As pandemic wanes, state banks see profits increase

by Paul Gatling ([email protected]) 458 views 

Arkansas’ 86 FDIC-insured banks and financial institutions together posted net income of $567 million for the three-month period ended March 31, up sharply (237%) from $168 million in the same quarter a year ago that coincided with COVID-19’s arrival.

The national increase was even greater. The FDIC reported net income of $76.8 billion in the first quarter of 2020, up 315% from $18.4 billion in first-quarter profits last year.

The growth in net income is a continuation of economic recovery following the worst of the pandemic. The FDIC said three-fourths of all banks reported annual improvements in quarterly net income.

“The banking industry reported positive results for first quarter 2021, reflecting optimism about the pace of the economic recovery,” FDIC Chairman Jelena McWilliams said in a May 26 statement. “However, a record low net interest margin and slow loan growth could challenge banks going forward.”

Collectively, Arkansas banks’ total assets as of March 31 ($139.3 billion) grew 3.8% from the previous quarter ($134.1 billion) and 17% from the previous year ($119.1 billion).

The new data also showed deposits grew by $5.05 billion, or 4.7%, from a quarter prior to $113.6 billion.

Little Rock-based Bank OZK was the Arkansas bank with the most profit in the first quarter at $148.4 million (up from $11.8 million in 1Q 2020) followed by Centennial Bank of Conway at $92.5 million (up from $11.6 million). Fayetteville-chartered Arvest Bank was at No. 3 among state banks with first-quarter profit of $87.7 million, a wild correction from a $50.6 million loss in 1Q 2020).

“The sharp decline in interest rates in Q1 2020 had a material impact on our earnings,” Arvest Bank said in a statement to the Business Journal. “Two primary areas of impact – mark-to-market on interest rate swaps and the fair value of our mortgage servicing rights. They are heavily impacted by the change in interest rates, either up or down.”

Simmons Bank of Pine Bluff ($74.6 million) and First Security Bank of Searcy ($29.4 million) round out the top five.

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