Earnings call transcript Q1 2023

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Operator

Hello everyone, and welcome to the OceanFirst Financial Corp Earnings Conference Call. My name is, Bruno, and I'll be the operator of today. [Operator Instructions]

I will now hand over to your host, Jill Hewitt. Please go-ahead.

Jill Hewitt

Bruno. you, Thank thank and for us joining Good you today. morning all Senior I'm OceanFirst. Vice Hewitt, at President Jill

will We morning's this begin disclosure. forward-looking statement call with our

statements Thank where other results from public many today including cause the Refer Please actual our in filings, you. find our based our these factors factors forward-looking could XX-K, to and that materially expectations. will on forward-looking to release remember press differ risk statements. current you of contain remarks that

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

Christopher Maher

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

are recent in Based comments refer the filed materials release. and we regular into and on adjusting be focus to the on Q&A will environment. straight the available to to on are industry After agenda earnings areas and Joe, The I events, jump relevant supplemental company's cover take those current that our questions slides will most will My Pat, the of your connection call portion the that, our questions. with website. also

included X, Turning for per earnings GAAP-diluted quarter of financial share to first our Slide the $X.XX. results

million. as earnings -- were in relate the XXXX. by million, industry the interest adversely Our compared sale securities to $X.X or down reflect period. as XX% of income million earnings $XX.X which resulting the the to year while increased share, in primarily XX% prior that prior same $X.XX to pretax interest $XX.X of events, of quarter Non-core Core impacted recent has loss income investments from linked a items net net were per compared period increasing

share The XXXth we company’s repurchasing did opportunity until common Tangible initiatives. $X.XX approved access shares core the repurchase capital This the $XX.XX. not and anticipate represents XX% increased better we dividend quarter the cash can of in share. dividend is consecutive a growth prudent and quarterly equity quarterly for of not shares to Board any earnings. to company per per cash The first deploy do common

Turning recent conservatively recent covering approach in moments the questions the events banking to I'll events. portfolio, and position, securities which underwritten to the spend liquidity compression, and portfolio, prudently key strong the loan from our margin few diversified dealing being resulted and structured company's well sector. a asked with

spring. government deposit that well-diversified summer and hits Regarding of well our and OceanFirst well banking commercial that at and the granular liquidity, the seasonal in typically our of segment XX% Shore balances QX addition built advance businesses, business deposits, highly Recall Jersey some account that clients season, QX, the the the excluding quarter December brokered XXst as the and balances cyclical ending CDs. at as of funding down typical two following the deposits New a seasonality in deposit lows along first quarter in drawing has portfolio with in upcoming quarter inventories typically end the performed

March as shown deposits up make deposits liquidity Slide uninsured a total of deposits than our XX% XXst, of and billion $X.X of coverage our less position uninsured XXX% at on Importantly, X. provides

our of portfolio. that points of beta regarding date disclosures detail cycle enhanced metrics, just deposit other important deposit provided we deposits, including the our to and data several XX% several deposit granularity discussing While

$XX,XXX and $XXX,XXX, business that accounts and XX% accounts highlights, at for respectively. some less of balances OceanFirst consider average of deposit balances deposit maintain than And are For $XXX,XXX. consumer

for evidenced long-standing of of XX more. banking age years and with clearly are by us customers deposit accounts an XX% years account our relationships Additionally, as average or five

clients with Conducting our of demonstrates financial why clients. to understand on transactions the at business please behalf To OceanFirst. our X, us turn primary best Slide deposit which bank

in you $XX perspective, bank deposit totaling five To the XXXX, over base Detailed equates included volumes to As turning metrics at transaction see X. X about clients. the we that million through billion facilitated can every put transactions, in are for over our on Slide total deposit $XXX over weeks.

two Now assets. of comprises implied portfolio investment key overview $X.X its to the Slide past several over on context The that company years billion X been quality weeks. recent avoid in The some highlighted in for an provides our high have the grade investment has portfolio. investment of important investments portfolio. on of issues strategies

we the a maintained modest favoring XX.X% total possible. floating-rate investment the assets. First, portfolio size when discipline around duration, we just at kept of Then, securities

of portfolio a of result, be capital. loss modest. duration portfolio The be XX will under as in is the just if basis-points the limited XXst, impact the is even position March entire unrealized entire to And mark-to-market valuations to years. for four As using the were portfolio

of Given grow the securities portfolio a value discipline material company. of to in reflected tangible share, illustrated XX%, present share ability band past over the our our X.X% our not ratio to CETX relatively XX. current quarters, value a the further is risk This quarter-end Slide increased which five the among on per us high-performance does placing has book per proxy peers. Tangible in book-value is

hallmark our better Credit to credit our been of management Next, and on XX. Slide selection loan risk history bank and diversification on risk by the portfolios portfolio performance, which demonstrated management Conservative to our thoughtful turn attention like our risk for I'd of prudent rate a has focused our starting decades. management.

