Tag Archives: Keith Maio

football

NB|AZ partners with Super Bowl Host Committee

The Arizona Super Bowl Host Committee announces a new partnership with National Bank of Arizona (NB|AZ). The partnership is a fully integrated program providing Official Sponsor designation, a custom media plan with traditional, digital and social elements, business development assets, as well as Presenting Partner status of the CEO Forum.

The recently announced CEO Forum is designed to directly foster Arizona economic growth, which correlates to the business and community goals of NB|AZ. The program leverages Super Bowl XLIX to host more than 50 business leaders from around the world and introduce them to the pro-business environment to encourage them to move or expand business operations in Arizona for a lasting economic impact.

“NB|AZ has a long tradition of supporting and leading economic development efforts across our state,” said CEO Keith Maio. “This partnership provides us with a platform to do what we do best, bring people together to talk about the great opportunities that exist in Arizona to grow business.”

The CEO Forum is unique to the Arizona Super Bowl Host Committee and started in 2008, which resulted in more than 1,000 jobs and over $400 million invested in the state.

“There has been tremendous interest and support in the CEO Forum by Arizona-based companies and CEOs. They see the value and recognize that hosting Super Bowl XLIX is about much more than football,” stated David Rousseau, chairman of the Arizona Super Bowl Host Committee. “As an Arizona-based company with storied leadership and community support, NB|AZ is a natural fit to support programs that accelerate economic development.”

NB|AZ is also a founding sponsor of the Arizona Leadership Forum. This year, Michael Bidwill, president of the Arizona Cardinals and Host Committee board member, along with Jay Parry, president and CEO of the Arizona Super Bowl Host Committee, spoke at the 2014 Arizona Leadership Forum regarding the overall economic impact of hosting Super Bowl XLIX and the 2015 Pro Bowl.

A Guide to Applying for a Bank Loan

NB|AZ Hosts Open House at New Wealth Center

National Bank of Arizona (NB|AZ) announced the opening of its new Camelback Wealth Center, which strengthens its commitment to the community and clients around the Camelback Corridor.

The existing branch location at 4040 East Camelback Road was remodeled into the new wealth center, which blends executive banking and private banking under one roof. The wealth center provides clients a comprehensive array of financial services under one roof, housing 15 bankers including retail bankers, wealth managers, an executive banking team and a mortgage specialist. The remodeled building also offers a more energy efficient design and has been updated with a cash recycler for quicker processing of cash transactions.

The open house on February 26 is open to NB|AZ clients, Camelback Corridor residents and NB|AZ representatives. Refreshments will be provided by North Italia and entertainment by Urban Electra.

WHO: Keith Maio, President and CEO of National Bank of Arizona

WHEN: Wednesday, February 26 from 5:30 – 7:30 p.m.

WHERE: National Bank of Arizona – Camelback Wealth Center, 4040 East Camelback Road, Phoenix, Arizona 85018

A Guide to Applying for a Bank Loan

National Bank of Arizona Elects New Board

National Bank of Arizona (NB|AZ) announced the appointment of three prominent business leaders as new members to its Board of Directors. The distinguished members elected to join the Board include David N. Beckham, real estate developer and co-founder of Beckham Gumbin Ventures; Tracy Bame, president of Freeport-McMoRan Copper & Gold Foundation; and Steve Christy, Vice Chair of ADOT’s State Transportation Board.

The current Board made a strategic decision to elect three additional members to expand the Board for greater bandwidth, a stronger element of diversity and to broaden community representation.

“The criteria we used for selecting candidates for the Board was in keeping with the high standards of excellence we adhere to as a bank,” said Keith Maio, CEO and president, National Bank of Arizona. “We appointed three leaders with an excellent reputation and the best in their field of work.”

“I’m honored to serve on the NB|AZ Board with individuals of such high integrity,” said incoming member, David N. Beckham. “I’m fortunate to have had long-term relationships with some of the current members of the Board, and I look forward to being a productive addition in supporting the vision of this strong financial institution.”

“National Bank of Arizona is an organization that clearly is committed to being an outstanding business and community partner,” said Tracy Bame. “Adding new directors that bring expanded insight and perspective to the Board is continued demonstration of this. I’m privileged and thrilled to accept the invitation to serve the bank in advancing these goals across the state in every way I can.”

