OCFC - Earnings call transcript Q1 2022 | OceanFirst Financial Corp.

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Operator

Good morning, everyone, and welcome to the OceanFirst Financial Corp. Quarterly Earnings Conference Call. My name is Davy, and I'll be coordinating today's event. [Operator Instructions] I'll now hand over to your host, Jill Hewitt, Investor Relations Officer at OceanFirst to begin.

So Jill, please go ahead.

Jill Hewitt

Davy. you, Thank thank and for us. joining Good you morning, all President Relations Officer I'm Jill OceanFirst Investor Vice Senior Hewitt, at and Financial Corp.

this I that in remarks other public We disclosure. Refer to differ Thank based begin find Executive morning's including release where our that expectations. with will could Chairman and press forward-looking now, on to you Please you. results statements. current forward-looking will remember morning, factors the contain the to many today our materially filings, XX-K, our Officer, over of these our forward-looking actual from this statements call our turn And call cause statement risk factors Christopher host Maher. Chief and

Christopher Maher

able today. our conference Lebel; Thank Fitzpatrick. XXXX earnings morning, to This and quarter Mike you, our and have join Chief morning Jill, first President, call good joined to I'm by all Officer, Joe Financial been who

the refer investor call. Please for accompanied website. an earnings available discussion, that in we to presentation our After to with pleased appreciate quarter, are taking our and for your may company's and always, the morning, This provide and on you. our questions. that As to discuss release note by We our operating your we those slides is this was our will our performance color business. the interest during we outlook financial forward performance regarding cover look able operating some be to results

expenses closures credit non-core charges diluted Core per reflect strong merger growth, per to a items, In $X.XX decreased and expanding deposit equity January, terms for Earnings charges reflect and XX $X.XX. related and conditions. of share loan valuations. were quarter, benign financial branch including were first operating earnings in results earnings share the and GAAP margins,

per consecutive cash is Board common $X.XX declared dividend. company's dividend XXXst common share preferred share and common per share XX% the of quarterly of approximately the Regarding The share cash quarterly dividend earnings. $X.XX dividend depositary represents a $X.XX of management, capital stock. The core

for the deposits, both $X.XX rates related share level. Given modest maintain increased loans portfolio. strong Tangible elected to reflecting investment we our $XX.XX, dividend marks and AOCI to growth to common equity a per current

year, available-for-sale we equity instruments $XXX subordinated during X.X% stockholder's rate a portfolio, sheet margins adding at assets which quarter, For on bank time, interest an floating also interest interest first equity XX as X.X% the increase is million grew shares March the to assets rate in strategy. rate share been linked of The to have positions of for focusing the environment. quarter. activities carrying retired $XX balance company's The X.XX% investment past Tangible tangible the company continued but expansion preserved our year. for rising to debt, sacrificed during decreased by repurchase our The XXX,XXX this repurchased. commercial earning banking driven the by of with million being or on the

Bancorp repurchases shares appetite able acquisition. number approval of under the There rules program. was current remains strong, while the to Partners awaiting trading X.X share the available for the of the limit Our shares are million retire the repurchase company

first Turning $XXX to deliver loan million to in just over originations set another for record, growth quarterly $X operations. Loan billion, of the net helping quarter.

million for provide second driven As margin and of the in pickup the deployment remained by believe important improvement expansion points which deployment to the of margins cash than drove basis that net to will a XX two note in the was margin, rather the of interest We the million. It's interest March rate by cash XX, quarter. for The X.XX%. tailwind income movements. factors pipeline $XXX loan expanded quarter at another interest strong committed net in $X.X a

first the $X.X of portfolio higher than $X.X billion. average quarter loan end quarter the was million of First, billion $XXX

Second, experiencing $X pressure which April not perhaps margins pricing of The at company present. provide rates the deposit instruments to the strengthen for is floating year. and increase rate QX, on as the company in held will opportunity in the billion repricing remainder of

of of provision PCD later assets. was some a for The rating have mortgage Although, assets, growth. form of with on as to posting can $X very a points the economic loans would non-performing expenses our XX both loan requirements, liked. portfolio total million lengthening duration The Much driven the the year. and reserve loan we net rates by the measurable expect quarter net increased residential benign a linked can of pressure Under bit of in the especially services, the average volatile mortgage low we pressure reflect the may Credit quarter-to-quarter. potential basis remain excluding loan and when periods. in materially. compared professional factors delinquencies, quarter and with reserve qualitative in of expected that information just recoveries. very develop are from of another uncertainty the decreased impact company remains positive trends portfolio came we future by Loan life technology have Core quarter, a CECL, from for characteristics higher risk than of the risk which healthy be but operating in quarter trends are

million. discussion this in for quarter past be for an target quarter, should a regarding approximately our bank. at will this turn of of including to tax Joe range I'll steady over on point, call the $XX update the expansion effective the rate XX%. second the progress The Our remain expense At commercial