through performance Our has exemplary history cycles. several Commercial clear. estate is real been

just XX the totaled in the era. to crisis, financial past Hurricane Sandy and million. related years COVID great charge-offs charge-offs all our have That net includes experience the $XX.X aggregate Over CRE

basis concentrated That XX XX% heavily regarding urban details XXX points low and estate, cash property of real into than portfolio our that strong as totaled with flows, of less office is both a points basis-points risk $XX commercial annual evidencing than put loans billion. our six comparison To the Peak influenced just averaged selection CRE and for net charge-offs group. just assets important perspective, XX which commercial to all and by in between banks LTVs billion charge-offs $XX just notes per represent lower of diversified compared X% basis peak year, and that provides is by portfolio geography. total X.X% the by and assets. type is Slide experience

X.X demonstrates Further, even and ratio a XX%. uses. credit The and is towards LTV of science debt times coverage entire tenants this and service portfolio a weighted of medical weighted-average life portfolio

shock estate a maturity. that LTV to low Another topic rates real concern is hot the cash commercial loans as flowing rollover wall, even and be represents subject payment the in which maturity may

to has portfolio structured this avoid carefully Our risk. been

to and rate of just $XXX XXXX aggregate million, reset First, maturities the face X.X% loans. in only total XXXX totaled

effect cover a All at rate are And rate time tested excess on these Loans of able to commercial the Over To loans loans XXXX real a those this and much might a higher a we than rate for rates underwriting. of average service subject have Next, X% understand rate at all test you the risk, in reset facing weighted stress in based rate of weighted amortization conducted think. best current the weighted-average within reset to a X.XX%. X.XX%. XXXX interest are in estate at of policies. maturities of million. with current have our rate rental in average debt XX% rates a the $X balances

considered our the rents not provide will majority cushion portfolio of origination. was market result net additional that or for analysis. higher substantially many in will operating In levels Current are income, cases an in at of than stronger that NOI which our

the We and but risks the will monitor to evidenced stress the rate a the risk. risk, subject minimal rollover of strength continue to small portfolio test to results no this relatively

then move credit to arise. manage address among management. In actions concerns serve that raised when to We took us also additional some offer then two we the final blanket and first One now. credit quickly but well regarding risk comment XXXX, programs, eyebrows risk forbearance will banks were actively our they but

First, in of that demonstrated attributes all the risk by selling heightened credits we credit the fall de-risked XXXX. portfolio

We a including to not appropriate our amortization. implemented deferrals to loan offer restructures all we credit that Next, structures, their practice CARES long-term to Act Act commercial return loans or required CARES did pre-COVID clients.

has CARES charge-offs quarters risk the and not in five any credit zero Our that position. modifications contain portfolio net commercial does addressing since Act experienced

our underwritten diversified of conservatively the highly well bode our issue performance portfolio wall performance maturity a exemplary portfolio. and So for of are of and history the future lack

cover nature. Before to forward-looking I turn I it over to one question-and-answer session. more last that’s wanted topic in

project difficult Over conditions been weeks margins for operating environment. the company preparing scenario anticipate and that we did the detailed present a we To internal We protracted a a prepare to and resources lead processes, matter few subject to inflation that hiring pressure that played dedicating would certainly all eventuality the developing six that did plans progressed economy. expect external and likely out performance. back, for exact experts of not the series have included but this past improve to benchmark studies, to would months, evaluate performed has the design risks

that run We've the to the which are phase, and design of through XXXX. and phase XXXX project moving the just of completed will execution remainder into

improving and improving branch business. The focus contribution of internal of expanding network, of the processes, our will all and revenue residential infrastructure across commercial automation include our businesses, these increasing initiatives of lines support

the work has certain banking this business opportunities also treasury date as will management, materially corporate reduce operating banking identified mortgage absolute level lines, expense. of and expand to While such program our C&I operations, to

efforts decrease As improvement year this during the transformation also but well second will for later leverage. just quarter to This be the self-funding, underway a XXXX. later operating no of be continuing will allow improvement than not into leverage measurable apparent the in result, expenses QX and operating beginning this of a will year. with year in be will The

financial on These margins, of those a bankers we With quarters decisions with we thought. to client environment. figure given was set that margin while a but we a the values the terrific has and capitalize balance to quarterly base then remarks our may and are relationships. given with liquidity a but that has bolster my collection opportunity to out advantages, relationship have by new wonderful great connect it driven a challenging was past conclude of have will sheet, The rock-solid our some I'll to final bank. that weakness protect and have sheet, disappointing, conversations loyal to improve the it how tremendous and few of take stabilize business. balance couple assurance client us The the us remained one weeks clients

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

Operator

question Sandler. line go first Please from [Operator Our ahead. Instructions] open. from Piper is Frank now comes Schiraldi Frank, your

