OceanFirst closes $8.7B Flushing acquisition, sells $1.3B multifamily loans at 7.75% discount

OceanFirst's Board declared a regular quarterly cash dividend of $0.20 per share. Shareholders of record as of August 10, 2026 will receive payment on August 21, 2026. This represents the company's ongoing capital return to shareholders through regular quarterly distributions.

OceanFirst sold $1.31 billion of multifamily loans acquired from Flushing at 92.25% of par and reinvested the $1.20 billion of net proceeds into highly-liquid, investment-grade securities. This repositioning reduced the commercial real estate concentration ratio by approximately 50 percentage points to 381%, increased on-hand liquidity to 11.5% of assets, lowered the loan-to-deposit ratio to 91.60%, and raised the allowance for credit losses to 1.29% of total loans. Management stated the sale reduced exposure to rent-regulated properties in New York City and positions the combined organization for sustainable, long-term growth.

OceanFirst reported a net loss of $3.0 million, or $0.04 per diluted share, for Q2 2026, compared to net income of $16.2 million, or $0.28 per share, in Q2 2025 and $20.5 million, or $0.36 per share, in Q1 2026. The current quarter included $42.8 million of non-recurring merger-related expenses for the Flushing acquisition, representing $33.6 million net of tax, or $0.48 per share. Excluding non-core items, core earnings were $30.5 million, or $0.43 per diluted share, up from $17.7 million, or $0.31 per share, in Q2 2025.

Net interest margin expanded 12 basis points to 3.05% in Q2 2026 from 2.93% in Q1 2026, and net interest income increased by $24.3 million to $120.7 million. The improvement was driven by the repricing of assets and new originations, the addition of loans acquired from Flushing at higher yields, and repricing of deposits and FHLB advances.

The Board of Directors declared the 118th consecutive quarterly cash dividend of $0.20 per share on common stock, payable August 21, 2026, to stockholders of record on August 10, 2026. This maintains the dividend at the same level as prior quarters.

OceanFirst completed its acquisition of Flushing Financial on June 1, 2026, paying $538 million in total consideration to Flushing shareholders. Simultaneously, the company closed a $225 million strategic equity investment from Warburg Pincus. On June 26, 2026, OceanFirst sold $1.3 billion of Flushing's multifamily loan portfolio at 92.25% of par, eliminating the majority of exposure to rent-regulated properties in New York City. The sale reduced the bank's CRE concentration ratio from 461% to 381% and rent-regulated loans to 2.5% of total assets. Proceeds were redeployed into highly-liquid, investment-grade securities at yields approximating the loans sold.

OceanFirst reported core diluted EPS of $0.43 for Q2 2026. Net interest income totaled $121 million, up 25% from Q1 2026 and 38% from Q2 2025, representing the eighth consecutive quarterly increase. Net interest margin expanded to 3.05%, up 12 basis points from the prior quarter. The company reported core ROAA of 0.71% and core ROTCE of 8.92%. Total loans grew to $16.3 billion (up 46% from Q1 2026), largely driven by the Flushing acquisition, while deposits increased to $17.8 billion.

OceanFirst delivered strong organic commercial loan growth with originations of $642 million in Q2 2026, up 50% from the prior quarter. The forward pipeline remained robust at $409 million as of quarter-end. Excluding the Flushing acquisition, total commercial loan growth was 2% compared to Q1 2026, demonstrating continued momentum in the company's core lending business.

OceanFirst maintained a strong capital position with a CET1 ratio of 10.7% as of June 30, 2026, unchanged from the prior quarter despite the impact of the Flushing acquisition. Shares outstanding totaled 98.4 million as of quarter-end. Tangible book value per common share decreased to $18.19 from $19.86 in the prior quarter, primarily due to the acquisition. The company continues to target a CET1 ratio above 10.5% and has sufficient capital to fund near-term growth.

OceanFirst provided guidance for the remainder of 2026, expecting loan growth of 1-2% by year-end driven by C&I lending, offset by residential portfolio run-off. The company projects net interest margin of 3.07%-3.12% in Q3 2026 and 3.09%-3.14% in Q4 2026, with no rate changes modeled. Operating expenses are expected to be $120-125 million in Q3 2026 and $110-115 million in Q4 2026, with the majority of cost savings from the Flushing acquisition flowing through in October. The core systems conversion is targeted for September 2026.