Companies: 10,793     total market cap: $138.593 T
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OceanFirst Financial
OCFC
#5882
Rank
$1.08 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$18.98
Share price
1.71%
Change (1 day)
30.81%
Change (1 year)
๐Ÿฆ Banks๐Ÿ’ณ Financial services
Categories
  1. OceanFirst Financial
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2023 Q2

OceanFirst Financial - 10-Q quarterly report FY2023 Q2


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________________ 
FORM 10-Q
 ________________________________________________  
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-11713
________________________________________________  
OceanFirst Financial Corp.
(Exact name of registrant as specified in its charter)
 ________________________________________________ 
Delaware22-3412577
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
110 West Front Street, Red Bank,NJ07701
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (732) 240-4500
________________________________________________  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per shareOCFCNASDAQ
Depositary Shares (each representing a 1/40th interest in a share of 7.0% Series A Non-Cumulative, perpetual preferred stock)OCFCPNASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ☒    No   ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☒Accelerated Filer ☐
Non-accelerated Filer ☐Smaller Reporting Company ☐
Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ☐    NO  ☒.
As of July 31, 2023, there were 59,421,498 shares of the Registrant’s Common Stock, par value $0.01 per share, outstanding.

OceanFirst Financial Corp.
INDEX TO FORM 10-Q
 
  PAGE
PART I.FINANCIAL INFORMATION
Item 1.Consolidated Financial Statements (unaudited)
21
22
23
24
26
28
Item 2.
4
Item 3.
19
Item 4.
20
PART II.
50
Item 1.
50
Item 1A.
50
Item 2.
50
Item 3.
50
Item 4.
50
Item 5.
50
Item 6.
51
52

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FINANCIAL SUMMARY(1)
At or for the Quarters Ended
(dollars in thousands, except per share amounts)June 30, 2023March 31, 2023June 30, 2022
SELECTED FINANCIAL CONDITION DATA:
Total assets$13,538,903 $13,555,175 $12,438,653 
Loans receivable, net of allowance for loan credit losses10,030,106 9,986,949 9,380,688 
Deposits10,158,337 9,993,095 9,831,484 
Total stockholders’ equity1,626,283 1,610,371 1,521,432 
SELECTED OPERATING DATA:
Net interest income92,109 98,802 90,797 
Provision for credit losses1,229 3,013 1,254 
Other income8,928 2,073 7,541 
Operating expenses62,930 61,309 58,661 
Net income 27,882 27,899 29,483 
Net income attributable to OceanFirst Financial Corp.27,797 27,883 28,961 
Net income available to common stockholders26,793 26,879 27,957 
Diluted earnings per share0.45 0.46 0.47 
SELECTED FINANCIAL RATIOS:
Stockholders’ equity per common share at end of period27.37 27.07 25.73 
Cash dividend per share0.20 0.20 0.17 
Dividend payout ratio per common share44.44 %43.48 %36.17 %
Stockholders’ equity to total assets12.01 11.88 12.23 
Return on average assets (2) (3) (4)
0.80 0.82 0.92 
Return on average stockholders’ equity (2) (3) (4)
6.61 6.77 7.31 
Net interest rate spread (5)
2.50 2.92 3.18 
Net interest margin (2) (6)
3.02 3.34 3.29 
Operating expenses to average assets (2) (4)
1.87 1.88 1.92 
Efficiency ratio (4) (7)
62.28 60.78 59.65 
Loans-to-deposits ratio (8)
99.30 100.50 95.90 
ASSET QUALITY:
Non-performing loans (9)
$22,758 $22,437 $20,753 
Allowance for loan credit losses as a percent of total loans receivable (8) (10)
0.61 %0.60 %0.55 %
Allowance for loan credit losses as a percent of total non-performing loans (9) (10)
271.51 268.28 250.86 
Non-performing loans as a percent of total loans receivable (8) (9)
0.23 0.22 0.22 
Non-performing assets as a percent of total assets (9)
0.17 0.17 0.17 
(1) With the exception of end of quarter ratios, all ratios are based on average daily balances.
(2) Ratios are annualized.
(3) Ratios for each period are based on net income available to common stockholders.
(4) Performance ratios for the three months ended June 30, 2023 included a net loss on equity investments of $559,000, or $397,000, net of tax benefit. Performance ratios for the three months ended March 31, 2023 included a net expense related to merger related expenses, net branch consolidation expenses, net loss on equity investments, and net loss on sale of investments of $7.6 million, or $5.8 million, net of tax benefit. Performance ratios for the three months ended June 30, 2022 included a net expense related to merger related expenses, net branch consolidation expenses, and net loss on equity investments of $8.8 million, or $6.7 million, net of tax benefit.
(5) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(7) Efficiency ratio represents the ratio of operating expenses to the aggregate of other income and net interest income.
(8) Total loans receivable excludes loans held-for-sale.
(9) Non-performing loans and assets generally consist of all loans 90 days or more past due and other loans in the process of foreclosure. It is the Company’s policy to cease accruing interest on all such loans and to reverse previously accrued interest.
4
(10) Loans acquired from prior bank acquisitions were recorded at fair value. The net unamortized credit and purchased with credit deterioration (“PCD”) marks on these loans, not reflected in the allowance for loan credit losses, was $9.8 million, $10.5 million, and $15.5 million at June 30, 2023, March 31, 2023 and June 30, 2022, respectively.

5
Summary
OceanFirst Financial Corp. is the holding company for OceanFirst Bank N.A. (the “Bank”), a regional bank serving business and retail customers throughout New Jersey and the major metropolitan areas of Philadelphia, New York, Baltimore, and Boston. The term “Company” refers to OceanFirst Financial Corp., the Bank and all of their subsidiaries on a consolidated basis. The Company’s results of operations are primarily dependent on net interest income, which is the difference between the interest income earned on interest-earning assets, such as loans and investments, and the interest expense on its interest-bearing liabilities, such as deposits and borrowings. The Company also generates non-interest income such as income from bankcard services, trust and asset management products and services, deposit account services, bank owned life insurance, commercial loan swap income, gain on sale of loans, securities and equity investments, title-related fees and service charges and other fees. The Company’s operating expenses primarily consist of compensation and employee benefits, occupancy and equipment, marketing, federal deposit insurance and regulatory assessments, data processing, check card processing, professional fees and other general and administrative expenses. The Company’s results of operations are also significantly affected by competition, general economic conditions, including levels of unemployment and real estate values, as well as changes in market interest rates, inflation, government policies and actions of regulatory agencies.
Key developments relating to the Company’s financial results and corporate activities for the three months ended June 30, 2023 were as follows:

•Excess Liquidity: The Company maintained elevated levels of on-balance sheet cash and funding availability of $4.0 billion at June 30, 2023. Deposits increased $165.2 million during the quarter, which included a shift from non-maturity deposits to time deposits.
•Asset Quality: Continued strong asset quality as criticized assets, non-performing loans, and loans 30 to 89 days past due as a percent of total loans receivable were 1.18%, 0.23%, and 0.03%, respectively, at June 30, 2023. Net charge-off activity continues to remain at zero percent of total average loans on an annualized basis.
•Strong Capital: Capital ratios remained above “well-capitalized” levels, including the Company’s common equity tier 1 capital, which increased 19 basis points from the prior quarter, to 10.21% at June 30, 2023. Stockholders’ equity per common share was $27.37, up $0.30 from the prior quarter.
The current quarter results were impacted by the following matters. Net interest income and cost of funds were adversely impacted by shifts to higher cost time deposits, repricing of government deposits, and maintaining excess liquidity on balance sheet, which outpaced the increase in interest-earning assets. This drove an increase in deposit betas, which is the change in rates paid to customers relative to the change in federal funds target rate, to 29%.
Net income available to common stockholders for the three and six months ended June 30, 2023 decreased to $26.8 million and increased to $53.7 million, respectively, or $0.45 and $0.91 per diluted share, as compared to $28.0 million and $52.7 million, or $0.47 and $0.89 per diluted share, for the corresponding prior year periods. The dividends paid to preferred stockholders were $1.0 million and $2.0 million for the three and six months ended June 30, 2023 and 2022, respectively.
On July 20, 2023, the Company’s Board of Directors declared a quarterly cash dividend on common stock of $0.20 per share. The dividend, related to the quarter ended June 30, 2023, will be paid on August 18, 2023 to common stockholders of record on August 7, 2023. The Board also declared a quarterly cash dividend on preferred stock of $0.4375 per depositary share, representing a 1/40th interest in the Series A Preferred Stock. This dividend will be paid on August 15, 2023 to preferred stockholders of record on July 31, 2023.
6
Recent Developments
Bank failures earlier in the year led to uncertainty and volatility in the financial services industry. In response to these events, in March 2023 the Company took a series of precautionary measures, which included expanding and optimizing its funding and contingency funding sources; enhanced monitoring of deposit and funding flows; refreshing stress test scenarios; and evaluating supplemental liquidity and conservation measures. Additionally, management executed other timely actions such as re-evaluating the securities portfolio and updating capital and credit stress tests to understand and mitigate other potential risks that were highlighted by these events.
As a result of these procedures, the Company took a few key actions such as increasing on-balance sheet liquidity and funding capacity to $4.0 billion at June 30, 2023; sold specific positions in two financial institutions for the three months ended March 31, 2023, reviewed and concluded no further impairment existed in the Company’s remaining securities portfolio; and performed credit stress tests on the Company’s commercial real estate - investor portfolio, which included site visits. These actions resulted in a robust liquidity position and strong balance sheet. The Company will continue to monitor these events and the impact they may have in future periods, and will respond accordingly as economic and industry conditions change. Refer to the “Liquidity and Capital Resources” section for further information regarding liquidity.

7
Analysis of Net Interest Income
Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rate earned or paid on them. For the three and six months ended June 30, 2023, interest income included net loan fees of $1.2 million and $1.8 million, respectively, as compared to $3.2 million and $4.2 million for the same prior year periods, respectively.
The following tables set forth certain information relating to the Company for the three and six months ended June 30, 2023 and 2022. The yields and costs, which are annualized, are derived by dividing the income or expense by the average balance of the related assets or liabilities, respectively, for the periods shown except where noted otherwise. Average balances are derived from average daily balances. The yields and costs include certain fees and costs which are considered adjustments to yields.
 For the Three Months Ended June 30,
 20232022
(dollars in thousands)Average BalanceInterest
Average
Yield/
Cost (1)
Average BalanceInterest
Average
Yield/
Cost (1)
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments$308,238 $4,283 5.57 %$67,440 $100 0.59 %
Securities (2)
1,931,032 16,709 3.47 1,811,869 8,585 1.90 
Loans receivable, net (3)
Commercial6,912,698 99,350 5.76 6,278,465 65,390 4.18 
Residential real estate2,895,629 25,936 3.58 2,718,787 22,742 3.35 
Home equity loans and lines and other consumer (“other consumer”)255,785 3,818 5.99 251,014 2,599 4.15 
Allowance for loan credit losses, net of deferred loan costs and fees(53,327)— — (43,683)— — 
Loans receivable, net10,010,785 129,104 5.17 9,204,583 90,731 3.95 
Total interest-earning assets12,250,055 150,096 4.91 11,083,892 99,416 3.60 
Non-interest-earning assets1,217,666 1,168,093 
Total assets$13,467,721 $12,251,985 
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking$3,718,289 11,964 1.29 %$4,020,474 1,612 0.16 %
Money market694,311 3,678 2.12 739,647 279 0.15 
Savings1,248,312 389 0.12 1,639,568 161 0.04 
Time deposits2,458,872 21,903 3.57 937,387 2,265 0.97 
Total8,119,784 37,934 1.87 7,337,076 4,317 0.24 
Federal Home Loan Bank (“FHLB”) advances1,246,914 15,406 4.96 538,754 1,647 1.23 
Securities sold under agreements to repurchase71,752 192 1.07 103,929 41 0.16 
Other borrowings195,754 4,455 9.13 194,481 2,614 5.39 
Total borrowings1,514,420 20,053 5.31 837,164 4,302 2.06 
Total interest-bearing liabilities9,634,204 57,987 2.41 8,174,240 8,619 0.42 
Non-interest-bearing deposits1,873,226 2,328,124 
Non-interest-bearing liabilities333,598 214,900 
Total liabilities11,841,028 10,717,264 
Stockholders’ equity1,626,693 1,534,721 
Total liabilities and equity$13,467,721 $12,251,985 
Net interest income$92,109 $90,797 
Net interest rate spread (4)
2.50 %3.18 %
Net interest margin (5)
3.02 %3.29 %
Total cost of deposits (including non-interest-bearing deposits)1.52 %0.18 %
8
For the Six Months Ended June 30,
20232022
(dollars in thousands)Average
Balance		Interest
Average
Yield/
Cost (1)
Average
Balance		Interest
Average
Yield/
Cost (1)
Assets:
Interest-earning assets:
Interest-earning deposits and short-term investments$219,482 $5,221 4.80 %$78,074 $136 0.35 %
Securities (2)
1,943,148 33,085 3.43 1,829,065 17,064 1.88 
Loans receivable, net (3)
Commercial6,876,553 192,130 5.63 6,157,060 123,745 4.05 
Residential real estate2,883,904 51,097 3.54 2,631,208 44,081 3.35 
Other consumer259,573 7,597 5.90 254,002 5,373 4.27 
Allowance for loan credit losses, net of deferred loan costs and fees(51,948)— — (42,080)— — 
Loans receivable, net9,968,082 250,824 5.07 9,000,190 173,199 3.87 
Total interest-earning assets12,130,712 289,130 4.80 10,907,329 190,399 3.51 
Non-interest-earning assets1,226,061 1,191,453 
Total assets$13,356,773 $12,098,782 
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing checking$3,790,413 18,234 0.97 %$4,197,935 3,762 0.18 %
Money market699,940 5,437 1.57 763,721 596 0.16 
Savings1,308,381 723 0.11 1,624,575 286 0.04 
Time deposits2,144,514 34,870 3.28 853,017 3,714 0.88 
Total7,943,248 59,264 1.50 7,439,248 8,358 0.23 
FHLB Advances1,234,919 29,824 4.87 285,501 1,682 1.19 
Securities sold under agreements to repurchase71,825 282 0.79 110,738 83 0.15 
Other borrowings203,911 8,849 8.75 211,407 5,252 5.01 
Total borrowings1,510,655 38,955 5.20 607,646 7,017 2.33 
Total interest-bearing liabilities9,453,903 98,219 2.10 8,046,894 15,375 0.39 
Non-interest-bearing deposits1,950,437 2,364,757 
Non-interest-bearing liabilities334,201 155,832 
Total liabilities11,738,541 10,567,483 
Stockholders’ equity1,618,232 1,531,299 
Total liabilities and equity$13,356,773 $12,098,782 
Net interest income$190,911 $175,024 
Net interest rate spread (4)
2.70 %3.12 %
Net interest margin (5)
3.17 %3.24 %
Total cost of deposits (including non-interest-bearing deposits)1.21 %0.17 %
(1)Average yields and costs are annualized.
(2)Amounts represent debt and equity securities, including FHLB and Federal Reserve Bank (“FRB”) 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.
9
Comparison of Financial Condition at June 30, 2023 and December 31, 2022
Total assets increased by $435.0 million to $13.54 billion, from $13.10 billion, due to higher cash and due from banks and loans. Cash and due from banks increased $289.8 million to $457.7 million, from $167.9 million as the Company maintained excess liquidity on balance sheet. Total loans increased by $165.6 million to $10.08 billion, from $9.92 billion, due to loan originations primarily in commercial.
Total liabilities increased by $394.2 million to $11.91 billion, from $11.52 billion. Deposits increased by $483.1 million to $10.16 billion, from $9.68 billion. Time deposits increased to $2.77 billion from $1.54 billion, or 27.2% and 15.9% of total deposits, respectively. Brokered time deposits increased $547.9 million and retail time deposits increased $674.9 million. The loans-to-deposit ratio was 99.3%, as compared to 102.5%. FHLB advances decreased by $119.5 million to $1.09 billion, from $1.21 billion.
Total stockholders’ equity increased to $1.63 billion, as compared to $1.59 billion, reflecting net income for the six months ended June 30, 2023 and a net increase in the fair market value of available-for-sale debt securities, net of tax, which decreased accumulated other comprehensive loss by $5.6 million.
For the six months ended June 30, 2023, the Company did not repurchase shares under its stock repurchase program. There were 2,934,438 shares available for repurchase at June 30, 2023 under the existing repurchase program. Stockholders’ equity per common share increased to $27.37, as compared to $26.81.