“I am truly looking forward to serving as a director with NB|AZ,” added Steve Christy. “I hope to bring to the bank a voice from southern Arizona, and will offer my connections within this community to further the bank’s Tucson interests in any way possible.”

maio

Leadership spotlight: Keith Maio

Keith Maio
President and CEO
National Bank of Arizona
nbarizona.com

Maio has been in banking for more than 30 years. He joined NB|AZ in 1992, was appointed president in 2001 and CEO in 2005.

Biggest challenge: “The challenges of the severe economic downturn, beginning in 2008.  Bringing a sharp, tactical approach to working through the problems of the day, while continuing to stay focused on a long term vision for our organization.”

Best advice received: “Know your strengths and weaknesses and hire smart people to fill the voids.”

Best advice to offer: “Ask yourself what activities you are accomplishing today that support your long-term goals. Not a day should go by that does not move you a step closer to your vision for yourself and your organization.”

Greatest accomplishment: “I am very proud and honored that NB|AZ has been selected by Arizonans as the No. 1 bank for 10 of the last 12 years in Ranking Arizona. I believe this is a testament to the power of an organization holding true to its core values and demonstrating a consistent approach to servicing customers each and every day.”

helping.hands

NB|AZ establishes account for Fire Victims

National Bank of Arizona (NB|AZ) has established a donation bank account through the United Way of Prescott to benefit the families of the 19 firefighters who lost their lives bravely battling the Yarnell Hill Fire. The fund also will be used to assist the residents of Yarnell whose homes were destroyed by the blaze.

Donations can be made to United Way of Yavapai County, FBO Yarnell Hill Fire Fund – #0440011985 at any NB|AZ branch in Arizona.

“We extend our deepest condolences and support to our employees, customers and residents in the Yarnell Hill area who are being affected by this tragedy,” said Keith Maio, president and CEO of NB|AZ. “With a branch location in Wickenburg and multiple branches in Prescott, this fire is in our own backyard. We will continue to service these communities and we pledge our support both now during this crisis and in the coming weeks and months of rebuilding.”

In addition to establishing the donation bank account, NB|AZ has committed to making contributions to the 100 Club of Arizona and the American Red Cross, along with individual cash gifts to the immediate family members of the 19 Granite Mountain Hotshots who were lost in the fire.

NB|AZ also is currently working to coordinate larger-scale relief efforts over the long-term. These include an internal fundraising campaign through the NB|AZ True Partner Fund for employees living and working near the affected area, and a benefit event that will likely take place in the coming months.

The NB|AZ branch locations in Wickenburg and Prescott remain open for business and for taking donations.

For more information about NB|AZ and its services, please visit www.nbarizona.com.

helping.hands

NB|AZ establishes account for Fire Victims

National Bank of Arizona (NB|AZ) has established a donation bank account through the United Way of Prescott to benefit the families of the 19 firefighters who lost their lives bravely battling the Yarnell Hill Fire. The fund also will be used to assist the residents of Yarnell whose homes were destroyed by the blaze.

Donations can be made to United Way of Yavapai County, FBO Yarnell Hill Fire Fund – #0440011985 at any NB|AZ branch in Arizona.

“We extend our deepest condolences and support to our employees, customers and residents in the Yarnell Hill area who are being affected by this tragedy,” said Keith Maio, president and CEO of NB|AZ. “With a branch location in Wickenburg and multiple branches in Prescott, this fire is in our own backyard. We will continue to service these communities and we pledge our support both now during this crisis and in the coming weeks and months of rebuilding.”

In addition to establishing the donation bank account, NB|AZ has committed to making contributions to the 100 Club of Arizona and the American Red Cross, along with individual cash gifts to the immediate family members of the 19 Granite Mountain Hotshots who were lost in the fire.

NB|AZ also is currently working to coordinate larger-scale relief efforts over the long-term. These include an internal fundraising campaign through the NB|AZ True Partner Fund for employees living and working near the affected area, and a benefit event that will likely take place in the coming months.

The NB|AZ branch locations in Wickenburg and Prescott remain open for business and for taking donations.

For more information about NB|AZ and its services, please visit www.nbarizona.com.

A Guide to Applying for a Bank Loan

Are Arizona banks lending?

Are they or aren’t they?

Banks can only stay in business by making loans, not turning away customers who want to borrow money. So why does the public believe that banks aren’t lending?

