primarily due to third quarter charge-offs of $1.6 million on loans sold or held for sale at September 30, 2016, and to a lesser extent, first quarter charge-offs of $886,000 on two non-performing commercial loans. Of the $1.6 million in third quarter charge-offs, $1.1 million was related to a pool of 58 higher risk commercial loans designated as held for sale at September 30, 2016, with an unpaid principal balance of $22.7 million. This pool of loans is expected to be
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sold in the fourth quarter. Non-performing loans totaled $16.5 million at September 30, 2016, as compared to $15.3 million at June 30, 2016, and $24.4 million at September 30, 2015. The non-performing loan amount at September 30, 2016 includes $3.2 million of loans held for sale which have been marked down to fair value.
For the three and nine months ended September 30, 2016, other income increased to $5.9 million and $14.2 million, respectively, as compared to $4.2 million and $12.3 million, respectively, in the same prior year periods. The increases from the prior periods were primarily due to the impact of the Cape acquisition which added $1.3 million and $2.2 million to total other income for the three and nine months ended September 30, 2016, respectively, as compared to the same prior year periods. Excluding Cape, other income increased $452,000 for the three months ended September 30, 2016, and decreased $396,000 for the nine months ended September 30, 2016, as compared to the same prior year periods. For the three and nine months ended September 30, 2016, other income included a gain of $125,000 and a loss of $292,000, respectively, attributable to the operations of a hotel, golf and banquet facility acquired as Other Real Estate Owned (“OREO”) in the fourth quarter of 2015. The Bank is currently engaged in a sales process with qualified buyers for this property.
For the quarter ended September 30, 2016, other income, excluding the impact from Cape, increased $672,000, as compared to the prior linked quarter. The increase was primarily related to an improvement in OREO operations of $338,000 and an increase of $177,000 in net gains on sales of loans.
Operating expenses increased to $25.0 million and $70.4 million, respectively, for the three and nine months ended September 30, 2016, as compared to $16.1 million and $44.3 million, respectively, in the same prior year periods. Operating expenses for the three and nine
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months ended September 30, 2016 include $1.3 million and $9.9 million, respectively, in merger related expenses, as compared to merger related expenses of $1.0 million and $1.3 million, respectively, in the prior year periods. Excluding merger related expenses, the increases in operating expenses over the prior year were primarily due to the operations of Cape and Colonial American, which added $7.9 million and $13.7 million for the quarter and year-to-date, respectively; the investment in commercial lending which added expenses of $21,000 and $822,000 for the quarter and year-to-date, respectively; the addition of new branches which added expenses of $269,000 and $991,000 for the quarter and year-to-date, respectively; and the FHLB prepayment fee of $136,000.
For the three months ended September 30, 2016, operating expenses, excluding merger related expenses, increased $2.3 million, as compared to the prior linked quarter. The increase was primarily related to the additional expense from the operations of Cape of $2.2 million.
The provision for income taxes was $4.8 million and $9.2 million, respectively, for the three and nine months ended September 30, 2016, as compared to $2.6 million and $8.1 million, respectively, for the same prior year periods. The effective tax rate was 34.4% and 35.0%, respectively, for the three and nine months ended September 30, 2016 as compared to 35.5% and 34.9%, respectively, for the same prior year periods and 34.5% in the prior linked quarter. The variances in the effective tax rate were primarily due to the timing of non-deductible merger related expenses.
Financial Condition
Total assets increased by $1.558 billion to $4.151 billion at September 30, 2016, from $2.593 billion at December 31, 2015, primarily as a result of the acquisition of Cape. Cash, due from banks and interest-bearing deposits increased by $267.6 million, to $311.6 million at
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September 30, 2016, from $43.9 million at December 31, 2015. The increase was primarily due to third quarter cash flows relating to deposit growth, the issuance of subordinated notes and the reduction in loans receivable. Loans receivable, net, increased by $1.058 billion, to $3.029 billion at September 30, 2016, from $1.971 billion at December 31, 2015. Excluding the Cape acquisition, loans receivable, net, decreased $99.8 million, partly due to the sale and pending sale, of $30.7 million in higher risk loans. As part of the acquisitions of Cape and Colonial American, and the purchase of an existing retail branch in the Toms River market in the first quarter of 2016, at September 30, 2016, the Company had outstanding goodwill of $66.5 million and core deposit intangibles of $3.7 million.
Deposits increased by $1.408 billion, to $3.325 billion at September 30, 2016, from $1.917 billion at December 31, 2015, including deposits of $1.248 billion acquired from Cape and $17.0 million acquired through the purchase of an existing retail branch located in the Toms River market. Excluding the Cape acquisition, deposits increased $159.6 million, while core deposits (all deposits excluding time deposits) increased $178.4 million. The loan-to-deposit ratio at September 30, 2016 was 91.1%, as compared to 102.8% at December 31, 2015. The deposit growth funded a decrease in FHLB advances of $73.2 million at September 30, 2016, to $251.1 million at September 30, 2016, from $324.4 million at December 31, 2015. The increase in other borrowings relates to the September 2016 issuance of $35.0 million in subordinated notes at an initial rate of 5.125% and a stated maturity of September 30, 2026.
Stockholders’ equity increased to $417.2 million at September 30, 2016, as compared to $238.4 million at December 31, 2015. The acquisition of Cape added $165.9 million to stockholder’s equity. At September 30, 2016, there were 244,804 shares available for repurchase under the stock repurchase program adopted in July of 2014. Tangible stockholders’ equity per common share decreased to $13.42 at September 30, 2016, as compared to $13.67 at December 31, 2015, due to the addition of intangible assets in the Cape acquisition.
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Asset Quality
The Company’s non-performing loans decreased to $16.5 million at September 30, 2016, as compared to $18.3 million at December 31, 2015 and $24.4 million at September 30, 2015. Non-performing loans do not include $5.8 million of purchased credit-impaired (“PCI”) loans acquired from Cape and Colonial American. The Company’s OREO totaled $9.1 million at September 30, 2016, as compared to $8.8 million at December 31, 2015. The amount includes $7.0 million relating to the hotel, golf and banquet facility located in New Jersey which the Company acquired in the fourth quarter of 2015. At September 30, 2016, the Company’s allowance for loan losses was 0.51% of total loans, a decrease from 0.84% at December 31, 2015. These ratios exclude existing fair value credit marks of $17.1 million at September 30, 2016 on the Cape and Colonial American loans and $2.2 million at December 31, 2015 on the Colonial American loans. These loans were acquired at fair value with no related allowance for loan losses. The allowance for loan losses as a percent of total non-performing loans was 94.61% at September 30, 2016 as compared to 91.51% at December 31, 2015.
