OceanFirst Financial Corp. serves as the holding company for OceanFirst Bank N.A. (the ‘bank’) that provides various banking products and services.
The company is subject to regulation by the Board of Governors of the Federal Reserve System (the ‘FRB’) and the Securities and Exchange Commission (the ‘SEC’). The bank is primarily subject to regulation and supervision by the Office of the Comptroller of the Currency (the ‘OCC’), as well as the Consumer Financial Protection Bureau (the ‘CFPB’) due...
OceanFirst Financial Corp. serves as the holding company for OceanFirst Bank N.A. (the ‘bank’) that provides various banking products and services.
The company is subject to regulation by the Board of Governors of the Federal Reserve System (the ‘FRB’) and the Securities and Exchange Commission (the ‘SEC’). The bank is primarily subject to regulation and supervision by the Office of the Comptroller of the Currency (the ‘OCC’), as well as the Consumer Financial Protection Bureau (the ‘CFPB’) due to the bank having in excess of $10 billion in assets. The bank is also subject to regulation and supervision by the Federal Deposit Insurance Corporation (the ‘FDIC’), as the deposit insurer. The company transacts the vast majority of its business through the bank, its wholly owned subsidiary.
The bank’s principal business is originating loans, consisting of commercial real estate and other commercial loans, which have become a key focus of the bank, and single-family, owner-occupied residential mortgage loans. The bank also invests in other types of loans, including residential construction and consumer loans. The bank primarily funds these loans by attracting retail and commercial deposits. In addition, the bank invests in mortgage-backed securities (‘MBS’), securities issued by the U.S. Government and agencies thereof, corporate securities, and other investments permitted by applicable law and regulations. The bank’s revenues are derived principally from interest on its loans, and to a lesser extent, interest on its debt and equity securities. 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.
Market Area
The bank is a regional community bank offering a wide variety of financial products and services to meet the needs of customers in the communities it serves. As of December 31, 2024, the bank primarily operated its business through its headquarters located in Toms River, New Jersey, its administrative office located in Red Bank, New Jersey, and various 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. In addition, the bank provides banking services through teams located in the major metropolitan markets between Massachusetts and Virginia.
Lending Activities
Commercial Real Estate - Investor Owned: The bank originates investor-owned commercial real estate loans that are secured by properties, or properties under construction, that are generally used for business purposes, such as office, industrial, multi-family, or retail facilities. A substantial majority of the bank’s investor-owned commercial real estate loans are located in its primary market area.
The bank originates investor-owned commercial real estate loans with adjustable rates and with fixed interest rates for a period that generally does not exceed ten years, and generally have an amortization schedule of up to 25 years and up to 30 years for multi-family properties. As a result, the typical amortization schedule will result in a substantial principal payment upon maturity. 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. 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 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. The bank assesses and mitigates the risk in several ways, including inspection of all such properties and the review of the overall financial condition of the borrower and guarantors, which include, for example, the review of the rent rolls and applicable leases/lease terms and conditions, and the verification of income. A tenant analysis and market analysis are part of the underwriting.
The bank also originates multi-family mortgage loans. 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 does 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.
Additionally, the bank offers an interest rate swap program that allows commercial loan customers to effectively convert an adjustable-rate commercial loan agreement to a fixed-rate commercial loan agreement. The bank simultaneously sells an offsetting back-to-back swap to an investment-grade national bank so that it does not retain this fixed-rate risk.
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. The majority of the bank’s construction loans are floating-rate loans with a maximum 75% loan-to-value ratio for the completed project and a minimum debt-service coverage of 1.0x during the construction period to ensure there is sufficient interest reserve to cover interest payments. The expectation is that the underlying project, when complete, will produce a debt service coverage ratio that is consistent with policy for completed income-producing projects. Additionally, at the time of initial analysis, the bank generally underwrites construction loans at a higher interest rate than current market rates.
Investor-owned commercial real estate loans are among the largest of the bank’s loans and may have higher credit risk and lending spreads. 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.
Commercial and Industrial (‘C&I’) and Commercial Real Estate - Owner Occupied: The bank originates C&I loans and lines of credit (including for working capital, fixed asset purchases, and acquisition, receivable, and inventory financing) primarily in the bank’s market area. In certain instances, the bank also purchases commercial and industrial loans through existing third-party channels. In underwriting C&I loans and credit lines, the bank reviews and analyzes the financial history and capacity of the borrower, collateral value, financial strength and character of the principal borrowers, and general payment history of the principal borrowers in coming to a credit decision. 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.
An owner-occupied property is defined as real estate used by a business for its operations. Given that the repayment is generally dependent on the ongoing operations of the underlying business with similar risk of a C&I loan, the bank reviews and analyzes the financial history and capacity of the operating business in addition to the real estate collateral value. The bank generally requires the corporate guarantee of the operating business, if not a direct borrower.
The bank primarily underwrites owner-occupied real estate loans to a maximum of 70% to 80% advance, depending on the property type, 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 requires minimum debt service coverage of 1.25x to 1.40x for owner-occupied real estate, depending on the property type.
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. 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.
The bank offers several ARM loan programs with interest rates that adjust between annually to ten years, as well as loans that operate as fixed-rate loans at their onset and later convert to an ARM for the remainder of the term.
The bank’s fixed-rate mortgage loans are made for terms from ten to 30 years. The bank either holds its residential loans for its portfolio or sells a portion of its loans to either government-sponsored enterprises, such as the FHLB, Freddie Mac, or Fannie Mae, or to a third-party aggregator.
The bank has made, and may continue to make, residential mortgage loans that will not qualify as Qualified Mortgage Loans under the Dodd-Frank Act and the CFPB regulations.