Joseph Lebel

growth at which originations a $XXX loan portfolio record. second by another The for originations commercial the million of residential, grew fueled driven $X.XX $XXX purchases. million $XXX and million $XXX billion, in pool Thanks, commercial by Chris. million set million of record in consecutive Loan $XXX quarter included

sentiment to C&I Nevertheless, company, largely uneven see We have experiences resulting conditions. customers with they expected pass estate pipeline economic Customer is been the the customers to us with activity instances in price chain. can including of environment lending. all have from to to some commercial segments, rate regions real continue all Commercial borrowers strong commercial on customers. in active effect bullish the along in increases supply and and their continue the most tell about uncertainty and be

experiencing most their delays shipping just constrained, especially delayed. rising are hand, while suppliers adequate inventory or containers indicate not materials raw on have is severely Some overseas costs, with overall availability so occasionally

on all strong limited amusement, summer inventory, are as shore-based operators real stellar Residential hospitality confident decrease spending recent highs keeping bookings are dramatically. consumers very I the demand in on slows time purchases residential expect another refinance to real we balance despite prices our market leisure excess utilized have high, any in the as overall Our the rate I with of rentals increases. residential seasonal sheet. don't and retail pool estate, with future expect that at remains the liquidity and bulk activities. yet volume estate now

for the purchases know, have diversity duration runoff some residential portfolio credit to counter rapid from that the our carries of in risk you refinance to used shorter we duration As like activity. offset pool residential and and commercial growth

For the speeds moment, prepay interest I increases. expect the we will rate with slow see dramatically

the points average and closures experience the year-end. in to two XX keep able coming cost XX growth deposits should and quarters. growth basis quarter XX of million So despite sale for the of even the may from fell January our December flat residential November. fund the quarterly of branches in $XXX helped and loan some portfolio to growth at branch be The the Deposit in team

sits core size branch expect The now at consolidations. is conversion optimization remain We in Notably, average we well now us. branch branch the stable foreseeable systems the network banking future, for the the to summer as distance million. at as as from behind locations XXXX XX the ourselves recent that $XXX

continue the returns branches and Our normalized remaining operations. net office promoter rebounded as their back scores have quickly retail and

in Xst, We center, text continue investments video Agency. chat, to acquisition experience. continuing closed of we Abstract majority Effective the share including the the efforts to on and make Trident April technology Title maximize customer our call

$X.X We quarter gaining loss a in QX. title a interchange it profit are I'll and providing that, in expect Chris. Durban back some impact of for modest to XXXX, million referrals to quickly attributed offset can beginning Trident revenue turn to the the of momentum With generate

Christopher Maher

Joe. you, Thank

spend questions, for OceanFirst. want Fitzpatrick the open line Mike to thanking minute we career at Before to here a his I just

you this our we for and quarter welcome, CFO Pat As will Mike many incoming Barrett, retiring know, call. will be the of next earnings

company and to perspective, the Mike and Just CFO not just as joined first of more our celebrated public things here, years than XXX but put financial statements. has ever, in XX quarters filings

to hours were creation time the has companies through connection host of at the first banks had not now further a banking many can in how than I the the company, IPOs that United is The CFO and some Foundation, around accurate million We that initial created the offering, first and importantly, was public don't our States just IPO. our Mike transitions, has that So helped that, copied of that our $XX more OceanFirst been foundation company record. bring made with charitable But create has dependable such long its and publicly OceanFirst but Foundation the in contributions approximately communities. in an And IPO. our the many company important traded format. completing know of after

offering traded for the to to many been those a their philanthropy mutual the our XX magnitude And public bank, now about of people publicly certainly say public along shareholders. sitting that we commercial as there's but publicly could industry Mike that, part way. years traded most able and is, market our to companies to I of are demands and about are So continue the the standalone as thing Mike big entities a the profitable here companies perhaps related has meet conversions exception that a and opportunity of important that's in on after talk the

Mike, the thank, to contributions years. his we So OceanFirst over for

what I'd line open So we like with for and have. see that, to questions the

Operator

ahead. from much, very is you is Our KBW. line Michael first Michael, Thank open. from question go your Perito Instructions] Please Chris. [Operator

Michael Perito

Thanks good Hey, morning. taking my for questions.

Christopher Maher

morning, Good Mike.