Comparison of Operating Results for the Three and Six Months Ended June 30, 2023 and June 30, 2022
General
Net income available to common stockholders for the three and six months ended June 30, 2023 decreased to $26.8 million and increased to $53.7 million, respectively, or $0.45 and $0.91 per diluted share, as compared to $28.0 million and $52.7 million, or $0.47 and $0.89 per diluted share, for the corresponding prior year periods. Net income for the three and six months ended June 30, 2023 included net loss on equity investments of $559,000 and $2.8 million, respectively. Net income for the six months ended June 30, 2023 also included merger related expenses of $22,000, net branch consolidation expense of $70,000 and net loss on sale of investments of $5.3 million. These items decreased net income by $397,000 and $6.2 million, net of tax, for the three and six months ended June 30, 2023, respectively.
Net income for the three and six months ended June 30, 2022 included merger related expenses of $196,000 and $2.2 million, respectively, net branch consolidation expenses of $546,000 and $948,000, and a net loss on equity investments of $8.1 million and $10.9 million. These items decreased net income by $6.7 million and $10.7 million, net of tax, for the three and six months ended June 30, 2022, respectively.
Interest Income
Interest income for the three and six months ended June 30, 2023 increased to $150.1 million and $289.1 million, respectively, from $99.4 million and $190.4 million for the corresponding prior year periods. For the three and six months ended June 30, 2023, the yield on average interest-earning assets increased to 4.91% and 4.80%, respectively, from 3.60% and 3.51% for the corresponding prior year periods, due to the impact of rising rates on interest-earning asset growth. Average interest-earning assets increased by $1.17 billion and $1.22 billion for the three and six months ended June 30, 2023, respectively, primarily driven by organic commercial loan growth.
Interest Expense
Interest expense for the three and six months ended June 30, 2023 increased to $58.0 million and $98.2 million, respectively, from $8.6 million and $15.4 million in the corresponding prior year periods, reflecting rising rates on costs, deposit mix shift to higher cost time deposits and FHLB advances, repricing of government deposits, and maintaining excess liquidity on balance sheet. For the three and six months ended June 30, 2023, the cost of average interest-bearing liabilities increased to 2.41% and 2.10%, respectively, from 0.42% and 0.39% for the corresponding prior year periods, due to higher cost of deposits and FHLB advances. The total cost of deposits (including non-interest-bearing deposits) increased to 1.52% and 1.21% for the three and six months ended June 30, 2023, respectively, from 0.18% and 0.17% for the same prior year periods.
10
Net Interest Income and Margin
Net interest income for the three and six months ended June 30, 2023 increased to $92.1 million and $190.9 million, respectively, from $90.8 million and $175.0 million in the corresponding prior year periods, reflecting a net impact of higher interest rates and to a lesser extent, an increase in average interest-earning assets. Net interest margin for the three and six months ended June 30, 2023 decreased to 3.02% and 3.17%, respectively, from 3.29% and 3.24% for the same prior year periods. Net interest margin decreased primarily due to the increase in cost of funds outpacing that of average interest earning assets in the current interest rate environment.
Provision for Credit Losses
Provision for credit losses for the three and six months ended June 30, 2023 was $1.2 million and $4.2 million, respectively, as compared to $1.3 million and $3.1 million for the corresponding prior year periods. The provision for credit losses for the current quarter reflected an increase to the allowance for loan credit losses, primarily related to commercial real estate, which was driven by sustained macroeconomic headwinds. Net loan charge-offs were $123,000 and $76,000 for the three and six months ended June 30, 2023, respectively. Net loan charge-offs were $9,000 and net loan recoveries were $83,000 for the three and six months ended June 30, 2022, respectively.
Non-interest Income
Three months ended June 30, 2023 vs. June 30, 2022
Other income increased to $8.9 million, as compared to $7.5 million. Other income was adversely impacted by net losses on equity investments of $559,000 and $8.1 million, for the respective quarters. The remaining decrease of $6.1 million was driven by decreases in commercial loan swap income of $2.3 million and fees and service charges of $2.0 million, which were adversely impacted by the current interest rate environment resulting in lower swap volume and mortgage activity. Bankcard services revenue decreased $1.8 million due to the Durbin amendment, which became effective for the Company on July 1, 2022.
Six months ended June 30, 2023 vs. June 30, 2022
Other income decreased to $11.0 million, as compared to $16.4 million. Other income was adversely impacted by net losses on equity investments of $8.1 million and $10.9 million, for the respective periods. The current year also included $5.3 million of losses related to the sale of investments in the first quarter. The remaining decrease of $8.2 million was driven by decreases in commercial loan swap income on lower volume of $4.4 million, bankcard services revenue of $3.4 million due to the Durbin amendment, and income from bank owned life insurance of $1.1 million on lower claims.
Non-interest Expense
Three months ended June 30, 2023 vs. June 30, 2022
Operating expenses increased to $62.9 million, as compared to $58.7 million. Operating expenses were adversely impacted by $742,000 of merger related expenses and net branch consolidation expense in the prior year period. The remaining increase of $5.0 million was due to increases in professional fees of $2.6 million related to the ongoing investments to improve profitability and operational efficiencies, and compensation and benefits expense of $1.1 million primarily related to inflation, annual merit-related compensation increases and higher medical costs. The current quarter also included increases to federal deposit insurance and regulatory assessments of $677,000 due to new assessment rates that went into effect on January 1, 2023, and real estate charges on assets held for sale of $580,000.
11
Six months ended June 30, 2023 vs. June 30, 2022
Operating expenses increased to $124.2 million, as compared to $116.2 million. Operating expenses were adversely impacted by $92,000 and $3.1 million, for the respective periods, related to merger related expenses and net branch consolidation expense. The remaining increase of $11.1 million was due to increases in professional fees of $4.4 million and compensation and benefits expense of $4.3 million. The drivers of changes in expenses for the three months ended, as noted above, were also the drivers for the six months ended. Additionally, other operating expenses included higher expenses of $580,000 and $427,000 related to real estate charges on assets held for sale and mortgage title search fees, respectively.
Income Tax Expense
The provision for income taxes was $9.0 million and $17.7 million for the three and six months ended June 30, 2023, respectively, as compared to $8.9 million and $16.9 million for the same prior year periods. The effective tax rate was 24.4% and 24.0% for the three and six months ended June 30, 2023, respectively, as compared to 23.3% and 23.4% for the same prior year periods.
12
Liquidity and Capital Resources
Liquidity Management
The Company manages its liquidity and funding needs through its Treasury function and the Asset Liability Committee. The Company has an internal policy that addresses liquidity and management monitors the adherence to policy limits to satisfy current and future cash flow needs. The policy includes internal limits, monitoring of key indicators, deposit concentrations, liquidity sources and availability, quarterly stress testing, collateral management, and other qualitative and quantitative metrics.
Management monitors cash on a daily basis to determine the liquidity needs of the Bank and OceanFirst Financial Corp. (the “Parent Company”), a separate legal entity from the Bank. Additionally, management performs multiple liquidity stress test scenarios on a quarterly basis. The Bank and Parent Company continue to maintain adequate liquidity under all stress scenarios. The Company also has a detailed contingency funding plan and obtains comprehensive reporting of funding trends on a monthly and quarterly basis, which are reviewed by management.
As a result of bank failures during the first quarter of the year, the Company took a series of precautionary measures and opted to bolster on-balance sheet liquidity, including cash and unpledged securities; and funding capacity at the FHLB and FRB Discount Window. As of June 30, 2023, total on-balance sheet liquidity and funding capacity was $4.0 billion.
The Company has a highly operational and granular deposit base, with long-standing client relationships across multiple customer segments providing stable funding. The vast majority of the government deposits are protected by the Federal Deposit Insurance Corporation insurance as well as the State of New Jersey under the Government Unit Deposit Protection Act, which requires uninsured government deposits to be further collateralized by the Bank. At June 30, 2023, the Bank reported in its respective Call Report $5.06 billion of estimated uninsured deposits. Excluding $2.03 billion of collateralized government deposits and $1.48 billion of intercompany deposits of fully consolidated subsidiaries, the Bank had estimated adjusted uninsured deposits of $1.55 billion, or 15% of total deposits. On balance-sheet liquidity and funding capacity represent 260% of the estimated adjusted uninsured deposits.

