 RED BANK, N.J., July 23, 2020 GLOBE NEWSWIRE -- OceanFirst Financial Corp. NASDAQ:OCFC, the Company, the holding company for OceanFirst Bank N.A. the Bank, today announced that net income was 18.6 million, or 0.31 per diluted share, for the three months ended June 30, 2020, as compared to 19.0 million, or 0.37 per diluted share, for the corresponding prior year period. For the six months ended June 30, 2020, net income was 35.2 million, or 0.58 per diluted share, as compared to 40.2 million, or 0.79 per diluted share, for the corresponding prior year period. The results of operations for the three months ended June 30, 2020 include merger related and branch consolidation expenses, which decreased net income, net of tax benefit, by 3.0 million. Results of operations for the six months ended June 30, 2020 include merger related expenses, branch consolidation expenses, and the Two River Bancorp Two River and Country Bank Holding Company, Inc. Country Bank opening credit loss expense under the Current Expected Credit Loss CECL model, which decreased net income, net of tax benefit, by 13.4 million. Excluding these items, core earnings for the three and six months ended June 30, 2020 were 21.6 million, or 0.36 per diluted share, and 48.6 million, or 0.81 per diluted share, respectively. Please refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of merger related, branch consolidation, and the Two River and Country Bank opening credit loss expenses. The quarter and year to date results were also impacted by the COVID-19 outbreak, through both higher credit loss expense and increased operating expense. Highlights for the quarter are described below: Loans Deposits: Drove record loan and deposit growth, including quarterly originations of 975 million, which included 504 million of Paycheck Protection Program PPP loans and total loan growth of 450 million after loan sales of 110 million. Deposits increased by 1.076 billion, driven by deposits from PPP borrowers of 504 million, ordinary course growth of 291 million, and short-term brokered deposits of 281 million. Capital: Bolstered a strong balance sheet with the addition of 181 million of subordinated notes and non-cumulative perpetual preferred stock. The increased capital further strengthened resources available to the Bank while credit metrics, including delinquencies, forbearances, and net charge-offs all evidenced significant positive trends. Operating Expenses: Improved operating leverage with the consolidation of thirteen branch locations, eight of which were driven by the completed integration of the Two River acquisition bringing the total number of branches consolidated over the past four years to 53. These consolidations increased the average branch size to 145 million and will help reduce operating expenses beginning in the third quarter. COVID-19: The Companys second quarter results were adversely impacted by the COVID-19 pandemic, including an elevated credit loss provision of 9.6 million and an additional 1.1 million in operating expense.Chairman and Chief Executive Officer, Christopher D. Maher, commented on the Companys results, The second quarter results included strong loan and deposit growth as we continued to serve our communities at a very difficult time. We facilitated 504 million in PPP loans, assisting local businesses and supporting 57,000 jobs. Mr. Maher added, The continuing national health crisis may weigh on results in future quarters, but we are exceptionally proud of our customers in New Jersey, New York, and Pennsylvania, who have worked with public health experts to bring the local epidemic under control and to begin a responsible and sustainable restart of our regional economy. The second quarter capital raise and the integration of the Two River acquisition have placed our Company in an advantageous position to face the future. The Company announced that the Companys Board of Directors declared its ninety-fourth consecutive quarterly cash dividend on common stock. The dividend, related to the three months ended June 30, 2020, of 0.17 per share will be paid on August 14, 2020 to stockholders of record on August 3, 2020.Results of Operations On January 31, 2019, the Company completed its acquisition of Capital Bank of New Jersey Capital Bank and its results of operations are included in the consolidated results for the three and six months ended June 30, 2020, but are excluded from the results of operations for the period from January 1, 2019 to January 31, 2019. On January 1, 2020, the Company completed its acquisitions of Two River and Country Bank and their respective results of operations from January 1, 2020 through June 30, 2020 are included in the consolidated results for the three and six months ended June 