OceanFirst Financial (OCFC) 20 Jan 232022 Q4 Earnings call transcript

Company Profile

Participants

Jill Hewitt	SVP and Investor Relations
Christopher Maher	Chairman and Chief Executive Officer
Joe Lebel	President and Chief Operating Officer
Pat Barrett	Executive Vice President and Chief Financial Officer
Frank Schiraldi	Piper Sandler
Daniel Tamayo	Raymond James
Michael Perito	KBW
David Bishop	Hovde Group
Christopher Marinac	Janney Montgomery Scott
Manuel Navas	DA Davidson
Matthew Breese	Stephens Inc.

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello everyone, and welcome to the OceanFirst Financial Corp. Earnings Conference Call. My name is Daisy, and I will be coordinating your call today. [Operator Instructions]

I would now like to hand over to your host, Jill Hewitt, Investor Relations Officer to begin.

ahead. come please Joe So

Jill Hewitt

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

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

now, I this Officer, host Chief And our Executive turn will Christopher Maher. over to Chairman and call morning, the

Christopher Maher

able call. Thank XXXX Lebel; in fourth Pat you, and We Jill. morning, morning This and happy you. Officer, Barrett. Good our your results our been join appreciate earnings our to quarter and President, conference New with joined all I'm this discuss interest by our Financial opportunity Joe to performance Chief to our Year

will quarter provide the financial operating the and brief outlook about our remarks for we regarding business. some performance for color and morning, the This

a earnings last an on After questions. our release presentation forward taking to addition look night, to to available reminder, We your our is during issued also may Website. the call. in investor company's refer As slides the these discussion, we

of $X.XX. results fourth diluted Our per quarter the for share GAAP financial included earnings

and XX, the $XX.X related Partners. $X.XX investment mark-to-market benign items share expanding Capital gain noncore margins, million details conditions. and X-K in earnings reflect filed management a auxiliary were an The to investment our strong XXXX. November equity valuation related growth Our on were expense per to unrealized primarily shared position on credit record Auxiliary and loan Core earnings disciplined with reflect

Nonperforming loan was credit the levels. the more in total linked and of pristine our with of provision basis XX from the pleased While represent $X.X experience million just couldn't loans prior quarter, points We million portfolio. for loans increase $X.X at an quarter. be remain expense

a quarter represents general the potential asset in and our the risks ahead, portfolio's provision for quality increase With recession loss macroeconomic and to experience. external factors for the

Turning capital $XX.XX, quarterly of portfolio. per cash XX% and dividend reflecting This of and momentum is $X.XX XXXth share. common a marks approved company's our dividend Board quarterly the investment earnings management. share cash common per Tangible to related core to to increased The consecutive stable AOCI represents equity earnings.

per increased the Over The the in past equity eight any company shares common fourth tangible quarter. XX%. share has not repurchase quarters, did

the details turn to call progress to over some the I'll point, provide this more during Joe At quarter. regarding our

Joe Lebel

across also Loan year Thanks, with expect of capping additional quarter to originations the the growth the XXXX. of of commercial over primarily year footprint. million, by vertical, conservatively underwritten billion. construction for were record Originations totaled bolstered a Chris. growth drive off $X.X $XXX bank, loan Loan billion in were loan driven net growth by our bank's the which $X we growth for

of We credit disciplines. asset pricing on and remain quality, unwavering preservation standards the

credit recoveries, net excluding delinquencies, are among loans, portfolio the ever bank and At PCD assets improving level basis metrics, Regarding classified decreased has XX and with assets, credit ratings. the nonperforming lower ended we just risk points, sharply year lowest the criticized recorded. risk

we risk in to mid credit prepayments. expect funding soften short-term responsible continue provides as pipeline shift credit The managed to and needs Our focus continued on noise growth improvements. That in segments. the allow of ranges loan discipline with less the for single-digit in will certain said, from on relief margin growth we pressure

to deposits. Turning

basis have deposits year of of for XXbasis deposit costs. over deposit billion X% for points X%. to our the emphasize XX than from of The increased beta quarter a just continue loan-to-deposit less prior slightly Total past XX.X% million, the ended XX% We year. above up of year points to costs prior compared QX ratio effective and the management at target of deposit in decreased The just XXX.X%, to the as $XX.X $X.X XXX%.

deposit exercise deposit price will facilities. the modest in and coming approximate quarters, credit growth to growth but expect growth well-priced We we pace in the discipline

gathering be seasoned will competitively focused through consumer We methodically relationship treasury deposits. and on priced management deposit bankers, our teams

the margin review Pat With tax that, expectations. call to I will rate expenses and turn to expansion, over

