Fort Smith market share for Bank of the Ozarks drops 52%

Reducing deposits requiring collateral and increasing cash to acquire new banks are key reasons behind a more than 52% two-year drop in deposits at Bank of the Ozarks’ Fort Smith branches.

At June 30, 2008, the bank held $134.172 million in deposits in Fort Smith, which was 6.73% of the market share, according to a Federal Deposit Insurance Corp. report. But as of June 30, 2010, the deposits fell to $64.259 million, down 52.1% from the 2008 value and down 50% from June 30, 2009. The Little Rock-based bank fell to a 2.98% market share in Fort Smith in the 2010 FDIC report.

Since March 2010, Bank of the Ozarks has expanded its footprint across the Southeast by participating in five FDIC-assisted acquisitions of problem banks in Georgia, South Carolina and Florida.

“Bank of the Ozarks reduced public fund CDs, in the Ft. Smith market and many other markets between June 30, 2008 and June 30, 2010 in conjunction with a reduction in the Bank’s investment securities portfolio,” noted an explanation from Susan Blair, spokeswoman for Bank of the Ozarks.

As does many banks, Bank of the Ozarks used its investment portfolios to cover the extra collateral required for public fund certificates of deposits at amounts above FDIC-insured limits. When the bank needed to convert the investments to cash to help fund the acquisitions, it had to reduce its holdings of public fund CDs.

Blair said the ratio of public fund CDs to regular accounts resulted in the big drop in market share.

“Personal and business deposit account balances tend to be smaller in nature than larger public fund CD balances resulting in an overall decrease in the Bank’s Fort Smith deposits,” Blair explained. “The bank has continued to add personal and business deposit account customers in all the markets it serves including the Ft Smith market throughout this time.”

The bank’s market share fell in other regional cities. In Van Buren, the bank’s market share in 2006 was 10.27%, but fell to 7.87% in 2010. Bank of the Ozarks’ market share in Alma in 2010 was 13.02%, down from 15.56% in 2006. In Paris, the bank market share was 11.18% in 2010, down from 13.34% in 2006.

The retrenchment in the Fort Smith area has not hurt the bank.

Bank of the Ozarks posted year-end net income of $64 million, up 74% from one year ago when Bank of the Ozarks recorded earnings of $36.8 million. For the quarter ended Dec. 31, 2010, net income was $16.9 million, an increase of 75.5% from $9.65 million for the fourth quarter of 2009.

Citizens Bank & Trust of Van Buren, Arvest Bank and Benefit Bank may have benefited from the Bank of the Ozarks’ pullback.

Citizens, a subsidiary of Fort Smith-based First Bank Corp., increased its market share in Van Buren from 46.36% in 2006 to 48.81% in 2010. In Fort Smith, Arvest saw its market share gain from 12.75% in 2006 to 14.55% in 2010.

Fort Smith-based Benefit Bank boosted its Fort Smith market share from 6.05% in 2006 to 7.97% in 2010.