The bank originates residential construction loans primarily on a construction-to-permanent basis, with such loans converting to an amortizing loan following the completion of the construction phase. All of the bank’s residential construction loans are made to individuals building a residence.
Home Equity Loans and Lines, Student Loans, and Other Consumer: The bank originates home equity loans typically as fixed-rate loans with terms ranging from five to 20 years. The bank also offers variable-rate home equity lines of credit. Home equity loans and lines of credit are originated based on the applicant’s income and their ability to repay, and are secured by a mortgage on the underlying real estate, typically owner-occupied, one-to-four family residences. The bank charges an early termination fee should a home equity loan or line of credit be closed within two or three years of origination. 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.
Investment Activities
As of December 31, 2024, the company's investment portfolio included U.S. government and agency obligations, state and municipal debt obligations, corporate debt securities, asset-backed securities, and mortgage-backed securities, such as agency residential, agency commercial, and non-agency commercial.
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’s deposits consist of money market accounts, savings accounts, interest-bearing checking accounts, non-interest-bearing accounts, and time deposits, including brokered deposits. The flow of deposits is influenced significantly by general economic conditions, prevailing interest rates, and competition. The bank’s deposits are obtained predominantly from the areas in which its branch offices are located, and to a lesser extent, through digital service channels. The bank relies on its community-banking focus, stressing customer service and long-standing relationships with its customers to attract and retain these deposits; however, market interest rates and rates offered by competing financial institutions could significantly affect the bank’s ability to attract and retain deposits.
Recent Acquisitions
On October 1, 2024, the company completed the acquisition of Spring Garden. The transaction will be complementary to the company’s existing products and will expand the company’s specialty finance offerings.
Subsidiary Activities
As of 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. OceanFirst Realty Corp., a Delaware corporation, was established in 1997 and invests in qualifying mortgage loans, and is intended to qualify as a real estate investment trust, which may, among other things, be utilized by the company to raise capital in the future.
Casaba Real Estate Holding Corporation, a New Jersey corporation, was acquired by the bank as a wholly-owned subsidiary as part of its acquisition of Cape Bancorp, Inc. in 2016. This subsidiary is maintained to take legal possession of certain repossessed collateral for resale to third parties.
Country Property Holdings Inc., a New York corporation, was acquired by the bank as a wholly-owned subsidiary as part of its acquisition of Country Bank in 2020. This subsidiary is maintained to take legal possession of certain repossessed collateral for resale to third parties.
Spring Garden Capital Group, LLC, a Delaware limited liability company, was acquired by the bank on October 1, 2024, to expand the bank’s specialty finance offerings. This subsidiary is the holding company for Spring Garden Lending Group, LLC, a specialty lending company, Spring Garden Capital Advisors, LLC, a real estate consulting company, and Spring Garden Equity, LLC, a mezzanine finance company. Spring Garden Lending Baltimore, LLC, a specialty lending company, is also a wholly-owned subsidiary of Spring Garden Lending Group, LLC.
OFB Acquisition LLC, a New Jersey limited liability company, was incorporated on August 1, 2024, as a wholly-owned subsidiary. The subsidiary holds certain assets and liabilities acquired through acquisitions.
In addition to the bank, the company holds OceanFirst Risk Management, Inc. as a direct subsidiary. OceanFirst Risk Management Inc. is a Nevada captive insurance company that insures certain risks relating to the business of the bank and the company. The company also holds a 60% interest in Trident Abstract Title Agency, LLC, a New Jersey corporation, which was acquired in 2022. This subsidiary provides commercial and residential title services throughout New Jersey, and through strategic alliances can also service clients’ title insurance needs outside of New Jersey.
Furthermore, the company holds the following statutory business trusts: OceanFirst Capital Trust I, OceanFirst Capital Trust II, OceanFirst Capital Trust III, Sun Statutory Trust VII, Sun Capital Trust VII, Sun Capital Trust VIII, and Country Bank Statutory Trust I, collectively known as the ‘Trusts’. All of the trusts are incorporated in Delaware and were formed to issue trust preferred securities.
Regulation and Supervision
The company is a bank holding company (‘BHC’) under Section 3 of the Bank Holding Company Act of 1956, as amended (the ‘BHC Act’). 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 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 is subject to extensive regulation, examination, and supervision by the OCC, as its primary federal regulator, and the FDIC, as the deposit insurer. As a financial institution with more than $10 billion in assets, the bank is also subject to examination by the CFPB. 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. In addition, the company elected to become a financial holding company under the Gramm-Leach Bliley Act (the ‘GLBA’) amendments to the BHC Act.
The bank is subject to CFPB supervision and examination for compliance with specified Federal consumer protection laws.
The company is a BHC and is supervised by the FRB and is required to file reports with the FRB and provide such additional information as the FRB may require. The company and its non-bank subsidiaries are subject to examination by the FRB.
During 2025, the bank received the Community Reinvestment Act (‘CRA’) Performance Evaluation from the OCC with a rating of ‘Outstanding’ for the evaluation period from 2021 to 2023, for which the examination commenced in 2024.
The bank is a member of the Federal Home Loan Bank System, which consists of 11 regional FHLBs. The bank, as a member of the FHLB New York is required to acquire and hold shares of capital stock in that FHLB in a specified amount. As a national bank, the bank is required to hold capital stock of the Federal Reserve Bank of Philadelphia.
History
OceanFirst Financial Corp. was founded in 1902. The company was incorporated under Delaware law in 1995.
The Analyst Price Target shows the analysts’ low, high, and average target at a glance.
