Surviving The Banking Game (Editorial)

One of the Little Rock television stations recently was touting its own newscast in a promotion that, unfortunately, includes a clip of a news anchor asking how Arkansas banks will survive the current economic crisis.

We’ve seen similar stories in Northwest Arkansas.

It makes those of us in the business news business cringe.

One bank in Arkansas failed last year under the weight of a high-risk growth strategy, and a few were over-exposed to the overbuilt real estate market in Northwest Arkansas.

But in general, Arkansas’ banking industry has proven far healthier than the national averages.

As of Sept. 30, only nine of the 146 bank charters in Arkansas were reporting year-to-date losses.

That’s only one more than at the same time in 2005 or 2006 and fewer than were in the red at the end of 2007.

Nationally, commercial banks and thrifts saw net income plummet by 94 percent in the third quarter of 2008 as compared with the same period of 2007.

But Arkansas institutions earned only 8.2 percent less in the third quarter.

To be only a bit less profitable in the current environment is a badge of honor.

True, stock in First Federal Bancshares of Arkansas, with its northwest exposure, ended 2008 at barely half the price it commanded at the end of 2007.

But Arkansas’ other publicly traded bank holding companies – Bank of the Ozarks, Home BancShares and Simmons First National – were safe havens for investors this year.

Home BancShares, in fact, was up by more than 30 percent year over year. Oh, that all our investments could say the same.

Johnny Chambers, CEO of Chambers Bancshares of Danville, was undoubtedly right when he complained recently that banking just isn’t as much fun as it used to be.

That’s true of most businesses right now. But the vast majority of Arkansas banks will survive, and some will even thrive in the current economic crisis. They will help other businesses survive and thrive as well.

And that’s when banking will be fun again.