ARIZONA BANKERS ASSOCIATION by AZ Big Media

2016

2017 outlook for bankers page 100 10 trends to watch page 112 Why arenâ&#x20AC;&#x2122;t we saving? page 116

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statements Where does the banking industry stand and where is it going in 2017? By MICHAEL GOSSIE

he banking industry is undergoing a massive change. The industry is facing disruptive competitors. Digital and mobile banking continues to evolve. Cybersecurity has forced banks to value tech troubleshooters as much as financial phenoms. Bank branches are starting to look like Apple stores. Interest rates have started rising. Regulation has never been so costly. These changes have the potential to shake the very foundation on which the banking industry has operated for generations. And banks have to balance these changes with rising consumer expectations and a changing perception of the industry. Az Business magazine talked with some of Arizonaâ&#x20AC;&#x2122;s most brilliant banking minds in a virtual roundtable discussion about the industry.

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Jack Barry

Scott Berg

Kevin Classen

Curt Hansen

Chris Sailus

Brian Schwallie

Joe Stewart

Mike Thorell

Candace D. Wiest

Ed Zito

The panelists are: • Jack Barry, president and CEO of the Arizona Region, Enterprise Bank • Scott Berg, chair of the Banking and Financial Institutions Practice, Quarles & Brady LLP • Kevin Classen, president – West Valley Market, FirstBank • Curt Hansen, chief operating officer, National Bank of Arizona • Chris Sailus, vice president and Northeast Arizona division manager, Washington Federal Bank • Brian Schwallie, Arizona market president, U.S. Bank • Joe Stewart, Arizona market president, and Patrick Joyce, Arizona commercial lending manager, Bankers Trust • Mike Thorell, president and CEO, Pinnacle Bank • Candace D. Wiest, president and CEO, West Valley Bancorp, Inc. and West Valley National Bank • Ed Zito, president, Alliance Bank of Arizona

Here is their take on what’s happening in the industry and what we can expect in 2017. Az Business: How is the health of the banking industry in Arizona? Barry: The banking industry in Arizona is good and is

growing in a prudent and proper manner. We are seeing solid, responsible growth in commercial real estate and there is also a healthy backlog and new revenue opportunities in non-real estate related industries. Berg: The banking industry in Arizona today is robust. Banks in Arizona generally have a fairly sizable amount of capital and are utilizing that capital to make new loans to consumers, small businesses and others. This has helped grow the Arizona economy consistently over the past few years. Classen: I would characterize it as healthy at this point. Most of the approximately 70 banks operating in Arizona have returned to growth and profitability since

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Arizona banks are performing well, consistent with many western region states

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the last bank failure, which took place in 2013. The net number of branch locations in Arizona has declined only slightly in the last few years. Hansen: Arizona banks are performing well, consistent with many western region states. We are seeing solid job growth, housing prices, and loan demand, translating to loan and earnings growth for our banks. In addition, banks are becoming more efficient overall, and credit quality remains good. Sailus: Generally in Arizona, banks are well funded, in good shape, have capital ready to invest in lending to commercial, business and for consumers. Banks are anxious to grow, but finding the market demand is weaker than expected. Schwallie: The banking industry in the Arizona area is strong and competitive. Our business clients are growing, expanding physical operations and hiring more staff. We are especially seeing growth in our small business segment. Stewart and Joyce: We would characterize it as vastly improved over three to five years ago. We see the commercial real estate market as solid and privately held companies are doing better. Overall, it’s a great story for the Arizona banking market and, fortunately, we aren’t seeing any early indicators that the market is overheating. Thorell: Banks in Arizona continue to see financial improvement within all key metrics but the many institutions, especially smaller ones, are still facing strong “head winds” as it relates to regulatory compliance, which ultimately effects financial success and mere existence. Wiest: I think the industry is a smaller, more well capitalized group than ever. We are also the most overburdened group in terms of regulatory expectations burden, change management and cybersecurity initiatives. Dodd Frank has been onerous for all banks, but especially community banks. The industry is smaller because so much of the market is controlled by the biggest five banks. Zito: The state of the banking industry in Arizona is stronger than ever, though highly competitive in a continued low interest environment. Arizona mirrors the national trend of fewer banks with greater concentration of total deposits

