OceanFirst Financial Corp.

Good morning and thank you to all who've been able to join our second quarter 2026 earnings conference call. This morning I'm joined by our President, Joe Lebel, and our Chief Financial Officer, Pat Barrett. We appreciate your interest in our performance and this opportunity to discuss our results with you. This morning we will provide brief remarks about the financial and operating performance for the quarter and some color regarding the outlook for our business. We may refer to the slides filed in connection with the earnings release throughout the call. After our discussion, we look forward to taking your questions. We reported second quarter results that reflect the closing of our transformational acquisition of Flushing Financial Corporation on June 1. On a gap basis, we reported a net loss of $0.04 per fully diluted share, which was driven by $0.47 per share, or $33.6 million, of non-recurring merger-related expenses net of taxes. On a core basis, which excludes non-recurring items, Earnings per share was 43 cents, or $30.5 million, unchanged from the prior quarter and up 39% from the prior year. Pre-tax, pre-provisioned core earnings grew by 29% from the prior quarter to $44.5 million. We've seen quarterly improvement in the company's performance in the second quarter of 2025 in net interest income, net interest margin, and return on average assets. This highlights our multi-quarter journey from our revenue generating investments as we continue to improve towards peer profitability levels. This week, our board also approved the quarterly cash dividend of 20 cents per common share, marking the company's 118th consecutive quarterly cash dividend. As mentioned previously, we complete our acquisition of Flushing Financial Corporation on June 1st, concurrent with the $225 million strategic investment from Warburg Pincus, which was priced at $19.76 per share. Flushing added approximately $8.7 billion in total assets, $5 billion in loans, and $7.4 billion in deposits, along with 30 retail branches across New York City and Long Island, bringing our combined franchise to approximately $23 billion in assets. We're thrilled to welcome the Flushing team and their customers to the Ocean First family. We also repositioned our balance sheet by selling $1.3 billion of multifamily loans acquired from Flushing which eliminated the majority of our exposure to New York City rent regulated properties and reduced the bank's commercial real estate concentration by approximately 50 percentage points to 381%. The proceeds were reinvested into highly liquid investment grade securities. Integration planning is well underway and we anticipate full integration of Flushing's operations and systems including the systems conversion and rebranding by the end of the third quarter of 2026. We're confident in the strategic and financial rationale of this combination, and we are already seeing competitive wins in both talent and customer acquisition. We remain on track to achieve the cost savings and returns outlined at the transaction announcement. A significant portion of our cost saves is expected shortly following systems conversion. Pat will provide additional details on the financial impact of the transaction in his remarks. We remain focused on executing our organic growth strategy, which continues to be reflected in our underlying results this quarter, while also approaching the integration of Flushing with a sense of urgency. I'm proud of the pace at which our staff is moving related to both organic initiatives and the Flushing integration. At this point, I'll turn the call over to Joe for additional color on these businesses.

Thanks, Chris. I'll start with loan originations for the quarter, which totaled $642 million. and increased to 50% from the prior quarter. Excluding the impact of the Flushing acquisition and the multifamily loan sale, underlying commercial organic loan growth was approximately 154 million, or 2% from the prior quarter, reflecting the company's focus on core relationships. These results underscore the continued strength of the core growth initiatives, which the Flushing franchise will further bolster. The C&I business grew 8% on an annualized basis, reflecting the continued momentum from our recruitment efforts in 2024 and 2025. We've recruited another 17 iBankers so far in 2026 and will continue to be opportunistic with hiring efforts throughout the remainder of the year. Total deposits grew by $6.6 billion during the quarter to $17.8 billion driven by the $7.4 billion of deposits acquired from Flushing. Excluding flushing, deposits declined modestly, primarily due to seasonal outflows in government deposits and a reduction in broker deposits. Positively, we did see a 6% increase in non-interest-bearing deposits. The Premier Bank deposits grew by $150 million, while the cost of deposits dropped by 17 basis points. Non-interest-bearing deposits crossed the $100 million mark during the quarter. The group now manages 426 clients and 1,879 accounts and continues to build its momentum. As an added benefit, the premier teams contributed $45 million in loan originations for the quarter. Customer engagement and calling activity has been significant, and the addition of Flushing's branch footprint throughout New York City and Long Island now provides a tailwind moving forward. We remain confident in our 2026 deposit targets and have recently added two new premier teams in Manhattan and Long Island. I wanted to add a brief summary of our calling efforts to date with the flushing teams in the commercial and retail segments of their market. Clients and notable centers of influence in all segments of the business have been welcoming. They are optimistic that we can continue to support their needs while using the scale of the combined company to grow with them. And in some cases, in the commercial bank specifically, grow exponentially. Recent visits in the Asian community specifically have surfaced several significant loan and deposit opportunities in both C&I and CREE. Lastly, non-interest income was 10.6 million during the quarter, up from 6.7 million in the prior quarter, excluding non-core items and Flushing's contribution of 1.4 million. Other income increased 2.5 million, primarily driven by higher net gains on other real estate activity and commercial loan swap income. Overall, non-interest income levels were in line with our expectations. With that, I'll turn the call over to Pat to review the remaining areas of the quarter.