Frank Schiraldi

morning. Good

Pat Barrett

Frank. morning Good

Frank Schiraldi

imply would the in you you in compression. NIM that And still next modest costs terms do It's kind from but, here, on deposit guys that deposit little expectation of what bit significantly? average are that spot over think quarters. walk on through just period see basis. thinking -- is on a could thoughts helpful maybe an it of it really guys of costs point NIM Is you the the you couple more provide of or provide quarter-over-quarter that you meaningful If the pressure obviously, margin guess, at XQ dynamics I modest about, the abate to

Pat Barrett

Pat. it's Frank,

So at amount we've I'll but timeframe, exception a be of completely know, the already amount actions take we of a prove or into huge not to taken. the and a shot with satisfying expecting that what some repricing huge will quarter or really probably seeing moment to least we aren't a for actions at next flow answer of as

the and cost of compression thinking done some that's So we about our compression, we that we were kind to think pressure quarter. modest aggregate say ramping higher it put on QX some repricings XX continue April in up we've when early And margin. that we will in basis-points of in this saw terms the

a prepayments remind early really due resolution those in the in and penalties loans. absent nine fourth-quarter. our third you benefits I'll They of that and prepayment of were basis-points of that problem were one-time margin kind to

declines. help it's million the out range, mid in and in probably see don't -- really we March, to stacked because so would at will on guess, So the the funding basis CDs we say, as average we retail compression brokered we roll-off we if in out beyond put point we see and half that $XXX core rate to up an points course, termed the going promotion, that, that. cause FHLB That quarters gives fixed to horizon I FHLB decline the on XX we If our of the kind that be basis CD had won't XX to about to were brokered the range us flexibility of and continue rates. three XX and with was to anything than like deposits. CDs four We've and in go more of but did would second the quarter, that borrowings to of I think termed up which less have that

guess I not got is healthy the remind is sheet balance a $XXX amount, the securities just of actually cash then you And leaving million right percentage points. to of portfolio X.X bad that the outperforms just dynamic the that, It's it last at by pretty It now. earned in sitting about investment. fed we've

Christopher Maher

deposits, their in to some have I maybe conversations feel but too a so pace the to of comfortable we we to forward are the the you month calling all to paid have kind some customers little the them tell, price got forward a just by talk we it color the happened or of course to largest your has have couple we for think it's of of make that client ahead the the think deposit I opportunity might again rates It's of but the that may yet, past they on for Frank, is that over them it, sense us earning out extra on those may about but so repricing. next of an changed just little hard weeks, of have introduces naturally to pulling conversations. tell of early pulled of one impacts conversations two,

Frank Schiraldi

less the the book the Got and the average on important would cash bottom-line the basis the obviously, you in just quarter wondering, makes of But on NII. first and you, put okay, I'm to be expect through then liquidity that’s sense. I assume books, to second quarter. that on And than more terms an borrowings excess more there

when of all, factored the really second that first talk I'm So all, you then into case margin that's if conversion. your XX wondering, basis that's if and on just [indiscernible] about of expectations points

Pat Barrett

that is and right it reflected. you're is think Frank, about I that, the case,

So that many we the liquid us coming of probably in expect remain will months. more

Frank Schiraldi

I certainly in most prudence pretty I just but guys provided levels. mean, on recognize kind think Okay. capital on And lastly, proof important and you the health and is thing liquidity detail that this capital then front of the have environment, of good liquidity and the

strategies some How of talk place through of do about just to turning the going operating kind that put imagine, you general XXXX. -- maybe So to here? below how into -- think are you given gets that ROA X% back back you ROA about return you and be back, you I year do dips X% we're in would about here, you profitability. leverage think end think just this talking you margin when just compression but the Do think that a continued here, or gets about you continued in returns do

Pat Barrett

working running more ROA expenses and the about a we're It's on you give good a rate that, it's kind time of we're I’d certain have than to obviously get with that. the better leverage. there, returns a hesitate environment. X% uncertain to a feel date much company about little very operating and but over We Frank, on to path

we our what can need affect but of point. terms So some a cycle levers, bit know at rate of in cooperation we from little the we

Frank Schiraldi

guys. Okay. All right, Thank you great.

Pat Barrett

Thanks, Frank.

Operator

ahead. line Tamayo from go now Please open. next Our Daniel from Raymond your James. is comes Daniel, question

Daniel Tamayo

mean, on that? make? overall you're the everybody. Maybe we profitability can on that put expenses. any final and that us of morning, on how to just Good point is path there help should I you. follow-up about Thank question, the savings thinking kind you're about we that but the you expenses focusing just planning think How a of

Pat Barrett

a take shot I'll that. at Yeah.

next the spend just So because that bring run-rate been of think think we see quarter it's call is run actually but quarter down the least to But quarter. by three at third a then going quarters. opportunity Largely fourth-quarter. have of one we has for through whether and good the rate we the lot little to good the as run-rate that the couple completion a as fourth anticipate first of our back we a for run-rate Hedging third-quarter external in a improvement the let's a X% we in some bit may quarter, the those to it two. or

actually about ago, technology. couple We we've and our working on this and opportunities didn't out talk a use but improve been of quarters better processes laying of existing out and needed to platform efforts get

professional million think at quarter. fall-off, by probably are that will so so going we come that to And a $X a -- minimum, come bucks would fees down

for resi-mortgage, we're along it. range as some -- we think next and productivity for that, deposits That against growth treasury good wide we'll into areas. lending, in the C&I be and But of are move we think and lending continued trying balance we which a management, efficiency there'll need Beyond with non-CRE there brings in opportunities staffing efficiency that go exit do year continue. to

it I more So but total than I'll X%, fourth just year. the to keep by this opportunity is of quarter X% say would

