Jonesboro and Craighead County provide a key road map for economic growth and banking in the state, Arkansas Bank Commissioner Candace Franks said Wednesday (April 13) at the annual Lenders Conference in the Woodard McAlister Family Club at Centennial Bank Stadium.
The 3rd annual event brought together more than 50 people in the banking and lending industry with ASU students.
Franks said the economic downturn of 2009 was behind us but said bankers should be mindful of the lessons learned. There has been some easing of both credit quality and credit standards among regulators, Franks said. In spite of it, the 91 commercial banks in the state had a combined $10 billion in deposits last year, with the banks dealing mainly in agriculture and commercial loans, Franks said.
Franks said while some challenges exist, low interest rates have pushed borrowing downward nationwide. However, Franks said Arkansas banks have been able to weather the storm by having a good charge off loan rate.
She said a weakening of manufacturing, problems in China and other factors like fluctuating oil and gas prices will play a huge role in whether the Federal Reserve will raise interest rates. Franks said it was unclear if rates will go up.
“It is probably too early to tell,” Franks said of a decision by the Federal Reserve. “We will probably have to see how economic conditions are through the end of the year.”
Locally, Franks said Arkansas banks had a 4.55% yield average on loans in 2015, with several areas of the state seeing a larger number. The number of banks under regulatory order has also dropped from 23 in 2010 to just six in 2015, Franks said, noting the numbers have followed a trend nationwide.
As for Craighead County, Franks said the sale of then Liberty Bank to Centennial Bank in 2013 dropped the amount of money in county banks for accounting purposes only. However, per capita income and the amount of deposits in banks have gone up in the past 10 years. Per capita income is now at $38,000 while deposits have gone up 14% in the past decade, said Franks, a 1974 ASU graduate.
“Craighead County has performed real well and is really a highlight in the state,” Franks said. “There has been a lot of commercial growth in town. There is the population growth, plus there is ASU. ASU is a real benefit. Also, there are a lot of community leaders who are willing to work and care about their town. There is a lot of opportunity here.”
There has been an increase in the number of homes bought in Jonesboro in the past several years. In 2015, 2,322 homes were sold, up from 2,242 homes in 2014 and an impressive 73% gain over the 1,342 homes sold in 2009.
There has also been a precipitous drop in the unemployment rate in Craighead County since 2009. The unemployment rate in Craighead County was at 7.1% in February 2009, then gradually rose to 8% and 8.2% in February 2010 and February 2011 respectively. Since then, the rate dropped to 7.3% in February 2012, 6.5% in February 2014, and 3.9% in February 2016.
Franks has worked for the Arkansas Banking Department since 1980 and has been director since 2007. The conference, sponsored by the Arkansas Small Business and Technology Development Center, also featured a talk from Talk Business & Politics CEO Roby Brock, and tours of the ASU campus and the stadium.