OCFC - Earnings call transcript Q4 2024 | OceanFirst Financial Corp.

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Operator

Good morning, and thank you all for attending the OceanFirst Financial Corp. Q4 '24 Earnings Call. My name is Breetha, and I will be your moderator for today. [Operator Instructions] And I would now like to pass the conference over to your host, Alfred Goon, Investor Relations at OceanFirst Financial. Thank you.

Alfred. proceed, may You

Alfred Goon

much. XXXX and Alfred Earnings Development of very OceanFirst Goon, to Fourth Corporate Relations. Investor Quarter Call. and Good you welcome morning, the SVP Thank I am

earnings we'd kick we remind the earnings the found off can call, company release Before like website, related and oceanfirst.com. the everyone to that be on supplement quarterly

may financial measures. non-GAAP remarks may Our to today contain refer forward-looking statements and

complete and differ discussion actual including All forward-looking participants those filings, the XX-K to Maher, should for And X-K, Forms results statements. call SEC any a refer and Christopher turn you. found Chairman XX-Q of cause statements I factors from to on could CEO. will and now over Thank our that those to

Christopher Maher

all Thank conference filed earnings you, morning, brief Barrett. interest Joe call. Officer, look to with We been for regarding connection our performance remarks performance financial operating some and and XXXX to the quarter forward fourth the the We your discussion, This the outlook join provide call. Lebel; our Financial and your This results to slides this Alfred. by earnings refer quarter taking our and for with Good our the we'll may release about business. to morning, throughout the you. we our in After color questions. to Pat I'm appreciate you able joined morning, Chief President, discuss our our and in opportunity thank

GAAP per on and share financial on Our $X.XX fourth the diluted reflected core of results for basis basis. a share income quarter a fully net $X.XX per

able both saw in growth the nearly brokered loan return past eliminate we last and core deposits our interest and to positive margin years. that were solid expansion Deposit the added to see to a of a are We X had net both portfolio. also we basis over income this and on of as GAAP was growth our quarter pleased

acquisitions growth few Loans Spring of Garden year. as and the from State expected increased the Garden we Capital expenses Operating the reflecting last of during Home months

continued Joe increases revenue-producing modest in saw which of hiring a from talent, also discuss We the moment. will

Asset Garden quarter was quality Spring macroeconomic X for remained related factors. acquisition the CECL build to day resulting and reserve provision from The very the the strong.

equity mention share XXXth XX.X% common X book net We decreased considerably by dividend and points. XX% This of well saw levels X quarterly per value cash Loans basis is consecutive dividend This below quarter $X.XX special of earnings. resulting represents just historical of Board than and classified cash charge-off total and quarterly less the another of X.XX% as the in represent rate than week, XX% substandard our approved company's average. tangible remain peer GAAP estimated and net and with full capital ratio average a lower robust year a recoveries Capital of share. Tier per an of common $XX.XX. our loans,

over into At organic Joe performance fourth XXXX. this our the regarding our provide details more I'll and quarter turn point, the efforts to call during heading to

Joseph Lebel

$XX included originations residential solid Chris. portfolios. and uneven for quarter X% the out annualized $XXX of loan of was loan totaled residential originations. net interest and pipelines move Thanks, we remained owner-occupied of originations improve driven for pipelines $XXX impacted which million months, seasonality. also reflects our the remain quarter, growth million increases should seasonality. loan by company's Despite winter and the million quarter, quarter-over-quarter Commercial of demand million The the rates as given loan by stable C&I and $XXX The during

month we another bank. For in the focus X the X C&I alone, added X we onboarded quarter, as the bankers expanding efforts This new C&I already to added bankers continue to on XXXX. we've

commercial, deposit-rich We level team, of which about pivotal historical new are excited believe banking our is the opportunity with to superior of this build-out our to We targeting our clients expand low-cost focused services relationships. premier delivery. customer also on a is

brokered Deposit CDs, excluding the approximately increased balances, by prior X% compared to quarter.

runoff Chris the we is X. early accelerating to higher of our commitment our We to brokered commercial growth reprice as in And deposit million, confident consumer, this government ability remain deposits mentioned, to year-to-date coming on is and retain levels XXXX which, $XXX close commercial of Our anticipate in environment. near CDs and in our quarters. attracting grow, based talent,

the during income Noninterest $X.X $XX.X million to decreased quarter. million

not income Pat improvement the However, likely by the primarily call loans, to on of modestly, mortgage to remaining but improvements that, With driven significant over areas review fee we markets. sale with excluding income, noninterest noncore increased and the residential for near-term without increased in nonrecurring increased combined in quarter. I'll the see items, will gain modest activity turn

Patrick Barrett

Good morning Joe. to Thanks, everyone.

the as sheet As yields Lending X.XX%, respectively. that both declined of margin balance rate activities modest earning noted, in quarter. and income totaling our cuts interest repricing and Chris costs the XX in quarter, the exceeded $XX and net through grew this basis asset points, decline decrease million a further impact meaningfully rolled by

modest, pleased deposit continue and deposit repricing all able momentum cautiously While be types was the across growth are this with we're that to optimistic costs volume overall into XXXX. in we'll reducing

we're and longer if alternatives, volatility investment short-term You should still particularly rate sensitivity spending, expect environment. a seasonality consumer entering for rate and higher and

due loans measures loans delinquencies. PCD nonperforming for XX XX and normal and X.XX% at increases remains to respectively. modest to with reflect past acquired days strong seasonality X.XX%, quality and due Asset These loans

great credit line continue with $X.X absent credit Noninterest expectations. our to expense the were Despite million $XX.X outlook. about any increased to allowance and in quarter, able our and of still we low million net quality, and during to increase profile historically deterioration charge-offs our feel in modestly, we

by $X.X largely our marketing, million, fee of professional Excluding expenses. full the on expenses and charges, grew impact processing data nonrecurring quarter reflecting compensation, acquisitions

any did during in This a of run quarter, actions $XX.XX. repurchases robust. the shares repurchase renewals. cost the X.X shares modestly remain the impact We're the annual quarter and with at for planning average not the near not in year share repurchases total compensation contract ended million rate material and reflecting weighted next levels of term. nearly of may increase vendor Capital We

word on a Finally, taxes.

Our rate the quarter other tax impacted credits effective by of for tax year-end was activity. true-up and XX% positively

effective policy. We in rate expect absent any this going changes point, we'll the in At tax range, XX% to the forward portion XX% the remain call. tax to our of begin Q&A

Operator

is We on Instructions] have [Operator KBW. the first the which line, person Switzer Tim with

Timothy Switzer

provided, knowing of quantify where very see appreciate side, QX typical 'XX on additional what's to then help Can that you you of of And an guys you trajectory OpEx over the from outlook kind We guys it's be increase the able seasonal you some that give [indiscernible] the the might helpful. of year us the there talent recruit goes? the idea kind course

Patrick Barrett

modified we just know we're to because So making our there's guidance that being investments this year. a we that QX reason

outlook. So modest full do Typically, as an each et QX. an posted those we're a guide we're and compensation, taxes, do keep payroll we investments. as towards quarter million, $X.X little $X year apprised of most around see We'll firms in It's bit pretty uptick bit you have little a million. uptick reluctant maybe cetera, to making a that

probably wouldn't different be So this year than that. any

and that real only expenses on be talent. focused we'll in that's revenue-producing made, are So almost have hiring already changes be in entirely to making or the likely

Christopher Maher

the on sort their Tim, and options, bank, this depending of usually bankers hires, either the somewhere some in payments high-quality typically, And receiving and bankers January incentive -- between those is when evaluate March. the are season

baseline, of So guidance today. see have this, consistent exactly staff we've you the we going But class what what the I we the certain can't say to our in be quite recruiting you XXXX be. is given today, is would with

So We adjusting should a successful and around would recruiting would also be adjusting we we guidance growth. and deposit hope will, indication growth guidance. season, and to every we we be loan expense have just not have certainly

April, the outlook So we the those you to better and a good like have to I or outlook we'd time look with pretty time. what on a more we're And precise handle at QX. think plan on [indiscernible] we'll that by numbers like, share phone really in impact

Timothy Switzer

you makes additional regions other [indiscernible] all That you mentioned initiatives. would Great. bankers And of specific What you And of from guys adding have typically? kind be multiple some any the Okay. there are then or are areas initiatives sense.