Michael Perito

pretty pipeline? really for stuff the it's move the economics is to [indiscernible] we and What model It just to getting some ACL. downside curious obviously start growth more I I'm potential start maybe CECL expected on of good. fair that the I it with there just mean, is out here. it particularly what a of quarters as to weightings flat higher to pretty, at just the growing is concerns side nature, credit and given And rate of But want that bigger here. on really in be? just feels kind and

Christopher Maher

is there ways Mike. think think about I few that, to

really this first provision a duration about loan The we portfolio biggest provision. that of standalone residential put The for quarter. of the our way single is want made was a provision and lengthening is, accounted in million factor context factor to $X.X the the our I expected in would've

There quarter. outcomes, and minuses pluses some actually before this driver and were number. a So other get the is that always was you obviously to there favorable final

in that to context I put want So driving into this the force quarter. was

forward the look things. we think about two year, I would As into

of for loan we terms be expect In loan to growth, provide need time. growth over to do able to

heavily good is in record kind allowance credit of over credit long-term, up. has an set dependent Our CECL upon the of your what and been very how, history you terms

point about So to loan think somewhere XX basis the would covering ballpark around that if down. up growth, were between or that could say, likely in range although change you or be XX

importantly, and of yesterday, models have need influences also Obviously dollars that credit really model, as GDP exact model the we're the we reserves I those uncertainty about, economy. well significant a to reserves is qualitative is while relate reserves that for as the kind GDP are qualitative how the driving and drives the many to scenario. the in a a saw think Ukraine, talk in in I our events unemployment. with GDP for the away it just But industry, the And of held couple think number, We extra number reserves. mentioning. And unemployment you're keeping we amount

be past. So GDP between quite we're as as the link it in and in not if tight cycle unemployment sure the has will this

into that So translates uncertainty.

not unemployment. of GDP as see of have on recession call And you a that have particularly the of a do two cycle. credit then you think result, impact tough a big have you negative could quarters where test academic a kind may I not a

see how put So got I of qualitative the kinds to things. those consider reserves all waiting to We've think develops. that aside we're

does. really about we what growth much thinking than know to give visibility economy future don't I if provisions and about So waiting other providing then see for – the can't

Michael Perito

that market market, side, was that you kind first Thanks. think then That I Okay. Or curious And growth pipeline kind Baltimore fared as pipeline a rundown, commentary are and I is something Chris. pipeline mean, team that about from to have And is the together of how. guys deal deal immediately already in in just how well. quarter, more the as helpful partners’ integration the of be and on guess, the Just standpoint somewhat you growth additive fully will incorporating then that how you and that think a and the of curious you guys the on basis? today? come that would any that about be great tracking into keeping

Christopher Maher

Sure.

to Let me markets, saying beginning, we additive should loan start growth customer so. and in the by think from to partners felt we that our those continue that be and

organic both a business in We're would $X York to well that and going as New we've to that entry had not on that a with work have regard combination point York of we Community acquisitions, great everything they in So approaching our in where I market as and really well had supplement with the has sense. way billion would to developed been combined our in acquisition side. the is the of strategy our acquisition same Bank. And organic and the where And an company. the make not New focus organic a

good So balance fair the opportunity logic the that. would us we about industrial partners of on a for continues cash good deploy which have a behind be that very feel help to sheet, to amount

all that's So solid. rock

have But have and can in nothing process regulatory everyone. for terms it the that to as we really respect there's as we're timing, I share update, about with as past. soon working we In of done And the the timing an have we'll through we it. share more process

Michael Perito

basis be you there just you growth that when that, then that I I there's that, guys might you like ago rate feels intact? the if you And but get should other it firmly Or put asset wondering with you sensitivity good. XXX guess about changings in I'm don't talked fine, we onsite nine Very with exit agree sooner. guys little make that ROA lastly, your you it's specifically, more and a plus environment comments Analyst if months achieving timeline on, to want were think from the at if would comment the point XXXX, to keep able that. Day,

Christopher Maher

just be had Uncomfortable, of rate we those increases to assumed for those, established performance, over we made back that there we might horizon pointing when those two targets the targets.

a environment in that. So clearly, from we're very different

going We outperform to both sensitivity sensitive, in are goes and on. asset think asset we're time margin we as

is outperform So at this that is targets. point, that cautionary area it kind would seem that watch funding, we have course we My material have to the opportunity note the those funding this of one over any probably don't closely. of to present, but just on cycle at that see we're only pressure

for and probably to we're sitting in where we with be that what environment, from sheet increases multiple that. appears we positioned of So front us today rate could this outperform think balance the we exact

Michael Perito

my taking in good Thanks. luck your retirement. And for Mike, you, guys, Thank questions. and Great. congrats

Michael Fitzpatrick

Michael. you, Thank

Operator

Thank you.

