OceanFirst Financial Q2 Earnings Call Highlights

Flushing Financial acquisition reshaped OceanFirst: The June 1 transaction added approximately $8.7 billion in assets, $5 billion in loans, $7.4 billion in deposits and 30 branches, bringing the combined company to roughly $23 billion in assets. Merger-related costs produced a GAAP loss of $0.04 per share, while core earnings were $0.43 per share.

Balance-sheet growth came with risk reduction: OceanFirst sold $1.3 billion of acquired multifamily loans, cutting its commercial real estate concentration by about 50 percentage points and reducing exposure to New York City rent-regulated properties. Underlying credit metrics remained relatively stable, with nonperforming loans at 0.33% excluding acquired credit-deteriorated loans.

Management expects improving profitability in the second half of 2026: The company projects modest 1%–2% loan and deposit growth, higher net interest margins, and declining expenses as integration savings emerge. Systems conversion and rebranding are expected by the end of the third quarter, with staffing-related savings benefiting results more fully in early 2027.

OceanFirst Financial NASDAQ: OCFC reported a second-quarter GAAP net loss of $0.04 per diluted share after recording $33.6 million of after-tax merger-related expenses tied to its acquisition of Flushing Financial Corporation. On a core basis, excluding non-recurring items, the company earned $0.43 per share, or $30.5 million, unchanged from the prior quarter and 39% above the prior-year period.

Management said the quarter reflected the June 1 closing of the Flushing acquisition, which added approximately $8.7 billion in assets, $5 billion in loans, $7.4 billion in deposits and 30 retail branches across New York City and Long Island. The combined company now has about $23 billion in assets. The transaction also included a $225 million strategic investment from Warburg Pincus, priced at $19.76 per share.

The company’s board approved a quarterly cash dividend of $0.20 per common share, its 118th consecutive quarterly cash dividend.

Acquisition drives income and balance-sheet changes OceanFirst said net interest income rose $24 million, or 25%, from the first quarter and $33 million, or 38%, from a year earlier. Chief Financial Officer Pat Barrett said Flushing contributed $19 million of net interest income, while the balance of the increase was largely attributable to earning-asset growth. Net interest margin expanded 12 basis points sequentially to 3.05%. Barrett said loan yields benefited from new originations and the acquired Flushing portfolio, while total deposit costs were 2.06% following the addition of Flushing’s deposits.

The company also sold $1.3 billion of multifamily loans acquired from Flushing. Management said the sale removed most of its exposure to New York City rent-regulated properties and reduced its commercial real estate concentration by about 50 percentage points to 381%. Proceeds were invested in highly liquid, investment-grade securities. During the question-and-answer session, management said it retained multifamily relationships where it held primary customer relationships and strong deposit balances. The remaining rent-regulated multifamily portfolio is expected to be in runoff over the next eight to 12 quarters. Management described the remaining assets as having low loan-to-value ratios and strong debt-service coverage, while noting the asset class carries public-policy risk.

Loan production, deposits and commercial banking President and COO Joseph Lebel said quarterly loan originations totaled $642 million, up 50% from the prior quarter. Excluding the Flushing acquisition and multifamily loan sale, underlying commercial organic loan growth was approximately $1...