Christopher Maher

bankers, broadly, other deposit taking, and kind more you But walk It's if about to of of details. funding both into of our tend parts C&I and Joe bankers from them business. who ratios really loan-to-deposit loan I'll in require let sets but are think the X have interested broadly that of

that on niche quite and area deposit bankers ratios accelerating in We're we're hiring -- tend able couple So years. low. in be And hiring a that as have everyone then of the may been gathering that they doing, in we've focus as who to the of been provide well their loan-to-deposit commercial of focused pace successful some to have has them last place.

net the hiring a deposits of about about producer of our you 'XX of far. in for parts and kind so talk things did business. So thinking how Joe you're going other maybe they're But

Joseph Lebel

think in bank, is on C&I Tim, door already to which us. 'XX can focusing additions spent of really recruiting I as the you see latter 'XX. And we open the half the the for

on And opportunity Chris residential then the bank. about mind more one my bank. touched And have to that think the We comment add in I I'd exponentially. grow the premier

in. some You the are we've success as environment, dependent had -- us we're obviously, the bringing rate of on all know but people in

to small our the added, which have we've add volume. has been substantial We acquisition

that in in while they're may they're of as be those work tend active, folks market a on and And the the market lot a a choppy, well. little commission, to we're

recruit some time as only us So the will if of help will, opportunity have those, goes which we we to on. more

Timothy Switzer

one And if Great. Okay. question. more I get

your You on preferred want at coming all [indiscernible] to guys you have all here. those refinance Has sub-debt at up if your thoughts

Christopher Maher

thinking and we're that and kind would we've cost I about the of the the multiple Tim, options, we're be watching markets guess that, available. is of way got capital

out their we our that base been is allowing reasons ratios ability at of have the the to of partially least to those hit up existing capital One drift when have to repricing. redeem they our capital

would using options, table redeem them in quarters, we some and options on the maybe of redeem to that the of our capital current earnings. then remainder in just but various out one consider May position the subsequent something it's of So is

So have we capital, of and want other well. be what to that, we factor in Certainly, into the overall capital about will do our we would the utilization fresh to growth careful as the consider but this books. certainly rate cost of raising very ways

hand conclude season like how understand as on and as we'll to have we'd much think we So capital of kind well. hiring for that growth capital, the through

Operator

Janney next Your Scott. from Christopher Marinac comes Montgomery with question

Christopher Marinac

the Chris this year? this horizon? anticipate of really Is the reserve saw on kind loss I wanted kind Joe, that and of any quarter. growth ask there we Is reflective in you loan that you of build to about content future see change

Christopher Maher

No.

I'll -- you the on primary messages Fortunately, give two that.

first was then won't related the good. provision remainder loan a The around that half -- seeing so less about interior, bit. it recur. lot than for half has macroeconomic the portfolio, the day little of Spring And it X of is on we're the that been was the a the Everything performance factors, models move to very Garden,

where a on little bit So be grow, you look I growth. probably think as of that reserve at growing higher now, depending we mix we'd maybe the at the if is level,

incremental X%. So as would bit might expect the or over lending, little probably more maybe provisioning to a be we closer you for do growth C&I that

Christopher Marinac

year of I or anticipate Great. big mean as overall C&I of And in of quick, of I then the overview if a portfolio. just the should mix a about we just terms percentage percentage change look you company? X, a how guess, out a

Christopher Maher

going very I be something gradually. see can it's to think you

our in very not kind thing We're quickly. of And we're a doing. to be all too that. it that there we're But lot structure trying do meaning mindful a So selection going market, careful trying the very to about selection same it's to of and to crowded down people there's risk pricing. exactly comes out we're turn risk

trend, and we're better going will as CRE think and think a I a you're of of on to see a company investor and proportion more little more grow slowly. valuable more that's you that's We rebalancing. with more just But and see a kind a going So is increase balance. to that profitable downward kind