Please from David line ahead. your Our Hovde is David, is open. Group. go next from question Bishop

David Bishop

congratulations. at Donovan's, Yes. gentlemen, shore. Mike, beer and Buy I'm next Good up time at morning, a the

Michael Fitzpatrick

David. Thanks,

David Bishop

Hey, pipeline of Chris, loan is obviously, down normalized here, and terms investment been the securities. growth, more cash in run off. has Cash levels to coming flow funding

about forward. the and think moving funding funding we mix nature the As of

potentially I said sources. wholesale would think at the in you look past,

maybe securities deposit outlook funding terms balance think runoff? in loan seeing for you're what the the curious we or sheet growth? about borrowings funding vis-a-vis or Just of should of the How

Christopher Maher

different lot funding So we sources. have access certainly of to a

million $XX now. worth sheet FHLB balance the We in advances have of just right

growth about think over way mix quarters internal huge think going to an a we're next fund there. the is But got few to right shift. we've how I the capacity loan So

of So we that buckets can turn opportunity shift the that mix. have going a to to we provide substantial couple are to

they deploy $XXX a We cash, That X%. is to The very first is opportunity about liquid. but only yield all floating portfolio we those rate established that was CLO great and had a like million investments.

then that about have year-end. cash another to million elect be up There's So the $XXX the that, off portfolio, would the we with worth – should coming and the if to have not flows as were rotate the of end portfolio off combined And of would that sheet, off million now we we reinvest? to at. million of between and of residential strong $XXX cash in loans now shift of we CLOs remainder our first probably production million very year, the we into amortization flows balance to of coming worth $XXX sale that. in $XXX secondary market investment our the opportunity thing look And to still to is out so between for opposed

So direct but opportunities talking combined, sure the not could draw of say you're we about commercial $XXX exact how And would we we would go lending are of on even deposit I'm into mix back growth. did on that we worth million that, core And interest net portfolio, funded our those we improve if margins the a organization. first changes investment place and to to assets. and return try that's

a have ratio loan XX% now. to We deposit

by comfortable in that So portfolio with responsible range very could have draw year-end the you we so down say running see been XX% or manner. a modest us in the past to a and investment

next that's but the margin shift, story first. and that's mix would So think go couple earnings, I would be hopefully expansion the where quarters, improvement over we to

at Beyond be that, the of could generating sheet generated that, balance amount wouldn't growth that balance are we thing but and do. we'd sheet a substantial grow we would after internally first and we look capital the

David Bishop

Jersey. New And appreciate as I'd expenses, of been then there's to the consolidation it obviously that lot color. relates in question, follow-up Yes. up a

opportunity you're to $XX within at just here a given level. As hold at you million any talent – at consolidation line, add least some the market? the sounded this trying the That it lending said, look to expense like, holding levels,

Christopher Maher

Yes.

always will adding bankers. prioritize quality We commercial

don't but no we also number so people, approach limit have interesting here. on firm And to have we a an a put We of target that.

So commercial we quality find bankers. high

the getting people, generally right you're year. are within flow positive a If they about cash

really big on be a drag that wouldn't So earning.

individuals little would we're up we think would of that hopefully and time. and line we everybody. in teams, I all So through hesitate to we the to walk that just you wouldn't add kind a market if came and expense did sense the the that make bit, And

David Bishop

Appreciate the Great. color.

Christopher Maher

Thanks, Dave.

Operator

Raymond is from question [Operator Instructions] James. go your Please William Wallace Thank line open. next ahead. Our you. from is William,

William Wallace

and good morning. Thank you,

Christopher Maher

Hey, Wally.

William Wallace

– question first hi. My

the are it follow-up to your opportunistically so – sense. you questioning, would anticipate hold just year, you hire can the last around of line to there the half $XX on or Outside Just of given are other pressures number? your of makes is you totally able the where inflation that, million line do guy, in you get producers, that if it second think that

Christopher Maher

bit Wally, over lot from I at that went there really inflation of for we out point remove inflation. an Look, of said, been of right pressure Yes. little branch is a the the to to whole years unknown have few you're think last a all could us. that That network

next more rate. the at of quarter or so, the portion get it the pressure, pressure $XX particular good persists some So or acute If from later there's were for Maybe to run pretty in any but to it, least we we million that feel in inflation. come year. about don't expect material wage

William Wallace

I more. it record scenario It's missed loan Thank had maybe hard you growth there pipelines loan view could you in very they the have can current I could what there to was based growth, Is about where rise that quarter. see the we commentary, with On on happen quarter. so rates accelerate chance not with a what prepays prepays your much. Great. if that that see? – a you didn't envision Okay. another and slow even if during you aggressively even

