What OceanFirst Financial (OCFC) Said on Its Q3 Earnings Call

Key Points

• Core earnings surged to $0.48 per share, up 54% from the prior quarter and 131% year over year, although GAAP earnings were $0.17 per share after $29.4 million in merger-related expenses.
• OceanFirst completed the Flushing Financial integration and reported quarterly loan growth of about 5% annualized and deposit growth of 1.8%. Management expects most remaining cost savings in the fourth quarter, with the full run rate reached in the first quarter of 2027.
• Net interest margin was 3.18%, or 3.08% excluding a non-recurring benefit, while asset quality remained solid. The company expects modest near-term growth, stable-to-slightly higher core margins, and continues targeting a 1% return on assets for 2027.

OceanFirst Financial NASDAQ: OCFC reported third-quarter results reflecting its first full quarter as a combined company following the acquisition of Flushing Financial Corp., with management citing loan and deposit growth, expanding net interest income and progress on merger-related cost savings.

On a GAAP basis, OceanFirst earned $0.17 per share during the quarter. Results included $29.4 million, or $0.30 per share after taxes, in non-recurring merger-related expenses. Core earnings, which exclude non-recurring items, were $0.48 per share, or $46.9 million, up 54% from the prior quarter and 131% from a year earlier, according to Chief Executive Officer Christopher Maher.

“We reported third quarter results that reflect our first full quarter as a combined company following the acquisition of Flushing Financial Corporation,” Maher said. The company completed the Flushing acquisition on June 1 and finished the operational integration and rebranding of its 30 branches in New York City and Long Island on Sept. 21.

Integration and Capital Priorities

Maher said the acquisition closing, balance-sheet restructuring and operational integration were completed on schedule. The company remains on track to achieve the cost savings and return targets outlined when the transaction was announced, he said, with third-quarter core operating expenses below the range management projected in July.

OceanFirst expects most remaining cost savings to appear in its fourth-quarter expense run rate, while the full run rate is expected in the first quarter of 2027. The company also cited hiring and customer-acquisition opportunities across the former Flushing footprint.

The board approved a quarterly cash dividend of $0.20 per common and common-equivalent share, representing OceanFirst’s 119th consecutive quarterly cash dividend. The company did not repurchase stock during the third quarter, choosing to preserve capital flexibility during the Flushing integration. About 3.2 million shares remained available under its repurchase authorization.

Maher said OceanFirst expects to become more active in share repurchases now that integration risks have receded, provided buybacks remain accretive to tangible book value and earnings per share.

Loan and Deposit Growth

President Joe Lebel said total loans increased $216 million during the quarter to $16.5 billion, representing approximately 5% annualized growth. The increase included $202 million of commercial real estate growth and $123 million of commercial and industrial growth, partly offset by expected residential loan runoff.

Commercial loan originations rose 15% sequentially to $735 million. C&I lending grew at an approximately 13% annualized rate, as the company continued to pursue diversification within its commercial loan portfolio. OceanFirst recruited 11 C&I bankers during 2026, Lebel said.

Total deposits increased $319 million, or 1.8%, to $18.1 billion. Excluding brokered certificates of deposit, deposits rose $156 million, led by interest-bearing checking and money market balances. Non-interest-bearing checking averaged $2.9 billion, or 16% of average deposits, and the loan-to-deposit ratio ended the period at 91%.

The company’s Premier Bank teams grew deposits by $181 million to $674 million during the quarter, with deposit costs of 2.49%. Lebel said the group managed 490 client relationships and 2,209 accounts and generated $42 million in loan originations. OceanFirst also appointed Eric Howell as president of Premier Bank after he previously worked as a consultant to the company.

Maher said management remains focused on reaching its previously discussed Premier Bank deposit target of $2 billion to $3 billion by the end of 2027, though he said the timing could extend by a quarter or two. He added that the company expects New York to remain the primary market for Premier Bank expansion.

Margin, Expenses and Asset Quality

Chief Financial Officer Pat Barrett said net interest income increased 43% sequentially and 90% year over year to $172 million. The figure included a $5.5 million non-recurring benefit from the payoff of a non-performing loan acquired from Flushing.

Third-quarter net interest margin rose 13 basis points to 3.18%. Excluding the non-recurring recovery, net interest margin was 3.08%. Loan yields increased 27 basis points to 5.82%, while total deposit costs rose 11 basis points to 2.17%.

For the fourth quarter, management expects net interest margin to be stable to modestly higher from the approximately 3.08% core level, excluding the non-recurring recovery. Barrett said the outlook assumes one additional 25-basis-point increase in short-term interest rates in December. The company expects about a 10-basis-point increase in deposit costs in the fourth quarter and first quarter, based on current assumptions.

Core operating expenses totaled $114 million, below OceanFirst’s July guidance of $120 million to $125 million. Management expects core expenses to decline to $110 million in the fourth quarter and said it aims to keep expenses stable from the first-quarter 2027 level, while pursuing automation, vendor renegotiations and other efficiency initiatives.

Asset-quality metrics remained relatively low excluding purchased credit deteriorated loans. Non-performing loans excluding those acquired loans were 0.37% of total loans, while non-performing assets were 0.32% of total assets. Net charge-offs were approximately 4 basis points of average loans on an annualized basis, and the allowance for credit losses stood at 1.29% of total loans.

Outlook for 2027

OceanFirst expects modest loan and deposit growth of 1% to 2% quarterly in the near term. Management maintained profitability targets announced with the Flushing deal, including a 1% return on assets target for 2027.

Barrett said capital remained strong, with an estimated common equity Tier 1 capital ratio of 10.6%. Tangible book value per share was $18.08, down slightly from the prior quarter because of merger costs and a higher accumulated other comprehensive loss tied primarily to interest-rate effects on the securities portfolio. Management expects tangible book value and capital ratios to grow as merger expenses largely subside.

The company expects other income of approximately $13 million per quarter and plans to provide full-year 2027 guidance when it reports fourth-quarter and full-year results in January.

About OceanFirst Financial (NASDAQ:OCFC)

OceanFirst Financial Corp. NASDAQ: OCFC is the bank holding company for OceanFirst Bank, a full-service community bank headquartered in Toms River, New Jersey. The company provides banking and financial services to individuals, families, businesses, and nonprofit organizations.

OceanFirst Bank offers deposit products, residential and commercial real estate lending, business loans, consumer loans, mortgage services, online and mobile banking, and cash-management solutions. Through its wealth-management operations, the company also provides investment management, trust, and financial-planning services.

Founded in 1902, OceanFirst has grown from a savings institution serving the Jersey Shore into a regional banking organization.

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