Explanation of Non-GAAP Financial Measures
Reported amounts are presented in accordance with generally accepted accounting principles in the United States (“GAAP”). The Company’s management believes that the supplemental non-GAAP information, which consists of reported net income excluding merger related expenses, loss on sale of investment securities available for sale and FHLB prepayment fee, which can vary from period to period, provides a better comparison of period to period operating performance. Additionally, the Company believes this information is utilized by
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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. Please refer to 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 Thursday, October 27, 2016 at 9:00 a.m. Eastern time. The direct dial number for the call is (888) 338-7143. For those unable to participate in the conference call, a replay will be available. To access the replay, dial (877) 344-7529, Replay Conference Number 10093578 from one hour after the end of the call until January 27, 2017. 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, founded in 1902, is a community bank with $4.2 billion in total assets, $3.1 billion in total loans, $3.3 billion in deposits and 50 branches located throughout central and southern New Jersey. OceanFirst Bank delivers commercial and residential financing solutions, wealth management and deposit services and is one of the largest and oldest community-based financial institutions headquartered in New Jersey.
OceanFirst Financial Corp.’s press releases are available by visiting us at www.oceanfirst.com.
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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: changes in interest rates, 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 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 and accounting principles and guidelines. These risks and uncertainties are further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 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.
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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
| September 30, 2016 |
June 30, 2016 |
December 31, 2015 |
September 30, 2015 |
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| (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
| ASSETS |
||||||||||||||||
| Cash, due from banks and interest-bearing deposits |
$ | 311,583 | $ | 66,222 | $ | 43,946 | $ | 50,576 | ||||||||
| Securities available-for-sale, at estimated fair value |
2,497 | 12,509 | 29,902 | 30,108 | ||||||||||||
| Securities held-to-maturity, net (estimated fair value of $478,727 at September 30, 2016, $520,971 at June 30, 2016, $397,763 at December 31, 2015, and $400,852 at at September 30, 2015) |
470,642 | 513,721 | 394,813 | 392,932 | ||||||||||||
| Federal Home Loan Bank of New York stock, at cost |
18,289 | 21,128 | 19,978 | 15,970 | ||||||||||||
| Loans receivable, net |
3,028,696 | 3,130,046 | 1,970,703 | 1,938,972 | ||||||||||||
| Loans held for sale |
21,679 | 5,310 | 2,697 | 2,306 | ||||||||||||
| Interest and dividends receivable |
9,396 | 10,143 | 5,860 | 5,978 | ||||||||||||
| Other real estate owned |
9,107 | 9,791 | 8,827 | 3,262 | ||||||||||||
| Premises and equipment, net |
51,243 | 49,392 | 28,419 | 28,721 | ||||||||||||
| Servicing asset |
259 | 664 | 589 | 639 | ||||||||||||
| Bank Owned Life Insurance |
106,433 | 105,929 | 57,549 | 57,206 | ||||||||||||
| Deferred tax asset |
39,391 | 37,052 | 16,807 | 18,298 | ||||||||||||
| Other assets |
11,543 | 14,581 | 10,900 | 10,816 | ||||||||||||
| Core deposit intangible |
3,722 | 3,903 | 256 | 269 | ||||||||||||
| Goodwill |
66,537 | 67,102 | 1,822 | 1,845 | ||||||||||||
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|
|
|
|
|
|
|
|
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| Total assets |
$ | 4,151,017 | $ | 4,047,493 | $ | 2,593,068 | $ | 2,557,898 | ||||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Deposits |
$ | 3,324,681 | $ | 3,206,262 | $ | 1,916,678 | $ | 1,967,771 | ||||||||
| Securities sold under agreements to repurchase with retail customers |
69,078 | 67,673 | 75,872 | 77,993 | ||||||||||||
| Federal Home Loan Bank advances |
251,146 | 312,603 | 324,385 | 233,006 | ||||||||||||
| Other borrowings |
56,399 | 22,500 | 22,500 | 27,500 | ||||||||||||
| Advances by borrowers for taxes and insurance |
8,287 | 9,828 | 7,121 | 7,808 | ||||||||||||
| Other liabilities |
24,182 | 19,369 | 8,066 | 9,132 | ||||||||||||
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|
|
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|
|
|
|
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| Total liabilities |
3,733,773 | 3,638,235 | 2,354,622 | 2,323,210 | ||||||||||||
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|
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|
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| Stockholders’ equity: |
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| Preferred stock, $.01 par value, $1,000 liquidation preference, 5,000,000 shares authorized, no shares issued |
— | — | — | — | ||||||||||||
| Common stock, $.01 par value, 55,000,000 shares authorized, 33,566,772 shares issued and 25,850,956, 25,748,898, 17,286,557 and 17,276,677, shares outstanding at September 30, 2016, June 30, 2016, December 31, 2015, and September 30, 2015, respectively |
336 | 336 | 336 | 336 | ||||||||||||
| Additional paid-in capital |
308,979 | 308,460 | 269,757 | 269,332 | ||||||||||||
| Retained earnings |
236,472 | 230,895 | 229,140 | 226,115 | ||||||||||||
| Accumulated other comprehensive loss |
(5,611 | ) | (5,798 | ) | (6,241 | ) | (6,326 | ) | ||||||||
