Pub. 4 2014 Issue 1

4 www.azbankers.org W e don’t need anyone to tell us it’s been a long last few years in bank- ing, both in Arizona and the country at large. Arizona is a housing-centric state and the Great Recession was triggered by a crash in that sector of the economy. So it’s not surprising that the recovery here has been, to say the least, arduous. The economic fundamentals for growth in financial services for the near and medium terms, however, look strong. Until recently the Phoenix market has led the nation in housing price increases. The percentage of our housing stock with negative equity is almost at pre-crisis levels, as is the number of completed and pending foreclosures. Demand in the housing market is reminiscent of a non-speculative, healthy market. Other metrics we count on also look promising. Unem- ployment, both in Arizona and the country, is moving towards seven percent and below while labor market participation is expand- ing. Economic growth for the second half of 2013 was the best we have seen in quite some time. And while interest rates are a double-edged sword for firms that are heavily engaged in mortgage origi- nation and re-finance, on balance a higher rate environment helps all of us-- and that is without a doubt where we’re headed. The $64,000 question is how increasing regula- tory and compliance costs will impact the size, scope, and effectiveness of the industry. Most of the Dodd-Frank rules should be completed within the next 18 months and there will be an inevitable adjustment period by both sides of the regulatory equation. I’m sensing a consensus among banking analysts, however, that the agencies recognize the pendulum may have swung too far in a restrictive direction. If their posture is more collaborative in terms of safety and soundness, and if the economy continues its current trajectory, 2014 will be a harbinger for even better banking industry growth prospects for the next several years. In This Issue In Counselor’s Corner on P.6 Christian Beams points out that litigation is an inevitable eventu- ality in banking. He notes that as the economy continues to improve we are going to see more lender liability claims and he suggests some important things to look for when choos- ing outside counsel. On P. 20 there is an insightful piece on managing vendors and fol- lowing that, on P. 25 we hear from Ogletree Deakins about the necessity of growing and managing your social media presence. Mesa Mayor and U.S. Con- ference of Mayors President, Scott Smith, provides some details about the remarkable economic development taking place in Arizona’s third largest city on P. 12. He points out that the companies looking to relocate to Arizona are going to need a qualified work- force, and Mesa is doing its part by bringing in legacy colleges and universities. The Arizona Bankers Association is working with our members to bring financially literate students to those universities through our partner- ship with the nation’s premier provider of financial education to secondary and college students, Everfi. We recount how the program has evolved in Arizona on P. 7. Providing financial education to young people is but one example of the many ways in which the employees and institutions in our industry We Are Bullish on 2014! By paul hickman , President & CEO A MESSAGE FROM THE PRES I DENT UNITED STATES GDP GROWTH RATE Percent Change in Gross Domestic Product Q4 Q1 Q2 Q3 2012 2013 Source: U.S. Bureau of Economic Analysis