Daniel Tamayo

Okay. That's said you expecting you savings more then XXXX as I -- well. Pat. in guys great think color And you're

Pat Barrett

Correct. down I'm early a pin us on just that. -- to it's for little all

we've quarter C&I though at business. gathering treasury shouldn't we'll quarter that. be don't in next say along. forget working as that originate and deposit -- be to and well expand don't sell forget move as business in I think I refining got each as -- capabilities And growth the we same we'll mortgage management initiatives, time that growth

would would So, to investments we make. be required my all have comments of any that net of

comments. absolute are these So

Daniel Tamayo

be that comment All And Okay. just think loan then the to appreciate it. you great. going-forward. on you're I that's expecting secondly, a I low right, that made growth,

what that be made when more could If around that you would provide you're detail great. thinking color any you or comment

Joe Lebel

Lebel. Joe it's Daniel,

support it you customer seeing to the base. still is, think loan activity. describe easiest I We're your way

You see it can the by evidenced pipeline.

We're You're also in can sevens the it in terms it higher well you into at pipe see the pipeline. the seeing rates, rate. in average of

our been can and existing some consistent, and if up, think cause ups is, we'll around approach what has for the come to intra-quarter can’t what and you new think we and look good clients, support credit pricing opportunities do going discipline, I which I we you do them. that's discipline, do downs and clients

fits to what gives And and fit. also make determinations doesn't existing look book a us chance still what at it and our about

growth, do may I where you be quarters some see So, you have quarters some where be see There think there unevenness. may you'll some flatness.

Daniel Tamayo

right. Okay, appreciate it. step-back. all That's I I'll helpful.

Pat Barrett

you. Thank

Operator

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

David Bishop

Yeah, good morning, Chris

Christopher Maher

Good morning, David.

David Bishop

or stress Chris, Valley the potential signature a maybe any relationship Silicon impact from less question in the impact in terms just move from off relationship and terms of bank of either did you the maybe or environment. for first. Obviously, ten managers, for of near-term any your that any or you fall [indiscernible] market loans macro sort and new deposits so over

Christopher Maher

things. Certainly that goes the going one XX interesting I'd, another. period organization talent people may mean, months, the say, about customer over both a couple is to of of twice uncertainty of to on six environment but movement. a be from moving you're I think it, when there to some next in be sides

those they were you see spreads can far consideration I lending think very So wait that today There we'll have fewer is play a expand. and year-ago. a see people least There are credit significant And in out then, Northeast. at the than will to things. out

really and will think that know that on focused grow as the get some Joe do. that so. do work And I into from the to translate paid were will book opportunity to that sure be we for for here team making we his loan I paid us

David Bishop

much Obviously, CRE. flags here the maybe lot or maybe maybe it. else in Joe. press out more, the a of that getting a more red there on the then dotting there crossing [indiscernible] terms fine-tuning in on signals, around team yellow attention Anything Got signals. as that for of you're office your of from flashing but not rebook, show or in maybe some of segments other warning question attention And terms that warning

Joe Lebel

Well.

David. remediation geography, head, the Everybody building the dozen on -- and talks about office. the around been this asset last We've credit about classes. years thoughtful hit around dispersion, in everybody talks think over nine, I book very XX,

the the I -- think a we're in warehousing definitely seen slowing space. we've seeing

to of I think we're dynamics point the from around COVID shopping home. both well past the relative the environment

it. but same but pace I at think really going in thought. our about people yet, not not seeing We're to book that's continue, that all the softness we're thoughtful

And then $X.X office it's I comment talks think, in because have important I make billion everybody office. the where about the we because just

is geography office. Jersey in only type the Philly, of dispersion terms New office, our have office Our in but we New in of not York, diversified, pretty largely regions even also between

remainder deck, assets at the largely our We medical million. less exposures office or the than also is have here I the $X credit you've central talked seen of of We've half of it's and in either our think only office about the less where but total bank is size X% suburban. tenants office districts, average than the business

some have $X talk about ones, XXXX, we while you XXX are of wall small So even for have maturity loans we the them under XXX maturing, and when million. offices some large

a amount of COVID, being fascinating up we comment home, the the pretty average working you just is but we stand-in that. So it still to are really XX%, people multifamily where housing. given see things, strong. itself, of from which back done getting just to I think goes your Since in multifamily about good job other But of show we've rents almost protecting the terms country

I doing right what critical think but forward. we going now we're comfortable see, of So, what we're on obviously very pretty