The primary sources of liquidity specifically available to the Parent Company are dividends from the Bank, proceeds from the sale of investments, and the issuance of debt, preferred and common stock. For the six months ended June 30, 2023, the Parent Company received dividend payments of $51.5 million from the Bank. At June 30, 2023, the Parent Company held $62.7 million in cash and cash equivalents.
The Bank’s primary sources of funds are deposits, principal and interest payments on loans and investments, FHLB advances, other borrowings, and proceeds from the sale of loans and investments. While scheduled payments on loans and securities are predictable sources of funds, deposit flows, loan prepayments, and loan and investment sales are greatly influenced by interest rates, economic conditions, and competition. The Bank has other sources of liquidity if a need for additional funds arises, including various lines of credit at multiple financial institutions, access to the FRB discount window, and the Bank Term Funding Program (“BTFP”).
As of June 30, 2023, the Company pledged $7.15 billion of loans with the FHLB and FRB to enhance the Company’s borrowing capacity, and includes collateral pledged to the FHLB to obtain a municipal letter of credit to collateralize certain municipal deposits. The Company also pledged $97.0 million of securities to collateralize its repurchase agreements and for other purposes required by law. The Company had $1.09 billion of term advances from the FHLB as of June 30, 2023, as compared to $1.21 billion at December 31, 2022. As of June 30, 2023, the Company had no overnight borrowings from the FHLB and no outstanding borrowings from the FRB discount window or the BTFP.
The Company’s cash needs for the six months ended June 30, 2023 were primarily satisfied by the increase in deposits. The cash was primarily maintained on the balance sheet to increase liquidity on hand, and utilized for loan originations and purchases of debt securities.
Off-Balance Sheet Commitments and Contractual Obligations
In the normal course of business, the Bank routinely enters into various off-balance sheet commitments, primarily relating to the origination and funding of loans. At June 30, 2023, outstanding commitments to originate loans totaled $115.8 million and outstanding undrawn lines of credit totaled $1.65 billion, of which $1.29 billion were commitments to commercial and commercial construction borrowers and $364.6 million were commitments to consumer borrowers and residential construction borrowers. Commitments to fund undrawn lines of credit and commitments to originate loans are agreements to lend to a customer as long as there is no violation of any condition established in the existing contracts. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are
13
expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company’s exposure to credit risk is represented by the contractual amount of the instruments.
At June 30, 2023, the Company also had various contractual obligations, which included debt obligations of $1.4 billion, including finance lease obligations of $1.8 million, and an additional $21.1 million in operating lease obligations included in other liabilities. The Company expects to have sufficient funds available to meet current commitments in the normal course of business. Time deposits scheduled to mature in one year or less totaled $2.51 billion at June 30, 2023.
Liquidity Used in Stock Repurchases and Cash Dividends
Under the Company’s stock repurchase program, shares of OceanFirst Financial Corp. common stock may be purchased in the open market and through other privately-negotiated transactions, from time-to-time, depending on market conditions. The repurchased shares are held as treasury stock for general corporate purposes. For the three months ended June 30, 2023, the Company did not repurchase any shares of its common stock. At June 30, 2023, there were 2,934,438 shares available to be repurchased under the authorized stock repurchase program.
Cash dividends on common stock declared and paid during the first six months of June 30, 2023 was $23.6 million. Cash dividends on preferred stock declared and paid during the first six months of June 30, 2023 was $2.0 million.
The Company’s ability to continue to pay dividends remains dependent upon capital distributions from the Bank, which may be adversely affected by capital restraints imposed by applicable regulations. The Company cannot predict whether the Bank will be permitted under applicable regulations to pay a dividend to the Parent Company. If applicable regulations or regulatory bodies prevent the Bank from paying a dividend to the Parent Company, the Company may not have the liquidity necessary to pay a dividend in the future or pay a dividend at the same rate as historically paid or be able to meet current debt obligations. Additionally, regulations of the Federal Reserve may prevent the Company from either paying or increasing the cash dividend to common stockholders.
Capital Management
The Company manages its capital sources, uses, and expected future needs through its Treasury function and the Asset Liability Committee. The Company has an internal policy that addresses capital and management monitors the adherence to policy limits to satisfy current and future capital needs. The policy includes internal limits, monitoring of key indicators, sources and availability, intercompany transactions, forecasts and stress testing, and other qualitative and quantitative metrics.
Additionally, management performs multiple capital stress test scenarios on a quarterly basis, varying loan growth, earnings, access to the capital markets, credit losses, and more recently, mark-to-market losses in the investment portfolio, including both available-for-sale and held-to-maturity. The Bank and Parent Company continue to maintain adequate capital under all stress scenarios, including a scenario where all losses related to the investment securities portfolio are realized. The Bank and the Parent Company also have detailed contingency capital plans and obtain comprehensive reporting of capital trends on a regular basis, which are reviewed by management and the Board.
14
Regulatory Capital Requirements
As of June 30, 2023 and December 31, 2022, the Company and the Bank satisfy all regulatory capital requirements currently applicable as follows (dollars in thousands):
ActualFor capital adequacy
purposes		To be well-capitalized
under prompt
corrective action
As of June 30, 2023AmountRatioAmountRatioAmountRatio
Company:
Tier 1 capital (to average assets)$1,190,122 9.21 %$517,131 4.00 %N/AN/A
Common equity Tier 1 (to risk-weighted assets)
1,060,812 10.21 727,032 7.00 
(1)
N/AN/A
Tier 1 capital (to risk-weighted assets)1,190,122 11.46 882,824 8.50 
(1)
N/AN/A
Total capital (to risk-weighted assets)1,380,249 13.29 1,090,547 10.50 
(1)
N/AN/A
Bank:
Tier 1 capital (to average assets)$1,144,580 8.92 %$513,100 4.00 %$641,375 5.00 %
Common equity Tier 1 (to risk-weighted assets)
1,144,580 11.13 719,670 7.00 
(1)
668,265 6.50 
Tier 1 capital (to risk-weighted assets)1,144,580 11.13 873,885 8.50 
(1)
822,480 8.00 
Total capital (to risk-weighted assets)1,209,475 11.76 1,079,505 10.50 
(1)
1,028,100 10.00 
As of December 31, 2022
Company:
Tier 1 capital (to average assets)$1,150,690 9.43 %$488,297 4.00 %N/AN/A
Common equity Tier 1 (to risk-weighted assets)
1,021,774 9.93 720,641 7.00 
(1)
N/AN/A
Tier 1 capital (to risk-weighted assets)1,150,690 11.18 875,064 8.50 
(1)
N/AN/A
Total capital (to risk-weighted assets)1,336,652 12.98 1,080,961 10.50 
(1)
N/AN/A
Bank:
Tier 1 capital (to average assets)$1,122,946 9.20 %$488,033 4.00 %$610,041 5.00 %
Common equity Tier 1 (to risk-weighted assets)
1,122,946 11.02 713,194 7.00 
(1)
662,251 6.50 
Tier 1 capital (to risk-weighted assets)1,122,946 11.02 866,021 8.50 
(1)
815,078 8.00 
Total capital (to risk-weighted assets)1,183,705 11.62 1,069,791 10.50 
(1)
1,018,848 10.00 
(1)Includes the Capital Conservation Buffer of 2.50%.
The Company and the Bank satisfied the criteria to be “well-capitalized” under the Prompt Corrective Action regulations.
At June 30, 2023 and December 31, 2022, the Company maintained a stockholders’ equity to total assets ratio of 12.01% and 12.10%, respectively.

15
Non-Performing Assets
The following table sets forth information regarding the Company’s non-performing assets, consisting of non-performing loans. It is the policy of the Company to cease accruing interest on loans 90 days or more past due or in the process of foreclosure.
June 30,December 31,
20232022
 (dollars in thousands)
Non-performing loans:
Commercial real estate – investor$13,000 $10,483 
Commercial real estate – owner occupied565 4,025 
Commercial and industrial199 331 
Residential real estate6,174 5,969 
Other consumer2,820 2,457 
Total non-performing loans and assets$22,758 $23,265 
PCD loans, net of allowance for loan credit losses
$18,872 $27,129 
Delinquent loans 30-89 days$3,136 $14,148 
Allowance for loan credit losses as a percent of total loans0.61 %0.57 %
Allowance for loan credit losses as a percent of total non-performing loans
271.51 244.25 
Non-performing loans as a percent of total loans receivable0.23 0.23 
Non-performing assets as a percent of total assets0.17 0.18 
The Company’s non-performing loans totaled $22.8 million at June 30, 2023, as compared to $23.3 million at December 31, 2022. At June 30, 2023, total non-performing loans included $718,000 of modified loans to borrowers experiencing financial difficulty and $6.2 million of troubled debt restructuring (“TDR”) loans that existed prior to adoption of Accounting Standards Update (“ASU”) 2022-02 on January 1, 2023. At December 31, 2022, total non-performing loans included $6.4 million of TDR loans. Included in the non-performing loans total was $3.2 million and $3.9 million of PCD loans at June 30, 2023 and December 31, 2022, respectively. At June 30, 2023, the allowance for loan credit losses totaled $61.8 million, or 0.61% of total loans, as compared to $56.8 million, or 0.57% of total loans, at December 31, 2022. These ratios exclude existing net unamortized credit and PCD marks on acquired loans of $9.8 million and $11.4 million at June 30, 2023 and December 31, 2022, respectively. 

The Company classifies loans and other assets in accordance with regulatory guidelines. The table below excludes any loans held-for-sale and represents Special Mention and Substandard assets (in thousands):
June 30,December 31,
20232022
Special Mention$30,859 $48,214 
Substandard88,152 50,776 
The change in special mention and substandard loans was due to a migration of certain loans from special mention to substandard risk rating, which primarily consisted of two CRE-Investor Owned relationships totaling $24.3 million. The remaining increase in substandard loans was primarily due to one CRE-Investor Owned relationship for $7.0 million, which was downgraded to substandard during the six months ended June 30, 2023.
16
Critical Accounting Policies

Note 1 to the Company’s Audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”), as supplemented by this report, contains a summary of significant accounting policies. Various elements of these accounting policies, by their nature, are subject to estimation techniques, valuation assumptions and other subjective assessments. Certain assets are carried in the consolidated statements of financial condition at estimated fair value or the lower of cost or estimated fair value. Policies with respect to the methodology used to determine the allowance for credit losses is a critical accounting policy and estimate because of its importance to the presentation of the Company’s financial condition and results of operations. The critical accounting policy involves a higher degree of complexity and requires management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions, and estimates could result in material differences in the results of operations or financial condition. The critical accounting policy and its application is reviewed periodically, and at least annually, with the Audit Committee of the Board of Directors.

Impact of New Accounting Pronouncements

Accounting Pronouncements Adopted in 2023

In March 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-01 “Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method”, which made targeted improvements to the optional hedge accounting model with the objective of improving hedge accounting to better portray the economic results of an entity’s risk management activities in its financial statements. This update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2022. Early adoption is permitted for any entity that has adopted the amendments in ASU 2017-12 for the corresponding period. The adoption of this standard did not have an impact on the Company’s consolidated financial statements, as the Company currently does not have any fair value hedges.
In March 2022, FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures”. The amendments in this ASU were issued to (1) eliminate accounting guidance for TDRs by creditors, while enhancing disclosure requirements for loan refinancings and restructurings when a borrower is experiencing financial difficulty; (2) require disclosures of current period gross write-offs by year of origination for financing receivables and net investments in leases. For entities that have adopted the amendments in ASU 2016-13, Measurement of Credit Losses on Financial Instruments, this update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2022. Early adoption is permitted. The amendments in this ASU should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, where there is an option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The Company adopted this guidance prospectively, and the adoption of this standard did not have an impact on the Company’s consolidated financial statements.
In December 2022, FASB issued ASU 2022-06, “Deferral of the Sunset Date of Topic 848”, which was effective upon issuance. The amendments in this ASU defer the sunset date of Topic 848 (Reference Rate Reform) from December 31, 2022 to December 31, 2024. Topic 848, originally issued in 2020 and later amended in 2021, provides optional accounting expedients and exceptions for certain loan agreements, derivatives and other transactions affected by the transition away from London Inter-Bank Offered Rate (“LIBOR”) towards alternative reference rates. As of December 31, 2021, the Company adopted certain of these practical expedients in Topic 848 and will continue to apply prospectively until December 31, 2024. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
Transition from LIBOR
As of December 31, 2021, the Company ceased issuing LIBOR-based products and transitioned to Alternative Rates. For the tenors of U.S. dollar LIBOR utilized by the Company, the administrator of LIBOR extended publication until June 30, 2023. As of June 30, 2023, the Company has transitioned substantially all of its previously existing LIBOR-based products that were not expected to mature or settle prior to the cessation date. Contract language for all remaining LIBOR-based loans, securities, and borrowings has been reviewed and updated as necessary to automatically convert to an Alternative Rate at their next rate reset date with no action required.

