Q1 2026 OceanFirst Financial Corp Earnings Call

April 24, 2026

Operator: Good morning. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the OceanFirst Financial Corp. Q1 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

Speaker #1: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during the Q&A session, simply press star, followed by the number one on your telephone keypad.

Operator: If you would like to ask a question during the Q&A session, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. I will now turn the call over to Alfred Goon. Please go ahead.

Speaker #1: And if you would like to withdraw your question, simply press star one again. I will now turn the call over to Alfred Goon. Please go ahead.

Speaker #2: Thanks, John. Good morning, and welcome to the OceanFirst First Quarter 2026 Earnings Call. I'm Alfred Goon, SEP of Corporate Development and Investor Relations. Before we kick off the call, we'd like to remind everyone that our quarterly earnings release and related earnings supplement can be found on the company website, oceanfirst.com.

Alfred Goon: Thanks, John. Good morning, and welcome to the OceanFirst Q1 2026 Earnings Call. I'm Alfred Goon, SVP of Corporate Development and Investor Relations. Before we kick off the call, we'd like to remind everyone that our quarterly earnings release and related earnings supplement can be found on the company website, oceanfirst.com. Our remarks today may contain forward-looking statements and may refer to non-GAAP financial measures. All participants should refer to our SEC filings for a complete discussion of forward-looking statements and associated risk factors. Thank you, and now I will turn the call over to Christopher Maher, Chairman and Chief Executive Officer.

Speaker #2: Our remarks today may contain forward-looking statements and may refer to non-GAAP financial measures. All participants should refer to our SEC filings for a complete discussion of forward-looking statements and associated risk factors.

Speaker #2: Thank you, and I will turn the call over to Christopher Maher, Chairman and Chief Executive Officer.

Speaker #3: Thank you, Alfred. Good morning, and thank you to all who have been able to join our first quarter 2026 earnings conference call. This morning, I'm joined by our President, Joe Webell, and our Chief Financial Officer, Pat Barrett.

Christopher Maher: Thank you, Alfred. Good morning, and thank you to all who have been able to join our Q1 2026 Earnings Conference Call. This morning, I'm joined by our President, Joe Labelle, and our Chief Financial Officer, Pat Barrett. We appreciate your interest in our performance and this opportunity to discuss our results with you. This morning, we will provide brief remarks about the financial and operating performance for the quarter and some color regarding the outlook for our business. We may refer to the slides filed in connection with the earnings release throughout the call. After our discussion, we look forward to taking your questions. We've reported solid Q1 results, which included earnings per share of $0.36 on a fully diluted GAAP basis and $0.43 on a core basis.

Speaker #3: We appreciate your interest in our performance and this opportunity to discuss our results with you. This morning, we will provide brief remarks about the financial and operating performance for the quarter, and some color regarding the outlook for our business.

Speaker #3: We may refer to the slides filed in connection with the earnings release throughout the call. After our discussion, we look forward to taking your questions.

Speaker #3: We've reported solid first quarter results, which included earnings per share of 36 cents on a fully diluted GAAP basis and 43 cents on a core basis.

Speaker #3: GAAP earnings per share increased a penny, and core earnings per share increased 8 cents, or 23%, as compared to the prior year's quarter. In terms of performance indicators, we delivered our fifth consecutive quarter of net interest income growth, which increased by $1 million, or 1%, as compared to the linked quarter, and was up $10 million, or 11%, as compared to the prior year's quarter.

Christopher Maher: GAAP earnings per share increased $0.01, and core earnings per share increased $0.08 or 23% as compared to the prior year's quarter. In terms of performance indicators, we delivered our fifth consecutive quarter of net interest income growth, which increased by $1 million or 1% as compared to the linked quarter and was up $10 million or 11% as compared to the prior year's quarter. This performance is driven by an increase in average net loans of $268 million and net interest margin expansion to 2.93%, supported by lower costs of funds and earning asset growth. Total loans for the quarter increased by $92 million, representing a 3% annualized growth rate, driven by $429 million in originations.

Speaker #3: This performance is driven by an increase in average net loans of $268 million and net interest margin expansion to 2.93%, supported by lower cost of funds and earning asset growth.

Speaker #3: Total loans for the quarter increased by $92 million, representing a 3% annualized growth rate. This was driven by $429 million in originations. Joe will have more to add regarding our growth strategy in a few minutes.

Christopher Maher: Joe will have more to add regarding our growth strategy in a few minutes, but we are encouraged by the continued organic growth momentum from H2 of last year. Asset quality remained exceptional as total loans classified as special mention and substandard were 1.5% of total loans, below our 10-year average of 1.8%, and within the top decile of our peer group. The quarterly provision was primarily driven by loan growth and an increase in criticized and classified loans, partly offset by lower unfunded commitments. GAAP operating expenses for the quarter were $73 million, which includes $4 million of merger-related expenses. On a core basis, operating expenses of $69 million declined by $2.1 million or 3% from the linked quarter, primarily driven by the impact of our strategic initiative to outsource the residential lending platform and disciplined expense management across the company.

Speaker #3: But we are encouraged by the continued organic growth momentum from the second half of last year. Asset quality remained exceptional, as total loans classified as special mention and substandard.

Speaker #3: We're 1.5% of total loans, below our 10-year average of 1.8%, and within the top decile of our peer group. The quarterly provision was primarily driven by loan growth and an increase in criticized and classified loans partly offset by lower unfunded commitments.

Speaker #3: GAAP operating expenses for the quarter were $73 million, which includes $4 million of merger-related expenses. On a core basis, operating expenses of $69 million declined by $2.1 million, or 3%, from the linked quarter.

