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2010-01-03 BACK
Texarkana's Financial Institutions Are Growing In Spite of Recession
Texarkana's Financial Institutions Are Growing In Spite of Recession This article originally appeared in the Texarkana Gazette on January 3, 2010 Mr. Mark Reavis, Adjunct Instructor of Finance, Texas A&M-Texarkana, College of Business The Federal Deposit Insurance Corporation (FDIC) lists 140 banks that have failed in the United States between January 1, 2009 and December 18, 2009. None of these banks were located in, or even near, Texarkana. While the recession of 2008-2009 slowed the economy, the financial institutions in Texarkana have weathered the economic storm. These institutions grew deposits over the past year by $87.8 million (or 3.9%) between June 30, 2008 and June 30, 2009 where total deposits were $2.3 billion. The June 30 dates are quoted here because that is the date the FDIC provides annual bank deposit information. The National Credit Union Association (NCUA) provides deposit information quarterly. There are 14 banks and 10 credit unions in the Texarkana MSA. Over the past year, 20 out of these 24 institutions grew their deposits. The institution with the greatest negative impact on deposits was Wells Fargo (formerly Century Bank). Wells Fargo lost $105.3 million in deposits from June 30, 2008 to June 30, 2009. Three other banks lost deposits during this timeframe. Regions Bank lost $3.4 million, Peoples Bank lost $2.6 million, and FNB - Arkansas lost $2.1 million. No credit unions suffered any reduction in their deposits. The clear winners in deposit growth were Guaranty Bond Bank (Guaranty), Red River Credit Union (RRCU), Texarkana First Bank, and Capitol One. Each of these grew their deposits by more than $25 million. Guaranty grew its deposits more than any other institution. Their growth of $37.7 million represents a 93.68% increase in deposits in just one year in the Texarkana MSA. Guaranty added key personnel and a new branch location in New Boston, TX which contributed to its success. According to Robert Irwin, President of Guaranty in Texarkana, the bank plans to add a drive through branch on Richmond Road in February 2010, a new branch will be built at I-30 and Kings Hwy with a planned opening of July 2010. Because of their growth in the Texarkana market, Guaranty also plans to add about 5,000 square feet to its branch on St. Michael Drive in 2010. Mr. Irwin attributes Guaranty's success to "great people" at Guaranty, a bank that is "relationship driven", and the high "quality of the bank". Mr. Irwin says "people aren't afraid to put their money in here". Guaranty's growth was much slower in previous years, but according to Mr. Irwin, "if you do things right, eventually you'll be rewarded". The mix of market deposits between credit unions and banks has been steadily shifting over the past 4 years. Banks have been increasing their deposits at a decreasing rate and credit unions have been increasing their deposits at an increasing rate. As of June 30, 2006, credit unions had a 17.9% share of total market deposits. This has grown steadily to 22.6% in 2009. Credit unions have grown their deposits from $364.0 million in 2006 to $529.3 million in 2009. This represents credit union deposit growth of $165.3 million or 45.4%. During the same period, banks have grown deposits from $1,669.6 million in 2006 to $1,811.6 million in 2009. This represents a growth of $142.0 million or 8.5%. The leader in deposit growth for credit unions during the past four years has been RRCU. From June 30, 2006 to June 30, 2009, RRCU grew its deposits in the Texarkana MSA by $89.9 million. This represents 54% of all credit unions' deposit growth in the Texarkana MSA from June 30, 2006 to June 30, 2009. RRCU also came in second among all financial institutions in deposit growth in the Texarkana MSA from June 30, 2008 to June 30, 2009 with deposit growth of $36.3 million. Robert Buck, President of RRCU attributes the credit union's success to being a local institution and developing relationships in the community. Also, according to Mr. Buck, the economic recession over the past year did not change RRCU's lending practices. Mr. Buck said, "We're here…loaning money in good times and bad". RRCU is building a new branch at the corner of Gibson Lane and University which should open in November 2010. Another factor in the growth of banks and credit unions is the changing of banks' names in Texarkana. These bank name changes don't necessarily cause growth in the overall market, but they do influence customers to shift their deposits, creating growth for some institutions. There have been many changes in bank ownership over the past several years. There were a total of 11 banks in the Texarkana MSA in 1996 with 30 branches. Since then, the number of banks has increased to 14. However, only two of the banks from 1996 have survived. Commercial National Bank and the State Bank of DeKalb are the only banks still in existence that were in the market in 1996. The number of bank branches swelled to 55 in 2009. This represents growth of 25 bank branches, an increase of 83.3%, from 1996 to 2009. Credit Unions have 26 branches in the Texarkana MSA. There are a total of 81 financial institution branches in the Texarkana MSA, and more are being built in 2010. Bank name changes and branch growth have brought a great deal of diversity and convenience in financial services to Texarkana. Even with the reduction in deposits of about $105.2 million, Wells Fargo is still the largest financial institution in the Texarkana MSA and one of the largest in the United States. Capitol One, Regions Bank, and Bancorp South are regional banks. They enjoy the number two, three, and five positions in market share in the Texarkana MSA. These larger institutions typically offer secondary market mortgage loans, leasing products, trust services, and cash management services along with more common checking accounts and loans. Many of the smaller banks in Texarkana do not offer all of these services. However, the smaller banks tend to make loan decisions locally and their lenders typically do their own credit analysis. The credit unions generally focus on consumer products. As a rule, they do not seek business customers. RRCU is the exception to this rule. RRCU has been making business loans for a few years and this effort has contributed to their growth. On October 3, 2008, President Bush signed the Emergency Economic Stabilization Act. Included in this Act was an increase in FDIC deposit insurance coverage and National Credit Union Share Insurance Fund (NCUSIF) deposit insurance coverage from $100,000 to $250,000. The increase in deposit insurance coverage may have encouraged investors to shift their wealth from a more risky and volatile stock market to liquid investments in insured financial institutions. The Dow Jones Industrial Average was at 11,350 as of June 30, 2008 and dropped to 8,447 as of June 30, 2009. These factors may have contributed to the growth in deposits in Texarkana during the recession of 2008-2009. Check out The Dean's Blog to comment on Mr. Reavis' column at www.EdBashaw.com.