17

Recent Accounting Pronouncements Not Yet Adopted
In June 2022, FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The amendments in this ASU clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. In addition, this update introduces new disclosure requirements to provide information about the contractual sales restriction including the nature and remaining duration of the restriction. This update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2023. Early adoption is permitted. The Company does not expect this standard to have a material impact to the consolidated financial statements.
In March 2023, FASB issued ASU 2023-02, “Investments - Equity Method and Joint Venture (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method”. The amendments in this ASU permit reporting entities to account for the tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method. This update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating the impact of this standard on the consolidated financial statements.
Private Securities Litigation Reform Act Safe Harbor Statement
In addition to historical information, this quarterly report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strategies and expectations of OceanFirst Financial Corp. (the “Company”). These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence. The Company’s ability to predict results or the actual effect of 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, inflation, general economic conditions, potential recessionary conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters, potential 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 FRB, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, changes in liquidity, including the size and composition of the Company’s deposit portfolio, including the percentage of uninsured deposits in the portfolio, competition, demand for financial services in the Company’s market area, changes in consumer spending, borrowing and savings habits, changes in accounting principles, a failure in or breach of the Company’s operational or security systems or infrastructure, including cyberattacks, the failure to maintain current technologies, failure to retain or attract employees, the impact of the COVID-19 pandemic or any other pandemic on our operations and financial results and those of our customers 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, 2022, 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.
18
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
Management of Interest Rate Risk (“IRR”)
Market risk is the risk of loss from adverse changes in market prices and rates. The Company’s market risk arises primarily from the IRR inherent in its lending, investment, deposit-taking, and funding activities. The Company’s profitability is affected by fluctuations in interest rates. Changes in interest rates may negatively or positively impact the Company’s earnings to the extent that the interest rates borne by assets and liabilities do not change at the same speed, to the same extent or on the same basis. Changes in interest rates may also negatively or positively impact the market value of the Company’s investment securities, in particular fixed-rate instruments. Net gains or losses in available-for-sale securities can increase or decrease accumulated other comprehensive income or loss and total stockholders’ equity. To that end, management actively monitors and manages IRR. The extent of the movement of interest rates, higher or lower, is an uncertainty that could have a substantial impact on the earnings and stockholders’ equity of the Company.
The principal objectives of the IRR management function are to: evaluate the IRR inherent in the Company’s business; determine the level of risk appropriate given the Company’s business focus, operating environment, capital, and liquidity requirements and performance objectives; and manage the risk consistent with Board approved guidelines. The Company’s Board has established an Asset Liability Committee (“ALCO”) consisting of members of management, responsible for reviewing asset liability policies and the IRR position. ALCO meets regularly and reports the Company’s IRR position and trends to the Board on a regular basis.
The Company utilizes a number of strategies to manage IRR including, but not limited to: (1) managing the origination, purchase, sale, and retention of various types of loans with differing IRR profiles; (2) attempting to reduce the overall interest rate sensitivity of liabilities by emphasizing core and longer-term deposits; (3) selectively purchasing interest rate swaps and caps converting the rates for customer loans to manage individual loans and the Bank’s overall IRR profile; (4) managing the investment portfolio IRR profile; (5) managing the maturities and rate structures of borrowings; and (6) purchasing interest rate swaps to manage overall balance sheet interest rate risk.
The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive.” Interest rate sensitivity is monitored through the use of an IRR model, which measures the change in the institution’s economic value of equity (“EVE”) and net interest income under various interest rate scenarios. EVE is the difference between the net present value of assets, liabilities and off-balance-sheet contracts. The EVE ratio, in any interest rate scenario, is defined as the EVE in that scenario divided by the fair value of assets in the same scenario. Interest rate sensitivity is monitored by management through the use of a model which measures IRR by modeling the change in EVE and net interest income over a range of interest rate scenarios. Modeled assets and liabilities are assumed to reprice at respective repricing or maturity dates. Pricing caps and floors are included in the results, where applicable. The Company uses prepayment expectations set forth by market sources as well as Company generated data where applicable. Generally, cash flows from loans and securities are assumed to be reinvested to maintain a static balance sheet. Other assumptions about balance sheet mix are generally held constant. The Company’s interest rate sensitivity should be reviewed in conjunction with the financial statements and notes thereto contained in the 2022 Form 10-K.
The Company performs a variety of EVE and twelve-month net interest income sensitivity scenarios. The following table sets forth sensitivity scenarios for a specific range of interest rate scenarios as of June 30, 2023 and December 31, 2022 (dollars in thousands).
 June 30, 2023December 31, 2022
Change in Interest Rates in Basis Points (Rate Shock)Economic Value of EquityNet Interest IncomeEconomic Value of EquityNet Interest Income
Amount% ChangeEVE RatioAmount% ChangeAmount% ChangeEVE RatioAmount% Change
(dollars in thousands)          
200$1,023,376 (12.9)%8.8 %$391,374 3.5 %$1,574,239 (8.5)%13.7 %$440,916 1.2 %
1001,090,156 (7.2)9.2 384,774 1.7 1,646,301 (4.3)13.9 438,280 0.6 
Static1,174,533 — 9.6 378,181 — 1,719,619 — 14.1 435,492 — 
(100)1,279,641 8.9 10.1 366,624 (3.1)1,762,678 2.5 14.0 428,519 (1.6)
(200)1,399,997 19.2 10.7 351,948 (6.9)1,740,837 1.2 13.5 412,038 (5.4)
The net interest income sensitivity results indicate that at both June 30, 2023 and December 31, 2022 the Company was modestly asset sensitive. The change in sensitivity between these periods was impacted by floating rate loan growth and an increase in longer-term fixed-rate funding, partially offset by the deposit mix shift into short-term time deposits.
19

Overall, the measure of EVE at risk increased in all rising rate scenarios from December 31, 2022 to June 30, 2023. This increase is the result of rising market rates resulting in lower market values in the loan portfolio, along with the impact of an increase in deposit costs and a shift from lower cost, long-term non-maturity deposits to higher cost time deposits.
Certain shortcomings are inherent in the methodology used in the EVE and net interest income IRR measurements. The model requires the making of certain assumptions which may tend to oversimplify the manner in which actual yields and costs respond to changes in market interest rates. First, the model assumes that the composition of the Company’s interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured. Second, the model assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Third, the model does not take into account the Company’s business or strategic plans or any steps it may take to respond to changes in rates. Fourth, prepayment, rate sensitivity, and average life assumptions can have a significant impact on the IRR model results. Lastly, the model utilizes data derived from historical performance. Accordingly, although the above measurements provide an indication of the Company’s IRR exposure at a particular point in time, such measurements are not intended to provide a precise forecast of the effect of changes in market interest rates, given the unique nature of the post-pandemic interest rate environment and the speed with which interest rates have been changing, the projections noted above on the Company’s EVE and net interest income and can be expected to significantly differ from actual results.

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

(b) Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

20
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
June 30,December 31,
20232022
 (Unaudited) 
Assets
Cash and due from banks$457,747 $167,946 
Debt securities available-for-sale, at estimated fair value452,016 457,648 
Debt securities held-to-maturity, net of allowance for securities credit losses of $964 at June 30, 2023 and $1,128 at December 31, 2022 (estimated fair value of $1,109,756 at June 30, 2023 and $1,110,041 at December 31, 2022)
1,222,507 1,221,138 
Equity investments96,452 102,037 
Restricted equity investments, at cost105,305 109,278 
Loans receivable, net of allowance for loan credit losses of $61,791 at June 30, 2023 and $56,824 at December 31, 2022
10,030,106 9,868,718 
Loans held-for-sale4,200 690 
Interest and dividends receivable47,933 44,704 
Premises and equipment, net124,139 126,705 
Bank owned life insurance263,836 261,603 
Assets held for sale3,608 2,719 
Goodwill506,146 506,146 
Core deposit intangible11,476 13,497 
Other assets213,432 221,067 
Total assets$13,538,903 $13,103,896 
Liabilities and Stockholders’ Equity
Deposits$10,158,337 $9,675,206 
Federal Home Loan Bank (“FHLB”) advances1,091,666 1,211,166 
Securities sold under agreements to repurchase with customers74,452 69,097 
Other borrowings195,925 195,403 
Advances by borrowers for taxes and insurance27,839 21,405 
Other liabilities364,401 346,155 
Total liabilities11,912,620 11,518,432 
Stockholders’ equity:
Preferred stock, $0.01 par value, $1,000 liquidation preference, 5,000,000 shares authorized, and 57,370 shares issued at both June 30, 2023 and December 31, 2022
1 1 
Common stock, $0.01 par value, 150,000,000 shares authorized, 62,155,942 and 61,877,686 shares issued at June 30, 2023 and December 31, 2022, respectively; and 59,420,859 and 59,144,128 shares outstanding at June 30, 2023 and December 31, 2022, respectively
613 612 
Additional paid-in capital1,159,394 1,154,821 
Retained earnings569,867 540,507 
Accumulated other comprehensive loss(30,348)(35,982)
Less: Unallocated common stock held by Employee Stock Ownership Plan ("ESOP")(4,986)(6,191)
Treasury stock, 2,735,083 shares at both June 30, 2023 and December 31, 2022
(69,106)(69,106)
OceanFirst Financial Corp. stockholders’ equity1,625,435 1,584,662 
Non-controlling interest848 802 
Total stockholders’ equity1,626,283 1,585,464 
Total liabilities and stockholders’ equity$13,538,903 $13,103,896 

See accompanying Notes to Unaudited Consolidated Financial Statements.
21
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
 For the Three Months Ended June 30,For the Six Months Ended June 30,
 2023202220232022
 (Unaudited)(Unaudited)
Interest income:
Loans$129,104 $90,731 $250,824 $173,199 
Debt securities14,320 7,473 28,606 14,977 
Equity investments and other6,672 1,212 9,700 2,223 
Total interest income150,096 99,416 289,130 190,399 
Interest expense:
Deposits37,934 4,317 59,264 8,358 
Borrowed funds20,053 4,302 38,955 7,017 
Total interest expense57,987 8,619 98,219 15,375 
Net interest income92,109 90,797 190,911 175,024 
Provision for credit losses1,229 1,254 4,242 3,105 
Net interest income after provision for credit losses90,880 89,543 186,669 171,919 
Other income:
Bankcard services revenue1,544 3,310 2,874 6,273 
Trust and asset management revenue645 658 1,257 1,267 
Fees and service charges5,602 7,646 10,761 10,706 
Net gain on sales of loans33 3 53 180 
Net loss on equity investments(559)(8,078)(7,360)(10,864)
Net gain from other real estate operations— 50 — 48 
Income from bank owned life insurance1,182 1,422 2,463 3,525 
Commercial loan swap income— 2,294 701 5,075 
Other481 236 252 183 
Total other income8,928 7,541 11,001 16,393 
Operating expenses:
Compensation and employee benefits34,222 33,153 68,142 63,848 
Occupancy5,265 4,758 10,504 10,502 
Equipment1,101 1,336 2,306 2,706 
Marketing961 971 1,943 1,587 
Federal deposit insurance and regulatory assessments2,465 1,788 4,214 3,678 
Data processing6,165 6,170 12,319 11,906 
Check card processing1,214 1,515 2,495 2,497 
Professional fees5,083 2,472 10,181 5,794 
Amortization of core deposit intangible994 1,178 2,021 2,388 
Branch consolidation expense, net— 546 70 948 
Merger related expenses— 196 22 2,161 
Other operating expense5,460 4,578 10,022 8,141 
Total operating expenses62,930 58,661 124,239 116,156 
Income before provision for income taxes36,878 38,423 73,431 72,156 
Provision for income taxes8,996 8,940 17,650 16,914 
Net income27,882 29,483 55,781 55,242 
Net income attributable to non-controlling interest85 522 101 522 
Net income attributable to OceanFirst Financial Corp.27,797 28,961 55,680 54,720 
Dividends on preferred shares1,004 1,004 2,008 2,008 
Net income available to common stockholders$26,793 $27,957 $53,672 $52,712 
Basic earnings per share$0.45 $0.48 $0.91 $0.90 
Diluted earnings per share$0.45 $0.47 $0.91 $0.89 
Average basic shares outstanding59,147 58,894 58,988 58,823 
Average diluted shares outstanding59,153 58,995 59,038 58,975 
See accompanying Notes to Unaudited Consolidated Financial Statements.
22
OceanFirst Financial Corp.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
 
 For the Three Months Ended June 30,For the Six Months Ended June 30,
 2023202220232022
 (Unaudited)(Unaudited)
Net income$27,882 $29,483 $55,781 $55,242 
Other comprehensive (loss) income:
Net unrealized gain (loss) on debt securities (net of tax expense of $92 and $1,858 in 2023 and tax benefit of $4,460 and $8,388 in 2022, respectively)
282 (13,996)5,829 (26,368)
Accretion of unrealized loss on debt securities reclassified to held-to-maturity (net of tax expense of $54 and $110 in 2023 and tax expense of $61 and $126 in 2022, respectively)
82 89 161 178 
Unrealized loss on derivative hedges (net of tax benefit of $506 and $375 in 2023)
(1,588)— (1,176)— 
Reclassification adjustment for losses (gains) included in net income (net of tax expense of $61 and $262 in 2023 and benefit of $5 and $26 in 2022, respectively)
191 (16)820 (82)
Total other comprehensive (loss) income, net of tax(1,033)(13,923)5,634 (26,272)
Total comprehensive income26,849 15,560 61,415 28,970 
Less: comprehensive income attributable to non-controlling interest85 522 101 522 
Comprehensive income attributable to OceanFirst Financial Corp.26,764 15,038 61,314 28,448 
Less: Dividends on preferred shares1,004 1,004 2,008 2,008 
Total comprehensive income available to common stockholders$25,760 $14,034 $59,306 $26,440 
See accompanying Notes to Unaudited Consolidated Financial Statements.
23

OceanFirst Financial Corp.
Consolidated Statements of Changes in Stockholders’ Equity
(dollars in thousands, except per share amounts)
(Unaudited)
For the Three Months Ended June 30, 2023 and 2022
Preferred
Stock		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
(Loss) Income		Employee
Stock
Ownership
Plan		Treasury
Stock		Non-Controlling InterestTotal
Balance at March 31, 2022$1 $612 $1,149,503 $456,251 $(15,170)$(8,009)$(63,854)$— $1,519,334 
Net income— — — 28,961 — — — 522 29,483 
Other comprehensive loss, net of tax— — — — (13,923)— — — (13,923)
Stock compensation— — 1,848 — — — — — 1,848 
Allocation of ESOP stock— — (30)— — 606 — — 576 
Cash dividend $0.17 per share
— — — (10,022)— — — — (10,022)
Exercise of stock options— — 42 (80)— — — — (38)
Repurchase 272,779 shares of common stock
— — — — — — (5,252)— (5,252)
Preferred stock dividend— — — (1,004)— — — — (1,004)
Acquisition of Trident Abstract Title Agency, LLC (“Trident”)— — — — — — — 836 836 
Distributions to non-controlling interest— — — 8 — — — (414)(406)
Balance at June 30, 2022$1 $612 $1,151,363 $474,114 $(29,093)$(7,403)$(69,106)$944 $1,521,432 
Balance at March 31, 2023$1 $613 $1,158,007 $554,941 $(29,315)$(5,588)$(69,106)$818 $1,610,371 
Net income— — — 27,797 — — — 85 27,882 
Other comprehensive loss, net of tax— — — — (1,033)— — — (1,033)
Stock compensation— — 1,508 — — — — — 1,508 
Allocation of ESOP stock— — (136)— — 602 — — 466 
Cash dividend $0.20 per share
— — — (11,837)— — — — (11,837)
Exercise of stock options— — 15 (30)— — — — (15)
Preferred stock dividend— — — (1,004)— — — — (1,004)
Distributions to non-controlling interest— — — — — — — (55)(55)
Balance at June 30, 2023$1 $613 $1,159,394 $569,867 $(30,348)$(4,986)$(69,106)$848 $1,626,283 
















