OceanFirst Financial Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Good morning. In terms of the new teams brought over, any specific sectors targeted here that you can share? And then I know it's -- obviously a lot depends on rates and so forth. But just any thoughts about around the mix that is likely to come over in terms of pickup in overall costs or

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Okay. Alright. I appreciate that. And then you mentioned the opportunity maybe to bring over additional folks. Just curious, given timing of bonuses, the way that works, is that more sort of a 2026 expectation? Or is there still opportunity here in coming weeks and months?

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Okay. And if I can just sneak one more in. In terms of the expense increase, 10% on run rate, $4 million related to these Premier groups. Just anything else to call out in terms of the rest of it? Is it just the 10% increase? Is it just general investments? Anything to call out there?

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Got you. Okay. Alright. I appreciate it. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 3:00PM, OCFC.OQ - Q1 2025 OceanFirst Financial Corp Earnings Call

Question: Tim Switzer - Keefe, Bruyette & Woods, Inc. - Analyst : Hey, good morning. Thank you for taking my question. I have a few follow-ups on the Premier Bank. Can you maybe walk us through kind of like the messaging to customers on Premier Bank versus kind of more classic oceans and what the reception has been so far in people who have joined the Premier Bank?

Question: Tim Switzer - Keefe, Bruyette & Woods, Inc. - Analyst : Okay. How many new customers is this bringing in versus moving larger legacy customers over into Premier Bank?

Question: Tim Switzer - Keefe, Bruyette & Woods, Inc. - Analyst : Okay. Got you. And then sorry if I missed this and jumping around calls, but can you update us on your plans for refinancing the sub debt if you want to after you've paid off the preferred?

Question: Tim Switzer - Keefe, Bruyette & Woods, Inc. - Analyst : Got it. Very helpful. Thank you, guys.

Question: David Bishop - Hovde Group, LLC - Analyst : Yeah, good morning, gentlemen.

Question: David Bishop - Hovde Group, LLC - Analyst : Curious, probably more a question for Joe. The growth in the C&I obviously was very strong this quarter. Just curious, does that represent maybe new sectors or segments and types of customers you're being able to book? And just curious where that growth was geographically? Was it broad-based? Or was it centered in any specific regions?

Question: David Bishop - Hovde Group, LLC - Analyst : Got it. And then Pat, you noted maybe waning ability to lean on deposit costs. Just curious of maybe -- I don't know if you have the spot rate of average cost of deposits at quarter end, but maybe a near-term outlook where you see maybe deposit costs trending? It sounds like there could be some seasonality in the second quarter that may require you to lean on borrowing. So did I read that right?

Question: David Bishop - Hovde Group, LLC - Analyst : Got it. I appreciate the color.

Question: Christopher Marinac - Janney Montgomery Scott, LLC - Analyst : Hey, thanks, good morning. As you execute the new Premier Bank initiative, how much of the customer kind of wallet do you think you'll get over time? And is that any different as you've kind of gotten closer to the launch compared to what it had been in the past?

Question: Christopher Marinac - Janney Montgomery Scott, LLC - Analyst : Got it. And Joe, is it fair that some of the teams that may be out there that you may not be pursuing as hard because you may not be having the same visibility to bring their full wallet over? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 3:00PM, OCFC.OQ - Q1 2025 OceanFirst Financial Corp Earnings Call

Question: Christopher Marinac - Janney Montgomery Scott, LLC - Analyst : Okay. I was just trying to delineate between the big opportunity and kind of how much kind of gets narrowed down into the funnel over time.

Question: Christopher Marinac - Janney Montgomery Scott, LLC - Analyst : Understood, Chris. Thanks for that. And then just one follow-up, I guess, from a credit perspective. Does this time of year with new financial statements make any difference to kind of how the risk ratings may play out? We've had obviously good experience here in recent quarters.

Question: Christopher Marinac - Janney Montgomery Scott, LLC - Analyst : Well stated, Chris. Thank you very much for sharing that too. I appreciate it.

Question: Daniel Tamayo - Raymond James Financial, Inc. - Analyst : Thank you. Good morning, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 3:00PM, OCFC.OQ - Q1 2025 OceanFirst Financial Corp Earnings Call

Question: Daniel Tamayo - Raymond James Financial, Inc. - Analyst : Yes. Maybe just going back to Premier Bank kind of longer-term goals you put in there the two year to three year ramp and how much you're expecting to get on deposits. Curious if you guys are thinking about, given you're putting on a lot of expenses kind of immediately, it's going to impact profitability, but kind of longer term, where this takes the bank, if you have any kind of targets from a financial perspective, where you think that might break even relative to where you would have been before if there's a loan to deposit -- sorry, a lot of questions in here, but loan deposit thoughts longer term as well. Thanks.