Pat Barrett

Joe. Thanks,

our sheet interest improvement, which and another net margin. quarter drove $XXX of by historically of income in loan expanded XX balance to Net Turning growth points toX.XX%. million margin asset-sensitive basis

and X benefited X accretion points basis basis purchase activity. accelerated strengthening accounting of payoff Our points from loan of margin

deposit margin through costs, to funding outperform While expected, would proven expand remarks important highlight to reiterate higher we our betas was be our and to respect the believe that we have than have ultimately clearly it's this lower others impacted date rate and or will cycle. in Joe's by current

Two provide overall our modest for factors should further margin. tailwinds

portfolio nearly fourth was $XXX the billion loan million average. higher than of quarter First, the $XX end quarter

rate. earning quarter Second, nearly for a a assets likely margin our more floating rate, at further providing modest although are expansion, opportunity of

noninterest to neutral other and with and fourth decreases Also securities increases prior equal quarter of remained an our quarter part position. the respectively. flat is lock fourth professional asset processing more almost not the yields data quarter, expense longer-term as investment offsetting effort in relatively overall and material performance sensitivity expense, in the compared towards in to conjunction efforts, during a of the quarter's in Core fees purchases note, although move and to with resumed that we

level our we year-end that a continue our effective of outperformed announced XX.X%, around through the management. was highlight our us steady The that targets of professional to to year. first that also last for in XXXX. remain Overall, It's 'XX the by range to with XXXX this the fees Investor we of third noting already growth worth remain rate that the to and the through expect in disciplined we efficiency puts are quarter tax quarterly and elevated level continue and expected at quarter expense profitability rest 'XX. in should XXXX of and This, position we've combined both very Day half up

financial be with performance. pleased company's the more We couldn't

As a at and $X.XX to XX%. that ROA set reminder, to targets thinking per achieved a through be an time going earlier X.X% of than work that the Having share, core largely earn year efficiency were anticipated, around how continue performance target achieve meter ratio should about financial metrics we exceed we forward. originally XXXX

near second also of the expect may we benchmarks. reviewing to relative operating are topic only in framed our interest businesses environment, More productivity terms considering our this to and on but Not the all how term, rate of quarter, industry we're across compared rather more than come targets absolute to during and and efficiency performance be medium over processes that the economic external goals. our

this At Chris. I'll the back turn call point, to

Christopher Maher

Pat. Thanks,

we begin Now portion to the of will call. question-and-answer the

Operator

Piper go [Operator Schiraldi ahead. Frank, Instructions] Our please from first question from Sandler. Frank today comes

is line open. Your

Frank Schiraldi

morning. Good

Christopher Maher

Hi, Frank.

Frank Schiraldi

talk like growth to think, more -- from mentioned about it thinking you're modest wanted here. still, but And Just the deposit the I mid single-digit sounds pipeline, growth. you Joe, maybe loan talked about

sheet? to Just specific wondering if target where there's or funding over side the balance you And looking guys of you're moving the sort of any time? to drive note at ratio that niches see also, loan-to-deposit

Christopher Maher

it's Chris. Frank, that. I Sure, will take

XX%to we great In the the That's terms a XXX%. loan-to-deposit like being for range ratio, over love operating us. of strategy

strategy. deposits So last We'd just in had manage of were the the go going I year, a no to become to around couple issue or of a it we stay XXX a there's days that's was franchise a a try to really not going to but bank frankly, don't to of that's We little bit XXX, timing mean, to XXX, and like going think we valuable variations are that couple higher. highly XXX. thing.

to have loan we going based see early as growth expect, would think we deposits single-digit much can I year, for as we most that right, mid into with now, So in is the try and part. this as fund We the go year. match which on really we're want to

So year not deposits. the group to have to bit much where commercial goals deposits, those Obviously, going a as that. bankers focused on in this will have be and in of a get had focus terms luxury have objectives that last of couple heavily terrific of we're little their of years a we on to

team. We treasury have great a

there. have We product set very a mature

to able to be our probably bankers have doing commercial heaviest our deposit also and franchise team some But consumer see are lift. treasury in So to we our drive the consumer. you're the going growth opportunity in

price-sensitive some interest-bearing of So blend, accounts I be would of less some as think may be market-sensitive about deposit lot growth of it which and coming be but either rates. be a just will it noninterest-bearing, in a may

it's blend. I a think

the So opportunities on pipeline, when we loan we the that maintain I look margins. at and in think we can blend

then long top. out maybe for potentially increase additional As continue Pat said, the there's to and margin as as rates an increase after is improvement, opportunity flattening

Frank Schiraldi

could spread mentioned also maybe asset then, Okay, you the FHLB I about guessing just borrowings. of securities purchases. get if to also reducing sensitivities, great. you I'm And adds there. I you're with you the assume of fund kind talk you book. the additional shorter-term securities Pat, that as size Pat -- curious don't much

how about year. we move the kind just So progression through to of curious think about the as there

