You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, we're very pleased to have back with us this afternoon. Frank Sorrentino. He's the CEO of Connect One Bank. He joins us via zoom from here in New York City. Connect One Bank is a regional bank. They've got branches throughout New York and New Jersey as well as a location in
West Palm Beach, Florida. So we always like to check in with Frank, not just to get an idea of what's going on with the Fed, what's going on with rates, but what's going on with real estate, construction, business, loans, deposit accounts, small business, and of course the health of the consumer. Frank, could to have you back with us. How are you great to see it's him great to be back. Yeah, we love, we love having you on the program. Um, so answer that question for for us
right now. Let's just get it out of the way. How is the consumer doing from your view, you know, to him. From our perspective, our consumers are doing quite well. They they at this point, they're all employed, their jobs probably are paying wages that are above where they were even year or two ago. They have probably have more UM cash in the bank today than they may have
ever had before. Yeah. Still so. So, despite the fact that we're at generational highs when it comes to inflation is coming down a little bit, despite the fact that this has been happening for the better part of a year now, we're still seeing cash balances at their highest. Yeah. I think that is true. I think we're seeing that just not only in the consumer, but we're also seeing
it in a small business owner. And so these things are coming down, there's no question about it, but they're still at elevated levels, and I think that's what's driving the economy today. Um. While things are slowing down a bit, we're still seeing some pretty good demand across the board for lots of different products and services. Now all the froth is starting to come off the market, and I think we're seeing that in the numbers. UM. But you know,
New York City is back, Restaurants are full, stores are full. UM, people are out and they're spending money. Travel is you know, you can't get a hotel room. Airlines are reporting big numbers. So in general, things are pretty good. There's an air of caution, Okay, an air of caution. So where where are you starting to see any cracks? And and look,
I gotta ask. We're getting this economic data that's coming in softer than expected retail sales, for example today, disappointing, and and that adding to sort of the narrative that investors that that consumers rather are pulling back a little bit him. Look, while retail sales may have been down slightly today for the month, if you look at retail sales going back eithern this quarter or a year to date or from last year, they're up pretty strongly. And so you know, it's all a function of of of
what time frame we're looking at. Um I think as we sit here today, yes there is some caution. Yes, there's no more lines around you the house when it's being put up for sale, or um, you know, any more bidding wars for various assets. Uh. Cars Today you can get a car. There's things that are coming back, uh to a more normal state from where they were before. Our clients at Connect One Bank or telling us it's
a fairly stable economy. Things are going pretty well. Interest rates are starting to change, the dynamic for a lot of business decisions, and I think that will slow things down a bit. I do believe we are still there's still the capability here for some sort of soft landing relative to our recession. UH. And I think the FED is doing the job that needs to be done to
get this inflation under control. It's the way, you know, I want to talk to you about business spending, and you know, I know you can't speak specifically to this, and you can feel free if you want to. But I was pretty struck by the news yesterday that that Charter Communications UH stock fell to UH, you know, the most on record because it unveiled this three year network spending budget with ten point seven billion dollars next year.
That's a billion dollars more than analysts estimated. And I thought to myself, I thought interest rates were going up. I thought this interest rates moving higher was supposed to dissuade businesses from making cabin from doing cabin spending on this scale. Look, it depends on the type of business you're in. All businesses, I think today we've counseled our businesses to sort of drown out the noise, think about what is going on in your business make good solid
investments where you need to make them. All businesses today have to think about technology. All businesses today have to think about their infrastructure spend. And additionally, I say all businesses today have to think about the opportunities that are going to be presented to them, because there will be some you know, some challenges and some turmoil in the markets um of relative to competitors or you know, any other, uh,
you know, any other aspect of their business. So yes, I think you we'll see businesses spending money, doubling down investing in particular parts of their businesses, and you will see very highly capital intensive businesses maybe having to take a pause in certain places. We're speaking right now to Frank Sorrentino, the CEO of Connect One Bank. It's a regional bank. They've got branches in New York, New Jersey, and a location in West Palm Beach, Florida as well.
Frank Moore on the business what you're seeing from small businesses right now? Are you still seeing are are you seeing any concern about businesses that are not able to pay back their loans right now? So I think we across the industry, we're seeing that credit trends still remain quite quite mild, uh, pretty much a big zero relative to credit that's today. I would I would suspect that there will be some sort of crack somewhere in the future.
I don't think they're going to be, you know, terrible. I do think that we will have a pretty strong economy going forward. The biggest, you know, sort of the biggest car relation for me relative to those credit trends are what's happening with employment. And you know, here we are at the lowest, pretty much the lowest unemployment we've ever had, and there's really no sign that that's going to change dramatically. So if that doesn't change dramatically, then
the FED. What does it mean for the Fed's mission to get inflation under control? Look, I think, you know, I certainly would only speak towards what we see in our local economy. I think having a well employed economy is a good thing. I don't know that we're going to be able to get to a two percent inflation
rate by the end of next year. I don't even know if that's what the FED wants to do they want to do it, I mean, that's what that's what J Pelli said yesterday, they're not changing that goal, okay, but they're also mandated to keep full employment. So I do think if we see that commodity prices come down, if there's um, if wage inflation appears to be whipped, but we have full employment, I think the FED consider its job done even if inflation settles in the three
percent range. UM. I don't think we need to go all the way back, at least not in the immediate terms or the you know, the tomorrow. I think that can be done over a period of time. So I do think we're gonna have to see how this will plays out. But I think we're seeing some big components of the economy are actually coming back into line. Right. We don't we see don't see housing prices going crazy anymore.
We don't see uh, energy, which is a big portion of our economy, uh, you know, out of control from a pricing perspective, UM, goods and services, other commodities, things that are driving inflation are pretty stable. And I do think that there is some level of employment fears. I think people are happy in the jobs that they have and maybe may not be searching as often as they did before. There's some concern about the economy slowing down, so maybe wage inflation will will tamp down. What about
when it comes to the housing market. Speaking of people being happy where they are, people with mortgages under three for a thirty year, I'm wondering if they ever move, and you know what that does to the housing market. Look, people move for a variety of reasons. Right, Yes, it's very nice to have a three thirty year mortgage, But if you want to move to a different part of the country, or your house is too big, or you have more kids and need more room, you're gonna have
to do something. Um. That being said, we we definitely do not have enough houses in the United States. People need to buy homes, and they will continue to buy homes. We actually just saw a little bit of an uptick in a residential real estate portfolio of people purchasing homes. The refinance market is, as you would well expect, is not really there anymore. But certainly, um, people that need a place to live and decide that home ownership is right for them are going to do it. Rates today
are not that terrible. They're in the five to six percent range, depending on the type of product that you pick, and so to me. Look, you're talking to someone who had thirteen and three quarter percent mortgage when I first bought my four So you know, a five or six or seven percent mortgage sounds like a bargain for me. It does. But the thing, the thing that's different about then versus now is the housing prices have gone up
so much with respect to wages. So in the last thirty seconds that we have with you, when do you think we'll start to see housing prices come down in a way that's commensurate with the rising rates. Well, again, I think we saw some of the froth in the Connect One Bank marketplace. We're definitely seeing some of the froth come off, and we're seeing more realistic pricing um and we are seeing some prices coming down to help with that level of additional interest expense, and we're seeing
additional deposits being made, more equity going to the homes. Frank, we love it when you join us. Thanks so much for taking the time. Really do appreciate it. Frank Sorrentino is CEO at Connect one Bank. He's joined us this afternoon via zoom from New York City. The Connect One Bank, it's a regional bank They've got branches in New York, New Jersey. They've also got a location in West Palm Beach of Florida,