Speaker #3: Primarily driven by the impact of our strategic initiative to outsource the residential lending platform, and disciplined expense management across the company. Looking forward, we've worked diligently to restructure our core IT infrastructure and position the bank to benefit from the deployment of artificial intelligence across all departments.

Christopher Maher: Looking forward, we worked diligently to restructure our core IT infrastructure and position the bank to benefit from the deployment of artificial intelligence across all departments. We've invested in AI through existing vendor relationships and have started to see the efficiency benefits in legacy bank processes while looking to further enhance our capabilities. We see significant opportunities to date, and these efforts will enable our ability to improve operating leverage, building further scalability as the bank grows. Pat will provide additional commentary on our financial outlook in a moment. Capital levels remain strong with an estimated common equity tier one capital ratio of 10.7%, and tangible book value per share increasing to $19.86. During the quarter, we also repurchased a modest number of shares solely related to the vesting of employee equity awards. We did not repurchase any shares under the board-approved authorization.

Speaker #3: We've invested in AI through existing vendor relationships and have started to see the efficiency benefits in legacy bank processes while looking to further enhance our capabilities.

Speaker #3: We see significant opportunities to date, and these efforts will enable our ability to improve operating leverage, building further scalability as the bank grows. Pat will provide additional commentary on our financial outlook in a moment.

Speaker #3: Capital levels remain strong with an estimated common equity tier one capital ratio of 10.7%, and tangible book value per share increasing to $19.86. During the quarter, we also repurchased a modest number of shares solely related to the vesting of employee equity awards.

Speaker #3: We did not repurchase any shares under the board-approved authorization. As previously announced, the quarterly cash dividend of $0.20 per common share was declared marking the company's 117th consecutive quarterly cash dividend.

Christopher Maher: As previously announced, a quarterly cash dividend of $0.20 per common share was declared, marking the company's 117th consecutive quarterly cash dividend. Finally, on 29 December 2025, we announced our merger agreement with Flushing Financial Corporation and an investment agreement with Warburg Pincus. To date, both companies have received shareholder approval. In addition, we have received regulatory approvals from the New York State Department of Financial Services and from the OCC. Approval from the Federal Reserve remains the final outstanding regulatory requirement to complete the merger. We continue to work towards an expected closing in Q2 of 2026, and a full systems integration and rebranding in Q3 of 2026. Importantly, we've made arrangements to accommodate branch transactions for all customers in all branches effective in our first day of operation.

Speaker #3: Finally, on December 29, 2025, we announced our merger agreement with Flushing Financial Corporation and an investment agreement with Warburg Pincus. To date, both companies have received shareholder approval.

Speaker #3: In addition, we've received regulatory approvals from the State of New York Department of Financial Services and from the OCC. Approval from the Federal Reserve remains the final outstanding regulatory requirement to complete the merger.

Speaker #3: We continue to work towards an expected closing in the second quarter of 2026 and a full systems integration and rebranding in the third quarter of 2026.

Speaker #3: Importantly, we have made arrangements to accommodate branch transactions for all customers in all branches effective on our first day of operation. We've undertaken that work as we believe that the additional Flushing branches will provide an immediate and meaningful competitive advantage.

Christopher Maher: We've undertaken that work as we believe that the additional Flushing branches will provide an immediate and meaningful competitive advantage. We plan to provide a detailed financial update on the Flushing merger in connection with our Q2 earnings, which will include a discussion on the pro forma balance sheet and other projections from our latest view of the merger model. In the meantime, we remain focused on executing our organic growth strategy, which is clearly reflected in our results of this quarter. At this point, I'll turn the call over to Joe for additional color on these businesses.

Speaker #3: We plan to provide a detailed financial update on the Flushing merger in connection with our second quarter earnings, which will include a discussion on the pro forma balance sheet and other projections from our latest view of the merger model.

Speaker #3: In the meantime, we remain focused on executing our organic growth strategy, which is clearly reflected in our results for this quarter. At this point, I'll turn the call over to Joe for additional color on these businesses.

Speaker #4: Thanks, Chris. I'll start with loan originations for the quarter, which totaled $429 million and resulted in quarterly loan growth of $92 million. This was in line with our expectations, given typical first quarter seasonality and a handful of customer-accelerated closings at the end of Q4.

Joseph J. Lebel III: Thanks, Chris. I'll start with loan originations for the quarter, which totaled $429 million and resulted in quarterly loan growth of $92 million, which was in line with our expectations given typical first quarter seasonality and a handful of customer-accelerated closings at the end of Q4. Our C&I business grew 19% on an annualized basis from the linked quarter, with closed loan volume in C&I and commercial real estate up 81% year over year, reflecting continued momentum from our recruitment of talent added in 2024 and 2025. We added another three C&I bankers in Q1 2026 with plans for more in the coming quarters. Total deposits grew by $192 million or 2% in the quarter. Excluding broker deposits increased $314 million, driven by broad-based organic growth across our core business lines and institutional deposits. The Premier Banking deposits grew $9 million or 3% from the linked quarter.

Speaker #4: Our CNI business grew 19% on an annualized basis from the linked quarter, with closed loan volume in CNI and commercial real estate up 81% year over year, reflecting continued momentum from our recruitment of talent added in 2024 and 2025.

Speaker #4: We added another three CNI bankers in Q1 2026, with plans for more in the coming quarters. Total deposits grew by $192 million, or 2%, in the quarter.

Speaker #4: Excluding broker deposits, deposits increased $314 million, driven by broad-based organic growth across our core business lines and institutional deposits. The Premier Bank deposits grew $9 million, or 3%, from the linked quarter.

