10q10k10q10k.net

What changed in OCEANFIRST FINANCIAL CORP's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of OCEANFIRST FINANCIAL CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+458 added−465 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-23)

Top changes in OCEANFIRST FINANCIAL CORP's 2024 10-K

458 paragraphs added · 465 removed · 369 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

152 edited+36 added−31 removed125 unchanged
Biggest changeTreasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, changes in liquidity, including the size and composition of the Company’s deposit portfolio, including the percentage of uninsured deposits in the portfolio, changes in capital management and balance sheet strategies and the ability to successfully implement such strategies, competition, demand for financial services in the Company’s market area, changes in consumer spending, borrowing and saving 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 effect of the Company’s rating under the Community Reinvestment Act, the impact of pandemics on our operations and financial results and those of our customers and the Bank’s ability to successfully integrate acquired operations. 3 These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Biggest changeTreasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, deposit flows, the availability of low-cost funding, changes in liquidity, including the size and composition of the Company’s deposit portfolio, and the percentage of uninsured deposits in the portfolio, changes in capital management and balance sheet strategies and the ability to successfully implement such strategies, our ability to enter new markets successfully and capitalize on growth opportunities; our ability to 3 successfully expand our franchise, including acquisitions or establishing new offices at favorable prices; our ability to successfully integrate any assets, liabilities, customers, systems and management personnel we have acquired or may acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto, competition, demand for loans and financial services in the Company’s market area, changes in consumer spending, borrowing and saving 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 pandemics on our operations and financial results and those of our customers and the Bank’s ability to successfully integrate acquired operations.
Risk of loss on a construction loan depends largely upon whether the initial estimate of the property's value at completion of construction equals or exceeds the cost of the property construction. During the construction phase, a number of factors can result in delays and cost overruns.
The risk of loss on a construction loan depends largely upon whether the initial estimate of the property's value at completion of construction equals or exceeds the cost of the property construction. During the construction phase, a number of factors can result in delays and cost overruns.
If estimates of value are inaccurate or if actual construction costs exceed estimates, the value of the property securing the loan may be insufficient to ensure full repayment when completed. The Bank addresses these risks through its underwriting policies and procedures and its experienced staff. Other Consumer: Home Equity Lines and Loans, Student Loans and Other Consumer .
If estimates of value are inaccurate or if actual construction costs exceed estimates, the value of the property securing the loan may be insufficient to ensure full repayment when completed. The Bank addresses these risks through its underwriting policies and procedures and its experienced staff. Home Equity Loans and Lines, Student Loans and Other Consumer .
When a borrower fails to make a required payment on a loan, the Bank takes a number of steps to have the borrower cure the delinquency and restore the loan to current status. The Bank sends the borrower a written notice of non-payment after the loan is first past due.
When a borrower fails to make the required payment on a loan, the Bank takes a number of steps to have the borrower cure the delinquency and restore the loan to current status. The Bank sends the borrower a written notice of non-payment after the loan is first past due.
Foreclosure timelines in New Jersey are among the longest in the nation and have remained protracted over the past several years. The Bank classifies assets in accordance with its Classification of Assets and Allowance for Credit Losses Policy (“ACL Policy”), which considers certain regulatory guidelines and definitions.
Foreclosure timelines in New Jersey are among the longest in the nation and have remained protracted over the past several years. The Bank classifies assets in accordance with its Classification of Assets and Allowance for Credit Losses Policy (the “ACL Policy”), which considers certain regulatory guidelines and definitions.
In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices based on the characteristics specified in those statutes. A national bank’s failure to comply with the provisions of the CRA could, at a minimum, result in regulatory restrictions on certain of its activities such as branching or mergers.
The Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices based on the characteristics specified in those statutes. A national bank’s failure to comply with the provisions of the CRA could, at a minimum, result in regulatory restrictions on certain of its activities such as branching or mergers.
The Bank must file reports with the OCC and the FDIC concerning its activities and financial condition in addition to obtaining regulatory approvals prior to consummating 18 certain transactions such as mergers with, or acquisitions of, other insured depository institutions. The OCC conducts periodic examinations to test the Bank’s safety and soundness and compliance with various regulatory requirements.
The Bank must file reports with the OCC and the FDIC concerning its activities and financial condition in addition to obtaining regulatory approvals prior to consummating certain transactions such as mergers with, or acquisitions of, other insured depository institutions. The OCC conducts periodic examinations to test the Bank’s safety and soundness and compliance with various regulatory requirements.
The investment policy is overseen by the Board of Directors and generally limits investments to government and federal agency obligations, agency and non-agency mortgage-backed securities, municipal, corporate, and asset-backed securities. The Company’s investment policy mirrors that of the Bank except that it allows for the purchase of certain other debt, preferred stock, and equity securities in limited amounts.
The investment policy is overseen by the Board and generally limits investments to government and federal agency obligations, agency and non-agency mortgage-backed securities, and municipal, corporate, and asset-backed securities. The Company’s investment policy mirrors that of the Bank except that it allows for the purchase of certain other debt, preferred stock, and equity securities in limited amounts.
Human Capital OceanFirst’s long-term growth and success depends on its ability to attract, develop and retain a high-performing and diverse workforce. The Company strives to provide a work environment that promotes collaboration, productivity, and employee engagement, which in turn drives both employee and customer success, as well as benefits the communities.
Human Capital OceanFirst’s long-term growth and success depends on its ability to attract, develop and retain a high-performing workforce. The Company strives to provide a work environment that promotes collaboration, productivity, and employee engagement, which in turn drives both employee and customer success, as well as benefits the communities.
The aggregate amount of “covered transactions” with all affiliates is limited to 20% of the bank’s capital 24 and surplus. Certain transactions with affiliates are required to be secured by collateral in an amount and of a type described in federal law. The purchase of low quality assets from affiliates is generally prohibited.
The aggregate amount of “covered transactions” with all affiliates is limited to 20% of the bank’s capital and surplus. Certain transactions with affiliates are required to be secured by collateral in an amount and of a type described in federal law. The purchase of low quality assets from affiliates is generally prohibited.
Recent Acquisitions The Company’s acquisitions over recent years have enhanced the Bank’s position as the premier community banking franchise in central and southern New Jersey, strengthened its presence in the major metropolitan areas of Philadelphia and New York, grown business lines, expanded its geographic footprint, and improved financial performance.
The Company’s acquisitions over recent years have enhanced the Company’s position as the premier community banking franchise in central and southern New Jersey, strengthened its presence in the major metropolitan areas of Philadelphia and New York, grown business lines, expanded its geographic footprint, and improved financial performance.
The retention of fixed-rate mortgage loans may increase the level of interest rate risk exposure of the Bank, as the rates on these 9 loans will not adjust during periods of rising interest rates and the loans can be subject to substantial increases in prepayments during periods of falling interest rates.
The retention of fixed-rate mortgage loans may increase the level of interest rate risk exposure of the Bank, as the rates on these loans will not adjust during periods of rising interest rates and the loans can be subject to substantial increases in prepayments during periods of falling interest rates.
The loans have an 18% lifetime cap on interest rate adjustments. Other consumer loans may entail greater risk than residential real estate loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly.
The loans have an 18% lifetime cap on interest rate adjustments. Consumer loans may entail greater risk than residential real estate loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly.
The Board of Directors has delegated authority to implement the investment policy to the Company and Bank’s Investment Committees under the oversight of the Asset Liability Committee. Day-to-day management of the portfolio rests with the Treasurer. Classification of securities are determined by management at the time of purchase.
The Board has delegated authority to implement the investment policy to the Company and Bank’s Investment Committees under the oversight of the Asset Liability Committee. Day-to-day management of the portfolio rests with the Treasurer. Classification of securities are determined by management at the time of purchase.
The guidance also provides for prior consultation with supervisory staff for material increases in the amount of a 20 BHC’s common stock dividend. The ability of a BHC to pay dividends may be restricted if a subsidiary bank becomes undercapitalized.
The guidance also provides for prior consultation with supervisory staff for material increases in the amount of a BHC’s common stock dividend. The ability of a BHC to pay dividends may be restricted if a subsidiary bank becomes undercapitalized.
This regulation and supervision establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for the protection of the DIF and depositors and to ensure the safe and sound operation of the Bank.
This regulation and supervision establishes a comprehensive 19 framework of activities in which an institution can engage and is intended primarily for the protection of the DIF and depositors and to ensure the safe and sound operation of the Bank.
The Bank generally originates C&I loans secured by the assets of the business including accounts receivable, inventory, and fixtures. The Bank generally requires the personal guarantee of the principal borrowers for all C&I loans.
The Bank generally originates C&I loans secured by the assets of the business including accounts receivable, inventory, equipment, and fixtures. The Bank generally requires the personal guarantee of the principal borrowers for all C&I loans.
In addition, the EGRRCPA limited the definition of loans that would be subject to the higher risk weighting applicable to high volatility commercial real estate. Volcker Rule .
In 20 addition, the EGRRCPA limited the definition of loans that would be subject to the higher risk weighting applicable to high volatility commercial real estate. Volcker Rule .
These regulatory policies may affect the ability of the BHC to pay dividends, repurchase shares of common stock, or otherwise engage in capital distributions. Acquisition of the Company .
These regulatory policies may affect the ability of the BHC to pay dividends, repurchase shares of common stock, or otherwise engage in capital distributions. 21 Acquisition of the Company .
Adjustments are generally based on a margin between 2.75% and 3.25%. Generally, the maximum interest rate on these loans is 6% above the initial interest rate. Generally, ARM loans pose credit risks different than the risks inherent in fixed-rate loans, primarily because as interest rates rise, the payments of the borrower rise, thereby increasing the potential for delinquency and default.
Adjustments are generally based on a spread between 2.75% and 3.25%. Generally, the maximum interest rate on these loans is 6% above the initial interest rate. Generally, ARM loans pose credit risks different than the risks inherent in fixed-rate loans, primarily because as interest rates rise, the payments of the borrower rise, thereby increasing the potential for delinquency and default.
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 changes in market interest rates, competition, general economic conditions, including levels of unemployment and real estate values, and inflation. The Company’s website address is www.oceanfirst.com .
While scheduled payments on loans and securities are predictable sources of funds, deposit flows, loan prepayments, and loan and investment activity are greatly influenced by changes in market interest rates, competition, general economic conditions, including levels of unemployment and real estate values, and inflation. The Company’s website address is www.oceanfirst.com .
Under the Change in Bank Control Act, no person may acquire control of a BHC, such as the Company, unless the FRB has been given 60 days prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquiror and the competitive effects of the acquisition.
Under the Change in Bank Control Act, no person may acquire control of a BHC, such as the Company, unless the FRB has been given 60 days prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition.
In accordance with regulatory guidelines, the Bank requires a full independent appraisal for commercial real estate properties for loans in excess of $500,000. The appraiser must be selected from the Bank’s approved appraiser list. The Bank uses an independent third party to review all applicable property appraisals to ensure compliance with regulations.
In accordance with regulatory guidelines, 7 the Bank requires a full independent appraisal for commercial real estate properties for loans in excess of $500,000. The appraiser must be selected from the Bank’s approved appraiser list. The Bank generally uses an independent third party to review all applicable property appraisals to ensure compliance with regulations.
These loans have periodic and overall caps on the increase or decrease at any adjustment date and over the life of the loan. These loans are indexed to an applicable Secured Overnight Financing Rate (“SOFR”) rate or U.S Treasury plus a margin. The majority of the ARM portfolio is tied to the one-year U.S. Treasury bill.
These loans have periodic and overall caps on the increase or decrease at any adjustment date and over the life of the loan. These loans are indexed to an applicable Secured Overnight Financing Rate (“SOFR”) rate or U.S Treasury plus a spread. The majority of the ARM portfolio is tied to the one-year U.S. Treasury bill.
A borrower is required to make monthly payments of principal and interest, at a minimum of $50, based upon a 10-, 15- or 20-year amortization period. Certain home equity lines of credit require the payment of interest-only during the first five years with fully-amortizing payments thereafter.
A borrower is required to make minimum monthly payments of principal and interest, based upon a 10-, 15- or 20-year amortization period. Certain home equity lines of credit require the payment of interest-only during the first five years with fully-amortizing payments thereafter.
Primary credit is available on a short-term basis, typically overnight, at a rate above the Federal Open Market Committee’s Federal funds target rate. All extensions of credit by the Federal Reserve Bank of Philadelphia must be secured. At December 31, 2023, the Bank had no borrowings outstanding with the Federal Reserve Bank of Philadelphia.
Primary credit is available on a short-term basis, typically overnight, at a rate above the Federal Open Market Committee’s Federal funds target rate. All extensions of credit by the Federal Reserve Bank of Philadelphia must be secured. At December 31, 2024, the Bank had no borrowings outstanding with the Federal Reserve Bank of Philadelphia.
As a bank holding company, the Company is subject to the requirements of the BHC Act, including required approvals for investments in or acquisitions of banking organizations, or entities involved in activities that are deemed closely related to banking, capital adequacy standards, and limitations on nonbanking activities.
As a bank holding company, the Company is subject to the requirements of the BHC Act, including required approvals for investments in or acquisitions of banking organizations, or entities involved in activities that are deemed closely related to banking, capital adequacy standards, and limitations on non-banking activities.
The Bank typically lends in its primary markets to experienced owners or developers who have knowledge and expertise in the commercial real estate market. The Bank performs extensive due diligence in underwriting commercial real estate loans due to the larger loan amounts and the riskier nature of such loans.
The Bank typically lends in its primary markets to experienced owners or developers who have knowledge and expertise in the commercial real estate market. The Bank performs extensive due diligence in underwriting investor owned commercial real estate loans due to the larger loan amounts and the riskier nature of such loans.
In addition, banks are prohibited from lending to any affiliate that is engaged in activities that are not permissible for BHCs and no bank may purchase the securities of any affiliate other than a subsidiary. Community Reinvestment Act and Fair Lending Laws.
In addition, banks are prohibited from lending to any affiliate that is engaged in activities that are not permissible for BHCs and no bank may purchase the securities of any affiliate other than a subsidiary. Community Reinvestment Act.
Critically undercapitalized institutions are subject to the appointment of a receiver or conservator. The OCC may also take any one of a number of discretionary supervisory actions against undercapitalized institutions, including the issuance of a capital directive. 23 Based on the regulatory guidelines, the Bank satisfies the criteria to be well-capitalized at December 31, 2023. Insurance of Deposit Accounts .
Critically undercapitalized institutions are subject to the appointment of a receiver or conservator. The OCC may also take any one of a number of discretionary supervisory actions against undercapitalized institutions, including the issuance of a capital directive. Based on the regulatory guidelines, the Bank satisfies the criteria to be well-capitalized at December 31, 2024. Insurance of Deposit Accounts .
(2) All of the Bank’s asset-backed securities carry interest rates which adjust to a spread over SOFR on a quarterly basis. (3) $335.2 million of the Bank’s mortgage-backed securities carry interest rates which generally adjust to a spread over SOFR on a quarterly basis. Equity Investments .
(2) All of the Bank’s asset-backed securities carry interest rates which adjust to a spread over SOFR on a quarterly basis. (3) $478.3 million of the Bank’s mortgage-backed securities carry interest rates which generally adjust to a spread over SOFR on a quarterly basis. Equity Investments .
The Bank’s PCD loans relate to loans acquired from prior bank acquisitions . PCD loans are accounted for at the purchase price or acquisition date fair value, with an 11 estimate of expected credit losse s for groups of PCD loans with similar risk characteristics and individual PCD loans without similar characteristics, to arrive at an initial amortized cost basis.
The Bank’s PCD loans relate to loans acquired from acquisitions . PCD loans are accounted for at the purchase price or acquisition date fair value, with an estimate of expected credit losse s for groups of PCD loans with similar risk characteristics and individual PCD loans without similar characteristics, to arrive at an initial amortized cost basis.
According to the federal banking agencies, applicable considerations include: quality of the bank’s interest rate risk management process; the overall financial condition of the bank; and the level of other risks at the bank for which capital is needed. 22 At December 31, 2023, the Bank exceeded all regulatory capital requirements currently applicable .
According to the federal banking agencies, applicable considerations include: quality of the bank’s interest rate risk management process; the overall financial condition of the bank; and the level of other risks at the bank for which capital is needed. At December 31, 2024, the Bank exceeded all regulatory capital requirements currently applicable .
At December 31, 2023, the Bank’s total assets were $13.54 billion and, therefore, the Bank is subject to CFPB supervision and examination for compliance with specified Federal consumer protection laws. Additionally, the Dodd-Frank Act includes a series of provisions covering mortgage loan origination standards affecting, among other things, originator compensation, minimum repayment standards and prepayments.