Christopher Maher

some two is bit excess with there to a growth pool I chance, use quarters think that I would you the purchase tell of the supplemented cash. a little the and Wally, last resi we've of

bit. a So I you carved think little that out

the but got it in organic net prepays itself. of million fair, we've to think outperform. in I $XXX the loan to I opportunity range growth, think to Relative somewhere quarter there's be definitely the a

the the little already I in quarters that in forecasted reserve. pretty obviously going The us, think the But prepays a last by tend benign in to market. we're loss going resi, few virtue the see bit choppier slowing we've prepays to which the been beneficial. be they been on you'll of that just see Commercial in Bank, also has what's for and

William Wallace

in it have And while is two you, or I strength geographies are any all any you seeing across or regions? one

Christopher Maher

we really very regions the continue Baltimore, but seen some regions, across expectations Boston pipelines our New We've New and all QX, QX. York it's stellar do outperform business, are In It's had in activity to stellar Philadelphia funny. from Jersey, strong.

William Wallace

Chris, Okay. question. last Great. one

net help kind towards think to you're benefits do mind and you trust So help where of appreciate to the you using see interest Maybe if about for just assets is as NIM margin you earning curve, remix the commentary betas about net us own around just kind and if we'll that what continue loans. forward us the land forward modeling think to hikes of wouldn't assuming Fed to could the the correct? curve the your margin might what maybe

Christopher Maher

Yes.

with So QX. point the off let me stepping start just into

the that having that we being already changes. made average about know talked ending adjustments higher quarter for balance than the the its we the and Fed So loan from

looking into in points in expansion QX, we're certainly outperform the basis we an range five NIM. XX of So And to that. going at could

Then as move $X forward, we for potential adjustable mentioned QX. we floating a our instruments, that of are in floors. through and upside we and rate there's the on rate So billion

for each points that in X of be little So which the Fed, two less little the rather have we're the to opportunity by portfolios movement equating basis have on a than we have margins XX expand point you more, entire floor loans a depending could might quarter. floors, I the through basis the means, range the to that think somewhere

perform much we we But confident mark, positions It's And than can that be where that. liquidity the we continued will level. this that, And beta we How deposit in XX the forward, of the pretty that going pressure recapturing Now the XX% banks better safe. that given perform quarter, we about to right? that could that's We of the But last major possible stepping pressure? Fed that feel increases start cycle. to in the market. experience especially assumes at had question fairly points on see summarize, funding seems then there of each going X funding that outperform of doesn't to to accelerate. and kind into provided could the basis

William Wallace

Thank you, Chris. That's very helpful. I'll step back.

Operator

you. Thank

question line Our is Gunther go D.A. from next Russell Please open. is from Russell, Davidson. ahead. your

Russell Gunther

Hey. Good morning, guys.

Christopher Maher

Good morning, Russell.

Joseph Lebel

Good Russell. morning,

Russell Gunther

may have Joe, already, this in asking a growth different the you but answered question maybe way.

the concerns expectation any Is still in the potential that there million the some that or to back back talked you the growth about see you some quality the thought forward? half path of Given do clear discussion. potential in $XXX of concerns a year, dialing going to of asset for or that softness guys

Joseph Lebel

don't out couple results an their rate the XX% in wide this expected in is a couple in have of with and the We've I insight, our clients. Obviously long Their been think you for have about lumber of price swings to it give pipelines only of look where nothing short can talked they the of example, And the they've supply we've and space, to a done activity about stellar. rises, at years, the time economic see and are period our yet the known good lumber an first today disparity. the in quarter. go very XX% I you limited the have last chain. residential with I'll we for think I a probably job know conversations relative quarters. own can being Russell, a wholesaler time. we their up inventory market Listen, only corporate

that, So variety into with we pipeline, of drawdowns, construction demand. similar translates a to very conversations C&I that all clients, have

QX, we're April. pretty bullish. least So start We've look, had at in good a for

the right. I think probably QX but is same, more you're

to to increases determine. of always then your of grow management of there's a You is And your have of rate capital constraints. course, an within add Growth quarters conversation, couple ability capital right. the outcropping you

Russell Gunther

it, Mike, the you, questions guys. I rest appreciate But I asked Thank to my just extend my congratulations answered. Thank as and of Guys, Joe. you. been have well. wanted

Michael Fitzpatrick

Thanks Russell.

