State’s Reserve Second Highest in Eighth District
by June 2, 2008 12:00 am 66 views
In the first quarter of 2008, Arkansas banks collectively had a loan-loss-reserve ratio of 1.60 percent, up from 1.38 percent for the same period in 2007.
Banks maintain a reserve adequate to absorb estimated credit losses associated with their loan and lease portfolios. The ratio is a percentage of a bank’s outstanding loans.
Therefore, on average, banks in Arkansas reserved 1.60 percent of outstanding loan value as a hedge against potential losses, the second highest of any other state in the U.S. Federal Reserve Bank’s Eighth District.
As of Dec. 31, the most recent data available from the Federal Deposit Insurance Corp., loan-loss ratios were 1.31 percent for Fayetteville-chartered Arvest Bank; 1.10 percent at Little Rock-based Metropolitan National Bank; 1.13 percent at Jonesboro-chartered Liberty Bank of Arkansas and 1.27 percent at Searcy-based First Security Bank.
The collective reserve ratio for the Eighth District, which includes all of Arkansas and parts of six other states, was 1.45 percent. The U.S. average was 1.56 percent.