OceanFirst Financial Corp Q3 2025 Earnings Call Transcript

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

Question: Daniel Tamayo - Raymond James - Analyst : Hey, good morning, everybody. Thanks for taking the questions. Yeah, maybe we could just start on the net interest income guidance. Just to clarify, there's a few things happening. I think in the slide deck, there was a comment about reaching 3% by the end of -- or maybe it was a terminal 3% rate in 2026. And then, Pat, you just mentioned potentially reaching 3% by mid-2026. The 8%-ish guidance for NII growth in 2026 pretty much implies that that would be more of an end-of-the-year story. And then that also implies kind of a reduction in the balance sheet from the end of the year. So sorry to pile all that into one question. But maybe you can just unpack the NII guidance from a balance sheet compared to a margin story for next year. It would be helpful. Thank you.

Question: Daniel Tamayo - Raymond James - Analyst : Okay. I appreciate what you said on the terminal rate, first of all. That was obviously a mistake on my side. But -- so that -- I guess, if the margin is up at that level, that would imply the balance sheet is going to come down -- not down in the fourth quarter -- but down relative. There was some pretty significant growth on overall balances in assets in the third quarter. It sounds like you pre-funded some growth with securities for next year. So there's some dynamic with the average earning assets coming down relative to the size of the overall balance sheet in the fourth quarter. Is that the way to think about it?

Question: Daniel Tamayo - Raymond James - Analyst : That's helpful. Okay. And thanks for the clarification on the securities. But ultimately, the NII numbers that you guys are talking about, just putting the guidance together, is my math correct here? It gets me kind of the $380 million range for 2026 for net interest income. Is that what we should be looking at?

Question: Daniel Tamayo - Raymond James - Analyst : Okay. Okay, so this 7% to 9% NII off of 2025 is kind of a floor? Is that the way (multiple speakers) that or better? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. OCTOBER 23, 2025 / 12:00PM, OCFC.OQ - Q3 2025 OceanFirst Financial Corp Earnings Call

Question: Daniel Tamayo - Raymond James - Analyst : Understood. Yeah, no, sorry for all the confusion on my end. I appreciate all the color, guys. I'll step back at this point. Thank you.

Question: Timothy Switzer - Keefe Bruyette & Woods Inc - Analyst : Hey, good morning. Thank you for taking my question.

Question: Timothy Switzer - Keefe Bruyette & Woods Inc - Analyst : Hey, good morning. So the first question I have is around the Premier Bank. Sorry if you guys touched on this in the call, but you doubled deposits this quarter. It looks like you got to double it again from a larger base for Q4. What's driving the acceleration there? I'm sure you already have a good amount of high points in the quarter, but just curious what's driving that. And is there any color you can provide on this trajectory as you try to get that $2 billion to $3 billion by the end of '27?

Question: Timothy Switzer - Keefe Bruyette & Woods Inc - Analyst : I'm sorry, I was on mute. Thank you. It was also great to see the $85 million of loan originations related to Premier Bank. That seems like that's a bit above kind of what you guys are expecting, at least, in terms of like an LDR. But certainly, so now we can move around. But can you maybe provide an update on your expectations there?

Question: Timothy Switzer - Keefe Bruyette & Woods Inc - Analyst : Okay, great. And then I want to make sure I heard this correctly. I think you guys said the restructuring at the residential mortgage business will provide about a $10 million pre-tax benefit. So if that's a $14 million expense savings, it implies about a $4 million headwind of revenue. Are there other headwinds expected in non-interest income that gets you that $25 million to $35 million guide? Because that's obviously at the low where you guys are trending for this year.

Question: Timothy Switzer - Keefe Bruyette & Woods Inc - Analyst : Okay. Very helpful. Appreciate all the color.

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

Question: David Bishop - Hovde Group LLC - Analyst : Hey, Chris, Joe, appreciate the color on the NDFI exposure there. Obviously, that's been in the headlines a bit. Any color you can provide there in terms of the nature of that lending, how it sort of bifurcates with the sort of the regulatory guidelines? And then, secondly, on the loan side, any update on, GovCon exposure, with the shutdown, how that portfolio might be holding up on a credit perspective. Thanks. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. OCTOBER 23, 2025 / 12:00PM, OCFC.OQ - Q3 2025 OceanFirst Financial Corp Earnings Call

Question: David Bishop - Hovde Group LLC - Analyst : Yeah, thank you.

Question: David Bishop - Hovde Group LLC - Analyst : On the GovCon exposure.

Question: David Bishop - Hovde Group LLC - Analyst : Got it. And then you've had an update in terms of thoughts on the sub-debt and that sort of reset -- any thoughts on sort of refining or paying off things? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. OCTOBER 23, 2025 / 12:00PM, OCFC.OQ - Q3 2025 OceanFirst Financial Corp Earnings Call

Question: David Bishop - Hovde Group LLC - Analyst : Got it. Thanks.

Question: Tyler Cacciatori - Stephens Inc - Analyst : Hi, good morning. This is Tyler, on for Matt Breese. The cost of deposits were stable again quarter over quarter despite strong deposit growth including demand deposits. And I know you talked about competition a little bit. But when do you think we start seeing some of the benefits from the team in terms of lower all-in costs there?

Question: Tyler Cacciatori - Stephens Inc - Analyst : Great, thank you. And then my next question is about the ROA. When do you guys think you can hit a 1% ROA here?

Question: Tyler Cacciatori - Stephens Inc - Analyst : Great. And then just my last question here. I think you said it in the prepared remarks -- sorry if I missed it -- about the deposit composition of -- the deposits the Premier team is bringing on and if the expectations of that 30% DDA target has changed at all.

Question: Tyler Cacciatori - Stephens Inc - Analyst : Great. Thank you. That'll be it for me.