The Company has been the holding company for the Bank since it acquired the
stock of the Bank upon the Bank’s conversion from a Federally-chartered
mutual savings bank to a Federally-chartered capital stock savings bank in 1996
(the “Conversion”). The Bank’s principal business has been
and continues to be attracting retail and business deposits in the communities
surrounding its branch offices and investing those deposits primarily in 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. 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 investment and
mortgage-backed securities. The Bank also receives income from fees and service
charges on loan and deposit products, wealth management services, Bankcard services
and the sale of alternative investment products, e.g., mutual funds, annuities
and life insurance. The Bank’s primary sources of funds are deposits,
principal and interest payments on loans, investments and mortgage-backed securities,
investment maturities, proceeds from the sale of loans, Federal Home Loan Bank
(“FHLB”) advances and other borrowings.
The Bank proudly promotes a higher quality of life in the communities it serves
through employee volunteer efforts and the OceanFirst Foundation (the “Foundation”).
Employees are continually encouraged to become leaders in their communities
and use the Bank’s support to help others. Through the Foundation, established
in 1996, OceanFirst Bank has donated $27.2 million to enrich the lives of local
citizens by supporting initiatives in health and human services, education,
affordable housing, youth development and the arts.
The investment policy of the Bank as established by the Board attempts to provide
and maintain liquidity, generate a favorable return on investments without incurring
undue interest rate and credit risk, and complement the Bank’s lending
activities. Specifically, the Bank’s policies generally limit investments
to government and Federal agency-backed securities, municipal securities and
corporate debt obligations. The Bank’s policies provide that all investment
purchases must be evaluated internally for creditworthiness and be approved
by two officers (any two of the Senior Vice President/Treasurer, the Executive
Vice President/Chief Financial Officer, and the President/Chief Executive Officer)
and must be ratified by the Board. The Company’s investment policy mirrors
that of the Bank except that it allows for the purchase of equity securities
in limited amounts.
Management determines the appropriate classification of securities at the time
of purchase. If the Bank has the intent and the ability at the time of purchase
to hold securities until maturity, they may be classified as held-to-maturity.
Investment and mortgage-backed securities identified as held-to-maturity are
carried at cost, adjusted for amortization of premium and accretion of discount,
which are recognized as adjustments to interest income. Securities to be held
for indefinite periods of time, but not necessarily to maturity are classified
as available-for-sale.
Deposits, repayments and prepayments of loans and mortgage-backed securities,
proceeds from sales of loans, investment maturities, cash flows generated from
operations and FHLB advances and other borrowings are the primary sources of
the Bank’s funds for use in lending, investing and for other general purposes.
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. The flow of deposits
is influenced significantly by general economic conditions, changes in money
market rates, prevailing interest rates and competition. The Bank’s deposits
are obtained predominantly from the areas in which its branch offices are located.
The Bank relies on its community-banking focus, stressing customer service and
long-standing relationships with its retail and business 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.
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