Operator

from question Group. Hovde a We with have Bishop now David

David Bishop

Chris just the on the down. side. seen funding come curious and We've costs Joe,

retail deposit or there sort more the see commercial CD you rolled opportunity is the book where much curious out to on or base? how of Just opportunity sort costs either on deposit of more

Christopher Maher

base We're still process, the that repricing in down. Dave, of

of obviously at book So work. to be watch deliberately is -- a hard it price to the how and market out CD The the pushes can very little down figure bit. flows what one exactly kind easiest back point and

to that And But pushback -- the to continue where down if of room, more price So back slowly, our methodically. there's kind posture room. going point going we point, a there's we're pull we'll this on little then wouldn't and kind get say to of still think I a but a of lot that room. into we more is balances little but QX a bit. a little there's at

there And there's last certainly pressure pretty the X at competitive point much was years. than less any in

So we which of rates. bit see us that still pressure around think gives little we decreasing, room a

David Bishop

for Got Chris, it. too. a And and Joe, I question guess then maybe

You hiring are of any those you some And seeing [indiscernible] thus these that [indiscernible] premier mentioned group? the hires of new division. banking from to far related sort traction

Christopher Maher

very it's So still early days.

infrastructure. the out we been So building have

one our say, have in York that markets make today teams these get new to as got the may So bankers expense opportunity very sure to in, well. don't brand into, already right, add especially baked really Metro the OceanFirst we've in going mindful We're brand be New hires we is as that a well. infrastructure know few we the our we let's into rate

Anything probably you So to hires They're than on, the in talked is the QX, And haven't We will business to We but careful. that way. starting put Joe? add, about do last X we're yet. launch right We which escrow be or we team have seen have being hiring quarter. to division nice. may of in QX the deliberate, X into very that QX. more want skewed very bankers

Joseph Lebel

No, I head. hit think right it the on you

will think hires I so QX met and be of by, people we've been impressed majority the QX. looking so the vast to The far forward it.

David Bishop

question [indiscernible] One it. final Got

Christopher Maher

the loan first? [indiscernible] on purchase,

David Bishop

loan in million that $XX any on sort the of [indiscernible] Yes, purchase, details

Christopher Maher

a and [indiscernible] then you Sure. that couple investment do noted want of this bit Well, we And opportunity do the add Joe, to loans we we talk about ago of these. we have them little the years did a -- some Capital. to with

Joseph Lebel

Yes.

So been we and thoughtful. Dave, with. which on three-pronged Obviously, levels, have like look happy that we a at ownership the We pretty we've have with investment, of been we've relationship very the a variety as approach. we

amalgam a we purchases loan purchases with them. credits done We've have to a of purchase do, at then have more as larger We combination been you I knew which we partner that with a where see where also we do participation of of looked transaction And we've them. as transactions referred these recently, couple a we and that that what an on variety credits already pools, really of originated. and they had one-off

in we And ownership. majority the where leasing and our then behalf also act also share they a white they own business label on our piece. provider, those as have equipment the hold of we where smaller loans We the

us, really the really -- good pretty it's it's approach and stool and So -- has happy with been a credit for been great. three-pronged quality we're

portfolio. no the have delinquencies We in

Operator

Inc. have We Breese Stephens, with Matthew

Matthew Breese

guidance of longer-term bringing that guess new areas. hiring how is impact Just does And the some items, team what Or do terms what were I be the if these very successful an know, way, the them expense don't ask I or some these here. in A expenses in, some maybe of deposit look a pipeline yourself bringing it would overall? give deposits the you're number and maybe hesitancy on I them guys like? here would helpful if some another for opportunities in, loans? on of you to per loan in different to color teams grade impact, Understanding of that

