Banks? 4Q Past Dues Soar Past $600M Mark

Twenty-one banks doing business in Benton and Washington counties had a combined $600.47 million worth of loans on their books that were not accruing interest as of Dec. 31, 2009.

That value is up almost 75 percent from the end of 2008, when the books reflected $343.57 million.

More than 25 percent – $141.3 million – of the total value is with Metropolitan National Bank of Little Rock. And Fayetteville-chartered Arvest Bank holds more than 40 percent of the total value, some $240.71 million.

The numbers come from Uniform Bank Performance Reports filed with the Federal Financial Institutions Examination Council. The collective value of loans in those 21 banks’ nonperforming columns is down from $638.73 million that 22 banks had at the end of 2007. That included ANB Financial’s portfolio at the time, which alone accounted for $388.13 million of that value.

Values for the four thrifts doing business in Northwest Arkansas are collected differently so the information is not included in the chart on Page 11. But if their numbers were combined with the 21 banks’ numbers, the total nonperforming portfolio would be about $676.12 million.

The Business Journal deliberately excludes large public banks, such as BancorpSouth Bank and Regions Bank, doing business in the two-county area because the majority of their business is done outside the market.

Large statewide banks such as Bank of the Ozarks and Metropolitan National Bank and Iberiabank fsb, all of Little Rock, First Security Bank of Searcy and Liberty Bank of Arkansas based in Jonesboro, are included because they maintain a significant presence in Northwest Arkansas. In many cases, those banks have indicated many of their problems stem from loans made in Northwest Arkansas.

Arvest’s total troubled portfolio is $372.7 million. The bank’s total past due value is significantly higher than the other banks’, but its giant loan portfolio – $7.81 billion – makes its ratio relatively smaller and it therefore ranks in the middle of the pack.

First Security, Liberty Bank, Metropolitan National Bank and Bank of the Ozarks all have significant statewide presence, but BOZ and Arvest are the only other two banks with out-of-state branches (excluding Bank of Arkansas, which is part of a larger out-of-state holding company, but has a Fayetteville charter).

Arvest has almost as many offices in Oklahoma as it does in Arkansas (96 and 115, respectively) and about 30 through Kansas and Missouri.

Another column bankers and regulators scrutinize is the 90-days past due slot. This is the step prior to loans rotating into non-performing status.

A total of $15.83 million of the 21 banks’ loans were in the 90-day column as of Dec. 31, up from $10.48 million a year earlier.

The bank with the highest percentage of loans in the 90-day column is Parkway Bank of Rogers, with almost 5 percent of its loans in that status.

Loans in the 30-89 days past due status totaled $301.52 million, up from $234.63 million a year prior, a 28.5 percent increase.

Chambers Bank of Danville has the highest ratio of any bank in the group with its loans in the 30-89 day range. Nearly 6 percent of its portfolio is slow to pay.

Luther Guinn, deputy bank commissioner with the ASBD, in the past has told the Business Journal that a ratio above 1 percent in the nonaccural column is a red flag. All 21 banks on the list fall into that category.

A 1 percent ratio in the 90-days past due column is also a red flag. Only two of the banks on the list fall into that category.

A spokeswoman for the Arkansas State Bank Department said that as of April 14, there were 20 state-chartered banks on the watch list. To be on the non-public list, a bank is under either formal or informal actions by the ASBD.

The watch number is up from 15 as of the first week of December.

The list on Page 11 is ranked by percent of total loans past due or in nonaccural status. According to the Federal Deposit Insurance Corp., the Arkansas median is 3.6 percent. Fifteen of the 21 banks and two of the four thrifts have ratios above the state’s median.

The FDIC has a slightly different calculation for a nationwide snapshot. One statistic published is that 5.37 percent of loans made by all insured institutions are noncurrent, which means they are in nonaccrual or 90-day past due status. That’s a total of $391.3 billion, up $24.3 billion during the fourth quarter.

Total loans and leases were down 1.7 percent during the fourth quarter. It was the sixth consecutive quarter in which the industry’s loan balances declined, the FDIC said.