| Less: Unallocated common stock held by Employee Stock Ownership Plan |
(2,832 | ) | (2,903 | ) | (3,045 | ) | (3,116 | ) | ||||||||
| Treasury stock, 7,715,816, 7,817,874, 16,280,215, and 16,290,095 shares at September 30, 2016, June 30, 2016, December 31, 2015, and September 30, 2015, respectively |
(120,100 | ) | (121,732 | ) | (251,501 | ) | (251,653 | ) | ||||||||
| Common stock acquired by Deferred Compensation Plan |
(310 | ) | (305 | ) | (314 | ) | (311 | ) | ||||||||
| Deferred Compensation Plan Liability |
310 | 305 | 314 | 311 | ||||||||||||
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|
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|
|
|
|
|
|
|||||||||
| Total stockholders’ equity |
417,244 | 409,258 | 238,446 | 234,688 | ||||||||||||
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|
|
|
|
|
|
|
|||||||||
| Total liabilities and stockholders’ equity |
$ | 4,151,017 | $ | 4,047,493 | $ | 2,593,068 | $ | 2,557,898 | ||||||||
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OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
| For the Three Months Ended, | For the Nine Months Ended | |||||||||||||||||||
| September 30, 2016 |
June 30, 2016 |
September 30, 2015 |
September 30, 2016 |
September 30, 2015 |
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| (unaudited) | (unaudited) | |||||||||||||||||||
| Interest income: |
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| Loans |
$ | 34,607 | $ | 30,521 | $ | 19,976 | $ | 86,163 | $ | 56,553 | ||||||||||
| Mortgage-backed securities |
1,700 | 1,708 | 1,460 | 4,823 | 4,602 | |||||||||||||||
| Investment securities and other |
1,000 | 912 | 534 | 2,535 | 1,560 | |||||||||||||||
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| Total interest income |
37,307 | 33,141 | 21,970 | 93,521 | 62,715 | |||||||||||||||
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| Interest expense: |
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| Deposits |
2,083 | 1,771 | 1,162 | 5,125 | 3,084 | |||||||||||||||
| Borrowed funds |
1,289 | 1,356 | 1,233 | 3,888 | 3,490 | |||||||||||||||
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| Total interest expense |
3,372 | 3,127 | 2,395 | 9,013 | 6,574 | |||||||||||||||
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| Net interest income |
33,935 | 30,014 | 19,575 | 84,508 | 56,141 | |||||||||||||||
| Provision for loan losses |
888 | 662 | 300 | 2,113 | 975 | |||||||||||||||
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| Net interest income after provision for loan losses |
33,047 | 29,352 | 19,275 | 82,395 | 55,166 | |||||||||||||||
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| Other income: |
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| Bankcard services revenue |
1,347 | 1,211 | 929 | 3,409 | 2,611 | |||||||||||||||
| Wealth management revenue |
608 | 621 | 501 | 1,779 | 1,657 | |||||||||||||||
| Fees and service charges |
2,916 | 2,502 | 2,091 | 7,235 | 6,042 | |||||||||||||||
| Loan servicing income |
26 | 95 | 75 | 177 | 186 | |||||||||||||||
| Net loss on sale of investment securities available for sale |
— | (12 | ) | — | (12 | ) | — | |||||||||||||
| Net gain on sale of loan servicing |
— | — | — | — | 111 | |||||||||||||||
| Net gain on sales of loans available for sale |
347 | 170 | 260 | 696 | 637 | |||||||||||||||
| Net loss from other real estate operations |
(63 | ) | (313 | ) | (59 | ) | (782 | ) | (111 | ) | ||||||||||
| Income from Bank Owned Life Insurance |
659 | 542 | 348 | 1,520 | 1,158 | |||||||||||||||
| Other |
56 | 67 | 7 | 133 | 18 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total other income |
5,896 | 4,883 | 4,152 | 14,155 | 12,309 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating expenses: |
||||||||||||||||||||
| Compensation and employee benefits |
13,558 | 11,432 | 8,269 | 33,456 | 23,508 | |||||||||||||||
| Occupancy |
2,315 | 2,011 | 1,508 | 5,952 | 4,204 | |||||||||||||||
| Equipment |
1,452 | 1,184 | 951 | 3,605 | 2,562 | |||||||||||||||
| Marketing |
479 | 543 | 398 | 1,273 | 1,087 | |||||||||||||||
| Federal deposit insurance |
743 | 723 | 541 | 1,995 | 1,545 | |||||||||||||||
| Data processing |
2,140 | 1,881 | 1,193 | 5,286 | 3,382 | |||||||||||||||
| Check card processing |
623 | 505 | 490 | 1,548 | 1,388 | |||||||||||||||
| Professional fees |
681 | 700 | 390 | 1,879 | 1,324 | |||||||||||||||
| Other operating expense |
1,543 | 2,217 | 1,369 | 5,036 | 4,005 | |||||||||||||||
| Federal Home Loan Bank prepayment fee |
— | 136 | — | 136 | — | |||||||||||||||
| Amortization of core deposit intangible |
181 | 125 | 8 | 319 | 8 | |||||||||||||||
| Merger related expense |
1,311 | 7,189 | 1,030 | 9,902 | 1,264 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total operating expenses |
25,026 | 28,646 | 16,147 | 70,387 | 44,277 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income before provision for income taxes |
13,917 | 5,589 | 7,280 | 26,163 | 23,198 | |||||||||||||||
| Provision for income taxes |
4,789 | 1,928 | 2,582 | 9,169 | 8,105 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income |
$ | 9,128 | $ | 3,661 | $ | 4,698 | $ | 16,994 | $ | 15,093 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Basic earnings per share |
$ | 0.36 | $ | 0.16 | $ | 0.28 | $ | 0.79 | $ | 0.91 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Diluted earnings per share |
$ | 0.35 | $ | 0.16 | $ | 0.28 | $ | 0.77 | $ | 0.90 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Average basic shares outstanding |
25,435 | 22,478 | 16,733 | 21,624 | 16,522 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Average diluted shares outstanding |
25,889 | 22,880 | 16,953 | 21,990 | 16,746 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
14
OceanFirst Financial Corp.
