Participation in office loan trips up New Jersey bank

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OceanFirst Monetary Corp. in Pink Financial institution, New Jersey, stated it expects to report elevated third-quarter charge-offs linked to its participation in a mortgage secured by a Manhattan workplace constructing. 

The $13.6 billion-asset OceanFirst acknowledged Thursday in a present occasions submitting with the Securities and Alternate Fee that mortgage losses linked to the Manhattan workplace credit score would complete between 45% and 50% of its $17 million complete publicity. For the second quarter, the corporate reported $123,000 of charge-offs. 

OceantFirst’s announcement got here only a day after First Horizon Corp. in Memphis, Tennessee, and the Greenville, South Carolina-based United Neighborhood Banks revealed they’d report substantial third-quarter charge-offs tied to their participation in a $218.5 million mortgage to an oil distribution firm. The $26.1 billion-asset UCBI expects to jot down off about $19 million, whereas First Horizon’s losses might complete $70 million. 

Workplace loans are rising as a selected space of concern for banks, regulators and buyers. The Federal Deposit Insurance coverage Corp. underscored considerations in regards to the workplace market in its most up-to-date danger evaluation, whereas a number of banks have moved to extend reserves or curtail lending to the sector.  

In its 8-Ok submitting, OceanFirst acknowledged the Manhattan workplace mortgage quantities to about 17% of the corporate’s $130 million portfolio of central enterprise district workplace loans. OceanFirst added it’s “regularly evaluating” them and “at present just isn’t conscious of different materials losses inside this portfolio.” 

David Bishop, who covers OceanFirst for Hovde, characterised the charge-off as “extra a selected borrower associated challenge fairly than a systemic challenge with the general CRE portfolio.” Janney Montgomery Scott Analyst Chris Marinac reached the same conclusion noting Friday in a analysis word that OceanFirst’s general ratio of criticized loans to loans, at 1.18%, is decrease than most friends.

Marinac reiterated his “purchase” score on OceanFirst. Bishop rated the corporate’s shares at “outperform.” 

OceanFirst shares have been buying and selling at $16.09 Friday afternoon, down 1.44%.