General

The following discussion and analysis is intended to provide information about the Company's financial condition as of September 30, 2009 and results of operations for the three and nine months ended September 30, 2009 and 2008. The following information should be read in conjunction with the Company's unaudited consolidated financial statements for the three and nine months ended September 30, 2009 and 2008, including the related notes thereto, contained elsewhere in this document.

Critical Accounting Policies

"Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as disclosures found elsewhere in this quarterly report on Form 10-Q, are based upon the Company's unaudited consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these unaudited consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 to Central Jersey Bancorp's audited consolidated financial statements for the year ended December 31, 2008, included with Central Jersey Bancorp's annual report on Form 10-K for the year ended December 31, 2008, contains a summary of the Company's significant accounting policies. Management believes the Company's policy with respect to the methodology for the determination of the allowance for loan losses and the impairment of investment securities requires management to make difficult and subjective judgments that often require assumptions or estimates about uncertain matters. Changes in these judgments, assumptions or estimates could materially impact results of operations. This critical policy and its application are periodically reviewed with Central Jersey Bancorp's Audit Committee and its Board of Directors.

Additional critical accounting policies relate to judgments about other asset impairments, including goodwill, servicing rights and deferred tax assets. Central Jersey Bancorp performs an annual analysis to test the aggregate balance of goodwill for impairment in accordance with FASB ASC Topic 350, "Goodwill and Other Intangibles." For purposes of the goodwill impairment evaluation, Central Jersey Bancorp is identified as the reporting unit. The fair value of goodwill is determined using standard valuation methodologies similar to those used to determine the fair value of goodwill in a business combination, including a review of comparable transactions. If the carrying amount of goodwill pursuant to this analysis were to exceed the implied fair value of goodwill, an impairment loss would be recognized.

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and overnight federal funds sold. Federal funds sold are generally sold for one-day periods.

Investment securities held-to-maturity are comprised of debt securities that Central Jersey Bank, N.A. The Company has the intent to hold the securities and will not be required to sell the securities before recovery occurs. Such securities are stated at cost, adjusted for amortization of premiums and accretion of discounts over the estimated remaining lives of the investment securities utilizing the level-yield method. Investment securities to be held for indefinite periods of

time and not intended to be held-to-maturity, including all equity securities, are classified as available-for-sale. Investment securities available-for-sale include investment securities that management intends to use as part of its asset/liability management strategy and that may be sold in response to changes in interest rates, resultant prepayment risk and other factors related to interest rate and resultant prepayment risk changes. Investment securities available-for-sale are carried at estimated fair value. Unrealized holding gains and losses on such investment securities available-for-sale are excluded from earnings and reported as a separate component of shareholders' equity. Gains and losses on sales of investment securities are based on the specific identification method and are accounted for on a trade date basis.

On a quarterly basis, Central Jersey Bank, N.A. evaluates investment securities for other-than-temporary impairment. For individual investment securities classified as either available-for-sale or held-to-maturity, a determination is made as to whether a decline in fair value below the amortized cost basis is other than temporary. If the decline in fair value is judged to be other than temporary, the cost basis of the individual investment security shall be written down to fair value and the amount of the write-down shall be recognized in earnings. Subsequent increases in the fair value of available-for-sale securities shall be included as a separate component of equity; subsequent decreases in fair value, if not an other-than-temporary impairment, also shall be included as a separate component of equity. After evaluation, as of September 30, 2009, Central Jersey Bank, N.A. noted no other-than-temporary impairment. The overall investment security portfolio is in an unrealized gain position and does not reflect any significant individual investment security losses.

Loans are stated at unpaid principal balances, less unearned income and deferred loan fees and costs.

Interest on loans is credited to operations based upon the principal amount outstanding.

Loan origination and commitment fees and certain direct loan origination costs are deferred, and the net amount is amortized over the estimated life of the loan as an adjustment to the loan's yield using the level-yield method.

A loan is considered impaired when, based on current information and events, it is probable that Central Jersey Bank, N.A. will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans are measured based on the present value of expected future cash flows, or, as a practical expedient, at the loan's observable market price, or the fair value of the underlying collateral, if the loan is collateral dependent. Conforming residential mortgage loans, home equity and second mortgages and loans to individuals, are excluded from the definition of impaired loans as they are characterized as smaller balance, homogeneous loans and are collectively evaluated.

