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