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One person we go to regularly for his view on the economy here in the United States and raids is Frank Sorrentino. He's chairman and CEO at the publicly held New Jersey based community bank connect One Bank Corp. Which is the parent company of Connect One Bank, accounts small businesses and construction companies among its customers, and the bank has some sixty three locations maybe in counting in New Jersey, New York, and Florida. And the bank earlier you will remember,
this merged with First of Long Island Corporation. Now its total assets are about fourteen billion. That's as of the end of September. Frank joining us here in our Bloomberg Interactive Broker Studio. Did we get anything wrong anything?
You've got it all right. That's because I wrote it. And great and great to be back. Great to see you.
It's good to have you here. We love talking to you because we are at this moment where we're trying to figure out I feel like I can say this a million times this year, like where we are in the US economy, what's ahead? What kind of clarity do we have? Tell us about your business.
And what you're seeing, lef the nice calm part of the pool and now we're into the rapids and the more turbulent it was, and when you look back before Liberation Day. But okay, certainly, you know we're seeing a lot of people have a lot of apprehension about where we stand right now, right so small businesses have a lot of concerns. There's so many things going on, there's so many different data points to look at or not look at, or not have information in front of them.
But you know, I know, I know, we've talked about this before. I keep saying I believe we're on a robust footing here with our economy.
Because you see it in terms of what loan generation or what are clients.
You know, they discuss the issues of you know, not being sure what to do next. Yet when you ask them, how are what's going on? You know? Are you are you are your revenues up? Are you thinking about expansion? Are there opportunities? Are you looking to hire people in our market? Anyway? In the New York metro market, which is the market we represent. We're finding that people, the businesses, business owners here are doing quite well and they're continuing
to do well. And there's so many inputs that are helping that AI is helping in a lot of cases, just the amount of capital coming into this region, the amount of construction going on, the amount of of of heavy and highway work, just you name it. Manufacturing. I think today there was a fact that came out about New York manufacturings on the rise, something that was actually a little bit of surprise to the most, not to me.
Our our clients are telling us that business is continuing to improve, yet they have trepidation about you know, where they where they settle right now. However, interestingly, if you ask them where they think they'll be in six months from now, everyone says they think they'll be in a better place. Oh so everyone is counting on the economy getting better, or at least their conception of what better may be from where they are today. What I say is they're in a good economy now and it's going
to continue to do better now. There's also the tale of two different stories here. There are some parts of our economy that are not doing as well as others, and I think we saw some of the reaction to that relatively recently in some of the political events that have occurred. So I think we do need to take a look at this. This what's the distribution of where wealth is being created and not created.
As a New Yorker, it's nice to hear that things in the New York City area are looking good, but it also makes me think of the changing politics of the city and Mayor elect Zoron Mamdani. And you know, this is not a political question, It's simply a question about how people should plan for the future. We reported last week the Bloomberg News team that is that aids to President Trump have spent the days following mom da victory in New York reviewing federal funds that benefit the
city to potentially suspend or cancel. A White House official said, highlighting the threat of retribution over the Democratic Socialists win. If we were to see in New York City or New York State funding cut off for some of these projects, would that have a big effect on the economy?
Look, I would believe the answer would be yes, it will have some effect on the economy.
Because you mentioned some infrastructure projects.
Sure, I don't know how big that would be, and I don't know what the you know, it seems to me in this economy, at least over the last twelve months or so, there seemed to be so many inputs that have been maybe going in one direction, maybe a negative way, and something else turns around and comes back to the other the other direction. So, look, New York has always been New York, and we've been through all different types of political environments, and there have been ups
and downs. But if you chart the growth of New York from sixteen oh nine or whenever, when the first settlement started here through to today, it has been an uphill, NonStop, you know, economy, and so I have every confidence that New York is going to continue to be the place to be. Are there challenges here today about affordability and who can live here, and you know, some of the changes that need to be made, Absolutely, I think we'll
get those things right. What one thing I have learned from this administration, There are a lot of threats that are made and a lot of you know, there's a lot of saber rattling. At the end of the day, though, I think our president loves the city of New York. I can't see him doing anything that's generally going to be harmful to the city.
