<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number 0-27428
OCEAN FINANCIAL CORP.
--------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3412577
------------------------------------- -----------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
975 Hooper Avenue, Toms River, NJ 08753
---------------------------------------- --------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 240-4500
-----------------------
--------------------------------------------------------------------
(Former name, former address and formal fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
As of May 12, 1998, there were 7,767,067 shares of the Registrant's Common
Stock, par value $.01 per share, outstanding.
<PAGE>
OCEAN FINANCIAL CORP.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
- ------- ---------------------
PAGE
----
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition
as of March 31, 1998 (unaudited) and December 31, 1997 1
Consolidated Statements of Income for the three
months ended March 31, 1998 and 1997 (unaudited)...... 2
Consolidated Statements of Cash Flows for the three
months ended March 31, 1998 and 1997 (unaudited)...... 3
Notes to Unaudited Consolidated Financial Statements.. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation.................... 7
Part II. OTHER INFORMATION
- ------- -----------------
Item 1. Legal Proceedings..................................... 10
Item 2. Changes in Securities................................. 10
Item 3. Default Upon Senior Securities........................ 10
Item 4. Submission of Matters to a Vote of Security Holders... 10
Item 5. Other Information..................................... 10
Item 6. Exhibits and Reports on Form 8-K...................... 10
Signatures....................................................... 12
<PAGE>
OCEAN FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31 December 31,
1998 1997
--------- ------------
(Unaudited)
ASSETS
- ------
<S> <C> <C>
Cash and due from banks $ 2,543 $ 2,225
Investment securities available for sale 173,536 207,357
Federal Home Loan Bank of New York stock, at cost 15,043 14,980
Mortgage-backed securities available for sale 448,690 457,148
Loans receivable, net 823,603 783,695
Mortgage loans held for sale 4,284 -
Interest and dividends receivable 10,865 11,064
Real estate owned, net 1,111 1,198
Premises and equipment, net 14,512 14,279
Other assets 24,298 19,001
---------- ----------
Total assets $1,518,485 $1,510,947
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits $ 987,180 $ 976,764
Federal Home Loan Bank borrowings 13,600 20,400
Securities sold under agreements to repurchase 288,886 288,200
Advances by borrowers for taxes and insurance 4,962 4,773
Other liabilities 7,909 5,266
---------- ----------
Total liabilities 1,302,537 1,295,403
---------- ----------
Stockholders' Equity:
Preferred stock, $.01 par value, 5,000,000
shares authorized, no shares issued - -
Common stock, $.01 par value, 55,000,000
shares authorized, 18,118,248 shares issued
and 15,534,134 and 15,705,720 shares
outstanding at March 31, 1998 and December 31,
1997, respectively 181 181
Additional paid-in capital 177,621 177,223
Retained earnings-substantially restricted 99,534 97,487
Accumulated other comprehensive income 1,265 989
Less: Unallocated common stock held by
Employee Stock Ownership Plan (10,562) (10,903)
Unearned Incentive Awards (7,413) (7,897)
Treasury Stock at cost (2,584,114 and
2,412,528 shares at March 31, 1998 and
December 31, 1997, respectively) (44,678) (41,536)
---------- ----------
Total stockholders' equity 215,948 215,544
---------- ----------
Total liabilities and stockholders'
equity $1,518,485 $1,510,947
========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
Note: Shares and related amounts have been adjusted for the two-for-one stock
split effected in the form of a 100% stock dividend payable on May 15,
1998 to common stockholders of record as of May 4, 1998.
1
<PAGE>
OCEAN FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
For the three months
ended March 31,
--------------------
1998 1997
-------- --------
(Unaudited)
Interest income:
Loans $15,773 $13,594
Mortgage-backed securities 7,040 5,730
Investment securities and other 3,413 3,221
-------- --------
Total interest income 26,226 22,545
-------- --------
Interest expense:
Deposits 10,745 10,295
Borrowed funds 4,401 1,738
-------- --------
Total interest expense 15,146 12,033
-------- --------
Net interest income 11,080 10,512
Provision for loan losses 225 225
-------- --------
Net interest income after provision for loan losses 10,855 10,287
-------- --------
Other income:
Fees and service charges 533 502
Net gain (loss) on sales of loans available for sale 3 (1)
Net (cost of) income from other real estate operations (49) 5
Other 134 80
-------- --------
Total other income 621 586
-------- --------
Operating expenses:
Compensation and employee benefits 3,504 3,304
Occupancy 446 499
Equipment 313 313
Marketing 323 121
Federal deposit insurance 217 88
Data processing 313 378
General and administrative 865 757
-------- --------
Total operating expenses 5,981 5,460
-------- --------
Income before provision for income taxes 5,495 5,413
Provision for income taxes 1,986 2,024
-------- --------
Net income $ 3,509 $ 3,389
======== ========
Basic earnings per share $ .250 $ .205
======== ========
Diluted earnings per share $ .245 $ .205
======== ========
Average basic shares outstanding 13,972 16,488
======== ========
Average diluted shares outstanding 14,326 16,542
======== ========
See accompanying notes to unaudited consolidated financial statements.
