Bank deposits in NWA up nearly $800 million

Reflecting the strong economic conditions in the area, banks across Northwest Arkansas reported lively deposit growth from mid-2015 to mid-2016.

Deposits in the Northwest Arkansas Business Journal’s six-county coverage area grew 6.3 percent, according to the FDIC’s 2016 Summary of Deposits report, released Sept. 30. That compares to a growth rate of 5.6 percent from 2014 to 2015.

The SOD is the annual survey of branch office deposits for all FDIC-insured institutions, including insured U.S. branches of foreign banks. The data provides a snapshot of bank deposits as of June 30, 2016.

In total, 40 banks operating 303 branches in the six-county area of Northwest Arkansas — Benton, Carroll, Crawford, Madison, Sebastian, and Washington counties — held $13.5 billion in deposits as of June 30, according to the FDIC (click here to see six-county breakdown). That’s up from $12.7 billion on June 30, 2015.

For a statewide perspective, Arkansas banks held a combined $60.7 billion in deposits as of June 30, up 7.6 percent from $56.4 billion one year ago.

Walton-family owned Arvest Bank of Fayetteville, with $5.3 billion in 67 branches, continues to dominate the deposit market share in Northwest Arkansas, even though the percentage declined very slightly from one year ago, going from 39.9 percent in 2015 to 39.3 in 2016.

The First National Bank of Fort Smith had 7 percent of the market share in the six-county area with $958.2 million in deposits. That includes the lender’s Northwest Arkansas division, First National Bank of NWA, which has four offices in Benton County and one in Washington County.

First Security Bank of Searcy is third in local deposits with $722.2 million. Two regional banks round out the top five: BancorpSouth of Tupelo, Mississippi, with $527.8 million and Regions Bank of Birmingham, Alabama, with $471.2 million.

Industry Analysis

Tim Yeager, a finance professor at the University of Arkansas in Fayetteville and former economist at the Federal Reserve, said Arvest Bank’s market share normally provides a significant advantage in funding costs over its competitors.

Ultra-low interest rates, however, may weaken that advantage, Yeager said, because banks can obtain deposits at a very low cost.

Yeager also noted Northwest Arkansas is bucking the trend when it comes to the number of branch locations. The six-county area saw an increase of six branches from 297 to 303 in the last year.

In Arkansas, the number of branches shrank slightly from 1,365 in 2015 to 1,354 this year. There were 1,388 bank branches in the state in 2014.

“Mobile banking and consolidation have led to a decline in the number of offices, but we are not seeing that here,” Yeager said.

Big Movers

The 26 banks doing business in Washington County grew their deposits by approximately $431 million in the 12-month period that ended June 30, the most of any area in the six-county coverage area.

Washington County also holds the largest amount of deposits at $4.7 billion, just ahead of Benton County’s $4.3 billion.

Alabama-based Regions Bank was a big mover, according to the SOD report. The bank’s deposits at its four Benton County locations grew 63.6 percent to $184.8 million, which trails only Arvest Bank in the county.

Regions’ deposits in its lone Washington County branch grew 85 percent to $57.4 million. Jerry Vest, president of the lender’s Northwest Arkansas operations, noted the solid deposit growth “with healthy balance increases across commercial, branch small business, consumer and private wealth deposits through the past year.”

Richest Branches

The FDIC data can be studied a number of ways, and be divided by geographic area at the state, county and metropolitan area level.

One interesting snapshot includes which branch locations of a given bank hold the most deposits.

In the six-county area of Northwest Arkansas, the top 20 branches ranked by total deposits as of June 30 had $4.8 billion in total deposits. (See accompanying chart).

The branch with the most deposits is the Arvest Bank location at 201 N.E. A St. in downtown Bentonville, with $690.2 million in deposits. That is easily the most deposit-rich branch, despite the fact that the office’s deposits declined by approximately $225 million since June 30, 2015.

Overall, there are 13 bank locations in the six-county area with at least $200 million in insured deposits — four in Fayetteville, three in Fort Smith, two each in Bentonville and Springdale and one each in Siloam Springs and Rogers.