Brad Fouss, SVP, Market President talks about how bank failures have impacted banks’ lending

July 5, 2023

July 2023 — In an interview with Invest:, Brad Fouss, SVP, Market President – Greater Philadelphia at OceanFirst Bank, talked about how bank failures have impacted banks’ lending, how OceanFirst bank manages risks to deal with high interest rates and how technology has transformed commercial and customer banking and made cybersecurity a priority.

What is the current state of the banking sector in the greater Philadelphia area?

We had three major bank failures earlier this year: Silicon Valley, Signature and First Republic. These failures have caused more attention to loan-to-deposit ratios and liquidity rather than to loan growth. At OceanFirst, we are being selective with new lending relationships, but we are continuing to support the existing customer base. The other major trend is interest rates rising above what most borrowers have become used to. From what we see, customers and businesses are doing well, but the current interest rates have increased the cost of credit for borrowers.

What is OceanFirst Bank’s strategy to build trust with its clients in the current banking environment?

The banks that had trouble did not have the profile that is common to other regional banks such as OceanFirst Bank. They grew quickly with a lot of deposits, and they put those deposits in long-term securities, which is different from OceanFirst Bank. In order to build trust we continue what has always been our priority — talking with our clients. Specifically we have focused on educating our clients about the health of OceanFirst Bank. This strategy has worked well, we have not seen any material declines in our deposits.

What is OceanFirst Bank’s approach to risk management to protect its customers?

One of the bigger risks out there at the moment is increasing interest rates, so we do a lot of stress-testing of our loan portfolio. We are also working with our clients on different strategies to help them manage the current interest rate environment while still accomplishing their short- and long-term objectives.

What are the strategic priorities of OceanFirst Bank for the Greater Philadelphia region?

The same strategy that we have had in place for the last couple of years has enabled us to grow in the Philadelphia market: In addition to loan and deposit growth, we are involved with many local organization, charities and not-for-profits. Also, OceanFirst Foundation supports several non-profit organizations serving the Philadelphia market providing grants to assist their efforts. OceanFirst employees are supportive of many nonprofit and community organizations getting involved by holding board or leadership positions and volunteering their time and talent to assist our neighbors most in need.

How have you seen technology impact the banking industry as a whole in the last year?

Technology has transformed banking, but it has had a bigger impact on the retail side than on the commercial side. On the commercial side, business clients rarely need to come into a branch because they can do almost all of their banking remotely, with services such  as online banking or remote deposit. On the retail side, our customers can bank when they want on their phones from opening an account to doing their routine banking online. 

What is the importance that OceanFirst Bank places on cybersecurity?

Cybersecurity is another one of our priorities and we invest at similar levels as the biggest banks in the country. We have an entire team dedicated to dealing with all the potential cybersecurity threats who work 24/7 to monitor our systems. All banks should be investing in cybersecurity because regardless of the size of the bank the risk remains.

What are the top priorities of OceanFirst Bank in the short term?

Although so much has changed during the 122-plus years OceanFirst has been serving our communities, there is so much that remains constant in banking — serving our customers to meet their financial needs. We do this every day, providing customized deposit and loan accounts and services. For the past several months, we have shifted our focus to providing more competitive CD and Money Market accounts to attract and retain customers. The trend to attract deposits is across the entire industry. So in the short term, OceanFirst is focused on growing deposits and supporting our existing clients.

What is your outlook for the banking sector in general for the next few years?

Overall the banking sector is solid. In 2023, we will likely continue to see slower growth and a continued focus on deposits while supporting our clients. We have seen a slow-down in bank M&A activity, but I do think that we will see an increase over the next few years. I believe that the outcome of the 2024 presidential election could have an impact on the banking sector over the next few years, so we will be watching that as well.

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