among the largest banks. In Maricopa County, 22 percent of the assets are controlled by four banks: The Big Three, followed by Western Alliance Bank, parent company of Alliance Bank of Arizona and the largest locally headquartered bank in the state. AB: What sectors of the banking industry are strongest going into 2017? Berg: The strongest sector in the

banking industry in Arizona is clearly real estate, both commercial and residential. In the last several years, the real estate sector has been expanding at growing intervals, with individuals, developers and equity sponsors willing to risk capital and obtain loans to develop real estate in all sectors. Commercial lending — including lending to companies in the technology sector — has also been increasingly strong in recent years. Classen: The strong loan volume we’ve seen in 2016 will likely carry over into 2017 and has primarily been centered in construction, commercial real estate, and residential mortgage loans. A continued low interest rate environment and stable economy should further support strong loan demand and overall asset growth in 2017. Hansen: With the continued low interest rate environment, in-migration of population and good economic conditions, we expect continued strong mortgage demand. In addition, while small and middle market companies remain cautious due to political uncertainty, Commercial and Industrial loan growth has been steady and will continue in 2017. Sailus: Real estate-related lending will continue to be a big driver in 2017 in new multifamily apartments, residential housing developments, and commercial and industrial. The middle market had robust growth in 2016 and we expect the same this year. There is capital and equity coming in from investors already here in Arizona and from out of state as well to continue looking for opportunities. Schwallie: We are expecting 2017 to be a strong year for real estate construction and home purchases. On the residential side we offer a full line of loan programs from first time home buyer all the way to jumbo lending. We feel we are well positioned to increase our market share in 2017.

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ABA Stewart and Joyce: We see opportunity across the board – including in consumer banking and residential mortgages – but we believe commercial real estate will be strongest in 2017. Thorell: Residential and commercial real estate will be the strongest sectors for 2017, as we are seeing here in late 2016. Small businesses are growing modestly, which is driving the need for new and improved space and we are seeing some larger employers coming to Arizona to do business as well. Wiest: I expect to see strong growth in commercial real estate on all banks balance sheets. Currently, the market in Phoenix doesn’t appear to be overheated in owner-occupied or commercial investor commercial real estate with the exception of multifamily. SBA 7A loans for small businesses continue to grow at very competitive terms and rates. Zito: The strongest sectors include commercial real estate, healthcare, technology, professional services, education, tourism and hospitality, along with the continued demand for financing mergers and acquisitions. This reflects the state’s more diversified economy, pro-business climate and the diligent work of our economic development organizations to retain, expand and attract business. Barry: Commercial real estate is strong and we continue to see job growth in that industry. The supply and demand curve in real estate overall is sound. More specifically, industrial and warehouse distribution is probably the strongest submarket, particularly along the I-10 corridor. I also think that the area south of Old Town (Scottsdale) down to ASU is ripe for gentrification in 2017 and beyond. Overall, real estate growth has been good and is a good indicator for our economy in general.

AB: Where does the industry need some help going into 2017? Classen: Overall bank regulatory compliance and

cyber security will likely be two areas that will continue to get attention from bankers in 2017. These issues impact banks of all sizes across the country and will likely be a concern well beyond 2017. Hansen: We need to pay attention to the commercial real estate market conditions and concentrations, liquidity risks in a potentially rising rate environment, and risk management requirements on a variety of fronts. Maintaining discipline in these areas while growing a bank is a delicate balance. Sailus: There will be challenges in the FinTech field as they continue to seek funds for the peer-to-peer marketplace, for banks that have exposure to the oil and gas industries and for non-depository lenders deciding to continue raising capital or partner with a bank. Stewart and Joyce: While, overall, the industry looks strong, some privately held, commercial and industrial businesses haven’t recovered as quickly from the recession of 2008. They may need a few more good years of improved revenues before they begin borrowing again to make investments in their businesses. Thorell: The overwhelming regulatory burden on the banking system that has been implemented over the past six years has proven to a negative in some areas. Government regulatory agencies are going to have to look into a reduction of unnecessary tired regulations that are outdated to today’s banking models. Wiest: I think you should watch multifamily housing. I attended a lenders conference in California two weeks ago. You can obtain non-recourse loans at rates in the low 3 percent fixed for 30 years. Those kinds of terms invite investors who have little skin in the game and could end up bailing if the markets change.