At December 31, 2024, the Bank’s total assets were $13.42 billion and, therefore, the Bank is subject to CFPB supervision and examination for compliance with specified Federal consumer protection laws. Additionally, the Dodd-Frank Act includes a series of provisions covering mortgage loan origination standards affecting, among other things, originator compensation, minimum repayment standards and prepayments.
Subsidiary Activities At December 31, 2023, the Bank owned all or a majority interest in three direct subsidiaries: • OceanFirst REIT Holdings, Inc., a Delaware corporation, was established in 2007 as a wholly-owned subsidiary of the Bank and now acts as the holding company for OceanFirst Management Corp, a New York corporation, which was organized in 2016 to hold and manage investment securities, including the stock of OceanFirst Realty Corp.
Subsidiary Activities At December 31, 2024, the Bank owned all or a majority interest in five direct subsidiaries: • OceanFirst REIT Holdings, Inc., a Delaware corporation, was established in 2007 as a wholly-owned subsidiary of the Bank and now acts as the holding company for OceanFirst Management Corp, a New York corporation, which was organized in 2016 to hold and manage investment securities, including the stock of OceanFirst Realty Corp.
Forward-Looking Statements In addition to historical information, this Form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strategies and expectations of the Company.
Forward-Looking Statements In addition to historical information, this Form 10-K may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strategies and expectations of the Company.
See Note 4 Securities, to the Consolidated Financial Statements. The ta ble below sets forth certain information regarding the amortized cost, weighted average yield, and contractual maturities, excluding scheduled principal amortization, of the Bank’s debt securities as of December 31, 2023.
See Note 4 Securities, to the Consolidated Financial Statements. 15 The ta ble below sets forth certain information regarding the amortized cost, weighted average yield, and contractual maturities, excluding scheduled principal amortization, of the Bank’s debt securities as of December 31, 2024.
The Bank offers both fixed-rate and adjustable-rate mortgage (“ARM”) loans secured by one-to-four family residences with maturities up to 30 years. The majority of such loans are secured by property located in the Bank’s primary market area.
Residential Real Estate . The Bank offers both fixed-rate and adjustable-rate mortgage (“ARM”) loans secured by one-to-four family residences with maturities up to 30 years. The majority of such loans are secured by property located in the Bank’s primary market area.
The FDIC’s regulations define the five categories as follows: An institution is classified as well capitalized if: • it has a leverage ratio of 5% or greater; and • it has common equity Tier 1 ratio of 6.5% or greater; and • it has a Tier 1 risk-based capital ratio of 8% or greater; and • it has a total risk-based capital ratio of 10% or greater; and • it is not subject to any written agreement, order or capital directive, or prompt corrective action directive issued by the OCC to meet and maintain a specific capital level for any capital measure.
The FDIC’s regulations define the five categories as follows: An institution is classified as well capitalized if: • it has a leverage ratio of 5% or greater; and • it has common equity Tier 1 ratio of 6.5% or greater; and • it has a Tier 1 risk-based capital ratio of 8% or greater; and • it has a total risk-based capital ratio of 10% or greater; and • it is not subject to any written agreement, order or capital directive, or prompt corrective action directive issued by the OCC to meet and maintain a specific capital level for any capital measure. 23 An institution is classified as adequately capitalized if: • it has a leverage ratio of less than 4%; and • it has a common equity Tier 1 ratio of 4.5% or greater; and • it has a Tier 1 risk-based capital ratio of 6%; and • it has a total risk-based capital ratio of 8% or greater.
In addition to internal credit reviews, the Bank has engaged an independent firm specializing in commercial loan reviews to examine a selection of commercial real estate and commercial and industrial loans, and provide management with objective analysis regarding the quality of these loans throughout the year.
In addition to internal credit reviews, the Bank has engaged independent firms specializing in commercial loan reviews to examine a selection of commercial real estate and commercial and industrial loans and provide management with objective analysis regarding the quality of these loans throughout the year.
A description of the methodology used in establishing the ACL is set forth in the section Management’s Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Policies and Estimates, Allowance for Credit Losses . At December 31, 2023 and 2022, the Bank’s loan ACL as a percentage of total loans was 0.66% and 0.57%, respectively.
A description of the methodology used in establishing the ACL is set forth in the section Management’s Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Policies and Estimates, Allowance for Credit Losses . At December 31, 2024 and 2023, the Bank’s loan ACL as a percentage of total loans was 0.73% and 0.66%, respectively.
The Foundation, established in 1996 during the Company’s initial public offering, has granted over $48.1 million to enrich the lives of local citizens by supporting initiatives in health and human services, education, affordab le housing, youth development, and the arts. 4 Lending Activities Loan Portfolio Composition .
The Foundation, established in 1996 during the Company’s initial public offering, has granted over $49.6 million to enrich the lives of local citizens by supporting initiatives in health and human services, education, affordab le housing, youth development, and the arts. 4 Lending Activities Loan Portfolio Composition .
Appraisals are obtained for loans secured by real estate properties. The weighted average loan-to-value ratio of the Bank’s residential real estate loans, excluding purchased loan pools, was 59% at December 31, 2023 based on appraisal values at the time of origination. Title insurance is typically required for first mortgage loans.
Appraisals are obtained for loans secured by real estate properties. The weighted average loan-to-value ratio of the Bank’s residential real estate loans, excluding loan purchase pools, was 59% at December 31, 2024 based on appraisal values at the time of origination. Title insurance is typically required for first mortgage loans.
At December 31, 2023, these loans totaled $5.7 million , as compared to $7.8 million at December 31, 2022. Generally, the adjustable rate of interest charged is based upon the prime rate of interest (as published in the Wall Street Journal), although the range of interest rates charged may vary from 1.0% below prime to 1.5% over prime.
At December 31, 2024, these loans totaled $5.9 million , as compared to $5.7 million at December 31, 2023. Generally, the adjustable rate of interest charged is based upon the prime rate of interest (as published in the Wall Street Journal), although the range of interest rates charged may vary from 1.0% below prime to 1.5% over prime.
The Company is registered with the FRB and is required by Federal law to file reports with, and comply with the rules and regulations of the FRB. The Bank is a member of the FHLB System and, with respect to deposit insurance, of the Deposit Insurance Fund (“DIF”) managed by the Federal Deposit Insurance Corporation (“FDIC”).
The Company is registered with the FRB and is required by Federal law to file reports with, and comply with the rules and regulations of the FRB. The Bank is a member of the FHLB System and, with respect to deposit insurance, of the Deposit Insurance Fund (“DIF”) managed by the FDIC.
The Bank generally mitigates these risks with (i) requiring an independent appraisal, which includes information on market rents and/or comparable sales for competing projects; (ii) advances on construction loans are made in accordance with a schedule reflecting the cost of the improvements and performing site inspections to determine if the work has been completed prior to the advance of funds for the project; and (iii) pre-sale or pre-leasing requirements and phasing of construction.
The Bank generally mitigates these risks by (i) requiring an independent appraisal, which includes information on market rents and/or comparable sales for competing projects; (ii) making advances on construction loans in accordance with a schedule reflecting the cost of the improvements and performing site inspections to determine if the work has been completed prior to the advancement of funds for the project; and (iii) pre-sale or pre-leasing requirements and phasing of construction.
Item 1. Business General OceanFirst Financial Corp. (the “Company”) is incorporated under Delaware law and serves as the holding company for OceanFirst Bank N.A. (the “Bank”). At December 31, 2023, the Company had consolidated total assets of $13.5 billion and total stockholders’ equity of $1.7 billion.
Item 1. Business General OceanFirst Financial Corp. (the “Company”) is incorporated under Delaware law and serves as the holding company for OceanFirst Bank N.A. (the “Bank”). At December 31, 2024, the Company had consolidated total assets of $13.4 billion and total stockholders’ equity of $1.7 billion.
Commercial real estate loans are among the largest of the Bank’s loans, and may have higher credit risk and lending spreads.
Investor owned commercial real estate loans are among the largest of the Bank’s loans and may have higher credit risk and lending spreads.
The independent firm reviewed over 60% of the outstanding loan balances for the Bank’s commercial real estate and commercial and industrial loans during 2023. Their conclusion was that the Bank’s internal credit reviews are consistent with both Bank policy and general industry practice. Loan Servicing .
The independent firms reviewed over 60% of the outstanding loan balances for the Bank’s commercial real estate and commercial and industrial loans during 2024. Their conclusion was that the Bank’s internal credit reviews are consistent with both Bank policy and general industry practice. Loan Servicing .
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”). Deposits . The Bank offers a variety of deposit accounts with a range of interest rates and terms to retail, government, and business customers.
The Bank has other sources of liquidity if a need for additional funds arises, including lines of credit at multiple financial institutions and access to the FRB discount window. Deposits . The Bank offers a variety of deposit accounts with a range of interest rates and terms to retail, government, and business customers.
The area is home to commuters working in and around New York City and Philadelphia and also includes a significant number of vacation and second homes in the communities along the New Jersey shore. In addition, the Bank provides banking services through teams located in the major metropolitan markets of Philadelphia, New York, Baltimore, and Boston.
The area is home to commuters working in and around New York City and Philadelphia and also includes a significant number of vacation and second homes in the communities along the New Jersey shore. In addition, the Bank provides banking services through teams located in the major metropolitan markets between Massachusetts and Virginia.
If any subsidiary bank of a financial holding company receives a rating under the CRA of less than “satisfactory,” then the financial holding company is prohibited from engaging in new activities or acquiring companies other than BHCs, banks, or savings associations until the rating is raised to “satisfactory” or better.
If any subsidiary bank of a financial holding company receives a rating under the Community Reinvestment Act (“CRA”) of less than “satisfactory,” then the financial holding company is prohibited from engaging in new activities or acquiring companies other than BHCs, banks, or savings associations until the rating is raised to “satisfactory” or better.
The Bank generally underwrites investor commercial real estate loans to a maximum of 65% to 80% advance, and owner occupied real estate loans to a maximum of 70% to 80% advance, depending on the asset class, against either the appraised value of the property or its purchase price (for loans to fund the acquisition of real estate), whichever is less.
The Bank generally underwrites investor owned commercial real estate loans to a maximum of 65% to 80% advance, depending on the asset class, against either the appraised value of the property or its purchase price (for loans to fund the acquisition of real estate), whichever is less.
At December 31, 2023, the Bank had outstanding municipal letters of credit of $1.30 billion issued by the FHLB used to secure such government deposits. The Company also pledged $1.15 billion of securities with FHLB and FRB to secure borrowings, enhance borrowing capacity, collateralize its repurchase agreements, and for other purposes required by law.
At December 31, 2024, the Bank had outstanding municipal letters of credit of $1.45 billion issued by the FHLB used to secure such government deposits. The Company also pledged $1.07 billion of securities with the FHLB and the FRB to secure borrowings, enhance borrowing capacity, collateralize its repurchase agreements, and for other purposes required by law.
The Bank generally requires minimum debt service coverage of 1.20x to 1.50x for investor real estate and 1.25x to 1.40x for owner occupied real estate, depending on the asset class. There is a potential risk that the borrower may be unable to pay off or refinance the outstanding balance at the loan maturity date.
The Bank generally requires minimum debt service coverage of 1.20x to 1.50x for investor owned real estate, depending on the asset class. There is a potential risk that the borrower may be unable to pay off or refinance the outstanding balance at the loan maturity date.
The following table shows the contractual maturity of the Bank’s total loans at December 31, 2023.
The following table shows the contractual maturity of the Bank’s total loans at December 31, 2024.
Th e Bank originates commercial real estate loans that are secured by properties, or properties under construction, that are generally used for busin ess purposes such as office, industrial, multi-family or retail facilities. Commercial real estate loans are provided on owner-occupied properties and on investor-owned properties.
Th e Bank originates investor owned commercial real estate loans that are secured by properties, or properties under construction, that are generally used for busin ess purposes such as office, industrial, multi-family, or retail facilities.
The Bank also receives income from other products and services it offers including bankcard services, trust and asset management products and services, deposit account services, and commercial loan swap income. The Bank’s primary sources of funds are deposits, principal and interest payments on loans and investments, Federal Home Loan Bank (“FHLB”) advances, and other borrowings.
The Bank also receives income from other products and services it offers including bankcard services, trust and fiduciary services, deposit account services, mortgage banking activity, and commercial loan swap income. The Bank’s primary sources of funds are deposits, principal and interest payments on loans and investments, Federal Home Loan Bank (“FHLB”) advances, and other borrowings.
For 2023, the asset level is $12.12 billion, and 25 financial institutions whose assets exceed that level receive dividends generally equal to the rate of the 10-year Treasury note, which totaled $1.6 million for the year ended December 31, 2023, as compared to $1.3 million in the prior year.
For 2024, the asset level is $12.52 billion, and financial institutions whose assets exceed that level receive dividends generally equal to the rate of the 10-year Treasury note, which totaled $1.7 million for the year ended December 31, 2024, as compared to $1.6 million in the prior year.
At December 31, 2023 , the Company exceeded all regulatory capital requirements currently applicable.
At December 31, 2024 , the Company exceeded all regulatory capital requirements currently applicable.
The management of the Bank does not know of any practice, condition, or violation that might lead to termination of deposit insurance. The total deposit insurance assessment expenses incurred in 2023 and 2022 were $9.9 million and $5.9 million, respectively.
The management of the Bank does not know of any practice, condition, or violation that might lead to termination of deposit insurance. 24 The total deposit insurance assessment expenses incurred in 2024 and 2023 were $9.7 million and $9.9 million, respectively.
See Risk Factors – Risks Related to Lending Activities – The Dodd-Frank Act imposes obligations on originators of residential mortgage loans . Included in the Bank’s residential real estate loan balance at December 31, 2023 were residential construction loans which totaled $110.0 million.
See Risk Factors – Risks Related to Lending Activities – The Dodd-Frank Act imposes obligations on originators of residential mortgage loans . Included in the Bank’s residential real estate loan balance at December 31, 2024, were residential construction loans which totaled $93.6 million.
Assets which do not currently expose the Bank to sufficient risk to warrant classification but possess potential weaknesses, such as past delinquencies, are designated as Special Mention. Special Mention assets totaled $40.4 million at December 31, 2023, as compared to $48.2 million at December 31, 2022.
Assets which do not currently expose the Bank to sufficient risk to warrant classification but possess potential weaknesses, such as past delinquencies, are designated as Special Mention. Special Mention assets totaled $54.5 million at December 31, 2024, as compared to $40.4 million at December 31, 2023.
For additional information, refer to Regulation of Bank Subsidiary – Community Reinvestment Act and Fair Lending Laws. 21 Regulation of Bank Subsidiary Business Activities .
For additional information, refer to Regulation of Bank Subsidiary – Community Reinvestment Act and Fair Lending Law. Regulation of Bank Subsidiary Business Activities .
As of December 31, 2023, these back-to-back swaps had a notional amount of $1.42 billion The commercial real estate portfolio also includes loans for the construction of commercial properties. The Bank generally underwrites construction loans for a term of three years or less.
As of December 31, 2024, these back-to-back swaps had a notional amount of $1.47 billion. The investor owned commercial real estate portfolio also includes loans for the construction of commercial properties. The Bank generally underwrites construction loans for a term of three years or less.
Loan originations are typically generated by the Bank’s commissioned loan representatives and are largely derived from contacts within the local real estate industry, members of the local communities, and the Bank’s existing or past customers.
Loan originations are typically generated by the Bank’s commissioned loan representatives and are largely derived from contacts within the local real estate industry, members of the local communities, the Bank’s existing or past customers, and targeted advertising through digital channels.
Risk of loss on a C&I business loan is dependent largely on the borrower’s ability to remain financially able to repay the loan from the ongoing operations of the business. In addition, any collateral securing such loans may depreciate over time, may be difficult to appraise, and may fluctuate in value. Consumer: Residential Real Estate .
The risk of loss on a C&I business loan is dependent largely on the borrower’s ability to repay the loan from the ongoing operations of the business. In addition, any collateral securing such loans may depreciate over time, may be difficult to appraise, and may fluctuate in value.
For investor-owned properties, because repayment is often dependent on the successful management of the properties, repayment of commercial real estate loans may be affected by adverse conditions in the real estate market or the economy, the Bank is particularly vigilant of this portfolio.
Because repayment is often dependent on the successful management of the properties, repayment of commercial real estate loans may be affected by adverse conditions in the real estate market or the economy, as a result, the Bank is particularly vigilant of this portfolio.
