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Investing.com -- Moody’s Ratings has affirmed all ratings forOceanFirst Financial Corpand its banking subsidiary,OceanFirstBank, N.A., while changing their outlook to negative from stable.
The rating action follows Monday’s announcement that OceanFirst will acquireFlushing Financial Corporationin an all-stock transaction. The deal is expected to close during the first half of 2026, pending regulatory and shareholder approvals.
As part of the transaction, OceanFirst has agreed to raise $225 million in common equity through the sale of shares and warrants to affiliates of funds managed by Warburg Pincus LLC. This will give Warburg Pincus a 12% ownership stake in OceanFirst and one board seat.
The ratings affirmation reflects OceanFirst’s solid pro forma capitalization, supported by the capital infusion from Warburg Pincus, reduced reliance on less stable funds, and potential for improved profitability after completing theFlushingintegration.
Moody’s noted that the acquisition will enhance OceanFirst’s scale and market position over time, which is considered credit positive. However, the negative outlook reflects near-term operational and execution risks associated with this sizable transaction, as well as potential governance risks from having Warburg Pincus as a significant minority investor.
Flushing’s total assets and loans each represent slightly more than 60% of OceanFirst’s as of September 30, 2025, while Flushing’s total deposits were approximately 70% of OceanFirst’s.
Moody’s expects OceanFirst’s tangible common equity to equal at least 11.0% of risk-weighted assets at closing, up from 10.8% at September 30, 2025, but still below the 11.4% recorded at year-end 2024.
The ratings agency also highlighted that OceanFirst’s commercial real estate concentration will increase with the Flushing acquisition, though this is expected to return to pre-acquisition levels over the medium term.
The outlook could return to stable if OceanFirst successfully executes the Flushing integration and achieves its intended cost savings and profitability targets while maintaining solid capital and reduced reliance on less stable funding.
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