We are carefully tracking the growth of nonbank financial service providers — including the increasing crowdfunding sector

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We don’t just rent money, we are job creators and provide families with opportunities to improve their lives every single day. Barry: One of our major challenges will be securing enough banking talent to support the growth the market is experiencing. The downturn distracted our ability to attract a younger workforce into the industry. Berg: We are carefully tracking the growth of non-bank financial service providers — including the increasing crowd funding sector — in the consumer and small business markets. While these providers were launched to compete with traditional banks, over the next few years we should begin to see whether they will stay independent as bank alternatives or begin to partner with existing banks. AB: What has been your biggest challenge over the last year? Hansen: While the prolonged low interest rate environment

remains a challenge to net interest margins and earnings growth, we are highly focused on our customers’ experience and putting bankers in the best position to help them. Recruiting and developing good bankers remains the best way to increase our client base and revenue streams. Sailus: The regulatory and compliance environment has dramatically raised the cost of doing business. To keep pace with the ever-increasing rules and new interpretations has meant we needed to hire more compliance and legal staff and set up more thorough reviews of our practices to ensure we stay in compliance. Schwallie: For the banking industry, it continues to be the low rate environment. It makes for a challenging environment. We continue to remain disciplined about our expenditures and maintain outstanding relationships with our clients. Stewart and Joyce: In a market dominated by large brands with dozens – if not hundreds – of locations, our biggest challenge 106

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in Arizona is brand recognition. Interestingly, brand building is also one of our greatest successes. We have seen continued strong organic growth through the relationships we’ve built and referrals from existing clients. Thorell: Jobs, jobs and jobs. Finding well-qualified, educated bankers to help our bank grow successfully is our biggest challenge. Our industry has had nearly a 10 percent job loss since 2009 — nearly 300,000 — and we have not been replacing those positions with seasoned banking professionals that left the industry. Wiest: Like most banks, we have two major challenges. The first is loan demand. Ten years after the recession started, loan demand is still not at the same level. I think there are two reasons for that. The first is the demographic trends. Boomers are looking at retirement, have faced diminished returns on some assets and may be gun shy about taking on new risk. The next group has not made the same income stream the Boomers did. They may not have the financial capacity to make large investments. There is light in the tunnel, though. Millennials are a big group and as the Boomers retire, the Millennials that have a skill are going to be well compensated. I believe they will also make investments in commercial real estate, for example, because they value lifestyle investments and businesses. The second challenge is talent. Let’s face it: banking isn’t the sexiest career path. And it’s highly regulated, which doesn’t allow for a lot of creativity or flexibility in certain areas. Arizona is especially challenging for community bank talent due to the small number of banks in this state and the challenges of retaining young talent in a state that borders a bigger sexier market like California. Zito: When Western Alliance Bank reached the $10 billion mark

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ABA in assets, we faced new challenges — challenges that required additional intellectual capital and technological enhancements. By streamlining back-end efficiencies, we have managed our expenses, while continuing to provide enhanced, personalized and responsive service our clients have grown to expect. Today, we exceed $16 billion in total assets. Alliance Bank of Arizona is proud to be part of one of the the fastest-growing banking companies in country, ranked 10th in Forbes’ 2016 “Best Banks in America” list. Barry: The competitive environment has increased substantially and as such we have begun to see some signs of relaxation in underwriting standards. Despite this trend, our bank is adhering to good underwriting principals. Berg: The ever increasing regulatory environment emanating from Washington D.C. and the European Union has challenged the industry, dramatically increasing the cost of doing business. The (Loan Syndications & Trading Association), the American Bankers Association and other groups in the industry have worked with government to ensure sensible regulation, rather than regulation for regulation sake. The Arizona Bankers Association has been at the forefront of these efforts and kept members apprised of developments in a real time manner. Classen: The overall pace of change in the industry has been a primary challenge for many years now. Not only are we competing with banks, but also with financial technology companies such as PayPal’s Venmo Person To Person Payments and Intuit’s Rocket Mortgage. To succeed we have invested substantially in IT and developed innovative mobile and online banking solutions. For instance, we’ll join a short list of banks that will offer instant person-to-person transfers at no charge, using the ClearXChange network, starting next year. AB: What has been your biggest success story over the past year? Sailus: Positioning people from different parts of the bank

