Dive Brief:

• New Jersey-based OceanFirst Financial Corp. has agreed to acquire Long Island-based Flushing Financial Corp. in a roughly $579 million deal that’s expected to close in the second quarter of 2026, the companies announced last week.
• Buying Flushing would give OceanFirst 30 added branches in New York state, as well as nearly $8.9 billion in extra assets, according to the banks. That would create a roughly $23 billion-asset lender with 80 locations, about $18 billion in deposits and $17 billion in loans.
• Warburg Pincus will also play a key role in the deal, investing $225 million toward a capital raise that would give the private-equity firm a 12% stake in OceanFirst and a board seat.

Dive Insight:

The acquisition, OceanFirst’s largest, aims to accelerate the New Jersey bank’s growth in three New York City boroughs and Long Island.

In a conference call Dec. 30, OceanFirst CEO Christopher Maher said the deal “provides [a] distribution network and branding presence that it would have taken many years and significant investments to achieve otherwise."

Maher will serve as CEO of the combined company once the acquisition closes. Flushing CEO John Buran, meanwhile, will become a nonexecutive chair at OceanFirst. Maher would become board chair in 2028, according to an investor presentation.

In a statement Dec. 29, Buran said OceanFirst shares Flushing’s “values and long-term vision” and “preserv[es] the relationship-focused culture that has defined our bank for nearly a century.”

“We look forward to taking the next step in our journey with OceanFirst and for our shareholders to participate in the future upside resulting from creating a scaled, more profitable franchise together,” Buran said.

The $579 million value of the deal is based on OceanFirst’s closing stock price of $19.76 from Dec. 26, the banks said. As part of the transaction, Flushing investors would receive 0.85 shares of OceanFirst common stock for each Flushing share they own. OceanFirst stockholders would own about 58% of the combined company, while Flushing investors would own roughly 30%, according to the deal announcement. 

The combined company’s new board would have 10 directors from OceanFirst and six from Flushing, in addition to Todd Schell, a managing director at Warburg Pincus.

“We have known both franchises for a long time – they share an underlying culture and philosophy and are complementary in ways that unlock strategic value for the combined entity,” Schell said. “This is a natural combination that can produce strong returns for shareholders.”

This is hardly the first time Warburg Pincus has played a pivotal role in bank mergers and acquisitions. The private-equity firm contributed to a $400 million investment, alongside Centerbridge Partners, in Banc of California’s purchase of PacWest in 2023.

OceanFirst, too, is no stranger to M&A – though it hasn’t completed one since 2020. The New Jersey bank’s last attempt to expand through acquisition – a $186 million proposed purchase of Salisbury, Maryland-based Partners Bancorp that would have given OceanFirst a foothold in the Washington, D.C., suburbs – was terminated in 2022, after it languished with regulators for a year. The 2021 deal announcement, though, came just after OceanFirst saw its Community Reinvestment Act rating decline. It would agree to pay more than $15 million in 2024 to resolve redlining allegations.

Flushing, meanwhile, topped Forbes magazine’s list of most cybersecure banks in 2024 – a title Buran attributed to the lender’s “very measured pace” of growth.

The Long Island bank sought, at the end of 2024, to reconfigure its balance sheet with a $70 million capital raise, to be used to offload commercial real estate loans, among other efforts, according to American Banker. 

OceanFirst has said buying Flushing would boost CRE concentration ratio to 461% from 417%. Regulators more closely scrutinize banks whose CRE loans account for more than 300% of risk-based capital. OceanFirst said it plans to reduce that figure in upcoming quarters.

OceanFirst estimates its cost savings from the deal at 35% of Flushing’s non-interest expenses, though it anticipates it will post one-time pretax expenses of $106 million, according to the investor presentation.

The bank also estimates roughly 16% accretion to earnings per share in 2027, along with a tangible book value dilution of about 6% and an earn-back period of roughly three years, according to the Dec. 29 announcement.