SELECTED LOAN AND DEPOSIT DATA
(dollars in thousands)
| LOANS RECEIVABLE |
At | |||||||||||||||||||||||
| September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||||||
| Commercial: |
||||||||||||||||||||||||
| Commercial and industrial |
$ | 185,633 | $ | 222,355 | $ | 141,364 | $ | 144,788 | $ | 129,379 | ||||||||||||||
| Commercial real estate – owner-occupied |
493,157 | 523,662 | 308,666 | 307,509 | 317,438 | |||||||||||||||||||
| Commercial real estate – investor |
1,014,699 | 1,011,354 | 536,754 | 510,936 | 486,625 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total commercial |
1,693,489 | 1,757,371 | 986,784 | 963,233 | 933,442 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Consumer: |
||||||||||||||||||||||||
| Residential mortgage |
1,061,752 | 1,090,781 | 792,753 | 791,249 | 787,211 | |||||||||||||||||||
| Residential construction |
46,813 | 48,266 | 54,259 | 50,757 | 51,580 | |||||||||||||||||||
| Home equity loans and lines |
251,421 | 258,398 | 190,621 | 192,368 | 193,587 | |||||||||||||||||||
| Other consumer |
1,273 | 1,586 | 570 | 792 | 719 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total consumer |
1,361,259 | 1,399,031 | 1,038,203 | 1,035,166 | 1,033,097 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total loans |
3,054,748 | 3,156,402 | 2,024,987 | 1,998,399 | 1,966,539 | |||||||||||||||||||
| Loans in process |
(13,842 | ) | (13,119 | ) | (15,033 | ) | (14,206 | ) | (14,145 | ) | ||||||||||||||
| Deferred origination costs, net |
3,407 | 3,441 | 3,253 | 3,232 | 3,216 | |||||||||||||||||||
| Allowance for loan losses |
(15,617 | ) | (16,678 | ) | (16,214 | ) | (16,722 | ) | (16,638 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loans receivable, net |
$ | 3,028,696 | $ | 3,130,046 | $ | 1,996,993 | $ | 1,970,703 | $ | 1,938,972 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Mortgage loans serviced for others |
$ | 143,657 | $ | 145,903 | $ | 152,653 | $ | 158,244 | $ | 164,488 | ||||||||||||||
| At September 30, 2016 Average Yield |
||||||||||||||||||||||||
| Loan pipeline (1): |
||||||||||||||||||||||||
| Commercial |
4.19 | % | $ | 64,976 | $ | 48,897 | $ | 57,571 | $ | 53,785 | $ | 71,944 | ||||||||||||
| Residential mortgage and construction |
3.75 | 39,252 | 30,520 | 28,528 | 31,860 | 39,894 | ||||||||||||||||||
| Home equity loans and lines |
4.51 | 5,099 | 5,594 | 8,082 | 5,481 | 8,859 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
4.04 | $ | 109,327 | $ | 85,011 | $ | 94,181 | $ | 91,126 | $ | 120,697 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| For the Three Months Ended, | ||||||||||||||||||||||||
| September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||||||
| Average Yield | ||||||||||||||||||||||||
| Loan originations: |
||||||||||||||||||||||||
| Commercial |
3.97 | % | $ | 63,310 | $ | 59,543 | $ | 58,005 | $ | 72,534 | $ | 70,378 | ||||||||||||
| Residential mortgage and and construction |
3.65 | 41,170 | 40,295 | 34,361 | 43,616 | 35,994 | ||||||||||||||||||
| Home equity loans and lines |
4.30 | 11,007 | 10,067 | 10,915 | 10,431 | 13,841 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
3.89 | $ | 115,487 | $ | 109,905 | $ | 103,281 | $ | 126,581 | $ | 120,213 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Loans sold |
$ | 17,787 | (2) | $ | 10,303 | $ | 8,901 | $ | 9,784 | $ | 11,063 | |||||||||||||
| (1) | Loan pipeline includes pending loan applications and loans approved but not funded |
| (2) | Excludes the sale of credit-impaired loans of $12.8 million |
| DEPOSITS |
At | |||||||||||||||||||
| September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
| Type of Account |
||||||||||||||||||||
| Non-interest-bearing |
$ | 512,957 | $ | 554,709 | $ | 351,743 | $ | 337,143 | $ | 362,079 | ||||||||||
| Interest-bearing checking |
1,451,083 | 1,310,290 | 860,468 | 859,927 | 883,940 | |||||||||||||||
| Money market deposit |
400,054 | 366,942 | 163,885 | 153,196 | 151,657 | |||||||||||||||
| Savings |
489,173 | 489,132 | 327,845 | 310,989 | 310,009 | |||||||||||||||
| Time deposits |
471,414 | 485,189 | 267,420 | 255,423 | 260,086 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | 3,324,681 | $ | 3,206,262 | $ | 1,971,361 | $ | 1,916,678 | $ | 1,967,771 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