and regions to work together on teams in what I call a non-silent approach. By integrating those teams to provide our clients with a more seamless delivery of products and services, we’ve seen a very nice jump in business in 2016, and we expect an even bigger one next year. Stewart and Joyce: Bankers Trust is proud of the growth we have achieved since opening our doors in Arizona in 2008. Much of that growth has been through referrals. In 2015, we moved into a larger space, which has enabled continued growth and increased presence in Arizona. Bankers Trust will celebrate its Centennial in 2017, so we will leverage that milestone as we continue to build our brand in Arizona. Thorell: We have continued to be a dominant player in the small business lending space, despite being substantially smaller than our local and regional competitors. We are helping local businesses that are creating jobs in Arizona. To us, that is a huge success story that isn’t told enough. Wiest: To solve our issue with loan demand, we hired a small SBA group in Southern California. I am familiar with that market, so I actually spend time there meeting with our new clients. After just four months, we are seeing the positive impact 108

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on both our balance sheet and our earnings. I was also honored to be the first banker who took a chance on a retired vet who started a business that has grown exponentially because he had the capital sources to do so. Paul Smiley has several hundred employees and gave our bank a shout out at the SBA awards when he won the SBA business of the year. It reminded me that we don’t just rent money, we are job creators and provide families with opportunities to improve their lives every single day. Zito: We owe our success to attracting and developing talented commercial bankers, whose local market knowledge and entrepreneurial spirit has allowed us to deepen existing relationships while growing our footprint. Today, we’re ranked fourth in deposits in Maricopa County, seventh in the state. This market position, along with our industry and sector expertise, has allowed us to explore, build and grow specialty lines of business. One such specialty is hotel franchise finance. We were able to translate our expertise in that specialty line into a big market advantage, culminating in the acquisition of GE Capital’s domestic, select-service hotel franchise finance loan portfolio. Barry: Our biggest success story has been our role in providing senior debt financing in the middle and lower middle market mergers and acquisitions space. We have assisted many notable M&A transactions over the last 12 to 18 months. Berg: Quarles & Brady has internally been successful in integrating its banking practice across practice areas and clients. We are now able to service our banking clients in teams, servicing all of our clients’ needs seamlessly and in a coordinated fashion. This has significantly increased our business with many clients and in the industry. Classen: FirstBank’s commitment to consistent and high quality customer service has resulted in a nearly 20 percent increase in both deposits and loans in Arizona over the last year. Since opening in Arizona in 2007, we have continuously built significant personal and business customer relationships, for which we are very grateful. Last year in Arizona, we hit an especially big milestone: originating more than $1 billion in loans. Hansen: National Bank of Arizona has enjoyed widespread success this year. While there are always challenges, we are benefitting from internal partnering and a great group innovative of clients. AB: How do you think automated banks will impact the industry? Schwallie: Banking is a relationship business and we don’t

believe that will change. That said, we look to service our customers in any and all channels they choose to do their banking. We continue to work on building and enhancing a unified customer experience where the service is seamless across multiple channels. Stewart and Joyce: While technology will continue to shape the industry, research tells us our customers want to interact with us in a variety of ways – mobile, online and in person. We work to provide the best possible customer experience across those platforms. Our new location in the Esplanade, for example, is what the industry refers to as a “universal banking” model, which allows us to serve customers in a more personal way and build stronger relationships with them. Thorell: All bank branches will not go away completely as currently rumored, but the automated banks will force brick-andmortar banks to think differently over the next decade as they continue to grow and exist in our community, regardless of your size. AB | November-December 2016