Operator

Thank you.

is Scott. from ahead. Christopher Montgomery Christopher, go line open. next Janney from your Our Please question Marinac is

Christopher Marinac

Thanks comments GDP Chris, the appreciate unemployment. influencing I very much. your about earlier

kind how in there'll reversing of cycles, happen I'm over feels just less than in be maybe It time? general, just So like natural course? trend sort charge-offs just the see but that what's curious, do past would you of

Christopher Maher

It's get and really right. hard wood to you predict always on of that knock feeling, kind Chris

you that anything, policy bit that that's credit careful things year-ago. at is tattooed. conservative appetite though the and If in time credit And will come we want credit credit than really and you exception to don't now go and risk we're talking a a appetite to LTVs way far years much out about looking too always game I that You provisions. little long the sure if say consistent. that a We've and has kind management more get very over fairly make and been the and on that. your try been like of in percentages just out, that's were

and of to place are your So a you serve history have lot policies, you faith going to that well. procedures

we've company, outperformed our always peer For our net in charge-offs. group

I think the worst basis the peak is XX back the had we've points. XXXX just That's the were about year our recession after XX. worst past case over charge-offs in

think we've disciplines. We're same I good the been at So using credit. pretty

going to very a not slow like they're event you're even have downgrades credit to going ratings. thing show tomorrow, are going other that to credit, point if that up gradually we were motion to around risk is issues portfolio. is out just I would our The They're those – see much to things kind of

to going You're in an increase delinquencies. see

charge-offs, to none for see quarters. of some experienced going essentially level You're five we've net

us. So none indicators of before are those

that's us two on because But number that to going to Joe the to seems Quarter is one data of data turn to that relatively gives we're point we're be watch is an And out. clear sailing. the watching we – the the point that So what indicates cycle. unemployment closely. right think be going have to

Christopher Marinac

that. related be then Great. or acquisitions, slower be up? And past the unamortized guess is discount to move moved interest I I rates that just up as the as recognized have from question appreciate would they

Christopher Maher

then Two look, able right. we’ve rate and more also, of also done of it we've most immediately at environment. or You're loans. Country on yet amortize And backwards the don't to manage rate. just River marks January banks have provisions because that into we pandemic to slowly very credit That's going general been We too bought on XXXX. looking pleased those And many now was and specific the in and acquisitions of went the we're

I proves asset our discipline kind around diligence think and out our So – due of quality.

Christopher Marinac

Great. maybe move me as to a here for rates competition? And that? one in kind rate there the to customers just the Is of last be next is portion quarters, on up of kind a there months way could that and hikes of interest handicap passed few is not

Christopher Maher

doubt have You sensitive balance sensitive folks there who is some always going competed may no of pressure. not the to in they the right? sheet, And asset everybody under be have balance and margin either way, same that, a you because liability worry may about that, sheet. a or will be especially Are

do that. always worry we So about

rate what inflation premature, that's if don't to it too other down. be. but control late. was the Fed After increases waited under time under going be up. till the thing we going of today know sound they all about about, at XX expect think think And to think I like rates rates today, sounds to the to get control, today, really point. and was time number because quarters ago, some going not will is, this get to you have may But The months you crazy about It

rate. You interest may moderation see a

certainly sensitivity learned we So asset a on try last we're that the toll going earnings little our bit. took in And moderate that to a and cycle.

XXXX. So the or rates where go we're maybe kind the back into we and cycle of as about thinking of end XXXX peak

Christopher Marinac

best to Great, Chris. for again Thanks Mike. and feedback all the wishes

Michael Fitzpatrick

next lose three. quarter, And eight, six, to next in Thanks, Chris. seven, first points it's basis accounting for that drops we purchase quarter, because steady And X XX but Chris on was the seven then pretty that it really seven, accretion, year. a the down – the so

in that. see not that less there's much past. as in in being left So not credit million volatile much we the it's It's about than but $XX volatility marks, been

Christopher Marinac

too. for Sounds that good. Thank you

Christopher Maher

right. All Thanks.

Operator

from Instructions] go Thank Scattergood. is Erik, line next is Please your question Our from & open. Erik Boenning you. Zwick [Operator ahead.

Erik Zwick

Good morning, everyone.

Christopher Maher

Good Erik. morning,

Erik Zwick

securities of that kind quarters? investment going little that forward, you coming and thinking the talk of going investment about a are pipeline of Or Just the with guess, pace next over okay to today. bit portfolio a loan the with you that I average assets keep expect the loan kind is growth little composition percentage securities at XX% kind earning growth? few of about the given portfolios about forward. the Would total strong down bit of

Christopher Maher

Yes.

operate investment I to the to core back I modest portfolio. deposits. really just think think it being And it, of with a ratio, more not can point deposit of our funding, the we deposit is loan which degree not a XX% sensitive composition at rate

us. So time well we down maybe to would for as that over see approach that XX% a limit start going could as

