PASSIONS. Possibilities

PEOPLE. PASSIONS. Possibilities. Annual REPORT OCEANFIRST FINANCIAL CORP. 2015 SERVING CENTRAL New Jersey NEW YORK MIDDLESEX BUCKS MERCER MONMOUTH OCEAN PHILADELPHIA BURLINGTON CAMDEN GLOUCESTER SALEM ATLANTIC CUMBERLAND OceanFirst Headquarters CAPE MAY Retail Branches, Commercial AÆ+¼bÑXÈÆ#wxXj¿_ÆAbÆ 9jAÈÆAA~jjÈÆ#wxXj¿ Cape Bank Market FINANCIAL SUMMARY (dollars in thousands, except per share amounts) At or for the year ended December 31, 2015 2014 2013 SELECTED FINANCIAL CONDITION DATA: Total assets $2,593,068 $2,356,714 $2,249,711 Loans receivable, net 1,970,703 1,688,846 1,541,460 Deposits 1,916,678 1,720,135 1,746,763 Stockholders’ equity 238,446 218,259 214,350 SELECTED OPERATING DATA: Net interest income 76,829 72,348 70,529 Other income 16,426 18,577 16,458 Operating expenses (1) 60,775 57,764 59,244 Net income (1) 20,322 19,920 16,330 Diluted earnings per share (1) 1.21 1.19 0.95 SELECTED FINANCIAL RATIOS: Tangible stockholders’ equity per share 13.67 12.91 12.33 Cash dividend per share 0.52 0.49 0.48 Tangible stockholders’ equity to total tangible assets 9.12% 9.26% 9.53% Return on average assets (1) 0.82 0.86 0.71 Return on average tangible stockholders’ equity (1) 8.96 9.18 7.51 Net interest rate spread 3.18 3.23 3.16 Net interest rate margin 3.28 3.31 3.24 Operating expenses to average assets (1) 2.47 2.50 2.58 wxXjXÛÆ¼AÈÆ©ª 65.17 63.53 68.11 Non-performing loans as a percent of total loans receivable 0.91 1.06 2.88 (1) Amounts and performance ratios for 2015 include non-recurring merger related expenses of $1.9 million. The total after-tax cost was $1.3 million, or $0.08 per diluted share. Amounts and performance ratios for 2013 include non-recurring expenses relating to the prepayment of Federal Home Loan Bank advances of $4.3 million and the consolidation of two branches into newer, in-market facilities, at a cost of $579,000. The total after tax cost was $3.1 million, or $0.19 per diluted share. LETTER TO SHAREHOLDERS APRIL 4, 2016 DEAR FELLOW SHAREHOLDERS: 2015 was an exciting year for OceanFirst as our strategic growth initiatives allowed us to build franchise value by growing the Bank, improving earnings, and positioning the business for success in the years to come. The strategic focus on growth was evident in the continuing success of our commercial banking business, the acquisition of Colonial American Bank, and the opening of two new branches located in Pier Village and Jackson. In addition, in 2016 we extended that strategy with the acquisition of a Provident Bank Branch on Fischer Boulevard in Toms River and in January announced an agreement to acquire Cape Bank. The focus on acquiring strategically valuable deposits will be a source of franchise strength and will support the consistent loan growth being demonstrated each quarter. Total assets grew 10%, to $2.6 billion in 2015 while the Company’s core net income, which excludes merger-related charges, increased by 9%, to $21.6 million. On a per share basis, core earnings per share improved 8.4%, to $1.29 and tangible book value per share made notable progress as well, increasing by 5.9%, to $13.67 per share. These important measures demonstrate our commitment to growing the Bank in a manner that improves both the scale and the §¼xÈAOÈÛÆwÆÈjÆ §AÛÆÆAÆ¿È¼AÈj~ÛÆbj¿~jbÆÈÆb¼ØjÆ~Èj¼Æ¿A¼jbj¼ÆØAÑj¬Æ Strategic Growth 13.67 COMMERCIAL BANKING 12.91 13 The commercial banking market has become more 12.33 competitive each year as national banks, community OA¿_ÆX¼jbÈÆÑ¿_ÆAbÆOAÆxAXAÆ 12 institutions compete to attract and retain the best bankers and the most valuable commercial clients. Our strategy remains focused on continuing to acquire seasoned bankers as we believe that the most effective 2.59 way to compete for high-quality commercial clients is 2.36 by focusing on developing our team of highly 2.25 professional, deeply experienced commercial lenders. In 2015 commercial loan originations of $264 million, combined with $121 million of loans acquired in 1.29 connection with the Colonial American Bank 1.14 1.19 acquisition, drove net commercial loan portfolio growth of $229 million, a 31% increase compared to 2013 2014 2015 the prior year. Since early 2013 when the Bank made the strategic decision to expand the number of (1) commercial lending teams, net commercial loans CORE EARNINGS PER SHARE (EPS), in dollars outstanding have increased by $430 million, growing ASSETS, dollars in billions the portfolio by over 80%. Over the past three years, commercial banking has grown to become our largest TANGIBLE BOOK VALUE PER SHARE (TBVPS), in dollars AbÆ¿ÈÆ§¼xÈAOjÆOÑ¿j¿¿Æj¬ (1) Refer to footnote on previous page. We are greatly appreciative of the local business jAbj¼¿ÆÙÆAØjÆjÈ¼Ñ¿ÈjbÆÑ¿ÆÈÆOjÆÈj¼Æ§¼A¼ÛÆxAXAÆ§A¼Èj¼¬Æ1¿ÆÛjA¼ÆÙjÆA¼jÆÈ¼bÑX~ÆAÆ¿§jXAÆ¿jXÈÆ of the annual report that focuses on several clients that we admire and respect for their dedication to successfully OÑb~ÆÈjÆOÑ¿j¿¿j¿ÆÈAÈÆbjxjÆÑ¼ÆXÑÈÛ¬Æ9jÆ§jÆÛÑÆjÛÆÈj¼Æ¿È¼j¿¬ OCEANFIRST FINANCIAL CORP. | NASDAQ: OCFC DEPOSIT FUNDING INITIATIVES One key indication of a healthy bank is the ability to generate core deposits in order to provide a stable and low-cost base to fund loan growth at attractive margins. The Bank has been focused on creating a high-quality, low-cost deposit base for many years, the result of which has been one of the most successful deposit franchises in our market. As a result, transaction accounts (Checking, Savings, and Money Market) comprise 87% of total deposits. The quality of these deposits is demonstrated by an AØj¼A~jÆX¿ÈÆwÆbj§¿È¿ÆwÆÑ¿ÈÆá¬ÏÄ«¬ÆØj¼A~jÆX¼jÆbj§¿È¿Æ increased by $103 million, largely driven by a $70 million increase in non-interest bearing deposits, which are considered to be the highest-quality deposit funding available. Our investment in the OceanFirst Bank customers can register for Card Valet to monitor and enhance the security of their debit card activity. Colonial American Bank acquisition, the success of our commercial banking business, two new branch openings, and a relentless focus on extraordinary customer service and convenience all contributed to the growth in high-quality deposits. On the technology side, the Bank has consistently invested in the latest technologies to support our customers. Over the past two years all branch ATM machines were upgraded to the latest technology, highly secure Apple Pay “tokenized” payments were introduced, our CardValet mobile app was launched, and EMV or “chip” debit cards are being distributed to all OceanFirst customers. Providing our customers with the most convenient and highly secure access to their accounts will ensure the Bank remains relevant as consumer preferences change over time. High-quality commercial loan growth funded by low-cost core deposits allowed the Bank to maintain a stable and jAÈÛÆjÈÆÈj¼j¿ÈÆA¼~ÆwÆÊ¬Ïo«Æw¼ÆÏáy_ÆAÆ¿~xXAÈÆwjAÈÆÆAÆÈj¼j¿ÈÆ¼AÈjÆjØ¼jÈÆÈAÈÆÙA¿ÆÑwAØ¼AOjÆÈÆ most banking institutions. CAPE BANK ACQUISITION The Bank announced the agreement to acquire Cape Bank on January 5th, 2016. The transaction received the required ¼j~ÑAÈ¼ÛÆA§§¼ØA¿ÆÆA¼XÆÏoÈ_ÆAbÆ¿ÑOjXÈÆÈÆ¿A¼jbj¼ÆØÈj¿_ÆÙXÆA¼jÆOj~Æ~AÈj¼jbÆA¿ÆÆÙ¼ÈjÆÈ¿ÆjÈÈj¼_Æ the closing could occur in early May. The acquisition of Cape Bank will make OceanFirst the largest community bank headquartered in central and southern New Jersey, and will extend the markets we serve as far as Cape May and the Philadelphia metropolitan area. The pro-forma company will have assets of approximately $4.2 billion and will operate yáÆO¼AXj¿¬Æ1jÆ¼j¿ÑÈ~Æ¿XAjÆ¿ÑbÆ¿Ñ§§¼ÈÆAÆ¼jÆ§¼xÈAOjÆ§j¼AÈÆA¿Æ¼j±Ñ¼jbÆØj¿ÈjÈ¿ÆÆ¼¿Æ management, information technology, and regulatory compliance can be leveraged over a larger operating platform. In an environment where high-quality funding is growing scarce and operating scale is becoming more critical, the opportunity to acquire Cape Bank addresses several strategic considerations. First and most importantly, Cape Bank has built a formidable deposit franchise that mirrors the OceanFirst approach and philosophy. Deep relationships AbÆAÆ~Èj¼Æ¼jX¼bÆwÆXÑÈÛÆØØjjÈÆbjxjÆÈjÆ A§jÆbj§¿ÈÆw¼AX¿j¬Æ1jÆAØj¼A~jÆA~jÆwÆAÆ A§jÆ branch is 60 years old, clearly demonstrating a business that has served the market for generations. Another important consideration was the ability to achieve an operating scale that would support the performance levels expected by shareholders. Finally, the opportunity to enter the desirable greater Philadelphia metropolitan area is anticipated to support organic growth in the coming years. We have scheduled the special shareholder meetings for both banks on April 25th and look forward to reporting a successful closing on the Cape transaction prior to our annual shareholder meeting on June 2nd. OCEANFIRST FINANCIAL CORP. | NASDAQ: OCFC RISK MANAGEMENT Enterprise Risk Management continues to be a high priority for the Bank as broad economic trends suggest that interest rates and credit conditions could create headwinds for our business over the next few years. In order to best position the Bank to prepare for a full range of potential scenarios, we have dedicated the time and resources to mitigate these risks, to the degree possible. The future direction of interest rates is always uncertain and market events in the latter half of 2015 and early 2016 demonstrate a growing tension between Federal Reserve policy, which suggests short-term rate increases are highly probable, and market forces, which have discounted the degree of interest rate increases that are expected to materialize in the coming years.

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