And correct as if we're wrong. Though, we were talking with some of our folks who also cover like the banking area and are interesting is you do have some exposure to rent regulated We do properties or apartments I think via your cre lending. So with the mom Donnie when here in New York City, how do you feel about that exposure and what he has said about, you know, his pledge to freeze rents.
So look for those you know, for those properties that we're trying to convert from rent regulated or rent stabilized rather to market rent, those properties are going to have some challenges going forward because that's not going to happen. And part of that was the two thousand night Let's not forget the twenty nineteen law made that change. And it was interesting, right the candidate everybody wanted to win, which was Andrew Cromwell, he's the one who signed that law.
So everybody's afraid of coming in. But yet you know, it was the one who ran against him that brought that law to pass. For the balance of the rent stabilized properties that are out there that are already cash flowing and have been underwritten under those terms, I think
they're going to be fine. As a matter of fact, the current mayor elect has spoken many times about programs possibly to lower property taxes for some of those property owners and come up with insurance programs to sort of help out to keep the rents at a lower rate. So if that's true, and you know, if there's going to be some level of negotiation around what to do or how to do it to keep the rent increases lower,
I'm all for it. That's great. What we have found over the years is that there have been rent increases. There was just one past recently for I think about three percent that went into effect in October. And let's not forget that the current mayor has six picks still on the rent guidelines board and they're not you know, they are supposed to look at the economy on the
ground today. Where are expenses. You know, the city does raise your taxes and your sewer fees and the cost of everything else goes up, so rents should go up appropriately as well, you know, based on inflation. So I do think there'll be a give and take there and you know, at the end of the day, look, I think having affordable apartments is a very very great thing for our city. I'd like to see us be able to do more in that regard here in New York City.
Why don't we do more? And I guess I asked that we.
Would need a very long program to get into what. You know, there are any cities and towns. New Rochelle is an example of that where they've taken the opposite approach, which is, let's build as many apartments as we can possibly build. Let's let the developers go build. And they did that, and you know, the laws of supply and demand, they're sort of like gravity, right, they can't you can't undo them. And so they built a lot of supply.
Guess what happened to the rents? They came down, they didn't go up.
The Yeah, we had the Mayor Yadira Ramos Herbert on a few months ago talking about this and the zoning changes. You a background as a builder, You actually went to college for this before you were a banker. And I think it's fair to say that I'm not going to say all economists. Most economists would agree the way to decrease housing prices is to build more housing? How do
you do that in New York City? And our developer is going to do that in New York's Like, what would developers need in the next administration order to do that apart from zoning changes? Like, what would they need to hear from city Hall that says you guys can go ahead and build and build more houses.
Well, we would need zoning changes, We would need the ability to build housing that is affordable to build. You can't add on all of these issues. Yeah, listen, you know, I come from a union family, so I love, you know, unionized workforces. But if you're going to force every small apartment builder to build using union labor, you're going to
drive up the cost. If we're going to force buildings to not be able to use certain types of natural gas appliances, or they got to meet certain environmentals that New York City has faced here, and so they keep adding all of these things on and it makes the projects unaffordable and if they're unaffordable, they don't get built.
I have like five more questions we have.
It's not that hard.
We have seventy seconds.
No, I know, we don't have a long time. Just one last question, because I've got it. We're bloomberg. We do have a last FED meeting December. What are you expecting? What do you think we do need? Based on you said pretty upbeat? Just got about forty seconds, Okay, FED.
The Fed's got a tough job ahead of them. On the one hand, you know, unemployment and the employment structure in the economy is giving some mixed signals. Yeah, you know, larger businesses maybe hiring, smaller businesses maybe laying off. That could be temporary in that camp. I do believe that the smaller businesses are going to catch up soon. I do think there is I don't think there's a lot of inflation built into the economy. I think the terriffs
are sort of skewing some of those numbers. I think they're going to have a tough call. My hope would be that they continue on the path and they cut rates another twenty five basis points in December.
Well, just another excuse for Frank to come and hang out with us again and get to the round December tenth.
That day when we.
Get that decision from j.
Powell and the Federal Reserve, you're just up the street so come back soon.
We'll do.
Frank Sorrentino, Chairman and Chief Executive Officer of connect One Bank, joining us right here in our Bloomberg Interactive Broker Studio