At December 31, 2023, and 2022, the Company held equity investments of $100.2 million and $102.0 million, respectively. The equity investments are primarily comprised of select financial services institutions’ preferred stocks, investments in other financial institutions and funds. Sources of Funds General .
At December 31, 2024, and 2023, the Company held equity investments of $84.1 million and $100.2 million, respectively. The equity investments are primarily comprised of select financial services institutions’ preferred stocks, investments in other financial institutions and funds. Sources of Funds General .
Financial holding companies, and the nonbank companies under their control, are permitted to engage in activities considered financial in nature or incidental to financial activities and, if the FRB determines that they pose no risk to the safety or soundness of depository institutions or the financial system in general, activities that are considered complementary to financial activities.
Financial holding companies that continue to meet the applicable requirements, and the non-bank companies under their control, are permitted to engage in activities considered financial in nature or incidental to financial activities and, if the FRB determines that they pose no risk to the safety or soundness of depository institutions or the financial system in general, activities that are considered complementary to financial activities.
The maximum amount that the FHLB will advance to member institutions, including the Bank, fluctuates from time-to-time in accordance with the policies of the FHLB. At December 31, 2023, the Bank had $848.6 million of outstanding advances from the FHLB. The Bank can also borrow from the Federal Reserve Bank of Philadelphia under its primary credit program.
The maximum amount that the FHLB will advance to member institutions, including the Bank, fluctuates from time to time in accordance with the policies of the FHLB. At December 31, 2024, the Bank had $1.07 billion of outstanding advances from the FHLB. The Bank can also borrow from the Federal Reserve Bank of Philadelphia under its primary credit program.
All of the loans currently being serviced for others are loans which were originated by the Bank. At December 31, 2023, the Bank was servicing $68.2 million of loans for others. Delinquencies and Classified Assets . The steps taken by the Bank with respect to delinquencies vary depending on the nature of the loan and period of delinquency.
Generally, loans currently being serviced for others are loans which were originated by the Bank. At December 31, 2024, the Bank was servicing $191.3 million of loans for others. Delinquencies and Classified Assets . The steps taken by the Bank with respect to delinquencies vary depending on the nature of the loan and period of delinquency.
At December 31, 2023, the Bank had $5.2 million of loans held-for-sale. Additionally, at December 31, 2023, 44.2% of the Bank’s total loans had adjustable interest rates. The types of loans that the Bank may originate are subject to federal and state laws and regulations.
At December 31, 2024, the Bank had $21.2 million of loans held-for-sale. Additionally, at December 31, 2024, 43.3% of the Bank’s total loans had adjustable interest rates. The types of loans that the Bank may originate are subject to federal and state laws and regulations.
The Bank also originates multi-family family mortgage loans and, to a lesser extent, land loans The underwriting standards and procedures that are used to underwrite commercial real estate loans are used to underwrite multi-family loans, except the loan-to-value ratio generally do not exceed 75% of the appraised value of the property, the debt-service coverage is generally a minimum of 1.20x and has an amortization period of up to 30 years may be used.
The underwriting standards and procedures that are used to underwrite investor owned commercial real estate loans are used to underwrite multi-family loans, except the loan-to-value ratio generally do not exceed 75% of the appraised value of the property, the debt-service coverage is generally a minimum of 1.20x and an amortization period of up to 30 years may be used.
In 2023, the WaveMakers spent nearly 7,000 hours volunteering their time and talents to help neighbors in need and the second annual Bank-wide volunteering event was held in September 2023 with more than 730 employees completing 95 projects for non-profit organization partners in the five states served by the Bank.
In 2024, the WaveMakers spent nearly 6,000 hours volunteering their time and talents to help neighbors in need and the second annual Bank-wide volunteering event was held in September 2024 with more than 700 employees completing over 70 projects for non-profit organization partners in the five states served by the Bank.
The state of New Jersey, New York City, Philadelphia, Baltimore, and Boston are also attractive markets to many financial institu tions. Many of the Bank’s competitors are significantly larger institutions that have greater financial resources than the Bank.
The states of New Jersey, New York City, Philadelphia, Pittsburgh, Baltimore, Boston, Virginia and Washington D.C. are also attractive markets to many financial institu tions. Many of the Bank’s competitors are significantly larger institutions that have greater financial resources than the Bank.
As of December 31, 2023, the Company pledged $7.26 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 government municipal deposits.
As of December 31, 2024, the Company pledged $7.43 billion of loans with the FHLB and the FRB to enhance the Company’s borrowing capacity, which included collateral pledged to the FHLB to obtain a municipal letter of credit to collateralize certain government municipal deposits.
The FDIC may terminate the insurance of an institution’s deposits upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order, or condition imposed by the FDIC.
The Bank cannot predict what assessment rates will be in the future. The FDIC may terminate the insurance of an institution’s deposits upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order, or condition imposed by the FDIC.
A tenant analysis and market analysis are part of the underwriting. Financial statements are also required annually for review. With respect to investor commercial real estate loans, rent rolls are also required annually in addition to financial statements.
A tenant analysis and market analysis are part of the underwriting. Depending on the size of the relationship, financial statements are also required annually for review. For investor owned commercial real estate loans, rent rolls are also required annually in addition to financial statements.
At December 31, 2023 2022 2021 (dollars in thousands) Non-performing loans (1) $ 29,548 $ 23,265 $ 25,494 OREO — — 106 Non-performing assets (1) $ 29,548 $ 23,265 $ 25,600 Allowance for loan credit losses as a percent of total loans receivable (2) 0.66 % 0.57 % 0.57 % Allowance for loan credit losses as a percent of total non-performing loans (1) (2) 227.21 244.25 191.61 Non-performing loans as a percent of total loans receivable (1) 0.29 0.23 0.30 Non-performing assets as a percent of total assets (1) 0.22 0.18 0.22 (1) Non-performing loans consist of all loans 90 days or more past due and other loans in the process of foreclosure.
At December 31, 2024 2023 2022 (dollars in thousands) Non-performing loans (1) $ 35,527 $ 29,548 $ 23,265 OREO 1,811 — — Non-performing loans and assets (1) $ 37,338 $ 29,548 $ 23,265 Allowance for loan credit losses as a percent of total loans receivable (2) 0.73 % 0.66 % 0.57 % Allowance for loan credit losses as a percent of total non-performing loans (1) (2) 207.19 227.21 244.25 Non-performing loans as a percent of total loans receivable (1) 0.35 0.29 0.23 Non-performing assets as a percent of total assets (1) 0.28 0.22 0.18 (1) Non-performing loans consist of all loans 90 days or more past due and other loans in the process of foreclosure.

… 139 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

86 edited+20 added−25 removed119 unchanged
Biggest changeA deterioration in economic conditions, especially local conditions, continued high interest 27 inflation, recession or otherwise, could have the following consequences, any of which could have a material adverse effect on the business, financial condition, liquidity and results of operations, and could more negatively affect the Company compared to a financial institution that operates with more geographic diversity: • demand for the products and services may decline; • there may be an increase to the allowance for credit losses; • loan delinquencies, problem assets, and foreclosures may increase; • collateral for loans, especially real estate, may decline in value, thereby reducing customers’ borrowing power, and reducing the value of assets and collateral associated with existing loans; and • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments.
Biggest changeA deterioration in economic conditions, especially local conditions, continued inflation, recession or otherwise, could have the following consequences, any of which could have a material adverse effect on the business, financial condition, liquidity and results of operations, and could more negatively affect the Company compared to a financial institution that operates with more geographic diversity: • demand for the products and services may decline; • the allowance for credit losses may increase; • loan delinquencies, problem assets, and foreclosures may increase; • collateral for loans, especially real estate, may decline in value, thereby reducing customers’ borrowing power, and reducing the value of assets and collateral associated with existing loans; and • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments. 28 Moreover, a significant decline in general economic conditions caused by inflation, tariffs, recession, acts of terrorism, civil unrest, an outbreak of hostilities or other internati onal or domestic calamities, an epidemic or pandemic, unemployment or other factors beyond the Company’s control could further impact these local economic conditions and could further negatively affect the financial results of banking operations.
Acquiring other banks, businesses, or branches may have an adverse effect on financial results and may involve various other risks commonly associated with acquisitions, including those discussed above, as well as, among other things: • payment of a premium over book and market values may dilute the book value and earnings per share in the short and long-term; • potential exposure to unknown or contingent liabilities of the target company; • exposure to potential asset quality problems of the target company; • inability to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits of the acquisition; • potential disruption to the business; • potential diversion of management’s time and attention; • the possible loss of key employees and customers of the target company; and • potential changes in banking or tax laws or regulations that may affect the target company.
Acquiring other banks, businesses, or branches may have an adverse effect on financial results and may involve various other risks commonly associated with acquisitions, including those discussed above, as well as, among other things: • payment of a premium over book and market values of the target company may dilute the book value and earnings per share of the Company in the short and long-term; • potential exposure to unknown or contingent liabilities of the target company; • exposure to potential asset quality problems of the target company; • inability to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits of the acquisition; • potential disruption to the business; • potential diversion of management’s time and attention; • the possible loss of key employees and customers of the target company; and/or • potential changes in banking or tax laws or regulations that may affect the target company.
In developing and marketing new lines of business and/or new products and services significant time and resources may be invested. Initial timetables for the development and introduction of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove feasible.
Significant time and resources may be invested in developing and marketing new lines of business and/or new products and services. Initial timetables for the development and introduction of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove feasible.
The following discussion of tax matters is intended only as a summary and does not purport to be a comprehensive description of the tax rules applicable to the Bank or the Company. The current applicable statutory tax rate is 21%. Dividends Received Deduction and Other Matters .
The following discussion of tax matters is intended only as a summary and does not purport to be a comprehensive description of the tax rules applicable to the Company or the Bank. The current applicable statutory tax rate is 21%. Dividends Received Deduction and Other Matters .
These provisions, as well as future regulatory or legislative changes applicable to the financial industry, may impact the profitability of the Company’s business activities and may change certain business practices, including the ability to offer new products, obtain financing, generate fee income, attract deposits, make loans and achieve satisfactory interest spreads, and could expose the Company to additional costs, including increased compliance costs.
These provisions, as well as future regulatory or legislative changes applicable to the financial industry, may impact the profitability of the Company’s business activities and may change certain business practices, including the ability to offer new products, obtain financing, generate fee income, attract deposits, make loans and achieve satisfactory interest spreads, and could expose the Company to additional costs, including increased 31 compliance costs.
The Company also receives funds from loan repayments, investment maturities and income on other interest-earning assets. While the Company emphasizes the generation of low-cost deposits as a source of funding, there is strong competition for such deposits in the Company’s market area. Additionally, deposit balances can decrease if customers identify alternative investments opportunities.
The Company also receives funds from loan repayments, investment maturities and income on other interest-earning assets. While the Company 37 emphasizes the generation of low-cost deposits as a source of funding, there is strong competition for such deposits in the Company’s market area. Additionally, deposit balances can decrease if customers identify alternative investments opportunities.
Under such a scenario, any borrowing or funds needed to raise capital required to make a capital injection may be more difficult and expensive and could have an adverse effect on the Company’s business, financial condition, and results of operations. The Company is subject to heightened regulatory requirements as a result of total assets exceeding $10 billion .
Under such a scenario, any borrowing or funds needed to raise capital required to make a capital injection may be more difficult and expensive and could have an adverse effect on the Company’s business, financial condition, and results of operations. The Company is subject to heightened regulatory requirements as a result of assets exceeding $10 billion .
Public fund deposits from local government 33 entities such as counties, townships, school districts and other municipalities generally have highe r average balances and the Company ’s inability to retain such funds could adversely affect liquidity or result in the use of higher-cost funding sources.
Public fund deposits from local government entities such as counties, townships, school districts and other municipalities generally have highe r average balances and the Company ’s inability to retain such funds could adversely affect liquidity or result in the use of higher-cost funding sources.
Although the Company has a history of paying a quarterly dividend on its common stock, there is no guaranty that such dividends will continue to be paid in the future or at what rate. Dividends on the Series A Preferred Stock are discretionary and non-cumulative . Dividends on the Series A Preferred Stock are discretionary and will not be cumulative.
Although the Company has a long history of paying a quarterly dividend on its common stock, there is no guaranty that such dividends will continue to be paid in the future or at what rate. Dividends on the Series A Preferred Stock are discretionary and non-cumulative . Dividends on the Series A Preferred Stock are discretionary and are not cumulative.
Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on operations, the classification of assets and determination of the level of the allowance for credit losses. The laws and regulations that govern the Company’s and the Bank’s operations are designed for the protection of depositors and the public, but not the Company’s stockholders.
Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on operations, the classification of assets and determination of the level of the allowance for credit losses. The laws and regulations that govern the Company’s and the Bank’s operations are designed for the protection of depositors and the public, not the Company’s stockholders.
Loans that were acquired as part of the Company’s acquisitions of other depository institutions were not underwritten or originated in accordance with the Company’s credit standards, including environmental matters, and the Company did not have long-standing relationships with many of these borrowers at the time of acquisition.
Loans that were acquired as part of the Company’s acquisitions of other depository institutions were not initially underwritten or originated in accordance with the Company’s credit standards, including environmental matters, and the Company did not have long-standing relationships with many of these borrowers at the time of acquisition.
In addition, a majority of data processing is outsourced to certain third-party providers. If these third-party providers encounter difficulties, or if there is difficulty communicating with them, the ability to adequately process and account for transactions could be affected, and business operations could be adversely affected.
In addition, a majority of data processing is outsourced to third-party providers. If these third-party providers encounter difficulties, or if there is difficulty communicating with them, the ability to adequately process and account for transactions could be affected, and business operations could be adversely affected.
These types of loans may expose a lender to greater risk of non-payment and loss than residential real estate loans because repayment of the loans often depends o n the successful operation of the property or the borrower’s business and the income stream of the borrowers.
These types of loans may expose a lender to greater risk of non-payment and loss 26 than residential real estate loans because repayment of the loans often depends o n the successful operation of the property or the borrower’s business and the income stream of the borrowers.
If a loan meets these criteria and is not a “higher priced loan” as defined in FRB regulations, the CFPB rule establishes a safe harbor preventing a consumer from asserting the failure of the originator to establish the consumer’s Ability-To-Repay.
If a loan meets these criteria and is not a “higher 27 priced loan” as defined in FRB regulations, the CFPB rule establishes a safe harbor preventing a consumer from asserting the failure of the originator to establish the consumer’s Ability-To-Repay.
Additionally, global markets may be adversely affected by the emergence of widespread health emergencies or pandemics. Societal responses to climate change could adversely affect the Company’s business and performance, including indirectly through impacts on its customers.
Additionally, global markets may be adversely affected by the emergence of widespread health emergencies or pandemics. 36 Societal responses to climate change could adversely affect the Company’s business and performance, including indirectly through impacts on its customers.
The Company may need to raise additional capital in the future and such capital may not be available when needed or at terms that are beneficial to stockholders. Substantial growth may stress regulatory capital levels, and may require the Company to raise additional capital.
The Company may need to raise additional capital in the future and such capital may not be available when needed or at terms that are beneficial to stockholders. Substantial growth may stress regulatory capital levels, and may require the Company to 30 raise additional capital.
Federal law requires that a holding company act as a source of financial and managerial strength to its subsidiary bank and to commit resources to support such subsidiary bank.
Federal law requires that a holding company act as a source of financial and managerial strength to its subsidiary bank and to commit resources to 32 support such subsidiary bank.
These areas 35 may be vulnerable to flooding or other damage from future storms or hurricanes, which could negatively impact the Company’s results of operations by disrupting operations, adversely impacting the ability of the Company’s borrowers to repay their loans, damaging collateral or reducing the value of real estate used as collateral.
These areas may be vulnerable to flooding or other damage from storms or hurricanes, which could negatively impact the Company’s results of operations by disrupting operations, adversely impacting the ability of the Company’s borrowers to repay their loans, damaging collateral or reducing the value of real estate used as collateral.
Threats to information security also exist in the processing of customer information through various vendors and their personnel. Breaches of security may occur through intentional or unintentional acts by those having authorized or unauthorized access to the confidential or other information of the Company and its customers, clients or counterparties.
Threats to information security also exist in the processing of customer information through various vendors and their personnel. Breaches of security may occur through intentional or unintentional acts by those having access to the confidential or other information of the Company and its customers, clients or counterparties.
These portfolios have grown in recent years and the Company intends to continue to emphasize these types of lending arrangements.
These portfolios have grown in recent years and the Company intends to continue to emphasize these types of lending.