David Bishop

rents or correct? said underwriting, not what -- [indiscernible] the underlying in you cash was introduction, And stress when Joe done did you did environment, test, current or adjust the flows in

Joe Lebel

David. for we dollars per looked original rent underwriting at tenancies. Yeah. current current tenancy, Exactly didn't We right, or the adjust rolls

we we and we looked that also that do. did properties sure which We had and those making the obviously still tenants

Pat Barrett

back had inflation of to in get rents. over of because of going good I rents to kind the Dave the count of we or I so, that thought us. on a rents, this Most maybe think year think we but that provide was which we were several years some was, would for multifamily. theory didn't that next That underwritten you're ago floor want pre COVID on

way So it. it's a to pretty look conservative at

David Bishop

We bit a Got special see little shift Thanks of mentioned in it. a credit. the one hop on to substandard, curious And did final off. loans. question what just I drove substandard and will maybe increase

Pat Barrett

there Yeah. significant. Listen, was nothing

fact, we last in we than In remained the third-quarter of were year. lower

from mention and Just to that migration, one moment secured [indiscernible] special substandard is the well bulk of [indiscernible]

David Bishop

Great. I appreciate color. the

Operator

question from next KBW. Michael, comes Michael Please from go open. now line your Our Perito is ahead.

Michael Perito

thanks guys, quarter, was taking the helpful. questions my for supplemental for Hey this and extra information it

lot much take covered I to of so two it, guys You here, but quick don't just want questions. time a too

but on I On of a the guys income here low the one, the on it, apologize side. missed watermark quarter. just first I core for you if basis noninterest Kind a in

anything swap income, there term of look commercial near kind of on whether rebounds mortgage, for of quarterly at we should the be trust anywhere, kind is core a run million any it's Just in rate we as first-quarter. this $X expectations mindful

Pat Barrett

I Mike. Thanks, think --

a up to think back anytime this as say expect number environment, kind volumes of right we to I don't decreased, swaps kind in swaps loan you're it's decreased of four-ish soon. pop

a couple in you noise that -- larger the might quarter deals. Although any have of swap might you

which business, ability counterintuitive talent. I a the there's rates that right to we thoughts find but the was have now, time behind us banking of may little at focusing mortgage sound our some high-interest think bit when good really some a on

You joining Adamo seen may press about the have release our team. Stephen

on sale So Joe Steve, opportunities working really on focusing business. for and gain are on the a

that to because refi and that. in income position counter-cyclical looking want volatility, down that's As that on high the of know, not where rates banking be underrepresented mortgage are come business understand one our is -- and a is year, position should not area some back make next multiples financials business to off but in you'll we it our money we the usually a a

now, where and require the could I business to I'm quarters done. I'm only line, two, see But to we would our again talking the too. that little a And there three, will rates would get comfortable better from probably That's expect Steve cooperate bit four that about potential. do and Joe that

Michael Perito

full guys guys an stand about can And it, heavy more comfortable obviously, you that? a of, the liquidity of near-term, us update but heavier that change, -- see what foreseeable be us you me, to are because, to might it future right fair capital higher recently thinking Got on that say is we terms for a is on where in lot guys take for you kind than -- of that carrying carry then normal but at little the, from for the what otherwise until maybe okay. fallout capital everything considering guys kind maybe little be some you and spent occurring can talking or how lastly the longer-term, we maybe you I'd just about is time jokingly give levels should

Pat Barrett

think probably guessed we're Mike, right conservative you've I folks.

all until discussion to going extra levels. in dead the Because, kind next and go and going is the I XXXX liquidity or hear and the come and a to some was today. think which quarters. been uninvestable a we're going were capital carry and thinks acceptable capital to it's in we've I a it be settle the world of we little So We're is in capital know on up extra liquidity what I going you for to their about banks with have talking to all cost-of-capital to XXXX you, of earn discussions never that sector and going in. remember will the internally. share industry, couple little to of going

out we'll the whatever ratios capital find how the industry it figure carrying adjust get we'll concern to just we profitability, impact to need we'll to as think extra more a but The to is and will did be, going is make back margins right, and great recession. and after I efficient, the and There get way our liquidity money. capital too out figure a

Michael Perito

Great.

XXX% loan-to-deposit around Pat, bogies ratio, stable? for one be near-term you one $XX.X the here Just assets for are could think pretty in last these decent just that billion

Pat Barrett

typical so. other for this think acceptable. around industry We're pretty run with or I the us leverage. deciding to And in at comfortable notwithstanding Yeah, to no Chris' again, comments, echo of stakeholders It's that. level longer industry and that's the

Michael Perito

guys. you Thank appreciate I Great. it.

