NJBIZ Conversations: Christopher Maher

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OceanFirst Financial Corp., the parent of OceanFirst Bank, turned in a decent financial performance in the second quarter, given the downturn caused by the COVID-19 pandemic. Like most businesses, though, OceanFirst is bracing for what may lie ahead. “Ironically during the second quarter our customers performed exceptionally, so we had really no issues in the loan portfolio,” said Chairman and Chief Executive Officer Christopher Maher. “But we know that we’re facing an uncertain future. So, even after putting aside a very significant amount of funds to cover future loan losses, we had a reasonably profitable quarter and we’re very proud of it.”

Maher sat down with NJBIZ for a virtual interview that covered the bank’s results, how its customers are faring and what businesses should be doing to prepare for the next several months. What follows is an abridged version of that discussion, edited for clarity. A video of the full interview is available here.

NJBIZ: I wonder how, if at all, your approach toward your business customers has changed over the past several months?

Christopher Maher: Well, you know, I think this is not a garden variety recession. So in a normal recession, you see a very different things happening. For example, the leisure industries like golf courses, marinas they’re doing great. … So it’s not your normal time and you need to engage with your customers, understanding that you have thoughtful conversations about how much money is needed … they may need more money than they’ve currently borrowed in order to get the PPE, to restructure their businesses with plexiglass dividers, which are incredibly expensive right now. So this is not a case of saying, ‘hey, we need you to pay us back.’ This is a case of saying, ‘Let’s sit down. Let’s talk, let’s understand what we can do to help you.’ Because if that business survives the bank’s going to be fine. If that business doesn’t survive, then everybody loses in that scenario.

Q. How do you assess both the state and federal government’s response?

A. I would give an A-plus to the federal government, to the state government and to the Federal Reserve System, because I think all three came together and offered incredibly important programs very quickly. I mean, the speed with which they brought these programs out was just incredible. They were the right programs, they were at the right time. They made a real difference.

We saw, for example, our average balance in our checking accounts was up about 14 percent so people have the liquidity they need to buy groceries and pay rent and do what they need to. And it’s funny, even the small dollar accounts are up even more than that. So the money got to the right place in the first few innings. I would say they did a spectacular job.

My concern, though, is what we see unfolding right now is really unhealthy. We’ve returned to partisan politics. We’ve got both sides of the aisle sniping at each other. And we have Americans and New Jersey citizens who need that support and you can’t pull that rug out. You just can’t. We’ve got to keep that support going until the public health crisis is under control and people can go back to more normal working conditions.

Q. Okay, that was my follow up: Whether you thought that there should be more done. And are you concerned that if Congress – the new bill is stalled now – I’m wondering if you are worried that if Congress doesn’t come up with another bill that that would really seriously damage state’s economy and your customers in particular.

A. Well, I’m very concerned about that because the programs were directed toward the most vulnerable segments of our society. The folks who don’t have a safety net, who can’t work from home, not everybody has the economic ability and Wi-Fi and a laptop and the ability to continue earning a wage while not going to work. We’ve got frontline workers out there that are working incredibly hard. So I think the assistance programs need to continue until we have a clear and well-defined lid on the on the health crisis, meaning that on a national basis, we’re not seeing the rise of hotspots that we’re seeing today. I think it’s incredibly important and I would be very concerned if there’s any pullback in support from any of those from the federal government, from the state.

And I think the Federal Reserve is the third leg of that stool. They have done an exceptional job of stabilizing markets, putting loan programs together that I think are going to make it a very significant difference in the next stage.

Q. Have you seen much from the Federal Reserve program in your area?

A. Oh, absolutely. … First, the work that the Fed has done today has been focused on keeping the financial markets functioning well. And if you compare us to say 2008, they’ve done an incredible job because we’ve had stability in the markets. So the credit markets work, the bond markets have worked — and that’s a Herculean task. They’ve got the Main Street Lending Program — we’re proud to be part of that program, we’re a certified lender in the program – we began those conversations with clients. That’s a more complicated program than the PPP program, so it’s in the early stages, yet, but I know they’re being flexible, responsive. They’ve had a series of meetings to talk to folks about how to make that program more attractive to borrowers. I think you’re just starting to see the Fed entering the game in the direct lending business.

Q. That’s why I asked, because I’ve heard a lot of what a lot of folks have said, in theory, in the abstract, it sounds great. But in practice, we haven’t really seen much yet and you seem to be confirming that it’s still early days.

A. It is absolutely early days and you know we know … that the Fed has a responsibility to make these loans in a credit-worthy manner. There’s a different intent than the PPP program where the expectation is that they could be …

Q. Forgiven, right …

A. Yes. But the Fed has been talking a lot, they’ve been holding roundtables and we’ve been part of them. Our clients have given us feedback on the program and they’re tailoring these programs to be as attractive as they can make them.