Note: Earnings per share and shares outstanding have been adjusted for the two-
for-one stock split effected in the form of a 100% stock dividend payable
on May 15, 1998 to common stockholders of record as of May 4, 1998.
2
<PAGE>
OCEAN FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
For the three months
ended March 31,
--------------------
1998 1997
-------- --------
(Unaudited)
Cash flows from operating activities:
Net income $ 3,509 $ 3,389
-------- --------
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization of premises
and equipment 344 317
Amortization of Incentive Awards 484 306
Amortization of ESOP 341 357
ESOP adjustment 270 165
Amortization of servicing asset 74 42
Net premium amortization in excess of discount
accretion on securities 837 987
Net accretion of deferred fees and discounts
in excess of premium amortization on loans (143) (86)
Provision for loan losses 225 225
Net gain on sales of real estate owned (3) (46)
Net (gain) loss on sales of loans available for sale (3) 1
Proceeds from sales of mortgage loans held for sale 999 703
Mortgage loans originated for sale (5,292) -
Decrease (increase) in interest and dividends
receivable 199 (1,054)
Increase in other assets (5,392) (413)
Increase in other liabilities 2,643 1,270
-------- --------
Total adjustments (4,417) 2,774
-------- --------
Net cash (used in) provided by operating activities (908) 6,163
-------- --------
Cash flows from investing activities:
Net increase in loans receivable (40,216) (20,662)
Purchase of investment securities available for sale (16,000) (25,000)
Purchase of mortgage-backed securities available
for sale (40,567) (88,753)
Proceeds from maturities of investment securities
available for sale 50,000 5,250
Principal payments on mortgage-backed securities
available for sale 48,447 47,239
Purchases of Federal Home Loan Bank of New York stock (63) (1,935)
Proceeds from sales of real estate owned 316 628
Purchases of premises and equipment (577) (1,039)
-------- --------
Net cash provided by (used in) investing
activities 1,340 (84,272)
-------- --------
Continued
3
<PAGE>
OCEAN FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(dollars in thousands)
For the three months
ended March 31,
---------------------------
1998 1997
------ ------
(Unaudited)
Cash flows from financing activities:
Increase in deposits $10,416 10,931
Decrease in Federal Home Loan Bank borrowings (6,800) (5,300)
Increase in securities sold under agreements
to repurchase 686 72,490
Increase in advances by borrowers for taxes and
insurance 189 403
Dividends paid (1,463) -
Purchase of treasury stock (3,142) -
------- -------
Net cash (used in) provided by financing activities (114) 78,524
------- -------
Net increase in cash and due from banks 318 415
Cash and due from banks at beginning of period 2,225 5,372
------- -------
Cash and due from banks at end of period $ 2,543 $ 5,787
======= =======
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the period for:
Interest $14,999 $11,812
Noncash investing activities:
Transfer of loans receivable to real estate owned 226 411
Mortgage loans securitized into mortgage-backed
securities 1,005 -
======= =======
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
OCEAN FINANCIAL CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
Note 1. Basis of Presentation
- -----------------------------
The accompanying unaudited consolidated financial statements include the
accounts of Ocean Financial Corp. (the "Company") and its wholly-owned
subsidiary, Ocean Federal Savings Bank (the "Bank") and its wholly-owned
subsidiaries, Ocean Federal Realty Inc. and Ocean Investment Services, Inc.
The interim consolidated financial statements reflect all normal and recurring
adjustments which are, in the opinion of management, considered necessary for a
fair presentation of the financial condition and results of operations for the
periods presented. The results of operations for the three months ended March
31, 1998 are not necessarily indicative of the results of operations that may be
expected for all of 1998.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted, pursuant to the rules and regulations of the
Securities and Exchange Commission.