Operator

Our Montgomery Marinac Scott. from next Christopher comes from Janney question Christopher.

is ahead. open. line go Your now Please

Christopher Marinac

curious and to environment. the enough to morning. Good team, and in back commercial how I this if you. wanted I'm wanted Thank about you're to loans doing Pat just Chris often high above new stress-test, X%. I X% ask circle is

Pat Barrett

I'd to think I weighted following average. the Chris, say So relative

I of footprint had the spec the and advent construction rate our has where floating think one non balance sheet can interest largely of we've that advantages with end-markets we reserves. with opportunities lending focused been our get

can majority at this which based on do we portfolios, average in is in pipe see relationship returns the flow and also of on the would increases of and as looking cash the where focused it, we that prudent driving average the in in where risk and say the books. what also and the we're some support I the that, recent returns us. you weighted the based in weighted So those existing it's vast think look at on I we're for have But

we a slow of earlier, be maturities will I slow amount or mentioned have a we it think -- we due. have a -- So coming small

-- at X.XX, is if the wall you X.XX small a at think seven that is one the low -- look I pipe moment, X.XX. maturity the So pipeline but --

recognize You think at number our you the focused on is don't what that's deals but and really cost we're want, those where going. done funds I of always -- we get

important. it's So I think

Christopher Maher

would XX% different carry apply those there about would don't typically sevens other also structures, those we're go we characteristics or the handle that the personal Chris rolling service think this high today see risk yet. Many a you service. into the credits that six have two market to, we be They're in ratio. loans not there. debt high low have but times, I LTV, And that LTV, guarantees in talking coverage credit coming that debt the soon, that, loans sevens other of that for I times may if characteristics,

Northeast, at the have in not least least at not those, we on sevens seeing seen. not You're

Pat Barrett

for to And new think what forward. clients those I yields versus being recognize we're we opportunities, we where going our more get existing need thoughtful

Christopher Marinac

it. helpful. very That's Got

described, how naturally in else LTVs, of your question the X% fall tenant half and level. I just makes goes now. you as about to that same next credit just Will low the curious medical, to time. back as the just Got it, that that okay. you concentration back the is then I'm think it someone So not want did another of know slip the you over back X%. my office. non-spec And kind

Christopher Maher

our but present you markets it's run we when think and we're good take also And going risk. think loans approach you, do today. on good themselves you well the I cognizant of in to what's enough I've long-term. the business smart I taken for undue loans diversified, always of don't

that if as [indiscernible] So enough to there return at are favor from certain of we and that asset stay purposely said, don't one-off, maybe away will That they I certain need, classes classes things go make you the out the understand we that But we're asset that forward. today. look think being get one-by-one decision. you

Pat Barrett

and nationally. bit little become about into of a a given will this, things the just than couple ago. like office Chris. this of very I seen asset priced like debt that commentary It's a have that a class. are pariah don't LTVs they differently We've conservative if know negative We've trend, that, exceptional been seen months but would turn and government deals, service tenancies six agencies,

if concentration. a on work on to build have to property, going the has this not conservative don't intend work an we're So exceptionally client we to going the popularity. credit, we But we're that

Christopher Marinac

it to office, just that to know generally granularity level rest got kind That's the but you I on by allocations for -- of is. question be last relative as don't pipe, property that. fair the reserves the all we a presume well great. reserve just higher speaking, have as just given Thank And it criticized the to type is allocation of the portfolio. you've of would

Pat Barrett

under significant the historical need Interestingly very of within offices then reserves. our so real any covers our to distribution versus class, pretty collateral classes, our to our other classes. estate well, losses similar past generate substandard our don't office performed other And have is the

to we've reserve have I our allocation We last about So majority is the out for conditions there's emerge of not make economic nothing the of account -- qualitative. that trying that there. about some see the been we these we Because book, year, risk may and point risk this do would just on unusual actually over in today sure the but talked based we've things morning.

a reallocation reserves down reserve. inside flip a if we that anywhere see So, you the see if anything road of might

Christopher Marinac

Thank appreciate Got it. I both. you it. really

Pat Barrett

Thanks.

Operator

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

Matthew Breese

was more given portfolios, around losses feels lack really securities on. done for industry book in color a and are AOCI, meaningful job on hoping Good to get morning. buybacks. a It like on -- your really you've which concerns of unrealized little focused I bit good the capital

stock So why understanding buyback? it being the where on not the conservative, but is buy also recognizing

Pat Barrett

kind this the would Well, buybacks. have capacity way, we of look, it I to classify do

that. put the have we We get an the as do a powder that the market and the keep and of for to of it between in just open bit around sure liquidity expectations we us future. and little -- we So make to want all capital and option distance that to

financial just authorization, wherewithal have more So environment know the to we to do before an about we want that. we do little the have we a operating it,

Matthew Breese

to Understood. Maybe a follow-up that.

any how can in for real You you CRE looking wake are the more and so, concentrations understanding attention the they're maybe capital all what regulators also ratios, Are some give If to estate but this? of concentrations. paying sense commercial at?

