OceanFirst Financial Corp.

Good morning, everyone, and welcome to the Ocean First Financial Corp Quarterly Earnings Conference Call. My name is Daisy, and I'll be coordinating today's event. You will have the opportunity to ask a question at the end of the presentation. If you would like to register a question, please press star followed by one on your telephone keypad. I will now hand over to your host, Jill Hewitt, Investor Relations Officer at Ocean First to begin. So, Jill, please go ahead.

Thank you, Daisy. Good morning, and thank you all for joining us. I'm Jill Hewitt, Senior Vice President and Investor Relations Officer at Ocean First Financial Corp. We will begin this morning's call with our forward-looking statement disclosure. Please remember that many of our remarks today contain forward-looking statements based on current expectations. Refer to our press release and other public filings, including the risk factors in our 10-K, where you will find factors that could cause actual results to differ materially from these forward-looking statements. Thank you. And now, I turn the call over to our host this morning, Chairman and Chief Executive Officer, Christopher Marr.

Christopher Marr Thank you, Jill. And good morning to all who've been able to join our first quarter 2022 earnings conference call today. This morning, I'm joined by our President, Joe LaBelle, and Chief Financial Officer, Mike Fitzpatrick. As always, we appreciate your interest in our performance and are pleased to be able to discuss our operating results with you. This morning, we'll cover our financial and operating performance for the quarter. and provide some color regarding the outlook for our business. Please note that our earnings release was accompanied by an investor presentation that is available on the company's website. We may refer to those slides during this call. After our discussion, we look forward to taking your questions. In terms of financial results for the first quarter, GAAP diluted earnings per share worth 42 cents. Earnings reflect strong loan and deposit growth, expanding margins, decreased operating expenses, and benign credit conditions. Core earnings were 49 cents per share and reflect non-core items, including charges related to 10 branch closures in January, merger charges, and equity valuations. Regarding capital management, the Board declared a quarterly cash dividend of 17 cents per common share and approximately 44 cents per depository share of preferred stock. The common share dividend is the company's 101st consecutive quarterly cash dividend. The 17-cent common share dividend represents 35 percent of core earnings. Given strong growth rates for both loans and deposits, we elected to maintain the current dividend level. Tangible common equity per share increased a penny to $15.94, reflecting modest AOCI marks related to our investment portfolio. For the past year, we've been focusing on adding floating rate instruments to our available for sale investment portfolio, which sacrificed margins at the time but preserved equity positions for the bank during a rising interest rate environment. The company also retired $35 million of subordinated debt, carrying an interest rate of 4.14% on March 31st of this year. Tangible stockholders' equity to tangible assets decreased to 8.6% as the balance sheet grew by $425 million, or 3.6% for the length quarter. The increase in interest-earning assets is being driven by our commercial banking expansion strategy. The company's share repurchase activities continued during the first quarter, with 100,444 shares repurchased. Our appetite for share repurchases remained strong, but trading rules limit the number of shares the company was able to retire while awaiting the approval of the Partners Bank Corp. acquisition. There are 3.2 million shares available under the current repurchase program. Turning to operations, loan originations of just over $1 billion set another quarterly record, helping to deliver $486 million in net loan growth for the first quarter. As of March 31st, the committed loan pipeline remained strong at $515 million. The deployment of cash drove a $3.6 million pickup in net interest income for the quarter and another improvement in net interest margin, which expanded by 19 basis points to 3.18%. It's important to note that the margin expansion was driven by the deployment of cash rather than interest rate movements. We believe that two factors will provide a tailwind for margins in the second quarter. First, the quarter end loan portfolio of $9.1 billion was $269 million higher than the first quarter average of $8.8 billion. Second, the company held $2 billion of floating rate instruments repricing in Q2 which will provide the opportunity to strengthen margins as rates increase in April and perhaps for the remainder of the year. The company is not experiencing pressure on deposit pricing at present, although we expect some pressure may develop later in the year. Credit trends remain very benign, with the company posting another quarter of net loan recoveries. Loan portfolio risk characteristics are very healthy, with low delinquencies, positive risk rating trends, and non-performing assets, excluding PCD loans, of just 19 basis points of total assets. The provision for the quarter was driven by a lengthening of the expected duration of the residential mortgage portfolio and net loan growth. Under CECL, the average loan life can have a measurable impact on reserve requirements, especially in a quarter when mortgage rates increase materially. Much of our reserve remains in the form of qualitative factors that reflect the potential for economic uncertainty in future periods. Core operating expenses decreased by $2 million as compared to the linked quarter, but were a bit higher than we would have liked. The pressure came from information technology and professional services, both of which can be volatile from quarter to quarter. Our expense target for the second quarter will remain steady at approximately $55 million. The effective tax rate should be in the range of 24%. At this point, I'll turn the call over to Joe for a discussion regarding progress this past quarter, including an update on the expansion of our commercial bank.