Pat Barrett

versus of $XXX of million those constructs. the and yields of later kind in on the trade agency future for towards of CMOs the the make it's bought Well, to paper future future Yes. Xs. mid quarter returns. asset-sensitivity you part kind roughly We low middle The log-in were

consider you if we funding we wholesale probably incrementally, X% it -- costs, on are are we net-net, increases. clear those So at about

sensitivity some like we neutral. And are we to of get we frankly, try downside our we the what position last are this kind that is move to had through efforts year. relatively other and combination we to where reduced from of year, ourselves hoping that at, Now to looking as

at hopefully a the saw a level So lock environment. zero certainly in that we interest we during rate what margin than can higher

Christopher Maher

the is going back us minimize underscore to to and begin opportunity that, change the This future in would of the compression, into to and rates XXXX. year I risk should Frank. half an try for margin

So that bank in positively affect our asset the period rates, year. interest in of seen pretty were We've we letting the last comfortable sensitive. the margin get zero

XXXX rates who you look and as to knows spreads. But go. get rates, we've see sure in terminal will might Now kind as about to 'XX. got reduce that This are on in want of very volatility we to we we -- closer that much make start is that how some where going to of terminal

Frank Schiraldi

Got you.

expected maybe there thinking -- from purchases, of is quarter? purposes, just not about? should in is for first maybe it the what think any Or ratio is much Just we did securities to sort assets, about change but you to modeling additional

Christopher Maher

going you're a material a is of see that approach. this to tailored think very change And don't kind I outlook. in

look a watch rate and at the watch what own in market, we averaging the to So into do, folks kind sensitivity positions, we stay also are want interest be, few evolves that we rates to to of that watch our are group in going sure peer be with. dollar of the and make we what band

to you're balance see just around think very don't the our a going I So different kind to sheet. of structure margins. It's

Frank Schiraldi

Thanks for all great. Okay, color. the

Christopher Maher

Thanks, Frank.

Operator

Thank you.

Raymond ahead. next Daniel Our Daniel, is from Tamayo go James. question please from

open. is line Your

Daniel Tamayo

Good morning, everyone. you. Thank

Christopher Maher

Good morning.

Daniel Tamayo

the [Indiscernible] expense starting on base.

Just thinking, then as increase we seemed a wanted how that remains line you quarter, if were what impacts assessments in place with to that off FDIC wondering line in what that guys good see quarter if just the were about the to And be see jumping in thinking to fourth that take the you item? point.

Pat Barrett

it's Right. Pat. Hey, Danny,

think off point. good jumping So, yes, quarter is fourth a I pretty

the comp always First towards that. have the costs and quarter staff costs of that end come will merits related tail impact of

be a more inflation. So insight it that And might in a will bit. this environment, permanent little

solid we of see most on line now. run So right the it items our just a up increases, little with merit but tick pretty rate might is bit

assume we of across kind working will of that revenue as sure you -- the optimizing that as That make take looking should a bit are base to businesses of for expense We productivity. we little do. well our all our time are

that year be will the us. So theme for a throughout

like the underpins that’s costs $X at professional FDIC tune everybody -- on will will assessment near-term. that else remain of the it and us, So professional elevated about -- for kind of scale. be the us the the to hit fees other will kind new least rate million some of for The

Daniel Tamayo

year? the For

Pat Barrett

Yes, for year, the sorry.

Daniel Tamayo

a that. side, for. Okay, Thanks, what income we're all impacted swap bit looking Pat. maybe fee certainly below terrific. And then the on The fees little

there fees then and the as on was And that? So bit maybe how if rates from you Or about thoughts swap are play well, the seasonality here little thinking there? into on how a below Trident the that forward? going some range, your

Christopher Maher

Look, in and I'd may thing. clients chime our both on things and a the a good just swaps Yes, say loan volume couple on and Trident. outlook That's of are then Joe there smart.

where be swaps they of market think So down couple are to rates years. the resistant that next a over going may they buying in

it's loan to well appetite want the aggregate as So the customers volume. in to a for as swaps of combination be our amount of

So volume has has pretty growth good, the quite while a come loan bit. been origination down

growth. So we're what's of affecting seeing kind and that's slower prepayments,

you vary to So not the looked with if at income your with your growth. originations, going new swap that's portfolio

any Joe, or … on or Trident So comments swaps

Joe Lebel

hit right to swaps, a have substantially in a market. that relative there's you residential head. to but up I'd quarter, fourth the Trident, always think I think Relative gone in on there's little the rates also seasonality the I mechanism that say

year a bit more next bit environment doing we into While little we're own in Trident, residential normalized, we and still until volatile of run we may little there that be doing the book less more that more are over expect a and muted penetration our the space. the of commercial get business rate rate

