- Key insight: The deal is expected to create a $23 billion-asset company with operations focused around New Jersey and New York.
- What's at stake: OceanFirst is vowing to reduce its commercial real-estate concentration, which was already hefty and will grow larger following the completion of the Flushing transaction.
- Forward look: Warburg Pincus will make a $225 million investment in the combined company, giving the private equity firm a seat on the board and a 12% ownership stake.
UPDATE: This article includes information from OceanFirst's conference call with analysts on Tuesday as well as from a note by Janney Montgomery Scott analyst Christopher Marinac.
OceanFirst Financial in New Jersey has inked one of the last bank deals of 2025, agreeing to buy Long Island-based Flushing Financial for $579 million in stock.
The private equity firm Warburg Pincus will invest $225 million for newly issued equity securities
The banks' combination will create a regional player with $23 billion of assets and 71 branches, primarily across New Jersey, New York and the Philadelphia area.
OceanFirst's common stock is expected to represent about 58% of the merged company, while Flushing stockholders should hold about 30% of the outstanding shares. The shares issued to Warburg Pincus in the capital raise are expected to make up about 12%.
Following the deal's announcement, investors sold off shares in the banks. OceanFirst's stock price was down 5.6% in afternoon trading on Tuesday. Flushing's stock was down nearly 8%.
An important regulatory benchmark does make the deal somewhat less beneficial than it would be otherwise. Flushing currently sits below $10 billion of assets, meaning it isn't subject to debit interchange price caps. Once OceanFirst swallows the smaller bank, it won't be able to reap some of that fee income, wrote Janney Montgomery Scott analyst Christopher Marinac in a note to clients.
But Marinac said that he sees the acquisition as "a modest price to remove a competitor" in the New York and New Jersey markets.
OceanFirst entered New York City in 2019 and has been steadily growing its presence there, CEO Christopher Maher told analysts on Tuesday.
"Broadly, we view this merger as an opportunity to support our growing New York franchise and to make OceanFirst much more attractive to both clients and to banking professionals," Maher said during a conference call. "Importantly, it provides the distribution network and branding presence that it would have taken many years and significant investments to achieve otherwise."
The merger agreement comes about one year after Flushing
Flushing has been working to strengthen its performance — adding branches in New York City, hiring deposit bankers from Flagstar Bank and specifically targeting Asian-market deposits.
OceanFirst said that it applied a mark of about $303 million on Flushing's current portfolio, despite what OceanFirst executives described as the seller's "pristine" record of credit quality and "conservative credit culture."
Flushing has a portfolio of rent-regulated, multifamily loans, and that line of business has faced close scrutiny in light of Zohran Mamdani's election as mayor of New York City. On the campaign trail,
OceanFirst said that it applied a 10% mark, inclusive of both potential cracks in credit and interest rates shifts, on the rent-regulated multifamily loans.
Maher said Tuesday that he was happy that outgoing New York Mayor Eric Adams made certain changes to the composition of the city's Rent Stabilization Board, appointing people who seemingly reduce OceanFirst's risk somewhat.
"But we took a view on this that there is additional credit risk, and that's what informed our mark," Maher added.
OceanFirst also said the Flushing deal will push its bank-level commercial real-estate concentration ratio, which is measured as a percentage of capital, from 417% to 461%, and that it plans to reduce that concentration over the coming quarters. Regulators apply more scrutiny to banks where CRE loans make up more than 300% of risk-based capital.
Maher said the two companies will work together on a plan to reduce the concentration.
"We have already held preliminary discussions on the potential sale of certain commercial real-estate loans," he said."Early interest from buyers has been strong, given the record of credit performance and the underlying borrowing base, which is dominated by multi-generational families with a long history of performance."
The deal for Flushing marks OceanFirst's first proposed acquisition since 2022,
OceanFirst's last successful acquisitions were in 2020, when the company purchased Two River Bancorp and Country Bank Holding concurrently.
OceanFirst CEO Maher said Monday that the Flushing deal brings together two "highly complementary organizations," leveraging Flushing's footprint in Long Island and New York City alongside his bank's business model and product offerings.
"This acquisition represents a natural extension of our proven growth strategy," Maher said in a prepared statement.
OceanFirst has been aiming to bolster its sources of stable funding. The company has hired bankers from institutions like Wells Fargo and TD Bank Group to its Premier Bank unit, with a goal of bringing in some $500 million of deposits in 2025. As of the third quarter, the strategy had yielded about half that amount.
OceanFirst and Flushing estimate that the transaction will come with tangible book value dilution of about 6%, to be earned back in roughly three years. The deal is expected to yield earnings per share accretion of about 16% and an internal rate of return of about 24% in 2027.
The banks also said the deal, in 2027, will offer a return on average tangible common equity of about 13%, a return on average assets of about 1%, a net interest margin of 3.2% and a common equity tier 1 capital ratio of 10.8%.
If the deal wins approval from regulators and shareholders, Maher will keep the chief executive job, and Flushing CEO John Buran will become nonexecutive board chairman for two years, after which Maher will resume his role as board chair. The board will consist of 17 directors: 10 from OceanFirst, six from Flushing and one from Warburg Pincus.
The equity capital raise is slated to close at the same time of the closing of the merger.
Warburg Pincus, whose chairman is former Treasury Secretary Timothy Geithner, has more than $85 billion in assets under management and
The company was part of the
Following several years of tepid dealmaking, banks have hatched more than 170 deals in 2025, worth more than $47 billion of value.
