Sun Bancorp CEO Thomas O’Brien is set to close the curtain on his fourth stint as a bank CEO — but he has no plans to leave the stage.
O’Brien, 67, gave a short response when asked if Sun’s sale to OceanFirst Financial in Mount Laurel, N.J., would be his final bow in the banking industry.
The veteran banker, who is being asked about his future plans with growing frequency, insisted in an interview that he has been focusing on the transition of power between the $2.2 billion-asset Sun and the $5.4 billion-asset OceanFirst. The deal is set to close late Wednesday.
“I’m going to take a couple weeks and unwind, and then I’ll see what’s out there,” O’Brien said. “Banking is, in my experience, a fantastic business. I enjoy what I do. It’s challenging.”
It wouldn’t be all that shocking to see O’Brien return to banking. After all, he has led four different banks over the past two decades.
In every instance, he ended up selling the institution, often after turning around its fortunes. Those sales netted nearly $1.4 billion for shareholders, who, not surprisingly, have come to lionize him.
“He’s a rock star,” said Mark Fitzgibbon, an analyst at Sandler O’Neill. “He has the ability to drill down to the core of troubled institutions and fix them. … Investors follow him wherever he goes.”
A hard-eyed approached served O’Brien well at Sun, which was reeling from cumulative losses in excess of $86 million during the two-plus years that preceded his appointment as CEO in July 2014.
“Sun was a mess and had been a mess for a long time,” Fitzgibbon said. “It had gone through four CEOs in a relatively short period. None of them seemed to figure out how to fix it. … It was hard to see how they were going to pull themselves out of that situation, ever.”
O’Brien’s predecessors tried to address Sun’s problems by diversifying into various complicated businesses. Those efforts instead “created more regulatory and more investor angst,” O’Brien recalled.
Sun's shareholder base included W.L. Ross & Co., which had been making large investments in several community banks after the financial crisis.
“Usually banks get in trouble and they work on fixing the problems,” O'Brien said. Sun had "embarked on a series of diversification strategies that only complicated the business more and left the critical issues unaddressed.”
Sun was in the middle of a regulatory examination the day O’Brien took charge. His reward was a four-hour trip to the woodshed with the lead examiner.
“I got the full broadside,” he recalled. “Obviously, I can’t disclose exam materials, but I can tell you it was pretty difficult.”
O’Brien responded with an aggressive turnaround plan that took an ax to underperforming businesses, closed scores of branches, sold millions of dollars in classified loans and laid off a large number of employees. Sun, which received $100 million in capital before O'Brien arrived, ended up raising another $20 million.
“No one would have invested if he hadn’t have been there,” Fitzgibbon said.
The process was at times gut-wrenching and O’Brien, who left a seat on the board at BankUnited in Miami Lakes, Fla., to join Sun, admitted he experienced more than a few moments of doubt.
“In the quiet moments each night, I probably questioned my sanity for a fair amount of time,” O’Brien said. Sun “was badly damaged and mismanaged, but at the core it was fixable. I had some good people here and I brought in some tremendous people who relocated and helped me every step of the way.”
Sun was profitable throughout 2015, making good on a promise O'Brien had made investors. By late 2016, the company reclaimed its deferred tax asset, which bumped that year's profit to $61.4 million. It stayed in the black last year.
“We’re pleased with the strong earnings improvements Sun has managed since the transaction was announced,” Christopher Maher, OceanFirst’s chairman and CEO, said during a recent conference call to discuss his company’s quarterly results.
Maher did not respond to requests for additional comment.
While no stranger to bank deals, O’Brien said Sun’s merger with OceanFirst has proceeded more smoothly than most.
“I’ve got to say that the OceanFirst people … are just nice people,” O’Brien said. “They look at us as an opportunity for growth in their business. They’ve been cooperative and communicative both within management and staff levels.”
Maher “walks the walk and talks the talk,” O’Brien added. “People get their cues from good leadership and he certainly exhibits that every day.”