These unaudited consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto included in
the Company's Annual Report to Stockholders on Form 10-K for the year ended
December 31, 1997.
Note 2. Earnings per Share
- ---------------------------
Amounts per common share have been adjusted for the two-for-one stock split
effected in the form of a 100% stock dividend declared by the Company's Board of
Directors on April 22, 1998 and payable on May 15, 1998 to common stockholders
of record as of May 4, 1998.
The following reconciles shares outstanding for basic and diluted earnings per
share for the three months ended March 31, 1998 and 1997
Three months ended
March 31
------------------
1998 1997
-------- --------
Weighted average shares issued net of Treasury shares 15,636 18,118
Less: Unallocated ESOP shares (1,070) (1,212)
Unallocated incentive award shares (594) (418)
------ --------
Average basic shares outstanding 13,972 16,488
Add: Effect of dilutive securities:
Stock options 216 28
Incentive awards 138 26
------ --------
Average diluted shares outstanding 14,326 16,542
====== ========
Note 3. Impact of Recent Accounting Pronouncements
- --------------------------------------------------
Effective January 1, 1998, the Company adopted the provisions of Financial
Accounting Standards Board ("FASB") Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 establishes
standards for reporting and display of comprehensive income and its components
in a full set of general purpose financial statements. Under SFAS 130,
comprehensive income is divided into net income and other comprehensive income.
Other comprehensive income includes items previously recorded directly in
equity, such as unrealized gains or losses on securities available for sale.
Comparative financial statements provided for earlier periods have been
reclassified to conform with the provisions of this Statement.
SFAS 130 requires total comprehensive income and its components to be displayed
on the face of a financial statement for annual financial statements. For
interim financial statements, SFAS 130 requires only total comprehensive income
to be reported and allows such disclosure to be presented in the notes to the
interim financial statements.
5
<PAGE>
For the three month periods ended March 31, 1998 and 1997 total comprehensive
income amounted to $3,665,000 and $3,350,000, respectively.
In February 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 132 "Employers' Disclosures about Pensions
and Other Postretirement Benefits" (SFAS 132). SFAS 132 revises employers'
disclosures about pension and other postretirement benefit plans. It does not
change the measurement or recognition of those plans. It standardizes the
disclosure requirements for pensions and other postretirement benefits to the
extent practicable, requires additional information about changes in the benefit
obligations and fair value of plan assets that will facilitate financial
analysis, and eliminates certain required disclosures of previous accounting
pronouncements. SFAS 132 is effective for fiscal years beginning after December
15, 1997. Earlier application is encouraged. Restatement of disclosures for
earlier periods provided for comparative purposes is required unless the
information is not readily available. AS SFAS 132 affects disclosure
requirements, it is not expected to have an impact on the financial statements
of the Company.
Note 4. Loans Receivable, Net
- -----------------------------
Loans receivable at March 31, 1998 and December 31, 1997 consisted of the
following (in thousands):
March 31, 1998 December 31, 1997
--------------- -----------------
(Unaudited)
Real estate:
One- to four-family $746,891 $711,548
Commercial real estate, multi-
family and land 30,188 25,699
Construction 8,480 8,748
Consumer 48,347 45,417
Commercial 4,779 2,904
-------- --------
Total loans 838,685 794,316
Less:
Loans in process 2,702 2,867
Deferred fees 1,270 1,133
Unearned discounts 9 9
Allowance for loan losses 6,817 6,612
-------- --------
Total loans, net 827,887 783,695
Less: mortgage loans held for sale 4,284 -
-------- --------
Loans receivable, net $823,603 $783,695
======== ========
Note 5. Deposits
- ----------------
The major types of deposits at March 31, 1998 and December 31, 1997 were as
follows (in thousands):
March 31, 1998 December 31, 1997
-------------- -----------------
Type of Account (Unaudited)
- ---------------
Non-interest bearing $ 16,405 $ 13,149
NOW 80,120 77,994
Money market deposit 69,482 67,979
Savings 164,781 163,202
Time deposits 656,392 654,440
-------- --------
$987,180 $976,764
======== ========
6
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Financial Condition
Total assets at March 31, 1998 were $1.518 billion, an increase of $7.5 million,
compared to $1.511 billion at December 31, 1997.
