Money Talk: Arkansas Banking Sector Continues To Heal

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ARKANSAS BANKING SECTOR BETTER IN 2014, HEALTHY OUTLOOK AHEAD IN 2015
The state’s banking sector has climbed out of the doldrums in the past few years and through three quarters of 2014 the financial sector is healthier than a year ago, according to the Federal Deposit Insurance Corp. state quarterly profile.

The FDIC reports the segment grew its employment across the state to 18,930 full-time workers in the third quarter, despite more bank consolidation to 111 financial institutions as of Sept. 30, down from 120 reported at the end of 2013.

More good news in the report: bank assets up, profits improving, loan activity expanding, stronger capital equity, and lower real estate owned (REO). Read the full report plus analysis here.

FALLING OIL PRICES FUEL STOCKS DROP
Last week, U.S. stocks took a downturn as the major indices all saw slides. Falling oil prices were the biggest factor fueling the financial market declines. For the week, the S&P 500 dropped 3.5%, while the blue-chip Dow Jones slid 3.8% for the week, its biggest decline since November 2011.

The sharp negative turn came amidst solid domestic economic news. Consumer confidence rose in one report, retail sales were healthy and improved, and wholesale prices remained low thanks to shrinking energy costs.

“Clearly the oil situation is driving things,” Randy Warren, a money manager at Pennsylvania-based Warren Financial Service and Associates Inc., told Bloomberg News. “At first it was just oversupply of oil. But now it’s that, plus fear of a world economy that’s growing too slow. Those fears are definitely outweighing the positive signs we’re seeing domestically.”

Benchmark U.S. oil prices are poised to test $55 a barrel after six months of dropping prices have pushed crude to its lowest value in five years.

Low oil prices may slow U.S. shale production, some experts warned. U.S. oil drillers idled the most rigs in almost two years this week. Rigs targeting oil dropped by 29 to 1,546, the lowest level since June and the biggest decline since December 2012, according to a Baker Hughes report.

FEDERAL RESERVE TO MEET FOR LAST TIME IN 2014
From Fortune magazine, a preview of Wednesday’s FOMC meeting:

The Federal Open Market Committee holds its final two-day meeting on Tuesday and Wednesday to decide on its future interest rate policy. As of its last meeting in November, the group said it would maintain low interest rates for a “considerable time.”

Fed Vice Chairman Stanley Fischer said the FOMC is closer to changing course and indicated a mid-2015 target could be appropriate for rate increases, though other leaders haven’t been so bullish. The recent job gains in November could entice regulators to change their language to suggest new timing for interest rate rises.

The Fed will announce its policymaking decisions at 1 p.m. on Wednesday. Fed Chairwoman Janet Yellen will hold a press conference at 1:30 p.m. to discuss the FOMC’s decisions.