Financial Performance - Net income available to common stockholders for the quarter ended June 30, 2023, was $26.8 million, down from $28.0 million in the same quarter last year, resulting in diluted earnings per share of $0.45 compared to $0.47[18]. - Net income for the three months ended June 30, 2023, decreased to $26.8 million, or $0.45 per diluted share, compared to $28.0 million, or $0.47 per diluted share, for the same period in 2022[34]. - Net interest income for the quarter was $92,109, a decrease from $98,802 in the previous quarter, impacted by higher cost time deposits[10][17]. - Net interest income for the three and six months ended June 30, 2023 increased to $92.1 million and $190.9 million, respectively, from $90.8 million and $175.0 million in the corresponding prior year periods[38]. - Other income for the three months ended June 30, 2023 increased to $8.9 million, compared to $7.5 million in the prior year, but was adversely impacted by net losses on equity investments of $559,000[40]. - Operating expenses for the three months ended June 30, 2023 increased to $62.9 million, compared to $58.7 million in the prior year, driven by increases in professional fees and compensation expenses[42]. Assets and Liabilities - Total assets as of June 30, 2023, were $13,538,903, a slight decrease from $13,555,175 in the previous quarter and an increase from $12,438,653 a year ago[10]. - Total liabilities increased by $394.2 million to $11.91 billion, with deposits rising by $483.1 million to $10.16 billion[31]. - Total assets increased by $435 million to $13.54 billion from $13.10 billion, driven by higher cash and loans[30]. - Total loans rose by $165.6 million to $10.08 billion, primarily due to commercial loan originations[30]. - The Company maintained elevated on-balance sheet liquidity of $4.0 billion as of June 30, 2023, reflecting precautionary measures taken in response to industry volatility[20][22]. Capital and Equity - The common equity tier 1 capital ratio increased by 19 basis points to 10.21% at June 30, 2023, indicating strong capital levels[20]. - Stockholders' equity per common share increased to $27.37 from $26.81[33]. - The Company maintained a stockholders' equity to total assets ratio of 12.01% as of June 30, 2023, slightly down from 12.10% at December 31, 2022[65]. - The Company satisfied the criteria to be "well-capitalized" under Prompt Corrective Action regulations as of June 30, 2023[65]. Loans and Credit Quality - Non-performing loans as a percentage of total loans receivable remained stable at 0.23% as of June 30, 2023, consistent with the previous quarter[20]. - Total non-performing loans decreased to $22.8 million as of June 30, 2023, from $23.3 million at December 31, 2022, with a non-performing loans ratio of 0.23%[66]. - The allowance for loan credit losses increased to $61.8 million, representing 0.61% of total loans, compared to $56.8 million or 0.57% at December 31, 2022[66]. - The allowance for loan credit losses as a percentage of total non-performing loans was 271.51% as of June 30, 2023, compared to 244.25% at December 31, 2022[66]. - Provision for credit losses for the three and six months ended June 30, 2023 was $1.2 million and $4.2 million, respectively, compared to $1.3 million and $3.1 million for the corresponding prior year periods[39]. Deposits and Funding - Deposits increased by $165.2 million during the quarter, reaching $10,158,337, with a notable shift from non-maturity deposits to time deposits[20]. - Time deposits increased to $2.77 billion, representing a 27.2% increase of total deposits[31]. - The loans-to-deposit ratio improved to 99.3% from 102.5%[31]. - The Company pledged $7.15 billion of loans with the FHLB and FRB to enhance borrowing capacity as of June 30, 2023[53]. Interest Rate Risk Management - The Company is currently evaluating the impact of ASU 2023-02 on its consolidated financial statements, which will be effective after December 15, 2023[75]. - Interest rate risk management strategies include managing loan origination and retention, emphasizing core deposits, and utilizing interest rate swaps[80]. - The Company actively monitors interest rate sensitivity through an IRR model that assesses changes in EVE and net interest income[81]. - The management of interest rate risk is overseen by the Asset Liability Committee (ALCO), which reports regularly to the Board[79]. - The model used for EVE and net interest income measurements has inherent shortcomings, including assumptions that may oversimplify actual market responses[85]. Economic Value of Equity - As of June 30, 2023, the Economic Value of Equity (EVE) decreased by 12.9% to $1,023,376,000 under a 200 basis points interest rate increase scenario[83]. - The net interest income for the same scenario decreased by 3.5% to $391,374,000[83]. - The Company reported a static EVE of $1,174,533,000 with no change in the 0 basis points scenario[83]. - The EVE at risk increased in all rising rate scenarios from December 31, 2022, to June 30, 2023, due to rising market rates and increased deposit costs[84]. - The Company is currently modestly asset sensitive, with changes in sensitivity influenced by floating rate loan growth and a shift in deposit mix[83].
OCEANFIRST FINL(OCFCP) - 2023 Q2 - Quarterly Report