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OceanFirst Financial (OCFC 1.02%)
Q2 2022 Earnings Call
Jul 29, 2022, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. Thank you for attending today’s OceanFirst Financial Corp. earnings conference call. My name is Bethany, and I will be your moderator for today’s call.

[Operator instructions] I’d now like to pass the conference over to our host, Jill Hewitt with OceanFirst Financial Corp. Please go ahead.

Jill HewittInvestor Relations Officer

Thank you, Bethany. Good morning and thank you all for joining us. I’m Jill Hewitt, senior vice president and investor relations officer at OceanFirst Financial Corp. We will begin this morning’s call with our forward-looking statement disclosure.

Please remember that many of our remarks today contain forward-looking statements based on current expectations. Refer to our press release and other public filings, including the risk factors in our 10-K, where you will find factors that could cause actual results to differ materially from these forward-looking statements. Thank you. And now I will turn the call over to our host, chairman and chief executive officer, Christopher Maher.

Christopher MaherChairman and Chief Executive Officer

Thank you, Jill. And good morning to all who’ve been able to join our second quarter 2022 earnings conference call. This morning, I’m joined by our president, Joe Lebel, and our chief financial officer, Pat Barrett. You may recall, Pat joined our team in April and assumed his role as chief financial officer on June 2, upon the retirement of Mike Fitzpatrick, so this has Pat’s first quarterly earnings season with us.

As always, we appreciate your interest in our performance and are pleased to discuss our results with you. This morning, we’ll provide brief remarks about the financial and operating performance for the quarter and then provide some color regarding the outlook for our business. As a reminder, in addition to the earnings release issued last night, an investor presentation is also available on our company’s website. We may refer to those slides during the call.

After our discussion, we look forward to taking your questions. Our financial results for the second quarter include GAAP diluted earnings per share of $0.47. Earnings reflect strong loan growth, expanding margins and benign credit conditions. Core earnings were $0.59 per share and reflect non-core items primarily related to unrealized equity mark-to-market valuation adjustments on preferred stock positions and to a lesser extent, charges related to branch closures and mergers.

Turning to capital management, given the company’s strong performance, the board increased the quarterly cash dividend by $0.03 or 18% to $0.20 per common share. This is the company’s 102nd consecutive quarterly cash dividend and represents 34% of core earnings. Tangible common equity per share increased modestly to $15.96, reflecting earnings momentum outpacing AOCI marks related to our investment portfolio, share repurchases and the acquisition of our interest in the Trident Title Insurance business. The company’s share repurchase activities continued during the second quarter with 272,779 shares repurchased at a weighted average cost of $19.25.

Our appetite for share repurchases will be balanced against opportunities to deploy capital in growth initiatives and reflects trading rules that limit the number of shares the company is able to retire while awaiting the regulatory review for the Partners Bancorp acquisition. There are 2.9 million shares available under the current repurchase program. Regarding the Partners Bancorp acquisition announced in November of 2021, the company has submitted all the necessary regulatory applications and continues to provide additional information as requested. At this time, we do not have a timeline from the regulators for when the process may be completed.

Until all approvals and customary closing conditions are met, we cannot schedule the merger closing. Turning to net interest income and margin, net loan growth of $316 million and our asset-sensitive balance sheet drove another quarter of margin improvement, which expanded by 11 basis points to 3.29%. We experienced elevated prepayment fees this quarter of $2.6 million or 9 basis points and expect the level of prepayments to slow for the remainder of the year. Two factors should provide a tailwind for margins.

First, the quarter end loan portfolio of $9.4 billion was $176 million higher than the second quarter average of $9.2 billion. Second, the company held $2.3 billion of floating rate loans repricing in the third quarter, which will provide the opportunity to strengthen margins as rates increase. That should be the case in the third quarter and perhaps for the remainder of the year. The benefit from rate increases experiences a timeline.

So in the coming quarters, NIM could be flat or expand but trends should be positive overall. Core non-interest income and non-interest expenses included a full quarter of Trident abstract title agency operations, which added $4.5 million of non-interest income and $3.2 million of non-interest expense for the quarter, resulting in $1.3 million of net income for the quarter. The purchase of our interest in Trident was completed on April 1, so these figures reflect a full quarter impact. Excluding the impact of Trident, our disciplined expense management resulted in core operating expenses related to banking operations improving modestly to $54.7 million or $400,000 lower than the prior quarter.