“The truth of the matter is that when things were really bad a few years ago, banks weren’t lending,” said Robert Sarver, CEO of Western Alliance Bancorporation. “The banking business, not unlike other businesses, tend to react and overreact and sometime we react too much when times are good and we lend too much money on too liberal terms, and when times are tough, we don’t lend enough money and are too conservative.”

Banks are a business — a unique kind of business — that is under significant pressure to make a profit like any other like any other business. A typical bank, in healthy years, should earn a return on assets (ROA) of 1.1 percent to 1.5 percent. That translates into an return on equity (ROE), because of leverage, of anywhere between 8 percent and 18 percent, similar to most other businesses.

A bank makes its money by investing deposits into either securities or loans, both of which earn a return. Typically, loans earn more than securities and both earn more than what banks pay out to depositors. Although loans earn more, they come with a credit loss rate that a securities portfolio generally does not have. In 2009, in the depths of the economic crisis, a typical bank had a loan loss rate of 1.73 percent on its loan portfolio, which ate into the profitability of the bank. So what does a bank to do when it incurs such high loss rates in its loan portfolio? It invests in fewer loans.

But that is changing. Banks have increased their lending for four of the last five quarters, but Federal Deposit Insurance Corporation (FDIC) acting chairman Martin Gruenberg, is still taking a ”wait and see if the trend toward increased lending can be sustained” approach.

“Banks are lending today, and most banks have excess liquidity that they would prefer to put out in loans,” said Keith Maio, president and Chief Executive Officer of National Bank of Arizona. “Those that feel that banks aren’t lending are likely those who have had their credit compromised in recent years. Loan demand is down from consumers and businesses particularly, since the recession. The recession has caused many personal borrowers to be more conservative in their approach to leverage. Businesses tend to increase borrowing when their revenues are increasing and they need to finance that growth.”

Sarver said that banks do want to lend, “but unfortunately there is a lot of regulation in our industry, which to a certain degree has stifled long-term growth because our capital requirements have almost doubled over the last five years, so that’s been another barrier to banks lending money.”

As an outgrowth of those regulatory changes, lending standards have tightened in certain consumer loan categories like mortgages, experts said. But while mortgage rules have changed, lending standards for business haven’t seen dramatic shifts.

“Commercial lending standards for owner-occupied real estate and commercial and industrial loans have not changed much,” said Kevin Sellers, executive vice president with First Fidelity Bank in Arizona. “For investment property loans, banks are requiring owners to maintain more equity capital in the properties and higher net operating income relative to the property debt service.”

According to Adam White, senior vice president of credit administration at Biltmore Bank of Arizona, bankers have always used the “Five C’s of Credit” to determine if a business is credit worthy.  Those included:
1. Cash flow – history of positive cash flows and probability of recurring
2. Collateral – adequate collateral support
3. Capital – adequate capital to support normal business operations
4. Conditions – what’s affecting the business
5. Character – who are the people behind the business

“In today’s environment, banks emphasize ALL five elements,” White said, “whereas in the past too much reliance may have been placed upon appreciating collateral values under unsustainable market conditions.”

Kevin Halloran, Arizona state president of Mutual of Omaha Bank, said that while there have been shifts in the requirements banks are setting for lending, he sees the industry taking steps toward normalcy.

“I believe lending standards have returned to the original norm,” he said. “In the early to mid-2000s, the banking industry required only limited borrower documentation relating to income and other basic information for residential loans. Now, the industry is requesting proper information to make sound decisions.”

On the business lending side of the equation, “lending standards over the past 10 months have loosened in both pricing and structure for both large and small companies,” Halloran said.

And while some banks have pulled back lending activity, it’s definitely not the case at many Arizona banks.

“Loans at our company have grown 8 percent this year and in discussions with my colleagues at other financial institutions in the Valley, they are experiencing similar results,” said Dave Ralston, chairman and CEO of Bank of Arizona. “Loans are the lifeblood of a bank and at Bank of Arizona. loan growth is our number one priority.  We are seeing increasing demand from credit-worthy consumers and businesses in the Valley.”

Halloran echoed Ralston’s observations.

“Over the past three years, we have completed more than $500 million in new loans in Arizona,” Halloran said. “That includes commercial loans and commercial real estate financing across multiple industries, as well as private banking loans and residential mortgages. Our local commercial banking group has provided local businesses with working capital, revolving lines of credit, equipment loans, owner-occupied loans and merger and acquisition loans. Our commercial real estate group has provided loans in industrial, multi-family, senior and student housing, charter schools and multiple other real estate segments. So we have been – and will continue to be – a very active lender.”