Christopher Maher

and kind I to understand of have because we and kind clicking, started you we through talking until Teams is out sizes. couple you it. work of Each multiple of have on ahead on ourselves. variety team hiring with teams. of portfolios get But would tell a people to this you, glad board, the hesitancy don't I'm of you our off want that a we're season of people Matt, has

$XXX just million, million hundred dollars. be a maybe might few Some some

have the the we about examples quality think a an a be customer well very when so to to what think the time. to of there get dollars will and priced of those you sense to I'm market into you've deposits. this the doing what for And And give but think blend you of money, if over you opportunity, and very got -- cost we it opportunity the would deposit of free it's millions will higher was kind that I be be. space. not seen deposits, this if base, good of done other is not new going But didn't opportunity your cost And be be in hesitant of wouldn't customers in hundreds banks

tremendously but things April, into So down new and kind and come didn't of not There's But more comfortable to about at lot because way wanted But bankers. going a over I is pool in think on largely. us. built But we'll going we 'XX make we've liquidity hiring of to substantial the a of give new strategy in there's be then. the what we're feel you bankers call years. the a that this commercial we obviously number skis other back information for be been and is. our that after. mode slowed able business get the you little in deliberate environment, this we a up, that we're our It's a that of for the issues market, We bankers, hiring not 'XX

Matthew Breese

little it to further. bit just a maybe And push

with bring to XX% seen the lot statement of these tend or it teams a kind with in an other Is to come deposits going teams that the savings. sounds of to balance being fair things what be XX% we've improvement some in to in? noninterest-bearing these maybe a you in start the market, of of market, There's One demand positive the like, money as at words. market either from

Christopher Maher

we've with consistent conversations the had. that's Yes,

Matthew Breese

I just from is then in where the your a level, it's can and or when you And Where increasingly maybe X up for the [indiscernible] that think favorable. you been kind get just do bigger environment, of XX [indiscernible] at would yield to margins is back picture. curve this historically. XXXX event think, right. XXXX? it's of folks like This mind, yourselves to I curious was your you assume -- kind X%

Christopher Maher

more of pretty shape of fair deposit but if I there's If well, But Probably this Matt, curve. bad the takes the we If -- and the than faster. general the amount resistance really us. uncertainty goes 'XX, is is deliberate our I maybe in still that a nice next. little part repricing But of a one then little our point talked accounts. earlier book, not of had back environment that that's a for about then think year 'XX a that likely rolls this your earlier, maybe longer. point, about right we a bit it a us little hit rate

nice new curve they're the by way, the long to being things our those shows the fine up perform testing are going reprice of that is healthy end things a at the just that And of One those about rates. at to rate. stress going

more have So elevated end time with long the this. of the curve a like having little -- like we being to

march that, in lot a now. the we're but on variables of So

now it see see think happens that a is to a march, pleased But not really just dramatic point to slow us. steady, something you're are that going inflection behind in fashion. We I

Operator

We Schiraldi Sandler. with the Frank Piper next question from have

Frank Schiraldi

know mention being C&I talked, over, think, couple last of You the missed I geographies what bankers Did mentioned you have weeks. I got? you Joe, in I it. new hired about even might --

Joseph Lebel

hired through anywhere I'll But Frank. know, the as all you also geographies. Sure, last bankers Northern we've so from up varied There year, our in Yes. Virginia use some footprint, but in the January new are half market Boston.

the use markets. in in or expect because and just I is hire hired from the we've way hired they're I'll tend something outside New and familiar with We else. the banks those Jersey And to interesting we more in do national happen, things terms we've thing larger it regional credit Philly, So but to of everything example. X

unhappy TD, we've year. additional some But early hired already in we've people They've bonuses seeing from from historically been activity that are and already with the their the paid especially direction. like folks

that. City. we the So fact by we're New also don't lose benefit York hired of a I to in want sight

So throughout all markets. I our would say

Frank Schiraldi

a your there well about reasonably And expansion are very these far result I -- kind then teams niches, did pretty in net? sort current of from? outside Okay. tasking you're geographies thinking an to over, any deposit-focused as portfolio? that Or of just shying come are away this maybe you're of certain geography wide you a mean