Speaker #4: The team has brought in over 1,500 new accounts across 400 relationships since the May 2025 inception, with approximately 20% representing non-interest-bearing accounts. As an added benefit, the team has contributed $21 million in loan originations for the quarter, and the loan pipeline in Premier stands at $40 million.

Joseph J. Lebel III: The team has brought in over 1,500 new accounts across 400 relationships since the May 2025 inception, with approximately 20% representing non-interest-bearing accounts. As an added benefit, the teams contributed $21 million in loan originations for the quarter, and the loan pipeline in Premier stands at $40 million. Customer engagement and calling activity has been significant, and the addition of the Flushing branch footprint will provide a meaningful tailwind moving forward. We remain confident in our 2026 Premier deposit targets and have recently added two new Premier teams located in Manhattan and Long Island, with a few more on the horizon. Lastly, non-interest income decreased by $2.7 million during the quarter, primarily driven by a lower gain on sale of loans of $779,000 relating to the Q4 2025 outsourcing of our residential platform.

Speaker #4: Customer engagement and calling activity has been significant, and the addition of the Flushing branch footprint will provide a meaningful tailwind moving forward. We remain confident in our 2026 Premier deposit targets and have recently added two new Premier teams on the Island, with a few more on the horizon.

Speaker #4: Lastly, non-interest income decreased by 2.7 million to 7 million during the quarter. Primarily driven by a lower gain on sale of loans of $779,000 relating to the Q4 2025 outsourcing of our residential platform.

Speaker #4: Additionally, we saw some reductions in commercial loan swap income due to lower swap origination volume for the quarter. That should improve through the year as seasonal origination volumes increase.

Joseph J. Lebel III: Additionally, we saw some reductions in commercial loan swap income due to lower swap origination volume for the quarter. That should improve through the year as seasonal origination volumes increase. Overall, non-interest income levels were in line with our expectations and as guided in the previous quarter. With that, I'll turn the call over to Pat to review the remaining areas.

Speaker #4: Overall, non-interest income levels were in line with our expectations and as guided in the previous quarter. With that, I'll turn the call over to Pat to review the remaining areas.

Speaker #5: Thanks, Joe. As Chris noted, net interest income increased and margin expanded in line with our previous guidance. Compared to the previous year's quarter, net interest income grew $10 million, or 11%, attributed to the tremendous loan growth in the latter half of 2025.

Patrick S. Barrett: Thanks, Joe. As Chris noted, net interest income increased and margin expanded in line with our previous guidance. Compared to the previous year's quarter, net interest income grew $10 million or 11%, attributed to the tremendous loan growth in the latter half of 2025. Pre-tax, pre-provision core earnings grew 4% or $1.2 million from the prior quarter, driven by earning asset growth during the quarter and in the second half of 2025. Loan yields decreased modestly, reflecting both lower rates and a continued mix shift within the portfolio. Total deposit costs decreased 16 basis points, driven by disciplined pricing across our relationship base and reflecting the positive impact of the Fed's rate cuts in late 2025. Looking ahead, we expect positive expansions in net interest income in line with our loan growth and a stable to modest increase in margin over the next quarters.

Speaker #5: Pre-tax, pre-provision core earnings grew 4%, or $1.2 million, from the prior quarter, driven by earning asset growth during the quarter and in the second half of 2025.

Speaker #5: Loan yields decreased modestly, reflecting both lower rates and a continued mix shift within the portfolio. Total deposit costs decreased 16 basis points, driven by disciplined pricing across our relationship base and reflecting the positive impact of the Fed's rate cuts in late 2025.

Speaker #5: Looking ahead, we expect positive expansion in net interest income in line with our loan growth and a stable to modest increase in margin over the next quarters.

Speaker #5: As Chris mentioned, asset quality remained very strong, with non-performing loans to total loans and non-performing assets to total assets both at 0.31%. Criticized and classified loans increased during the quarter, driven by one large commercial relationship that remains current and well collateralized.

Patrick S. Barrett: As Chris mentioned, asset quality remained very strong with non-performing loans to total loans, and non-performing assets to total assets both at 0.31%. Criticized and classified loans increased during the quarter, driven by one large commercial relationship that remains current and well collateralized. Even including this increase, asset quality continues to remain at the low end of historical levels for criticized and classified loans. Lastly, net charge-offs were de minimis, representing only three basis points of average total loans on an annualized basis. Turning to expenses. Core non-interest expense decreased from $71 million to $69 million, driven by our initiative to outsource the residential business. Non-core items in Q1 were almost entirely Flushing merger-related costs. Looking ahead, we expect our Q2 core operating expense run rate to remain in the range of $70 to $71 million. Capital levels remain strong with our estimated CET1 ratio 10.7%.

Speaker #5: Even including this increase, asset quality continues to remain at the low end of historical levels for criticized and classified loans. And lastly, net charge-offs were de minimis, representing only three basis points of average total loans on an annualized basis.

Speaker #5: Turning to expenses, core non-interest expense decreased from $71 million to $69 million, driven by our initiative to outsource the residential business. Non-core items in the first quarter were almost entirely Flushing merger-related costs.

Speaker #5: Looking ahead, we expect our second quarter core operating expense run rate to remain in the range of $70 to $71 million. Capital levels remained strong with our estimated CET1 ratio at 10.7%.

Patrick S. Barrett: A word on taxes. We expect our effective tax rate, which was 24% in Q1, to remain in the 23% to 25% range absent any tax policy changes. This will change with the impact of the Flushing acquisition, and we'll update you accordingly once the transaction closes. There are no changes to our full year guidance as stated in the previous quarter, although we've removed the modest impact of further Fed rate cuts from our outlook. To recap, our guidance is for mid to high single-digit loan and deposit growth, NIM growing past 3% in H2, other income ranging from $7 to $9 million per quarter, and expenses stable at $70 to $71 million per quarter. Note that these are stand-alone expectations and do not reflect the impact of the Flushing acquisition. We've also added our Q2 outlook for your convenience.