Pat Barrett

right. do guess [indiscernible] why, not right on understand now, I focused we everything they're

on risk or sorts of we're business, about or concentration, questions of the events rollover getting liquidity couple whether the of last the the --. or all months it's Given things

yes, changed we've classes. inched But not I than it couple on they some other I our up. plans last tests degree has special would any So no say, of but would different years, that focused quite capital that time all real asset for to of on so stuff, focus. our management not the and it, they're about over they're and regulator position liquidity And the that dramatically and out point commercial stress estate focused had the are with conversation

Matthew Breese

the classes a on you maintains is than XX% rent seeing huge rents. me asset average Okay. And a of is at page that, what greater least? today? underwritten one. you from it maturing XX, originally book ratio test And stress kind some give debt you I point amount of service were like where stress then the maybe coverage most feel the the here just Could the the for XXXX, to where classes increase XXXX, and then sense rent increase of the the asset are seeing you

Pat Barrett

type. by We'd why little should bit comfortable. But in the strong of Joe across said out And stabilized I That's rent and in didn't of never the We've any geography slides the expect market. note it to property is call as any a kind earlier degree special entirety consistently operated to the really degree. this we we're multifamily, varies multifamily.

rent market is product this in. So that we're

multifamily concern all is pullback do mentioned, Joe about where see industrial and flattish, need some So and the you this we strongest warehouse, probably this capacity. is

Target and for space. Walmart seen and back the needs You've about their Amazon pulling warehouse headlines

don't maybe than because to was, the great up even And may there, done would is we central was the of that at vacancy what have Nothing business is. suburban surprisingly that, better has than than year open and I the it's The little thought. are wouldn't indicative. tell question, think is unusual knows you held being comment real retail a softer but has a would us concern that look I out anyone there I today an office district it ago. it bit strong Joe office because softer exactly and on rates

Joe Lebel

and a $X also folks we about what you and doing geographically all doing we're we've steps taken step, taken ago, it Matt, But on. year, the year to heavily the granularity given should worried think extra and if Yeah. then I And a retail, of site course, gone days as extra mentioned, site are week. then, heavily in loan stress-test, mean, about million. doing out the has you visits average we're and were diversified. I visits math we actually sending suburban couple a under We've addition half we're

lots, you are So but offices, buildings as obviously, where they at it, maintaining. actually walk-in really just looking people at and back-in however not looking you're well they can parking

things and because the surprised all we environment, doing signs you we're want be So so-far doing in this the need prudent don't are just to to be good.

Pat Barrett

almost It's urban had class the long-time under for markets. because all suburban the of into years, more XX creation with color a office been suburban one Just no comment on in lease our migration for office pressure markets. maybe been

here and kind some of not is product and park demand in just far in interesting. life is rock-solid we properties. some there the office sciences repurposing Those there exceptional situations. what demand Boston is did less there's have is So up necessarily of The stuff is those suburbs, of demand we are the

of were And the ago year, and and we probably been pleasantly suburban a surprised about concerned been interesting really office absorption a more so, year amount it's by have in We markets. half of time. a our many

Matthew Breese

Great.

from me. last Okay, one

greater X.X. Under the rate is service think these you weighted-average and coverage average on debt show of curious, service what I'm loans portfolio page post? at amount kind does the coverage of show a again pre reset. XX, reset average on than hold that You where X.X stress-test, the just at? debt the I

Pat Barrett

I comes [indiscernible]. think average what that XXX We'll it don't is that I from. out an on to. have a good number came get

Matthew Breese

taking there. All Okay. Thanks it leave right, question. I'll for my

Pat Barrett

Thank you, Matt.

Operator

question from is now go D.A. Our from ahead. open. line Davidson. next your Manuel Manuel, is Please Navas

Manuel Navas

targeting deposit to book. maintain kind Is that data, you're edges we on you beta XX% keeping And are deposit you're beta morning. seems good the doing think versus successfully things deposit around How how base. everything that should you going-forward? the them? legacy that lower of about it legacy seems the two-level like are like Hey, XX% for successfully a core It like whole --

Pat Barrett

strategy the base to deposits our pressure price that from price complicated. and separate to go pressure not is, of is other. Exactly need tried the our Yeah. of versus we let done on existing the all the kind acquire not to contagion What one we've to

we're because with that us amount a them for, giant a money moving they every they're being transactions and a value day looking around their customers Our not for doing of lot rate. are existing for tremendous we

our keep of think incremental deposit do I higher. happy it. kind cost where providing to that of growth, on good service. growth want is, They're the we're we weighs So it that marginal with it But, is

about our and So in have carefully. that think loan to reflect rates we

Christopher Maher

have say repricing government and with to for employees and account people and so and yield XX% pay think things, tended are it as we DDA have pay talk our of of of a which held exception bills CDs, the to we they're well. this those retail still our and and we non-interest that. where volume and looking the we're about with and checking When low transaction to to well-articulated using broad-based to you of other slide the deposit group like we've more times, to municipal do on excluding I'd I that has number bearing CDs turns. accounts needed behave concentrations kind are a brokered not maybe and expecting of had our do. It's do and up thrilled a of and lot pretty base base pretty the pay repricing absolutely fairly levels