A positive result in the changes in lending banks have been forced to examine in the wake of the Recession is that bank have learned lessons that will create a stronger business model for the industry.

“Banks need to consistently monitor their concentrations in all lending sectors and understand they can only provide so much capital to any one industry,” Halloran said. “Arizona’s population grew so much over the past decade that it resulted in a substantial need for real estate lending. The concentration Arizona banks had in real estate negatively affected all Arizona banks.  In the future, I believe all banks will be better at managing their overall balance sheet risk as a percentage of capital.”

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Are Arizona’s anti-deficiency statutes feeding the bubble?

Jack and Jill were living the American dream. They bought their dream house in 2006. Then, the economy spiraled downward. Jack lost his job. Housing values dropped, and the amount remaining on Jack and Jill’s mortgage exceeded the value of the property — commonly known as having a house that is “under water.”

Jack and Jill didn’t want to pay the mortgage any more, so they walked away, leaving the bank to clean up the mess from their financial misstep.

They were able to do that because of Arizona’s anti-deficiency statute, which says that if a person or corporation owns a residential property on 2.5 acres or less that is used as a dwelling, the owner is not responsible for any deficiency occurring after a foreclosure, according to Lynne B. Herndon, city president for BBVA Compass.

“The difference between the fair market value of the home — or the amount that the foreclosure sale brings — and the loan balance is known as a deficiency,” said Paul Hickman, president and CEO of the Arizona Bankers Association. “In Arizona, the bank suffers that loss, not the homeowner who walks away from the home.”

But it’s not only the homeowners — whom the statutes were intended to protect — who are catching the breaks.

“Unfortunately, the statute has been interpreted more broadly than originally intended such that properties used for investment are also covered,” Herndon said.

Arizona is one of only 12 states that has some form of anti-deficiency protection. Of the 12, Herndon said Arizona has the most liberal statute.

“This statute absolutely contributed to the housing bubble as investors both in this state and outside of the state knew they could buy residential real estate in Arizona and walk away if the investment became negative,” Herndon said. “Homeowners in this state have experienced larger declines in home value due to this statute allowing investors to speculate and walk away.”

The incidence of homeowners like Jack and Jill walking away from their home, avoiding hundreds of thousands of dollars of negative equity in their home, and legally sticking their lenders with a loss and became an all-too-common move during the Recession, experts said.

“In my view, the average borrower was not likely aware of the finer points of the anti-deficiency statutes when determining whether to purchase a home,” said Jennifer Hadley Dioguardi, a partner in Snell & Wilmer’s Phoenix office. “However, once the housing market crashed, the anti-deficiency statutes likely caused some homeowners who had the means to make their mortgage payments to decide to simply walk away from the residence given the fact that the lender had no recourse against them other than to foreclose upon the residence once the residence was under water. The borrower was not responsible for the deficiency. This likely contributed to some homeowners who could pay their mortgage simply walking away from the property and leaving the lender on the hook.”

Experts believe that homeowners and investors who seized the opportunity to take advantage of Arizona’s anti-deficiency statutes to protect their own financial futures, might be stifling the state’s chance at an economic recovery and exacerbating the economic collapse.

“The broadness of the deficiency statute has had an overall negative impact not just on the banking industry, but more importantly, Arizona’s long-term economy,” said Keith Maio, president and chief executive officer of National Bank of Arizona. “Arizona’s statute is the most liberally interpreted of the 12 non-recourse/deficiency states, the majority of which limit the protection to primary residences or some other means that limit its contribution to speculation. In Arizona, it allows investors to finance their speculation in housing, risk-free. If their investment does not work out, they don’t have to pay back the difference between what they sold the home for and what they owe. This statute was intended to protect homeowners, but what it has really done is hurt traditional homeowners by opening them up to large swings in housing values. I believe the impact, while negatively effecting banks earnings, is greater on the homeowners in the community at large.”

Despite the impact on the overall economy, it’s still been the banks who take the initial and biggest hit because they are often precluded from recovering the balance of the loan deficiency from the foreclosed borrower. While short sales are not protected by the Arizona’s anti-deficiency statutes, lenders have often been willing to agree to short sales and reduce or otherwise waive deficiency claims, because lenders know they could not otherwise recover loan deficiencies, should the borrower elect to foreclose.