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We view Arizona as very strong through 2017 Wiest: I think the FinTech type lenders are going to be a positive development for both their industry and the banks. It will provide our banks with a lower origination costs, ease the talent shortage and give the FinTech companies the capital and systems the regulators will expect. Zito: A great customer experience is technology-enhanced, personalized and proactive services. Technology will never supplant the value of a personal business banking relationship. Understanding what matters to our clients — what drives them — is priceless. Nonetheless, technology has a role. It serves to enhance our banking relationships by affording our clients greater access to our top decision makers and the capital they need to grow by enhancing communication, transparency, and — of course — security. Barry: The “FinTech” phenomenon presents new challenges and opportunities. It represents the potential to more efficiently move money from one place to another. It’s a new reality and one in which we are responding to. Berg: There has been and will continue to be a natural tension between personal service and automation. Although there will always be a need for personal service in the banking industry, technological innovation — including addressing security issues — will continue to be a driver with banks at the forefront. Classen: It seems logical that branch count will drop given alternative options for banking nowadays, including P2P payments, mobile wallet, and remote check deposit. Banks will have to be innovators in products and technology to continue to be successful. Hansen: If you think about how digital and mobile innovation has already changed the landscape, there are even greater opportunities over the next decade. That said, how we manage those risks that are inherent in new technology and innovation will differentiate the banks that are successful, both in partnering with and competing against new players. Sailus: We believe that automation isn’t a bad thing, as long as it is to support and enhance the delivery of services in a personable way. Innovation has to be a key for the banking industry to deliver better, more secure and cost-effective client services in the coming years. AB: What is your industry outlook for 2017? Stewart and Joyce: We view Arizona as very strong through

2017. Phoenix, especially, has recovered very well and, again, we don’t see any early indicators that the market is overheating. The 110

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interest rate and regulatory environment will potentially impact the industry, in general, in 2017 and beyond. Thorell: The banking industry will continue to steadily improve overall, but we will continue to see a higher level of consolidation of small and regional banks that will, by necessity, have to find merger partners to be able to scale the costs of being in the banking business. Wiest: I expect to see one or two quarter-percent increases in interest rates. I also see another year of consolidation, more compliance and lackluster loan demand. But I am optimistic in that the economy seems to be positive, which could give us a lift IF our folks in Washington can get their act together and realize that there is a direct correlation between the performance of the economy and a strong community banking system. Barry: I am bullish on 2017 and see growth at an accelerated, but responsible pace. Berg: Currently, my outlook is positive as I believe the banking industry has weathered low interest rates and many of the new regulations, and the industry is generally better positioned for 2017. However, there are many variables that could alter that outlook, such as the elections and corresponding treatment of the industry, privacy and security issues, interest rates and the overall economic environment. Classen: Assuming the current economic trends of 2016 continue into 2017, I believe the banking industry will see moderate growth, continued stability, and success in developing new and impactful banking technology for consumers and businesses. Hansen: The industry will see rapid innovation, regulatory challenges, mobile and digital opportunities, and competition from FinTech firms. We will see increased regulation and oversight from these firms, as well as continued revenue and earnings growth for the industry as a whole. Sailus: Growth in Arizona will remain manageable and sustainable versus what we went through pre-recession. We expect to continue seeing new businesses moving to Arizona, and growth in both small and mid range companies. Residential housing will enjoy relatively low rates, affordable prices, limited existing housing inventory, and builders ramping up development projects. Schwallie: We are excited about 2017. Again, we think the economy is trending in a positive direction and that business remains strong here in Arizona.

ABA

things to watch

that could impact banking in 2017

anks put a tremendous number of man hours and pour a staggering amount of resources in analytics so they can better understand, navigate and predict their risk environment. But there are some things that just cannot be predicted and banking leaders have to sit back and take a wait-andsee attitude. Technology, politics, interest rates and the economy are just some of the things analystics cannot predict. Here are 10 things Arizona banking leaders say to watch for in 2017. They could shake the foundation of the industry. 1. Dodd-Frank implications Jack Barry, president and CEO of the Arizona Region, Enterprise Bank: “Increased regulatory oversight. We are still seeing significant implications of Dodd-Frank and that continues to have a big impact on the industry.” 2. Interest rates Scott Berg, chair of the Banking and Financial Institutions Practice, Quarles & Brady LLP: “Apart from the federal elections, interest rates could have the biggest impact on the industry in 2017. If interest rates rise, particularly significantly, although this would generally be good for the banking industry, there could be an adverse effect on many consumers and small businesses, who currently pay low interest on their borrowings, resulting in a wave of defaults.”

