Berryville Conversion Helps Shareholders

The First National Bank of Berryville’s January conversion from a “C” corporation to an “S” corporation made a difference in the latest banking report card released by Bauer Financial Inc. The bank’s return on assets (ROA) and return on equity (ROE) both were the best in the state’s six-county northwest corner.

The bank posted a 22.06 percent ROE and a 3.14 percent ROA.

Although the conversion diminished the Carroll County bank’s assets by about 2 percent to $123.65 million, it also stripped away a layer of taxation for First National shareholders and thereby improved returns.

Local bank income was also highly affected by the consolidation of Arvest Bank Group Inc. into one charter — that held by Arvest Bank-Fayetteville. The Arvest property has traditionally dominated local income but the massive influx of consolidated assets diluted its performance down this quarter.

Bill Hudspeth, First National’s CEO, said many small- to mid-sized banks are converted to “S” corporations because of the tax advantages to shareholders.