The guidance focuses on exposure to commercial real estate loans that are dependent on the cash flow from the real estate held as collateral and that are likely to be at greater risk to conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment).
The guidance focuses on exposure to commercial real estate loans that are dependent on the cash flows from the real estate held as collateral and that are likely to be at greater risk to conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment).
An increase in the required capital level would further limit the Company’s use of capital for other purposes. Changes in card network rules or standards could adversely affect the Company’s business . The Company is a member of the Visa and MasterCard networks.
An increase in the required capital levels would further limit the Company’s use of capital for other purposes. Changes in card network rules or standards could adversely affect the Company’s business . The Company is a member of the Visa and MasterCard networks.
The Company’s board of directors relies on management in overseeing cybersecurity risk management. The Company has a standing Information Technology and Security Management Committee, consisting of leaders across multiple domains. The Chief Information Security Officer is the primary management liaison to the committee.
The Company’s board of directors relies on management in overseeing cybersecurity risk management. The Company has an Information Technology and Security Management Committee, consisting of leaders across multiple domains. The Chief Information Security Officer is a primary management liaison to the committee.
No assurance can be given that the Company will be successful in these efforts. The Company’s intent to expand its geographic footprint may not be successful in entering into new markets . The Company intends to expand its geographic footprint through acquisitions and organic growth.
No assurance can be given that the Company will be successful in these efforts. The Company may not be successful in entering into new markets . The Company intends to expand its geographic footprint through acquisitions and organic growth.
These estimates and assumptions are based on management’s best estimates and experience as of that date and are subject to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information becomes known, including the evaluation of the adequacy of the allowance for credit losses. Changes in accounting standards could affect reported earnings .
These estimates and assumptions are based on management’s best estimates and experience as of that date and are subject to change. Materially different results may occur as circumstances change and additional information becomes known, including the evaluation of the adequacy of the allowance for credit losses. Changes in accounting standards could affect reported earnings .
Failure to comply with these regulations could result in wide variety of sanctions, including payment of damages and civil money penalties, injunctive relief, and restrictions on mergers and acquisitions activity and expansionary activities.
Failure to comply with these regulations could result in sanctions, including payment of damages and civil money penalties, injunctive relief, and restrictions on mergers and acquisitions activity and expansionary activities.
Stockholders should carefully consider the risks described below, together with other information contained in this Annual Report on Form 10-K and that was filed with the SEC, before making any purchase or sale decisions regarding the Company’s common stock or Series A Preferred Stock.
Stockholders should carefully consider the risks described below, together with other information contained in this Annual Report on Form 10-K and other documents filed with the SEC, before making any purchase or sale decisions regarding the Company’s common stock or Series A Preferred Stock.
Many of these competitors enjoy advantages, including greater financial resources and access to capital, stronger regulatory ratios and higher lending limits, a wider geographic presence, more accessible branch office locations, the ability to offer a wider array of services or more favorable pricing alternatives, as well as lower origination and operating costs.
Many of these competitors enjoy advantages not available to the Company, including greater 33 financial resources and access to capital, stronger regulatory ratios and higher lending limits, a wider geographic presence, more accessible branch office locations, the ability to offer a wider array of services or more favorable pricing alternatives, as well as lower origination and operating costs.
The Company’s concentrations of loans in certain industries could have adverse effects on credit quality. As of December 31, 2023, the Company’s commercial real estate loan portfolio included loans to: (i) lessors of office buildings of $1.3 billion, or 13% of total loans; and (ii) borrowers in the retail industry of $1.2 billion, or 12% of total loans.
The Company’s concentrations of loans in certain industries could have adverse effects on credit quality. As of December 31, 2024, the Company’s commercial real estate loan portfolio included loans to: (i) lessors of office buildings of $1.2 billion, or 12% of total loans; and (ii) borrowers in the retail industry of $1.2 billion, or 12% of total loans.
The Company and the Bank report their income on a calendar year basis using the accrual method of accounting, and are subject to Federal income taxation in the same manner as other corporations with some exceptions, including particularly the Bank’s reserve for bad debts.
FEDERAL AND STATE TAXATION Federal Taxation General . The Company and the Bank report their income on a calendar year basis using the accrual method of accounting, and are subject to Federal income taxation in the same manner as other corporations with some exceptions, including particularly the Company’s reserve for bad debts.
Depending on the capitalization status and regulatory treatment of depository institutions, including whether an institution is subject to a supervisory prompt corrective action directive, certain additional regulatory restrictions and prohibitions may apply, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on payment of dividends and restrictions on the acceptance of brokered deposits. 37 FEDERAL AND STATE TAXATION Federal Taxation General .
Depending on the capitalization status and regulatory treatment of depository institutions, including whether an institution is subject to a supervisory prompt corrective action directive, certain additional regulatory restrictions and prohibitions may apply, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on payment of dividends and restrictions on the acceptance of brokered deposits.
Conversely, an increase in interest rates generally reduces prepayments. Additionally, increases in interest rates may decrease loan demand and/or make it more difficult for borrowers to repay adjustable-rate loans. Changes in interest rates may also affect the current estimated fair value of the securities portfolio. Generally, the value of securities moves inversely with changes in interest rates.
Additionally, increases in interest rates may decrease loan demand and/or make it more difficult for borrowers to repay adjustable-rate loans. Changes in interest rates may also affect the current estimated fair value of the securities portfolio. Generally, the value of securities moves inversely with changes in interest rates.
Although the majority of residential mortgages historically originated by the Company would be considered Qualified Mortgages, the Company currently originates residential mortgage loans that do not qualify.
Although the majority of residential mortgages historically originated by the Company would be considered Qualified Mortgages, the Company currently originates residential mortgage loans that do not meet the definition.
The Company’s ability to maximize profitability and manage growth successfully will depend on its ability to continue to attract and retain management and loan officers experienced in banking and financial services and fami liar with the communities in its market area.
The Company’s ability to maximize profitability and manage growth successfully depends on its ability to attract and retain management and loan officers experienced in banking and financial services and fami liar with the communities in its market area.
This legislation included an exception if at least 50% of the shares, by vote or value, are owned or controlled, directly or indirectly, by a state or federally chartered bank, savings bank, or savings and loan association (financial institution) with assets of $15 billion or less. As of December 31, 2023 the Company qualified for this exception.
This legislation included an exception if at least 50% of the shares, by vote or value, are owned 38 or controlled, directly or indirectly, by a state or federally chartered bank, savings bank, or savings and loan association (financial institution) with assets of $15 billion or l ess. As of December 31, 2024 the Company qualified for this exception.
Because of these concentrations of loans in specific industries, a deterioration within these industries, especially those that have been particularly adversely impacted by long-term work-from-home arrangements on the commercial real estate sector, including retail stores, hotels and office buildings, creates greater risk exposure for the Company’s commercial real estate loan portfolio.
A deterioration within these industries, especially those that have been particularly adversely impacted by long-term work-from-home arrangements on the commercial real estate sector, including retail stores, hotels and office buildings, creates greater risk exposure for the Company’s commercial real estate loan portfolio.
During the year ended December 31, 2023, the Company incurred other comprehensive gains of $14.3 million, net of tax, related to net changes in unrealized holding gains in the available-for-sale investment securities portfolio, which positively impacted stockholders’ equity, as well as book value per common share. The increase occurred even though the securities are not sold.
During the year ended December 31, 2024, the Company incurred other comprehensive 29 gains of $4.7 million, net of tax, related to net changes in unrealized holding gains in the available-for-sale investment securities portfolio, which positively impacted stockholders’ equity, as well as book value per common share. The increase occurred even though the securities are not sold.
Based on these factors, the Bank has a concentration in multi-family and commercial real estate lending, as such loans represented 447% of total bank capital as of December 31, 2023.
Based on these factors, the Bank has a concentration in multi-family and commercial real estate lending, as such loans represented 424% of total bank capital as of December 31, 2024.
The Company is a community bank and its ability to maintain its reputation is critical to the success of the business. The failure to do so may materially adversely affect the Company’s performance. The Company is a community bank, and its reputation is one of the most valuable components of its business.
The failure to do so may materially adversely affect the Company’s performance. The Company is a community bank, and its reputation is one of the most valuable components of its business.
The Dodd-Frank Act contains a comprehensive framework for over-the-counter derivatives transactions.
The Dodd-Frank Act contains a comprehensive framework for over-the-counter derivative transactions.
Many competitors enjoy advantages, including greater financial resources and access to capital, stronger regulatory ratios, more aggressive marketing campaigns, better brand recognition and more branch locations.
Many competitors enjoy advantages not available to the Company, including greater financial resources and access to capital, stronger regulatory ratios, more aggressive marketing campaigns, better brand recognition and more branch locations.
The unexpected loss of service of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could adversely affect the Company. If the Company is not able to attract qualified personnel it could negatively impact the Company’s profitability and growth.
The unexpected loss of service of any key management personnel, or the inability to recruit and retain qualified personnel, could adversely affect the Company. If the Company is not able to attract qualified personnel it could negatively impact the Company’s profitability and growth. The soundness of other financial institutions could adversely affect the Company .
At December 31, 2023, the Company maintained a debt securities portfolio of $1.91 billion, of which $753.9 million was classified as available-for-sale. The estimated fair value of the available-for-sale debt securities portfolio may change depending on the credit quality of the underlying issuer, market liquidity, changes in interest rates and other factors.
At December 31, 2024, the Company maintained a debt securities portfolio of $1.87 billion, of which $827.5 million was classified as available-for-sale. The estimated fair value of the available-for-sale debt securities portfolio may change depending on the credit quality of the underlying issuer, market liquidity, changes in interest rates and other factors.
For this purpose, taxable income generally means Federal taxable income, excluding some entities not included in the unitary filing and other adjustments (including addition of interest income on state and municipal obligations). The Company is required to file a New Jersey income tax return because it does business in New Jersey.
State and Local Taxation New Jersey Taxation . The Company files New Jersey income tax returns. For this purpose, taxable income generally means Federal taxable income, excluding some entities not included in the unitary filing and other adjustments (including addition of interest income on state and municipal obligations). The Company is required to file a New Jersey income tax return.
An important function of the Federal Reserve Board is to regulate the money supply and credit conditions. Among the instruments used by the Federal Reserve Board to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against certain transaction account deposits.
Among the instruments used by the Federal Reserve Board to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against certain transaction account deposits.
Furthermore, if customers do not perceive new offerings as providing significant value, they may fail to accept the new products and services. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences may also impact the successful implementation of a new line of business or a new product or service.
Furthermore, customers may fail to accept the new products and services. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences may also impact the successful implementation of a new line of business or a new product or service.
The Company has also been active in competing for New Jersey governmental and municipal deposits. At December 31, 2023, these relationships included public school districts, local municipal governments, and cooperative health insurance funds, which such deposits accounted for approximately 23% of the Company’s total deposits.
The Company has also been active in competing for New Jersey governmental and municipal deposits including public school districts, local municipal governments, and cooperative health insurance funds. At December 31, 2024 such deposits accounted for approximately 26% of the Company’s total deposits.
Success will also depend on the ability of officers and key employees to continue to implement and improve operational and other systems, to manage multiple, concurrent customer relationships and to retain, hire, train and manage skilled employees.
Success will also depend on the ability of officers and key employees to continue to implement and improve operational and other systems, to manage multiple, concurrent customer relationships and to retain, hire, train and manage skilled employees and to build market share in its existing and new market areas.
Risks Related to Lending Activities The Company’s emphasis on commercial lending may expose the Company to increased lending risks . At December 31, 2023, $6.96 billion, or 68.3%, of the Company’s total loans consisted of commercial real estate, multi-family real estate and land loans, and commercial and industrial loans.
Risks Related to Lending Activities The Company’s emphasis on commercial lending may expose the Company to increased lending risks . At December 31, 2024, $6.84 billion, or 67.4%, of the Company’s total loans consisted of commercial real estate, multi-family real estate, construction and land loans, and commercial and industrial loans.
Information technology systems are critical to the Company’s business, which is required to collect, process, transmit and store significant amounts of confidential information regarding the Company’s customers, employees and its own business, operations, plans and business strategies. The Company uses various technology systems to manage customer relationships, deposits and loans, general ledger, securities investments, and other processes.
Information technology systems are critical to the Company’s business, which includes collecting, processing, transmitting and storing significant amounts of confidential information regarding the Company’s customers, employees and its business, operations, plans and business strategies. The Company uses various technology systems to manage customer relationships, deposits and loans, general ledger, securities investments, and other processes.
The Company’s total assets were $13.5 billion at December 31, 2023, thereby making it subject to requirements imposed by the Dodd-Frank Act and its implementing regulations, including examination by the CFPB to assess compliance with federal consumer financial laws, imposition of higher FDIC premiums, reduced debit card interchange fees, and enhanced risk management frameworks, all of which increase operating costs and reduce earnings. 32 Additional costs have been and will be incurred to implement processes, procedures, and monitoring of compliance with these requirements, including investing significant management attention.
The Company’s total assets were $13.4 billion at December 31, 2024, thereby making it subject to requirements imposed by the Dodd-Frank Act and its implementing regulations, including examination by the CFPB to assess compliance with federal consumer financial laws, imposition of higher FDIC premiums, reduced debit card interchange fees, and enhanced risk management frameworks, all of which increase operating costs and reduce earnings.
As a Delaware holding company not earning income in Delaware, the Company is exempted from Delaware corporate income tax but is required to file an annual report with and pay an annual franchise tax to the State of Delaware.
The allocation and apportionment to these jurisdictions may affect the overall tax rate. Delaware Taxation . As a Delaware holding company not earning income in Delaware, the Company is exempted from Delaware corporate income tax but is required to file an annual report with and pay an annual franchise tax to the State of Delaware. Item 1B.
The Company may be challenged to successfully manage its business as a result of the strain on management and operations that may result from growth. The ability to manage growth will depend on its ability to continue to attract, hire and retain skilled employees.
The Company may be challenged to successfully manage its business as a result of the strain on management and operations that may result from growth.
Should the fundamentals of the commercial real estate market deteriorate, the Company’s financial condition and results of operations could be adversely affected. 26 The Dodd-Frank Act imposes obligations on originators of residential mortgage loans, which if not followed could lead to loan losses, litigation-related expenses, and delays in taking title to real estate collateral in a foreclosure .
The Dodd-Frank Act imposes obligations on originators of residential mortgage loans, which if not followed could lead to loan losses, litigation-related expenses, and delays in taking title to real estate collateral in a foreclosure .
These failures led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository institutions. 36 These events have led to a greater focus by institutions, investors and regulators on the on-balance sheet liquidity of and funding sources for financial institutions, the composition of its deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management.
Events such as the bank failures that occurred in early 2023 have led to a greater focus by institutions, investors and regulators on the on-balance sheet liquidity of and funding sources for financial institutions, the composition of its deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management.
While management regularly reviews security assessments that were conducted on the Company’s third-party service providers that have access to sensitive and confidential information, there can be no assurance that their information security protocols are sufficient to withstand a cyber-attack or other security breach. 34 The occurrence of any system failures, interruption, or breach of security of the Company’s or its vendors’ systems could cause serious negative consequences for the Company, including significant disruption of the Company’s operations, misappropriation of confidential information of the Company or that of its customers, or damage to computers or systems of the Company and those of its customers and counterparties, which could result in violations of applicable privacy and other laws, financial loss to the Company or to its customers, loss of confidence in the Company’s security measures, customer dissatisfaction, significant litigation exposure, and harm to the Company’s reputation, all of which could have a material adverse effect on the Company.
The occurrence of any system failures, interruption, or breach of security of the Company’s or its vendors’ systems could cause negative consequences for the Company, including significant disruption of the Company’s operations, misappropriation of confidential information of the Company or that of its customers, or damage to computers or systems of the Company and those of its customers and counterparties, which could result in violations of applicable privacy and other laws, financial loss to the Company or to its customers, loss of confidence in the Company’s security measures, customer dissatisfaction, litigation exposure, and harm to the Company’s reputation, all of which could have a material adverse effect on the Company.
For 2019 and prospectively, New Jersey law requires combined filing for members of an affiliated group, but excludes companies that qualify as a New Jersey Investment Company (“ICs”) and Real Estate Investment Trusts (“REITs”). The allocation and apportionment of taxable income to New Jersey may affect the overall tax rate.
For 2019 and prospectively, New Jersey law requires combined filing for members of an affiliated group, but excluded companies that qualify as a New Jersey Investment Company (“ICs”) and Real Estate Investment Trusts (“REITs”).