Speaker #5: A word on taxes. We expect our effective tax rate, which was 24% in the first quarter, to remain in the 23% to 25% range absent any tax policy changes.

Speaker #5: This will change with the impact of the Flushing acquisition, and we'll update you accordingly once the transaction closes. There are no changes to our full-year guidance as stated in the previous quarter, although we've removed the modest impact of further Fed rate cuts from our outlook.

Speaker #5: To recap, our guidance is for mid- to high single-digit loan and deposit growth, NIM growing past 3% in the back half of the year, other income ranging from $7 million to $9 million per quarter, and expenses stable at $70 million to $71 million per quarter.

Speaker #5: Note that these are standalone expectations and do not reflect the impact of the Flushing acquisition. We've also added our second quarter outlook for your convenience.

Speaker #5: At this point, we'll begin the question-and-answer portion of the call.

Patrick S. Barrett: At this point, we'll begin the question and answer portion of the call.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the Q&A session. At this time, I would like to remind everyone that in order to ask a question, please press star followed by the number one on your telephone keypad.

Operator 2: Thank you. Ladies and gentlemen, we will now begin the Q&A session. At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking the question. Our first question comes from the line of Daniel Tamayo with Raymond James. Please go ahead.

Operator: Thank you. Ladies and gentlemen, we will now begin the Q&A session. At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking the question. Our first question comes from the line of Daniel Tamayo with Raymond James. Please go ahead.

Speaker #1: And if you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking the question.

Speaker #1: Our first question comes from the line of Danielle Tamayo with Raymond James. Please go ahead.

Speaker #3: Thank you. Good morning, guys.

Daniel Tamayo: Thank you. Good morning, guys.

Speaker #4: Good morning.

Joseph J. Lebel III: Good morning.

Patrick S. Barrett: Good morning.

Speaker #3: Maybe starting first on the deposit side, nice quarter of growth for you guys. Had some positive mix shift, sounds like the Premier folks are making an impact there.

Daniel Tamayo: Maybe starting first on the deposit side. Nice quarter of growth for you guys. Had some positive mix shift. Sounds like the Premier folks are making an impact there. Maybe just some detail on, you touched on in the prepared remarks a little bit. How sustainable you think this is, if there's any seasonality in the Q1 numbers, if you're able to maintain the mix shift that you've had. Any color on the deposit side would be great. Thanks.

Speaker #3: Maybe just some detail on—you touched on it in the prepared remarks a little bit—but how sustainable do you think this is, and if there's any seasonality in the first quarter numbers?

Speaker #3: If you're able to maintain the makeshift that you've had, any color on the deposit side would be great. Thanks.

Joseph J. Lebel III: Dan, I think you see some seasonality. It's not uncommon for us in our space to see some, given where our geography is. Quite frankly, I think the Premier guys' momentum, we're going to see more in Q2 and Q3. We're still pretty bullish there. It's a little bit slow start to the year for them, but it was more than made up for in other areas of the company. We're pretty happy with the trajectory. More work to do, but overall, I think we're generally optimistic.

Speaker #4: Danny, I think you see some seasonality. It's not uncommon for us in our space to see some given where our geography is. And quite frankly, I think the Premier guys' momentum—we're going to see more in Q2 and Q3.

Speaker #4: We're still pretty bullish there. It’s a little bit of a slow start to the year for them, but it was more than made up for in other areas of the company.

Speaker #4: So we're pretty happy with the trajectory. More work to do, but overall, I think we're generally optimistic.

Speaker #3: Okay. And the reiteration of the net interest income guide, despite pulling the cuts out, is that—and correct me if I'm wrong—but is the read there that competition is increasing and impacting loan spreads, or is it something else?

Daniel Tamayo: Okay. The reiteration of the net interest income guide despite pulling the cuts out. Correct me if I'm wrong, but is the read there that competition is increasing and impacting loan spreads or is it something else?

Speaker #4: Yeah, I would say yes. Competition is pretty intense. You see that in our loan yields—stable versus expanding—so any benefit from maturities and rollovers is being competed away for new originations and, of course, the yield curve.

Patrick S. Barrett: Yeah. I would say yes, competition is pretty intense. You see that in our loan yields stable versus expanding. Any benefit from maturities and rollovers is being competed away for new originations. Of course, the yield curve is playing a little bit of havoc with repricing. We've been positioned relatively neutral for several quarters on interest rates. The impact of the Fed cuts is less of a thing that rolls through our balance sheet than it is a reason that gives us the ability to cut or reduce deposit costs. It's about a quarter lag on seeing the benefit of that when we do it. We saw nice benefit from the Fed's rate cuts in September, November, December, rolling through this quarter. We had only modeled, I think, a September rate cut and a December rate cut previously.

Speaker #4: It's playing a little bit of havoc with repricing. But we've been positioned relatively neutral for several quarters on interest rates. And the impact of the Fed cuts is less of a thing that rolls through our balance sheet than it is a reason that gives us the ability to cut or reduce deposit costs.

Speaker #4: And it's about a quarter lag on seeing the benefit of that when we do it. So we saw nice benefit from the Fed's rate cuts in September, November, and December rolling through this quarter. We had only modeled, I think, a September rate cut and a December rate cut previously.

Speaker #4: So when we take that out, because we tend to track with consensus where the market views predict rates to be, it was less than half a million dollars of impact on the year.