15
OceanFirst Financial Corp.
ASSET QUALITY
(dollars in thousands)
| September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
| ASSET QUALITY |
||||||||||||||||||||
| Non-performing loans: |
||||||||||||||||||||
| Commercial and industrial |
$ | 1,152 | $ | 964 | $ | 909 | $ | 123 | $ | 115 | ||||||||||
| Commercial real estate – owner-occupied |
5,213 | 4,363 | 4,354 | 7,684 | 15,666 | |||||||||||||||
| Commercial real estate – investor |
1,675 | 1,675 | 940 | 3,112 | 1,391 | |||||||||||||||
| Residential mortgage |
7,017 | 7,102 | 8,788 | 5,779 | 5,481 | |||||||||||||||
| Home equity loans and lines |
1,450 | 1,226 | 1,202 | 1,574 | 1,738 | |||||||||||||||
| Other consumer |
— | — | — | 2 | 3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total non-performing loans |
16,507 | 15,330 | 16,193 | 18,274 | 24,394 | |||||||||||||||
| Other real estate owned |
9,107 | 9,791 | 9,029 | 8,827 | 3,262 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total non-performing assets |
$ | 25,614 | $ | 25,121 | $ | 25,222 | $ | 27,101 | $ | 27,656 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Purchased credit-impaired (“PCI”) loans |
$ | 5,836 | $ | 9,673 | $ | 376 | $ | 461 | $ | 1,019 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Delinquent loans 30 to 89 days |
$ | 8,553 | $ | 15,643 | $ | 6,996 | $ | 9,087 | $ | 8,025 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Troubled debt restructurings: |
||||||||||||||||||||
| Non-performing (included in total non-performing loans above) |
$ | 3,520 | $ | 2,990 | $ | 4,775 | $ | 4,918 | $ | 3,819 | ||||||||||
| Performing |
26,396 | 28,173 | 26,689 | 26,344 | 26,935 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total troubled debt restructurings |
$ | 29,916 | $ | 31,163 | $ | 31,464 | $ | 31,262 | $ | 30,754 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Allowance for loan losses |
$ | 15,617 | $ | 16,678 | $ | 16,214 | $ | 16,722 | $ | 16,638 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Allowance for loan losses as a percent of total loans receivable (1) |
0.51 | % | 0.53 | % | 0.80 | % | 0.84 | % | 0.85 | % | ||||||||||
| Allowance for loan losses as a percent of total non-performing loans |
94.61 | 108.79 | 100.13 | 91.51 | 68.21 | |||||||||||||||
| Non-performing loans as a percent of total loans receivable |
0.54 | 0.48 | 0.80 | 0.91 | 1.24 | |||||||||||||||
| Non-performing assets as a percent of total assets |
0.62 | 0.62 | 0.97 | 1.05 | 1.08 | |||||||||||||||
| (1) | The loans acquired from Cape and Colonial American were recorded at fair value. The net credit mark on these loans, not reflected in the allowance for loan losses, was $17,051, $27,281, $2,013, $2,202 and $3,046 at September 30, 2016, June 30, 2016, March 31, 2016, December 31, 2015 and September 30, 2015, respectively. |
NET CHARGE-OFFS
| For the three months ended | ||||||||||||||||||||
| September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
| Net Charge-offs: |
||||||||||||||||||||
| Loan charge-offs |
$ | (2,116 | ) | $ | (223 | ) | $ | (1,172 | ) | $ | (236 | ) | $ | (210 | ) | |||||
| Recoveries on loans |
167 | 25 | 101 | 19 | 14 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net loan charge-offs |
$ | (1,949 | ) | $ | (198 | ) | $ | (1,071 | ) | $ | (217 | ) | $ | (196 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net loan charge-offs to average total loans (annualized) |
0.25 | % | 0.03 | % | 0.21 | % | 0.04 | % | 0.04 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net charge-off detail - (loss) recovery: |
||||||||||||||||||||
| Commercial |
$ | (1,707 | ) | $ | (84 | ) | $ | (1,073 | ) | $ | 12 | $ | (47 | ) | ||||||
| Residential mortgage and construction |
(161 | ) | (69 | ) | (24 | ) | (117 | ) | (51 | ) | ||||||||||
| Home equity loans and lines |
(83 | ) | (45 | ) | 28 | (109 | ) | (98 | ) | |||||||||||
| Other consumer |
2 | — | (2 | ) | (3 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net loans charged-off |
$ | (1,949 | ) | $ | (198 | ) | $ | (1,071 | ) | $ | (217 | ) | $ | (196 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Note: | Included in net loan charge-offs for the three months ended September 30, 2016 is $1,627 relating to credit-impaired loans sold or held-for-sale. |
16
OceanFirst Financial Corp.