Daniel Tamayo

about you. Thank particular, Wall perfect. the just interest and renewals, then on industry -- on thinking what And there. I the potentially the Street about an growth, I that just cap curious, recently was demand just loan dynamic real curious environment? Okay, CRE the But how lastly, article in estate you're in that mean, guess, that impact current Journal there values in may of loan in

Christopher Maher

of credit always couple put We've I testing So just things a stress disciplined point about on. been would out. very we every

that affect loan. over looking borrower's kind the interest to roll are very how time we at of will rate So beginning, ability at changes that

the kind in referencing you're those exposure I you on vacancies, focused and roll We think the in have how that district and ability of office the business central cap for rates very segment. article that? low that could

than less business have we our central of assets, CRE. So X% district underwritten in office

beginning exposures feel well So going have the that a enough to seen rates if we've we to out be and got the stressed Most other where you've risk have exposure have at material, is tested we significant the segment you market don't been office of of outside we Any the don't strength. about rollover top least room that. now. at expects kind kind continuing Joe, of thoughts and think segments,

Joe Lebel

reported the look the are if mean metrics I the balance at Yes. and credit you very sheet we've strong. way

We any seeing any are noise not segment. one in

have in not the of one CRE only and things is, asset we think book I is the we within do well classes. especially diversified

of also retail, other We've region. diversified industrial, by multifamily and office So geographic and a bunch stuff.

we've last few years, the the in New which Boston, of old the are portfolio. advent years [indiscernible] our and with more offices, So diversified York Baltimore, now already X really recently,

Daniel Tamayo

color. guys. Thanks, appreciate Okay. all I the

Christopher Maher

Thank you.

Operator

Thank you.

Our next go Michael, ahead. Perito question KBW. is from please from Michael

open. Your is line

Michael Perito

Hey, for taking guys. Thanks questions. my

Christopher Maher

Mike. morning, Good

Michael Perito

of talk hit. one are morning. of balance of couple things technology one, opening -- Good the about the on Number here, I a want guys to the you kind you guys Two efficiencies slides investments and of making.

guys investment mean, schedule. ratio bare differently. room maybe I kind an a want it of maintain, still mean I But or targets Pat, in Or and little in the environment? range, still low of question XX% for efficiency this you you of thinking fair is that the to of minimum kind I about ahead some of year next of about give expense kind the pressures be take? efficiency kind mean do ways the we think hit leverage as there's the both level of to guys So asking you think

Pat Barrett

to guess that. I yes, and Yes

right think ballpark I bad So thing [indiscernible] a proxy to a as not is now. for

can And that business -- in preparing further we that across do for in over we do. we growth for in time. better think I can certainly, better we are lines think the do scale we what

years. investments a and over got disparate the of processes made We’ve still a we’ve lot lot technology So people. of

focused in the leverage in falling time achieved that to but we the so environment revenue as come to the over to environment, time. know environment, -- want And would of this we've that we in any environment this in be the operating on are or revenues and we protect rates that, even fall, particularly over try efficiency face down likely our

important us So again, year. to for on more come an this I But it's focus that. guess

Michael Perito

guys That's office. is clarified it forgot remind helpful. I little -- where Got about Chris, mentioned opportunities the it, for but was us more the what seeing? central you're as I I total business secondly, maybe that, of the Just what year mean, kind a Joe, follow-up just you just by activity of can Can to book? the think pipeline kind in then curious product give it. you and on And loan office -- recall and district next geographically, the could you how commercial how both just side, think color the growth -- kind maybe you are you And rebound of a faster? exposure bit -- as you

Christopher Maher

Sure.

to that in markets. figure is exposure the I So we was define would referring as office central urban

would us, that Philadelphia and for So New be Boston. York,

to but that? don't a -- I to add would get little you Joe, what know, broader, So

Joe Lebel

Yes.

as -- of mentioned you of the out, in sciences [indiscernible] Chris or So total million, $XX out tenants, it's office have mentioned, Chris about as portfolio. only to that's central billion credit which we business mentioned, CRE office the $XXX life the in Central earlier, $X.X in if if million strip district. loan business you I book. about X% book, down as X% strip And is

So there's not exposure there. much

we has We fairly much. served a played too We credit think haven't pretty which us have narrow well. really band, space look, ever in but I that

at forth -- book, is end back think day last and pipeline in and a growth pace. I'd we rotate fairly time In the rapid I terms mentioned things a quarter, and growth just period in CRE of of say I this,

a choppiness a bit it in growth. had We've we -- already mid looking and with back we saw bit little in forth. QX,we've think in our could yet are markets in little more comfortable people It QX out pullback of clients, some single-digit goes -- be opportunities. of pretty some could I already seen for be

So want that the for lot work. of put liquidity there's funds to fortunate and available people of bank out a there that in opportunities. money There's a we've the to money still years have the over market, investor bunch been

for still actually to you continue do grow there'll us opportunities responsibly rapidly So better I if be or said responsibly. think to

