States Reserve Tops in Region

According to the most recent data available from the U.S. Federal Reserve Bank’s Eighth District, Arkansas banks collectively had a loan loss ratio average of 2.16 percent in the fourth quarter of 2011, up slightly from 2.06 percent for the same period in 2010.

The state’s ratio was 2.13 percent for the third quarter of 2011.

Banks carry a reserve that’s adequate to offset estimated credit losses associated with their loan and lease portfolios. The ratio is a percentage of a bank’s outstanding loans.

So, on average, Arkansas banks reserved 2.16 percent of outstanding loan value to protect against potential losses.

That ratio is tied with Tennessee for highest among the seven states in the Eighth District.

Arkansas is the only state wholly in the Eighth District. The other six states are partially in the Eighth and partially in another.

As of Dec. 31, the most current data available from the Federal Deposit Insurance Corp., loan loss ratios were 3.64 percent at Pinnacle Bank in Rogers, 2.94 percent at The Bank of Fayetteville, 4.18 percent at Little Rock-based Metropolitan National Bank and 4.60 percent at Decatur State Bank.