ANALYSIS OF NET INTEREST INCOME
| FOR THE THREE MONTHS ENDED, | ||||||||||||||||||||||||||||||||||||
| SEPTEMBER 30, 2016 | JUNE 30, 2016 | SEPTEMBER 30, 2015 | ||||||||||||||||||||||||||||||||||
| AVERAGE BALANCE |
INTEREST | AVERAGE YIELD/ COST |
AVERAGE BALANCE |
INTEREST | AVERAGE YIELD/ COST |
AVERAGE BALANCE |
INTEREST | AVERAGE YIELD/ COST |
||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||
| Assets |
||||||||||||||||||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||||||||||||||||||
| Interest-earning deposits and short-term investments |
$ | 168,045 | $ | 139 | 0.33 | % | $ | 40,567 | $ | 41 | 0.41 | % | $ | 55,047 | $ | 17 | 0.12 | % | ||||||||||||||||||
| Securities (1) and FHLB stock |
533,809 | 2,561 | 1.91 | 571,463 | 2,579 | 1.82 | 468,707 | 1,977 | 1.67 | |||||||||||||||||||||||||||
| Loans receivable, net (2): |
||||||||||||||||||||||||||||||||||||
| Commercial |
1,723,520 | 20,970 | 4.84 | 1,471,159 | 17,783 | 4.86 | 885,769 | 9,980 | 4.47 | |||||||||||||||||||||||||||
| Residential |
1,118,435 | 10,874 | 3.87 | 1,076,557 | 10,225 | 3.82 | 810,103 | 7,939 | 3.89 | |||||||||||||||||||||||||||
| Home equity |
255,919 | 2,745 | 4.27 | 236,937 | 2,498 | 4.24 | 193,483 | 2,050 | 4.20 | |||||||||||||||||||||||||||
| Other |
1,163 | 18 | 6.16 | 1,011 | 15 | 5.97 | 513 | 7 | 5.41 | |||||||||||||||||||||||||||
| Allowance for loan loss net of deferred loan fees |
(13,346 | ) | — | — | (13,146 | ) | — | — | (14,410 | ) | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Loans receivable, net |
3,085,691 | 34,607 | 4.46 | 2,772,518 | 30,521 | 4.43 | 1,875,458 | 19,976 | 4.23 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total interest-earning assets Total interest- earning assets |
3,787,545 | 37,307 | 3.92 | 3,384,548 | 33,141 | 3.94 | 2,399,212 | 21,970 | 3.63 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Non-interest-earning assets |
316,290 | 262,554 | 122,269 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total assets |
$ | 4,103,835 | $ | 3,647,102 | $ | 2,521,481 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity |
||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||||||||||||||
| Interest-bearing checking |
$ | 1,425,350 | 583 | 0.16 | $ | 1,166,298 | 503 | 0.17 | $ | 870,115 | 291 | 0.13 | ||||||||||||||||||||||||
| Money market |
386,490 | 295 | 0.30 | 298,530 | 180 | 0.24 | 142,063 | 65 | 0.18 | |||||||||||||||||||||||||||
| Savings |
488,749 | 49 | 0.04 | 434,438 | 41 | 0.04 | 306,928 | 27 | 0.03 | |||||||||||||||||||||||||||
| Time deposits |
477,496 | 1,156 | 0.96 | 417,301 | 1,047 | 1.01 | 244,325 | 779 | 1.26 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total |
2,778,085 | 2,083 | 0.30 | 2,316,567 | 1,771 | 0.31 | 1,563,431 | 1,162 | 0.29 | |||||||||||||||||||||||||||
| Securities sold under agreements to repurchase |
68,540 | 24 | 0.14 | 76,907 | 26 | 0.14 | 78,516 | 30 | 0.15 | |||||||||||||||||||||||||||
| FHLB advances |
264,213 | 1,067 | 1.61 | 287,171 | 1,201 | 1.68 | 249,623 | 998 | 1.59 | |||||||||||||||||||||||||||
| Other borrowings |
26,207 | 198 | 3.01 | 22,500 | 129 | 2.31 | 27,500 | 205 | 2.96 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total interest-bearing liabilities |
3,137,045 | 3,372 | 0.43 | 2,703,145 | 3,127 | 0.47 | 1,919,070 | 2,395 | 0.50 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Non-interest-bearing deposits |
521,088 | 529,230 | 354,411 | |||||||||||||||||||||||||||||||||
| Non-interest-bearing liabilities |
31,536 | 26,033 | 13,827 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total liabilities |
3,689,669 | 3,258,408 | 2,287,308 | |||||||||||||||||||||||||||||||||
| Stockholders’ equity |
414,166 | 388,694 | 234,173 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 4,103,835 | $ | 3,647,102 | $ | 2,521,481 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Net interest income |
$ | 33,935 | $ | 30,014 | $ | 19,575 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Net interest rate spread (3) |
3.49 | % | 3.47 | % | 3.13 | % | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Net interest margin (4) |
3.56 | % | 3.57 | % | 3.24 | % | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total cost of deposits (including non-interest-bearing deposits) |
0.25 | % | 0.25 | % | 0.24 | % | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| (1) | Amounts are recorded at average amortized cost |
| (2) | Amount is net of deferred loan fees, undisbursed loan funds, discounts and premiums and estimated loss allowances 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. |
17
| FOR THE NINE MONTHS ENDED, | ||||||||||||||||||||||||
| SEPTEMBER 30, 2016 | SEPTEMBER 30, 2015 | |||||||||||||||||||||||
| AVERAGE BALANCE |
INTEREST | AVERAGE YIELD/ COST |
AVERAGE BALANCE |
INTEREST | AVERAGE YIELD/ COST |
|||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||
| Assets |
||||||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||||||
| Interest-earning deposits and short-term investments |
$ | 86,007 | $ | 209 | 0.32 | % | $ | 37,409 | $ | 29 | 0.10 | % | ||||||||||||
| Securities (1) and FHLB stock |
517,051 | 7,149 | 1.85 | 489,671 | 6,133 | 1.67 | ||||||||||||||||||
| Loans receivable, net (2): |
||||||||||||||||||||||||
| Commercial |
1,390,196 | 49,750 | 4.78 | 805,961 | 27,034 | 4.50 | ||||||||||||||||||
| Residential |
1,009,012 | 29,139 | 3.86 | 793,512 | 23,469 | 3.95 | ||||||||||||||||||
| Home equity |
228,172 | 7,233 | 4.23 | 194,743 | 6,027 | 4.14 | ||||||||||||||||||
| Other |
893 | 41 | 6.13 | 461 | 23 | 6.67 | ||||||||||||||||||
| Allowance for loan loss net of deferred loan fees |
(13,379 | ) | — | — | (13,654 | ) | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Loans receivable, net |
2,614,894 | 86,163 | 4.40 | 1,781,023 | 56,553 | 4.25 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total interest-earning assets |
3,217,952 | 93,521 | 3.88 | 2,308,103 | 62,715 | 3.63 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Non-interest-earning assets |
236,399 | 115,577 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total assets |
$ | 3,454,351 | $ | 2,423,680 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Liabilities and Stockholders’ Equity |
||||||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||
| Interest-bearing checking |
$ | 1,181,110 | 1,391 | 0.16 | $ | 864,054 | 673 | 0.10 | ||||||||||||||||
| Money market |
280,836 | 546 | 0.26 | 122,038 | 111 | 0.12 | ||||||||||||||||||
| Savings |
413,388 | 117 | 0.04 | 304,799 | 75 | 0.03 | ||||||||||||||||||
| Time deposits |
386,505 | 3,071 | 1.06 | 220,827 | 2,225 | 1.35 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
2,261,839 | 5,125 | 0.30 | 1,511,718 | 3,084 | 0.27 | ||||||||||||||||||
| Securities sold under agreements to repurchase |
76,289 | 78 | 0.14 | 71,054 | 73 | 0.14 | ||||||||||||||||||
| FHLB advances |
272,405 | 3,351 | 1.64 | 254,189 | 2,810 | 1.48 | ||||||||||||||||||
| Other borrowings |
23,846 | 459 | 2.57 | 27,500 | 607 | 2.95 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total interest-bearing liabilities |
2,634,379 | 9,013 | 0.46 | 1,864,461 | 6,574 | 0.47 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Non-interest-bearing deposits |
448,459 | 319,797 | ||||||||||||||||||||||
| Non-interest-bearing liabilities |
23,650 | 14,407 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities |
3,106,488 | 2,198,665 | ||||||||||||||||||||||
| Stockholders’ equity |
347,863 | 225,015 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 3,454,351 | $ | 2,423,680 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Net interest income |
$ | 84,508 | $ | 56,141 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Net interest rate spread (3) |
3.42 | % | 3.16 | % | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Net interest margin (4) |
3.51 | % | 3.25 | % | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total cost of deposits (including non-interest-bearing deposits) |
0.25 | % | 0.23 | % | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| (1) | Amounts are recorded at average amortized cost |
| (2) | Amount is net of deferred loan fees, undisbursed loan funds, discounts and premiums and estimated loss allowances 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. |
18
OceanFirst Financial Corp.