In recognition of this shift in consumer patterns, the Company has undertaken a comprehensive review of its branch network, resulting in branch consolidation accompanied by the enhancement of the Company’s capabilities to serve its customers through alternate delivery channels. The benefits of this strategy are dependent on the Company’s ability to realize expected expense reductions without experiencing significant customer attrition.
In recognition of this shift in consumer patterns, the Company has undertaken a comprehensive review of its branch network, resulting in branch consolidation accompanied by the enhancement of the Company’s capabilities to serve its customers through alternate delivery channels.
The Bank’s net assets, less allowable deductions, are taxed at a rate presently equal to 0.95% of apportioned net assets. The allocation and apportionment to Pennsylvania may affect the overall tax rate. Delaware Taxation .
The Bank’s net assets, less allowable deductions, are taxed at a rate presently equal to 0.95% of apportioned net assets. The allocation and apportionment to Pennsylvania may affect the overall tax rate. Other City and State Taxation . The Company or the Bank are required to file other city and state tax returns within its geographical footprint.
Most of the Bank’s loans are s ecured by real estate and are made to borrowers throughout New Jersey and the major metropolitan areas of Philadelphia, New York, Baltimore, and Boston, as well as their surrounding areas.
Most of the Bank’s loans are s ecured by real estate and are made to borrowers throughout New Jersey and the major metropolitan areas between Massachusetts and Virginia.
Risks Related to Acquisitions and Growth The Company must successfully integrate the operations and retain the customers of its acquired institutions .
Risks Related to Acquisitions and Growth The Company must successfully integrate the operations and retain the customers of its acquired institutions . The Company has historically acquired financial institutions and other service companies and continues to explore acquisition opportunities.
In addition, third parties with whom the Company has relationships may take actions over which the Company has limited control that could negatively impact perceptions about the Company or the financial services industry.
In addition, third parties with whom the Company has relationships may take actions over which the Company has limited control that could negatively impact perceptions about the Company or the financial services industry. The proliferation of social media may increase the likelihood that negative information about the Company, whether or not accurate, could impact the Company’s reputation and business.
Acquisitions may reduce or not enhance cash flows, business, financial condition, results of operations or prospects and, as a result, such acquisitions may have an adverse effect on the results of operations, particularly during periods in which the acquisitions are being integrated into operations. 30 Risks Related to Loan Sales The Company may be required to repurchase mortgage loans for a breach of representations and warranties, which could harm the Company’s earnings .
Acquisitions may reduce or not enhance cash flows, business, financial condition, results of operations or prospects and, as a result, such acquisitions may have an adverse effect on the results of operations, particularly during periods in which the acquisitions are being integrated into operations.
If the Company is not able to maintain qualified and experienced directors, it could negatively impact the Company’s security measures, reputation, and growth. An inability to attract and retain qualified personnel or the unexpected loss of service of any key personnel could have a negative impact on financial condition and results of operations.
An inability to attract and retain qualified personnel or the unexpected loss of service of any key personnel could have a negative impact on financial condition and results of operations.
In preparing periodic reports the Company is required to file under the Securities Exchange Act of 1934, including the consolidated financial statements, management is and will be required under applicable rules and regulations to make estimates and assumptions as of a specified date.
Changes in management’s estimates and assumptions may have a material impact on the Company’s consolidated financial statements and the financial condition or operating results . In preparing periodic reports the Company is required to file under the Securities Exchange Act of 1934, including the consolidated financial statements, management is required to make estimates and assumptions as of a specified date.
Risks Related to Operational Matters Risks associated with system failures, interruptions, or breaches of security could disrupt businesses, result in the disclosure of confidential information, damage the reputation of, and create significant financial and legal exposure for the Company .
The benefits of this strategy are dependent on the Company’s ability to realize expected expense reductions without experiencing significant customer attrition. 34 Risks Related to Operational Matters Risks associated with system failures, interruptions, or breaches of security could disrupt businesses, result in the disclosure of confidential information, damage the reputation of, and create significant financial and legal exposure .
Risks Related to Accounting and Internal Controls Matters The Company may incur impairments to goodwill. At December 31, 2023, the Company had $506.1 million in goodwill, which is evaluated for impairment at least annually.
Any such losses could materially and adversely affect the Company’s results of operations. Risks Related to Accounting and Internal Controls Matters The Company may incur impairments to goodwill. At December 31, 2024, the Company had $523.3 million in goodwill, which is evaluated for impairment at least annually.
Further, if the Company is unable to adequately manage liquidity, deposits, capital levels and interest rate risk, which have come under greater scrutiny in light of recent bank failures, it may have a material adverse effect on the Company’s financial condition and results of operations.
If the Company is unable to adequately manage liquidity, deposits, capital levels and interest rate risk, it may have a material adverse effect on its financial condition and results of operations. The Company is a community bank and its ability to maintain its reputation is critical to the success of the business.
During 2023, the New Jersey Division of Taxation enacted certain tax reform legislation. Most notably to the Company, for periods ending on and after July 31, 2023, companies meeting the statutory definition of “captive” ICs and REITs are required to be included in the combined filing.
F or periods ending on and after July 31, 2023, companies meeting the statutory definition of “captive” ICs and REITs are required to be included in the combined filing.
New York Taxation . The Company is required to file New York State (“NYS”) and New York City (“NYC”) tax returns. The NYS and NYC returns require consolidation of all entities, including OceanFirst Realty, and taxable income, consistent with other states, generally means Federal taxable income subject to certain adjustments.
The NYS and NYC returns require consolidation of all entities and taxable income, consistent with other states, generally means Federal taxable income subject to certain adjustments.
A reduction in interest rates causes increased prepayments of loans and mortgage-backed securities as borrowers refinance their debt to reduce their borrowing costs. This creates reinvestment risk, which is the risk that the Company may not be able to reinvest the funds from faster prepayments at rates that are comparable to the rates earned on the prepaid loans or securities.
This creates reinvestment risk, which is the risk that the Company may not be able to reinvest the funds from faster prepayments at rates that are comparable to the rates earned on the prepaid loans or securities. Conversely, an increase in interest rates generally reduces prepayments.
Competitive factors driven by consumer sentiment or otherwise can also reduce the Company’s ability to generate fee income, such as through overdraft fees. In attracting deposits, the Company faces substantial competition from other insured depository institutions such as banks, savings institutions and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds.
In attracting deposits, the Company faces substantial competition from other insured depository institutions such as banks, savings institutions and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds.
See Regulation and Supervision, Bank Holding Company Regulation . Monetary policies and regulations of the Federal Reserve Board could adversely affect the Company’s business, financial condition, and results of operations . The Company’s earnings and growth are affected by the policies of the Federal Reserve Board.
Monetary policies and regulations of the Federal Reserve Board could adversely affect the Company’s business, financial condition, and results of operations . The Company’s earnings and growth are affected by the policies of the Federal Reserve Board. An important function of the Federal Reserve Board is to regulate the money supply and credit conditions.
For New Jersey tax purposes, regular corporations are presently taxed at a rate equal to 9% of taxable income. New Jersey also imposed a temporary surtax of 2.5% which was effective through December 31, 2023.
For New Jersey tax purposes, regular corporations are presently taxed at a rate equal to 9% of taxable income. New Jersey currently also imposes a Corporate Transit Fee of 2.5%, which applies to the Company, for corporations with a taxable net income over $10 million effective through December 31, 2028.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Over the past two years, in response to a pronounced rise in inflation, the FRB raised certain benchmark interest rates to combat inflation.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money.
An institution will be subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if its capital level falls below the capital conservation buffer amount. 31 The application of these capital requirements could, among other things, require the Company to maintain higher capital resulting in lower returns on equity, and could require the Company to obtain additional capital to comply or result in regulatory actions if the Company is unable to comply with such requirements.
The application of these capital requirements could, among other things, require the Company to maintain higher capital resulting in lower returns on equity, and could require the Company to obtain additional capital to comply or result in regulatory actions if the Company is unable to comply with such requirements. See Regulation and Supervision, Bank Holding Company Regulation .
The Company completes acquisitions of financial institutions and other service companies and continues to explore acquisition opportunities. 29 Future results of operations will depend in large part on the Company’s ability to successfully integrate the operations of the institutions it acquires and retain the employees and customers of those institutions.
Future results of operations will depend in large part on the Company’s ability to successfully integrate the operations of the institutions it acquires, retain the employees and customers of those institutions and achieve the level of expected cost savings and revenue growth.
Further, unless and until U.S. political, credit and financial market conditions have been sufficiently resolved or stabilized, it may increase the Company’s future borrowing costs. Risks Related to Interest Rates Rising interest rates have decreased the value of the Company’s securities portfolio, and the Company would realize losses if it were required to sell such securities to meet liquidity needs.
Further, unless and until U.S. political, credit and financial market conditions have been sufficiently resolved or stabilized, it may increase the Company’s future borrowing costs. Risks Related to Interest Rates Changes in interest rates could adversely affect results of operations and financial condition .
FHLB, Fannie Mae, Freddie Mac and investors carefully examine loan documentation on delinquent loans for a possible reason to request a repurchase by the loan originator. A subsequent sale of a repurchased mortgage loan could be at a significant discount to the unpaid principal balance. The Company maintains a reserve for repurchased loans.
A subsequent sale of a repurchased mortgage loan could be at a significant discount to the unpaid principal balance. The Company maintains a reserve for repurchased loans.
If the Company is unable to adequately manage liquidity, deposits, capital levels and interest rate risk, it may have a material adverse effect on its financial condition and results of operations. Negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system.
Other Risks Related to the Business The Company’s stock price may be negatively impacted by unrelated bank failures and negative depositor confidence in depository institutions. Further, if the Company is unable to adequately manage liquidity, deposits, capital levels and interest rate risk, it may have a material adverse effect on the Company’s financial condition and results of operations.

… 51 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+0 added−0 removed10 unchanged
Biggest changeCybersecurity Governance Management Committee Oversight The Company has established an Information Technology and Security Management Committee consisting of department leaders across multiple functional areas including Data Engineering, Enterprise Applications, Strategic Planning, Technology, and Cybersecurity. These functional areas are led by qualified financial service technology professionals, with extensive certifications and advanced degrees in cybersecurity.
Biggest changeCybersecurity Governance Management Committee Oversight The Company has established an Information Technology and Security Management Committee consisting of department leaders across multiple functional areas including Data Engineering, Enterprise Applications, Strategic Planning, Technology, IT Governance, and Cybersecurity. These functional areas are led by qualified financial service technology professionals, with extensive certifications and advanced degrees in cybersecurity.
The Chief Information Security Officer has several years of experience leading cybersecurity operations in financial services, supported by a team with various security, 39 technical, risk, audit and leadership certifications. Management provides cybersecurity statistics and details to the board monthly. Board Committee Oversight The Company’s Risk and IT Board Committees provide oversight of the cyber program.
The Chief Information Security Officer has several years of experience leading cybersecurity operations in financial services, supported by a team with various security, technical, risk, audit and leadership certifications. Management provides cybersecurity statistics and details to the board monthly. Board Committee Oversight The Company’s Risk and IT Board Committees provide oversight of the cyber program.
Like many other companies, the Company relies on third-party vendor solutions to support its operations; many of these vendors have access to sensitive and proprietary information. Third-party vendors continue to be a notable source of operational and informational risk.
Like many other companies, the Company relies on third-party vendor solutions to support its operations; many of these vendors have access to sensitive and proprietary information. Third-party vendors continue to be a notable source of operational 39 and informational risk.
Item 1C. Cybersecurity Cybersecurity Risk, Management and Strategy Cybersecurity is a significant and integrated component of the Company’s risk management strategy, designed to protect the confidentiality, integrity, and availability of sensitive information contained within the Bank’s information services.
Item 1C. Cybersecurity Cybersecurity Risk, Management and Strategy Cybersecurity is a significant and integrated component of the Company’s risk management strategy, designed to protect the confidentiality, integrity, and availability of sensitive information contained within the Company’s information services.
Core activities supporting the Company’s strategy include cybersecurity training, technology optimization, threat intelligence, vulnerability and patch management and the testing of incident response, business continuity and disaster recovery capabilities. Employees play a significant role in the defense against cybersecurity threats. Every employee is responsible for protecting the Bank and client information.
Core activities supporting the Company’s strategy include cybersecurity training, technology optimization, threat intelligence, vulnerability and patch management and the testing of incident response, business continuity and disaster recovery capabilities. Employees play a significant role in the defense against cybersecurity threats. Every employee is responsible for protecting the Company’s and client’s information.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeThe Bank also conducts its business at 39 branch offices and various deposit production facilities located throughout central and southern New Jersey and the greater metropolitan areas of New York City and Philadelphia. The Bank also operates commercial loan production offices in New Jersey, New York City, the greater Philadelphia area, Baltimore, and Boston.
Biggest changeThe Company also conducts its business at 39 branch offices and various deposit production facilities located throughout central and southern New Jersey and major metropolitan areas of New York City and Philadelphia. The Bank also operates commercial loan production offices in New Jersey, New York City, the greater Philadelphia area, Pittsburgh, Washington D.C., Baltimore, and Boston.
Item 2. Properties At December 31, 2023, the Bank primarily conducted its business through its headquarters located in Toms River, New Jersey, and its administrative office located in Red Bank, New Jersey.
Item 2. Properties At December 31, 2024, the Company primarily conducted its business through its headquarters located in Toms River, New Jersey, and its administrative office located in Red Bank, New Jersey.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed1 unchanged
Biggest changePeriod Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 OceanFirst Financial Corp. $100.00 $116.70 $88.57 $109.05 $108.12 $92.74 NASDAQ Composite Index 100.00 136.69 198.10 242.03 163.28 236.17 KBW Regional Banking Index 100.00 123.81 113.03 154.45 143.75 143.17 For the year ended December 31, 2023 and 2022, the Company paid an annual cash dividend of $0.80 and $0.74 per share, respectively.
Biggest changePeriod Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 OceanFirst Financial Corp. $100.00 $75.89 $93.45 $92.65 $79.47 $86.95 NASDAQ Composite Index 100.00 144.92 177.06 119.45 172.77 223.87 KBW Regional Banking Index 100.00 91.29 124.74 116.10 115.64 130.90 For both years ended December 31, 2024 and 2023, the Company paid an annual cash dividend of $0.80 per share.
Stock Performance Graph The following graph shows a comparison of total stockholder return on OceanFirst Financial Corp.’s common stock, based on the market price of the Company’s common stock with the cumulative total return of companies in the NASDAQ Composite Index and the KBW Regional Banking Index for the period from December 31, 2018 through December 31, 2023.
Stock Performance Graph The following graph shows a comparison of total stockholder return on OceanFirst Financial Corp.’s common stock, based on the market price of the Company’s common stock with the cumulative total return of companies in the NASDAQ Composite Index and the KBW Regional Banking Index for the period from December 31, 2019 through December 31, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock OceanFirst Financial Corp.’s common stock is traded on the NASDAQ Global Select Market under the symbol OCFC. As of February 20, 2024, there were 2,611 common stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock OceanFirst Financial Corp.’s common stock is traded on the NASDAQ Global Select Market under the symbol OCFC. As of February 21, 2025, there were 2,588 common stockholders of record.
On June 25, 2021, the Company announced the authorization 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 during the quarter ended December 31, 2023. At December 31, 2023, there were 2,934,438 shares available for repurchase.