30, 2020, but are not included in the results of operations for the corresponding prior year periods. Net income for the three months ended June 30, 2020 was 18.6 million, or 0.31 per diluted share, as compared to 19.0 million, or 0.37 per diluted share, for the corresponding prior year period. Net income for the six months ended June 30, 2020 was 35.2 million, or 0.58 per diluted share, as compared to 40.2 million, or 0.79 per diluted share, for the corresponding prior year period. Net income for the three months ended June 30, 2020 included merger related and branch consolidation expenses, which decreased net income, net of tax benefit, by 3.0 million. Net income for the six months ended June 30, 2020 included merger related expenses, branch consolidation expenses, and the Two River and Country Bank opening credit loss expense under the CECL model, which decreased net income, net of tax benefit, by 13.4 million. Net income for the three and six months ended June 30, 2019 included merger related expenses, branch consolidation expenses, and compensation expense due to the retirement of an executive officer, which decreased net income, net of tax benefit, by 7.0 million and 11.4 million, respectively. Excluding these items, net income for the three and six months ended June 30, 2020 was 21.6 million and 48.6 million, respectively, a decrease from 26.0 million and 51.6 million for the same prior year periods, respectively, primarily due to the adverse impact of the COVID-19 outbreak. Net interest income for the three and six months ended June 30, 2020 increased to 78.7 million, and 158.3 million, as compared to 64.8 million and 129.2 million for the same prior year periods, respectively, reflecting an increase in interest-earning assets, partly offset by a reduction in net interest margin. Average interest-earning assets increased by 2.684 billion and 2.435 billion for the three and six months ended June 30, 2020, respectively, as compared to the same prior year periods. The averages for the three and six months ended June 30, 2020 were favorably impacted by 1.815 billion and 1.793 billion, respectively, of interest-earning assets acquired from Two River and Country Bank and 373.7 million and 186.8 million, respectively, of PPP loans. Average loans receivable, net, increased by 2.347 billion and 2.215 billion for the three and six months ended June 30, 2020, respectively, as compared to the same prior year periods. The increases attributable to the acquisitions of Two River and Country Bank for the three and six months ended June 30, 2020 were 1.606 billion and 1.581 billion, respectively. The net interest margin for the three and six months ended June 30, 2020 decreased to 3.24 and 3.37, respectively, from 3.66 and 3.72, respectively, for the same prior year periods. The compression in net interest margin is primarily due to the lower interest rate environment, the origination of low-yielding PPP loans, and the excess balance sheet liquidity which the Company strategically accumulated entering the economic downturn. For the three months ended June 30, 2020, the cost of average interest-bearing liabilities decreased to 0.92 from 0.98 in the corresponding prior year period. For the six months ended June 30, 2020, the cost of average interest-bearing liabilities increased to 0.98 from 0.94, in the corresponding prior year period. The total cost of deposits including non-interest bearing deposits was 0.57 and 0.63 for the three and six months ended June 30, 2020, respectively, as compared to 0.62 and 0.60, respectively, in the same prior year periods. Net interest income for the three months ended June 30, 2020, decreased by 1.0 million, as compared to the prior linked quarter, as the net interest margin decreased to 3.24 as compared to 3.52 for the prior linked quarter. The yield on average interest-earning assets decreased to 3.94 from 4.34 in the prior linked quarter, primarily due to the lower interest rate environment, the origination of low-yielding PPP loans, and the excess balance sheet liquidity which the Company strategically accumulated entering the economic downturn. The total cost of deposits including non-interest bearing deposits was 0.57 for the three months ended June 30, 2020, as compared to 0.70 for the three months ended March 31, 2020. The decrease in total cost of deposits is primarily due to the repricing of deposits acquired from Two River and Country Bank and the growth in business deposits relating to PPP originations. For the three and six months ended June 30, 2020, the credit loss expense was 9.6 million and 19.6 million, respectively, as compared to 356,000 and 976,000, respectively, for the corresponding prior year periods, and 10.0 million in the prior linked quarter. 