“The deficiency statute has led to greater losses for residential lenders in Arizona because they cannot obtain a judgment against the borrower who may have the ability to repay the deficiency,” Kevin Sellers, executive vice president of First Fidelity Bank. “Lenders’ inability to pursue the borrower for the deficiency creates an environment that results in a higher incidence of strategic defaults.”

The biggest problem for lenders may be that it doesn’t appear that they will get any relief from lawmakers. Dioguardi said properties initially covered by the anti-deficiency statutes had to be two and one-half acres or less and utilized either for a single one-family or a single two-family dwelling. This language was interpreted by the Arizona Supreme Court to require that the dwelling be built and at least occasionally occupied.

“However, a recent decision by the Arizona Court of Appeals has extended the anti-deficiency protection to cover a residence that was not yet constructed and in which the borrowers had never resided,” Dioguardi said. “The Court found that even though the home was never utilized for a residence as required by the statute, because the borrowers intended to live in the single-family home upon its completion, they were subject to the protections of the anti-deficiency statute.”

The court decision, Dioguardi said, needs to be refined to protect both lenders and borrowers.

“Given that the Arizona Supreme Court declined the petition for review of the decision, the legislature should amend the statute to make it even clearer that the borrower must physically inhabit the property to claim the protection of the anti-deficiency statute,” she said. “The current risk to lenders created by the decision as it currently stands will likely drive up the cost of construction loans.”

Bank executives also believe that amending — not necessarily getting rid of — the state anti-deficiency statutes is what the banking industry needs to continue on the road to post-Recession economic recovery.

“A very reasonable solution proposed by the Arizona banking community is to simply require that a property protected from a deficiency judgment be the primary residence of you or a member of your family as already defined in Arizona’s property tax statues,” Maio said. “This will have the effect of limiting this protection for homeowners, which is what was intended. Those in our Arizona business community that oppose this type of change are motivated by their own special interests. Those whose real motivation is to profit on speculative investment or from the fees and commissions that come from buying and selling speculative homes for profit, you will oppose this type of change. But for the rest of us that want to protect Arizonans from future bubbles and encourage a long-term and sustainable economy, we should support this simple change, as it is in our best long-term interest.”

home.prices

Are Arizona’s anti-deficiency statutes feeding the bubble?

Jack and Jill were living the American dream. They bought their dream house in 2006. Then, the economy spiraled downward. Jack lost his job. Housing values dropped, and the amount remaining on Jack and Jill’s mortgage exceeded the value of the property — commonly known as having a house that is “under water.”

Jack and Jill didn’t want to pay the mortgage any more, so they walked away, leaving the bank to clean up the mess from their financial misstep.

They were able to do that because of Arizona’s anti-deficiency statute, which says that if a person or corporation owns a residential property on 2.5 acres or less that is used as a dwelling, the owner is not responsible for any deficiency occurring after a foreclosure, according to Lynne B. Herndon, city president for BBVA Compass.

“The difference between the fair market value of the home — or the amount that the foreclosure sale brings — and the loan balance is known as a deficiency,” said Paul Hickman, president and CEO of the Arizona Bankers Association. “In Arizona, the bank suffers that loss, not the homeowner who walks away from the home.”

But it’s not only the homeowners — whom the statutes were intended to protect — who are catching the breaks.

“Unfortunately, the statute has been interpreted more broadly than originally intended such that properties used for investment are also covered,” Herndon said.
Arizona is one of only 12 states that has some form of anti-deficiency protection. Of the 12, Herndon said Arizona has the most liberal statute.

“This statute absolutely contributed to the housing bubble as investors both in this state and outside of the state knew they could buy residential real estate in Arizona and walk away if the investment became negative,” Herndon said. “Homeowners in this state have experienced larger declines in home value due to this statute allowing investors to speculate and walk away.”

The incidence of homeowners like Jack and Jill walking away from their home, avoiding hundreds of thousands of dollars of negative equity in their home, and legally sticking their lenders with a loss and became an all-too-common move during the Recession, experts said.