I also like to provide some additional color regarding expense trends. As noted in our earnings release, the bank increased base salaries by 5% for over 80% of our employees and paid a one-time award to almost 20% of our employees to support our team members who would be most impacted by inflationary challenges. The annual impact not captured in this quarter’s financial results is $2.3 million or almost $600,000 per quarter. I will add the compensation increases for this purpose are not typical at OceanFirst.

Our company is a talent-led business and our employees provide our competitive advantage. This investment in our team reinforces our commitment to them. It demonstrates an understanding of the challenges they and their families are facing during the current economic cycle. No additional compensation actions are contemplated for the remainder of 2022, and it’s simply too early to speculate on the level of labor expense pressure for 2023.

Fortunately, our multi-year and comprehensive program of branch consolidations has improved our ability to manage the company’s overall expense base. The second quarter run rate captures our expected core operating expense for the remainder of the year. At this point, I’ll turn the call over to Joe to provide some color regarding our progress during the quarter.

Joe LebelPresident

Thanks, Chris. The loan portfolio had another strong growth quarter with $316 million in net growth fueled by commercial banking relationships. Total loan originations were $835 million, driven by commercial closings of $646 million. Our New York region crested $2 billion in its loan portfolio, while our Boston region has built a loan book of $250 million in one year from the opening of the office, a testament to our continued investment in commercial talent and our legacy and expansion markets.

After nearly $1.6 billion in meaningful loan growth over the last 12 months, we are starting to see the impact of rising rates affecting the decision-making of certain segments of our customer base. Our pipeline of $385 million at the end of Q2 is typically our seasonal low for the bank but also reflects our expectation of more measured loan growth for the rest of the year as we maintain our traditional discipline in pricing, structure and credit appetite. That said, I expect we can responsibly grow the loan book in the range of $250 million quarterly, although growth could be choppy at times. I expect the residential originations to slow or prepaid speeds will also moderate providing some offset.

At the moment, we have less visibility in the pipelines looking much past Q3, given some of the noise in rates, supply chains and economic uncertainties. Turning to deposits, our loan-to-deposit ratio ticked upwards to 95.9% from 90.6% in the prior linked quarter due to the loan growth, coupled with a traditional decline due to seasonality in certain deposit classes. You’ll notice we took action to protect against near-term deposit cost pressure. During the quarter, we elected to replace a portfolio of market-sensitive floating rate deposits with term-based certificates.

We accomplished the duration extension by issuing $689 million in brokered CDs with latter duration maturities. The strategy also took advantage of some pricing anomalies in the brokered city market and gained duration at lower rates than the equivalent duration FHLB advances. The rotation is complete, and we expect to return to our traditional sources of funding for the remainder of the year. In keeping with normal seasonal trends, the bank has experienced net deposit growth of $145 million since June 30.

Credit trends remained benign with the company realizing just $9,000 of net charge-offs for the quarter and net recoveries of 83,000 year-to-date. Loan portfolio risk characteristics are very healthy with low delinquencies, positive risk rating trends and non-performing assets, excluding PCD loans of just 14 basis points of total assets. For the first time in our history as a public company, we do not carry a single property of other real estate owned on our balance sheet. The loan loss provision for the quarter was driven primarily by net loan growth with much of our reserve remaining in the form of qualitative factors that reflect the potential for economic uncertainty in future periods.

As Chris mentioned, Trident was additive to the non-interest income on a net basis by $1.3 million in its first quarter as an OceanFirst subsidiary. This partially offsets the loss in interchange revenue contributed to roughly $1.5 million per quarter, which began on July 1. With that, I’ll turn it back to Chris.

Christopher MaherChairman and Chief Executive Officer

All right. Thanks, Joe. We’ll now begin our question-and-answer portion of the call.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from the line of Michael Perito with KBW. Please go ahead.

Michael PeritoKeefe, Bruyette and Woods — Analyst

Hey, guys. Good morning. Thanks for taking my questions.

Christopher MaherChairman and Chief Executive Officer

Good morning, Mike.

Michael PeritoKeefe, Bruyette and Woods — Analyst

I apologize I did hop on a few minutes late. So I’m assuming I might have it but Chris, what’s the latest that you can share beyond the press release regarding the partner transaction? Yes, I guess I’ll just leave it there. I’m sure it’s not much but just I wanted to ask.

Christopher MaherChairman and Chief Executive Officer

Yes. I appreciate the question, Mike, and I know that’s on everybody’s mind, on our minds as well. Unfortunately, the only thing I can share is that we continue to await regulatory approval. And that’s just a process we’re being respectful about and trying to work through as best we can.

