Council CEO: Northwest Arkansas Positioned to Pave Path to Recovery

by Northwest Arkansas Business Journal Staff  on Friday, Dec. 21, 2012 2:48 pm  

Arkansas banks lead the Eighth District in net interest margin at 4.19 percent, while bank deposits continued to climb in 2012 — almost 3 percent statewide and nearly 12 percent in the six-county area of Northwest Arkansas.

“I guess I’d be real optimistic, if it weren’t for a small item called the fiscal cliff,” he said. “The boys in Washington sure have us stalled out.”

The cliff notwithstanding, there are other challenges remaining for many banks in 2013. Loan demand is weak in most areas of the state, according to the Arkansas State Bank Department.

In Northwest Arkansas, most of the loan volume is for sales of Other Real Estate Owned, which totals $578 million in the entire state, according to the ASBD, up from $46 million at the end of 2006. Jett Cato, president and CEO of Bank of Arkansas, a subsidiary of Bank of Oklahoma Financial Corp., said one thing banks will have to work on is finding additional sources of revenue.

“One of the things I see is the continuation of the QE programs, and that continues to put a downward pressure on interest rates,” he said. “With that pressure, [loan] spreads are being compressed, so you focus on other areas like mortgage origination and less on loan interest-rate income.”

The demands of the regulatory burden wrought by Dodd-Frank aren’t going away anytime soon, either. Holmes said, however, it does feel like headway has been made toward lessening the impact.

“It feels like the pendulum has quit swinging out farther,” he said. “It’s swinging back toward the center a bit, or at least stopped the over-regulation swing.”

 

Commercial Real Estate

A forecast released by the National Association of Realtors in November indicated the commercial real estate market is looking less bleak than it has in recent years, with vacancy rates, rents and absorption rates improving on a national scale. And according to several area commercial real estate brokers, those fundamental improvements will make Northwest Arkansas a solid market as the recovery in the commercial real estate market continues in 2013.

“When we talk to retailers on the national level,” said Amy Mills, “Northwest Arkansas is an easy sell.”

Mills, executive broker with Steve Feinberg & Associates of Bentonville, also noted lease rates have gone up significantly in the fourth quarter of 2012.

 

 

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