Christopher Maher

funding either net, within Cluster happening It's it's a places a us. wide volatility. that, York, Had have footprint. creating that most -- would to on New pretty our like close of that not current be far eye pretty customers look, wide appetite for the an than are sure the would a in kinds that directly Frank, volatile do We of that to service. areas flung make We but more are or like. we conversations they pretty we're source over not in want

all want be So we've the hiring long-term do. goes had for and this relationships we high conversations the and to quality,

we've done. have than that value our they for a durable hiring usually best a C&I that creates the They us. about have are. talking mature and decade more clients, with of We their people love have was long-term relationships Joe where spent people, lot

Frank Schiraldi

a how time is wondering the we've earn what -- think Any earn seen if speaking, right? a some Is back there? be? reasonable thinking just Broadly Obviously, you're to upfront Is broad thoughts it Okay. expenses. do then back is? X reasonable do you through that too a there would what year? And short over

Christopher Maher

I blend, be a Frank. will think it

need track, we the you've good you all you're looked historically going see expect on, as got early as about you're give But conversations, the long momentum, So the right productive, get of teams -- productive some and very feel and right things. the time would on right? have If you productive we that the they're of people at they things. to and pipeline, seeing may kind to that way pretty be That's maturity. we've they're

Our over between X. year at typically, of contributing X point the best year bankers years, kind that they're somewhere and

making cost. all should while business good They high be substantial good, are they've but it's at contributing what along. more time, be unusual has I little inside momentum, them they're but of they kind also doesn't it caution, in talent it talent, these contributions. a part year got it matter of If But could is, would the hit really more not And kinds a that. for the of a percentage if to first. expenses, second right? need us. on year the the this than in not multiyear the It's a margins months the to about say, of, giant is not talking next a if pick for XX represent were people that our would number, I'd is somewhere they're of This But you or kind total number exercise. in costs the the expense of we're stride a still the next

Frank Schiraldi

Okay. And you initiatives? that back and less is focused -- here, here. say, these guess, or M&A burner then given the focus likely the just valuation the of guess -- is you I as stock, I organic say would kind organically on would the of Is you on lastly, are given

Christopher Maher

initiatives. That's organic on focused highly the would of I what say. kind We're

Operator

[Operator question on Tamayo the James. line from another with Instructions] And have we Daniel Raymond

Daniel Tamayo

also picture to asked But big I'll guess answered been have already. one here. and the of ask I my most related questions just So

into track the on a making in credit push C&I but growth record big strong the You're have space, obviously side. CRE and a

kind back CRE business curious the core you're Just thinking Is Just there? you've forward? mix? that if plan is get [indiscernible] business that biggest it lever you concentration how to that's the the it going about again, of had CRE

Christopher Maher

on were a we in conservative the thoughts have portfolio. is very that first We the few it. the way And constructed we

portfolio multifamily. spread So it's urban does business exposure well. been among performing It not have X have It's office central an rent really office. really It's district things to It's doesn't exposure a in stabilized rolling that a or well. states. material like

So customers to signs distress. rates. We've rolled seen kind the not of new of

is good credit testing are good. metrics stress Our the and

book, we're that So a more if diversified. I the like we're we think valuable we recognize company but more

you're repricing So And up. number slowly not opportunity CRE the CI and of seeing CRE in accomplish day. every that coming But originate gives is there's next X we're be this to that's is going the us a will why the CRE the fair quarters. something trying number loans to down amount investor

So we're not markets. markets. our out us for the never We of that we're to It's left the there important clients.

We're But some things is our for and the space the little best paid credits a you to do. of seen can we Obviously, do. appetite little priced want conservative. more best We structured we've get what the a in different. CRE are that

you'll the doing see we're still of blend So But directionally, if a loans. more those of business lines that sense. makes

Operator

that day, enjoy and [Operator does of registered, We for joining. Please the call. conclude your Instructions] now disconnect. may confirm can you today's no questions I you further currently have Thank rest

OceanFirst Financial (OCFC) 24 Jan 252024 Q4 Earnings call transcript