OceanFirst Financial (OCFC) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income available to common stockholders was $23.4 million ($0.40 per diluted share), down from $26.8 million ($0.45) year-over-year; core diluted EPS was $0.39.

• Asset quality remained strong, with non-performing loans at 0.33% of total loans and criticized/classified assets at 1.42%.

• CET1 ratio increased to 11.2%, and tangible book value per share rose to $18.93, up 7% year-over-year.

• Share repurchases totaled 338,087 shares ($5.0 million) in Q2, with 1,295,914 shares ($20.1 million) repurchased YTD; a $0.20 per share quarterly dividend was declared.

• The company is focused on organic growth, especially in C&I lending, and expects stronger loan growth in the second half of 2024.

Financial highlights

• Net interest income for Q2 2024 was $82.3 million, down from $92.1 million year-over-year and $86.2 million sequentially.

• Net interest margin compressed to 2.71% from 3.02% year-over-year, with funding costs rising as deposit betas increased to 42%.

• Operating expenses were stable at $58.6 million, reflecting performance improvement initiatives.

• Provision for credit losses increased to $3.1 million in Q2 2024, including a $1.6 million charge-off on a single CRE relationship.

• Deposit balances declined, with non-maturity deposits down and brokered CDs running off by $142 million.

Outlook and guidance

• Management expects loan growth to return in H2 2024, with low to mid-single digit annualized growth by Q4 and a strong pipeline with higher yields.

• Net interest margin is expected to see modest compression or stability for the remainder of 2024.

• Operating expenses are guided to $58–$60 million per quarter.

• CET1 ratio is expected to remain robust, above 10%.

• The company expects the sale of collateral from a previously charged-off CRE relationship to close in Q3 2024.