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3. Federal Reserve Kevin Classen, president – West Valley Market, FirstBank: “A Federal Reserve decision to move interest rates from current levels could have a meaningful impact on the banking industry in 2017. Interest rates are currently at historically low levels and affect nearly all parts of banking from loan production to earnings.” 4. Innovation Curt Hansen, chief operating officer, National Bank of Arizona: “Rapid innovation and change driven by financial technology companies and how depository institutions partner, compete and manage associated risks will be interesting in 2017.” 5. Politics Chris Sailus, vice president and Northeast Arizona division manager, Washington Federal Bank: “Uncertainty. The political environment will be a question mark for some time, no matter who takes the presidency, until we see their regulatory stance. Just as important are interest rates; the expectations of the market and the direction from the Federal Reserve moves from Fed meeting to meeting. Moving rates up too quickly can cause detrimental effects in consumer and commercial lending, and potentially ruin a recovering housing market.”

6. The economy Brian Schwallie, Arizona market president, U.S. Bank: “In 2017 it will continue to be the rate environment and some of the economic challenges the country continues to face. We are in an election year, so a lot will happen in the next six to 12 months. We will continue to stay steadfast in servicing our customers and maintaining close relationships with our clients.” 7. Cybersecurity Joe Stewart, Arizona market president, and Patrick Joyce, Arizona commercial lending manager, Bankers Trust: “Cybersecurity is an issue that will continue to have a big impact on the industry. Bankers Trust is committed to the financial safety and security of our customers and we have made significant investments in both people and technology to stay ahead of potential threats. We are also keeping our eye on interest rates and the impact financial technology startup companies – or FinTechs – may have on the banking industry.” 8. Mobile banking Mike Thorell, president and CEO, Pinnacle Bank: “Mobile Banking will continue to have the biggest impact on banking for some time to come. Banks of all shapes and sizes will have to reinvent themselves to adapt to the technological appetite of the American public.”

9. Over-regulation Candace D. Wiest, president and CEO, West Valley Bancorp, Inc. and West Valley National Bank: “Regulatory burden is going to continue to be a problem in terms of costs, the business lines we will have to give up, the talent we need to be in compliance compared with the talent available and the brain damage of dealing with all of this. It makes zero sense to have community banks bound by rules made for the too-big-to-fail banks. Our risk profiles are incredibly different and if we fail, we don’t take down the free world economy. All of this combined has caused record-setting consolidation of the industry. We lose one community bank a day. If consolidation keeps going at this rate, it makes the big banks bigger and limits options for consumers and rural communities.” 10. Mergers Ed Zito, president, Alliance Bank of Arizona: “We expect to see continued growth and slightly higher interest rates. We also can expect more bank mergers and branch consolidations as the banking industry at large grapples with the ‘ideal’ online/offline balance to meet the changing expectations of customers. As a dedicated commercial bank, our growth is indicative of what we believe is the perfect balance. By servicing our clients where they live and work has allowed us to be more nimble and strategic with branch expansion.

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Banking

future on the

Why have Americans forgotten how to save money and how can we change that? By JESSE A. MILLARD

he old line, “a penny saved is a penny earned,” seems to have been forgotten in recent years. It goes without saying how important it is to save. Without some sort of savings you can’t retire comfortably, meet sudden costs like healthcare emergencies, or afford that really expensive camera you’ve had your eye on. The Great Recession, yes we’re still talking about it, hurt nearly everyone, forcing many to clean out their savings so they could weather the storm. A Pew Research Center report in 2010 found that four-in-ten adults who had a savings, checking or retirement account withdrew money from those very places you’re Ben Garcia continuously advised to forget about and leave alone. Now, we’ve been in what many have called the recovery period, with Arizona only recently fully recovering from the downturn, but many of the jobs the state as recouped have left folks underemployed, which can have an impact on how much people save.

