OceanFirst Financial Corp. posts slim Q2 profit amid waning subprime problems
After being plagued by risky subprime loans, OceanFirst Financial Corp., Inc. (Nasdaq: OCFC) executives flaunted the company’s return to quarterly profitability during a midday conference call.
“I am pleased to report that our resilient core banking operations have finally overcome the drag of Columbia and returned the company to profitability during the past quarter as we successfully moved past the disastrous effect on our operations,” CEO John Garbarino said during the call. “We have ceased all subprime lending in Columbia and are moving to discontinue all operations at their Valhalla, New York, headquarters. Columbia, as a separate subsidiary, will cease to exist during the third quarter.”
He said all the costs associated with closing Columbia – other than the lease of its headquarters – were reflected in the company’s second quarter results. Because of the subprime problems, Garbarino said the company had to devote the majority of its attention to “investigating, identifying and providing for the losses associated with Columbia’s renegade subprime lending operations.”
Columbia Home Loans, the company’s subsidiary mortgage bank, recorded a net loss of $4.2 million during the quarter, after making millions of dollars in loans to home buyers with poor credit histories.
Before the start of trading, the Toms River, N.J.-based company reported net income of $0.27 million, or $0.02 per share, for the second quarter ended June 30. In the corresponding quarter of 2006, OceanFirst recorded net income of $4.9 million, or $0.41 per share. The company’s quarterly net interest income fell to $12.7 million, from $14.4 million in the year-ago period.
Under the company’s stock repurchase program, OceanFirst had about 0.48 million shares to buy back as of June 30. During the quarter ended June 30, the OceanFirst stockholders’ equity decreased to $123.7 million, from $132.3 million on December 31.
“We repurchased no shares during the quarter but still have ample existing board authority and holding company liquidity available to us as we continue to evaluate our repurchase strategy for future periods,” Garbarino said.
Part of the reason the company did not buy back stock was that it was concerned about being delisted from the Russell 2000, he said.
Garbarino also said fierce price competition and negative press relating to the subprime problems have hurt the company’s bottom line.
During the past 52 weeks, shares of the company have ranged between $15.36 and $24. In midday trading, shares are down $0.15, or 0.93%, at $15.99.