And I don’t have a timeline that I can give over when we might receive that.

Michael PeritoKeefe, Bruyette and Woods — Analyst

Can you remind us, though, in terms of the actual motor contract, like what was the duration that it went through? And when would it be required to kind of negotiate that as mentioned?

Christopher MaherChairman and Chief Executive Officer

Yes. So the contract would call for us to consummate the transaction on or before November 4 of this year.

Michael PeritoKeefe, Bruyette and Woods — Analyst

And then I heard the expense commentary, obviously, the evolving challenges, but I just want to make sure I heard it right. It sounded like, obviously, ex-partners, you guys think the second quarter run rate now kind of reflects the near-term higher level of salaries and benefits and should be a decent run rate for the back half of the year as some of the other items you guys are working on continue or did I mishear that?

Christopher MaherChairman and Chief Executive Officer

So that’s a good guide. Obviously, in every quarter, there’s kind of some puts and calls on things like that but if you take the second quarter, we think that’s roughly what we would experience in Q3 and Q4. It might be a little bit higher than that but it’s not going to be a materially different number.

Michael PeritoKeefe, Bruyette and Woods — Analyst

And then just lastly for me and then I’ll step off. Just on the capital front, you guys have been a little bit more insulated than some clear terms of the AOCI impact, and I know it doesn’t impact regulatory cap ratios but I guess the bottom line is, you guys are still sitting in a pretty strong position today despite the loan growth. So is it fair to assume that buybacks will continue to a certain extent, near term here or does the potential deal impact your ability to buy back stock in the back half of the year?

Christopher MaherChairman and Chief Executive Officer

We still have an appetite for buybacks but I guess I’d characterize that appetite to be informed by kind of where we’re trading, what the earn-backs would be from a buyback and how strong the loan growth is going to be. Joe had mentioned that our pipeline is seasonally low, it’s always low at this point of the year, so we’ve got really good conversations with clients. We think Q3 will be in good shape. But looking forward, I can’t give much guidance around how much loan demand we may see in Q4.

Obviously, the best thing we want to do is grow the bank, the second best thing is if we don’t have use for the capital is to return it to the shareholders. So we still have an appetite for buybacks, we’re watching closely the organic consumption of capital. And look, we can grow at a good clip with our internally generated capital but there may be points at which we decide to ratchet back on buybacks and use it to just fund growth.

Michael PeritoKeefe, Bruyette and Woods — Analyst

All right. Sounds good. Thanks for taking my questions. Have a good weekend.

Christopher MaherChairman and Chief Executive Officer

All right. Thanks, Mike.

Operator

Thank you, Mr. Perito. The next question comes from the line of David Bishop with Hovde Group. Please go ahead.

David BishopHovde Group — Analyst

Good morning, Chris. How are you?

Christopher MaherChairman and Chief Executive Officer

Boy. How are you? I’m good. I’m good.

David BishopHovde Group — Analyst

In your commentary, it sounded like maybe a little bit of cautiousness in service of regards with regard to the outlook for this and near-term net interest margin, obviously, it looks like loan yields in the pipeline are up over 100 basis points year over year but does the addition of the broker deposits sort of mute maybe the asset sensitivity over the near term, and it plays out maybe at the tail end of the current cycle, if we get to like 350 by next year?

Christopher MaherChairman and Chief Executive Officer

It may a little bit in the short term. I think what happens is not unlike other places, the rate increases roll through our loan book over the course of sometimes some loans adjust immediately, some at the end of the month, some may have a quarterly repricing. So the asset sensitivity is there, whether it will show fully in Q3 is a question we’re just kind of watching closely. What you might see is a little plateau and then a resumed expansion after that.

And look, it may be an expansion in Q3 but we don’t expect it to be a material expansion.

David BishopHovde Group — Analyst

And then in terms of the new market initiatives here, just curious in terms of the pipeline there, what you’re seeing relative to the rest of the book and maybe a potential for even further expansion within maybe the greater Boston market?

Joe LebelPresident

So Dave, we’re really happy with what Boston and Baltimore have done so far. $0.25 billion in a year for Boston is outstanding, this is an impressive number. They continue to have a healthy pipeline, as does Baltimore. And I now refer to fully New York as legacy markets because we’ve been in them for between four and five years, and they’re both well over $1 billion, over $2 billion.

