OceanFirst Financial Corp is engaged in the banking sector of the United States. It conducts the business of attracting retail and business deposits and investing them in loans, consisting of single-family, owner-occupied residential mortgage loans, and commercial real estate loans. The company's sole segment deals with the delivery of loan and deposit products to customers. 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 rest of its income is dependent on bank card services and wealth management products and services.
Total capital is Tier 1 equity capital, consisting of equity capital, disclosed reserves and Tier 2 capital, made up of revaluation reserves, undisclosed reserves, hybrid instruments and subordinated term debt.
Risk-weighted assets are used to determine the minimum amount of capital a bank must hold in relation to the risk profile of its lending activities and other assets. This is done in order to reduce the risk of insolvency and protect depositors. The more risk a bank has, the more capital it needs on hand. The capital requirement is based on a risk assessment for each type of bank asset. For example, a loan that is secured by a letter of credit is considered to be riskier than a mortgage loan that is secured with collateral and thus requires more capital.
Minimum capital adequacy ratios are critical in ensuring that banks have enough cushion to absorb a reasonable amount of losses before they become insolvent and consequently lose depositors’ funds. The minimum ratio of capital to risk-weighted assets is 8% under Basel II and 10.5% under Basel III.
The liquidity coverage ratio (LCR) refers to the proportion of highly liquid assets held by financial institutions, to ensure their ongoing ability to meet short-term obligations. The LCR is a requirement under Basel III whereby banks are required to hold an amount of high-quality liquid assets that's enough to fund cash outflows for 30 days.
A nonperforming asset (NPA) refers to a classification for loans or advances that are in default or in arrears. A loan is in arrears when principal or interest payments are late or missed. A loan is in default when the lender considers the loan agreement to be broken and the debtor is unable to meet his obligations. In most cases, debt is classified as nonperforming when loan payments have not been made for a period of 90 days.
It shows the Lease percentage that is impacting the total amount of the company's debt.
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