Thanks, Joe. Good morning, everyone. We delivered our eighth consecutive quarter of net interest income growth, which increased $24 million, or 25%, from the prior quarter, 33 million, or 38%, from the prior year. This performance was driven by the addition of Flushing, which contributed $19 million of net interest income, with the remaining increase largely reflective of earning asset growth. Net interest margin expanded 12 basis points to 3.05%. Loan yields increased, reflecting new originations and the net impact of adding the Flushing portfolio. Total deposit costs were 2.06%, reflecting the addition of Flushing's deposit base. Looking ahead, we expect net interest income to benefit further from a full quarter of the combined franchise. Our underlying asset quality remains strong. Reported ratios this quarter reflect the fair value marks on Flushing's acquired loans, including purchased credit deteriorated loans, which elevated our reported nonperforming and criticized loan levels, but are not indicative of underlying credit deterioration. Excluding acquired credit deteriorated loans, Non-performing loans to total loans were 0.33%, and non-performing assets to total assets were 0.38%, both consistent with our historically low levels. Criticized and classified loans did increase to 3.12% of total loans impacted by the Flushing acquisition, but still remained below peer averages. The increase in criticized and classified loans was driven by the application of ocean first credit rating The methodology to the flushing portfolio, which bears repeating, does not reflect a deterioration in credit performance. We have no inherent concerns in the pro forma customer base. Our allowance for credit losses increased to 1.29% of total loans, primarily reflecting the day one reserve established for the flushing portfolio. Net charge-offs were de minimis, representing only five basis points of average total loans on an annualized basis. Turning to expenses, GAAP operating expenses for the quarter were $130 million, including $43 million of merger-related expenses. On a core basis, operating expense of $87 million included approximately $15 million of one month of flushing operations. Excluding flushing, our core expense base of $72 million continued to reflect disciplined expense management across the company. Capital levels remain strong following the acquisition with an estimated common equity tier one ratio of 10.7% flat to the previous quarter. That capital position was supported by the $225 million strategic investment from Warburg Pincus that funded concurrently with the closing of the Flushing transaction. Tangible book value per share was $18.19. reflecting the impact of purchase accounting and the very substantial increase in our allowance for credit losses. Quick word on taxes. Our reported effective tax rate this quarter was impacted by non-deductible merger expenses and a one-time deferred tax revaluation related to the acquisition. On a normalized basis, our ETR was approximately 28%. Given our new profile taxability, we expect our go-forward rate to remain around that level, absent any tax policy changes for the near term. With the flushing acquisition now closed, we're updating our guidance on the pro forma combined company for the remainder of 2026. For loans and deposits, we expect 1% to 2% growth from our June 30th levels by year end. That interest margin should continue to expand to a range of 307 to 312. in Q3, and 309 to 314 in Q4, subject to average balance, seasonal volatility, and with no rate changes modeled through the second half of the year. We expect other income of 12 to 16 million per quarter. We expect operating expenses for the third quarter to decline to the 120 to 125 million dollar range, declining further in the fourth quarter to 110 to 115, as cost savings begin to be realized. As we complete the integration of Flushing and mature our efforts to apply AI-driven automation, we expect that operating leverage will continue to improve throughout 2027. Finally, capital is expected to remain strong and grow with earnings from the current level. We plan to provide detailed guidance for 2027 in the fourth quarter, but I just wanted to highlight that our 2027 profitability targets remain essentially unchanged from when we announced the Flushing deal. One last point, just to talk about consensus estimates. While there's a fair amount of variability among individual analysts and line items within our financials, on average, the earnings estimates look reasonable and should be generally aligned with our outlook for the second half of the year and for next year, both of which, again, remain consistent with our initial estimates at the time we announced the transaction. At this point, and the question and answer portion of the call.