Patrick S. Barrett: When we take that out, because we tend to track with consensus where the market views or predicts rates to be, it was less than a half a million dollars of impact on the year. It's a little bit more on an annualized basis for next year, but pretty much de minimis for this year.

Speaker #4: It's a little bit more on an annualized basis for next year, but pretty much de minimis for this year.

Speaker #3: Got it. Okay. Thanks for the color, Pat. And then maybe one for you, Chris, just on the portfolio sale for Flushing. Any update there on potential size or timing?

Daniel Tamayo: Got it. Okay. Thanks for the color, Pat. Maybe one for you, Chris, just on the portfolio sale for Flushing. Any update there on potential size, timing, anything you can give us in terms of where you stand with that now?

Speaker #3: Anything you can give us in terms of where you stand with that now?

Speaker #4: Yeah, so the only thing I can tell you is that when we kind of work through legal day one and have all those answers, we'll promptly share them out with folks.

Christopher Maher: Yeah. The only thing I can tell you is that when we kind of work through legal day one and have all those answers, we'll promptly share them out with folks. There's nothing that's changed our outlook since either the last time that we spoke. The merger model is holding up, so there's really no deviation in terms of marks, earnbacks, anything like that. I think we're pretty much on track to where we thought we would be, but I'd leave the details around the balance sheet restructure for legal day one, and we'll talk to you then. I would note that certainly there are some loan segments we're looking at, but it even goes deeper than that. We're looking at hedges, liability structures, and securities portfolios.

Speaker #4: There's nothing that's changed our outlook since either the last time that we spoke. The merger model is holding up, so there's really no deviation in terms of marks, earnbacks, anything like that.

Speaker #4: So, I think we're pretty much on track to where we thought we would be. But I'll leave the details around the balance sheet restructure for legal day one, and we'll talk to you then.

Speaker #4: And I would note that certainly there are some loan segments we're looking at, but it even goes deeper than that. We're looking at hedges and liability structures and securities portfolios.

Christopher Maher: It's kind of an all-encompassing review to make sure we have the right balance sheet coming together as a combined company. There's a lot of kind of different things we would tick and tie, but we will report them out to you guys promptly. Our views haven't changed, and the merger model's on track. No reason to have any concern about either marks or earn back periods at this point.

Speaker #4: So, it's kind of an all-encompassing review to make sure we have the right balance sheet coming together as a combined company. So, there are a lot of different things we would tick and tie.

Speaker #4: But we will report them out to you guys promptly. But our views haven't changed in the merger models. On track, no reason to have any concern about either marks or earnback periods at this point.

Speaker #3: All right. I appreciate it. Thanks, guys. I'll step back.

Daniel Tamayo: All right. I appreciate it. Thanks, guys. I'll step back.

Speaker #4: Thanks.

Christopher Maher: Thanks.

Speaker #1: Our next question comes from the line of Tim Switzer with KBW. Please go ahead.

Operator 2: Our next question comes from the line of Tim Switzer with KBW. Please go ahead.

Operator: Our next question comes from the line of Tim Switzer with KBW. Please go ahead.

Tim Switzer: Hey, good morning. Thanks for taking my questions.

Speaker #5: Hey, good morning. Thanks for taking my question.

Speaker #4: Good morning, Tim.

Christopher Maher: Morning, Tim.

Speaker #5: So you guys mentioned you've hired a few C&I bankers already, two other Premier Bank teams, and looking to maybe do a little bit more hiring.

Tim Switzer: You guys mentioned you've hired a few C&I bankers already, two other premier bank teams, and looking to maybe do a little bit more hiring. Any goals in terms of how many bankers you'd like to add, and how should we think about this impacting the expense outlook?

Speaker #5: Any goals in terms of how many bankers you'd like to add, and how should we think about this impacting the expense outlook?

Christopher Maher: Yeah, Tim, the way I think about it is we're really bullish on the opportunity to be building out our franchise in New York. We think there's so much opportunity there that the more qualified bankers we can bring on, the better. I think that as we see that opportunity, it's getting us interested in adding a few more bankers. Joe, you might talk a little bit about the work you're doing now, and this is kind of key hiring season. Why don't you take it from there?

Speaker #4: Yeah, Tim, the way I think about it is we're really bullish on the opportunity to be building out our franchise in New York. We think there's so much opportunity there that the more qualified bankers we can bring on, the better.

Speaker #4: So, I think that as we see that opportunity, it's getting us interested in adding a few more bankers. But, Joe, you might talk a little bit about the work you're doing now, and this is kind of key hiring season.

Speaker #4: So, why don’t you take it from there?

Joseph J. Lebel III: Yeah, Tim, there's a lot of irons in the fire. I'm a big believer that you hire talent when talent's available to you. We were fortunate to get a couple folks just ahead of the hiring season. We're in the thick of it today. I think you'll see more from us in the coming quarters, but we're pretty bullish. A lot of that talent's going to come in the C&I section of the bank, which I think is where you're going to see the vast majority of the loan growth as we diversify the mix over time. There's good talent to be held or had across the geographies that we're in.

Speaker #6: Yeah, Tim, there's a lot of irons in the fire. I'm a big believer that you hire talent when talent's available to you. So we were fortunate to get a couple of folks just ahead of the hiring season.

Speaker #6: We're in the thick of it today. I think you'll see more from us in the coming quarters, but we're pretty bullish. A lot of that talent's going to come in the CNI section of the bank, which I think is where you're going to see the vast majority of the loan growth as we diversify the mix.

Speaker #6: Over time. But there's good talent to be held or had across the geographies that we're in.

