Bank deposits in Arkansas grew by more than 4 percent – officially, almost 5 percent – in the year that ended on June 30 and exceeded $50 billion for the first time, the Federal Deposit Insurance Corp.’s annual summary of deposits shows.
Arkansas’ deposits grew significantly faster than deposits nationally, which increased by 1.4 percent to $7.66 trillion. As was the national trend, the number of bank branches in Arkansas contracted by a bit more than 1 percent during the year.
The summary of deposits, released earlier this month, is a snapshot taken at mid-year by the government agency that insures bank deposits. And while it is not a holistic report card on the health of a bank or of the banking industry, it is the only official report that provides Arkansas-specific trend data for multi-state banks.
Statewide deposits increased by $2.34 billion, or 4.82 percent. But the growth rate would only be a bit over 4 percent without the $363 million in additional deposits Wells Fargo Bank of Sioux Falls, S.D., claimed in its four Arkansas branches (three in Texarkana and one in Ashdown).
Asked to explain the tripling of its Arkansas deposits – which boosted Wells Fargo to No. 20 among the 146 doing business in the state and moved Miller County’s total deposits above those of both Independence and Lonoke counties – bank spokesman Joe Stroop issued the following one-sentence statement: “Some of the deposit growth is based on administrative balance movements from the Wells Fargo/Wachovia merger.”
In other words, it doesn’t say much of anything about the bank markets or customers in Miller and Little River counties.
But since Arvest’s 4.12 percent growth was less than the 4.8 percent expansion of the statewide deposit market, its deposit market share dropped slightly to 9.61 percent.
Regions, chartered in Birmingham, Ala., but built on the foundation of First Commercial Corp. in Arkansas, lost 3.4 percent of its deposit during the year, giving back some of the eye-popping 9 percent growth recorded in 2009.
“We let some higher-cost money run off that we had on the balance sheet in June 2009, and by June 2010 that was gone,” Lynn Wright, Regions Arkansas-area president, said last week. “In our core, low-cost deposits, we had growth year-over-year.”
Bank of America and First Security Bank of Searcy maintained their spots at No. 3 and No. 4 in the state, and both recorded double-digit deposit growth without benefit of merger activity. That performance moved First Security’s one-bank holding company, First Security Bancorp, up a spot to No. 4 among the holding companies in the state, swapping places with Simmons First National Corp. of Pine Bluff, which continues to operate eight separate charters.
Bank of the Ozarks of Little Rock, the fifth-largest bank in the state last year, dropped to eighth place with an 11.5 percent drop in Arkansas deposits. Bank of the Ozarks reduced its reliance on “brokered deposits” – deposits generally from outside a bank’s operating market and placed in the home office by brokers seeking the highest interest rates – by some $328 million during calendar year 2009. Its in-state deposits declined by only about $215 million in the year that ended June 30, suggesting healthy growth in core deposits.
“As recently as June 2008 brokered deposits were 18.8 percent of total deposits. As of June 30, 2010, brokered deposits were just 2.3 percent of total deposits,” Susan Blair, Bank of the Ozarks executive vice president, said in an e-mail. “This decrease in brokered deposits has helped improve our net interest margin and has favorable implications for business development opportunities as we have a larger percent of deposits from our local markets.”
The same drop in in-state deposits moved Bank of the Ozarks from No. 6 to No. 9 among bank holding companies operating in Arkansas. Rogers Banshares Inc., Doyle Rogers’ holding company for Metropolitan National Bank, dropped out of the list of the 10 largest holding companies with a decline in deposits of more than 8 percent. Taking its place in the Top 10 holding companies is First Banc Corp of Fort Smith, the holding company for First National Bank of Fort Smith, which enjoyed deposit growth of more than 7 percent.
A few banks in the state benefited from merger and acquisition activity. Southern Bancorp Bank of Arkadelphia, for instance, is now the 15th-largest bank in Arkansas after collapsing the charters of sister banks in West Helena and Blytheville.
But most of the M&A activity during the past year has been out of state: Arvest, Bank of the Ozarks, Simmons and Home BancShares Inc. of Conway have made FDIC-assisted acquisitions of 11 failing banks from Kansas to the Florida Keys. Those acquisitions have added nearly $3 billion in deposits to their Arkansas-based owners, but virtually none of it shows in their Arkansas deposit totals.
Pulaski County’s deposits grew more than 7 percent last year as the countywide deposits creep close to the $10 billion mark. The number of banks jostling for those dollars has grown to 27; Peoples Bank of Sheridan actually entered Pulaski County in mid-2008 but initially wasn’t included in the FDIC’s summary of deposits for 2009.
Unsurprisingly, deposits were stagnant in northwest Arkansas, where the Washington County total grew by 1.4 percent and Benton County’s by only half a percent. But that doesn’t mean more banks aren’t interested in a piece of the pie. Intrust Bank of Wichita, Kan., opened a branch in Rogers on June 20, 2009, just 10 days before last year’s deposit snapshot, and Great Southern Bank of Reeds Spring, Mo., opened a full-service branch in Rogers in May 17 of this year.
Delta Trust & Bank, which is chartered at Parkdale in Ashley County but has its corporate offices in Little Rock, opened its first Washington County branch in Fayetteville in July 2009, contributing almost $7 million of its more than $83 million (37 percent) growth in deposits during the year. “Most of that gain is here in central [Arkansas], where we have increased market share in loans and deposits by recruitment of new personnel,” CEO French Hill said in an e-mail to Arkansas Business. “We added capital last fall to support the balance sheet growth.”