OceanFirst Financial (US:OCFC)2024-01-19 19:32Financial Data and Key Metrics Changes - The company reported GAAP diluted earnings per share of $0.46 for Q4 2023, with net interest income of $87.8 million, a decrease from $91 million in the prior linked quarter [65][68] - Operating expenses decreased to $60.2 million, excluding a special FDIC assessment of $1.7 million, and further down to $58.5 million [65][68] - The common equity Tier 1 capital ratio increased to 10.88%, with tangible book value per share growing to $18.35 [69][71] Business Line Data and Key Metrics Changes - Non-maturity deposits grew approximately 1% linked quarter, while overall deposit balances declined by about 1% due to a planned runoff of brokered CDs [73] - The percentage of brokered CDs to total deposits dropped to 6%, reflecting successful organic deposit growth of $760 million for the year [74] - Loan origination showed tempered growth due to reduced customer demand, with expectations for mid-single-digit growth in loans and deposits in 2024 [75] Market Data and Key Metrics Changes - Deposit betas increased to 38% from 35% in the prior linked quarter, indicating a slowdown in the pace of deposit cost increases [68] - The loan-to-deposit ratio remained below 100%, with a decision to reduce brokered time deposits by $364 million [68][69] Company Strategy and Development Direction - The company aims to maintain expense discipline and prudent balance sheet management while focusing on responsible growth [71] - The Board approved a quarterly cash dividend of $0.20 per common share, marking the 108th consecutive quarterly cash dividend [70] - The company is considering reactivating its share repurchase program, especially as it trades below tangible book value [71][86] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for margin stabilization and modest expansion throughout 2024, contingent on stable liquidity and funding conditions [77][78] - The company anticipates a resurgence in customer demand for loans, with growth expected to accelerate in the latter half of 2024 [75][90] Other Important Information - The company reported essentially zero net charge-offs, with nonperforming loans and criticized assets representing only 0.29% and 1.44% of total loans, respectively [76] - The effective tax rate for the quarter was 24%, expected to remain in line with prior periods [79] Q&A Session Summary Question: What are the assumptions regarding rate cuts and their impact on margins? - Management assumes three rate cuts in midyear, with a cautious outlook on the impact of these cuts on net interest income [88] Question: How does the company expect to fund loan growth? - The company expects to fully fund loan growth with continued core deposit growth as relationships deepen [91] Question: What is the outlook for deposit costs and margins? - Management indicated that deposit costs may see a lag effect in response to rate cuts, with a competitive environment for deposits expected to persist [100][101]