Most Fort Smith regional banks sport good quarterly financial reports

story by Michael Tilley

Most banks based and operating in the Fort Smith area have a few things in common: a decline in net income, decline in dividends and increases in bad loans and real estate holdings.

But despite a few financial hickeys, area banks are healthy relative to their counterparts in other parts of the state and nation, according to figures from reports the banks file with federal regulators.

The king of the hill, so to speak, is Fort Smith-based First National Bank. The bank — whose parent company owns other banks and insurance companies in Northwest Arkansas and eastern Oklahoma — posted net income of $7.07 million for the first nine months of 2008. The income reflects a 34.5 percent drop from the first nine months of 2007. First National recorded $14.61 million in net income for all of 2007.

The bank halved its dividend payments to $4 million — paid from the bank to the parent company, First Bank Corp. — for the first nine months of 2008 compared to $8 million for the same period in 2009.

As a sign of trouble in the real estate and housing market, the bank has seen its value of real estate owned jump to $14 million as of Sept. 30, compared to just $2.6 million as of Sept. 30, 2007. An increase in real estate owned by banks is an indication that foreclosures increased homes, land and other property held by the bank.

Sam T. Sicard, a bank vice president, said bank earnings are down because of a “dramatic decline” in interest rates and the increase in provisions for loan losses. He said most of the real estate owned by and the loan loss provisions are related to the bank’s lending activities in Benton County. That Northwest Arkansas county has seen a dramatic increase in home foreclosures and a growing number of abandoned subdivisions.

“Earnings are down due to the dramatic decline in interest rates and to an increase in provisions for loan losses. The increase in provisions and (other real estate owned) is primarily due to Benton County subdivisions,” Sicard said in an e-mail note. “We will always actively work to sell real estate, but are prepared to hold real estate until excess supply of houses and lots are absorbed by the continued growth in (Northwest Arkansas).”

Sicard said the bank is positioned well in terms of capital ratios. His claim is confirmed by the federal call reports, with shows the bank’s tier one ratio at 13.71, compared to 8.94 for the bank’s national peer group.

“We are pleased that our earnings and capital continues to far exceed national and state industry averages this year,” Sicard said.

First National Bank of Sallisaw posted net income of $2.75 million for the first nine months of 2008, down from $3.29 million for the same period of 2007. The bank, however, has not had trouble with real estate holdings. Its holdings as of Sept. 30 were a mere $325,000.

Farmers Bank of Greenwood saw net income of $1.85 million for the first nine months of 2008, just a slight decrease from $1.94 million for the same period of 2007. The bank also has kept its real estate portfolio under control, with just $828,000 in real estate owned as of Sept. 30.

Two exceptions to the relative health of area banks are Booneville-based First Western Bank and Mulberry-based Allied Bank.

First Western, once active in the troubled Northwest Arkansas housing market, posted a $1.13 million loss for the first nine months of 2008. The bank posted a loss of $244,000 for the same period of 2007. Also, the bank’s real estate holdings jumped to $9.78 million as of Sept. 30, up 278 percent over holdings as of Sept. 30, 2007.

While Allied Bank posted respectable income figures — $1.35 million for the first nine months of 2008, compared to $1.53 million for the same period in 2007 — its real estate holdings jumped $1.79 million as of Sept. 30.

Fort Smith-based Benefit Bank posted net income of just $464,000 as of Sept. 30. Also, the thrift could have problem loans in its pipeline. As of Sept. 30, Benefit had $4.98 million in loans 30-89 days overdue.

The smallest bank in the region — based on assets — is doing well. Scranton-based Logan County Bank had net income of $540,000 as of Sept. 30, up 14.6 percent over the same period of 2007. Also, the bank has no real estate holdings and its total non-current loans were just $391,000 as of Sept. 30.

Following are some financial details of banks based in the Fort Smith area. (Banks listed in order of asset size. All figures in $000.)

