July 27, 2022
Joseph J. Lebel III
The evidence of a downturn in the economy is all around us — from the dire predictions of financial experts, to our own experience at the gas pump and grocery store. It’s easy to become discouraged by the daily drumbeat of bad news about rising inflation and higher interest rates. I’m encouraged by our customers and team members who are finding creative solutions to economic challenges. And, I’m proud to say that, at OceanFirst, we’re doing our part to help businesses and consumers stay on solid financial ground. Here are just a few “real world” examples:
A commercial banking client that is a fabricator of plastic products saw early in the cycle that prices were rising for key raw materials, particularly resin. Their solution: purchase almost a 9 months’ supply of resin up-front, compared to the 1-2 months’ supply they normally keep on hand. After discussions between the company and their OceanFirst Bank Relationship Manager, we were able to assist by providing additional financing resources which, for the company, helped them to better control costs.
A manufacturer of durable goods was enjoying revenue growth, partly due to strategic hiring in its sales team that opened the doors to new customers. This progress was threatened, however, by supply chain issues: at a time when “supply was king,” they were worried that interruptions in the flow of specialized metals would be an obstacle to continued growth. Working with the borrower, our OceanFirst team was able to approve a 40% increase to the client’s credit line, which gave them the flexibility to build enough inventory of specific metals to support their successful, growing sales team.
For many small businesses coping with economic pressures, accelerated access to credit can be a financial lifesaver. We are in the process of introducing an online Community Banking Platform, including a digital loan application that is open 24/7. This customer portal enables borrowers to upload documents directly to our system, while streamlined underwriting and an automated decision engine for smaller loan amounts provides faster solutions for the credit needs of small businesses.
Individuals and families also have been hard hit by inflation, and many don’t have the financial flexibility of our commercial customers. OceanFirst has introduced programs to help credit-worthy consumers improve their financial well-being. Our NeighborFirst Program is making home buying more affordable, with lower down payments, a 0.25% interest rate discount, waiver of private mortgage insurance, and other cost-saving features. Qualified applicants also may be eligible to receive a $2,000 credit towards closing costs. About $4 million in home mortgage loans has been provided through the NeighborFirst program in 2022 to date.
Expert opinions vary greatly as to the severity and duration of the current market cycle. But this much is certain: we can learn a lot from the individuals and businesses that are facing up to economic challenges with imagination, ingenuity and initiative. Banks can play a vital role – as resource providers and financial partners – in helping their customers steer a steady course through turbulent economic seas.