Investment securities available for sale decreased by $33.8 million, to a
balance of $173.5 million at March 31, 1998, compared to a balance of $207.4
million at December 31, 1997, and mortgage-backed securities available for sale
decreased by $8.5 million, to $448.7 million at March 31, 1998, from $457.1
million at December 31, 1997. The investment and mortgage-backed securities
available for sale portfolios decreased in order to fund growth in the Bank's
loans receivable. Loans receivable, net, increased by $39.9 million, or 5.1%, to
a balance of $823.6 million at March 31, 1998, compared to a balance of $783.7
million at December 31, 1997. The increase was largely attributable to robust
residential loan growth (including mortgage refinance activity) in the Bank's
market area, as well as commercial lending (including commercial real estate)
initiatives which accounted for $6.4 million of this growth. Included in the
residential loan growth is $16.3 million of 30 year fixed rate mortgage loans
which the Bank retained in portfolio. In the past, the Bank has often sold this
product into the secondary market. The Bank intends to fund $15.0 million of
these loans with repurchase agreements with an approximate term of seven years,
thus mitigating part of the interest rate risk associated with retaining these
mortgages.
Total deposits at March 31, 1998 were $987.2 million, an increase of $10.4
million, compared to $976.8 million at December 31, 1997. Stockholders' equity
at March 31, 1998 was $216.0 million, compared to $215.5 million at December 31,
1997. The Company repurchased 85,793 shares of common stock during the quarter
for $ 3.1 million, completing the 5% repurchase program announced in October
1997.
Results of Operations
General
Net income increased to $3.5 million for the three months ended March 31, 1998
as compared to net income of $3.4 million for the three months ended March 31,
1997
Interest Income
Interest income for the three months ended March 31, 1998 was $26.2 million,
compared to $22.5 million for the three months ended March 31, 1997, an increase
of $3.7 million, or 16.3%. The increase in interest income was the result of an
increase in the average balance of loans receivable which increased by $113.0
million for the three months ended March 31, 1998, as compared to the same prior
year period. Also, the average size of the investment and mortgage-backed
securities available for sale portfolios increased due to the investment of
funds received from increased wholesale borrowings. The increase in interest
income was further augmented by an increase in the yield on average interest
earning assets, which improved to 7.20% on average in the first quarter of 1998,
from 7.02% on average in the first quarter of 1997.
Interest Expense
Interest expense for the three months ended March 31, 1998 was $15.1 million,
compared to $12.0 million for the three months ended March 31, 1997, an increase
of $3.1 million, or 25.9%. The increase in interest expense was primarily the
result of an increase in the average outstanding balance of total borrowings
(Federal Home Loan Bank and securities sold under agreements to repurchase)
which increased by $178.2 million for the three months ended March 31, 1998 as
compared to the same prior year period and a smaller average increase in
deposits. The increase in wholesale borrowings was part of a leverage strategy
adopted in late 1996 to improve returns on invested capital. The borrowings
were invested in investment and mortgage-backed securities. The average cost of
interest bearing liabilities increased to 4.79% for the three months ended March
31, 1998, as compared to 4.55% for the same prior year period due to a greater
percentage increase in higher cost wholesale funding over retail deposit
funding.
Provision for Loan Losses
For the three months ended March 31, 1998, the Company's provision for loan
losses was $225,000, unchanged from the same prior year period. The Company's
non-performing assets declined by $1.6 million at March 31, 1998 as compared to
March 31, 1997 allowing for stable provisions despite loan growth.
7
<PAGE>
Other Income
Other income was $621,000 for the three months ended March 31, 1998, compared to
$586,000 for the same prior year period. Other income increased $54,000 for the
three months ended March 31, 1998 compared to the same prior year period due to
a rise in earnings from corporate owned life insurance as these balances
increased to $17.8 million at March 31, 1998 as compared to $8.0 million at
March 31, 1997.
Operating Expenses
Operating expenses were $6.0 million for the three months ended March 31, 1998,
an increase of $521,000 compared to the same prior year period. The increase
was primarily due to higher non-cash charges of $267,000 relating to the
Employee Stock Ownership Plan and expenses associated with the stock awards
granted to directors and officers under the 1997 Incentive Plan effective
February 4, 1997. Additionally, marketing expense increased by $202,000 as the
Bank aggressively promoted its new retail checking products.
Provision for Income Taxes
Income tax expense was $2.0 million for the three months ended March 31, 1998
and 1997. The effective tax rate, however, declined to 36.1% for the three
months ended March 31, 1998 from 37.4% for the same prior year period due to
reduced state taxes and higher amounts of non taxable income from corporate
owned life insurance.
