In the fourth quarter of 2018, the average return on assets (ROA) for Arkansas banks was 1.57%, ranking the state’s lenders as the top performers among the seven states that make up the U.S. Federal Reserve Bank’s Eighth District. The state’s collective ROA was up 0.21% from the fourth quarter of 2017.
A bank’s ROA is a popular metric used to determine a bank’s profitability. As defined by the Federal Deposit Insurance Corp. (FDIC), it shows the percentage of how profitable a company’s assets are in generating revenue. The higher the ROA, the more money the company is earning on its assets.
Arkansas banks are ahead of the Eighth District average of 1.38% and the national average of 1.35%.
For the same quarter, which ended Dec. 31, the best year-to-date ROA among Arkansas banks belonged to Centennial Bank of Conway at 2.95%. Little Rock-based Bank OZK and The First National Bank of Fort Smith tied for fourth at 2.52%.
In the category of return on average equity, or ROE, Arkansas banks ranked fourth at 11.29% in the fourth quarter of 2018. That represents an increase of 1.19% from the fourth quarter of 2017.
Missouri is the top-performing state in the Eighth District in the category, with an ROE in the fourth quarter of 13.21%. That represents an increase of 3.31% from the fourth quarter of 2017.
ROE, as defined by the FDIC, is “annualized net income as a percent of average equity on a consolidated basis.”
Among Arkansas banks United Bank of Springdale had an ROE of 7.13% at the end of the fourth quarter, Simmons Bank of Pine Bluff had an ROE of 10.22% and Searcy-chartered First Security Bank had an ROE of 11.11%.