By JOHN HOFHEIMER
Leader senior staff writer
Even amidst bankruptcies, bailouts and fire sales of some of the legendary names in banking—Merrill Lynch and Lehman Brothers, for instance—commercial banks in Arkansas are doing well, state Bank Commissioner Candace A. Franks told Jacksonville Rotarians on Monday.
She said that these were challenging times, even for the locally owned and regulated commercial banks, with decreased profitability.
“We’re not immune from the decelerating economy and lack of confidence,” Franks said, but Arkansas-based banks held relatively few sub-prime mortgages.
Local banking concerns are more about Main Street than Wall Street, she said.
“Looking ahead, a slowing economy and lack of credit likely will continue to negatively impact commercial real estate activity,” she said, citing the National Association of Realtors.
Franks said that nationally, the Federal Insurance Deposit Corp. was monitoring 117 problem institutions as of June 30—an increase of 41 since the end of 2007, but a small fraction of the 1,430 problem institutions at the end of 1991, when the banking industry was in a period of pronounced crises.
The only Arkansas bank that failed this year was ANB Financial in northwest Arkansas, which was not regulated by the state.
“Fortunately, most commercial banks in Arkansas remain well managed and well capitalized, and in a strong position to withstand a downturn in the business cycle,” Franks said.
Arkansas-based financial institutions have more than $41 billion in deposits, she said.
Nationwide, the number of commercial banks has declined steadily over the last 20 years, dropping nearly 50 percent from 13,419 to 7,203.
While the number of banks has decreased, the number of offices, including branches, has more than doubled.
Deposits in Arkansas banks have increased 4.46 percent annually since 1998, but over the last 12 month, deosits decreased for the first time over that period.
As of June, deposits in Jack-sonville banks totaled $316 million, $278 million of that in Arkansas-based banks.
The growth rate in deposits in Jacksonville in the last 10 years is 4.84 percent, slightly higher than the statewide rate.
Since 1998, there has been a $4 billion increase in Pulaski County deposits.
That was the largest increase, followed by Benton and Washington counties, which combined for a $3.2 billion increase, she said.
For the 12-month period ending June 2008, 12,782 people or businesses filed for bankruptcy in the state.
That’s up slightly from the preceding year, but roughly half the number before Congress passed a law making it more difficult for individuals to declare bankruptcy.
By way of comparison, the number of business bankruptcies is in the same range now as it was before the new law was passed—ranging from 335 per year to 429.
Arkansas has the ninth highest rate of personal bankruptcy, 4.36 per 1,000 population compared to a U.S. average of 3.07 bankruptcies per 1,000 people.