FDIC state profile shows mixed economic health

A collection of second quarter 2010 banking and other economic data released Monday by the Federal Deposit Insurance Corp. (FDIC) show a state economy in neutral or barely moving forward.

The quarterly FDIC state profile shows total nonfarm employment down 0.5%, but an improvement over a 3.3% decline for the same period in 2009. For all of 2009, non-farm employment declined 3.1% compared to 2008, and 2008 non-farm employment fell 0.2%.

In other indicators, the number of single-family home permits issued statewide during the second quarter were up 18.4% and apartment and duplex permits were up 51.2% compared to the 2009 period. However, the home price index fell 2.4% in the second quarter, compared to a 3.6% decline in the first quarter of 2010 and a 0.4% dip in the second quarter of 2009.

Through closures and buyouts, the number of banking institutions in Arkansas in the second quarter fell to 132 compared to 136 in the second quarter of 2009. However, total assets of the remaining banks grew to $56.365 billion in the second quarter from $53.870 billion in the second quarter of 2009.

Loan quality continues to be a problem in Arkansas — much like with the other 49 states.

The ratio of past due and non-accrual loans to total loans increased to 3.66 in the second quarter of 2010, up from 2.89 in the same quarter of 2009. In all of 2009, the ratio was 3.6, up from the 2.82 in 2008.

Despite the loan-quality issues, Arkansas banks are performing better according to the key metric of return on assets. The ROA average all 132 banks during the quarter was 0.96, up from 0.88 in the 2009 quarter. In all of 2009, the ROA was 0.87, down from 0.94 in 2008.

Arkansas bank execs have pulled back on their overall loan activity. The net loan to assets ratio was 62.5 in the quarter, down from 65.7 in the 2009 quarter. For all of 2009, the ratio was 63.9, down from 65.4 in 2008.

The FDIC report appears to correspond to the recent The Compass Report. According to The Compass Report, the second quarter of 2010 saw relative economic improvement in the Fort Smith region compared to the same period in previous years, and did not slip from the economic improvements seen in the first quarter of 2010. Economist Jeff Collins conducts the data collection and analysis for The Compass Report, which is presented by Fort Smith-based Benefit Bank.

Arkansas’ top five largest deposit markets by metro area, based on 2009 total deposits, are:
• Memphis Tenn.-Miss.-Ark.: $22.185 billion, 59 banks in the market
• Little Rock-North Little Rock-Conway: $12.768 billion, 37 banks in the market
• Fayetteville-Springdale-Rogers: $7.393 billion, 36 banks in the market
• Fort Smith: $4.072 billion, 23 banks in the market
• Jonesboro: $2.331 billion, 19 banks in the market