On June 25, 2021, the Company announced the authorization 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 during the quarter ended December 31, 2024. At December 31, 2024, there were 1,551,200 shares available for repurchase.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

113 edited+30 added−37 removed38 unchanged
Biggest changeFor the Year Ended December 31, 2023 2022 2021 (dollars in thousands) Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Assets: Interest-earning assets: Interest-earning deposits and short-term investments $ 327,539 $ 17,084 5.22 % $ 72,913 $ 1,106 1.52 % $ 969,982 $ 1,258 0.13 % Securities (1) 1,905,413 69,025 3.62 1,792,598 39,683 2.21 1,517,649 25,597 1.69 Loans receivable, net (2) Commercial 6,903,731 400,459 5.80 6,386,755 287,044 4.49 5,362,265 221,144 4.12 Residential real estate 2,911,246 105,796 3.63 2,724,398 91,432 3.36 2,309,790 79,696 3.45 Home equity loans and line and other consumer (“other consumer”) 255,359 15,610 6.11 256,912 11,910 4.64 298,193 14,397 4.83 Allowance for loan credit losses, net of deferred loan costs and fees (53,477) — — (44,446) — — (48,637) — — Loans receivable, net 10,016,859 521,865 5.21 9,323,619 390,386 4.19 7,921,611 315,237 3.98 Total interest-earning assets 12,249,811 607,974 4.96 11,189,130 431,175 3.85 10,409,242 342,092 3.29 Non-interest-earning assets 1,237,218 1,200,725 1,260,079 Total assets $ 13,487,029 $ 12,389,855 $ 11,669,321 Liabilities and Stockholders’ Equity: Interest-bearing liabilities: Interest-bearing checking $ 3,795,502 52,898 1.39 % $ 4,063,716 11,344 0.28 % $ 3,878,465 13,400 0.35 % Money market 794,387 18,656 2.35 764,837 2,234 0.29 769,157 1,105 0.14 Savings 1,364,333 9,227 0.68 1,597,648 758 0.05 1,581,472 631 0.04 Time deposits 2,440,829 91,237 3.74 1,167,499 16,685 1.43 985,328 10,074 1.02 Total 8,395,051 172,018 2.05 7,593,700 31,021 0.41 7,214,422 25,210 0.35 FHLB advances 944,219 46,000 4.87 389,750 10,365 2.66 — — — Securities sold under agreements to repurchase with customers 75,140 931 1.24 101,377 159 0.16 134,939 253 0.19 Other borrowings (3) 307,368 19,294 6.28 203,117 12,153 5.98 228,600 11,291 4.94 Total borrowings 1,326,727 66,225 4.99 694,244 22,677 3.27 363,539 11,544 3.18 Total interest-bearing liabilities 9,721,778 238,243 2.45 8,287,944 53,698 0.65 7,577,961 36,754 0.49 Non-interest-bearing deposits 1,869,735 2,319,657 2,429,547 Non-interest-bearing liabilities (3) 262,883 239,861 151,950 Total liabilities 11,854,396 10,847,462 10,159,458 Stockholders’ equity 1,632,633 1,542,393 1,509,863 Total liabilities and equity $ 13,487,029 $ 12,389,855 $ 11,669,321 Net interest income $ 369,731 $ 377,477 $ 305,338 Net interest rate spread (4) 2.51 % 3.20 % 2.80 % Net interest margin (5) 3.02 % 3.37 % 2.93 % Total cost of deposits (including non-interest-bearing deposits) 1.68 % 0.31 % 0.26 % Ratio of interest-earning assets to interest-bearing liabilities 126.00 % 135.00 % 137.36 % 47 (1) 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.
Biggest changeFor the Year Ended December 31, 2024 2023 2022 (dollars in thousands) Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Assets: Interest-earning assets: Interest-earning deposits and short-term investments $ 175,611 $ 9,381 5.34 % $ 327,539 $ 17,084 5.22 % $ 72,913 $ 1,106 1.52 % Securities (1) 2,084,451 87,549 4.20 1,905,413 69,025 3.62 1,792,598 39,683 2.21 Loans receivable, net (2) Commercial 6,836,728 410,978 6.01 6,903,731 400,459 5.80 6,386,755 287,044 4.49 Residential real estate 2,998,732 117,747 3.93 2,911,246 105,796 3.63 2,724,398 91,432 3.36 Home equity loans and line and other consumer (“other consumer”) 243,360 16,518 6.79 255,359 15,610 6.11 256,912 11,910 4.64 Allowance for loan credit losses, net of deferred loan costs and fees (59,289) — — (53,477) — — (44,446) — — Loans receivable, net 10,019,531 545,243 5.44 10,016,859 521,865 5.21 9,323,619 390,386 4.19 Total interest-earning assets 12,279,593 642,173 5.23 12,249,811 607,974 4.96 11,189,130 431,175 3.85 Non-interest-earning assets 1,215,809 1,237,218 1,200,725 Total assets $ 13,495,402 $ 13,487,029 $ 12,389,855 Liabilities and Stockholders’ Equity: Interest-bearing liabilities: Interest-bearing checking $ 3,923,846 86,320 2.20 % $ 3,795,502 52,898 1.39 % $ 4,063,716 11,344 0.28 % Money market 1,214,690 41,948 3.45 794,387 18,656 2.35 764,837 2,234 0.29 Savings 1,169,424 11,422 0.98 1,364,333 9,227 0.68 1,597,648 758 0.05 Time deposits 2,325,638 102,443 4.40 2,440,829 91,237 3.74 1,167,499 16,685 1.43 Total 8,633,598 242,133 2.80 8,395,051 172,018 2.05 7,593,700 31,021 0.41 FHLB advances 742,575 35,686 4.81 944,219 46,000 4.87 389,750 10,365 2.66 Securities sold under agreements to repurchase with customers 73,399 1,893 2.58 75,140 931 1.24 101,377 159 0.16 Other borrowings 484,406 28,426 5.87 307,368 19,294 6.28 203,117 12,153 5.98 Total borrowings 1,300,380 66,005 5.08 1,326,727 66,225 4.99 694,244 22,677 3.27 Total interest-bearing liabilities 9,933,978 308,138 3.10 9,721,778 238,243 2.45 8,287,944 53,698 0.65 Non-interest-bearing deposits 1,630,719 1,869,735 2,319,657 Non-interest-bearing liabilities 245,680 262,883 239,861 Total liabilities 11,810,377 11,854,396 10,847,462 Stockholders’ equity 1,685,025 1,632,633 1,542,393 Total liabilities and equity $ 13,495,402 $ 13,487,029 $ 12,389,855 Net interest income $ 334,035 $ 369,731 $ 377,477 Net interest rate spread (3) 2.13 % 2.51 % 3.20 % Net interest margin (4) 2.72 % 3.02 % 3.37 % Total cost of deposits (including non-interest-bearing deposits) 2.36 % 1.68 % 0.31 % Ratio of interest-earning assets to interest-bearing liabilities 123.61 % 126.00 % 135.00 % 47 (1) 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.
To accomplish these objectives, the Company has sought to: (1) grow the commercial banking business, with a particular focus on strengthening commercial and industrial banking; (2) expand the residential lending business, focusing on the secondary market and saleable loan business; (3) diversify and strengthen its deposit base through product offerings appealing to a broadened customer base; and (4) improve operating efficiency through the ongoing investment in information technology.
To accomplish these objectives, the Company has sought to: (1) diversify and strengthen its deposit base through product offerings appealing to a broadened customer base; (2) grow the commercial banking business, with a particular focus on strengthening commercial and industrial banking; (3) expand the residential lending business, focusing on the secondary market and saleable loan business; and (4) improve operating efficiency through the ongoing investment in information technology.
(2) Performance ratios for 2023 included a net expense related to merger related expenses, net branch consolidation expense, FDIC special assessment, net loss on sale of investments and net gain on equity investments of $6.2 million, or $4.7 million, net of tax benefit.
Performance ratios for 2023 included a net expense related to merger related expenses, net branch consolidation expense, FDIC special assessment, net loss on sale of investments and net gain on equity investments of $6.2 million, or $4.7 million, net of tax benefit.
This period is intended to represent the credit profile of the current portfolio and capture prior performance in a severe economic recession. These guardrails are updated annually to capture recent behavior that is indicative of the credit profile of the current portfolio. Management considers subjective, objective, and unique qualitative factors at each estimation date.
This period is intended to represent the credit profile of the current portfolio and capture prior performance in a severe economic recession. These guardrails are updated annually to capture recent behavior that is indicative of the credit profile of the current portfolio. 53 Management considers subjective, objective, and unique qualitative factors at each estimation date.
Capital Management The Company actively manages its capital position to ensure adequate coverage and improve return on stockholders’ equity. The Company conducts capital stress testing, which includes evaluating the effects of various scenarios on capital, as one means of evaluating capital adequacy. The results of stress testing are considered in the capital planning process and strategy 43 development.
Capital Management The Company actively manages its capital position to ensure adequate coverage and improve return on stockholders’ equity. The Company conducts capital stress testing, which includes evaluating the effects of various scenarios on capital, as one means of evaluating capital adequacy. The results of stress testing are considered in the capital planning process and strategy development.
Various elements of these accounting 52 policies, by their nature, are subject to estimation techniques, valuation assumptions and other subjective assessments. Certain assets are carried on the consolidated statements of financial condition at estimated fair value or the lower of cost or estimated fair value.
Various elements of these accounting policies, by their nature, are subject to estimation techniques, valuation assumptions and other subjective assessments. Certain assets are carried on the consolidated statements of financial condition at estimated fair value or the lower of cost or estimated fair value.
The Company also analyzes the need to raise additional capital in the future, through issuance of debt or equity, to meet its commitments and business needs. Over the past five years, the Company has implemented or announced two stock repurchase programs.
The Company also analyzes the need to raise additional capital in the future, through issuance of debt or equity, to meet its commitments and business needs. Over the past five years, the Company has implemented or announced two stock 43 repurchase programs.
Management concluded no triggering events were identified subsequent to the August 31, 2023 annual test date. Significant negative industry or economic trends, including declines in the market price of the Company’s stock, reduced estimates of future cash flows or business disruptions could result in impairments to goodwill in the future, which would result in recording an impairment loss.
Management concluded no triggering events were identified subsequent to the August 31, 2024 annual test date. Significant negative industry or economic trends, including declines in the market price of the Company’s stock, reduced estimates of future cash flows or business disruptions could result in impairments to goodwill in the future, which would result in recording an impairment loss.
The following table sets forth certain information relating to the Company for each of the years ended December 31, 2023, 2022 and 2021. The yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods shown except where noted otherwise. Average balances are derived from average daily balances.
The following table sets forth certain information relating to the Company for each of the years ended December 31, 2024, 2023 and 2022. The yields and costs are derived by dividing the income or expense by the average balance of assets or liabilities, respectively, for the periods shown except where noted otherwise. Average balances are derived from average daily balances.
Depending on market conditions, the Company may pay higher rates on such deposits or other borrowings than it currently pays on the certificates of deposit due on or after December 31, 2023. The Company believes, however, based on past experience that a significant portion of such deposits will remain with us.
Depending on market conditions, the Company may pay higher rates on such deposits or other borrowings than it currently pays on the certificates of deposit due on or after December 31, 2024. The Company believes, however, based on past experience that a significant portion of such deposits will remain with us.
Interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services. 56
Interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services.
Other than discussed above, there were no changes in the estimation methodology for these assumptions in 2023. Goodwill Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets acquired through purchase acquisitions.
Other than discussed above, there were no changes in the estimation methodology for these assumptions in 2024. Goodwill Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets acquired through purchase acquisitions.
Investments in Residential Lending The Company began its expansion of the residential lending business into new and adjacent geographies, which included the recruitment of leadership roles and sales personnel in expanded geographies and a focus on secondary marketing and saleable loans.
Investments in Residential Lending The Company continued its expansion of the residential lending business into new and adjacent geographies, which included the recruitment of leadership roles and sales personnel in expanded geographies and a focus on secondary marketing and saleable loans.
As of December 31, 2023, the Bank and Parent Company continued to maintain adequate capital under all stress scenarios, including a scenario where all losses related to the investment securities portfolio are realized.
As of December 31, 2024, the Bank and Parent Company continued to maintain adequate capital under all stress scenarios, including a scenario where all losses related to the investment securities portfolio are realized.
Additionally, the Company continues to improve its treasury management function by enhancing capabilities through expanded product offerings and thoughtfully evaluating opportunities to further bolster talent and technology to better serve the Company’s customers.
Additionally, the Company continues to improve its treasury management capabilities by enhancing services through expanded product offerings and thoughtfully evaluating opportunities to further bolster talent and technology to better serve the Company’s customers.
Non-performing loans 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. (10) The loans acquired from prior bank acquisitions were recorded at fair value.
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. (10) Loans acquired from acquisitions were recorded at fair value.
These assumptions are consistent with the assumptions employed by the Company’s Interest Rate Risk (“IRR”) model. Changes in these assumptions have varying implications to the ACL measurement. For example, faster prepayment rates would shorten the life of loans and reduce the lifetime expected credit loss, whereas slower prepayment rates would have the inverse effect.
These assumptions are consistent with the assumptions evaluated in the Company’s Interest Rate Risk (“IRR”) model. Changes in these assumptions have varying implications to the ACL measurement. For example, faster prepayment rates would shorten the life of loans and reduce the lifetime expected credit loss, whereas slower prepayment rates would have the inverse effect.
Goodwill in accordance with ASC 350, Intangibles - Goodwill and Other was a critical accounting estimate in the preparation of the consolidated financial statements as of and for the period ended December 31, 2023.
Goodwill in accordance with ASC 350, Intangibles - Goodwill and Other, was a critical accounting estimate in the preparation of the consolidated financial statements as of and for the period ended December 31, 2024.
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 years ended December 31, 2023, 2022, and 2021, interest income included net loan fees of $2.9 million, $3.0 million, and $2.5 million, respectively.
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 years ended December 31, 2024, 2023, and 2022, interest income included net loan fees of $3.3 million, $2.9 million, and $3.0 million, respectively.
Net income available to common stockholders for the year ended December 31, 2023 included net gain on equity investments of $876,000, net loss on sale of investments of $5.3 million, a special FDIC assessment of $1.7 million, net branch consolidation expenses of $70,000, and merger related expenses of $22,000.
Net income for the year ended December 31, 2023 included a net gain on equity investments of $876,000, net loss on sale of investments of $5.3 million, a special FDIC assessment of $1.7 million, net branch consolidation expenses of $70,000, and merger related expenses of $22,000.
Net income available to common stockholders for the year ended December 31, 2023 included net loss on sale of investments of $5.3 million, a special assessment charge of $1.7 million related to the FDIC’s final rule to recover the loss on the Deposit Insurance Fund (“DIF”), net branch consolidation expenses of $70,000, merger related expenses of $22,000, and net gain on equity investments of $876,000.
Net income available to common stockholders for the year ended December 31, 2023 included net loss on sale of investments of $5.3 million, net gain on equity investments of $876,000, a special assessment charge of $1.7 million related to the FDIC’s final rule to recover the loss on the DIF, net branch consolidation expenses of $70,000, and merger related expenses of $22,000.
Additionally, the Company remains well-capitalized with a stockholders’ equity to total assets ratio of 12.28% at December 31, 2023. 46 Analysis of Net Interest Income Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities.
Additionally, the Company remains well-capitalized with a stockholders’ equity to total assets ratio of 12.69% at December 31, 2024. 46 Analysis of Net Interest Income Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities.
For example, at December 31, 2023, if the Company had elected a scenario using more favorable credit trends in the qualitative input in its commercial portfolio, the ACL measurement would have been approximately $1.0 million lower. Alternatively, if the Company had elected a more adverse scenario for its macro-economic forecasts, the ACL measurement would have been approximately $4.2 million higher.
For example, at December 31, 2024, if the Company had elected a scenario using more favorable credit trends in the qualitative input in its commercial portfolio, the ACL measurement would have been approximately $1.9 million lower. Alternatively, if the Company had elected a more adverse scenario for its macro-economic forecasts, the ACL measurement would have been approximately $4.9 million higher.
As of December 31, 2023, the Company pledged $7.26 billion of loans with the FHLB and FRB to enhance the Company’s borrowing capacity, which included collateral pledged to the FHLB to obtain a municipal letter of credit to collateralize certain municipal deposits.
As of December 31, 2024, the Company pledged $7.43 billion of loans with the FHLB and FRB to enhance the Company’s borrowing capacity, which included collateral pledged to the FHLB to obtain a municipal letter of credit to collateralize certain municipal deposits.
The results of the quantitative assessment indicated that the fair value of the Company’s reporting unit exceeded its carrying amount, though not substantially, which resulted in no impairment loss at August 31, 2023. 54 Management continued to carefully assess and evaluate all available information for potential triggering events after the August 31 annual testing date and through December 31, 2023.
The results of the quantitative assessment indicated that the fair value of the Company’s reporting unit exceeded its carrying amount, which resulted in no impairment loss at August 31, 2024. Management continued to carefully assess and evaluate all available information for potential triggering events after the August 31 annual testing date and through December 31, 2024.
At December 31, 2023 and 2022, the Company maintained stockholders’ equity to total assets ratio of 12.28% and 12.10%, respectively. Critical Accounting Policies and Estimates Note 1 Summary of Significant Accounting Policies to the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2023 contains a summary of significant accounting policies.
At December 31, 2024 and 2023, the Company maintained stockholders’ equity to total assets ratio of 12.69% and 12.28%, respectively. 52 Critical Accounting Policies and Estimates Note 1 Summary of Significant Accounting Policies to the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2024 contains a summary of significant accounting policies.