“In my view, the average borrower was not likely aware of the finer points of the anti-deficiency statutes when determining whether to purchase a home,” said Jennifer Hadley Dioguardi, a partner in Snell & Wilmer’s Phoenix office. “However, once the housing market crashed, the anti-deficiency statutes likely caused some homeowners who had the means to make their mortgage payments to decide to simply walk away from the residence given the fact that the lender had no recourse against them other than to foreclose upon the residence once the residence was under water. The borrower was not responsible for the deficiency. This likely contributed to some homeowners who could pay their mortgage simply walking away from the property and leaving the lender on the hook.”

Experts believe that homeowners and investors who seized the opportunity to take advantage of Arizona’s anti-deficiency statutes to protect their own financial futures, might be stifling the state’s chance at an economic recovery and exacerbating the economic collapse.

“The broadness of the deficiency statute has had an overall negative impact not just on the banking industry, but more importantly, Arizona’s long-term economy,” said Keith Maio, president and chief executive officer of National Bank of Arizona. “Arizona’s statute is the most liberally interpreted of the 12 non-recourse/deficiency states, the majority of which limit the protection to primary residences or some other means that limit its contribution to speculation. In Arizona, it allows investors to finance their speculation in housing, risk-free. If their investment does not work out, they don’t have to pay back the difference between what they sold the home for and what they owe. This statute was intended to protect homeowners, but what it has really done is hurt traditional homeowners by opening them up to large swings in housing values. I believe the impact, while negatively effecting banks earnings, is greater on the homeowners in the community at large.”

Despite the impact on the overall economy, it’s still been the banks who take the initial and biggest hit because they are often precluded from recovering the balance of the loan deficiency from the foreclosed borrower. While short sales are not protected by the Arizona’s anti-deficiency statutes, lenders have often been willing to agree to short sales and reduce or otherwise waive deficiency claims, because lenders know they could not otherwise recover loan deficiencies, should the borrower elect to foreclose.

“The deficiency statute has led to greater losses for residential lenders in Arizona because they cannot obtain a judgment against the borrower who may have the ability to repay the deficiency,” Kevin Sellers, executive vice president of First Fidelity Bank. “Lenders’ inability to pursue the borrower for the deficiency creates an environment that results in a higher incidence of strategic defaults.”

The biggest problem for lenders may be that it doesn’t appear that they will get any relief from lawmakers. Dioguardi said properties initially covered by the anti-deficiency statutes had to be two and one-half acres or less and utilized either for a single one-family or a single two-family dwelling. This language was interpreted by the Arizona Supreme Court to require that the dwelling be built and at least occasionally occupied.

“However, a recent decision by the Arizona Court of Appeals has extended the anti-deficiency protection to cover a residence that was not yet constructed and in which the borrowers had never resided,” Dioguardi said. “The Court found that even though the home was never utilized for a residence as required by the statute, because the borrowers intended to live in the single-family home upon its completion, they were subject to the protections of the anti-deficiency statute.”

The court decision, Dioguardi said, needs to be refined to protect both lenders and borrowers.

“Given that the Arizona Supreme Court declined the petition for review of the decision, the legislature should amend the statute to make it even clearer that the borrower must physically inhabit the property to claim the protection of the anti-deficiency statute,” she said. “The current risk to lenders created by the decision as it currently stands will likely drive up the cost of construction loans.”

Bank executives also believe that amending — not necessarily getting rid of — the state anti-deficiency statutes is what the banking industry needs to continue on the road to post-Recession economic recovery.

“A very reasonable solution proposed by the Arizona banking community is to simply require that a property protected from a deficiency judgment be the primary residence of you or a member of your family as already defined in Arizona’s property tax statues,” Maio said. “This will have the effect of limiting this protection for homeowners, which is what was intended. Those in our Arizona business community that oppose this type of change are motivated by their own special interests. Those whose real motivation is to profit on speculative investment or from the fees and commissions that come from buying and selling speculative homes for profit, you will oppose this type of change. But for the rest of us that want to protect Arizonans from future bubbles and encourage a long-term and sustainable economy, we should support this simple change, as it is in our best long-term interest.”

Keith Maio President and CEO National Bank of Arizona

CEO Series: Keith Maio President and CEO National Bank of Arizona

Keith Maio
President and CEO
National Bank of Arizona

Assess the current state of the banking industry in Arizona.
It looks pretty tough. The economic environment is difficult. What we deal with in Arizona is that we have a real estate-dominant economy, so many of the local banks are heavy in real estate lending. And — as we all know and see and live in our homes every day — assessed values and real estate valuations have declined dramatically, and that puts pressure on banks. That’s starting to trickle through to the consumer segment and small business segment. Everybody is feeling impacted. That being said, I would tell you that the banks in Arizona, the vast majority, are highly capitalized. So they’ve got the capital base to weather the storm.