Christopher Maher

different in I the of period putting only but not and the complement that specialize in Joe kind group diversify assembled to commercial team, of portfolio, of to opportunity we’ve growth diversity. would one bankers geographic which just really his the gives lot a a us any on things, and the we're

types we bankers So seasoned And they is really to allows how be markets we opportunity opportunity come selective have the they're cold. the in the to choose go largest on. be our and hot advantage. and It some of and kind which proving us to about take of very in have markets risks an to grow we country and of

Michael Perito

And great business. me, Great. lastly the was to ROE it then for just see the of

You narrative about of XX% a on years. over level, you that being There's high-level but those peak at and schedule, earnings guys talked there's a all of like OpEx, handful pressures last banks the the things. lot kind ahead for the guys NIM, of inputs are

any able necessarily you you are, of that how of but comments aren't take? to fair expect maintain Just -- provide year, that internal you to ROE for sounds say to curious, expectations? give And willing it I guys it level the mean but compares be majority are I kind kind your know like or on next to guys is expecting? this of that guys of kind to level -- targets, you

Christopher Maher

business. say hard that have a humility a to kind start But the things It's coming. lot us, in confirmed panned year year. our what's and opinions of are few of that think, around a for some certainty have out any there have a with our it's I'd on just of last I cloud that

us base first So to to the around first, well. that's a going deposits Yes, we deposit serve solid, you are little competitive rock has of see in and half the our year. the deposit to continue be But beta. existing been more going

not we up while may for have are paying to portfolio. up pay the deposits, on So we

up of to on deposits loan fund paying amount to the are have we We of kind grow growth.

So I think great that's a opportunity.

rise. the pickup continue loan of terms yields, saw this rates the loan yield you pickup, quarter. as to continue yield investment That should In

the Pat have. So of mentioned level rate assets we floating

without want We may a expansion. I We so that clients trade to -- got day. some off. So margin growth, We you've business of every think in. run bring some new

everything sunny bring in they're You because clients days and good on in days and rainy clients. between

outlook margin. to think I our a don't at we're margin I continue while. So think should improve that generally peak is for

the back, can to overcome of job are efficiency, of good mentioned, That double kind we think like as pandemic, long-term absent that. I expenses, will And digits be We going in the done customer as a I $XX the price through be grow? at operating base. even crossed whole growing our like single and this giant I'd now billion, behind path In and the to feel credit the a time more down we including digits. about thinking Pat growing be the to cut, efficient kind to date. of terms we structural how work scale of to -- continue hard of things, are year. you closer that a kind are shock where which we've to know amendment us. and be realistically, we with discipline not changes just But our look things point happened to the But going to that's of system, is you variety we had

I So outlook a us. that for know but general if that's don't helps,

Michael Perito

I appreciate Great. the that No, for context, all Thanks Chris. question. taking guys no,

Christopher Maher

you. Thank Mike. Thanks,

Operator

Thank you.

Hovde ahead. Group. please from Our David next David, comes today from question Bishop go

open. line is Your

David Bishop

morning, Hey, good gentlemen.

Christopher Maher

Dave. morning, Good

David Bishop

break Slide the distribution loan Chris, you Joe, geographic region. X, by out or

so? think here next years? gets next the a see that to Boston look double maybe maybe digits X you curious the X potentially you and X years Do Baltimore, of in markets, to As the as growing newer where terms out you just over of pie the or that percent in the

Joe Lebel

as we done I where with Chris happy because of the game referred end cloudiness the don't pretty at least for far. But know it, are so to 'XX. is what they've

has little tend do, outlooking group to to Boston the are a do start. we And little bit a whereas is Baltimore CRE. will the largely been C&I team of bit I continue Boston got seasoned think focused larger successful of as They a that. we has a focused largely for always head space, have on in bankers

So it's do to have of not if you them. grow look easy those Philadelphia compare did we the in to we meaningfully trajectory what at the opportunity But I road. and New think down York, an

that will Some upon incumbent appropriately to in to this continue of us be fund them environment.

see it in New it blue be York if don't really environment. skies as rapid we've the I infilling But a ahead, David. So in really, growth know as I good do enjoyed they will call

David Bishop

growth Joe, Got opportunities? on it. seeing during to that where some some dive particular [indiscernible] you're the think And then segment. into you maybe, Maybe I opportunities mentioned the construction just

Joe Lebel

ago years, bit. are are did in We you XXXX. volume in lot the started We guys Well, built construction has that we recall in of may talented space been a did is with as few a out. that that XX significant actually because that banker years triple of projects out for XXXX. the saw would these you about some vertical team really and Sure. A we being acquisition a undrawn a just the built that, very expect, we activity

that that going the uncertainty, some were activity us to segment are of if because we space support these we to do growth fund see slow projects loan so And and in regardless. that even in help

we So are we reinvesting there. there. pretty are bullish And

pretty New example. you It's It approved, know, again, are an markets We the are very that things we filled. thoughtful, to serve as When will XX as projects especially, months use they approved. difficult get things approved. very get built get to And we get we and all get XX we they but well. to Jersey know takes

pretty So we are bullish.