Liquidity and Capital Resources
The Company's primary sources of funds are deposits, principal and interest
payments on loans, FHLB and other borrowings and, to a lesser extent, investment
maturities and proceeds from the sale of loans. While scheduled amortization of
loans are predictable sources of funds, deposit flows and mortgage prepayments
are greatly influenced by general interest rates, economic conditions and
competition. The Company has other sources of liquidity if a need for
additional funds arises, including an overnight line of credit and advances from
the FHLB.
At March 31, 1998, the Company had $13.6 million of outstanding overnight
borrowings from the FHLB, representing a decrease from $20.4 million at December
31, 1997. The Company utilizes the overnight line from time to time to fund
short-term liquidity needs. The Company also borrowed $288.9 million at March
31, 1998 through securities sold under agreements to repurchase, an increase
from $288.2 million at December 31, 1997. These borrowings were used to fund a
wholesale leverage strategy designed to improve returns on invested capital.
The Company's cash needs for the three months ended March 31, 1998, were
principally provided by maturities of investment securities available for sale,
principal payments on loans and mortgage-backed securities and increased
deposits. The cash provided was principally used for investing activities, which
included the purchase of investment and mortgage-backed securities and the
origination of loans. For the three months ended March 31, 1997, the cash needs
of the Company were primarily satisfied by principal payments on loans and
mortgage-backed securities, FHLB borrowings and increased deposits. The cash
was principally utilized for loan originations and purchases of investment and
mortgage-backed securities.
Federal regulations require the Bank to maintain minimum levels of liquid
assets. The required percentage has varied from time to time based upon
economic conditions and savings flows and is currently 4% of net withdrawable
savings deposits and borrowings payable on demand or in one year or less during
the preceding calendar month. Liquid assets for purposes of this ratio include
cash, accrued interest receivable, certain time deposits, U.S. Treasury and
Government agencies and other securities and obligations generally having
remaining maturities of less than five years. The levels of these assets are
dependent on the Bank's operating, financing, lending and investing activities
during any given period. As of March 31, 1998 and December 31, 1997, the Bank's
liquidity ratios were 7.5% and 9.8%, respectively, both in excess of the minimum
regulatory requirement.
At March 31, 1998, the Bank exceeded all of its regulatory capital requirements
with tangible capital of $184.2 million, or 12.3%, of total adjusted assets,
which is above the required level of $22.6 million or 1.5%; core capital of
$184.2 million or 12.3% of total adjusted assets, which is above the required
level of $45.1 million, or 3.0%; and risk-based capital of $190.8 million, or
29.5% of risk-weighted assets, which is above the required level of $51.8
million or 8.0%. The Bank is considered a "well capitalized" institution under
the Office of Thrift Supervision's prompt corrective action regulations.
8
<PAGE>
Non-Performing Assets
The following table sets forth information regarding the Company's nonperforming
assets consisting of non-accrual loans and Real Estate Owned (REO). The Company
had no troubled-debt restructured loans within the meaning of SFAS 15 at March
31, 1998 or December 31, 1997. It is the policy of the Company to cease
accruing interest on loans 90 days or more past due or in the process of
foreclosure.
March 31, December 31,
1998 1997
------------ ------------
(Dollars in thousands)
Non-accrual loans:
Real estate:
One-to four-family $ 5,578 $ 5,062
Commercial real estate,
multi-family and land 495 382
Consumer 151 110
------- -------
Total 6,224 5,554
REO, net 1,111 1,198
------- -------
Total non-performing assets $ 7,335 $ 6,752
======= =======
Non-performing loans as a percent of total
loans receivable .74% .70%
Non-performing assets as a percent of total
assets .48% .45%
Allowance for loan losses as a percent of
total loans receivable .81% .83%
Allowance for loan losses as percent of
total non-performing loans 109.53% 119.03%
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The Company is not engaged in any legal proceedings of a material
nature at the present time. From time to time, the Company is a party
to routine legal proceedings within the normal course of business.
Such routine legal proceedings in the aggregate are believed by
management to be immaterial to the Company's financial condition or
results of operations.
Item 2. Changes in Securities
---------------------
Not Applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
Not Applicable
Item 4. Submission of Matters to Vote of Security Holders
-------------------------------------------------
The annual meeting of stockholders was held on April 23, 1998. The
following directors were elected for terms of three years: Michael E.