Speaker #5: I'd also note, and we mentioned this in the prepared remarks, that we've made a lot of progress on a few things that relate to the infrastructure costs around the company.

Christopher Maher: I'd also note, and we mentioned this in the prepared remarks, that we've made a lot of progress on a few things that relate to the infrastructure costs around the company. We did guide on standalone expenses, and those reflect us being able to add a significant amount of talent but not have expenses go up. We're seeing material decreases in some of the operations areas, which is helping us fund the new folks that we're bringing on board. I think we're going to have a brisk hiring season, and we're going to be able to comply with the expense guidance that we put out earlier. Don't look for expenses to move up if we are able to hire several more high-quality bankers. We've got room to do that.

Speaker #5: So, we did guide on standalone expenses, and those reflect us being able to add a significant amount of talent but not have expenses go up.

Speaker #5: So, we're seeing material decreases in some of the operations areas, which is helping us fund the new folks that we're bringing on board. So, I think we're going to have a brisk hiring season, and we're going to be able to comply with the expense guidance that we put out earlier.

Speaker #5: So don't look for expenses to move up if we are able to hire several more high-quality bankers. We've got room to do that.

Patrick S. Barrett: Don't be surprised if you see comp expenses go up and data processing expenses go down, and the net would be a push. Funding-

Speaker #4: But don't be surprised if you see comp expenses go up and data processing expenses go down. And the net would be a push. Funding right now.

Patrick S. Barrett: Don't be surprised if you see comp expenses go up and data processing expenses go down, and the net would be a push. Funding-

Tim Switzer: Got it. Okay. Yeah. It's good to hear. You touched on this in your comments earlier, but there was some slight credit migration across some of the more forward-looking metrics. Nothing crazy, and all from low levels, but just to check the box, is there anything systemic in there or concentrations in certain sectors?

Speaker #5: Got it. Okay. Yeah, it's good to hear. And you touched on this in your comments earlier, but there was some slight credit migration across some of the more forward-looking metrics.

Speaker #5: Nothing crazy at all from low levels. But just to check the box, is there anything systemic in there or concentrations in certain sectors?

Christopher Maher: No. It was a single customer who had a weak year last year, so you look at your risk ratings on that basis. At this point, looks like that they've got runway to recover and migrate back out of that over a foreseeable time period. We're watching closely, but it was only one credit, and it was not something that had a pattern or anything that we would be concerned about bleeding from there.

Speaker #4: Really, it was just a single customer who had a weak year last year, so you kind of look at your risk ratings on that basis.

Speaker #4: At this point, it looks like they've got runway to recover and migrate back out of that over the foreseeable time period. But we're watching closely.

Speaker #4: But it was only one credit, and it was not something that had a pattern or anything that we would be concerned about bleeding from there.

Speaker #5: Okay, great. And one last quick one for me. The timing of close for the merger—so would we be thinking end of Q2?

Tim Switzer: Okay, great. One last quick one for me. The timing of close for the merger, so we'd be thinking like end of Q2?

Speaker #4: So we're going to close pretty promptly after we receive the final regulatory approval. But we've got to kind of respect their process and understand where they are.

Christopher Maher: We're going to close up pretty promptly after we receive the final regulatory approval, but we've got to kind of respect their process and understand where they are. Typically, you're not really able to close for about 15 days after you receive the final Fed approval. We would be hopeful that we're doing it earlier in the quarter, but who knows? We've got to just kind of respect that process and let's see how things fall out.

Speaker #4: And there is a—typically, you're not really able to close for about 15 days after you receive the final Fed approval. So we would be hopeful that we're doing it earlier in the quarter.

Speaker #4: But who knows? And we've got to just kind of respect that process and let's see how things fall out.

Speaker #5: Yep. Okay. Totally understand. Thank you.

Tim Switzer: Yep. Okay. Totally understand. Thank you.

Speaker #1: Our next question comes from the line of David Bishop with the Hovde Group. Please go ahead.

Operator 2: Our next question comes from the line of David Bishop with Hovde Group. Please go ahead. Hey, good morning, gentlemen.

Operator: Our next question comes from the line of David Bishop with Hovde Group. Please go ahead. Hey, good morning, gentlemen.

Speaker #7: Hey, good morning, gentlemen.

Speaker #4: Good morning, David.

Christopher Maher: Morning, Dave.

David Bishop: Hey, Chris, Joe, I'm just curious, as you sort of get to know the legacy Flushing franchise and their customer and deposit base, any sort of update on your assumptions in terms of your ability to go in there and maybe reprice, resystemize, remap some of their deposit products, and realize some of the maybe deposit cost saves you guys may have contemplated on first pass?

Speaker #7: Hey, Chris, Joe, I'm just curious, as you sort of get to know the legacy Flushing franchise and their customer and deposit base. Any sort of update on your assumptions in terms of your ability to sort of go in there and maybe reprice and maybe resystemize, remap some of their deposit products and realize some of the, maybe, deposit cost saves you guys may have contemplated on first pass?

Speaker #4: Yeah, I think there's opportunity, David, in a lot of different ways. First, we've been very pleased as we've—you can do all your work in diligence, but as you start working kind of face-to-face with people in broad numbers and get to know them better, we've got hundreds of people with OceanFirst and Flushing working together and preparing for not just the closing, but the integration and how we're going to run the business together.

Christopher Maher: Yeah. I think there's opportunity, Dave, in a lot of different ways. First, we've been very pleased. You can do all your work and diligence, but as you start working kind of face-to-face with people in broad numbers and get to know them better, we've got hundreds of people with OceanFirst and Flushing working together and preparing for not just the closing, but the integration, and how we're going to run the business together. Really enjoy that opportunity. A lot of good talent there. Particular call-out, we think the branch folks are fantastic. We're working through a process of kind of integrating the commercial bankers as well. I think in terms of deposit pricing, I think that some of that will be a little bit market-driven. We've got to just understand where the market comes.

