Instability in the global banking system that began just more than a week ago, raising global concerns about the sector's health and leading to jittery consumers, has avoided Arkansas as industry observers note depositors in the state appear to be staying calm as early March madness rips through the sector.
The crisis began March 10 with the collapse of California-based Silicon Valley Bank, the second-largest bank failure in U.S. history. That was followed quickly by a similar run on deposits at Signature Bank of New York, creating the third-largest U.S. bank failure. Global concerns were heightened late last week by the dodgy market performance of Credit Suisse, based in Switzerland but with a global reach.
Customers at Arkansas banks seem to have stayed relatively calm through the crisis.
Arkansas Bank Commissioner Susannah Marshall assures customers that financial institutions in the state are sound and do not have the underlying problems that eroded the California bank, which catered primarily to technology customers in Silicon Valley.
"We've not seen or had any concerns and I've not heard any from our banks," Marshall said. "Despite the recent events on a national level, the banking industry as a whole is truly in a historically strong position, and that is especially true for Arkansas banks."
Arkansas banks, she noted, have strong capital, quality assets and their community-focused approach insulates them from broader market disturbances. "And our management teams are especially strong at managing risk in the institutions," she said.
Arkansas banks generally avoid high-risk investments like those made at Silicon Valley Bank. "Overall, our banks have traditional business models and business lines," Marshall noted.
The department regularly monitors quarterly bank filings to make sure they are in step with all regulations, including risk-capital requirements.
Allied Bank of Mulberry was the most recent institution shut down by the Arkansas Bank Department, which took action in April 2016 and appointed the Federal Deposit Insurance Corp. as receiver to protect depositors by coordinating a sale to Huntsville-based Today's Bank. Allied had been struggling financially for several years and was cited by the Federal Reserve as "critically undercapitalized" shortly before the collapse.
Like Marshall, banking industry officials and observers noted the stability of Arkansas banks. "Arkansas depositors should rest assured that Arkansas' banks are strong, capitalized and ready to do business," the Arkansas Community Bankers Association said last week.
The industry trade group said banks in the state, over the past four years, have had a higher return on assets, higher net-interest margin, more available capital, lower nonrecurrent loans and more capital set aside for potential loan losses than the U.S. average. "Simply put, Arkansas' banks are the best capitalized, best-positioned banks, by almost every banking metric, in the U.S.," the group said.
Lorrie Trogden, president and chief executive officer of the Arkansas Bankers Association, also pointed to the financial stability of financial institutions in the state. "Arkansas banks remain strong and a source of strength," Trogden said. They are regularly audited and examined by the federal government and for those with a state bank charter, the Arkansas State Bank Department.
Banking analysts at Stephens Inc. pointed out Friday, after a review of the institutions they cover nationally, that any concerns over a run on deposits have subsided.
"In our channel checks, we found that the majority of bank deposit balances have remained stable throughout the week as depositors have digested the recent news and the ensuing fear has slowed," the analysts wrote in an industry report. "We think investors are now appreciating U.S. banks generally maintain strong capital levels and are more diversified as compared to banks that are now in FDIC receivership, and while industry liquidity levels remain tight, U.S. banks have multiple sources of off-balance sheet liquidity that can offset deposit headwinds."
PITCHING TO HIGHER ED
The Conductor, an entrepreneurial support organization in Conway, is offering free training Wednesday to small businesses and entrepreneurs interested in working with higher-education institutions.
The session aims to eliminate difficulties in doing business with publicly funded colleges and universities in Arkansas. The training will provide insight and tips on how to register as a supplier and market products and services in the higher-education sector.
An hourlong session will outline the application process, how to find the right contacts at a university and purchasing thresholds in Arkansas schools. An instructor from the Arkansas APEX Accelerator program will lead the program. The accelerator provides technical expertise to Arkansas businesses interested in increasing their selling to the government.
Training starts at noon Wednesday at 1201 Oak St. in Conway. More information and registration are available at arconductor.org.
SUPPORT FOR HISPANIC BUSINESSES
A statewide small-business support organization is collaborating with a Springdale nonprofit to enhance support for Hispanic businesses in Arkansas.
Like most minority businesses, Hispanic-owned small businesses are challenged by access to capital, but their difficulties are often compounded by language barriers and cultural differences.
With the partnership, the Arkansas Small Business and Technology Development Center (ASBTDC) and Conexion de Negocios Latinos are collaborating to deliver no-cost specialized services and resources for the state's Hispanic entrepreneurs.
"We know that Latino entrepreneurs face unique challenges and barriers, and this partnership will help us provide the resources and support they need to succeed," said Irma Chavez, founder and CEO of the Hispanic nonprofit.
The project is part of ASBTDC's business navigator initiative. "Through this partnership, we hope to connect more Latino entrepreneurs with the resources and networks they need to start and grow successful businesses in Arkansas," said Michael Singleton, ASBTDC associate state director.
Conexion de Negocios Latinos is the seventh partner organization -- and the only one exclusively serving the Hispanic community -- to join the business navigator initiative, which was established to build community partners that reach into specific sectors of the state's entrepreneurial community.
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