Regional banks in high-cost areas of the country, such as New York City and San Francisco, are making like snowbirds and flocking to Arizona.

Over the past couple of years, several of the industry’s biggest names — including Northern Trust, SVB Financial Group and MUFG Americas — have opened corporate offices and added thousands of jobs in the Phoenix area.

The appeal is more than just year-round sunshine. Arizona for decades has been a hub for call centers, given the scarcity of natural disasters in the state’s desert climate. But the low cost of living and attractive tax sweeteners have made the region a destination for banks looking for a cheap way to add staff in technology, compliance and other high-paying lines of business.

“It’s the low cost of doing business — and that’s real estate, utilities, the overall cost,” said Chris Camacho, CEO of the Greater Phoenix Economic Council. “It’s also policy-related; we have a very competitive tax position.”

banking jobs added in Phoenix, bar chart


Camacho is in charge of recruiting companies to the area, a role that involves competing with other regional hubs such as Atlanta, Dallas and Charlotte, N.C., and also the target companies’ headquarters cities.

In recent years, Arizona has upped the tax incentives that it provides to employers, Camacho said. Its baseline offer: a $9,000 tax credit for each job added, though each deal is negotiated based on the total investment a company is willing to make. The state also provides grants for job-training reimbursement and other types of business development.

The incentives have successfully wooed banks to the Grand Canyon State. At the moment, financial firms account for 15% of the total pipeline of companies considering moving jobs to Phoenix, according to Camacho.

“Our goal is that greater Phoenix becomes an epicenter” for the industry, he said.

That Arizona is becoming a hotbed for bank jobs underscores how the state has reshaped its financial sector since the crisis.

JPMorgan Chase, Bank of America and Wells Fargo control roughly 80% of the state’s deposits and also have expansive retail footprints in the region, according to the Federal Deposit Insurance Corp.

For smaller banks, times have been tough for the better part of the last decade. Following the subprime mortgage crash, Arizona faced a wave of community bank failures.

“We were about one of five major ground zeros for the mortgage meltdown,” said Paul Hickman, president and CEO of the Arizona Bankers Association. “We had a lot of community banks that were concentrated in that space.”

Many that survived have found it hard to compete in an era of escalating compliance costs and have opted instead to sell. The list of state-chartered banks in Arizona has been whittled down to about 11, compared with nearly about 20 about a decade ago.

Job recruitment efforts aimed at banks with little or no retail presence in the state have helped it rebuild its financial sector, officials said. It has also brought stability to the regional economy.

From the banks’ perspective, it’s all about the bottom line.

Consider rents as an indicator of the cost living in major financial centers. In Manhattan, for instance, the average apartment costs just over $4,000, compared with just over $1,000 for Phoenix, according to Rent Café, an online listings website.

“If you look at our business model right now, 90% plus of our employees live in the New York metro area, Los Angeles, or the San Francisco Bay area, so an inherently high cost base,” Steve Cummings, CEO of MUFG Americas, said in a recent interview.

MUFG is based in New York and operates the $119 billion-asset MUFG Union Bank in California. In an effort to control costs and improve its efficiency ratio, which has hovered in the mid-70% range over the past year, the company opened an “alternative work site” in Arizona in 2016. It now hosts almost 800 people, in jobs ranging from cybersecurity risk to compliance.

MUFG does not have any retail branches in the state, according to the FDIC.

SVB Financial in Santa Clara, Calif., meanwhile, has recently added about 400 jobs in the Phoenix area, accounting for about 15% of its total workforce.

“We opened the Tempe office in 2012 with growth in mind, and moving to a less expensive location has been one of the elements in our efforts to grow,” Carrie Merritt, a spokeswoman for the $50 billion-asset SVB, said in an email.

Low-cost office space and corporate tax benefits are among the factors that have made the move attractive for SVB, Merritt said. Proximity to its California office was also a consideration.

Additionally, Bank of the West announced in October that it would add 1,000 jobs in the Tempe area. The San Francisco company has $90 billion in assets.

“Cost of living is a lot better than in California, certainly, and the Tempe-Scottsdale area is an attractive place for young professionals,” said Hickman, from the Arizona Bankers Association.

Another important perk: “The weather is pretty good,” he said.

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