Christopher Maher

kind Also talk bit little of characteristics the about risk that. of a

non-speculative, approximating book, another it, XX% you significant of spec that our XX% about chunk If think is is of a construction apartment-based.

So very rental to underwritten expectations. are --and those a modest

Joe tend those and have home. there we only and inventory of as to an And prices. mature to Northeast, So kind as be really relate stable shouldn't would level issue it XX% in the more a of single-family much a of noted,

prices the In be fact, all slowdown to unit or home year-over-year. despite Jersey up about in in continue the New X% sales

good very So that conservative it's underwritten, very feel a about. thoughtful very portfolio very prudently we

David Bishop

the it. then loan the great noticed pretty drove in That's improvement color. commentary deck, bucket. slide that substandard just substantial I Got And decline? Maybe some in what

Christopher Maher

base think the paying, a we the do We've for majority was period, were had it at to because those factors, COVID or prudent company. were of into but quick to improving criticized typically downgrade of as classified made concerns, the for in folks credit combination that conservative we had be vast sense us to were, what we very was post-COVID. affected looking I conditions And it's tend we David. economic that adversely client by during

allowed had those. they've anticipated would. upgrade it's we from well and As that some some to we've rebounded that post-COVID, which recoveries, payoffs as we And bucket us

way not will And to just when need it's a we certainty, uncertainty, see have more think we I when to. some we afraid are things the So we of foundational when downgrade we aspect we upgrade. approach

Christopher Maher

COVID, may not We which two super time. decisions the important have made been popular during at

first The thought a the having would stuff was XXXX, post-COVID in off. that likelihood of portfolio the of out higher a the we third and issue have quarter pushing sold by derisked we

did we deferrals no in our Act that base. we did Cares thing second not commercial long-term The care is

periods facilities, our sure restructure kind that the worked IO we would enter or short-term these weakness to a them lot deferrals, did of that borrowers, a but took of longer-term we and position made really allowed continue. So that into got we of not kind through we gave with payment a have plans time, difficult

a a So move in think our about on recoveries through When X having we X balance think, effectively. were sheet you pretty able last row, years I that, quarters, size. to net

I kind the our held was proves of which popular, out think in 'XX, very think, that not thesis I true. of back third quarter

David Bishop

color, Appreciate the guys. it. Got

Christopher Maher

David. Thanks,

Operator

Thank you.

today from comes Marinac from Scott. ahead. Christopher, Our Montgomery go next Janney question Christopher please

open. is line Your

Christopher Marinac

you’ve team, and of managing your mentioned all now. Chris morning, Good as process the thought bank thanks. for Hey, part XXXX

know have there last different As now? when the tactics peaked of floors a era learned portfolio from think then, way structure the lessons the through there's the can can from Fed past? and we particular if rate you that kind is of the loan or with implement I are the time just a you lot curious any But XXXX different. any kind if possibly work rates other

Christopher Maher

we I we're learn That's point. experience to exactly what it's particular. do to think went the excellent from an through trying in XXXX, in

of cycle, what the that had through into this fourth the strongly down time. began margins the doing, resulted can, continue that we've been will neutral you edges, doing over what coming we -- in position but the you position. quarters make next asset-sensitive can XXXs we That only quarter COVID a interest rate our and going we in sure the and to around of risk can couple kind doing So do and more much decreasing what so have at is a

make trying we is not another. What we kind the So relative to or to degree we’re and around environment, ensure to way to can one game are of margin. do trying money the stability

walked the interest that to some longer today income willing give purchases. through term. protect to Pat are you margin the we net our securities And So for of up

we again, point. to at against decreases a began have additional that could protect quarter increases. Fed what fourth not position hedge be very And against protect well. the It's some actually We modest in Fed to as it's

idea show no they may when have We on.

Christopher Marinac

And what's portfolio helpful. going Pat, things, far you remind two are flow the off out on each that hedge how the position? can securities quarter? you comes the then us And amount cash of That's Great.

Pat Barrett

X, the It's about X-year just guess range durations putting Chris are We I one. purchases in balance only X have position, hedge year effective the the sheet the probably for that swap. are cash on we SOFR. So a talked

So flavor things than that our the in exposure So kind dramatically that's sort that have to And dated of short going improvement -- Ks, change securities book general Qs is. other the of pretty as rate interest a risk you'll right? see downside marginal and of around is our that.

aggregate. X.X think years I So in

around it's off flows cash come month. $XX that So little With book, for every helps a bit million to stretching respect out. that the the

Christopher Marinac

million Okay, month. Great. $XX a

all. Okay. morning. That’s the this very time helpful. Perfect. I Thank appreciate you

Christopher Maher

Thanks, Chris.

