Arkansas banking sector sees 4% income dip in 2023; Bank OZK most profitable

According to a Federal Deposit Insurance Corp. (FDIC) report on Thursday (March 7), 4,587 federally insured commercial banks and savings institutions saw net income decline by 2.3% to $256.9 billion in 2023. The decrease was primarily attributable to non-recurring, noninterest expenses at large banks.

Community banks reported a full-year 2023 net income of $26.6 billion, down by $2 billion (7.1%) from the previous year. Similarly to the industry overall, the combined noninterest and provision expense increase offset higher net operating revenue.

Net income for 82 FDIC-insured Arkansas banks last year decreased by 4% to $1.90 billion from $1.98 billion in 2022. That’s still above pre-pandemic levels of $1.62 billion in 2019 and 2018.

“The banking industry has shown resilience after a period of liquidity stress in early 2023,” FDIC Chairman Martin J. Gruenberg said. “Full-year net income remained high, overall asset quality metrics were favorable, and the industry’s liquidity was stable.

“However, ongoing economic and geopolitical uncertainty, continuing inflationary pressures, volatility in market interest rates, and emerging risks in some bank commercial real estate portfolios pose significant downside risks to the banking industry.”

Arkansas’ three public banks were the most profitable last year:

• Little Rock-based Bank OZK had the most profit in 2023 with $690.7 million, up 22.4% from $564.1 in 2022.
• Centennial Bank of Conway had a profit last year of $413.8 million, up 24% from $331.3 million in 2022.
• Simmons Bank of Pine Bluff posted a profit of $206.4 million last year, down 28.8% from $290.2 million in 2022.

Searcy-based First Security Bank ($127.5 million) and The First National Bank of Fort Smith ($32.1 million) rounded out the state’s top five most profitable banks last year.

Collectively, Arkansas banks’ total assets as of Dec. 31 ($168.7 billion) grew 6.6% from the previous year ($158.2 billion).

Four Arkansas banks ended 2023 with more than $20 billion in assets — Bank OZK ($34.2 billion), Fayetteville-chartered Arvest Bank ($27.6 billion), Simmons Bank ($27.3 billion) and Centennial Bank ($22.5 billion).

The new data also showed Arkansas bank deposits had a 4.2% annual growth last year to $135.8 billion and a two-year increase of 14% from $119.1 billion at the end of 2021.

At the end of 2023, Bank OZK ($27.4 billion), Simmons Bank ($22.4 billion), and Arvest Bank ($21.7 billion) held the most deposits.