The accrual of income on loans, including impaired loans, is generally discontinued when a loan becomes more than ninety days delinquent as to principal or interest or when other circumstances indicate that collection is questionable, unless the loan is well secured and in the process of collection. Income on non-accrual loans, including impaired loans, is recognized only in the period in which it is collected, and only if management determines that the loan principal is fully collectible. Loans are returned to an accrual status when a loan is brought current as to principal and interest and reasons for doubtful collection no longer exist.

A loan is considered past due when a payment has not been received in accordance with the

contractual terms. Generally, commercial loans are placed on non-accrual status when they are ninety days past due unless they are well secured and in the process of collection or, regardless of the past due status of the loan, when management determines that the complete recovery of principal and interest is in doubt. Commercial loans are generally charged off after an analysis is completed which indicates that collectibility of the full principal balance is in doubt. Consumer loans are generally charged off after they become one hundred twenty days past due. Mortgage loans are not generally placed on a non-accrual status unless the value of the real estate has deteriorated to the point that a potential loss of principal or interest exists. Subsequent payments are credited to income only if collection of principal is not in doubt. If principal and interest payments are brought contractually current and future collectibility is reasonably assured, loans are returned to accrual status. Mortgage loans are generally charged off when the value of the underlying collateral does not cover the outstanding principal balance. Loan origination and commitment fees less certain costs are deferred and the net amount amortized as an adjustment to the related loan's yield. Loans held-for-sale are recorded at the lower of aggregate cost or market value.

The allowance for loan losses is based upon the Interagency Policy Statement on the Allowance for Loan and Lease Losses issued jointly by the federal banking agencies on December 13, 2006 (OCC Bulletin 2006-47) and management's evaluation of the adequacy of the allowance, including an assessment of: (a) known and inherent risks in the loan portfolio, (b) the size and composition of the loan portfolio, (c) actual loan loss experience, (d) the level of delinquencies, (e) the individual loans for which full collectibility may not be assured, (f) the existence and estimated net realizable value of any underlying collateral and guarantees securing the loans, and (g) the current economic and market conditions. Although management uses the best information available, the level of the allowance for loan losses remains an estimate that is subject to significant judgment and short-term change. Various regulatory agencies, as an integral part of their examination process, periodically review Central Jersey Bank, N.A.'s allowance for loan losses. Such agencies may require Central Jersey Bank, N.A. to make additional provisions for loan losses based upon information available to them at the time of their examination. Furthermore, the majority of Central Jersey Bank, N.A.'s loans are secured by real estate in the State of New Jersey. Accordingly, the collectibility of a substantial portion of the carrying value of Central Jersey Bank, N.A.'s loan portfolio is susceptible to changes in local market conditions and may be adversely affected should real estate values decline or the Central New Jersey area experience an adverse economic climate. Future adjustments to the allowance for loan losses may be necessary due to economic, operating, regulatory and other conditions beyond Central Jersey Bank, N.A.'s control. Management believes that the allowance for loan losses is adequate as of September 30, 2009.

Income taxes are accounted for under the asset and liability method. Current income taxes are provided for based upon amounts estimated to be currently payable, for both federal and state income taxes. Deferred federal and state tax assets and liabilities are recognized for the expected future tax consequences of existing differences between financial statement and tax basis of existing assets and liabilities. Deferred tax assets are recognized for future deductible temporary differences and tax loss carry forwards if their realization is "more-likely-than-not." The effect of a change in the tax rate on deferred taxes is recognized in the period of the enactment date. The determination of whether deferred tax assets will be realizable is predicted on estimates of future taxable income. Such estimates are subject to management's judgment. A valuation reserve is established when management is unable to conclude that it is more likely than not that it will realize deferred tax assets based on the nature and timing of these items.

Comprehensive income is segregated into net income and other comprehensive income. Other comprehensive income includes items previously recorded directly to equity, such as unrealized gains and losses on securities available-for-sale. Comprehensive income is presented in the Consolidated Statements of Changes in Shareholders' Equity.