So I think overall, while we’re seeing some clients question what they want to do going forward that we remain pretty confident that we can get that $250 million a quarter, which is sort of our benchmark. It may be a little bumpy depending on the quarter but I think on an annualized basis, we’re not overly concerned. Visibility going out a little bit more than a quarter is become a little bit more murky just because you just don’t know where clients are going to fall out. But I made a comment earlier this morning that we had the 3% 10-year rates just four years ago, people are acting like these rates we haven’t seen in forever.

Prime was 5.5% in December of 2018. So customers would acclimate fairly quickly.

David BishopHovde Group — Analyst

Got it. Appreciate it.

Operator

Thank you, Mr. Bishop. Our next question comes from the line of Matthew Breese with Stephens, Inc. Please go ahead.

Matthew BreeseStephens, Inc. — Analyst

Good morning, guys. Joe, just on the $250 million of growth per quarter, understanding it could be lumpy. How long should we contemplate that kind of growth for? I’m just thinking, it’s still a robust pace of growth. Should we consider that through year-end ’23 or just through year-end in your view?

Joe LebelPresident

I think, look, I don’t know how you forecast that. I look at it quarter by quarter. I used to have, I’d say, before the noise in supply chains and economics, you add a little bit further visibility. But the neat thing about having engines in varying regions markets in the country is that when a region may be down or even a property area is down, CRE is down, C&I picks up, C&I slows down, CRE picks up, so we feel pretty bullish.

We’re talking to our folks all the time. And we did take a fairly measured approach in credit structure. I think short term, that’s probably impacted the pipeline a bit. I think we’re holding fast disciplines but I’m not overly concerned, Matt.

It might be a little lumpy but I don’t think that’s a near-term concern.

Christopher MaherChairman and Chief Executive Officer

It’s really difficult right now because we see the pricing changes and we’re going to get paid for the risk we take. We’ve always been a conservative credit shop. So it’s hard to tell whether those two things, the pricing and our credit cut, which has always been, I think, careful that may impact our ability to grow. So I’d say that as far as we can see, we think we can hit that number, but the bias might be to underperform that number rather than overperform that number.

Matthew BreeseStephens, Inc. — Analyst

And then aside from capturing better yields, it sounds like perhaps you’re just taking a second look at how you’re underwriting things. In what ways have you become more conservative? Are you asking for more skin in the game from the borrowers? Are you putting more stipulations in place? And if there’s a portion of the portfolio that you’ve taken a second look at, I’d be curious which ones?

Joe LebelPresident

I think for us, Matt, in a way, we always ask for equity. We are stressing portfolios at higher rates, as you would expect, given the rate increases. And I think property types important spec in the CRE space. So office, I think everybody is looking a little harder at office because no one knows what’s going to go on at lease expirations in a few years.

Everything we hear is consolidation of the space because of some remote work, some hybrid work. And the same with retail. I mean we look at retail as well. Everybody has jumped in the last few years in industrial.

That’s become a very crowded space. And I think what you do there is pick and choose not only from a credit perspective but from a pricing perspective, there’s no need to be in something where you don’t make money. But I think we’re fairly confident.

Matthew BreeseStephens, Inc. — Analyst

And then just maybe turning to the opposite side of the balance sheet supporting that $250 million in loan growth, how much of that can be done through deposit growth, what kinds of deposits? And then I’m curious on the 96% loan-to-deposit ratio, how should we be thinking about an upper limit on that?

Christopher MaherChairman and Chief Executive Officer

Joe made some additional thoughts on kind of how we’ll get those deposits but I’ll make some general comments. First, for the most part, we think that funding loan growth with deposits is the right thing to do. So that’s generally what our position is. And we think we can grow deposits in the future quarters.

Now we may have to pay a little bit more for that or we may have to offer certain products or rates but we’re prepared to do that. In terms of on the deposit ratio, I think the most valued banks are traditionally at that 100% or lower loan-to-deposit ratio, and that’s where we generally like to be. That said, we have a very unusual rate cycle going on right now. And you could foresee that if the Fed may peak increases later in the year, early next year or something like that that it might be a good strategy to lean on some wholesale funds that would reprice faster.

So we’re just going to balance those two things off but we’re not going to turn into a company that’s going to have a 120% loan-to-deposit ratio, that’s not up. So in fact, we’re talking to our officers this morning and just emphasizing that we’ve always been good at deposit gathering, and we’re going to spend a lot more time and attention on that so we can kind of balance it out. It’s been a little while since we needed that engine.

