OceanFirst Financial Corp. is hoping the third time is the charm in its efforts to establish a foothold in Washington, D.C., this time with the help of a former TD Bank executive.
Susanne Svizeny, Mid-Atlantic regional president and head of commercial and industrial lending for OceanFirst, said the hope is that the nation’s capital performs as well as Philadelphia, where the Toms River, New Jersey bank has virtually doubled its space at Two Logan Square since opening there five years ago to accommodate its growing team.
OceanFirst (NASDAQ: OCFC) set up shop in the Washington, D.C., area by hiring Chad Dally, most recently of TD Bank, as president for Greater Washington and head of aerospace, defense and government services. The move marks its entry into the competitive defense and government services sector. The bank is currently looking for office space in Northern Virginia.
Svizeny said OceanFirst hopes to hire two more lenders in that market this year, noting Dally has strong connections there. The focus will be on commercial and industrial lending and Dally’s expertise in defense and government services. Svizeny said the bank is not looking to be aggressive in commercial real estate lending, particularly the office market, but will build a portfolio that includes owner-occupied businesses and real estate that comes along with those opportunities.
“We’re really focusing our energies on C&I, which is different than what we were doing a couple of years back,” said Svizeny said, who noted the bank’s first attempt at entering Washington included the hire of a CRE lender.
There are also no plans for retail branches there. Svizeny noted that in Philadelphia, OceanFirst added a retail branch only two years after it entered the market with commercial banking. It did the same thing in New York before making a retail banking acquisition there. The bank just has a commercial banking presence in Boston and Baltimore.
Garrett Matthew
OceanFirst is hoping Dally's standing in the market can propel its Washington strategy. It first entered the Baltimore and Washington markets in May 2021. That included four lenders added in Baltimore from BBVA and one in Washington from Wells Fargo. While the Baltimore team has grown, the lender in Washington, Amy Grutzner, only lasted a few months before moving on to WesBanco.
In November 2021, OceanFirst tried to accelerate its entry into the Washington market and the Delmarva Peninsula with the planned acquisition of Salisbury, Maryland-based Partners Bancorp for $186 million. But that deal was mutually terminated in November 2022 due to lack of regulatory approval.
With its presence in Washington, OceanFirst now has lending operations in the five major cities in the Northeast corridor, starting in Philadelphia and then adding New York, Boston and Baltimore.
In Philadelphia, the bank inherited some suburban loan production offices in Mount Laurel, Newtown Square and Doylestown from a series of bank acquisitions between 2016 and 2019 and then opened a loan office in Center City in 2019 and opened its first Pennsylvania branch at 1500 Market St. across from City Hall in 2021.
Svizeny said the bank has shuttered the three original suburban lending offices and consolidated its teams into Philadelphia and an office in Yardley. OceanFirst started at Two Logan with 2,858 square feet and almost doubled that space in June 2022 when it added 2,465 square feet. It now has more than 20 lenders and support staff in Philadelphia and Yardley combined.
Svizeny said the retail branch at 1500 Market offers visibility and supports commercial and retail customers. A bank spokeswoman said it currently has $121 million in deposits.
“Our team in the branch is actually doing a lot in reaching out to local businesses,” Svizeny said. “So they're actually doing their own business development, and it's gone really well. They’re growing the branch.”
The $13.4 billion-asset OceanFirst has expressed interest in accelerating its Philadelphia presence via an acquisition. Asked about whether the bank made a bid with the FDIC for failed Republic Bank, which was acquired by Fulton Financial Corp. last month, Svizeny said that was a question for CEO Christopher Maher.
“I'm always hopeful that we can continue to expand, whether it's in our business and all the markets that we serve,” Svizeny said. “And it'd be great if we could do something in this market.”
The Philadelphia market has $1.6 billion in loans and New York has also exceeded the $1 billion threshold, while newer markets Baltimore and Boston are not quite there.
Svizeny said the lending demand was tepid in the first quarter due partly to uncertainty about the Federal Reserve’s plans to raise interest rates. That has caused some businesses to freeze and assess whether they want to take out a C&I loan to expand. But halfway through the second quarter, she said the bank is starting to see more new activity.
“I'm optimistic that people are accepting this is where rates are going to be for a bit,” Svizeny said. “Now they're talking about one or two [interest rate cuts this year instead of the anticipated three]. People are just moving forward and understanding that they need to continue to grow their businesses. It's not where it historically has been, but it feels like there's some momentum behind it now.”