The Bank also conducts its business at 39 branch offices and various deposit production facilities located throughout central and southern New Jersey and the greater metropolitan areas of New York City and Philadelphia. The Bank also operates commercial loan production offices in New Jersey, New York City, the greater Philadelphia area, Baltimore, and Boston.
The Bank also conducts its business at 39 branch offices and various deposit production facilities located throughout central and southern New Jersey and major metropolitan areas of New York City and Philadelphia. The Bank also operates commercial loan production offices in New Jersey, New York City, the greater Philadelphia area, Pittsburgh, Washington D.C., Baltimore, and Boston.
If applicable regulations or regulatory bodies prevent the Bank from paying a dividend to the Company, the Company may not have the liquidity necessary to pay a dividend in the future or pay a dividend at the same rate as historically paid or be able to meet current debt obligations.
If applicable regulations or regulatory bodies prevent the Bank from paying a dividend to the Company, the Company may not have the liquidity necessary to repurchase shares of common stock or 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.
Unlike industrial companies, nearly all of the assets and liabilities of the Company are monetary in nature. As a result, interest rates have a greater impact on the Company’s performance than do the effects of general levels of inflation.
The impact of inflation is reflected in the increased cost of the Company’s operations. Unlike industrial companies, nearly all of the assets and liabilities of the Company are monetary in nature. As a result, interest rates have a greater impact on the Company’s performance than do the effects of general levels of inflation.
Comparison of Operating Results for the Years Ended December 31, 2022 and December 31, 2021 Refer to the Company’s 2022 Form 10-K on pages 47-48. Liquidity and Capital Resources Liquidity Management The Company manages its liquidity and funding needs through its Treasury function and the Asset Liability Committee.
Comparison of Operating Results for the Years Ended December 31, 2023 and December 31, 2022 Refer to the Company’s 2023 Form 10-K on pages 50-51. Liquidity and Capital Resources Liquidity Management The Company manages its liquidity and funding needs through its Treasury function and the Asset Liability Committee.
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 December 31, 2023, the Bank reported in its Call Report $5.32 billion of total uninsured deposits.
The vast majority of the government deposits are protected by the FDIC 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 December 31, 2024, the Bank reported in its Call Report $5.75 billion of total uninsured deposits.
The primary sources of liquidity specifically available to the Parent Company are dividends from the Bank, proceeds from sale of investments, and the issuance of debt, preferred and common stock. For the year ended December 31, 2023, the Parent Company received dividend payments of $97.0 million from the Bank.
The primary sources of liquidity specifically available to the Parent Company are dividends from the Bank, proceeds from sale of investments, and the issuance of debt, preferred and common stock. For the year ended December 31, 2024, the Parent Company received dividend payments of $86.4 million from the Bank.
Electing scenarios that are stronger or weaker than the base case would reduce or increase, respectively, the ACL measurement. The Company measures the accuracy of the macro-economic forecasts quarterly to identify any material deviations that would be considered for a qualitative adjustment.
The Company uses the base case macro-economic forecast to reflect the consensus view of future economic conditions. Electing scenarios that are stronger or weaker than the base case would reduce or increase, respectively, the ACL measurement. The Company measures the accuracy of the macro-economic forecasts quarterly to identify any material deviations that would be considered for a qualitative adjustment.
The Company’s investment in technology lays a foundation for future growth, scale, and operational efficiency. Focus areas include digital-direct customer engagement, efficient customer servicing, support safe banking operations and strategic technology change, and competitively delivering new lending and customer self-service capabilities in the post-pandemic influenced environment.
The Company’s investment in technology lays a foundation for future growth, scale, and operational efficiency while maintaining a secure and robust cybersecurity framework. Focus areas include digital-direct customer engagement, efficient customer servicing, supporting safe banking operations and strategic technology change, and competitively delivering new lending and customer self-service capabilities in the post-pandemic influenced environment.
Cash dividends on common stock declared and paid during the year ended December 31, 2023 were $47.3 million, as compared to $43.5 million for the prior year. Cash dividends on preferred stock declared and paid during the years ended December 31, 2023 and 2022 were $4.0 million for both periods.
Cash dividends on common stock declared and paid during the year ended December 31, 2024 were $46.9 million, as compared to $47.3 million for the prior year. Cash dividends on preferred stock declared and paid during the years ended December 31, 2024 and 2023 were $4.0 million for both periods.
While the economic environment in 2023, with markedly higher rates, was a headwind, the Company remains committed to this segment and have deepened its focus on the longstanding commitment to its communities with enhanced products and pricing in the NeighborFirst and special credit programs and the recruitment of Community Reinvestment Act (“CRA”) residential loan officers for the Company’s footprint.
While the economic environment in 2024, with continued higher rates, was a headwind, the Company remains committed to this segment and has deepened its focus on the longstanding commitment to its communities with enhanced products and pricing in the NeighborFirst and special credit programs, expansion of product offerings, and the recruitment of Community Reinvestment Act (“CRA”) residential loan officers for the Company’s footprint.
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 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 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2023. The Company adopted this standard in 2024.
At December 31, 2023, the Parent Company held $79.4 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, and other borrowings .
At December 31, 2024, the Parent Company held $111.5 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, and other borrowings .
Performance ratios for 2021 included a net expense related to merger related expenses, net branch consolidation expenses, and a net gain on equity investments of $6.7 million, or $5.1 million, net of tax benefit. (3) Ratios for each period are based on net income available to common stockholders.
Performance ratios for 2022 included a net benefit related to merger related expenses, net branch consolidation expense, and gain on equity investments of $6.2 million, or $4.6 million, net of tax expense. (3) Ratios for each period are based on net income available to common stockholders.
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.
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 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2023. The Company adopted this standard in 2024.
The Company has a long history as a residential lender and continues to expand this portfolio with a continued focus on customer relationships. At December 31, 2023, residential loans represented 29.3% of the Company’s total loans at December 31, 2023 as compared to 28.8% at December 31, 2021.
The Company has a long history as a residential lender and continues to expand this portfolio with a continued focus on customer relationships. At December 31, 2024, residential loans represented 30.3% of the Company’s total loans as compared to 28.9% at December 31, 2022.
On June 25, 2021, the Company announced the authorization to repurchase up to an additional 5% of the Company’s outstanding common stock, or 3.0 million shares. For the year ended December 31, 2023, the Company did not repurchase any shares of its common stock under this repurchase program to strategically build capital.
On June 25, 2021, the Company announced the authorization to repurchase up to an additional 5% of the Company’s outstanding common stock, or 3.0 million shares. For the year ended December 31, 2024, the Company repurchased 1,383,238 shares of its common stock under this repurchase program to strategically build capital.
Rate Volume Analysis The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected the Company’s interest income and interest expense during the periods indicated.
(4) Net interest margin represents net interest income divided by average interest-earning assets. Rate Volume Analysis The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected the Company’s interest income and interest expense during the periods indicated.
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 adoption of this standard did not have a material impact on the Company’s 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”.
Comparison of Operating Results for the Years Ended December 31, 2023 and December 31, 2022 General Net income available to common stockholders decreased to $100.0 million, or $1.70 per diluted share, as compared to $142.6 million, or $2.42 per diluted share.
Comparison of Operating Results for the Years Ended December 31, 2024 and December 31, 2023 General Net income available to common stockholders decreased to $96.0 million, or $1.65 per diluted share, as compared to $100.0 million, or $1.70 per diluted share.
As of the annual impairment testing date of August 31, 2023, the Company bypassed the qualitative assessment and proceeded directly to the quantitative impairment test based on the stock price of the Company on the measurement date and economic uncertainty and market volatility impacting the banking sector.
As of the annual impairment testing date of August 31, 2024, the Company bypassed the qualitative assessment and proceeded directly to the quantitative impairment test based on the stock price of the Company on the measurement date and economic uncertainty.
Diversify and Strengthen Deposit Base The Company continues to focus on deposit growth through a series of initiatives intended to both grow deposits and diversify sources of liquidity. The Company seeks to increase deposits in its primary market area by improving market penetration.
Refer to ‘Liquidity and Capital Resources’ for further discussion. Diversify and Strengthen Deposit Base The Company continues to focus on deposit growth through a series of initiatives intended to both grow deposits and diversify sources of liquidity. The Company seeks to increase deposits in its primary market area by improving market penetration and expanding deposit gathering initiatives and hires.
This update will be effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. Early adoption is permitted. The Company does not expect this standard to have a material impact to the consolidated financial statements. In November 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”.
This update will be effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. Early adoption is permitted. The Company does not expect this standard to have a material impact on the consolidated financial statements. In December 2023, FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”.
At December 31, 2023, commercial loans (which includes multi-family and commercial real estate loans, commercial construction loans, and commercial and industrial loans) represented 68.3% of the Company’s total loans, as compared to 68.2% at December 31, 2021, while commercial and industrial loans represented 6.5% of total loans as compared to 5.2% at December 31, 2021.
At December 31, 2024, commercial loans (which includes multi-family and commercial real estate loans, commercial construction loans, and commercial and industrial loans) represented 67.4% of the Company’s total loans, as compared to 68.5% at December 31, 2022, of which commercial and industrial loans represented 6.4% of total loans as compared to 6.3% at December 31, 2022.
Alternative loss calculation methods, such as vintage and migration methodologies, limit observable data to closed pools of loans, which excludes performance data from the historical loss rate calculation. Macro-economic forecasts used in the quantitative analysis are provided by a leader in global forecasting. The Company uses the base case macro-economic forecast to reflect the consensus view of future economic conditions.
Alternative loss calculation methods, such as vintage and migration methodologies, limit observable data to closed pools of loans, which excludes performance data from the historical loss rate calculation. Macro-economic forecasts used in the quantitative analysis are provided by a third-party leader in global forecasting.
The Company incorporated unique factors in 2023 to address macro-economic uncertainty and alternative economic forecast projections. 53 Although management believes that it uses the best information available to establish the ACL in conformity with generally accepted accounting principles (“GAAP”), future adjustments to the ACL may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.
Although management believes that it uses the best information available to establish the ACL in conformity with generally accepted accounting principles (“GAAP”), future adjustments to the ACL may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.
At December 31, 2023 2022 2021 (dollars in thousands) Selected Financial Condition Data: Total assets $ 13,538,253 $ 13,103,896 $ 11,739,616 Debt securities available-for-sale, at estimated fair value 753,892 457,648 568,255 Debt securities held-to-maturity, net of allowance for securities credit losses 1,159,735 1,221,138 1,139,193 Equity investments 100,163 102,037 101,155 Restricted equity investments, at cost 93,766 109,278 53,195 Loans receivable, net of allowance for loan credit losses 10,136,721 9,868,718 8,583,352 Deposits 10,434,949 9,675,206 9,732,816 Federal Home Loan Bank ("FHLB") advances 848,636 1,211,166 — Securities sold under agreements to repurchase and other borrowings 269,604 264,500 347,910 Total stockholders’ equity 1,661,945 1,585,464 1,516,553 For the Year Ended December 31, 2023 2022 2021 (dollars in thousands, except per share amounts) Selected Operating Data: Interest income $ 607,974 $ 431,175 $ 342,092 Interest expense 238,243 53,698 36,754 Net interest income 369,731 377,477 305,338 Provision for credit losses (benefit) 17,678 7,768 (11,832) Net interest income after provision for credit losses (benefit) 352,053 369,709 317,170 Other income (excluding activity related to debt and equity investments) 38,053 49,409 44,786 Net gain on equity investments 876 9,685 7,145 Net loss on sale of investments (5,305) — — Operating expenses (excluding Federal Deposit Insurance Corporation (“FDIC”) special assessment, merger related and net branch consolidation expense) 247,157 231,433 213,020 FDIC special assessment 1,663 — — Branch consolidation expense, net 70 713 12,337 Merger related expenses 22 2,735 1,503 Income before provision for income taxes 136,765 193,922 142,241 Provision for income taxes 32,700 46,565 32,165 Net income $ 104,065 $ 147,357 $ 110,076 Net income attributable to non-controlling interest 36 754 — Net income attributable to OceanFirst Financial Corp. $ 104,029 $ 146,603 $ 110,076 Net income available to common stockholders $ 100,013 $ 142,587 $ 106,060 Basic earnings per share $ 1.70 $ 2.43 $ 1.79 Diluted earnings per share $ 1.70 $ 2.42 $ 1.78 44 (continued) At or for the Year Ended December 31, 2023 2022 2021 Selected Financial Ratios and Other Data (1) : Performance Ratios: Return on average assets (2)(3) 0.74 % 1.15 % 0.91 % Return on average stockholders’ equity (2)(3) 6.13 9.24 7.02 Stockholders’ equity to total assets 12.28 12.10 12.92 Net interest rate spread (4) 2.51 3.20 2.80 Net interest margin (5) 3.02 3.37 2.93 Operating expenses to average assets (2) 1.85 1.90 1.94 Efficiency ratio (2)(6) 61.71 53.80 63.50 Loans-to-deposits ratio (7) 97.70 102.50 88.60 Asset Quality Ratios (8) : Non-performing loans as a percent of total loans receivable (7)(9) 0.29 0.23 0.30 Non-performing assets as a percent of total assets (9) 0.22 0.18 0.22 Allowance for loan credit losses as a percent of total loans receivable (7)(10) 0.66 0.57 0.57 Allowance for loan credit losses as a percent of total non-performing loans (9)(10) 227.21 244.25 191.61 Wealth Management (dollars in thousands): Wealth assets under administration and management (“AUA/M”) $ 335,769 $ 324,066 $ 287,404 Nest Egg AUA/M 401,420 403,538 428,558 Per Share Data: Cash dividends per common share $ 0.80 $ 0.74 $ 0.68 Dividend payout ratio per common share 47.06 % 30.58 % 38.20 % Stockholders’ equity per common share at end of period $ 27.96 $ 26.81 $ 25.63 Number of full-service customer facilities: 39 38 47 (1) With the exception of end of year ratios, all ratios are based on average daily balances.
At December 31, 2024 2023 2022 (dollars in thousands) Selected Financial Condition Data: Total assets $ 13,421,247 $ 13,538,253 $ 13,103,896 Debt securities available-for-sale, at estimated fair value 827,500 753,892 457,648 Debt securities held-to-maturity, net of allowance for securities credit losses 1,045,875 1,159,735 1,221,138 Equity investments 84,104 100,163 102,037 Restricted equity investments, at cost 108,634 93,766 109,278 Loans receivable, net of allowance for loan credit losses 10,055,429 10,136,721 9,868,718 Deposits 10,066,342 10,434,949 9,675,206 Federal Home Loan Bank ("FHLB") advances 1,072,611 848,636 1,211,166 Securities sold under agreements to repurchase and other borrowings 258,113 269,604 264,500 Total stockholders’ equity 1,702,757 1,661,945 1,585,464 For the Year Ended December 31, 2024 2023 2022 (dollars in thousands, except per share amounts) Selected Operating Data: Interest income $ 642,173 $ 607,974 $ 431,175 Interest expense 308,138 238,243 53,698 Net interest income 334,035 369,731 377,477 Provision for credit losses 6,263 17,678 7,768 Spring Garden opening provision for credit losses 1,426 — — Net interest income after provision for credit losses 326,346 352,053 369,709 Other income (excluding activity related to debt and equity investments and sale of trust business) 43,362 38,053 49,409 Net gain on equity investments 4,225 876 9,685 Net gain on sale of trust business 2,600 — — Net loss on sale of investments — (5,305) — Operating expenses (excluding Federal Deposit Insurance Corporation (“FDIC”) special assessment, merger related and net branch consolidation expense) 243,680 247,157 231,433 FDIC special assessment 418 1,663 — Branch consolidation expense, net — 70 713 Merger related expenses 1,779 22 2,735 Income before provision for income taxes 130,656 136,765 193,922 Provision for income taxes 30,266 32,700 46,565 Net income $ 100,390 $ 104,065 $ 147,357 Net income attributable to non-controlling interest 325 36 754 Net income attributable to OceanFirst Financial Corp. $ 100,065 $ 104,029 $ 146,603 Net income available to common stockholders $ 96,049 $ 100,013 $ 142,587 Basic earnings per share $ 1.65 $ 1.70 $ 2.43 Diluted earnings per share $ 1.65 $ 1.70 $ 2.42 44 (continued) At or for the Year Ended December 31, 2024 2023 2022 Selected Financial Ratios and Other Data (1) : Performance Ratios: Return on average assets (2)(3) 0.71 % 0.74 % 1.15 % Return on average stockholders’ equity (2)(3) 5.70 6.13 9.24 Stockholders’ equity to total assets 12.69 12.28 12.10 Net interest rate spread (4) 2.13 2.51 3.20 Net interest margin (5) 2.72 3.02 3.37 Operating expenses to average assets (2) 1.82 1.85 1.90 Efficiency ratio (2)(6) 63.99 61.71 53.80 Loans-to-deposits ratio (7) 100.50 97.70 102.50 Asset Quality Ratios (8) : Non-performing loans as a percent of total loans receivable (7)(9) 0.35 0.29 0.23 Non-performing assets as a percent of total assets (9) 0.28 0.22 0.18 Allowance for loan credit losses as a percent of total loans receivable (7)(10) 0.73 0.66 0.57 Allowance for loan credit losses as a percent of total non-performing loans (9)(10) 207.19 227.21 244.25 Wealth Management (dollars in thousands): Wealth assets under administration and management (“AUA/M”) (11) $ 147,956 $ 335,769 $ 324,066 Nest Egg AUA/M 431,434 401,420 403,538 Per Share Data: Cash dividends per common share $ 0.80 $ 0.80 $ 0.74 Dividend payout ratio per common share 48.48 % 47.06 % 30.58 % Stockholders’ equity per common share at end of period $ 29.08 $ 27.96 $ 26.81 Number of full-service customer facilities: 39 39 38 (1) With the exception of end of year ratios, all ratios are based on average daily balances.
