Securities

6 Months Ended

Jun. 30, 2025

Investments, Debt and Equity Securities [Abstract]

The amortized cost, estimated fair value, and allowance for securities credit losses of debt securities available-for-sale and held-to-maturity at June 30, 2025 and December 31, 2024 are as follows (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Allowance for Securities Credit Losses
At June 30, 2025
Debt securities available-for-sale:
U.S. government and agency obligations	$	59,254	$	4	$	(3,516)	$	55,742	$	—
Corporate debt securities	22,071		295		(278)		22,088		—
Asset-backed securities	140,653		136		(50)		140,739		—
Mortgage-backed securities (“MBS”):
Agency residential	419,213		902		(753)		419,362		—
Agency commercial	108,591		—		(10,961)		97,630		—
Total mortgage-backed securities	527,804		902		(11,714)		516,992		—
Total debt securities available-for-sale	$	749,782	$	1,337	$	(15,558)	$	735,561	$	—
Debt securities held-to-maturity:
State and municipal debt obligations	$	183,589	$	150	$	(12,958)	$	170,781	$	(27)
Corporate debt securities	55,677		252		(625)		55,304		(588)
Mortgage-backed securities:
Agency residential	633,637		1,065		(55,702)		579,000		—
Agency commercial	79,035		6		(5,487)		73,554		—
Non-agency commercial	17,840		—		(389)		17,451		(194)
Total mortgage-backed securities	730,512		1,071		(61,578)		670,005		(194)
Total debt securities held-to-maturity	$	969,778	$	1,473	$	(75,161)	$	896,090	$	(809)
Total debt securities	$	1,719,560	$	2,810	$	(90,719)	$	1,631,651	$	(809)
At December 31, 2024
Debt securities available-for-sale:
U.S. government and agency obligations	$	62,396	$	11	$	(5,022)	$	57,385	$	—
Corporate debt securities	14,042		43		(762)		13,323		—
Asset-backed securities	197,116		235		(84)		197,267		—
Mortgage-backed securities:
Agency residential	465,108		1,256		(801)		465,563		—
Agency commercial	108,610		—		(14,648)		93,962		—
Total mortgage-backed securities	573,718		1,256		(15,449)		559,525		—
Total debt securities available-for-sale	$	847,272	$	1,545	$	(21,317)	$	827,500	$	—
Debt securities held-to-maturity:
State and municipal debt obligations	$	201,369	$	199	$	(13,665)	$	187,903	$	(31)
Corporate debt securities	65,350		775		(1,416)		64,709		(734)
Mortgage-backed securities:
Agency residential	680,052		44		(73,110)		606,986		—
Agency commercial	79,925		1		(5,878)		74,048		—
Non-agency commercial	20,146		—		(875)		19,271		(202)
Total mortgage-backed securities	780,123		45		(79,863)		700,305		(202)
Total debt securities held-to-maturity	$	1,046,842	$	1,019	$	(94,944)	$	952,917	$	(967)
Total debt securities	$	1,894,114	$	2,564	$	(116,261)	$	1,780,417	$	(967)

The following table presents the activity in the allowance for credit losses for debt securities held-to-maturity for the three and six months ended June 30, 2025 and 2024 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Allowance for securities credit losses
Beginning balance	$	(898)	$	(1,058)	$	(967)	$	(1,133)

Benefit for credit losses	89		100		158		175



Total ending allowance balance	$	(809)	$	(958)	$	(809)	$	(958)

The Company monitors the credit quality of debt securities held-to-maturity on a quarterly basis through the use of internal credit analysis supplemented by external credit ratings. Credit ratings of BBB- or Baa3 or higher are considered investment grade. Where multiple ratings are available, the Company considers the lowest rating when determining the allowance for securities credit losses. Under this approach, the amortized cost of debt securities held-to-maturity at June 30, 2025, aggregated by credit quality indicator, are as follows (in thousands):



	Investment Grade		Non-Investment Grade/Non-rated		Total
As of June 30, 2025


State and municipal debt obligations	$	183,589	$	—	$	183,589
Corporate debt securities	42,723		12,954		55,677







Non-agency commercial MBS	17,840		—		17,840

Total debt securities held-to-maturity	$	244,152	$	12,954	$	257,106

There were $56,000 of realized losses on sale of debt securities available-for-sale for both the three and six months ended June 30, 2025, as compared to $4,000 of realized gains and $106,000 of realized losses for the corresponding prior year periods. These realized gains/losses on debt securities are presented within Other and included within Total other income on the Consolidated Statements of Income.