Question: Daniel Tamayo - Raymond James Financial, Inc. - Analyst : No, that was great. I guess the only other question within there is just do you have a target in mind for where you want the loan-to-deposit ratio to be?

Question: Daniel Tamayo - Raymond James Financial, Inc. - Analyst : Okay. And then I guess, lastly, just to put a finer point on the expense build. You talked a lot about it. Pat talked about it earlier. But -- so should we think about the 10% increase that's off of the what, it's --

Question: Daniel Tamayo - Raymond James Financial, Inc. - Analyst : Okay. So 10% on the $64.3 million in the second quarter? And then any other kind of incremental build that we should expect going forward? Or kind of how you were thinking about expense growth prior to this announcement is still about -- still makes sense?

Question: Daniel Tamayo - Raymond James Financial, Inc. - Analyst : Okay. So 10% off of $66 million in the second quarter and then assuming no other hires kind of a normal, call it, mid-single-digit growth rate off of that. And then if you do have more hiring, then that would be incremental.

Question: Daniel Tamayo - Raymond James Financial, Inc. - Analyst : Got it. So I guess back of the envelope that you're going to be kind of maybe $73 million-ish for the rest of the year. It sounds like it's in the ballpark.

Question: Daniel Tamayo - Raymond James Financial, Inc. - Analyst : Got it. Okay. Alright. Thanks very all the color. I appreciate it.

Question: Matthew Breese - Stephens Inc. - Analyst : Hey, good morning. I was hoping with the Premier teams and the anticipated deposit growth, could you give us some help on how we should think about the overall balance sheet size. With the growth, is it a one-for-one increase? Or do you expect reductions in some of your higher cost funding categories? And if so, kind of just frame for us what you'd like to run off?

Question: Matthew Breese - Stephens Inc. - Analyst : Okay. I know the teams are going to be metro New York City based, Long Island based. Any of them have a more national kind of customer focus or national business line focus? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 3:00PM, OCFC.OQ - Q1 2025 OceanFirst Financial Corp Earnings Call

Question: Matthew Breese - Stephens Inc. - Analyst : Got it. Okay. Yes, that's what I was looking for. And then the last one for me is obviously, there's more of a C&I focus. And commercial real estate has been deemphasized to some extent here. Could you just update us on what your current CRE concentration is, where you'd like it to be? And do you foresee any sort of kind of bulk sales to kind of help get you there? It sounds like the environment from a payoff and competitive standpoint is a bit more friendly today?

Question: Matthew Breese - Stephens Inc. - Analyst : Okay. I guess that leads to -- and this is the last one, why not a more positive bias on the NII outlook granted, we're just looking at 2Q for the presentation, but it feels like if there's movement in deposit costs, it should be lower, especially with the new teams. To your point on the repricing on fixed assets, it's positive. When -- if it's not 2Q, when do we start to see that inflection point in the NIM and NII just from the simple mechanics of repricing the fixed assets and deposits?

Question: Matthew Breese - Stephens Inc. - Analyst : I'll leave it there. Thanks for taking my question. I appreciate it.

Question: Manuel Navas - DA Davidson & Co - Analyst : Hey, good morning. What is the current book of business for these new hires at past institutions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 3:00PM, OCFC.OQ - Q1 2025 OceanFirst Financial Corp Earnings Call

Question: Manuel Navas - DA Davidson & Co - Analyst : So any new hires just kind of build that target a little bit higher?

Question: Manuel Navas - DA Davidson & Co - Analyst : If we get to those targets, that could be 20% plus of your deposits, would you reevaluate at that point how big this Premier Bank could get? Prior institutions got very large doing this, and you have a key recruiter that could continue this process for years. What are your kind of thoughts like the long-term growth here?

Question: Manuel Navas - DA Davidson & Co - Analyst : In the Premier Bank model for the [nine teams], are there any differences or improvements on product or comp here versus what they had at prior institutions?

Question: Manuel Navas - DA Davidson & Co - Analyst : Shifting over to loan growth for a moment. Can this mid-single-digit expectations for the second quarter with continued Premier Bank progress become a more normalized rate, especially with the ramp in the pipeline you've already seen?

Question: Manuel Navas - DA Davidson & Co - Analyst : And a shift in topic a bit is with growth potentially picking up during the second -- into the second quarter, you were able to buy back just under 1% of shares in the first quarter. You talked a little bit about buybacks continuing -- potentially continuing. Where do you kind of see -- where do you balance buybacks versus growth kind of near term?

Question: Manuel Navas - DA Davidson & Co - Analyst : Right. I appreciate the commentary. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 3:00PM, OCFC.OQ - Q1 2025 OceanFirst Financial Corp Earnings Call