Erik Zwick

income then down and service non-interest Thanks, card for the lines looking Chris. and the at services the breakdown charges quarter, were bank quarter-over-quarter. And both fees

seasonality due pick was good expect or sort to and or those throughout that factor, of maybe as move kind if rates we then curious or some you the forward? going year would some up other of Just reversal

Christopher Maher

because think to is card, of quarter I busiest relative the season. fourth always holiday the bank the quarter

of that's a And Some out, subject lot we've thing. spending, on seasonal X. more that July natural [Durban] become a kind as of people do to pointed Joe so

you So per item that into quarter. headwind line about a million expect five can

kept there those have In is pandemic, I income and have acquisition long-term, the those people fees as The to Trident, of come fluctuate terms see down. do balances acquired the other related April higher X. upside In the deposit of to to non-interest we expect company softness really during swaps, lot in our on some a we fees, be title there.

that too. So a help should bit little

Erik Zwick

any are able to be what – Trident, XQ? on you quantify Right. in might impact that And then positive

Christopher Maher

basis, think a operate million right. range you in. an and that a if I between think it that on We you can is somewhere think $X annual year about $X.X the million

a terms majority but we we're of own XXX%. don't portion, owner, our So a in

range per somewhere year. So in we'd recognize that

cover certainly it doesn't some in So of it. completely the Durban, but offsets lost

Erik Zwick

That's the working Thanks. a to I great. all retirement. you. also That's been Mike, But pleasure It's with congratulations wanted had. throw on and

Michael Fitzpatrick

Erik. Thanks,

Operator

Thank you.

Matthew open. Our is line next Breese your from question ahead. is from Matthew, go Stephens. Please

Matthew Breese

morning. Good you. Thank

Christopher Maher

Good morning, Matt.

Matthew Breese

to hoping well. as to fee up back you Chris, had go second. was I income for just a swaps, was mentioned BOLI

run going Just sense forward? this rates whether we a wanted saw to what for a get decent quarter,

Christopher Maher

BOLI. Mike handle and maybe handle you can swaps Joe,

Joseph Lebel

I'm Matt, do. on swaps. I bullish pretty Yes,

rate in value much build, we earlier time trying on education. and discipline year, like last talking talked we around about our folks space, about to lot swaps commercial environment. spend rate focus continue floating the the of to rising clients assets a think, especially a to the our with in We I of

that's think off. really to I starting pay

that's I think going So to continue.

fair offset think And that of pretty run that's it. rate. the think we'll use some as Durban income of have to about I a some mentioned, happy I'm actually to Chris opportunity I loss. that

Michael Fitzpatrick

Yes.

that's debt the so $XXX,XXX On volatility. about the in [indiscernible] BOLI, benefit quarter,

Matthew Breese

Okay.

had, commercial estate higher regulated. question was you just And given Chris, think I it's XXX. we bring other up, I right I year-end wouldn't The this but And XXX, are growth. the this OCC around your real quarter, saw assume I really where concentration,

bit So reference it's flexibility maybe some the you that point take it… Can just to us and where just give a keep regulator. for higher? to about you concentration a for much like could cap, have this you there's if average talk you'd how And above

Christopher Maher

Sure.

year. We've about start in talked why talking okay environment. this bit a on recession economic next maybe And moving me in little commercial it's the we're spending hard course could just potential say. and a by about higher for year call over weakness the it be to Let estate that a bit little maybe minute this the into a real of acute, number the

track the cash from outperform It's that We a in credit our have composition to commercial a manage been real of to strongest can asset record continue think estate LTV and flow performance. category. through We we great perspective.

So we assets But love the flow of at like C&I, C&I we evaluations grew can C&I to somewhere around that. day, be XX% quarter. cash for and exposed end the things the

some C&I worse. and do those better of period will in inflationary Some assets

from sense Increasing this collateral point of at estate in we're real level, real the our a okay. always estate high we're that because cash commercial comfort in very a So gives cycle, lenders. flow concentration us and having

So things. we at both always look

terms regulatory CRE. the In their have out the out investor antenna regulators environment, of look, you're point right to around all

important higher our If the I think to may any or is been come recommendations risk or were traditionally the estate higher real you're Northeast. others with the concentration. with commercial regulator complying And an that managing concentrations thing their to you area country that’s in pick CRE investor are where enhanced increased the most that around of potentially

have you're So we sure our to We sure incremental lot this there's that the and that. process that risk National get people that with do with making XXXX, made regulator and down acquired road, management we things you make working complying this a when in Bank and around that and to Sun started investments to like in procedures right.

those What cap, of not you tell limit. enhanced there's there's I the that would there increase. is management a the So concentrations as expectation no regulators think risk is,

of on advice do everybody to similar we know a making investments look, how to that everybody our sure – situations been in right. we've we're and talk and and lot So they and provides peers, those make that's