24
OceanFirst Financial Corp.
Consolidated Statements of Changes in Stockholders’ Equity
(dollars in thousands, except per share amounts)
(Unaudited)
For the Six Months Ended June 30, 2023 and 2022
Preferred
Stock		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
(Loss) Income		Employee
Stock
Ownership
Plan		Treasury
Stock		Non-Controlling InterestTotal
Balance at December 31, 2021$1 $611 $1,146,781 $442,306 $(2,821)$(8,615)$(61,710)$— $1,516,553 
Net income— — — 54,720 — — — 522 55,242 
Other comprehensive loss, net of tax— — — — (26,272)— — — (26,272)
Stock compensation— — 3,400 — — — — — 3,400 
Allocation of ESOP stock— — 35 — — 1,212 — — 1,247 
Cash dividend $0.34 per share
— — — (20,015)— — — — (20,015)
Exercise of stock options— 1 1,147 (897)— — — — 251 
Repurchase 373,223 shares of common stock
— — — — — — (7,396)— (7,396)
Preferred stock dividend— — — (2,008)— — — — (2,008)
Acquisition of Trident— — — — — — — 836 836 
Distributions to non-controlling interest— — — 8 — — — (414)(406)
Balance at June 30, 2022$1 $612 $1,151,363 $474,114 $(29,093)$(7,403)$(69,106)$944 $1,521,432 
Balance at December 31, 2022$1 $612 $1,154,821 $540,507 $(35,982)$(6,191)$(69,106)$802 $1,585,464 
Net income— — — 55,680 — — — 101 55,781 
Other comprehensive income, net of tax— — — — 5,634 — — — 5,634 
Stock compensation— — 3,336 — — — — — 3,336 
Allocation of ESOP stock— — (75)— — 1,205 — — 1,130 
Cash dividend $0.40 per share
— — — (23,592)— — — — (23,592)
Exercise of stock options— 1 1,312 (720)— — — — 593 
Preferred stock dividend— — — (2,008)— — — — (2,008)
Distributions to non-controlling interest— — — — — — — (55)(55)
Balance at June 30, 2023$1 $613 $1,159,394 $569,867 $(30,348)$(4,986)$(69,106)$848 $1,626,283 

See accompanying Notes to Unaudited Consolidated Financial Statements.
25
OceanFirst Financial Corp.
Consolidated Statements of Cash Flows
(dollars in thousands)
 For the Six Months Ended June 30,
 20232022
 (Unaudited)
Cash flows from operating activities:
Net income$55,781 $55,242 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment6,082 5,627 
Allocation of ESOP stock1,130 1,247 
Stock compensation3,336 3,400 
Net excess tax expense on stock compensation244 217 
Amortization of servicing asset20 12 
Net premium amortization in excess of discount accretion on securities2,012 3,714 
Net amortization of deferred costs on borrowings297 276 
Amortization of core deposit intangible2,021 2,388 
Net accretion of purchase accounting adjustments(2,448)(5,384)
Net amortization of deferred fees/costs and premiums/discounts on loans(818)414 
Provision for credit losses4,242 3,105 
Net gain on sale of other real estate owned— (54)
Net write down of fixed assets held-for-sale to net realizable value459 1,403 
Net gain on sale of fixed assets(26)(63)
Net loss on sales of available-for-sale securities697 — 
Net loss on equity investments7,360 10,864 
Net gain on sales of loans(53)(180)
Proceeds from sales of residential loans held for sale22,578 727 
Residential loans originated for sale(26,035)(703)
Increase in value of bank owned life insurance(2,463)(3,525)
Net loss (gain) on sale of assets held for sale44 (1,394)
Increase in interest and dividends receivable(3,229)(1,578)
Deferred tax benefit(33)(47)
Decrease (increase) in other assets6,424 (55,494)
Increase in other liabilities18,640 106,082 
Total adjustments40,481 71,054 
Net cash provided by operating activities96,262 126,296 
Cash flows from investing activities:
Net increase in loans receivable(163,714)(646,428)
Proceeds from sale of loans— 12,167 
Purchase of residential loan pool— (161,701)
Premiums paid on purchased loan pool— (495)
Purchase of debt securities available-for-sale(4,287)(63,568)
Purchase of debt securities held-to-maturity(63,661)(25,204)
Purchase of equity investments(7,175)(3,298)
Proceeds from maturities and calls of debt securities available-for-sale15,800 63,750 
Proceeds from maturities and calls of debt securities held-to-maturity11,465 17,700 
Proceeds from sales of debt securities available-for-sale1,300 25,257 
Proceeds from sale of equity investments4,822 17,734 
Principal repayments on debt securities held-to-maturity51,012 77,510 
Proceeds from bank owned life insurance230 2,502 
Proceeds from the redemption of restricted equity investments105,427 109,543 
Purchases of restricted equity investments(101,449)(132,395)
Proceeds from sale of other real estate owned— 160 
Proceeds from sales of assets held-for-sale328 6,100 
Purchases of premises and equipment(4,717)(11,745)
Net cash consideration received for acquisition— 38,609 
Net cash used in investing activities(154,619)(673,802)
26
OceanFirst Financial Corp.
Consolidated Statements of Cash Flows (Continued)
(dollars in thousands)
 For the Six Months Ended June 30,
 20232022
 (Unaudited)
Cash flows from financing activities:
Increase in deposits$483,289 $99,068 
Increase (decrease) in short-term borrowings5,303 (13,274)
Net proceeds from FHLB advances(119,500)488,750 
Repayments of other borrowings— (35,052)
Increase in advances by borrowers for taxes and insurance6,434 3,335 
Exercise of stock options593 251 
Payment of employee taxes withheld from stock awards and phantom stock units(2,346)(1,472)
Purchase of treasury stock— (7,396)
Dividends paid(25,600)(22,023)
Distributions to non-controlling interest(55)(406)
Net cash provided by financing activities348,118 511,781 
Net increase (decrease) in cash and due from banks and restricted cash289,761 (35,725)
Cash and due from banks and restricted cash at beginning of period167,986 224,784 
Cash and due from banks and restricted cash at end of period$457,747 $189,059 
Supplemental Disclosure of Cash Flow Information:
Cash and due from banks at beginning of period$167,946 $204,949 
Restricted cash at beginning of period40 19,835 
Cash and due from banks and restricted cash at beginning of period$167,986 $224,784 
Cash and due from banks at end of period$457,747 $189,019 
Restricted cash at end of period— 40 
Cash and due from banks and restricted cash at end of period$457,747 $189,059 
Cash paid during the period for:
Interest$86,290 $15,059 
Income taxes20,076 3,633 
Non-cash activities:
Accretion of unrealized loss on securities reclassified to held-to-maturity272 304 
Net loan charge-offs (recoveries) 123 (83)
Transfer of loans receivable to loans held-for-sale— 12,011 
Transfer of premises and equipment to assets held-for-sale1,302 2,776 
Acquisition:
Non-cash assets acquired:
Other current assets$— $238 
Premises and equipment— 18 
Right of use (“ROU”) asset— 779 
Other assets— 81 
Total non-cash assets acquired$— $1,116 
Liabilities assumed:
Lease liability$— $779 
Other liabilities— 43,937 
Total liabilities assumed$— $44,716 

See accompanying Notes to Unaudited Consolidated Financial Statements.
27
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements


Note 1. Basis of Presentation
The consolidated financial statements include: the accounts of OceanFirst Financial Corp. (the “Company”); its wholly-owned subsidiaries, OceanFirst Bank N.A. (the “Bank”) and OceanFirst Risk Management, Inc.; the Bank’s direct and indirect wholly-owned subsidiaries, OceanFirst REIT Holdings, Inc., OceanFirst Management Corp., OceanFirst Realty Corp., Casaba Real Estate Holdings Corporation, and Country Property Holdings, Inc; and a majority controlling interest in Trident. Certain other subsidiaries were dissolved in 2022 and are included in the consolidated financial statements for previous periods. All significant intercompany accounts and transactions have been eliminated in consolidation.
The interim consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results of operations that may be expected for the full year 2023 or any other period. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and the results of operations for the periods presented. Actual results could differ from these estimates.
Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).
These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

28
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

Note 2. Earnings per Share
The following reconciles shares outstanding for basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022 (in thousands):
Three Months Ended
June 30,		Six Months Ended
June 30,
 2023202220232022
Weighted average shares outstanding59,451 59,300 59,371 59,302 
Less: Unallocated ESOP shares(273)(393)(287)(408)
 Unallocated incentive award shares(31)(13)(96)(71)
Average basic shares outstanding59,147 58,894 58,988 58,823 
Add: Effect of dilutive securities:
Incentive awards6 101 50 152 
Average diluted shares outstanding59,153 58,995 59,038 58,975 
For the three and six months ended June 30, 2023, antidilutive stock options of 1,986,000 and 1,540,000, respectively, were excluded from the earnings per share calculation. For the three and six months ended June 30, 2022, antidilutive stock options of 1,577,000 and 1,573,000, respectively, were excluded from the earnings per share calculation.
29
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

Note 3. Securities
The amortized cost, estimated fair value, and allowance for securities credit losses of debt securities available-for-sale and held-to-maturity at June 30, 2023 and December 31, 2022 are as follows (in thousands):
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value		Allowance for Credit Losses
At June 30, 2023
Debt securities available-for-sale:
U.S. government and agency obligations$73,026 $— $(7,228)$65,798 $— 
Corporate debt securities10,077 — (1,141)8,936 — 
Asset-backed securities296,212 — (11,375)284,837 — 
Agency commercial mortgage-backed securities (“MBS”)110,073 — (17,628)92,445 — 
Total debt securities available-for-sale$489,388 $— $(37,372)$452,016 $— 
Debt securities held-to-maturity:
State and municipal debt obligations$249,515 $90 $(22,371)$227,234 $(52)
Corporate debt securities54,948 51 (5,349)49,650 (907)
Mortgage-backed securities:
Agency residential863,179 400 (84,246)779,333 — 
Agency commercial32,569 — (1,794)30,775 — 
Non-agency commercial25,286 — (2,522)22,764 (5)
Total mortgage-backed securities921,034 400 (88,562)832,872 (5)
Total debt securities held-to-maturity$1,225,497 $541 $(116,282)$1,109,756 $(964)
Total debt securities$1,714,885 $541 $(153,654)$1,561,772 $(964)
At December 31, 2022
Debt securities available-for-sale:
U.S. government and agency obligations$87,648 $1 $(7,635)$80,014 $— 
Corporate debt securities8,928 — (756)8,172 — 
Asset-backed securities296,222 — (19,349)276,873 — 
Agency commercial MBS110,606 — (18,017)92,589 — 
Total debt securities available-for-sale$503,404 $1 $(45,757)$457,648 $— 
Debt securities held-to-maturity:
State, municipal, and sovereign debt obligations$260,249 $46 $(24,940)$235,355 $(60)
Corporate debt securities56,893 380 (3,778)53,495 (1,059)
Mortgage-backed securities:
Agency residential849,985 795 (83,586)767,194 — 
Agency commercial32,127 23 (1,189)30,961 — 
Non-agency commercial25,310 — (2,274)23,036 (9)
Total mortgage-backed securities907,422 818 (87,049)821,191 (9)
Total debt securities held-to-maturity$1,224,564 $1,244 $(115,767)$1,110,041 $(1,128)
Total debt securities$1,727,968 $1,245 $(161,524)$1,567,689 $(1,128)

There was no allowance for securities credit losses on debt securities available-for-sale at June 30, 2023 or December 31, 2022.
The following table presents the activity in the allowance for credit losses for debt securities held-to-maturity for the three and six months ended June 30, 2023 and 2022 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Allowance for securities credit losses
Beginning balance$(1,043)$(1,380)$(1,128)$(1,467)
Provision for credit loss benefit79 87 164 174 
Total ending allowance balance$(964)$(1,293)$(964)$(1,293)
30
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

