Pub. 10 2020 Issue 4

4 www.azbankers.org By Dale Brown — Research Director, Phoenix Business Journal PRESIDENT’S MESSAGE Arizona Bankers Association’s Paul Hickman Dishes on How the Sector Fared in 2020 T HE CORONAVIRUS PANDEMIC HAS had ripple effects across all sec - tors in 2020, and the banking and financial services business has had its share of bumps and bruises. Across the Valley, many brick-and-mortar bank branches closed amid the COVID-19 stay-at-home orders, and some have been shuttered permanently as a result. Still, the sector has also been buoyed by the contin - ued surge in real estate activity in the Val - ley. At the same time, the SBA-administered the Paycheck Protection Program, despite some instances of misuse, kept bankers extremely busy. Meanwhile, some out-of-state bank brands started bulking up operations in the Valley, and one of the biggest M&A deals of the year was announced in November when Pittsburgh-based PNC Financial Services agreed to buy the U.S. banking arm of Euro - pean financial giant BBVA. We caught up with Paul Hickman, presi - dent and CEO of the Arizona Bankers As - sociation, to weigh in on how the industry is doing. Has the Valley’s residential buying boom caused area banks to tighten or change their lending criteria? Not in any fundamental sense. The hous - ing-induced real estate crash of 2008-2009 resulted in the loss of many financial institutions and the decision to exit the res - idential mortgage lending line of business by many others. The remaining residential mortgage lending industry already had much tighter underwriting standards than the industry-at-large. The regulations put into place per the Dodd-Frank Act of 2010 leave little latitude for banks to loosen residential mortgage lending criteria now. How has the pandemic impacted mortgage lending specifically? It has significantly increased the vol - ume of mortgage lending, particularly in the Phoenix MSA. It has also created a demand-driven increase in price — some - what abetted by shortages of lots and new building materials. Where do you see interest rates head- ing over the next year if the pandemic continues? It’s important first to note what the pan - demic has done to interest rates already. The effective federal funds rate has cratered nearly 150 basis points since February. In November, the Fed announced they would leave rates where they are for the time being. And where they are is essentially at Interview with Paul Hickman, president and CEO, Arizona Bankers Association First appeared in the Phoenix Business Journal on December 10, 2020