Sep 19, 2023 - News

First-quarter loss drags down Arvest's second quarter

The Arvest Bank branch in downtown Bentonville. Photo: Terra Fondriest/Bloomberg via Getty Images

Arvest Bank of Fayetteville posted a loss of nearly $1.4 million for the first half of the year.

  • It was the only one of 20 Arkansas-based banks and credit unions with more than $1 billion in assets to report a loss on June 30, according to Arkansas Business.

State of play: Arvest made $4.1 million in profit in the second quarter, but not enough to offset its loss of about $5.5 million in the first quarter.

  • The bank's net income for the first half of 2022 was $81 million.

Context: A bank's quarterly profit is only one indicator of its health, and in the grand scheme, Arvest's losses so far this year are minor.

  • The bank had loaned 77.8% of its total deposits (loan-to-deposit ratio) at the end of the second quarter, a generally healthy number.

What they're saying: "Contributing factors to our second-quarter results include an industrywide decline in mortgage production revenue compared to 2022 and the current interest rate environment compressing net interest margins," the president of Arvest's Little Rock region, Ron Witherspoon, said in a statement to Axios.

  • "We had very robust loan growth, with year-over-year growth of 16%."

The statement also noted that Arvest invested "heavily" in its technology during 2022.

The big picture: Watching banks' balance sheets is an important way to keep a pulse on the economy.

  • California's Silicon Valley Bank and New York's Signature Bank failed over one weekend in March, giving many seasoned bankers a jolt of deja vu from the crisis of 2008.
  • An Arkansas bank, ANB Financial, was one of the first failures at the beginning of the Great Recession, which endured from late 2007 to mid-2009.

Of note: State Bank Commissioner Susannah Marshall told Axios in March the state's banking industry is "stable" and "healthy."

What we're watching: Third-quarter financials for banks are generally available from the FDIC in late October.

Editor's note: This article has been updated with additional context throughout.

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