The Company monitors the credit quality of debt securities held-to-maturity on a quarterly basis through the use of internal credit analysis supplemented by external credit ratings. Credit ratings of BBB- or Baa3 or higher are considered investment grade. Where multiple ratings are available, the Company considers the lowest rating when determining the allowance for securities credit losses. Under this approach, the amortized cost of debt securities held-to-maturity at June 30, 2023, aggregated by credit quality indicator, are as follows (in thousands):
Investment GradeNon-Investment Grade/Non-ratedTotal
As of June 30, 2023
State and municipal debt obligations$249,515 $— $249,515 
Corporate debt securities40,408 14,540 54,948 
Non-agency commercial MBS25,286 — 25,286 
Total debt securities held-to-maturity$315,209 $14,540 $329,749 
During 2021 and 2013, the Bank transferred $12.7 million and $536.0 million, respectively, of previously designated available-for-sale securities to a held-to-maturity designation at estimated fair value. The securities transferred had an unrealized net loss of $209,000 and $13.3 million at the time of transfer in 2021 and 2013, respectively, which continues to be reflected in accumulated other comprehensive loss on the Consolidated Statement of Financial Condition, net of subsequent amortization, which is being recognized over the life of the securities. The carrying value of debt securities held-to-maturity at June 30, 2023 and December 31, 2022 is as follows (in thousands): 
June 30,December 31,
20232022
Amortized cost$1,225,497 $1,224,564 
Allowance for securities credit losses(964)(1,128)
Net loss on date of transfer from available-for-sale(13,556)(13,556)
Accretion of net unrealized loss on securities reclassified as held-to-maturity11,530 11,258 
Carrying value$1,222,507 $1,221,138 
There were no realized losses and $697,000 of realized losses on sale of debt securities available-for-sale for the three and six months ended June 30, 2023, respectively, as compared to $21,000 and $108,000 for the corresponding prior year periods. These realized losses on debt securities are presented within Other under Total other income of the Consolidated Statements of Income.
The amortized cost and estimated fair value of debt securities at June 30, 2023 by contractual maturity are shown below (in thousands):
June 30, 2023Amortized
Cost		Estimated
Fair Value
Less than one year$36,231 $35,786 
Due after one year through five years176,032 160,455 
Due after five years through ten years207,267 193,962 
Due after ten years264,248 246,252 
$683,778 $636,455 
Actual maturities may differ from contractual maturities in instances where issuers have the right to call or prepay obligations with or without call or prepayment penalties. At June 30, 2023, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $64.0 million, $82.3 million, and $296.2 million, respectively, and an estimated fair value of $57.6 million, $78.0 million, and $284.8 million, respectively, were callable prior to the maturity date. Mortgage-backed securities are excluded from the above table since their effective lives are expected to be shorter than the contractual maturity date due to principal prepayments.
31
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

The estimated fair value and unrealized losses for debt securities available-for-sale and held-to-maturity at June 30, 2023 and December 31, 2022, segregated by the duration of the unrealized losses, are as follows (in thousands):
 Less than 12 months12 months or longerTotal
 Estimated
Fair
Value		Unrealized
Losses		Estimated
Fair
Value		Unrealized
Losses		Estimated
Fair
Value		Unrealized
Losses
At June 30, 2023
Debt securities available-for-sale:
U.S. government and agency obligations$2,334 $(25)$63,464 $(7,203)$65,798 $(7,228)
Corporate debt securities6,557 (520)2,379 (621)8,936 (1,141)
Asset-backed securities— — 284,837 (11,375)284,837 (11,375)
Agency commercial MBS— — 92,445 (17,628)92,445 (17,628)
Total debt securities available-for-sale8,891 (545)443,125 (36,827)452,016 (37,372)
Debt securities held-to-maturity:
State and municipal debt obligations29,552 (368)191,803 (22,003)221,355 (22,371)
Corporate debt securities5,532 (576)39,686 (4,773)45,218 (5,349)
MBS:
Agency residential227,401 (5,715)498,132 (78,531)725,533 (84,246)
Agency commercial28,478 (1,751)1,899 (43)30,377 (1,794)
Non-agency commercial— — 22,764 (2,522)22,764 (2,522)
Total MBS255,879 (7,466)522,795 (81,096)778,674 (88,562)
Total debt securities held-to-maturity290,963 (8,410)754,284 (107,872)1,045,247 (116,282)
Total debt securities$299,854 $(8,955)$1,197,409 $(144,699)$1,497,263 $(153,654)
At December 31, 2022
Debt securities available-for-sale:
U.S. government and agency obligations$27,232 $(450)$52,782 $(7,185)$80,014 $(7,635)
Corporate debt securities4,735 (193)3,437 (563)8,172 (756)
Asset-backed securities143,392 (9,179)133,481 (10,170)276,873 (19,349)
Agency commercial MBS8,782 (1,675)83,807 (16,342)92,589 (18,017)
Total debt securities available-for-sale184,141 (11,497)273,507 (34,260)457,648 (45,757)
Debt securities held-to-maturity:
State, municipal, and sovereign debt obligations133,492 (11,952)97,135 (12,988)230,627 (24,940)
Corporate debt securities11,783 (598)36,152 (3,180)47,935 (3,778)
MBS:
Agency residential297,296 (12,404)397,036 (71,182)694,332 (83,586)
Agency commercial25,936 (1,150)2,062 (39)27,998 (1,189)
Non-agency commercial16,839 (1,621)6,198 (653)23,037 (2,274)
Total MBS340,071 (15,175)405,296 (71,874)745,367 (87,049)
Total debt securities held-to-maturity485,346 (27,725)538,583 (88,042)1,023,929 (115,767)
Total debt securities$669,487 $(39,222)$812,090 $(122,302)$1,481,577 $(161,524)

The Company concluded that debt securities were not impaired at June 30, 2023 based on consideration of several factors. The Company noted that each issuer made all the contractually due payments when required. There were no defaults on principal or interest payments, and no interest payments were deferred. Based on management’s analysis of each individual security, the issuers appear to have the ability to meet debt service requirements over the life of the security. Furthermore, the change in net unrealized losses were primarily due to changes in the general credit and interest rate environment and not credit quality. Historically, the Company has not utilized securities sales as a source of liquidity and the Company’s liquidity plans include adequate sources of liquidity outside securities sales.
32
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

Equity Investments
At June 30, 2023 and December 31, 2022, the Company held equity investments of $96.5 million and $102.0 million, respectively. The equity investments are primarily comprised of select financial services institutions’ preferred stocks, investments in funds and other financial institutions.
The realized and unrealized gains or losses on equity securities for the three and six months ended June 30, 2023 and 2022 are shown in the table below (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Net loss on equity investments$(559)$(8,078)$(7,360)$(10,864)
Less: Net (losses) gains recognized on equity investments sold(854)(231)(5,462)1,351 
Unrealized gains (losses) recognized on equity investments still held$295 $(7,847)$(1,898)$(12,215)
33
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

Note 4. Loans Receivable, Net
Loans receivable, net at June 30, 2023 and December 31, 2022 consisted of the following (in thousands):
June 30,December 31,
20232022
Commercial:
Commercial real estate – investor$5,319,686 $5,171,952 
Commercial real estate – owner occupied981,618 997,367 
Commercial and industrial620,284 622,372 
Total commercial6,921,588 6,791,691 
Consumer:
Residential real estate2,906,556 2,861,991 
Home equity loans and lines and other consumer (“other consumer”)255,486 264,372 
Total consumer3,162,042 3,126,363 
Total loans receivable10,083,630 9,918,054 
Deferred origination costs, net of fees8,267 7,488 
Allowance for loan credit losses(61,791)(56,824)
Total loans receivable, net$10,030,106 $9,868,718 
The Company categorizes all loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, and current economic trends, among other factors. The Company evaluates risk ratings on an ongoing basis. The Company uses the following definitions for risk ratings:
    Pass: Loans classified as Pass are well protected by the paying capacity and net worth of the borrower.
    Special Mention: Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank’s credit position at some future date.
    Substandard: Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the collection or the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
    Doubtful: Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

34
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

The following tables summarize total loans by year of origination, internally assigned credit grades and risk characteristics (in thousands):
202320222021202020192018 and priorRevolving lines of creditTotal
June 30, 2023
Commercial real estate - investor
Pass$116,385 $1,169,785 $1,304,903 $535,020 $502,580 $994,662 $616,235 $5,239,570 
Special Mention— — 2,460 188 63 17,502 1,388 21,601 
Substandard— — — 3,750 20,109 33,398 1,258 58,515 
Total commercial real estate - investor116,385 1,169,785 1,307,363 538,958 522,752 1,045,562 618,881 5,319,686 
Commercial real estate - owner occupied
Pass51,839 117,775 110,128 66,894 108,189 488,320 12,127 955,272 
Special Mention— — — — — 4,895 — 4,895 
Substandard— — — — 2,003 19,358 90 21,451 
Total commercial real estate - owner occupied51,839 117,775 110,128 66,894 110,192 512,573 12,217 981,618 
Commercial and industrial
Pass65,775 57,240 21,505 11,258 9,781 57,200 390,624 613,383 
Special Mention— — 10 — — 210 2,037 2,257 
Substandard— — 21 18 960 2,006 1,639 4,644 
Total commercial and industrial65,775 57,240 21,536 11,276 10,741 59,416 394,300 620,284 
Residential real estate (1)
Pass111,815 931,294 582,192 405,474 234,279 637,803 — 2,902,857 
Special Mention— 308 — 206 147 1,336 — 1,997 
Substandard62 56 — 258 487 839 — 1,702 
Total residential real estate111,877 931,658 582,192 405,938 234,913 639,978 — 2,906,556 
Other consumer (1)
Pass15,400 22,078 22,150 13,850 14,128 131,342 34,589 253,537 
Special Mention— — — — — 109 — 109 
Substandard— — — — 49 1,791 — 1,840 
Total other consumer15,400 22,078 22,150 13,850 14,177 133,242 34,589 255,486 
Total loans$361,276 $2,298,536 $2,043,369 $1,036,916 $892,775 $2,390,771 $1,059,987 $10,083,630 
(1)For residential real estate and other consumer loans, the Company evaluates credit quality based on the aging status of the loan and by payment activity.


35
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

202220212020201920182017 and priorRevolving lines of creditTotal
December 31, 2022
Commercial real estate - investor
Pass$1,144,763 $1,339,289 $555,937 $524,428 $220,999 $881,344 $450,787 $5,117,547 
Special Mention— 2,508 192 17,094 — 12,818 2,188 34,800 
Substandard— — — 893 — 18,180 532 19,605 
Total commercial real estate - investor1,144,763 1,341,797 556,129 542,415 220,999 912,342 453,507 5,171,952 
Commercial real estate - owner occupied
Pass119,912 110,440 59,952 115,385 88,204 458,708 14,932 967,533 
Special Mention— — — — 748 5,679 — 6,427 
Substandard— — 3,750 2,037 4,817 12,803 — 23,407 
Total commercial real estate - owner occupied119,912 110,440 63,702 117,422 93,769 477,190 14,932 997,367 
Commercial and industrial
Pass60,078 23,724 14,072 17,175 10,992 47,370 443,211 616,622 
Special Mention— 7 — — — 250 1,680 1,937 
Substandard— 21 76 1,083 301 2,212 120 3,813 
Total commercial and industrial60,078 23,752 14,148 18,258 11,293 49,832 445,011 622,372 
Residential real estate (1)
Pass919,364 591,745 419,712 247,387 99,945 577,392 — 2,855,545 
Special Mention— 193 1,514 204 59 2,407 — 4,377 
Substandard— — — 656 286 1,127 — 2,069 
Total residential real estate919,364 591,938 421,226 248,247 100,290 580,926 — 2,861,991 
Other consumer (1)
Pass24,069 24,111 15,440 15,471 39,057 108,818 34,851 261,817 
Special Mention— — — 75 — 598 — 673 
Substandard— — — 157 18 1,707 — 1,882 
Total other consumer24,069 24,111 15,440 15,703 39,075 111,123 34,851 264,372 
Total loans$2,268,186 $2,092,038 $1,070,645 $942,045 $465,426 $2,131,413 $948,301 $9,918,054 
(1) For residential real estate and other consumer loans, the Company evaluates credit quality based on the aging status of the loan and by payment activity.



36
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

An analysis of the allowance for credit losses on loans for the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):
 Commercial
Real Estate –
Investor		Commercial
Real Estate –
Owner
Occupied		Commercial
and 
Industrial		Residential
Real Estate		Other ConsumerTotal
For the three months ended June 30, 2023
Allowance for credit losses on loans
Balance at beginning of period$22,451 $4,116 $5,827 $26,928 $873 $60,195 
Provision (benefit) for credit losses2,029 223 239 (785)13 1,719 
Charge-offs (1)
— — (125)— (81)(206)
Recoveries1 3 4 9 66 83 
Balance at end of period$24,481 $4,342 $5,945 $26,152 $871 $61,791 
For the three months ended June 30, 2022
Allowance for credit losses on loans
Balance at beginning of period$23,637 $5,053 $4,649 $16,277 $982 $50,598 
(Benefit) provision for credit losses(1,080)(116)572 1,966 130 1,472 
Charge-offs— (14)— (56)(217)(287)
Recoveries51 98 19 9 101 278 
Balance at end of period$22,608 $5,021 $5,240 $18,196 $996 $52,061 
For the six months ended June 30, 2023
Allowance for credit losses on loans
Balance at beginning of period$21,070 $4,423 $5,695 $24,530 $1,106 $56,824 
Provision (benefit) for credit losses3,408 (81)370 1,605 (259)5,043 
Charge-offs (1)
— (6)(128)— (82)(216)
Recoveries3 6 8 17 106 140 
Balance at end of period$24,481 $4,342 $5,945 $26,152 $871 $61,791 
For the six months ended June 30, 2022
Allowance for credit losses on loans
Balance at beginning of period$25,504 $5,884 $5,039 $11,155 $1,268 $48,850 
(Benefit) provision for credit losses(2,947)(956)166 6,994 (129)3,128 
Charge-offs— (18)— (56)(356)(430)
Recoveries51 111 35 103 213 513 
Balance at end of period$22,608 $5,021 $5,240 $18,196 $996 $52,061 
(1) Gross charge-offs for the three and six months ended June 30, 2023 of $206,000 and $216,000, respectively, related to loans that were originated in and prior to 2018.
A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral and, therefore, is classified as non-accruing. At June 30, 2023 and December 31, 2022, the Company had collateral dependent loans with an amortized cost balance as follows: commercial real estate - investor of $7.3 million and $4.6 million, respectively, commercial real estate - owner occupied of $565,000 and $4.0 million, respectively, and commercial and industrial of $199,000 and $160,000, respectively. In addition, the Company had residential and consumer loans collateralized by residential real estate, which are in the process of foreclosure, with an amortized cost balance of $1.6 million and $858,000 at June 30, 2023 and December 31, 2022, respectively. 
The following table presents the recorded investment in non-accrual loans, by loan portfolio segment as of June 30, 2023 and December 31, 2022 (in thousands):
June 30,December 31,
20232022
Commercial real estate – investor$13,000 $10,483 
Commercial real estate – owner occupied565 4,025 
Commercial and industrial199 331 
Residential real estate6,174 5,969 
Other consumer2,820 2,457 
$22,758 $23,265 
 