Speaker #4: And really, enjoy that opportunity—a lot of good talent there. Particular call out: we think the branch folks are fantastic. We're working through a process of kind of integrating the commercial bankers as well.

Speaker #4: I think in terms of deposit pricing, some of that will be a little bit market-driven. We've got to just understand where the market comes.

Speaker #4: The yield curve kind of bouncing around the last few weeks has at least raised a question in our mind about how much you could reprice.

Christopher Maher: The yield curve kind of bouncing around the last few weeks has at least raised a question in our mind about how much you could reprice. The model was not especially dependent upon that, so I think we have an opportunity. Look, we're looking at the whole balance sheet because if we have an opportunity to restructure the balance sheet, we may be able to be less dependent on certain sources of funding. That could give us some options as well. We still feel good about it. We're also watching the broader world, where short-term rates are, and what Fed policy becomes because that'll probably make a little bit of a difference over the next couple of quarters. As Pat pointed out, it's not going to make a big difference in our full-year earnings or the NIM, but around the margins, it could matter.

Speaker #4: But the model was not especially dependent upon that. So I think we have an opportunity. And look, we're looking at the whole balance sheet, because if we have an opportunity to restructure the balance sheet, we may be able to be less dependent on certain sources of funding.

Speaker #4: That could give us some options as well. So we still feel good about it. But we're also watching the broader world and where short-term rates are and what Fed policy becomes, because that'll probably make a little bit of a difference over the next couple of quarters.

Speaker #4: As Pat pointed out, it's not going to make a big difference in our full-year earnings or the NIM. But around the margins, it could matter.

David Bishop: Got it. Maybe one follow-up question. Obviously, the focus with the merger, obviously in the New York metro area, but a lot of disruption from integration from M&A down in the greater Baltimore, DC region. Still looking to potentially add talent down in this metro area as well as Boston? Thanks.

Speaker #7: Got it. And that may be one follow-up question. Obviously, the focus with the merger, obviously, in the New York metro area. But a lot of disruption.

Speaker #7: From integration, from M&A down in the greater Baltimore, DC region. Still looking to potentially add talent down in this metro area as well as Boston.

Speaker #7: Next.

Speaker #4: Absolutely. I was just staying with that team a couple of weeks ago, and we think there's a great opportunity there. But Joe, maybe you can walk through that a little more.

Christopher Maher: Absolutely. I was just down with that team a couple of weeks ago, and we think there's a great opportunity there. Joe, maybe you can walk through that a little more.

Joseph J. Lebel III: Yeah, Dave. We have almost a dozen folks down there now. We've continued to build that team out in the last 18 months and remain out there looking for more. I think we're still just scratching the surface of our opportunities down there.

Speaker #5: Yeah, David. We have almost a dozen folks down there now. We’ve continued to build that team out in the last 18 months and remain out there looking for more.

Speaker #5: I think we're still just scratching the surface of our opportunities down there.

Speaker #4: I think one of the things we're seeing, David, is kind of the advent of technology. There are a lot of smaller technology players that are working in the mission-critical government space.

Christopher Maher: I think one of the things we're seeing, Dave, is it's kind of the advent of technology. There are a lot of smaller technology players that are working in the mission-critical government space. Everything from defense to cybersecurity and all that. Because they're smaller companies, it really particularly suits our banking model where the relationship matters a great deal, where they're looking to align themselves with the bank over the long term. A bank that can grow with them because they may be small today but have aspirations to grow very quickly. Really enjoyed meeting and working with a lot of those clients, and we think we can grow that pretty nicely in the coming years.

Speaker #4: Everything from defense to cybersecurity and all that. And because they're smaller companies, they have really particularly suited our banking model, where the relationship matters a great deal, where they're looking to align themselves with the bank over the long term.

Speaker #4: And a bank that can grow with them, because they may be small today but have aspirations to grow very quickly. So, really enjoyed meeting and working with a lot of those clients.

Speaker #4: And we think we can grow that pretty nicely in the coming years.

David Bishop: Great. Appreciate the color.

Speaker #7: Great. Appreciate the color.

Speaker #5: All right. Thanks, David.

Christopher Maher: All right. Thanks, Dave.

Operator 2: Our next question comes from the line of Christopher Marinac with Janney Montgomery Scott. Please go ahead.

Operator: Our next question comes from the line of Christopher Marinac with Janney Montgomery Scott. Please go ahead.

Speaker #1: Our next question comes from the line of Christopher Marinek with Breen Capital Research. Please go ahead.

Christopher Marinac: Thanks. Good morning. Wanted to ask a little bit about the kind of non-New York geography, and sort of new C&I business that you're doing in Philadelphia, Boston, and the DC corridor, and kind of how those markets can complement what you're building now with Flushing and the combined OceanFirst footprint.

Speaker #8: Thanks. Good morning. I wanted to ask a little bit about the kind of non-New York geography and the sort of new C&I business that you're doing in Philadelphia and Boston and the DC corridor, and kind of how those markets can complement what you're building now with Flushing and the combined OceanFirst footprint.