These items increased net income in the prior year by $4.6 million, net of tax, and diluted earnings per share by $0.08. The Company's estimated common equity tier 1 capital ratio increased to 10.86%.
These items decreased net income in the current year by $4.7 million, net of tax, and diluted earnings per share by $0.08. The Company's common equity tier 1 capital ratio increased to 11.17%.
Strategy The Company operates as a full-service regional community bank delivering comprehensive financial products and services, which includes commercial and consumer financing, deposit services, and wealth management products and services, throughout New Jersey and the major metropolitan markets of Philadelphia, New York, Baltimore, and Boston.
Strategy The Company operates as a full-service regional community bank delivering comprehensive financial products and services, which includes commercial and consumer financing, deposit services, and wealth management products and services, throughout New Jersey and in the major metropolitan areas between Massachusetts and Virginia.
The Company focuses on prudent growth to create value for stockholders, which may include opportunistic acquisitions. The Company will also continue to build additional operational infrastructure and invest in key personnel in response to growth and changing business conditions.
The Company focuses on prudent growth to create value for stockholders, which may include opportunistic acquisitions. The Company will also continue to build additional operational infrastructure and invest in key personnel in response to growth and changing business conditions. The Company has continued to maintain and strengthen its liquidity and capital position, while servicing its customers and communities.
The cash was principally utilized for loan originations, purchases of residential loan pools, purchases of debt securities, dividend payments, and redemption of subordinate debt. 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.
The cash was invested in debt securities, and utilized for the reduction of FHLB advances and loan originations. 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.
This total included $2.31 billion of collateralized government deposits and $1.42 billion of intercompany deposits of fully consolidated subsidiaries, leaving estimated adjusted uninsured deposits of $1.60 billion, or 15.2% of total deposits. On balance-sheet liquidity and funding capacity represented 230% of the estimated adjusted uninsured deposits.
This total included $2.48 billion of collateralized government deposits and $1.58 billion of intercompany deposits of fully consolidated subsidiaries, leaving estimated adjusted uninsured deposits of $1.69 billion, or 16.5% of total deposits. On balance-sheet liquidity and funding capacity represented 223% of the estimated adjusted uninsured deposits.
At December 31, 2023, the Company remains authorized to repurchase 2,934,438 shares and will prudently evaluate repurchase opportunities while maintaining existing capital levels.
At December 31, 2024, the Company remains authorized to repurchase 1,551,200 shares and will prudently evaluate repurchase opportunities while maintaining existing capital levels.
Allowance for credit losses in accordance with ASU 2016-13 was a critical accounting policy in the preparation of the consolidated financial statements as of and for the period ended December 31, 2023.
Allowance for credit losses in accordance with Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), was a critical accounting policy in the preparation of the consolidated financial statements as of and for the period ended December 31, 2024.
The Company conducts business primarily through its ownership of the Bank, which, at December 31, 2023, primarily operated out of its headquarters located in Toms River, New Jersey and its administrative office located in Red Bank, New Jersey.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview The Company conducts business primarily through its ownership of the Bank, which, at December 31, 2024, primarily operated out of its headquarters located in Toms River, New Jersey and its administrative office located in Red Bank, New Jersey.
The Company’s cash needs for the year ended December 31, 2023 were primarily satisfied by the increase in deposits. The cash was invested in debt securities, and utilized for the reduction of FHLB advances and loan originations.
The Company’s cash needs for the year ended December 31, 2024 were primarily satisfied by FHLB advances and principal and interest payments on loans and securities and primarily utilized for the reduction of deposits. The Company’s cash needs for the year ended December 31, 2023 were primarily satisfied by the increase in deposits.
These items increased net income for the prior year by $4.6 million, net of tax. Interest Income Interest income increased to $608.0 million, from $431.2 million. The yield on average interest-earning assets increased to 4.96%, from 3.85%, due to the impact of rising rates.
These items decreased net income for the prior year by $4.7 million, net of tax. Interest Income Interest income increased to $642.2 million, from $608.0 million. The yield on average interest-earning assets increased to 5.23%, from 4.96%, due to the impact of the rate environment.
These commitments are further discussed in Note 13 Commitments, Contingencies and Concentrations of Credit Risk, to the Consolidated Financial Statements. 51 At December 31, 2023, the Company also had various contractual obligations, which included debt obligations of $1.12 billion, including finance lease obligations of $1.7 million and an additional $20.0 million in operating lease obligations included in other liabilities, and purchase obligations of $82.8 million.
These commitments are further discussed in Note 13 Commitments, Contingencies and Concentrations of Credit Risk, to the Consolidated Financial Statements. 51 At December 31, 2024, the Company also had various contractual obligations, which included debt obligations of $1.33 billion, including finance lease obligations of $1.4 million and an additional $17.1 million in operating lease obligations included in other liabilities, and purchase obligations of $97.2 million Refer to Note 9 Borrowed Funds and Note 17 Leases to the Consolidated Financial Statements for further discussion of debt obligations and lease obligations, respectively.
Expanding the Company’s geographies provides a hedge on risks or issues that may arise if the Company was fully concentrated in a single market. 42 While these growth markets are important to the Company’s strategy, the Company has continued efforts to keep the community bank feel for customers, employees, and stakeholders, which has been a focal point for longstanding stable funding, brand reputation, and community development efforts in the Company’s legacy markets.
While these growth markets are important to the Company’s strategy, the Company has continued efforts to keep the community bank feel for customers, employees, and stakeholders, which has been a focal point for longstanding stable funding, brand reputation, and community development efforts in the Company’s legacy markets.
The Company does not expect this standard to have a material impact to the consolidated financial statements. In August 2023, FASB issued ASU 2023-05, “Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement”.
The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. 55 Recent Accounting Pronouncements Not Yet Adopted In August 2023, FASB issued ASU 2023-05, “Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement”.
Additionally, management performs multiple capital stress test scenarios on a quarterly basis, varying loan growth, earnings, access to the capital markets, credit losses, and mark-to-market losses in the investment portfolio, including both available-for-sale and held-to-maturity.
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 mark-to-market losses in the investment portfolio, including both available-for-sale and held-to-maturity.
If these deposits do not remain with the Company, it may need to seek other sources of funds, including other deposit products, advances from the Federal Home Loan Bank of New York and other borrowing sources.
Time deposits scheduled to mature in one year or less totaled $2.02 billion at December 31, 2024. If these deposits do not remain with the Company, it may need to seek other sources of funds, including other deposit products, advances from the Federal Home Loan Bank of New York and other borrowing sources.
The cost of average interest-bearing liabilities increased to 2.45%, from 0.65%, primarily due to higher cost of deposits and FHLB advances. The total cost of deposits (including non-interest bearing deposits) increased to 1.68%, from 0.31%. Net Interest Income and Margin Net interest income decreased to $369.7 million, from $377.5 million, reflecting the net impact of the higher interest rate environment.
The total cost of deposits (including non-interest bearing deposits) increased to 2.36%, from 1.68%. 49 Net Interest Income and Margin Net interest income decreased to $334.0 million, from $369.7 million, reflecting the net impact of the interest rate environment.
Commercial Banking The Company continues to distinguish itself from the mega-bank competition with access to responsive, local decision-makers and from the smaller bank competition that are unable to deliver the same depth of products, services, and technology.
The Company continues to invest in the overall customer experience with the Company’s customer satisfaction performance and digital capabilities on par with national banks and fintech companies. 42 Commercial Banking The Company continues to distinguish itself from the mega-bank competition with access to responsive, local decision-makers and from the smaller bank competition that are unable to deliver the same depth of products, services, and technology.
The repurchased shares are held as treasury stock for general corporate purposes. For the year ended December 31, 2023, the Company did not repurchase any shares of its common stock. At December 31, 2023, there were 2,934,438 shares available to be repurchased under the authorized stock repurchase program.
The repurchased shares are held as treasury stock for general corporate purposes. For the year ended December 31, 2024, the Company repurchased 1,383,238 shares of its common stock totaling $21.5 million. At December 31, 2024, there were 1,551,200 shares available to be repurchased under the authorized stock repurchase program.
At December 31, 2023, outstanding commitments to originate loans totaled $183.0 million and outstanding undrawn lines of credit totaled $1.45 billion, of which $1.10 billion were commitments to commercial and commercial construction borrowers and $349.4 million were commitments to consumer and residential construction borrowers.
At December 31, 2024, outstanding commitments to originate loans totaled $306.7 million and outstanding undrawn lines of credit totaled $1.37 billion, of which $1.06 billion were commitments to commercial and commercial construction borrowers and $310.8 million were commitments to consumer and residential construction borrowers.
Ongoing product development and design to deepen market penetration will allow the Company to rely on competencies in commercial lending and the retail branch network to drive growth and diversification of deposits. The Company continues to invest in the overall customer experience with the Company’s customer satisfaction performance and digital capabilities on par with national banks and fintech companies.
Ongoing product development and design to deepen market penetration will allow the Company to rely on competencies in commercial lending and the retail branch network to drive growth and diversification of deposits.
Other income for the year ended December 31, 2023 was adversely impacted by net losses on equity investments of $4.4 million, which included $5.3 million of losses related to the sale of investments in the first quarter of 2023.
The prior year was adversely impacted by net losses on investments of $4.4 million, which included $5.3 million of losses related to the sale of investments.
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.
This update will be effective for financial statements issued for fiscal years beginning after December 15, 2023, and interim periods for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted this standard in 2024.
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 also generates non-interest income such as income from bankcard services, trust and fiduciary services, deposit account services, and commercial loan swap income. 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.
(2) 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.
(2) 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. (3) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
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 Company.
The Company’s ability to continue to repurchase shares of common stock and pay dividends remains dependent upon capital distributions from the Bank, which may be adversely affected by capital restraints imposed by applicable regulations.
The market approach utilizes observable market data from comparable public companies, including price-to-tangible book value ratios, to estimate the Company’s fair value. The market approach also incorporates a control premium to represent the Company’s expectation of a hypothetical acquisition. Management uses judgment in the selection of comparable companies and includes those with similar business activities, and related operating environments.
The market approach for guideline public company method utilizes observable market data from comparable public companies, including price-to-tangible book value ratios, to estimate the Company’s fair value. This approach also incorporates a control premium to represent the Company’s expectation of a hypothetical acquisition.
The Company has made a significant effort to recruit new relationship managers that specialize in clients doing business in deposit rich industries. The Company anticipates that the acquisition of these customers will help to drive quality funding with expanded yields.
The Company has continued to make significant efforts to recruit new relationship managers that specialize in clients operating in deposit heavy industries. The Company anticipates that the acquisition of these customers will help to drive quality funding through deeper deposit relationships.
As of December 31, 2023, total on-balance sheet liquidity and funding capacity was $3.7 billion. The Company has a highly operational and granular deposit base, with long-standing client relationships across multiple customer segments providing stable funding.
The Company has a highly operational and granular deposit base, with long-standing client relationships across multiple customer segments providing stable funding.

… 100 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+3 added−3 removed13 unchanged
Biggest changeDecember 31, 2023 December 31, 2022 Change in Interest Rates in Basis Points Economic Value of Equity Net Interest Income Economic Value of Equity Net Interest Income (Rate Shock) % Change % Change % Change % Change 300 (12.8) % (2.2) % (14.3) % 1.6 % 200 (9.1) (1.3) (8.5) 1.2 100 (5.2) (0.4) (4.3) 0.6 Static — — — — (100) 7.0 (0.5) 2.5 (1.6) (200) 8.8 (1.9) 1.2 (5.4) (300) 6.8 (4.2) (3.6) (10.4) The net interest income sensitivity results indicate that at December 31, 2023, the Company was modestly asset sensitive to falling rates and modestly liability sensitive to rising rates compared to being modestly asset sensitive at December 31, 2022.
Biggest changeDecember 31, 2024 December 31, 2023 Change in Interest Rates in Basis Points Economic Value of Equity Net Interest Income Economic Value of Equity Net Interest Income (Rate Shock) % Change % Change % Change % Change 300 (6.2) % (0.8) % (12.8) % (2.2) % 200 (3.6) 0.1 (9.1) (1.3) 100 (1.5) 0.4 (5.2) (0.4) Static — — — — (100) 1.5 (0.5) 7.0 (0.5) (200) 1.8 (1.3) 8.8 (1.9) (300) (0.6) (2.6) 6.8 (4.2) The net interest income sensitivity results at December 31, 2024 was modestly asset sensitive to neutral as compared to the prior year.
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 stable relationship-based deposits 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 time deposits; and (6) purchasing interest rate swaps to manage overall balance sheet interest rate risk.
ALCO meets regularly and reports the Company’s IRR position and trends to the Board on a regular basis. 56 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 stable relationship-based deposits 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 time deposits; and (6) purchasing interest rate swaps to manage overall balance sheet interest rate risk.
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.
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.
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.
Lastly, the model utilizes data derived from historical performance. 57 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.
The Company’s Board maintains 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’s Board maintains an Asset Liability Committee (“ALCO”) consisting of members of management, responsible for reviewing asset liability policies and the IRR position.
The following table sets forth sensitivity for a specific range of interest rate scenarios as of December 31, 2023 and 2022.
The Company performs a variety of EVE and twelve-month net interest income sensitivity scenarios. At both December 31, 2024 and 2023, the Company was in compliance with Board guidelines for each scenario. The following table sets forth sensitivity for a specific range of interest rate scenarios as of December 31, 2024 and 2023.
The change in sensitivity between these periods was impacted by a deployment of cash into floating rate loans as well as higher-yielding securities with interest rate caps, offset by the deposit mix shift into short-term time deposits and higher-yield savings deposits.
The change in sensitivity from prior year was impacted by an increase in floating-rate securities and term borrowings, a deposit mix shift within non-maturity deposits with lower betas as well as a change in loan prepayments, partially offset by an increase in overnight borrowings and a reduction in short-term time deposits.
Removed
During 2023, the Company refined certain fair value assumptions related to the loan portfolio, including prepayment rates. This resulted in a modest increase to EVE and a decrease to its sensitivity, and had a marginal impact to the net interest income scenarios. 57 The Company performs a variety of EVE and twelve-month net interest income sensitivity scenarios.
Added
For loans, investments, borrowings and time deposits, the fair value used in the EVE closely aligns with the Company’s fair value measurements defined within Note 15, Fair Value Measurements to the Consolidated Financial Statements.
Removed
Overall, the measure of EVE at risk increased in all rate scenarios from December 31, 2022 to December 31, 2023.
Added
However, for non-maturity deposits, the fair value differs for EVE as it also considers the likelihood of deposit and withdrawals and current weighted average rate relative to market rates. The Company’s weighted average age of non-maturity deposit accounts is approximately 11 years, and the weighted average cost is 1.64%.
Removed
This increase was the result of rising market rates resulting in lower market values in the loan and investment portfolios, along with the impact of an increase in deposit costs and a shift from lower cost, long-term non-maturity deposits to short-term higher cost time deposits and higher-yield savings deposits.
Added
Overall, the measure of EVE at risk decreased in all rate scenarios from December 31, 2023 to December 31, 2024. This decrease was the result of an increase in floating-rate securities and term borrowings, a deposit mix shift within non-maturity deposits with lower betas and longer average lives, as well as a change in loan prepayments.

Other OCFC 10-K year-over-year comparisons