Bank Deposit Market Share: Slow, Steady

Deposits in the six counties that make up Northwest Arkansas grew just less than 2.5 percent, according to data released by the Federal Deposit Insurance Corp. in early October.

As of June 30 total deposits for the market were $10.96 billion, up from $10.70 a year earlier.

The Business Journal classifies the Northwest Arkansas market as Benton, Carroll, Crawford, Madison, Sebastian and Washington counties. A county-by-county deposit breakdown is available by clicking here.

In 2007, there were about $12 billion in deposits in the market but $1.57 billion of those were brokered deposits held with former ANB Financial of Bentonville. The bank’s brokered deposits skewed the market share data for years, but in 2008 the market’s total dipped 12.5 percent after the bank failed.

Nationally, deposits were up 1.4 percent to $7.66 trillion on June 30. The state outpaced the nation, posting almost 5 percent growth to $48.97 billion. Northwest Arkansas accounts for more than 22 percent of the deposits in the state.

Many bankers said they weren’t surprised by the slow growth. There’s not as much loan demand as in the past, so there’s no need to compete on rates for deposits.

Several said they’ve been working on growing core checking deposits rather than time deposits, or “hot money” frequently raised with time deposit rate specials. Core deposits can lead to the development of future business relationships, they said.  

 

Benton and Washington

Benton and Washington counties grew slower than any of the other six counties – 0.52 percent and 1.43 percent, respectively.

Benton County’s deposits contracted almost 1 percent from a year prior, and Washington County’s were up more than 5 percent.

Still, Fayetteville-chartered Arvest Bank’s 25 Benton County branches have the highest concentration of deposits of any bank in the six-county region with $1.72 billion, up 0.23 percent from a year prior.

The bank has a 50.6 percent of the market share in Benton County, down slightly from years past.

David Short, president and CEO of Arvest Bank-Benton County, offices at Arvest’s largest single branch in deposits. As of June 30, there were $480.5 million deposited at the office.

Short said the bank benefits from business longevity – Wal-Mart founder Sam Walton bought controlling interest of the Bank of Bentonville, now Arvest, in 1961 – as well as work with city and county governments, and schools.

Arvest has $2.98 billion in deposits in the two-county market and a total of $3.54 billion in the six-county market, or 32 percent of the deposits in Northwest Arkansas.

With 114 branches, Arvest is the state’s largest bank in terms of deposits. The bank’s $4.85 billion in deposits grew more than 4 percent from 2009 and its total market share is 9.54 percent.

Decatur State Bank came in as a somewhat surprising No. 2 in Benton County. It grew by 24 percent year-over-year to $158.3 million.

According to the FDIC, Decatur’s brokered deposits grew to $40.5 million from $26.2 million in 2009. That’s nearly a 55 percent increase.

Vernon Austin, the bank’s president, did not return requests for comment.

 

Siloam Springs

One of Decatur State Bank’s three offices is in Siloam Springs and is branded as the Bank of Siloam Springs.

The branch’s deposits have grown from $53.6 million in 2009 to $82.6 million in mid-2010.

Most of the other nine offices in Siloam Springs have had small losses or small increases. Total, the nine offices are down $2.6 million to $408.8 million, and now make up about 12 percent of the Benton County deposit market.

The former Signature Bank of Arkansas office is Siloam Springs sold to Harrell Bancshares Inc. of Hampton in early November. That office had $88.6 million in deposits as of June 30, 2009, but had dropped to about $67 million as of mid-2010.

Somewhat isolated from the rest of Benton County, Siloam Springs is a flat but good market.

The Jonesboro-based bank, along with Russellville Bancshares Inc., acquired Arkansas State Bancshares Inc. of Siloam Springs in 2004, giving it a foothold in this corner of the state.

The Allen family of Allen Canning Co., and the Simmons family of Simmons Foods Inc., were significant shareholders in ASB.

Liberty has since grown its presence statewide and added seven branches in Benton and Washington counties.

Howard Hamilton is Northwest Arkansas regional president for Liberty Bank of Arkansas. He said the Siloam market is flat and that some jobs have been lost there, but that it’s a “cohesive community, so it’s been a good community to be in bank-wise.”

Hamilton said Liberty’s Northwest Arkansas strategy is to grow its deposit market share, but to focus on core deposits for now.

The bank has gained new customers because “the public is starting to recognize how strong the bank is,” Hamilton said.

 

River Valley

If Siloam Springs is a flat and steady sub market of Benton County, the Fort Smith and Van Buren market are the slow steadies of Northwest Arkansas, if not the state.

Deposit growth is always slow in Crawford and Sebastian counties – last year it was down 4.3 percent and up 2.3 percent, respectively – but the economy there hasn’t suffered drastic swings like those in other parts of the state. 

As of June 30, Crawford County’s deposits were up 4.1 percent; Sebastian’s up more than 5 percent.

Citizens’ Bank & Trust Co. in Crawford, and First National Bank of Fort Smith in Sebastian, are both tops in their counties. Both are owned by First Bank Corp. of Fort Smith, which also owns the National Bank of Sallisaw and the Bank of Rogers (under the FNB of Fort Smith charter).

Citizens’ deposit growth was up 10 percent for the year and it controls 45 percent of the Crawford County market.

FNB’s deposit growth was slower, 5.7 percent, but still higher than the county’s total growth. FNB, which has had to compete with heavyweights like BancorpSouth Bank and Arvest, maintains a 29 percent market share in Sebastian County. 

“We’re after core deposits and relationships,” said Sam T. Sicard, vice president of FNB and director of First Bank Corp.

Loan demand is “up slightly” for the year, Sicard said, which he’s pleased with, given the economy.

Sicard acknowledges the Fort Smith market is “aging” and it will become more competitive to maintain a customer base.

“Our plan is to be around for many years to come, so we have long-term perspective,” Sicard said. “We work on attracting new customers … we partner very strongly with the [University of Arkansas at Fort Smith] on several programs and try to stay out in front of the students and in elementary and high school.

“We build relationships for the future,” Sicard said.