OceanFirst Financial Corp. (NASDAQ:OCFC) Q4 2022 Earnings Call Transcript

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I think we are pretty comfortable in mid single-digit growth. It could be a little bit more — it could be a little bit of choppiness in markets goes back and forth. We’ve seen already — we saw some pullback in Q4 with some of our clients, yet already in Q1,we’ve had people out looking for opportunities. So there’s still a lot of liquidity in the investor market, and people want to put money to work. There’s a bunch of funds out there that we’ve been fortunate the bank over the years that have money available for opportunities. So I do think there’ll still be opportunities for us to continue to grow rapidly or responsibly if you better actually said responsibly.

Christopher Maher: I would just to kind of complement Joe and his team, we’ve assembled a group of commercial bankers that specialize in a lot of different things, which gives us the opportunity to really diversify not only the portfolio, but the growth we’re putting on in any one period and the geographic diversity. So we have the opportunity markets they come and go and they’re hot and cold. And our opportunity to have seasoned bankers in some of the largest markets in the country is really proving to be an advantage. It allows us to be very selective about kind of how we choose to grow and which types of risks we take on.

Michael Perito: Great. And then just lastly for me, it was great to see the ROE of the business. You guys talked a lot about the inputs being ahead of schedule, but like the 15% level, high-level for you guys over the last handful of years. There’s a narrative that banks are kind of at peak earnings and there’s pressures on OpEx, NIM, all those things. Just curious, I know you guys aren’t willing to necessarily provide targets, but — any comments on kind of how that — this ROE level kind of compares to your internal expectations? And are you guys expecting? I mean it sounds like you are, but is it fair to say that you guys expect to be able to kind of maintain that level for the majority of next year, give or take?

Christopher Maher: I’d start with some humility and just say that it’s a cloud a year. It’s hard for any of us, I think, to have a lot of certainty around what’s coming. But there are a few things that have panned out in the last year that have kind of confirmed our opinions on our business. So first, you see the deposit beta. Yes, we are going to be a little more competitive around deposits in the first half of the year. But our existing deposit base has been rock solid, and that’s going to continue to serve us well. So while we may have to pay up for deposits, we are not paying up on the portfolio. We are paying up on the amount of deposits we have to kind of grow to fund loan growth. So I think that’s a great opportunity.

In terms of loan yields, you saw the loan yield pickup, the investment yield pickup this quarter. That should continue as rates continue to rise. So Pat mentioned the level of floating rate assets we have. So — so without growth, I think you’ve got some margin expansion. We may trade some of that off. We run a business every day. We want to bring new clients in. You bring clients in on sunny days and rainy days and everything in between because they’re good clients. So I think our outlook is generally that margin should continue to improve for a while. I don’t think we’re at peak margin. In terms of operating efficiency, I think we’ve done a good job to date. But as Pat mentioned, we are thinking hard about long-term kind of structural expenses, how can you be even more efficient as you grow?

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