In terms of the storm, are you seeing any light at the end of the tunnel?
I haven’t seen the light yet. I know it’s there, but I haven’t seen it yet.

How has the turmoil at the nation’s largest banks affected Arizona-chartered banks?
I think it’s a little bit anecdotal in nature. Some of the problems that the big banks feel are not felt directly by the more local, Arizona banks. Local banks tend to be a little higher capitalized, which is a good thing, and their exposures are more direct-lending exposures versus securities investments and off-balance sheet vehicles.

At the end of the day it’s all about credit contraction, so it impacts people different ways. But the local banks are more direct lenders, so it’s what happens directly in their market.

Do you think that’s a positive thing?
I think it’s a positive thing, other than the fact that we have been impacted so badly in Arizona relative to the rest of the country. So that makes it tougher. But at least when you have direct exposures, you are able to assess on an individual basis what that exposure is.

We are hearing more about the role off-bank balance sheet structures have had in the sharp decline in capitalization among the larger national banks. What type of exposure to such off-bank balance sheet structures do local banks have?
Local banks don’t have much exposure there, and what it allows those banks to do is to assess their risk on a transaction-by-transaction basis, rather than market valuations on pools of securities. So it’s a little easier to assess their risk. Local banks have a little bit more capital to weather the storm, but their exposures on the lending side tend to be a little bit greater than the large national banks.

What challenges and opportunities does the current financial crisis hold for local banks in general, and National Bank of Arizona in particular?
Having been through this before, I think there is an opportunity — and as a CEO you’ve got to always look at the long run, not just the short run. You need to manage what we’re all in the middle of today, but you need to keep an eye on the long run. In getting through this, these tough times actually make people and good organizations better. You’ll learn, ‘What could I have done better before,’ and people who want to improve will improve.

Organizations that can improve end up much better off in the long run. And generally, anytime you have a market disruption — which this is — there’s turmoil in the market and there’s disruption. However, over the long run it presents market-share opportunities to banks. I think that’s an opportunity a lot of us have in the long run — to resettle what the market shares look like at the end of this. For the survivors, it’s a very good thing.

At the end of the day it’s all about credit contraction, so it impacts people different ways. But the local banks are more direct lenders, so it’s what happens directly in their market.

Do you think that’s a positive thing?
I think it’s a positive thing, other than the fact that we have been impacted so badly in Arizona relative to the rest of the country. So that makes it tougher. But at least when you have direct exposures, you are able to assess on an individual basis what that exposure is.


We are hearing more about the role off-bank balance sheet structures have had in the sharp decline in capitalization among the larger national banks. What type of exposure to such off-bank balance sheet structures do local banks have?

Local banks don’t have much exposure there, and what it allows those banks to do is to assess their risk on a transaction-by-transaction basis, rather than market valuations on pools of securities. So it’s a little easier to assess their risk. Local banks have a little bit more capital to weather the storm, but their exposures on the lending side tend to be a little bit greater than the large national banks.

What challenges and opportunities does the current financial crisis hold for local banks in general, andNational Bank of Arizona in particular?
Having been through this before, I think there is an opportunity — and as a CEO you’ve got to always look at the long run, not just the short run. You need to manage what we’re all in the middle of today, but you need to keep an eye on the long run. In getting through this, these tough times actually make people and good organizations better. You’ll learn, ‘What could I have done better before,’ and people who want to improve will improve.

Organizations that can improve end up much better off in the long run. And generally, anytime you have a market disruption — which this is — there’s turmoil in the market and there’s disruption. However, over the long run it presents market-share opportunities to banks. I think that’s an opportunity a lot of us have in the long run — to resettle what the market shares look like at the end of this. For the survivors, it’s a very good thing.

    Vital Stats





  • Executive vice president, Zions Bancorporation, parent company of National Bank of Arizona
  • Joined National Bank of Arizona in 1992
  • Has served as president since 2001; appointed CEO in 2005
  • Current chairman, Arizona Bankers Association board of directors
  • Bachelor of Arts, University of New Mexico; graduate, Pacific Coast School of Banking