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share amounts)
| September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
| Selected Financial Condition Data: |
||||||||||||||||||||
| Total assets |
$ | 4,151,017 | $ | 4,047,493 | $ | 2,588,447 | $ | 2,593,068 | $ | 2,557,898 | ||||||||||
| Securities available-for-sale, at estimated fair value |
2,497 | 12,509 | 30,085 | 29,902 | 30,108 | |||||||||||||||
| Securities held-to-maturity, net |
470,642 | 513,721 | 375,616 | 394,813 | 392,932 | |||||||||||||||
| Federal Home Loan Bank of New York stock |
18,289 | 21,128 | 16,645 | 19,978 | 15,970 | |||||||||||||||
| Loans receivable, net |
3,028,696 | 3,130,046 | 1,996,993 | 1,970,703 | 1,938,972 | |||||||||||||||
| Loans held-for-sale |
21,679 | 5,310 | 3,386 | 2,697 | 2,306 | |||||||||||||||
| Deposits |
3,324,681 | 3,206,262 | 1,971,360 | 1,916,678 | 1,967,771 | |||||||||||||||
| Federal Home Loan Bank advances |
251,146 | 312,603 | 251,917 | 324,385 | 233,006 | |||||||||||||||
| Securities sold under agreements to repurchase and other borrowings |
125,477 | 90,173 | 106,413 | 98,372 | 105,493 | |||||||||||||||
| Stockholders’ equity |
417,244 | 409,258 | 241,076 | 238,446 | 234,688 | |||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
| Selected Operating Data: |
||||||||||||||||||||
| Interest income |
$ | 37,307 | $ | 33,141 | $ | 23,073 | $ | 23,149 | $ | 21,970 | ||||||||||
| Interest expense |
3,372 | 3,127 | 2,514 | 2,461 | 2,395 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net interest income |
33,935 | 30,014 | 20,559 | 20,688 | 19,575 | |||||||||||||||
| Provision for loan losses |
888 | 662 | 563 | 300 | 300 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net interest income after provision for loan losses |
33,047 | 29,352 | 19,996 | 20,388 | 19,275 | |||||||||||||||
| Other income |
5,896 | 4,883 | 3,376 | 4,118 | 4,152 | |||||||||||||||
| Operating expenses |
23,715 | 21,457 | 15,314 | 15,885 | 15,117 | |||||||||||||||
| Merger related expenses |
1,311 | 7,189 | 1,402 | 614 | 1,030 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income before provision for income taxes |
13,917 | 5,589 | 6,656 | 8,007 | 7,280 | |||||||||||||||
| Provision for income taxes |
4,789 | 1,928 | 2,451 | 2,777 | 2,582 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income |
$ | 9,128 | $ | 3,661 | $ | 4,205 | $ | 5,230 | $ | 4,698 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Diluted earnings per share |
$ | 0.35 | $ | 0.16 | $ | 0.25 | $ | 0.31 | $ | 0.28 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net accretion/amortization of purchase accounting adjustments included in net interest income |
$ | 1,637 | $ | 1,267 | $ | 164 | $ | 177 | $ | 140 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| At or For the Three Months Ended | ||||||||||||||||||||
| September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
| Selected Financial Ratios and Other Data(1): |
||||||||||||||||||||
| Performance Ratios (Annualized): |
||||||||||||||||||||
| Return on average assets (2) |
0.88 | % | 0.40 | % | 0.65 | % | 0.80 | % | 0.74 | % | ||||||||||
| Return on average stockholders’ equity (2) |
8.77 | 3.79 | 7.05 | 8.77 | 7.96 | |||||||||||||||
| Return on average tangible stockholders’ equity (2) (3) |
10.58 | 4.32 | 7.59 | 8.86 | 8.02 | |||||||||||||||
| Stockholders’ equity to total assets |
10.05 | 10.11 | 9.31 | 9.19 | 9.18 | |||||||||||||||
| Tangible stockholders’ equity to tangible assets (3) |
8.50 | 8.51 | 9.23 | 9.12 | 9.10 | |||||||||||||||
| Net interest rate spread |
3.49 | 3.47 | 3.25 | 3.25 | 3.13 | |||||||||||||||
| Net interest margin |
3.56 | 3.57 | 3.34 | 3.35 | 3.24 | |||||||||||||||
| Operating expenses to average assets (2) |
2.43 | 3.16 | 2.58 | 2.53 | 2.54 | |||||||||||||||
| Efficiency ratio (2) (4) |
62.83 | 82.09 | 69.84 | 66.51 | 68.05 | |||||||||||||||
| For the Nine Months Ended September 30, | ||||||||
| 2016 | 2015 | |||||||
| Performance Ratios (Annualized): |
||||||||
| Return on average assets (2) |
0.66 | % | 0.83 | % | ||||
| Return on average stockholders’ equity (2) |
6.52 | 8.97 | ||||||
| Return on average tangible stockholders’ equity (2) (3) |
7.39 | 8.99 | ||||||
| Net interest rate spread |
3.42 | 3.16 | ||||||
| Net interest margin |
3.51 | 3.25 | ||||||
| Operating expenses to average assets (2) |
2.72 | 2.45 | ||||||
| Efficiency ratio (2) (4) |
71.34 | 64.69 | ||||||
19
(continued)
| At or For the Three Months Ended | ||||||||||||||||||||
| September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
| Wealth Management: |
||||||||||||||||||||
| Assets under administration |
$ | 221,612 | $ | 221,277 | $ | 203,723 | $ | 229,039 | $ | 205,087 | ||||||||||
| Per Share Data: |
||||||||||||||||||||
| Cash dividends per common share |
$ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | ||||||||||
| Stockholders’ equity per common share at end of period |
16.14 | 15.89 | 13.89 | 13.79 | 13.58 | |||||||||||||||
| Tangible stockholders’ equity per common share at end of period (3) |
13.42 | 13.14 | 13.75 | 13.67 | 13.46 | |||||||||||||||
| Number of full-service customer facilities: |
50 | 50 | 28 | 27 | 27 | |||||||||||||||
| Quarterly Average Balances |
||||||||||||||||||||
| Total securities |
$ | 533,809 | $ | 571,463 | $ | 445,696 | $ | 456,486 | $ | 468,707 | ||||||||||
| Loans, receivable, net |
3,085,691 | 2,772,518 | 1,981,101 | 1,960,099 | 1,875,458 | |||||||||||||||
| Total interest-earning assets |
3,787,545 | 3,384,548 | 2,475,298 | 2,457,812 | 2,399,212 | |||||||||||||||
| Total assets |
4,103,835 | 3,647,102 | 2,605,017 | 2,587,109 | 2,521,481 | |||||||||||||||
| Interest-bearing transaction deposits |
2,300,589 | 1,899,266 | 1,372,357 | 1,371,415 | 1,319,106 | |||||||||||||||
| Time deposits |
477,496 | 417,301 | 263,722 | 256,378 | 244,325 | |||||||||||||||
| Total borrowed funds |
358,960 | 386,578 | 372,240 | 357,171 | 355,639 | |||||||||||||||
| Total interest-bearing liabilities |
3,137,045 | 2,703,145 | 2,008,319 | 1,984,964 | 1,919,070 | |||||||||||||||
| Non-interest bearing deposits |
521,088 | 529,230 | 343,371 | 349,473 | 354,411 | |||||||||||||||
| Stockholder’s equity |
414,166 | 388,694 | 239,999 | 236,498 | 234,173 | |||||||||||||||
| Total deposits |
3,299,173 | 2,845,797 | 1,979,450 | 1,977,266 | 1,917,842 | |||||||||||||||
| Quarterly Yields |
||||||||||||||||||||
| Total securities |
1.91 | % | 1.82 | % | 1.81 | % | 1.73 | % | 1.67 | % | ||||||||||
| Loans, receivable, net |
4.46 | 4.43 | 4.27 | 4.28 | 4.23 | |||||||||||||||
| Total interest-earning assets |
3.92 | 3.94 | 3.75 | 3.74 | 3.63 | |||||||||||||||
| Interest-bearing transaction deposits |
0.16 | 0.15 | 0.12 | 0.11 | 0.12 | |||||||||||||||
| Time deposits |
0.96 | 1.01 | 1.33 | 1.29 | 1.26 | |||||||||||||||
| Borrowed funds |
1.43 | 1.41 | 1.34 | 1.38 | 1.38 | |||||||||||||||
| Total interest-bearing liabilities |
0.43 | 0.47 | 0.50 | 0.49 | 0.50 | |||||||||||||||
| Net interest spread |
3.49 | 3.47 | 3.25 | 3.25 | 3.13 | |||||||||||||||
| Net interest margin |
3.56 | 3.57 | 3.34 | 3.34 | 3.24 | |||||||||||||||
| Total deposits |
0.25 | 0.25 | 0.26 | 0.24 | 0.24 | |||||||||||||||
| (1) | With the exception of end of quarter ratios, all ratios are based on average daily balances. |
| (2) | Performance ratios for each period include merger related expenses. Refer to Other Items – Non-GAAP Reconciliation for impact of merger related expenses. |
| (3) | Tangible stockholders’ equity and tangible assets exclude intangible assets relating to goodwill and core deposit intangible. |
| (4) | Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income. |
20
OceanFirst Financial Corp.
