Task force seeks better banking climate

Phoenix Business Journal - by Chris Casacchia, The Business Journal

Friday, February 2, 2007

Business leaders have formed a task force to improve the economic climate in Arizona and increase the number of midsize banks and large financial institutions based in the state.

The Arizona Financial Institutions Task Force, composed of bank and finance executives and legislators, met for the first time Jan. 19 to discuss ways to enhance the competitiveness of banking.

Specifically, the group examined:

• Tax incentives for banks based and chartered in Arizona.
• Creating a community development loan program through local institutions to provide guarantees for working capital loans.
• Revising state bank charter lending limits to compete with Nevada and California.
• The benefits of distributing a percentage of muni¬cipal deposits among banks based here.
• Augmenting FDIC insurance with Arizona Deposit Insurance to increase bank deposits.

"The intention here is to make Arizona the place to be for banking," said Republican state Sen. Chuck Gray, chairman of the Senate Judiciary Committee who helped assemble the task force. "We're trying to create an economic engine. It's going to be a long-term project."

For the past 22 years, Arizona bank deposits increasingly have been controlled by out-of-state financial institutions because of headquarters shifts, acquisitions and non¬local startups.

According to a January study by Mesa-based consulting and research firm Director's Services Inc., only 5.7 percent of state deposits are locally controlled, compared with 95 percent in 1984 when interstate banking was introduced.

In 2006, Arizona ranked 25th in the country with $78.8 billion in deposits, according to the FDIC.

"This situation impacts the availability of capital for our small businesses, the income level of workers, our philanthropic efforts — which impacts our quality of life — and our ability to control Arizona's economic future," said Ernie Garfield, task force chairman.

Garfield, a former GOP state senator, deputy state treasurer and state corporation commissioner, heads Scottsdale-based Interstate Bank Developers, which provides consulting services to form community banks.

Candace Wiest, president of West Valley National Bank and vice chairwoman of the task force, said the situation "leaves Arizona's business owners and consumers vulnerable because decisions about their economic future are controlled by businesses that aren't even based here."

Garfield said he isn't concerned about conflicts with other local and state trade groups.

"We aren't looking for state funding or ways to exclude or alienate any group," he said.

Still, the state's leading bank advocate seems less than enthused about the task force.

"The Arizona Bankers Association is already engaged in making Arizona a positive place for banks to locate," said President and Chief Executive Tanya Wheeless. "So, I'm not sure that a separate task force is necessary to do what we are already doing, but I support any group sharing our mission and focus.

"I do think the task force could be more inclusive and that by having a broader consortium we would add depth to the ideas generated and avoid divisions within the industry down the line."

AT A GLANCE
Members of the Arizona Financial Institutions Task Force who attended the group's first event include:

• Ernie Garfield, chairman, Arizona Financial Institutions Task Force
  
• State Sen. Chuck Gray
  
• State Sen. Jim Waring, Finance Committee chairman
  
• Christina Behrens, Acuity Consulting Inc.
  
• Greg Faris, Director's Services Inc.
  
• James Vigars, Sonoran Bank president and chief executive
  
• Norman Storey, Squire Sanders and Dempsey
  
• James Kennedy, Sunstate Bank president/CEO
  
• John McEvoy, Sunstate Bank chairman
  
• Tom Van Overbeke, Infinity Bank president/CEO
  
• Robert Regan, RepublicbankAZ president/CEO
  
• Martin Whalen, Gateway Commercial Bank chairman
  
• Candace Wiest, West Valley National Bank president

Non-members also in attendance included:

• Tanya Wheeless, Arizona Bankers Association president/CEO
  
• Audrey Johnson, Boundless Group managing partner
  
• Steven Parker, CPA and Larson Allen partner

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