Joe LebelPresident

For the first time in a long time, Matt, we’re actually going to start looking actively for deposits. We’ve all been in the same boat the last couple of years with excess liquidity. But our folks, I think, are chomping at the bit to be able to go at it from both sides, right? We’ve been going at it hard on the lending side. I think our folks, especially our retail folks are excited about going out depositing.

Christopher MaherChairman and Chief Executive Officer

The single biggest place we would see deposit growth is in our corporate treasury function. That is an engine that we have built over the last few years. We’ve got the right people in the right place. We’ve got the right technology.

So we’re going to push that pretty hard.

Matthew BreeseStephens, Inc. — Analyst

And then the last one along these lines is just expectations for the deposit beta now that what seems to be at the halfway mark on the rate hiking cycle and how you compare and contrast expectations around beta this cycle versus last?

Joe LebelPresident

Every cycle is different, Matt. So I’d hesitate to try and predict how this one will play out exactly. I will say that given the mix of our deposits, 85% core, the vast majority of them are checking accounts. some interest-bearing and some not but almost all checking accounts, we expect to outperform the group.

I’m less clear on what that group will do but I don’t think we’ll be on the positive side of that. And we have seen, other than we noted the price-sensitive accounts that we took care of in the second quarter. Other than that, we’ve seen remarkably little pressure on deposit flows and rates thus far. That said, the third quarter deposits are going to be materially more highly priced than second quarter.

But as of right now, the loan yields are moving faster than that. So we’re not concerned about margin compression but you’ll see deposit costs come up.

Matthew BreeseStephens, Inc. — Analyst

Got it. OK, I’ll leave it there. Thank you for taking my questions. I appreciate it.

Operator

Thank you, Mr. Breese. Our next question comes from the line of Manuel Navas with D.A. Davidson.

Please go ahead.

Manuel NavasD.A. Davidson — Analyst

Good morning. In thinking about the loan outlook, do you think that kind of the shortened view is being imposed on you by the greater market or are you seeing some things with your customer base that is informing that perhaps the fourth quarter could be a little different than prior expectations?

Christopher MaherChairman and Chief Executive Officer

Joe and I probably have the same view. I think when we think about what we’re seeing in the market, there has not been a material decrease in economic activity or the demand for credit in our markets to date, now that could change. However, we’ve talked about structures and pricing, we are going to stick to our structure and pricing requirements. It will take a little while to understand exactly how many of those deals will be able to pull out.

So my caution is more about the market share of deals we’re going to get depending on rate and structure, not that the demand is falling off. Is it fair, Joe, is it going to —

Joe LebelPresident

Yes, that’s fair.

Manuel NavasD.A. Davidson — Analyst

I guess following up on that, are you seeing greater competition in terms of pricing and structure? And is it different in different markets? So that’s going to be my next question.

Joe LebelPresident

Sure. I mean I think the competition is similar. I think we purposefully have said we’ve had significant growth in the last year. We know the kind of deals we put on.

We also know the kind of deals we’re seeing today. And I think the market is a little bit more aggressive in pricing and definitely a little progressive in structure. So I think for us, we have the ability to, for the lack of a word, we could choose. I’m not overly concerned in any one market.

I think all our markets are similar in scope. So I think what we’re seeing is what we expected to see. We just hold the disciplines, our folks understand it. And remember that pipeline at a point in time, the pipeline you’re seeing is important time.

It’s improved since quarter end.

Christopher MaherChairman and Chief Executive Officer

It’s just one more point about the market. And we’re very fortunate, although we did this deliberately in the market that we are in. This Northeast megapolis for us, it’s 50 million people here. We are a very modest player in that market.

So Joe has the ability from quarter-to-quarter and as conditions change to be more or less aggressive in different geographies and different asset classes. We’re operating in a regional economy that is so significant that I don’t expect loan demand is going to fall off. It’s going to be a matter of what choices we make about risk selection problem.

Manuel NavasD.A. Davidson — Analyst

Kind of a picky question for modeling. How quickly, if you get regulatory approvals, could your deal close?

Christopher MaherChairman and Chief Executive Officer

Typically, if you secure final regulatory approval, you could close in two weeks, three weeks. There is a shareholder election thing we have to work through should we get approvals, but it should be measured in weeks.

Manuel NavasD.A. Davidson — Analyst

That’s helpful. Thank you.

Operator

Thank you. [Operator instructions] Next question is a follow-up from the line of David Bishop with Hovde Group. Please go ahead.