OTHER ITEMS
(dollars in thousands, except per share amounts)
NON-GAAP RECONCILIATION
| For the three months ended | ||||||||||||||||||||
| September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
| Core earnings: |
||||||||||||||||||||
| Net income |
$ | 9,128 | $ | 3,661 | $ | 4,205 | $ | 5,230 | $ | 4,698 | ||||||||||
| Add: Merger related expenses |
1,311 | 7,189 | 1,402 | 614 | 1,030 | |||||||||||||||
| Loss on sale of investment securities available for sale |
— | 12 | — | — | — | |||||||||||||||
| Federal Home Loan Bank prepayment fee |
— | 136 | — | — | — | |||||||||||||||
| Less: Income tax benefit on items |
(172 | ) | (2,311 | ) | (171 | ) | (173 | ) | (316 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Core earnings |
$ | 10,267 | $ | 8,687 | $ | 5,436 | $ | 5,671 | $ | 5,412 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Core diluted earnings per share |
$ | 0.40 | $ | 0.38 | $ | 0.32 | $ | 0.33 | $ | 0.32 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Core ratios: |
||||||||||||||||||||
| Return on average assets |
1.00 | % | 0.96 | % | 0.84 | % | 0.87 | % | 0.85 | % | ||||||||||
| Return on average tangible stockholder’s equity |
11.90 | 10.26 | 9.19 | 9.60 | 9.24 | |||||||||||||||
COMPUTATION OF TOTAL TANGIBLE EQUITY TO TOTAL TANGIBLE ASSETS
| September 30, 2016 |
June 30, 2016 |
March 31, 2016 |
December 31, 2015 |
September 30, 2015 |
||||||||||||||||
| Total stockholders’ equity |
$ | 417,244 | $ | 409,258 | $ | 241,076 | $ | 238,446 | $ | 234,688 | ||||||||||
| Less: |
||||||||||||||||||||
| Goodwill |
66,537 | 67,102 | 2,081 | 1,822 | 1,845 | |||||||||||||||
| Core deposit intangible |
3,722 | 3,903 | 310 | 256 | 269 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible stockholders’ equity |
$ | 346,985 | $ | 338,253 | $ | 238,685 | $ | 236,368 | $ | 232,574 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Assets |
$ | 4,151,017 | $ | 4,047,493 | $ | 2,588,447 | $ | 2,593,068 | $ | 2,557,898 | ||||||||||
| Less: |
||||||||||||||||||||
| Goodwill |
66,537 | 67,102 | 2,081 | 1,822 | 1,845 | |||||||||||||||
| Core deposit intangible |
3,722 | 3,903 | 310 | 256 | 269 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible assets |
$ | 4,080,758 | $ | 3,976,488 | $ | 2,586,056 | $ | 2,590,990 | $ | 2,555,784 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Tangible stockholders’ equity to tangible assets |
8.50 | % | 8.51 | % | 9.23 | % | 9.12 | % | 9.10 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
21
ACQUISITION DATE – FAIR VALUE BALANCE SHEET
The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of the acquisition for Cape, net of the total consideration paid (in thousands):
| At May 2, 2016 | ||||||||||||
| Cape Book Value |
Purchase Accounting Adjustments |
Estimated Fair Value |
||||||||||
| Total Purchase Price: |
$ | 196,403 | ||||||||||
|
|
|
|||||||||||
| Assets acquired: |
||||||||||||
| Cash and cash equivalents |
$ | 30,025 | $ | — | $ | 30,025 | ||||||
| Securities and Federal Home Loan Bank Stock |
218,577 | 361 | 218,938 | |||||||||
| Loans: |
1,169,568 | — | 1,169,568 | |||||||||
| Specific credit fair value on credit impaired loans |
— | (4,925 | ) | (4,925 | ) | |||||||
| General credit fair value |
— | (20,533 | ) | (20,533 | ) | |||||||
| Interest rate fair value |
— | 1,888 | 1,888 | |||||||||
| Reverse allowance for loan losses |
— | 9,931 | 9,931 | |||||||||
| Reverse net deferred fees, premiums and discounts |
— | 1,824 | 1,824 | |||||||||
| Premises and equipment |
27,972 | (6,249 | ) | 21,723 | ||||||||
| Other real estate owned |
2,343 | (347 | ) | 1,996 | ||||||||
| Deferred tax asset |
9,407 | 12,257 | 21,664 | |||||||||
| Other assets |
61,793 | — | 61,793 | |||||||||
| Core deposit intangible |
831 | 2,887 | 3,718 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total assets acquired |
1,520,516 | (2,906 | ) | 1,517,610 | ||||||||
|
|
|
|
|
|
|
|||||||
| Liabilities assumed: |
||||||||||||
| Deposits |
(1,247,688 | ) | (679 | ) | (1,248,367 | ) | ||||||
| Borrowings |
(123,587 | ) | (879 | ) | (124,466 | ) | ||||||
| Other liabilities |
(7,611 | ) | (5,224 | ) (a) | (12,835 | ) | ||||||
|
|
|
|
|
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| Total liabilities assumed |
(1,378,886 | ) | (6,782 | ) | (1,385,668 | ) | ||||||
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| Net assets acquired |
141,630 | (9,688 | ) | 131,942 | ||||||||
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|
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| Goodwill recorded in the merger |
$ | 64,461 | ||||||||||
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|
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| (a) | Represents accrued liability related to the Pension Plan. |
22