Matthew Breese

it. Got

to Appreciate deposit on the beginning betas for flip it turning betas. Okay. And that. then funny, feels like It's to is back the script cycle.

management come don't were about year-ago, quite were if did cycle. they did I same in today. confidence you ask last get where a very think the confident betas, I below most they teams to that

this for the last this So and cycle what why I it some your characterize are time? betas the was might factors and hoping expectations for and versus you could industry the deposit bank of swing different be

Christopher Maher

and that can talk about But if sea couple positions shares. at portfolio. cash and last so cash significant cash Wells look talk and United have out our Citibank to let largest market be States, first, only you three you JPMorgan also different, much how things a a and changed BofA, in that's and of there. excess There their deposit at the the how positions very look could They me market of banks is it's and have the years. have think the they the take at I the I you in still

if pricing, to So see largest banks in going start about gorillas. scenario bid to I big country they're you And be don't the the deposits. where a the think right, deposit up

would that a positive, on less deposit maybe So and to speak that's pressure pricing.

maybe where growth. period maybe some, through we're for that hand, of other only margins the way the On compressed going enter to a out

before take a rate. to doesn't that market too it in the competitors So around start to market rate become many starts a throwing

at about or balance drive be some the the maybe it a That's going question FinTech. on Goldman the to really pays banks, FinTech, Look a peripheral smaller players combination, even going who's So or and big banks, bank to Is right? is, rate market? of markets, what regional right?

money under pressure. I be and like this, of I or think that play on is we're transaction rate What always do that can high the focused our back are rate-driven lowest to the think out. going to base markets, deposit about will have that the deposits, kinds CDs, most disciplines say things those we of all things. the accounts. Those we've have banks those concentration better, I'd to that see go

management deposits. commercial We have those cash That us around almost a group. in customers XX,XXX granularity our gives

So look mix outperformed think we the group. our mix our last as in we cycle. we in peer was models, cycle, the the at is the that And better than last

and you would be. So what tell we'll mix the be that our I them. can't in suggest will half betas our of But experience better

Michael Fitzpatrick

hike beta about measure cost deposit cycle. XXX we That the last XXXX, had in our was when basis is a Fed XXXX, of points. versus XX%. And XXXX the rate we XXXX,

our relatively than less well group that's a said, modest Chris and peer beta. As

So on than cycle and worse no we think hopefully that be it'll better. this

Matthew Breese

Great. Appreciate that.

Christopher Maher

have much turn it deposit The to how you loan tells rate to deposit have well focus pressure because increases. on ratio something you as is to to before you

So bank available to that's we widely at have us. virtually federal the loan dry powder

to So are be the going turn. deposit place we not first rates

Matthew Breese

Understood.

acquisition, Trident, I Okay. revenue the appreciate Title And the the there. company then guide

is and Just consider? curious, are that within we should not should that we're considering synergies acquisition be revenue else there that what that over we – there time

Christopher Maher

Yes.

real into transaction that estate synergies anyone plan. revenue and potential be transactions, estate commercial is who's There are that thought down, we're in going enemy the transaction. Matt. knows do you're not And a of your that consumers settlement But right, or friend we for lot there can a think entities. I for that both real your our had of baking title

So work title jurisdictions, is to think have a customer going we to workflow, prices are In going the many fixed. into our to opportunity provide our process. benefit They're smoother that clients. to

choose really our business is not title causes will So we with a the going although percentage for – Obviously, it market to of price. certainly think embedded is buying forward. we've get requirement. Trident kind offer Convenience a is as option, a the but whomever there's Trident, done can not transactions all And we estate what opportunity an larger the real from always they'd same a decision. like. of Customers

Matthew Breese

Got it. taking for all I Thanks had. it. I appreciate my That's questions.

Christopher Maher

Thanks, Matt.

Operator

we Thank you. the This today. have is all questions

remarks. hand So I'll Christopher for now closing back any to over

Christopher Maher

their this our I at And our look for you. Meeting Shareholder A.M. have July. to all We participation the on remind XX with I'd our thank call Thank out there, like we you, just that, right. With May forward results X:XX shareholders Annual All in quarter morning. for to everyone following second on you speaking

to our We to access shareholders. possible that will holding provide in virtual format, think a and be widest we that's going the

quarter. So to next look Shareholder up the at Thank you with you. Meeting or either forward catching

Operator

call. Thank you, everyone for joining today's

lines You lovely disconnect day. may have and a now your

OceanFirst Financial (OCFC) 29 Apr 222022 Q1 Earnings call transcript