Interview: Kevin Rogers, South

fraud in Fort Lauderdale is a testament to the significant ongoing mortgage activity in the market. CoreLogic reported that fraudulent mortgage applications dropped 26% across the country during 2Q20. One of every 164 mortgage applications contained indications of fraud at the end of the quarter, while the proportion was one in 123 in 2Q19. The record volume of mortgage refinances fostered by historic low interest rates is the primary factor behind this fall. Fort Lauderdale also showcased a drop mirroring the national trend, falling from top of the list to third place nationally.

Even the pandemic couldn’t discourage companies from betting on Fort Lauderdale’s effervescent mortgage market. In September 2020, Re/Max Holdings acquired Wemlo, a 20-month-old mortgage processing startup based near Fort Lauderdale.

Fort Lauderdale’s mortgage market has also eyes on the Biden administration as a harsher stance against predatory lending is likely to be adopted, particularly directed at installment lenders.

While South Florida’s real estate market continues to sizzle in the unprecedented low interest rate environment, calls for caution are multiplying. Ken H. Johnson, a real estate economist at Florida Atlantic University’s College of Business warns that home prices have been on the rise uninterrupted since 2012 but a halt is just around the corner. What is more, he estimates South Florida homes to be overvalued by as much as 20%. Even if mortgage rates are expected to remain low at least until 2023, consumers should be wary of rising rates or properties of sale, as they could very well flatten home prices. On the plus side, mortgage underwriting has improved dramatically compared to where it was during the 2008 crisis, while individual credit scores are virtually at an all-time high since 2012.

Competitive environment Given COVID-19, forecasts for the M&A market were on the downside in March 2020, but it didn’t pan out that way. In fact, dealmaking numbers climbed both globally and nationally, although the overall dollaramount in the United States was lower than in 2019.

During the second half of 2020, the world saw a flurry of deals that sent total M&A value to $3.6 trillion, according to Refinitiv data. While representing a 5 percent decrease for the same period in 2019, the segment demonstrated a definitive improvement and a strong sign of recovery compared to the first half of 2020. In the United States alone, the number of deals was up on 2019, although the overall value in 2020 dropped 21% to $1.4 trillion.

Leading deals included S&P Global’s $44 billion Kevin Rogers

South Florida Regional President Seaside Bank and Trust

What lessons were learned througout the PPP process?

As a smaller community bank, we did not have thousands of applications that a large regional bank would have. Their clients were directed into a portal, falling in line. The biggest complaint was they did not have any communication with their bankers. The application went through the portal and they were left waiting to hear back from someone. Our clients came directly to the bankers, and therein lies the di erence. We were talking with our clients, entering the portals for them and we were able to communicate. When we got the approval from the SBA, we were able to go back to them directly to announce their approved status. The biggest issue right now is the forgiveness phase. There is still all kinds of noise out there. Clients think the SBA is going to come up with a program that will waive everyone but you have to go through a process. The work we are doing now seems to be just as involved as in the first phase because we have to communicate with our clients to make sure they go through the forgiveness process.

What regulatory issues are you keeping an eye on?

Believe it or not, COVID-19 is not our biggest challenge or concern. We consider ourselves a wealth management private bank and as such, it is considered high risk by the Federal Reserve and the government. We are always concerned about anti-money laundering, tracking money and related issues. It’s di cult to onboard any client as we have to be strict and thorough with our due diligence and background checks to ensure we are dealing with people who do not have any negative news or issues in the past that can come back to haunt us. In parallel, we are always cautious about fraud, hacking and things going on in the banking industry. That would be our primary concern. We regularly have meetings with our employees about being careful when we are sending wires, for instance. We make sure we know who we’re talking to, that we know it’s our client we’re talking to.

Fort Lauderdale has a sturdy financial footing, with its bonds rated AAA by S&P

purchase of IHS Markit, AMD’s $35 billion deal for rival U.S. chipmaker Xilinx and AstraZeneca’s $39 billion acquisition of U.S. biotech group Alexion for $39 billion. Another encouraging aspect of this activity is that it is spearheaded by tech and finance companies, two of the industries that have proven strongly COVID-resilient.

Bolstering its reputation as a highly touted financial hub, Fort Lauderdale’s financial rating was sturdy going into the pandemic, with its bonds awarded a AAA rating in January 2020 by S&P. It is likely that once the pandemic is under control, the rating will stand. Financial companies also see good value in the region. In 2021, New York investment banking firm PJ Solomon opened a branch office on Las Olas Boulevard.

Insurance Fort Lauderdale’s insurance space also witnessed significant consolidation in the past year. Insurance broker McGriff, for example, is expanding its operations further into Southern Florida to include a footprint in Coral Gables, Fort Lauderdale and Weston. Key drivers in the decision included the region’s employment growth, new construction activity, and the region’s businessfriendly environment. McGriff closed 2019 with a $121 million in southeast Florida alone.

Yet, the industry is not challenge-free. Floridians across the board welcomed 2021 with significant property insurance rate hikes, ranging from 20 to 40%. Insurers are justifying the increase based on long-standing and prevalent property damage claims from past hurricanes and the emerging litigation resulting from COVID.

While the Sunshine State’s Florida’s property insurance market raked in $56.6 billion in premiums during 2019, it sustained more than $1 billion in underwriting losses from 1Q20 to 3Q20, parallel to $500 million in negative net income, as reported by the Florida Office of Insurance Regulation.

Looking ahead

While the post-COVID recovery on the banking and finance side of things is poised to be a long, constant effort, several elements within Fort Lauderdale’s fundamentals are reassuring in the sense of establishing a foundation for recovery that will serve as the launching pad for future growth. The city had been a population and corporation relocation magnet prior to the pandemic, and now even more so, with industry heavyweights such as Goldman Sachs added to the list of household names looking to relocate, scouting locations in both Palm Beach County and Broward County, although Palm Beach appears to have the inside track.

Fort Lauderdale is well positioned to capitalize from in-migration and company expansions and relocations, bolstering the region’s potential for banking and finance sector growth.

Transportation, Infrastructure

& Logistics:

The shock of the pandemic had the potential to send the economy into a deep funk. Instead, businesses in transportation, logistics and infrastructure seized the opportunity to redouble their efforts at expansion. As a result, the region is uniquely poised to take advantage of what, by many accounts, will be a post-COVID boom.