Manuel Navas

of of increases little bit. so two you you far separate that kind kind have levels. that book of beta rate As felt stabilize you a might number a you've do one assumption Do into for kind whole done the or

Pat Barrett

not think give XX decided in the were can were a behind price deposit last say, that you're we've do we to to conservative. make is we or are decisions should regard, right? the the we a being that over you accurate So over, pay if whether side of and days that, and to I having hug would us we number. broad that we core appreciate you sure worst a I'm that in

pulled as lot a forward that fewer So I of seeing now. earlier think some it, of I that, conversations those said we're

the have earlier. down three weeks, or think them we May that what So anyway, a tempo did to were last two and slow month did we in in just things I two March would going done weeks or probably we the April is

Manuel Navas

Okay.

in the growth loan the On pipeline.

they there encompass some construction fundings showing have are you kind all pipeline, guys up of I weren’t think the of Speakers]. now? construction pipeline in previously, all expected future the that [Multiple Is

Pat Barrett

wouldn't undrawn existing commitment. you loans in find put an that That's where that. draw. that Yes, yet are the would to infrastructure the Of would pipeline. We that be

Manuel Navas

highlighted businesses, Okay. where there national and before, Is you you the big-picture, opportunities it can regional also think are you some that And of banking. Mortgage various any including considering local around revenue you then in more of you number place thinking businesses.

of Just kind thoughts there. some of your

Pat Barrett

of kind quite We of that's folks. to variety wide far done down a and well double so we treasury that have products, on product product want that and serves

the one that to but That's appropriately in shown saw and akin we've and are we keep that. could more are and that clients us got we're transaction right. you for are we've interestingly doing stuff also the that and that segments opportunity, some pay akin $XXX,XXX do got went Maybe focus of have there to competitiveness some small So is fee businesses [indiscernible] are learned volume, that there a that for and we that mid-sized this, through the because suite million $XX a businesses product them. as that is we've opportunity, deposit to

but XXXX, we've it's around Joe? last that too comments that, we've want given but admittedly, the at quickly, specific them. going early for third-quarter. make to since us change to less today, you you're not that in spent Any volumes decade in the the give But And to and So look been to market see on it is you number. we're time changes notorious, mortgages in a trying mortgage, rates the

Joe Lebel

only expand have lender, in and New the I'd Jersey-based we do geography, southern been expect the historically that, we we most have the Jersey-based, central is New think add to there because licensing I residential of states. mortgage thing

now York fairly I Boston, and next the not And opportunity not quiet, in the think we're and tomorrow, running national put prepare but refinance when there's talent. that opportunities as for more do it on treat purchase think opportunity, normalized. we're them XX I is and good also Baltimore some New market states and only but in and Philadelphia an rates get

Christopher Maher

is infrastructure months most to do. to what out tuned need more things in would taking and appropriately that's an strategic six our we of do trying in that, out it. We're last One the value just the have of review that get of determined we you to

Manuel Navas

That's really helpful.

clears down kind loan of up use for is deployment, of preferred growth hopefully As and the the capital? capital kind buyback of shifts environment

Pat Barrett

the business. those to have know if depends if to spreads comfortable all on more about we kind persist, It banking cost the capital. Bank, in thing backs commercial now, the do get But do a is credit of think tool. I see are the seeing prudent going environment, then adds in what yes, we capital a can like a marginal funding. starts it don't we that but grow the to love of little to but we'd about first nice to buy don't market, with a we're and the we do point, the opportunity we'd build-up are If to to

Manuel Navas

Okay. Thank you very much for the comments.

Pat Barrett

Thank you.

Operator

hand currently would Christopher go to remarks. no for We have I further back Please ahead. final questions. to Maher like

Christopher Maher

materials of our March Relations XXXX. Alfred of I record Hewitt have already thank encourage Goon. directly. call. Jill you X, All important of the joined Officer of mailing on reaching at for to be we X:XX the comments and many stockholders transitioned finish Alfred virtually We team in to Stockholders, few XXrd April to Time. your shares. review right, additional Also held will the XXXX May Investor you role the materials vote before A recently, we from which out Today much. Alfred finance started be know AM our Eastern commencing Meeting on Annual very we'll

questions. encourage I you contact Alfred not, to you've If any with

Jill now company's is our will OceanFirst, will department. head corporate to continue lead the with and still communications function marketing

thanks, Garbarino, try me we and decade to did longer I time many of a that a know have effort so with look. than my through and and as Jill put predecessor it these as her with appreciate spent than all-the-time John it look forth that we much earnings she with special spent more calls and can As good you working she's make

Thank after Financial are second our the published July in time speaking you next to we look-forward your and Shareholders or and results support Virtual today Meeting. Annual with OceanFirst month appreciate at quarter We of you. your Corp,

Operator

Ladies and gentlemen, today’s this concludes call.

may disconnect your Thank You now you. lines.

OceanFirst Financial (OCFC) 21 Apr 232023 Q1 Earnings call transcript