37
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

At June 30, 2023 and December 31, 2022, the non-accrual loans were included in the allowance for credit loss calculation and the Company did not recognize or accrue interest income on these loans. At June 30, 2023, there were no loans that were past due 90 days or greater and still accruing interest. At December 31, 2022, there was one Paycheck Protection Program (“PPP”) loan for $14,000 that was past due 90 days or greater and still accrued interest, which subsequently became current. Per Small Business Administration (“SBA”) guidelines, the SBA will pay accrued interest through the deferral period up to a maximum of 120 days past due. Given these servicing guidelines, PPP loans that are 90 to 120 days past due will be reported as accruing loans.
The following table presents the aging of the recorded investment in past due loans as of June 30, 2023 and December 31, 2022 by loan portfolio segment (in thousands):
30-59
Days
Past Due		60-89
Days
Past Due		90 Days or Greater Past DueTotal
Past Due		Loans Not
Past Due		Total
June 30, 2023
Commercial real estate – investor$— $— $3,958 $3,958 $5,315,728 $5,319,686 
Commercial real estate – owner occupied95 41 — 136 981,482 981,618 
Commercial and industrial7 149 39 195 620,089 620,284 
Residential real estate— 1,997 1,702 3,699 2,902,857 2,906,556 
Other consumer738 109 1,840 2,687 252,799 255,486 
$840 $2,296 $7,539 $10,675 $10,072,955 $10,083,630 
December 31, 2022
Commercial real estate – investor$217 $875 $3,700 $4,792 $5,167,160 $5,171,952 
Commercial real estate – owner occupied143 80 3,750 3,973 993,394 997,367 
Commercial and industrial159 47 180 386 621,986 622,372 
Residential real estate7,003 4,377 2,069 13,449 2,848,542 2,861,991 
Other consumer573 673 1,882 3,128 261,244 264,372 
$8,095 $6,052 $11,581 $25,728 $9,892,326 $9,918,054 
The Company adopted Accounting Standards Update (“ASU”) 2022-02 on January 1, 2023. Since adoption, the Company has modified certain loans to borrowers experiencing financial difficulty. These modifications may include a reduction in interest rate, an extension in term, principal forgiveness and/or other than insignificant payment delay. At June 30, 2023, loans with modifications to borrowers experiencing financial difficulty totaled $898,000 related to term extensions, which included residential real estate of $658,000 and other consumer of $240,000.
The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Of the $898,000 loans with modifications to borrowers experiencing financial difficulty, $755,000 were current and one residential loan of $143,000 had a payment default during the three and six months ended June 30, 2023.
Prior to the adoption of ASU 2022-02, the Company classified certain loans as troubled debt restructuring (“TDR”) loans when credit terms to a borrower in financial difficulty were modified in accordance with ASC 310-40. Since adoption of this ASU, the Company has ceased to recognize or measure for new TDRs but those existing at December 31, 2022 remain until settled.
At June 30, 2023 and December 31, 2022, TDR loans totaled $13.5 million and $13.9 million, respectively. At June 30, 2023 and December 31, 2022, there were $6.2 million and $6.4 million, respectively, of TDR loans included in the non-accrual loan totals. At June 30, 2023 and December 31, 2022, the Company had $436,000 and $590,000, respectively, of specific reserve allocated to one loan that was classified as a TDR loan. Non-accrual loans which become TDR loans are generally returned to accrual status after six months of performance. In addition to the TDR loans included in non-accrual loans, the Company also has TDR loans classified as accruing loans, which totaled $7.3 million and $7.5 million at June 30, 2023 and December 31, 2022, respectively. 
38
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

The following table presents information about TDR loans which occurred during the three and six months ended June 30, 2022 (dollars in thousands):
Number of LoansPre-modification
Recorded Investment		Post-modification
Recorded Investment
Three months ended June 30, 2022
Troubled debt restructurings:NoneNoneNone
Six months ended June 30, 2022
Troubled debt restructurings:
Commercial and industrial1$65 $65 
Consumer3991 1,109 
There were no TDR loans that defaulted during the three and six months ended June 30, 2023 and 2022, which were modified within the preceding year.

39
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

Note 5. Deposits
The major types of deposits at June 30, 2023 and December 31, 2022 were as follows (in thousands):
Type of AccountJune 30,December 31,
20232022
Non-interest-bearing$1,854,136 $2,101,308 
Interest-bearing checking3,537,834 3,829,683 
Money market deposit770,440 714,386 
Savings1,229,897 1,487,809 
Time deposits2,766,030 1,542,020 
Total deposits$10,158,337 $9,675,206 
Included in time deposits at June 30, 2023 and December 31, 2022 was $310.6 million and $117.7 million, respectively, in deposits of $250,000 or more. Time deposits also include brokered deposits of $1.42 billion and $873.4 million at June 30, 2023 and December 31, 2022, respectively.
Note 6. Borrowed Funds
Borrowed funds at June 30, 2023 and December 31, 2022 were as follows (in thousands):
June 30,December 31,
20232022
FHLB advances$1,091,666 $1,211,166 
Securities sold under agreements to repurchase with customers74,452 69,097 
Other borrowings195,925 195,403 
Total borrowed funds$1,362,043 $1,475,666 
The Company had no FHLB overnight advances or borrowings from the Federal Reserve Bank (“FRB”) Discount Window or Bank Term Funding Program at June 30, 2023 and December 31, 2022.
Pledged assets
The following table presents the assets pledged to secure borrowings, borrowing capacity, repurchase agreements, letters of credit, and for other purposes required by law at carrying value (in thousands):
LoansDebt securitiesTotal
June 30, 2023
FHLB and FRB$7,147,408 $15,037 $7,162,445 
Repurchase agreements— 81,919 81,919 
Total pledged assets$7,147,408 $96,956 $7,244,364 
December 31, 2022
FHLB and FRB$6,487,980 $830,057 $7,318,037 
Repurchase agreements— 105,294 105,294 
Total pledged assets$6,487,980 $935,351 $7,423,331 

The securities pledged, which collateralize the repurchase agreements are delivered to the lender, with whom each transaction is executed, or to a third-party custodian. The lender, who may sell, loan or otherwise dispose of such securities to other parties in the normal course of their operations, agrees to resell to the Company substantially the same securities at the maturity of the repurchase agreements.
40
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

Note 7. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.
The Company uses valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability and developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability and developed based on the best information available in the circumstances. In that regard, a fair value hierarchy has been established for valuation inputs that gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlations or other means.
Level 3 Inputs – Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.
Assets and Liabilities Measured at Fair Value
A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis, that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).
Debt Securities Available-for-Sale
Debt securities classified as available-for-sale are reported at fair value. Fair value for these debt securities is determined using inputs other than quoted prices that are based on market observable information (Level 2). Level 2 debt securities are priced through third-party pricing services or security industry sources that actively participate in the buying and selling of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing is a mathematical technique used principally to value certain debt securities without relying exclusively on quoted prices for the specific securities, but comparing the debt securities to benchmark or comparable debt securities.
Equity Investments
Equity investments with readily determinable fair value are reported at fair value. Fair value for these investments is primarily determined using a quoted price in an active market or exchange (Level 1) or using inputs other than quoted prices that are based on market observable information (Level 2). Equity investments without readily determinable fair values are carried at cost less impairment, if any, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer (measurement alternative). Certain equity investments without readily
41
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

determinable fair values are measured at net asset value (“NAV”) per share as a practical expedient, which are excluded from the fair value hierarchy levels in the table below.
Interest Rate Derivatives
The Company’s interest rate swaps and cap contracts are reported at fair value utilizing discounted cash flow models provided by an independent, third-party and observable market data (Level 2). When entering into an interest rate swap or cap contract, the Company is exposed to fair value changes due to interest rate movements, and also the potential nonperformance of the contract counterparty.
Loans Individually Measured for Impairment
Loans measured for impairment based on the fair value of the underlying collateral are recorded at estimated fair value, less estimated selling costs. Fair value is based on independent appraisals (Level 3).
The following table summarizes financial assets and financial liabilities measured at fair value as of June 30, 2023 and December 31, 2022, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):
  Fair Value Measurements at Reporting Date Using:
Total Fair
Value		Level 1
Inputs		Level 2
Inputs		Level 3
Inputs
June 30, 2023
Items measured on a recurring basis:
Debt securities available-for-sale
$452,016 $— $452,016 $— 
Equity investments
49,469 — 49,470 — 
Interest rate derivative asset109,651 — 109,651 — 
Interest rate derivative liability(110,869)— (110,869)— 
Items measured on a non-recurring basis:
Equity investments (1) (2)
46,983 — — 43,576 
Loans measured for impairment based on the fair value of the underlying collateral (3)
9,613 — — 9,613 
December 31, 2022
Items measured on a recurring basis:
Debt securities available-for-sale
$457,648 $— $457,648 $— 
Equity investments
61,942 430 61,511 — 
Interest rate derivative asset113,420 — 113,420 — 
Interest rate derivative liability(113,473)— (113,473)— 
Items measured on a non-recurring basis:
Equity investments (1) (2)
40,095 — — 37,076 
Loans measured for impairment based on the fair value of the underlying collateral (3)
9,635 — — 9,635 
(1)    As of June 30, 2023 and December 31, 2022, primarily consists of $43.6 million and $37.1 million, respectively, of equity investments measured under the measurement alternative. This included no unrealized gains or losses for the six months ended June 30, 2023 as a result of observable price changes in the investment and $20.0 million of unrealized gains for the year ended December 31, 2022.
(2)    As of June 30, 2023 and December 31, 2022, equity investments of $47.0 million and $40.1 million, respectively, included $3.4 million and $3.0 million of certain equity investment funds measured at NAV per share (or its equivalent) as a practical expedient to fair value and these equity investments have not been classified in the fair value hierarchy levels.
(3) Primarily consists of commercial loans, which are collateral dependent. The amounts are based on independent appraisals, which may be adjusted by management for qualitative factors, such as economic factors and estimated liquidation expenses. The range may vary but is generally 0% to 8% on the discount for costs to sell and 0% to 10% on appraisal adjustments.

42
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

The following table reconciles the beginning and ending balances for equity investments that are recognized at fair value on a recurring basis, in the Consolidated Statements of Financial Condition, using significant unobservable inputs (in thousands):
For the Six Months Ended June 30,
2022
Beginning balance$2,718 
Transfers out of Level 3(2,718)
Ending balance$— 
The Company recognizes transfers between levels of the valuation hierarchy at the end of the applicable reporting periods. There were no assets in Level 3 that were recognized at fair value on a recurring basis or transfers into or out of Level 3 for the three and six months ended June 30, 2023. During the six months ended June 30, 2022, the Company executed its right to convert $2.7 million of preferred stock into common stock, which resulted in a transfer from Level 3 into Level 1.