The amortized cost and estimated fair value of debt securities at June 30, 2025 by contractual maturity are shown below (in thousands):


June 30, 2025	Amortized Cost		Estimated Fair Value
Less than one year	$	27,939	$	27,749
Due after one year through five years	182,411		175,331
Due after five years through ten years	166,697		164,505
Due after ten years	84,197		77,069
	$	461,244	$	444,654

Actual maturities may differ from contractual maturities in instances where issuers have the right to call or prepay obligations with or without call or prepayment penalties. At June 30, 2025, corporate debt securities, state and municipal obligations, and asset-backed securities with an amortized cost of $77.2 million, $49.6 million, and $140.7 million, respectively, and an estimated fair value of $76.8 million, $48.3 million, and $140.7 million, respectively, were callable prior to the maturity date. Mortgage-backed securities are excluded from the above table since their effective lives are expected to be shorter than the contractual maturity date due to principal prepayments.

The estimated fair value and unrealized losses for debt securities available-for-sale and held-to-maturity at June 30, 2025 and December 31, 2024, segregated by the duration of the unrealized losses, are as follows (in thousands):


	Less than 12 months				12 months or longer				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
At June 30, 2025
Debt securities available-for-sale:
U.S. government and agency obligations	$	2,429	$	(1)	$	51,067	$	(3,515)	$	53,496	$	(3,516)
Corporate debt securities	4,000		—		4,722		(278)		8,722		(278)
Asset-backed securities	42,333		(36)		5,986		(14)		48,319		(50)
MBS:
Agency residential	231,636		(753)		—		—		231,636		(753)
Agency commercial	493		(2)		97,137		(10,959)		97,630		(10,961)
Total MBS	232,129		(755)		97,137		(10,959)		329,266		(11,714)
Total debt securities available-for-sale	280,891		(792)		158,912		(14,766)		439,803		(15,558)
Debt securities held-to-maturity:


State and municipal debt obligations	7,985		(31)		151,858		(12,927)		159,843		(12,958)
Corporate debt securities	2,220		(30)		23,710		(595)		25,930		(625)

MBS:
Agency residential	34,872		(552)		457,112		(55,150)		491,984		(55,702)
Agency commercial	1,727		(6)		71,004		(5,481)		72,731		(5,487)
Non-agency commercial	—		—		17,451		(389)		17,451		(389)
Total MBS	36,599		(558)		545,567		(61,020)		582,166		(61,578)
Total debt securities held-to-maturity	46,804		(619)		721,135		(74,542)		767,939		(75,161)
Total debt securities	$	327,695	$	(1,411)	$	880,047	$	(89,308)	$	1,207,742	$	(90,719)
At December 31, 2024
Debt securities available-for-sale:
U.S. government and agency obligations	$	3,221	$	—	$	49,538	$	(5,022)	$	52,759	$	(5,022)
Corporate debt securities	4,793		(55)		6,029		(707)		10,822		(762)
Asset-backed securities	31,588		(21)		59,148		(63)		90,736		(84)
MBS:
Agency residential	202,961		(801)		—		—		202,961		(801)
Agency commercial	—		—		93,962		(14,648)		93,962		(14,648)
Total MBS	202,961		(801)		93,962		(14,648)		296,923		(15,449)
Total debt securities available-for-sale	242,563		(877)		208,677		(20,440)		451,240		(21,317)
Debt securities held-to-maturity:


State and municipal debt obligations	7,098		(176)		169,434		(13,489)		176,532		(13,665)
Corporate debt securities	1,247		(219)		25,518		(1,197)		26,765		(1,416)

MBS:
Agency residential	114,557		(1,647)		479,847		(71,463)		594,404		(73,110)
Agency commercial	3,894		(20)		69,912		(5,858)		73,806		(5,878)
Non-agency commercial	—		—		19,271		(875)		19,271		(875)
Total MBS	118,451		(1,667)		569,030		(78,196)		687,481		(79,863)
Total debt securities held-to-maturity	126,796		(2,062)		763,982		(92,882)		890,778		(94,944)
Total debt securities	$	369,359	$	(2,939)	$	972,659	$	(113,322)	$	1,342,018	$	(116,261)

The Company concluded that no debt securities were impaired at June 30, 2025 based on consideration of several factors. The Company noted that each issuer made all contractually due payments when required. There were no defaults on principal or interest payments, and no interest payments were deferred. Based on management’s analysis of each individual security, the issuers appear to have the ability to meet debt service requirements over the life of the security. Furthermore, the net unrealized losses were primarily due to changes in the general credit and interest rate environment and not credit quality. Additionally, the Company has not utilized securities sales as a source of liquidity and the Company’s liquidity plans include adequate sources of liquidity outside securities sales.

Equity Investments

At June 30, 2025 and December 31, 2024, the Company held equity investments of $87.8 million and $84.1 million, respectively. The equity investments are primarily comprised of select financial services institutions’ preferred stocks, investments in other financial institutions and funds.

The realized and unrealized gains or losses on equity securities for the three and six months ended June 30, 2025 and 2024 are shown in the table below (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net gain on equity investments	$	488	$	887	$	693	$	2,810
Less: Net gains recognized on equity investments sold	—		—		—		—
Unrealized gains recognized on equity investments still held	$	488	$	887	$	693	$	2,810

OCEANFIRST FINANCIAL CORP 10-Q