Reserve Ratio of Arkansas Banks Is Second in Eighth District

In the fourth quarter of 2014, Arkansas banks collectively had a loan loss reserve ratio of 1.52 percent. That’s down from a ratio of 1.77 percent in the fourth quarter of 2013.

Banks maintain a reserve adequate to absorb estimated credit losses associated with their loan and lease portfolio. The ratio is a percentage of a bank’s outstanding loans.

Therefore, on average, banks in Arkansas reserved 1.52 percent of outstanding loan value as a hedge against potential losses.

As of Dec. 31, The Bank of Fayetteville had a loan loss ratio of 1.26 percent; Chambers Bank of Danville had a ratio of 2.70 percent; and Anstaff Bank of Green Forest had a ratio of 1.20 percent.

The collective reserve ratio for the U.S. Federal Reserve Bank’s Eighth District, which includes all of Arkansas and parts of six other states, was 1.44 percent.

Arkansas ranked as the second highest in reserve for the Eighth District, just behind Missouri with a 1.61 percent ratio and close to the U.S. average of 1.49 percent.

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