FDIC Reports Show Steady First Quarter

The Federal Deposit Insurance Corp. published its quarterly edition of state profiles, a summary of state-by-state banking and economic trends, on July 6.

Some of the FDIC’s findings for Arkansas-based banks and thrifts for the first quarter:

– Aggregate net operating income for all institutions was $124 million, a record;

– The median return on assets was 1 percent for the state, down from 1.05 percent a year earlier;

– Despite an all-time high of about 31,000 personal bankruptcies filed in 2005, Arkansas institutions didn’t report significant weakening in asset quality and;

– Banks and thrifts continued to substitute non-core funding (certificates of deposit over $100,000, federal fund purchases and other funding) for core deposits. The state had a non-core funding-to-total-assets ratio of 27.5 percent — the seventh highest in the country. This type of funding is typically more sensitive to interest rate changes, the FDIC said.

The report also said the Fayetteville-Springdale-Rogers and the Little Rock metropolitan statistical areas were 163rd and 223rd respectively out of 331 nationwide in the use of nontraditional mortgage products. The two markets also had the highest one-year home price appreciation, so borrowers may be experiencing “declining housing affordability in these MSAs.”