Financial Performance - Net income available to common stockholders for Q3 2023 was $19.7 million, down 47.5% from $37.6 million in Q3 2022, resulting in diluted earnings per share of $0.33 compared to $0.64 in the prior year[16]. - For the three months ended September 30, 2023, net income available to common stockholders decreased to $19.7 million, or $0.33 per diluted share, compared to $37.6 million, or $0.64 per diluted share for the same period in 2022[33]. - Other income for Q3 2023 decreased to $10.8 million from $15.2 million in Q3 2022, impacted by lower commercial loan swap income and fees[39]. - Operating expenses increased to $64.5 million in Q3 2023, up from $59.0 million in Q3 2022, primarily due to higher professional fees and compensation expenses[41]. - The effective tax rate for Q3 2023 was 23.9%, slightly down from 24.1% in Q3 2022[43]. Asset and Liability Management - Total assets decreased to $13,498.2 million as of September 30, 2023, from $13,538.9 million in the previous quarter, and increased from $12,683.5 million year-over-year[10]. - Total liabilities rose by $342.1 million to $11.86 billion, with deposits increasing by $858.7 million to $10.53 billion[29]. - Stockholders' equity increased to $1.64 billion, up from $1.59 billion, primarily due to net income net of dividends[31]. - The Company reported a stockholders' equity to total assets ratio of 12.13% as of September 30, 2023, slightly up from 12.10% at December 31, 2022[61]. Loan and Deposit Activity - Total deposits increased by $375.6 million, or 4%, compared to the prior linked quarter, with a loan-to-deposit ratio of 96.10%[18]. - Total loans increased by $205.5 million to $10.12 billion, reflecting strong loan originations[28]. - Time deposits increased to $2.65 billion, representing a 25.2% increase of total deposits[29]. - The loan-to-deposit ratio improved to 96.10% from 102.50%[29]. Credit Quality - Non-performing loans increased to $30.1 million, representing 0.30% of total loans receivable, up from 0.23% in the previous quarter[10]. - The Company recognized a provision for credit losses of $10.3 million in Q3 2023, significantly higher than $1.2 million in the previous quarter[10]. - Provision for credit losses rose to $10.3 million in Q3 2023, compared to $1.0 million in Q3 2022, driven by elevated macroeconomic risks[38]. - The allowance for loan credit losses was $63.9 million, or 0.63% of total loans, as of September 30, 2023, up from $56.8 million, or 0.57% of total loans, at December 31, 2022[63]. - The Company's non-performing loans increased to $30.1 million as of September 30, 2023, compared to $23.3 million at December 31, 2022, reflecting a rise of approximately 29.5%[63]. - Substandard assets increased to $86,597 thousand as of September 30, 2023, compared to $50,776 thousand at December 31, 2022, indicating a significant rise in credit risk[64]. Interest Income and Expense - Net interest income for Q3 2023 was $91.0 million, down from $96.0 million in Q3 2022, reflecting a net interest margin of 2.91%[10]. - Interest income for the three months ended September 30, 2023, increased to $158.4 million, up from $110.5 million in the prior year, driven by a yield increase on average interest-earning assets to 5.08% from 3.88%[35]. - Interest expense increased to $67.4 million for Q3 2023, up from $14.5 million in Q3 2022, reflecting rising rates and a shift to higher-cost deposits[36]. - Net interest income for Q3 2023 decreased to $91.0 million from $96.0 million in Q3 2022, while net interest margin fell to 2.91% from 3.36% year-over-year[37]. Capital Adequacy - The common equity tier 1 capital ratio remained strong at 10.36%, indicating a well-capitalized status[18]. - As of September 30, 2023, the Company maintained Tier 1 capital of $1,200,832 thousand, representing a ratio of 11.62% to risk-weighted assets, exceeding the required 8.50%[60]. - The total capital to risk-weighted assets ratio for the Company was 13.47% as of September 30, 2023, exceeding the required 10.50%[60]. Regulatory and Accounting Updates - The Company adopted certain practical expedients in Topic 848, which did not have a material impact on its consolidated financial statements[76]. - The Company is currently evaluating the impact of ASU 2023-02 on its consolidated financial statements, effective after December 15, 2023[79]. - The Company does not expect ASU 2023-05 to have a material impact on its consolidated financial statements, effective for joint venture formations on or after January 1, 2025[80]. - The Company bypassed the qualitative assessment for goodwill impairment testing and proceeded directly to the quantitative test, which indicated no impairment loss as of August 31, 2023[71]. Risk Management - The Company actively monitors and manages interest rate risk (IRR) through various strategies, including managing loan origination and deposit structures[85]. - The Company’s interest rate sensitivity is monitored using an IRR model that measures changes in EVE and net interest income under various interest rate scenarios[86]. - The Economic Value of Equity (EVE) decreased by 5.8% to $1,259,131 thousand under a 200 basis points rate shock as of September 30, 2023[90]. - The EVE at risk increased in all rising rate scenarios from December 31, 2022, to September 30, 2023, due to rising market rates and increased deposit costs[91].
OCEANFIRST FINL(OCFCP) - 2023 Q3 - Quarterly Report