Eric Palmer

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A recent poll conducted by the Associated PressNORC Center for Public Affairs Research found twothirds of Americans would have a tough go at paying for a $1,000 emergency. Eric Palmer, chief marketing officer at Brokers Alliance, says the poll shows people just aren’t saving as much as they used to. “We lost the art of saving,” Palmer says. “(Saving) was something the late generations were good at. Over time, it just seems that it’s becoming less and less of a priority.” Another report, released by the Federal Reserve in May, found 47 percent of its respondents had an emergency or rainy day fund that could meet three months worth of expenses. “Overall, many individuals appear ill-prepared for financial emergencies that may arise,” the Federal Reserve study states about its overall poll results. Palmer says there isn’t enough education around the art of saving. With today’s technology and the ondemand economy, it can be hard to save when there’s a new iPhone to buy or several dozen streaming services for which to pay. And it’s not just young 20-somethings who might not be saving their money because there’s so much to buy. The older generations are having a tough time at saving, too, because we’re all spending more than we’re saving, Palmer says. It’s just an overall change in habits across the country and across generations, he adds.

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ABA Interest rates Beyond having more bills to pay, low interest rates on savings accounts has been disheartening to potential savers, too. Even though the Federal Reserve raised interest rates for the first time in nearly a decade last December from the zero percent to .25 percent range to .25 percent to .5 percent, according to CNN Money, it’s still not enough to convince people to save. Palmer says the low interest rates certainly have an effect on people’s saving habits because there isn’t much incentive or value for folks to stash their cash in the bank. Ben Garcia, Chase Bank’s Arizona market director in Consumer and Community Banking, says bankers get a lot of questions about interest rates when folks are looking to save. Just like there is more than one way to skin a cat, though, there are many ways to save your hard-earned dough. Garcia likens saving to investing, where you should put your money in multiple vehicles instead of just one savings account. “It’s a must,” Garcia says about spreading your assets. “It’s not good to have it all in one place.” Putting away money in a certificate of deposit and retirement funds to spread the wealth are all great ways to spread the wealth and save.

Out of sight, out of mind Saving with the classic mentality that you never really earned that money in the first place, is probably the best way to save your assets, Palmer says. Having your savings set up in a way where the money is put away into a 401k or some other type of savings vehicle before it even reaches your pocket will leave you surprised at how much you can save, Palmer says. If you received your whole paycheck, it might be a lot harder to put some money away, he says. It’s also best to have two savings accounts, Palmer adds. One account can be used for fun stuff like vacations and fancy clothes, while the other is strictly for emergencies. It may take a while, but it’s best to have six months worth of your earnings saved up in the emergency account, Palmer says. Everyone is different, though, and it may not be easy to save your assets because of financial obligations. Garcia says saving depends on the individual, and as long as you look at your assets and determine you’re saving enough for your goals, then the right steps are being taken.

Back to school Low-income families especially have trouble saving. Complaints about wage growth is one reason, but Garcia says education is another reason low-income families aren’t saving enough. Chase Bank has programs where its bankers go out into the community to teach financial planning and education, Garcia says. It’s especially beneficial to start young. Recently, Chase Bankers were on hand at the Salvation Army Kroc Center’s Back to School Bash to teach kids financial leassons. Savings is just one of those things that should be started early. “All of us in the finance industry would like more folks saving,” Garcia says.

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Maybe we ARE saving?

he JPMorgan Chase Institute released a report on gas prices in early July revealing that people are saving more money now, but it’s at the gas pump. The report found: •

In 2015, households across the nation spent about $480 less on gas compared with 2014, increasing annual income for 60 percent of households

•

The money folks saved at the pump generated a potential savings of $632 for middle-income households

•

With the extra money, households spent approximately 34 percent of it on non-gas goods and services, mostly restaurants , retail and online retail

•

The low gas prices specifically helped households making less than $30,000, freeing up $332

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