Assets and Liabilities Disclosed at Fair Value
A description of the valuation methodologies used for assets and liabilities disclosed at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy is set forth below.
Cash and Due from Banks
For cash and due from banks, the carrying amount approximates fair value.
Debt Securities Held-to-Maturity
Debt securities classified as held-to-maturity are carried at amortized cost, as the Company has the positive intent and ability to hold these debt securities to maturity. The Company determines the fair value of the debt securities utilizing Level 2 and, infrequently, Level 3 inputs. Most of the Company’s debt securities are fixed income instruments that are not quoted on an exchange, but are bought and sold in active markets. Prices for these instruments are obtained through third-party pricing vendors or security industry sources that actively participate in the buying and selling of debt securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing is a mathematical technique used principally to value certain debt securities without relying exclusively on quoted prices for the specific debt securities, but comparing the debt securities to benchmark or comparable debt securities.
Management’s policy is to obtain and review all available documentation from the third-party pricing service relating to their fair value determinations, including their methodology and summary of inputs. Management reviews this documentation, makes inquiries of the third-party pricing service and decides as to the level of the valuation inputs. Based on the Company’s review of the available documentation from the third-party pricing service, management concluded that Level 2 inputs were utilized for all securities except for certain debt securities where management utilized Level 3 inputs, such as broker or dealer quotes with limited levels of activity and price transparency.
Restricted Equity Investments
The fair value for Federal Home Loan Bank of New York, Federal Reserve Bank stock, and Atlantic Community Bankers Bank is its carrying value since this is the amount for which it could be redeemed. There is no active market for this stock and the Company is required to maintain a minimum investment as stipulated by the respective entities.
Loans Receivable and Loans Held-for-Sale
Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as residential real estate, consumer and commercial. Each loan category is further segmented into fixed and adjustable rate interest terms.
Fair value of performing and non-performing loans, which is based on an exit price notion, was estimated by discounting the future cash flows, net of estimated prepayments, at market discount rates that reflect the credit and interest rate risk inherent in the loan.
Deposits Other than Time Deposits
The fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, and interest-bearing checking accounts and money market accounts is, by definition, equal to the amount payable on demand. The related
43
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

insensitivity of the majority of these deposits to interest rate changes creates a significant inherent value which is not reflected in the fair value reported.
Time Deposits
The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.
Securities Sold Under Agreements to Repurchase with Customers
Fair value approximates the carrying amount as these borrowings are payable on demand and the interest rate adjusts monthly.
FHLB Advances and Other Borrowings
Fair value estimates are based on discounting contractual cash flows using rates which approximate the rates offered for borrowings of similar remaining maturities.
The book value and estimated fair value of the Company’s significant financial instruments not recorded at fair value as of June 30, 2023 and December 31, 2022 are presented in the following tables (in thousands):
  Fair Value Measurements at Reporting Date Using:
Book
Value		Level 1
Inputs		Level 2
Inputs		Level 3
Inputs
June 30, 2023
Financial Assets:
Cash and due from banks$457,747 $457,747 $— $— 
Debt securities held-to-maturity1,222,507 — 1,100,929 8,827 
Restricted equity investments105,305 — — 105,305 
Loans receivable, net and loans held-for-sale10,034,306 — — 8,895,899 
Financial Liabilities:
Deposits other than time deposits (1)
7,392,307 — 7,392,307 — 
Time deposits2,766,030 — 2,731,216 — 
FHLB advances and other borrowings1,287,591 — 1,277,187 — 
Securities sold under agreements to repurchase with customers74,452 74,452 — — 
December 31, 2022
Financial Assets:
Cash and due from banks$167,946 $167,946 $— $— 
Debt securities held-to-maturity1,221,138 — 1,097,984 12,057 
Restricted equity investments109,278 — — 109,278 
Loans receivable, net and loans held-for-sale9,869,408 — — 9,103,137 
Financial Liabilities:
Deposits other than time deposits (1)
8,133,186 — 8,133,186 — 
Time deposits1,542,020 — 1,504,601 — 
FHLB advances and other borrowings1,406,569 — 1,416,384 — 
Securities sold under agreements to repurchase with customers69,097 69,097 — — 
(1) The estimated fair value of non-maturity deposits does not consider any inherent value and represents amount payable on demand. However, non-maturity deposits do contain significant inherent value to the Company, particularly when overnight funding costs are greater than the deposit costs.

Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because a limited market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other significant unobservable inputs.
44
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include premises and equipment, bank owned life insurance, deferred tax assets and goodwill. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

45
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

Note 8. Derivatives and Hedging Activities
The Company enters into derivative financial instruments which involve, to varying degrees, interest rate and credit risk. The Company manages these risks as part of its asset and liability management process and through credit policies and procedures, seeking to minimize counterparty credit risk by establishing credit limits and collateral agreements. The Company utilizes derivative financial instruments to accommodate the business needs of its customers as well as to economically hedge the exposure that this creates for the Company. Additionally, the Company enters into certain derivative financial instruments to enhance its ability to manage interest rate risk that exists as part of its ongoing business operations. The Company does not use derivative financial instruments for trading purposes.
Customer Derivatives – Interest Rate Swaps and Cap Contracts
Derivatives Not Designated as Hedging Instruments
The Company enters into interest rate swaps that allow commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. Under these agreements, the Company enters into a variable-rate loan agreement with a customer in addition to an interest rate swap agreement, which serves to effectively swap the customer’s variable-rate loan into a fixed-rate loan. The Company then enters into a corresponding swap agreement with a third party in order to economically hedge its exposure through the customer agreement. The Company also enters into interest rate cap contracts that enable commercial loan customers to lock in a cap on a variable-rate commercial loan agreement. This feature prevents the loan from repricing to a level that exceeds the cap contract’s specified interest rate, which serves to hedge the risk from rising interest rates. The Company then enters into an offsetting interest rate cap contract with a third party in order to economically hedge its exposure through the customer agreement.
These interest rate swaps and cap contracts with both the customers and third parties are not designated as hedges under ASC Topic 815, Derivatives and Hedging, therefore changes in fair value are reported in earnings. As the interest rate swaps and cap contracts are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC Topic 820, Fair Value Measurements. The Company recognized gains of $22,000 and $0 in commercial loan swap income resulting from the fair value adjustment for the three and six months ended June 30, 2023, respectively, as compared to gains of $0 and $37,000 for the corresponding prior year periods.
Derivatives Designated as Hedging Instruments
During the fourth quarter of 2022, the Company entered into a three-year interest rate swap intended to add stability to its net interest income and to manage its exposure to future interest rate movements associated with a pool of floating rate commercial loans. The swap requires the Company to pay variable-rate amounts indexed to one-month term Secured Overnight Financing Rate (“SOFR”) to the counterparty in exchange for the receipt of fixed-rate amounts at 4.0% from the counterparty. The swap was designated and qualified as a cash flow hedge, under ASC Topic 815, Derivatives and Hedging. The changes in the fair value of cash flow hedges are initially reported in other comprehensive income. Amounts are subsequently reclassified from accumulated other comprehensive income to earnings when the hedged transactions occur, specifically within the same line item as the hedged item (interest income). Therefore, a portion of the balance reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income as interest payments are made or received on the Company’s interest rate swaps.
The table below presents the effect on the Company’s accumulated other comprehensive income/loss (“AOCI” or “AOCL”) attributable to the cash flow hedge derivative, net of tax, and the related gains/(losses) reclassified from AOCI into income (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
20232023
AOCI (AOCL) balance at beginning of period, net of tax$488 $(25)
Unrealized losses recognized in OCI(1,588)(1,176)
Losses reclassified from AOCI into interest income191 292 
AOCL balance at end of period, net of tax$(909)$(909)
46
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

During the next twelve months, the Company estimates that an additional $1.2 million will be reclassified as a reduction to interest income.
The table below presents the notional amount and fair value of derivatives designated and not designated as hedging instruments, as well as their location on the Consolidated Statements of Financial Condition (in thousands):
NotionalFair Value
Other assetsOther liabilities
As of June 30, 2023
Derivatives Not Designated as Hedging Instruments
Interest rate swaps and cap contracts$1,424,747 $109,651 $109,670 
Derivatives Designated as Cash Flow Hedge
Interest rate swap contract100,000 — 1,199 
Total Derivatives$1,524,747 $109,651 $110,869 
December 31, 2022
Derivatives Not Designated as Hedging Instruments
Interest rate swaps and cap contracts$1,368,245 $113,420 $113,440 
Derivatives Designated as Cash Flow Hedge
Interest rate swap contract100,000 — 33 
Total Derivatives$1,468,245 $113,420 $113,473 
Credit Risk-Related Contingent Features
The Company is exposed to credit risk in the event of nonperformance by the interest rate derivative counterparty. The Company minimizes this risk by being a party to International Swaps and Derivatives Association agreements with third party broker-dealers that require a minimum dollar transfer amount upon a margin call. This requirement is dependent on certain specified credit measures. The amount of collateral posted with third parties was $0 and $40,000 at June 30, 2023 and December 31, 2022, respectively. The amount of collateral received from third parties was $112.5 million and $104.5 million at June 30, 2023 and December 31, 2022, respectively. The amount of collateral posted with third parties and received from third parties is deemed to be sufficient to collateralize both the fair market value change as well as any additional amounts that may be required as a result of a change in the specified credit measures. The aggregate fair value of all derivative financial instruments in a liability position with credit measure contingencies and entered into with third parties was $110.9 million and $113.5 million at June 30, 2023 and December 31, 2022, respectively.
The interest rate derivatives which the Company executes with the commercial borrowers are collateralized by the borrowers’ commercial real estate financed by the Company.

47
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

Note 9. Leases
A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company’s leases are comprised of real estate property for branches, automated teller machine locations and office space with terms extending through 2038. The Company has one existing finance lease, which has a lease term through 2029.
The following table represents the classification of the Company’s ROU assets and lease liabilities on the Consolidated Statements of Financial Condition (in thousands):
June 30,December 31,
20232022
Lease ROU AssetsClassification
Operating lease ROU assetsOther assets$20,044 $19,055 
Finance lease ROU assetPremises and equipment, net1,420 1,532 
Total lease ROU assets$21,464 $20,587 
Lease Liabilities
Operating lease liabilities (1)
Other liabilities$21,080 $20,053 
Finance lease liabilityOther borrowings1,811 1,934 
Total lease liabilities$22,891 $21,987 
(1) Operating lease liabilities excludes liabilities for future rent and estimated lease termination payments related to closed branches of $6.8 million and $7.7 million at June 30, 2023 and December 31, 2022, respectively.
The calculated amount of the ROU assets and lease liabilities are impacted by the lease term and the discount rate used to calculate the present value of the minimum lease payments. Lease agreements often include one or more options to renew the lease at the Company’s discretion. If the exercise of a renewal option is considered to be reasonably certain, the Company includes the extended term in the calculation of the ROU asset and lease liability. For the discount rate, ASC Topic 842, Leases requires the Company to use the rate implicit in the lease, provided the rate is readily determinable. As this rate is not readily determinable, the Company utilizes its incremental borrowing rate, at lease inception, over a similar term. For operating leases existing prior to January 1, 2019, the Company used the incremental borrowing rate for the remaining lease term as of January 1, 2019. For the finance lease, the Company utilized its incremental borrowing rate at lease inception.
June 30,December 31,
20232022
Weighted-Average Remaining Lease Term
Operating leases6.68 years6.87 years
Finance lease6.10 years6.60 years
Weighted-Average Discount Rate
Operating leases2.86 %2.86 %
Finance lease5.63 5.63 






48
OceanFirst Financial Corp.
Notes to Unaudited Consolidated Financial Statements (Continued)

The following table represents lease expenses and other lease information (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Lease Expense
Operating lease expense$1,174 $1,440 $2,319 $2,698 
Finance lease expense:
Amortization of ROU assets54 50 112 99 
Interest on lease liabilities (1)
26 26 52 52 
Total$1,254 $1,516 $2,483 $2,849 
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$1,121 $1,249 $2,260 $2,411 
Operating cash flows from finance leases26 26 52 52 
Financing cash flows from finance leases62 51 123 102 
(1)Included in borrowed funds interest expense on the Consolidated Statements of Income. All other costs are included in occupancy expense on the Consolidated Statements of Income.
Future minimum payments for the finance lease and operating leases with initial or remaining terms were as follows (in thousands):
Finance LeaseOperating Leases
For the Year Ending December 31,
2023$175 $2,311 
2024350 4,334 
2025350 4,274 
2026350 3,648 
2027350 2,489 
Thereafter559 6,400 
Total2,134 23,456 
Less: Imputed interest(323)(2,376)
Total lease liabilities$1,811 $21,080 

Note 10. Variable Interest Entity
The Company accounts for Trident as a variable interest entity (“VIE”) under ASC 810, Consolidation, for which the Company is considered the primary beneficiary (i.e. the party that has a controlling financial interest). In accordance with ASC 810, Consolidation, the Company has consolidated Trident’s assets and liabilities.

The summarized financial information for the Company’s consolidated VIE at June 30, 2023 and December 31, 2022 consisted of the following (in thousands):
June 30, 2023December 31, 2022
Cash and cash equivalents$37,022 $30,062 
Other assets805 941 
Total assets37,827 31,003 
Other liabilities35,706 28,998 
Net assets$2,121 $2,005 

49

PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and the Bank are not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business. Such routine legal proceedings in the aggregate are believed by management to be immaterial to the Company’s financial condition or results of operations.
Item 1A. Risk Factors
For a summary of risk factors relevant to the Company, see Part I, Item 1A, “Risk Factors,” in the 2022 Form 10-K and Part II, Item 1A, “Risk Factors,” in the Form 10-Q for the quarter ended March 31, 2023. Except as previously disclosed, there have been no material changes to risk factors relevant to the Company’s operations since December 31, 2022. Additional risks not presently known to the Company, or that the Company currently deems immaterial, may also adversely affect the business, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Purchases of Equity Securities
On June 25, 2021, the Company announced the authorization by the Board of Directors to repurchase up to an additional 5% of the Company’s outstanding common stock, or 3.0 million shares. The Company did not repurchase any shares of its common stock under its repurchase program during the three month period ended June 30, 2023. At June 30, 2023, there were 2,934,438 shares available for repurchase under the Company’s stock repurchase program.
For the month of May 31, 2023, there were 1,525 shares that were repurchased outside of the Company’s stock repurchase program at an average share price of $19.02. The Company repurchased these shares from employees that elected to sell to cover their withholding tax obligations on vested stock awards.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information

During the three months ended June 30, 2023, no directors or executive officers of the Company adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and/or any “Rule 10b5-1 trading arrangement.”


50
Table of Contents
Item 6. Exhibits
 
Exhibit No:Exhibit DescriptionReference
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Filed here within this document
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Filed here within this document
Certification pursuant to 18 U.S.C. Section 1350 as added by Section 906 of the Sarbanes-Oxley Act of 2002Filed here within this document
101.0
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements
104.0Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)



51
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
OceanFirst Financial Corp.
Registrant
DATE:August 3, 2023/s/ Christopher D. Maher
Christopher D. Maher
Chairman and Chief Executive Officer
DATE:August 3, 2023/s/ Patrick S. Barrett
Patrick S. Barrett
Executive Vice President and Chief Financial Officer

52

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