Central Jersey Bank, N.A.'s operations are solely in the financial services industry and include traditional banking and other financial services. Central Jersey Bank, N.A. operates primarily in the geographical region of Central New Jersey. Management makes operating decisions and assesses performance based on an ongoing review of Central Jersey Bank, N.A.'s consolidated financial results. Therefore, Central Jersey Bancorp has a single operating segment for financial reporting purposes.

The Company originates SBA loans and, when favorable market conditions exist, sells up to 90% of the outstanding loan balance to investors, with servicing retained. Servicing rights fees, which are usually based on a percentage of the outstanding principal balance of the loan, are recorded for servicing functions. The Company accounts for its transfers and servicing of financial assets in accordance with FASB ASC Topic 860, "Transfers and Servicing." The Company records servicing rights based on the fair values at the date of sale.

Core deposit premiums represent the intangible value of depositor relationships assumed in purchase acquisitions and are amortized on an accelerated basis over a period of ten years. The amortization of the core deposit premiums is recorded in other operating expenses.

Long-lived assets including goodwill and certain identifiable intangibles are periodically evaluated for impairment in value. Long-lived assets and deferred costs are typically measured whenever events or circumstances indicate that the carrying amount may not be recoverable. Certain identifiable intangibles and goodwill are evaluated for impairment at least annually utilizing the "market approach" as prescribed by FASB ASC Topic 350. Asset impairment is recorded when required. Intangible assets consist of goodwill, core deposit premiums and servicing rights. Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets acquired through purchase acquisitions. In accordance with FASB ASC Topic 350, goodwill with an indefinite useful life is not amortized, but is evaluated for impairment on an annual basis and on an interim basis when indicators of impairment exist.

On January 7, 2008, Central Jersey Bancorp announced a common stock repurchase program. As authorized by Central Jersey Bancorp's Board of Directors, Central Jersey Bancorp could repurchase up to 5.7%, or 525,000 shares, of the 9,183,290 shares of its common stock outstanding at the time the repurchase program was announced. Repurchases could be made from time to time, in the open market, in unsolicited negotiated transactions or in such other manner deemed appropriate by management, at prices not exceeding prevailing market prices, subject to availability of the shares, over 24 months ending December 31, 2009, or such shorter or longer period of time as Central Jersey Bancorp determined. The acquired shares are held in treasury to be used for general corporate purposes. Central Jersey Bancorp's repurchase activities were transacted in accordance with SEC safe harbor rules and guidance for issuer repurchases. During the year ended December 31, 2008, Central Jersey Bancorp repurchased 246,448 shares of its common stock at an average price of $7.29 per share. Central Jersey Bank, N.A. declared and paid $2.045 million in cash dividends to Central Jersey Bancorp in order to effectuate the common stock repurchase program. Effective December 23, 2008, Central Jersey Bancorp suspended its stock repurchase program due to its participation in the U.S. Department

of the Treasury's Capital Purchase Program, as further described herein.

Overview

Central Jersey Bancorp, the parent company of Central Jersey Bank, N.A., reported net income and net income available to common shareholders of $920,000 and $734,000, respectively, for the three months ended September 30, 2009, as compared to $1.03 million for both for the same period in 2008. The net income available to common shareholders figure takes into account $186,000 in preferred stock dividends paid to the U.S. Department of the Treasury as part of the Capital Purchase Program during the three months ended September 30, 2009. Basic and diluted earnings per common share for the three months ended September 30, 2009 and 2008 were $0.08 and $0.11, respectively.

For the nine months ended September 30, 2009, Central Jersey Bancorp reported a net loss and a net loss available to common shareholders of $25.1 million and $25.6 million, respectively, as compared to $2.3 million for both for the same period in 2008. The net income available to common shareholders figure takes into account $557,000 in preferred stock dividends paid to the U.S. Department of the Treasury as part of the Capital Purchase Program during the nine months ended September 30, 2009. The decrease in net income is primarily attributable to $4.5 million in provision for loan losses recorded during the nine months ended September 30, 2009, resulting from credit deterioration due to general economic conditions. This charge was partly mitigated by $2.8 million in gains realized from the sale of investment securities during the period. Central Jersey Bancorp recognized a second quarter $27.0 million goodwill impairment charge, resulting in a net loss available to common shareholders of $25.6 million for the first nine months of 2009. Basic and diluted loss per common share for the nine months ended September 30, 2009 were ($2.82), as compared to basic and diluted earnings per common share of $0.25 and $0.24, respectively, for the same period in 2008. Per share earnings were adjusted in all periods to reflect the 5% stock dividend paid on July 1, 2008.