Joseph J. Lebel III: Chris, I'll start with Boston, just to give you a little bit of flavor. The three C&I hires this year were in the Boston footprint. We're pretty happy with that addition. That team is now eight folks or so. I mentioned earlier, we're almost a dozen down in the DC-Baltimore metro. Philly's always been a constant performer. It's a book that's north of $2 billion today. We're really bullish on all three markets, continuing to add people in those segments. The C&I business is growing in all three segments. If you recall, initially, the CRE business was very strong in Philly and Boston. The focus for us has been to diversify the books, and I think we've done a really good job there. As I mentioned earlier, we're just touching the surface. I think there's a wealth of opportunity going forward.

Speaker #4: Chris, I'll start with Boston just to give you a little bit of flavor. The three CNI hires this year were in the Boston footprint—we're pretty happy.

Speaker #4: With that addition, that team is now eight folks or so. I mentioned earlier we're almost a dozen down in the DC-Baltimore metro. Philly has always been a constant performer.

Speaker #4: It's a book that's north of $2 billion today, so we're really bullish on all three. The markets are continuing to add people in those segments.

Speaker #4: The CNI business is growing in all three segments. If you recall, initially, the C&I business was very strong in Philly and Boston. But the focus for us has been to diversify the books.

Speaker #4: And I think we've done a really good job there. But as I mentioned earlier, we're just touching the surface. I think there's a wealth of opportunity going forward.

Christopher Marinac: Great, Joe. Thank you for that. Chris or Joe, if you go back to when Signature failed a couple of years ago, how much business is still out there to move if you had to ballpark it in terms of today, do you think?

Speaker #8: Great, Joe. Thank you for that. And Chris or Joe, if you go back to when Signature failed a couple of years ago, how much business is still out there to move, if you had to ballpark it in terms of today?

Speaker #8: Do you think?

Speaker #4: You know what? Look, there's always some opportunity there. But what we're really focused on is winning share across kind of a wider group of a lot of different competitors.

Christopher Maher: Look, there's always some opportunity there, but what we're really focused on is winning share across kind of a wider group of a lot of different competitors. In fact, the hires we made, including the number of the hires we made into the premier group this year, came from other banks and have other targets. I think what we tried to build when we brought our teams over was to build out the folks that had had a history of working in this model and hiring bankers from a variety of different institutions and kind of bringing them into the premier model and making it work. I think we're less dependent upon any particular competitor. There is still opportunity out there.

Speaker #4: And, in fact, the hires we made, including the number of the hires we made into the premier group this year, came from other banks.

Speaker #4: And have other targets. So I think what we tried to build when we brought our teams over was to build out the folks that had a history of working in this model and hiring bankers from a variety of different institutions.

Speaker #4: And kind of bringing them into the premier model and making it work. So I think we're less dependent upon any particular competitor, but there is still opportunity out there.

Christopher Marinac: If we go back pre-pandemic and the hires you were doing in those years, Chris, it's going to look more like that, a real diverse set of institutions that bring their customers over.

Speaker #8: So if we go back pre-pandemic and the hires you were doing in those years, Chris, it's going to look more like that—a real diverse set of institutions that bring their customers over.

Christopher Maher: That's exactly. Although, I will say that we continue to focus on the Premier group, although it's recruiting from a variety of sources, is still a deposit-heavy, deposit-centric hire. The bankers we're looking at there are bankers that can bring cash management portfolios with them, which is a slightly different focus. The C&I folks bring cash management with them as well. In fact, we're really happy. Our C&I bankers are funding almost 50% of their asset growth with their own deposits, which exceeds our expectations in that segment. In the Premier segment, we expect it to be more, they would contribute excess funding. It's a slightly different candidate, but would look very similar to what we've done over the years.

Speaker #4: Exactly. Although I will say that we continue to focus—the premier group, although it's recruiting from a variety of sources, is still a deposit-heavy, deposit-centric hire.

Speaker #4: So the bankers we're looking at there are bankers that can bring cash management portfolios with them, which is a slightly different focus. The CNI folks bring cash management with them as well.

Speaker #4: And in fact, we're really happy. Our CNI bankers are funding almost 50% of their asset growth with their own deposits, which exceeds our expectations in that segment.

Speaker #4: But in the premier segment, we expect it to be more—they would be funding, contribute excess funding. So it's a slightly different candidate, but would look very similar to what we've done over the years.

Speaker #8: Great. Thank you, Chris. I appreciate the background here.

Christopher Marinac: Great. Thank you, Chris. I appreciate the background here.

Christopher Maher: All right. Thanks, Chris.

Speaker #4: All right. Thanks, Chris.

Speaker #1: Thank you. And at this time, you have no further questions. I will now turn the call back over to Chris Maher for closing remarks.

Operator 2: Thank you. At this time, we have no further questions. I will now turn the call back over to Chris Maher for closing remarks.

Operator: Thank you. At this time, we have no further questions. I will now turn the call back over to Chris Maher for closing remarks.

Speaker #5: All right. Thank you. We appreciate your time today and your continued support of OceanFirst Financial Corp. We look forward to speaking with you in July at our second-quarter results and hope we'll have the opportunity to go a little deeper into the Flushing merger model at that time as well.

Christopher Maher: All right. Thank you. We appreciate your time today and your continued support of OceanFirst Financial Corp. We look forward to speaking with you in July about our Q2 results and hope we'll have the opportunity to go a little deeper in the Flushing merger model at that time as well. Thanks, everyone.

Speaker #5: So thanks, everyone.

Speaker #1: Ladies and gentlemen, this concludes today's conference call. You may now disconnect your lives at this time. Thank you for your participation and have a pleasant day.

Operator 2: Ladies and gentlemen, this concludes today's conference call. You may now disconnect your lines at this time. Thank you for your participation, and have a pleasant day.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect your lines at this time. Thank you for your participation, and have a pleasant day.

Q1 2026 OceanFirst Financial Corp Earnings Call

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