Operator

you. Thank

ahead. from Our please D.A. is Navas Manuel next Davidson. Manuel, question from go

line Your open. is

Manuel Navas

Hey, good morning.

Christopher Maher

morning. Good

Christopher Maher

A and in the that not line my that, growth with -- pipeline up that right this Is think the construction? to about going lower that construction it bit pipeline? But answered. been lot questions the Is come show in that little a might the way have in being help of does on with forward.

Christopher Maher

These then like and they're building down that as drawing of are life convert X-year kind and that. undrawn after a facilities kind of have

like, first the be be difficulty] can So the the of half commitments. year And as kind have coming similar, in the X.X% would The that that lines a of expected we not natural. would is pipeline they I draws nice of project some are What kind construction be loan And in has higher in coming loan there'll in yields. some really roughly? that like well? [technical think, they yield

Joe Lebel

prime. I Well, think average anywhere and X half over construction between the higher are transactions

you take they you're it the as but I'm at risk disintermediation get have look rise, from to long-term. And sure would little are want to paid continued expect. the that in. our the of in environment for the disappointed it's You rates some a borrowers that you

If prime you at over treasury, cost you up it, and XXX to at multifamily loan get project may you X today fill is stabilize X.X a to a it you the build plus XX still, it today. which an end end, can or when build year it one and

to the as flows. you're look much It's of get risk end do. get for at the And a they pay then to better So that you construction. the going stabilize and cash we game, it to window when

Manuel Navas

have balancing purposely versus being more you loan are Or you're you price helpful. slower seeing kind slowdown. you today that of did more suggest as conscious. you're economy, you were on ago? is maybe activity. positive there's But a probability you growth Are of much the of loan probably -- it selective, some view you're if year How better kind That’s the yields, growth? of your includes could that How on a

Christopher Maher

warehouses. in with people the as I few been some fewer As market can kind few think out giant There I'll that new of see take are to has you're that very you have those things going an of opportunities, build growing quickly going example, right? the start years, last to the net right? warehouse in

a are for as to over that discriminating And little see take activity, on. so want all go bit up, you which us. down So then of rates borrowers they the a less economic does opportunity pull little projects

going they're handle, if an So prime, you you're to pay paying eight over and if could paying with be right? something

work into make lightly. you're about be it going So not capital using entering you're you, but for that judicious you that when can to

there's I little demand. a lower So think

having of -- of to And great markets in participating my York kind back We or side kind filters for traditional New kind of hot the a I out the and of about you if Jersey's think and market look there's places our bankers. need comments lot go in New the or them. of need multiple trade side what's group anyway. you discipline Boston can deals Philly side of off a

the but slower. overall -- tone is So

recession point understand coming your recession, is To whether about severe. to the a hard how very or

greatly I The recession. that's of geographic impact a other the is thing think overlooked

have to historically, Northeast things So by impacted the cycle bust business differently cycles. and has of around boom risk I no less been reason kind believe and

even to our on a in be market. seems mild goes fair recessions, Northeast. That's in that there the So amount

on. we've or is have some we eye not observed central office our in or kind vacancy over certainly So district with markets, area an the rates like capacity submarkets we of selective significant got an the overbuild that don't business

Manuel Navas

loan marks. the about recession If you about basis loss really you have reserve do points a where know I helpful. XX the heads That's think probability now grows, of to? with XX it's

the you push scenario, adverse like to have -- would that where to head are that -- severely up kind more of if to? We

Christopher Maher

we've everyone, and had up of coming said, That the our qualitative allowance the hard some it come near-term. of assumes is to is that you kind tribulations you majority when class have quantitative recession As imagine, a to high our with in is right, trials charge-offs, with of risk and problem CECL and really a like the can have there it's no allowance.

there So a is So geographically, guess hazard segments, evaluate I have those number were wouldn't that where are product to what that we'd about a segments? exposures if to want hitting I go. think our in where recession, would which

very say ratio. leave tend and underwriting would the that I'm our group, of why us which see better that and peer would the composition comfortable loan the you lower is management I a portfolio to coverage credit being than is What risk our reserve

Our $XX XX% net about than peer charge-offs billion to $XX billion are bank the group. lower

So reserve. doesn't those a are loss things two It lower we correlated. -- have

up. credit and would performance it know kind just our Pat today. made I relative go as don't quantitative in to the point, I segments to we think going have could what Yes, and are And hurt use I to So think will degree. as discipline But data be to are layer point SQ show bunch our that which yes, that the to hold. for of a get we foundation of Moody's models, the long a qualitative where whole point we still earlier our