The $27.0 million in goodwill was recorded on January 1, 2005 in conjunction with Central Jersey Bancorp's combination with Allaire Community Bank. The goodwill impairment charge was a non-cash adjustment to Central Jersey Bancorp's financial statements which did not affect cash flows, liquidity, or tangible capital. As goodwill is excluded from regulatory capital, the impairment charge did not impact regulatory capital ratios of Central Jersey Bancorp or Central Jersey Bank, N.A., both of which remain "well-capitalized" under regulatory requirements. The goodwill impairment charge was recorded in accordance with FASB ASC Topic 350, which requires an interim goodwill impairment analysis under certain events including "a more-likely-than-not expectation that a reporting unit will be sold."

The respective shareholders of Central Jersey Bancorp and OceanFirst approved the merger of Central Jersey Bancorp with and into OceanFirst at special meetings of shareholders held by each company on October 1, 2009. OceanFirst and Central Jersey Bancorp expect to consummate the merger in the fourth quarter of 2009. Completion of the merger remains subject to regulatory approval and certain other conditions in accordance with the terms of the Merger Agreement. Upon closing, Central Jersey Bancorp shareholders will receive 0.50 share of OceanFirst common stock for each Central Jersey Bancorp share held.

Total assets of $577.7 million at September 30, 2009 were comprised primarily of $371.5 million in net loans, $114.2 million in investment securities and $71.0 million in cash and cash

equivalents, as compared to total assets of $599.4 million at December 31, 2008, which primarily consisted of $356.3 million in net loans, $185.4 million in investment securities, $9.8 million in cash and cash equivalents and $400,000 in residential loans held-for-sale. Total assets at September 30, 2009 were funded primarily through deposits totaling $459.8 million and other borrowings totaling $54.1 million, as compared to deposits totaling $418.8 million and other borrowings totaling $71.7 million at December 31, 2008.

Non-performing/impaired loans totaled $21.1 million at September 30, 2009, as compared to $2.7 million at December 31, 2008. Of that amount, non-accrual loans totaled $9.3 million at September 30, 2009, as compared to $2.5 million at December 31, 2008. The increase in non-performing/impaired loans was due primarily to 18 commercial loans which were placed on non-accrual status and/or deemed to be impaired during the nine months ended September 30, 2009. Specific allowance for loan loss required for impaired loans totaled $3.0 million at September 30, 2009, as compared to $474,000 at December 31, 2008. There were $2,000 and $717,000, respectively, in loan charge-offs during the three and nine months ended September 30, 2009, as compared to no loan charge-offs for the same periods in 2008. There were $17,000 and $138,000, respectively, in loan loss recoveries during the three and nine months ended September 30, 2009, as compared to $4,000 and $10,000, respectively, for the same periods in 2008.

Results of Operations

General

Central Jersey Bancorp's principal source of revenue is derived from its bank subsidiary's net interest income, which is the difference between interest income on earning assets and interest expense on deposits and borrowed funds. Interest-earning assets consist principally of loans, investment securities and federal funds sold, while the sources used to fund such assets consist primarily of deposits. Central Jersey Bancorp's net income is also affected by its bank subsidiary's provision for loan losses, other-than-temporary impairment of investment securities, other income and other expenses. Other income consists primarily of service charges and fees. Other expenses consist primarily of salaries and employee benefits, occupancy costs, data processing fees and other operating related expenses.

For the Three Months Ended September 30, 2009 and 2008

Net Interest Income

Net interest income was $4.7 million for the three months ended September 30, 2009, as compared to $5.0 million for the same period in 2008. Net interest income for the three months ended September 30, 2009 and 2008 was comprised primarily of $5.3 million and $5.4 million, respectively, in interest and fees on loans, $1.2 million and $2.0 million, respectively, in interest on investment securities and $61,000 and $60,000, respectively, in interest income on federal funds sold and due from banks, less interest expense on deposits of $1.7 million and $1.9 million, respectively, interest expense on borrowed funds of $236,000 and $429,000, respectively, and interest expense on subordinated debentures of $43,000 and $78,000, respectively. The net interest margin for the three months ended September 30, 2009 was 3.38%, as compared to 3.99% for the same period in 2008.