Barrett, Donald E. McLaughlin and James T. Snyder. The following
proposals were voted on by the stockholders:
Withheld/ Broker
Proposal For Abstain Non-Votes
-------- --- ------- ---------
1) Election of Directors:
Michael E. Barrett 6,393,380 42,632 0
Donald E. McLaughlin 6,400,127 35,885 0
James T. Snyder 6,399,952 36,060 0
<TABLE>
<CAPTION>
Withheld/ Broker
For Against Abstain Non-Votes
--- ------- ------- ---------
<S> <C> <C> <C> <C>
2) Ratification of the Amended
and Restated Ocean Financial
Corp. 1997 Incentive Plan 5,945,540 440,408 50,064 0
3) Ratification of KPMG Peat
Marwick LLP as independent
auditors for the Company for
the year ending December 31,
1998. 6,370,224 49,928 15,860 0
</TABLE>
Item 5. Other Information
-----------------
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits:
3.1 Certificate of Incorporation of Ocean Financial Corp.*
3.2 Bylaws of Ocean Financial Corp.*
4.0 Stock Certificate of Ocean Financial Corp.*
11 Computation of earnings per share
10
<PAGE>
27 Financial Data Schedule (filed herewith)
b) There were no reports on Form 8-K filed during the three months
ended March 31, 1998.
* Incorporated herein by reference into this document from the Exhibits to Form
S-1, Registration Statement, filed on December 7, 1995, as amended,
Registration No. 33-80123.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Ocean Financial Corp.
-------------------------------
Registrant
DATE: May 12, 1998 /s/ John R. Garbarino
---------------------------------
John R. Garbarino
Chairman of the Board, President
and Chief Executive Officer
DATE: May 12, 1998 /s/ Michael Fitzpatrick
----------------------------------
Michael Fitzpatrick
Executive Vice President and
Chief Financial Officer
12
<PAGE>
Exhibit 11
----------
OCEAN FINANCIAL CORP.
---------------------
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
-----------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
------------------------------------------
(dollars in thousands, except per share amounts)
------------------------------------------------
Three Months Ended
------------------
March 31
------------------
1998 1997
---- ----
Net income $ 3,509 $ 3,389
====== ======
Weighted average shares outstanding:
Weighted average shares issued net of Treasury shares 15,636 18,118
Less: Unallocated ESOP shares (1,070) (1,212)
Unallocated incentive award shares (594) (418)
------ ------
Average basic shares outstanding 13,972 16,488
Add: Effect of dilutive securities:
Stock options 216 28
Incentive awards 138 26
------ ------
Average diluted shares outstanding 14,326 16,542
====== ======
Basic earnings per share $ 0.250 $ 0.205
====== ======
Diluted earnings per share $ 0.245 $ 0.205
====== ======
Note: Earnings per share and shares outstanding have been adjusted for the two-
for-one stock split effected in the form of a 100% stock dividend payable
on May 15, 1998 to Common stockholders of record as of May 4, 1998.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,543
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 622,226
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 827,887
<ALLOWANCE> 6,817
<TOTAL-ASSETS> 1,518,485
<DEPOSITS> 987,180
<SHORT-TERM> 302,486
<LIABILITIES-OTHER> 12,871
<LONG-TERM> 0
0
0
<COMMON> 181
<OTHER-SE> 215,767
<TOTAL-LIABILITIES-AND-EQUITY> 1,518,485
<INTEREST-LOAN> 15,773
<INTEREST-INVEST> 10,453
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 26,226
<INTEREST-DEPOSIT> 10,745
<INTEREST-EXPENSE> 15,146
<INTEREST-INCOME-NET> 11,080
<LOAN-LOSSES> 225
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,981
<INCOME-PRETAX> 5,495
<INCOME-PRE-EXTRAORDINARY> 5,495
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,509
<EPS-PRIMARY> .250<F2>
<EPS-DILUTED> .245<F2>
<YIELD-ACTUAL> 0<F1>
<LOANS-NON> 6,224
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,612
<CHARGE-OFFS> 0<F1>
<RECOVERIES> 0<F1>
<ALLOWANCE-CLOSE> 6,817
<ALLOWANCE-DOMESTIC> 0<F1>
<ALLOWANCE-FOREIGN> 0<F1>
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1>Information not disclosed in 10-Q
<F2>Adjusted for two-for-one stock split effected in the form of a 100% stock
dividend payable on May 15, 1998 to common stockholders of record as of May 4,
1998.
</FN>
</TABLE>