Manuel Navas

appreciate back that I into Okay. color. I queue. can the step

Christopher Maher

you. Thank

Operator

Thank you.

next from from Stephens. Breese go ahead. is question Matthew Our Matthew, please

open. is line Your

Matthew Breese

morning. good Hey,

Christopher Maher

Matt. Hi,

Matthew Breese

ask for NIM per is some hike, NIM an little do color hoping the bit around question, age-old know was near-term around point the outlook. at you which to more questions maybe a XX what expectation expansion point? is Fed is going basis this so what -- for I I the there's And

Christopher Maher

one Well, I can the is make is expectation expansion. comment the

an last the did deposits thinking be with better you, NIM spoke all single were the single-digit quarter, we than that of much outperformed expansion we and not in -- important that's that. We and fourth note, right, contraction. So time the I high think might it we

how So see, seen of is determined be a lot it we lot by to ultimately date. haven't pressure deposit we to going a much

and continue raising long a you see should they So after about quarter rates, Fed we start flat see stop rates, some to modest is then now. will we still for raising expansion and as us the as think that

it So hesitate points, could would but to basis I give a XX number. you be

Matthew Breese

I roll-on maybe specific loan rate? the little for of could on the re-quantify And then And get roll-off a the fixed components, majority is yields? to you much Okay. the portfolio, us is bit yield how what is the versus more just think,

Christopher Maher

we is have and is book float. or XX% about the rest, So obviously, the of so the and -- fixed

Matthew Breese

a will yields roll-off payoffs. new the coming change. to then And have high the like high a X and probably facilities handle Xs, And is X X on the

Matthew Breese

end Okay. And the in cost all you provide quarter can deposits? the was at then of if of -- what the

Joe Lebel

think don't that. we I published

of I think going you're appreciate I see deposit Matt. low when I hesitate pack you I So going coming the that number, to forward. the from. would think still I but new question to on introduce -- think us But where a is betas, end hesitate the about

Matthew Breese

capital a know stock in tangible AOCI, obviously, from bit more sheet I slowdown and is but equity capital little your that where do growth, so solid. area some regulatory level around management the If we protected just there's balance a buyback? see the wanted on get is I to Okay. thoughts your bank ratio been pretty loan bit ratios has thinner, thought

Christopher Maher

question. not been we've great a buybacks. And It's doing obviously,

So question be would is our the appetite. what

business. of adding been the we've not our Jersey, New of markets. but the in in with teams core financial of I had our about and the where we in because expansion right? view are think feel we relationships about just banking fundamental We a the just kind It's terms build-out on about metrics, year starts really markets not customer good bankers commercial

this bit in and side not others of to feel at it. another with will recession there'll year. the we many about little be a maybe So don't the we we --we're the us really kind the slowing deep, go distracting But we will that not particularly that. through be as camp recession be to beginning good be Obviously, of could growth see what a --

to a have grow years. So over great -- continue couple opportunity of we next the think we to

coming use the position to are two, good allowing we up. it. we And patient we'll to So our we no it build or opportunity will find year that a in equity and about shareholders that have doubt for be

But will faster slower be it. a little I'm year use this a point, at because if the may up little for good find that a it's -- year, So our growth or this growth capital building case. we levels are confident next we

Christopher Maher

in a undulations unrealized portfolio. been just some one, question, million there's ball odd last in but gains equity investments, $XXX My Understood. Okay. there's

this Just likely movement, you're equity think out see rates. how interest curious of in investment giant Are that is to a kind note absent I What is in don't positive granular a move point there of the much outside portfolio, anything quarter highlight. it? it? negative you or the

instrument We've are million $XXX instruments they're good a granular. giant we And coming it's got kind but preferred yield, about one -- flow decent banks. in mostly referring So There's the going no cash has to you're much off. there. of pretty -- of a any limits that take. positions how carry is it's it to

that think maybe were would to a shouldn't up bit, lot, but a risk you as go little I be don't in much rates of so there's to us. either have It material continue And a number for direction.

Okay. that. appreciate Yes. I

the [indiscernible] the to of I with pleased and really the with short-term. would Those very year in have expect about are had that unusual opportunities half to were recur there's and the We [indiscernible]. them in second nothing

Christopher Maher

very you Thank much. I Understood. That’s all had.

Operator

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

Chris any over back hand for will remarks. I closing So to

Christopher Maher

All right. Thank you very much.

Thank challenging our year leave appreciate with always, April. look fourth quarter to an in us Our well-positioned and OceanFirst, are we you forward time and be may were for in results what your you interest results in very after we strong XXXX.As performance with much. they speaking throughout and XXXX, first our consistent economically published quarter

Operator

everyone you call. for joining Thank today’s

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

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.