OceanFirst Financial NASDAQ: OCFC reported first-quarter 2026 results highlighted by higher earnings and continued net interest income growth, while management reiterated its standalone full-year outlook and provided an update on the pending Flushing Financial merger.
Quarterly earnings and net interest income growth
Chairman and CEO Christopher Maher said the company delivered “solid first-quarter results,” with GAAP earnings per share of $0.36 and core earnings per share of $0.43. Maher noted GAAP EPS increased $0.01 year-over-year, while core EPS increased $0.08, or 23%, compared to the prior-year quarter.
Maher said OceanFirst posted its fifth consecutive quarter of net interest income growth, with net interest income up $1 million, or 1%, from the linked quarter and up $10 million, or 11%, from the prior-year quarter. The company’s net interest margin expanded to 2.93%, which Maher attributed to “lower costs of funds and earning asset growth,” alongside an increase in average net loans of $268 million.
Loan growth, deposit growth, and Premier Bank momentum
President Joe Lebel said loan originations totaled $429 million in the quarter, helping drive loan growth of $92 million, which he said was in line with expectations given typical first-quarter seasonality and some customer closings that were accelerated into the end of the fourth quarter.
Lebel highlighted strength in commercial lending. He said the company’s C&I business grew 19% on an annualized basis versus the linked quarter, and that closed loan volume in C&I and commercial real estate increased 81% year-over-year, reflecting momentum from talent recruited in 2024 and 2025. Lebel added that OceanFirst hired three additional C&I bankers in the first quarter and expects more hiring in coming quarters.
On the funding side, Lebel said total deposits grew by $192 million, or 2%, during the quarter. Excluding broker deposits, deposits increased $314 million, which he described as “broad-based organic growth across our core business lines and institutional deposits.”
Lebel also provided an update on the company’s Premier Bank initiative. Premier Bank deposits increased $9 million, or 3%, from the linked quarter. Since the May 2025 inception, Lebel said the team has brought in over 1,500 new accounts across 400 relationships, with about 20% of those accounts being non-interest-bearing. He said Premier teams contributed $21 million in loan originations during the quarter and that the Premier loan pipeline stood at $40 million. Lebel said OceanFirst remains confident in its 2026 Premier deposit targets and has added two new Premier teams in Manhattan and Long Island.
During the Q&A, Maher told Raymond James’ Daniel Tamayo that some deposit seasonality is typical in OceanFirst’s geography, but he said he expects Premier momentum to improve in the second and third quarters, adding that the company is “generally optimistic” about the trajectory.
Credit quality and expense management
Management characterized asset quality as strong. Maher said loans classified as special mention and substandard were 1.5% of total loans, below the company’s 10-year average of 1.8% and within the “top decile” of its peer group. CFO Pat Barrett said non-performing loans to total loans and non-performing assets to total assets were both 0.31%, and net charge-offs were “de minimis,” at three basis points of average total loans on an annualized basis.
Barrett noted criticized and classified loans rose during the quarter due to “one large commercial relationship” that remains current and well collateralized. In response to a KBW question about credit migration, Maher said it was “a single customer who had a weak year last year,” and added the company does not see a broader pattern.
On expenses, Maher said GAAP operating expenses were $73 million, including $4 million of merger-related expenses. On a core basis, expenses were $69 million, down $2.1 million, or 3%, from the linked quarter. He attributed the decline primarily to the company’s strategic move to outsource its residential lending platform and ongoing expense discipline.
Barrett said core non-interest expense declined from $71 million to $69 million, driven by the outsourcing initiative, while non-core items in the quarter were “almost entirely” Flushing merger-related. Looking ahead, he said the company expects a second-quarter core operating expense run rate of $70 million to $71 million.
Maher and Lebel also discussed hiring plans, particularly in New York and in C&I. Maher said OceanFirst expects to add talent while keeping expenses within guidance, citing infrastructure changes and efficiency gains. Barrett added that investors “shouldn’t be surprised” if compensation rises while data processing costs decline, resulting in a net “push.”
Outlook, rate environment, and Flushing merger update
Barrett said OceanFirst expects “positive expansions in net interest income” in line with loan growth and a “stable to modest increase in margin” over the next few quarters. He also addressed questions about competition, telling analysts that competitive intensity is affecting the ability to expand loan yields, with benefits from maturities and rollovers “being competed away for new originations.”
Barrett reiterated that there were no changes to full-year standalone guidance, though he said the company removed the modest modeled benefit from potential additional Fed rate cuts. He summarized management’s standalone expectations as:
- Mid- to high-single-digit loan and deposit growth
- Net interest margin growing past 3% in the back half of the year
- Other income of $7 million to $9 million per quarter
- Expenses stable at $70 million to $71 million per quarter
Barrett also said the effective tax rate was 24% in the first quarter and is expected to remain in the 23% to 25% range absent policy changes, though he noted the Flushing acquisition will affect taxes after closing.
On capital and shareholder returns, Maher said the company’s estimated common equity Tier 1 ratio was 10.7% and that tangible book value per share increased to $19.86. He said share repurchases during the quarter were limited to shares related to the vesting of employee equity awards, with no repurchases made under the board authorization. Maher also noted the board declared a quarterly cash dividend of $0.20 per share, marking the company’s 117th consecutive quarterly cash dividend.
Regarding the pending Flushing Financial transaction and Warburg Pincus investment, Maher said both companies have received shareholder approval and that the merger has received regulatory approvals from the New York State Department of Financial Services and the OCC, with Federal Reserve approval remaining. Maher reiterated expectations for a second-quarter 2026 closing and a third-quarter 2026 systems integration and rebranding. He also said OceanFirst has arranged to accommodate branch transactions for all customers in all branches effective on day one of combined operations.
Asked about potential portfolio actions related to Flushing, Maher said the company would share details once it works through “legal day one” considerations. He said the merger model is “holding up” with “no deviation” in marks or earnback periods based on current views. Maher also told KBW’s Tim Switzer that closing would occur promptly after final regulatory approval, but noted that typically “you’re not really able to close for about 15 days” after receiving Fed approval.
Maher said OceanFirst plans to provide a more detailed financial update on the Flushing merger with second-quarter earnings, including a discussion of a pro forma balance sheet and updated projections.
About OceanFirst Financial NASDAQ: OCFC
OceanFirst Financial Corporation NASDAQ: OCFC is a bank holding company headquartered in Toms River, New Jersey, that provides a full range of community banking and financial services through its principal subsidiary, OceanFirst Bank. Established in the early 20th century, the company has built its business around serving the deposit, lending and wealth management needs of individuals, small businesses, municipalities and nonprofit organizations across New Jersey and portions of New York.
The company's core activities include accepting consumer and business deposits, making commercial, municipal and consumer loans, and offering residential mortgage financing.
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