Interest income was $6.7 million for the three months ended September 30, 2009, as compared to

$7.4 million for the same period in 2008. This represents a decrease of $778,000, or 10.5%. The average yield on interest-earning assets decreased to 4.33% for the three months ended September 30, 2009, from 5.87% for the same period in 2008. The decrease in the average yield on interest-earning assets for the three months ended September 30, 2009 was primarily due to the significant reduction in the general level of short term interest rates, including the 500 basis point reduction in the Prime Rate of interest which occurred between September 2007 and December 2008 and the sale of higher yielding investment securities. Average interest-earning assets, which were 97.5% of average total assets, totaled $569.1 million for the three months ended September 30, 2009, and were comprised of $379.6 million in loans, $172.6 million in investment securities, $12.2 million in federal funds sold and $4.8 million in other interest bearing deposits.

Interest expense was $1.9 million for the three months ended September 30, 2009, as compared to $2.5 million for the same period in 2008. This represents a decrease of $534,000, or 21.6%. The decrease was due primarily to average cost of deposits and interest bearing liabilities which decreased to an average cost of 1.71% for the three months ended September 30, 2009 from an average cost of 2.66% for the same period in 2008. Average interest-bearing deposits totaled $368.0 million for the three months ended September 30, 2009, as compared to $319.7 million for the same period in 2008, an increase of $48.2 million, or 15.1%, and were comprised of $147.9 million in interest-bearing checking and money market deposits, $53.2 million in savings deposits and $166.8 million in time deposits. Interest expense associated with borrowings and subordinated debentures totaled $236,000 and $43,000, respectively, for the three months ended September 30, 2009, as compared to $429,000 and $78,000, respectively, for the same period in 2008. Borrowings for the three months ended September 30, 2009 averaged $71.0 million, as compared to $53.2 million for the same period in 2008. The increase was due to growth in the bank subsidiary's sweep account product for business customers and in FHLB advances. The FHLB advances were used to fund interest-earning assets during the period.

Provision for Loan Losses

For the three months ended September 30, 2009, the provision for loan losses was $1.1 million, as compared to $252,000 for the same period in 2008. The recorded provision for loan losses was mostly related to the risk rating downgrade of certain loans, a $1.4 million increase in the specific reserve of certain impaired loans and loan charge-offs totaling $2,000. The significant increase in the provision for loan losses is due to the credit deterioration of certain commercial loans as a result of general economic conditions. There were $2,000 in loan charge-offs during the three months ended September 30, 2009, as compared to no loan charge-offs for the same period in 2008. Loan loss recoveries totaled $17,000 during the three months ended September 30, 2009, as compared to $4,000 for the same period in 2008.

Non-Interest Income

Non-interest income, which consists of gains on the sale of investment securities available-for-sale, service charges on deposit accounts, gains on the sale of loans held-for-sale and income from bank owned life insurance was $1.5 million for the three months ended September 30, 2009, as compared to $844,000 for the same period in 2008. Gains on the sale of investment securities available-for-sale totaled $731,000 for the three months ended September 30, 2009, as compared to $340,000 for the same period in 2008. These gains were generated as a result of favorable market conditions due to the low interest rate environment. Gains on the sale of loans held-for-sale were $304,000 for the three months ended September 30, 2009, as compared to $81,000 for the three

months ended September 30, 2008. The increase in gains on the sale of loans held-for-sale was due to fees realized from the sale and servicing of SBA loans for the three months ended September 30, 2009. Servicing rights fees recorded in conjunction with SBA loans sold were $104,000 for the three months ended September 30, 2009, as compared to $28,000 for the same period in 2008.

Non-Interest Expense

Non-interest expense for the three months ended September 30, 2009 was $4.1 million, as compared to $4.0 million for the same period in 2008. Non-interest expense generally includes costs associated with employee salaries and benefits, occupancy expenses, data processing fees, core deposit intangible amortization, and other operating expenses.

The table below presents non-interest expense, by major category, for the three months ended September 30, 2009 and 2008 (in thousands):

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