David BishopHovde Group — Analyst

OK. Christian, ticking to discussion on the funding and the deposit side. I guess you mentioned the runoff of those interest of checking accounts, just curious what the genesis of those is? Are those accounts acquired via acquisition, sort of core organic deposit growth, just curious where those were generated from?

Christopher MaherChairman and Chief Executive Officer

So our corporate treasury group, first of all, it has a great granularity. So we have almost 40,000 customers, have at least one cash management product with us. It was a very small segment of those customers who were rate sensitive, and we were happy to have them when Fed funds was 0.25 point. They wanted to optimize their balances, either do sweeps or different things like that.

So we could have elected to keep them. And in fact, interestingly, if we elected to keep them, we would have kept them at a lower cost than the CDs we put on. However, we knew we would be in the cycle of having to match it would have been not 100% beta, but close to it. So we said, you know what, we don’t need these 100% beta deposits, let’s replace them with something that has a little more duration.

But they were a very defined portfolio and that rotation has been completed. So we don’t have that concern beyond that.

David BishopHovde Group — Analyst

So this isn’t the case. I know you guys have obviously been aggressive in winning the branch network here. This isn’t sort of related to any sort outflow there. So it sounds like it’s no issue from what you said in terms of deposit attrition from branch closures.

Christopher MaherChairman and Chief Executive Officer

No, that’s a really good point, David. Thanks for mentioning it. In fact, we track deposit retention really, really carefully given our history. And even the closures we did in December and January, the attrition peaked by probably end of March and then those branches began growing again.

And again, it was well within the range of what we expected, so this is not related to the branch consolidation efforts.

David BishopHovde Group — Analyst

And then maybe out of your purview and round of expertise but did you see that Netflix is potentially getting on to build their East Coast studio there at the Fort Monmouth property. I know you’re on a lot of boards up there in terms of chamber commerce but any insights or probability or hedging or any update? Have you heard any rumors about that getting approved?

Christopher MaherChairman and Chief Executive Officer

We would love to have them here, as I’m sure most communities would. And one of the assets we have in our core geography is the former Fort Monmouth, which is in the process of redevelopment and the process it takes decades. So I will be thrilled that Netflix comes in there. If they don’t come in there, then somebody else would come in there over time, and it will be good for the area.

David BishopHovde Group — Analyst

Great. Thank you.

Christopher MaherChairman and Chief Executive Officer

All right. Thank you.

Operator

Thank you, Mr. Bishop. Our next question is a follow-up from the line of Manuel Navas with D.A. Davidson.

Please go ahead.

Manuel NavasD.A. Davidson — Analyst

Just wanted to follow up. With kind of the actions you’ve done with the brokered deposits into the FHLB lengthening duration, would you consider offering CDs to try to get ahead of deposit cost increases? It seems like that would match your kind of thought process in general with funding?

Christopher MaherChairman and Chief Executive Officer

Yes. So we want to be careful in this. We’re very thoughtful in the duration we chose. So the weighted average duration is nine months on that book.

Some of them extend say, a little bit over a year. What we don’t want to do is create a funding overhang that should the Fed start to ease in 2023 that we regret having gone too long unpinning, so we want to lengthen it a little bit but not go overboard.

Manuel NavasD.A. Davidson — Analyst

And I was thinking more of your general CD strike, your general deposit strategy, you’ll have kind of comparing to, so this is just a piece of it and you’ll be a little bit more careful with the rest of the larger —

Christopher MaherChairman and Chief Executive Officer

Correct.

Joe LebelPresident

And we would have a similar pricing philosophy on consumer CDs and things like that. And same idea. You want to lengthen enough so that you’re not having to reprice those every few weeks but you don’t want them lasting out there for years unless we see something different in the economy.

Manuel NavasD.A. Davidson — Analyst

Perfect. Very thoughtful. Thank you.

Christopher MaherChairman and Chief Executive Officer

All right. Thanks.

Operator

Thank you, Mr. Navas. [Operator instructions] There are no questions waiting at this time. I’d like to pass the conference back to Christopher Maher for any closing remarks.

Christopher MaherChairman and Chief Executive Officer

All right. Thank you. We appreciate everyone’s time and participation this morning. We look forward to speaking with you after our third quarter results are published in October.

Thanks.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Jill HewittInvestor Relations Officer

Christopher MaherChairman and Chief Executive Officer

Joe LebelPresident

Michael PeritoKeefe, Bruyette and Woods — Analyst

David BishopHovde Group — Analyst

Matthew BreeseStephens, Inc. — Analyst

Manuel NavasD.A. Davidson — Analyst

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