The First National Bank of Fort Smith
Average Assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007
$797,147              $799,314                 $800,737    
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$7,074                  $10,813                  $14,617        

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$34,559                 $41,442                 $54,977  

Cash dividends declared
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$4,000                  $8,000                    $13,000                       

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$12,218              $19,484              $17,899   

All other real estate owned
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$14,092              $2,607                 $2,482  

First Western Bank, Booneville
Average assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$297,980              $305,641                 $307,021  
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
-$1,139              -$244                       $122    

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$13,165                $15,614                  $20,708        

Cash dividends declared
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$0                         $600                        $600               

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
 $7,294                  $10,220                  $11,927

All other real estate owned
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$9,785                  $2,588                     $2,731

First National Bank of Sallisaw
Average assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$199,171               $192,317                $191,609
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007
$2,752                  $3,294                     $4,316        

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007
$8,682                  $9,335                     $12,389         

Cash dividends declared
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007
$2,390                  $3,275                    $4,275                 

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007
$33                        $204                      $1,462  

All other real estate owned
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007
$325                      $26                        $0 

Farmers Bank of Greenwood
Average assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$194,473              $191,156                 $191,170
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,851                  $1,949                    $2,312      

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$9,236                  $9,516                     $12,689      

Cash dividends declared
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$2,000                  $2,000                    $2,000        
        
Retained earnings
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
-$149                    -$51                        $312          

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$279                     $195                        $202

All other real estate owned
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$828                      $667                       $717

The Central National Bank of Poteau
Average assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$176,676              $164,334                 $165,068  
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$3,296                  $3,526                    $4,432    

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$8,190                  $8,877                     $11,907     

Cash dividends declared
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,194                  $1,514                     $3,311        
         
Retained earnings
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$2,102                  $2,012                     $1,121     

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$4,182                  $958                      $1,036   

All other real estate owned
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$226                      $289                       $289

The Community State Bank (Poteau)
Average assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$135,107              $123,580                 $124,078  
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$992                     $575                        $926

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$6,810                  $6,575                     $8,835     

Cash dividends declared
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$84                        $345                     $437       
          
Retained earnings
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$908                      $230                          $489            

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,125                  $1,298                      $1,146  

All other real estate owned
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$230                      $337                     $424

Allied Bank (Mulberry)
Average assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$133,133               $126,579              $127,801  
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,356                  $1,538                    $1,880  

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$6,432                  $6,779                     $9,141      

Cash dividends declared
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$896                      $914                         $1,192       
          
Retained earnings
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$460                     $624                        $688  

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,094                   $524                       $0

All other real estate owned
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,794                  $587                        $521  

The First National Bank at Paris

Average assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$104,826              $104,510                 $104,057
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,208                  $996                       $1,301

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$4,798                  $4,855                       $6,432      

Cash dividends declared
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$0                         $0                            $1,208     
           
Retained earnings
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,208                  $996                       $93         

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,499                  $536                       $1,006  
 
All other real estate owned
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$44                        $90                         $3

National Bank of Sallisaw

Average assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$95,954                 $94,623                  $94,516 
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$737                       $1,014                   $1,297  

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$3,946                  $4,560                    $6,034       

Cash dividends declared
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$500                      $600                       $1,000      
         
Retained earnings
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$237                      $414                      $297         

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$579                       $248                       $247 

All other real estate owned
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,846                  $786                       $794
 

First Community Bank of Crawford County

Average assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$71,091                 $60,445                  $62,133 
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$369                      $238                       $364

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$3,325                  $3,032                      $4,150      

Cash dividends declared
(no dividends paid in any period)      

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,308                  $1,416                      $1,664 
  
All other real estate owned
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007
$0                         $63                         $0

Spiro State Bank

Average assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$52,477                 $50,101                  $50,598 
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$359                      $427                       $470 

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$1,945                  $2,170                      $2,916     

Cash dividends declared
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$120                      $120                       $240    
          
Retained earnings
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$239                      $307                       $230          

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$168                      $63                         $49  

All other real estate owned
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$51                        $51                        $51

Logan County Bank (Scranton)

Average assets
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$63,735                  $61,832                  $62,468 
 
Net income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$540                      $471                       $607

Total interest income
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$2,700                   $2,655                     $3,586      

Cash dividends declared
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$180                     $180                       $240       
          
Retained earnings
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$360                  $291                          $367

Total non-current loans and leases
Sept. 30, 2008      Sept. 30, 2007        Fiscal year 2007 
$391                      $187                        $264

All other real estate owned
(no real estate owned for any period)