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Texarkana's Financial Institutions Are Growing In Spite of Recession
Texarkana's Financial Institutions Are Growing In Spite of Recession This article originally appeared in the Texarkana Gazette on January 3, 2010 Mr. Mark Reavis, Adjunct Instructor of Finance, Texas A&M-Texarkana, College of Business The Federal Deposit Insurance Corporation (FDIC) lists 140 banks that have failed in the United States between January 1, 2009 and December 18, 2009. None of these banks were located in, or even near, Texarkana. While the recession of 2008-2009 slowed the economy, the financial institutions in Texarkana have weathered the economic storm. These institutions grew deposits over the past year by $87.8 million (or 3.9%) between June 30, 2008 and June 30, 2009 where total deposits were $2.3 billion. The June 30 dates are quoted here because that is the date the FDIC provides annual bank deposit information. The National Credit Union Association (NCUA) provides deposit information quarterly. There are 14 banks and 10 credit unions in the Texarkana MSA. Over the past year, 20 out of these 24 institutions grew their deposits. The institution with the greatest negative impact on deposits was Wells Fargo (formerly Century Bank). Wells Fargo lost $105.3 million in deposits from June 30, 2008 to June 30, 2009. Three other banks lost deposits during this timeframe. Regions Bank lost $3.4 million, Peoples Bank lost $2.6 million, and FNB - Arkansas lost $2.1 million. No credit unions suffered any reduction in their deposits. The clear winners in deposit growth were Guaranty Bond Bank (Guaranty), Red River Credit Union (RRCU), Texarkana First Bank, and Capitol One. Each of these grew their deposits by more than $25 million. Guaranty grew its deposits more than any other institution. Their growth of $37.7 million represents a 93.68% increase in deposits in just one year in the Texarkana MSA. Guaranty added key personnel and a new branch location in New Boston, TX which contributed to its success. According to Robert Irwin, President of Guaranty in Texarkana, the bank plans to add a drive through branch on Richmond Road in February 2010, a new branch will be built at I-30 and Kings Hwy with a planned opening of July 2010. Because of their growth in the Texarkana market, Guaranty also plans to add about 5,000 square feet to its branch on St. Michael Drive in 2010. Mr. Irwin attributes Guaranty's success to "great people" at Guaranty, a bank that is "relationship driven", and the high "quality of the bank". Mr. Irwin says "people aren't afraid to put their money in here". Guaranty's growth was much slower in previous years, but according to Mr. Irwin, "if you do things right, eventually you'll be rewarded". The mix of market deposits between credit unions and banks has been steadily shifting over the past 4 years. Banks have been increasing their deposits at a decreasing rate and credit unions have been increasing their deposits at an increasing rate. As of June 30, 2006, credit unions had a 17.9% share of total market deposits. This has grown steadily to 22.6% in 2009. Credit unions have grown their deposits from $364.0 million in 2006 to $529.3 million in 2009. This represents credit union deposit growth of $165.3 million or 45.4%. During the same period, banks have grown deposits from $1,669.6 million in 2006 to $1,811.6 million in 2009. This represents a growth of $142.0 million or 8.5%. The leader in deposit growth for credit unions during the past four years has been RRCU. From June 30, 2006 to June 30, 2009, RRCU grew its deposits in the Texarkana MSA by $89.9 million. This represents 54% of all credit unions' deposit growth in the Texarkana MSA from June 30, 2006 to June 30, 2009. RRCU also came in second among all financial institutions in deposit growth in the Texarkana MSA from June 30, 2008 to June 30, 2009 with deposit growth of $36.3 million. Robert Buck, President of RRCU attributes the credit union's success to being a local institution and developing relationships in the community. Also, according to Mr. Buck, the economic recession over the past year did not change RRCU's lending practices. Mr. Buck said, "We're here…loaning money in good times and bad". RRCU is building a new branch at the corner of Gibson Lane and University which should open in November 2010. Another factor in the growth of banks and credit unions is the changing of banks' names in Texarkana. These bank name changes don't necessarily cause growth in the overall market, but they do influence customers to shift their deposits, creating growth for some institutions. There have been many changes in bank ownership over the past several years. There were a total of 11 banks in the Texarkana MSA in 1996 with 30 branches. Since then, the number of banks has increased to 14. However, only two of the banks from 1996 have survived. Commercial National Bank and the State Bank of DeKalb are the only banks still in existence that were in the market in 1996. The number of bank branches swelled to 55 in 2009. This represents growth of 25 bank branches, an increase of 83.3%, from 1996 to 2009. Credit Unions have 26 branches in the Texarkana MSA. There are a total of 81 financial institution branches in the Texarkana MSA, and more are being built in 2010. Bank name changes and branch growth have brought a great deal of diversity and convenience in financial services to Texarkana. Even with the reduction in deposits of about $105.2 million, Wells Fargo is still the largest financial institution in the Texarkana MSA and one of the largest in the United States. Capitol One, Regions Bank, and Bancorp South are regional banks. They enjoy the number two, three, and five positions in market share in the Texarkana MSA. These larger institutions typically offer secondary market mortgage loans, leasing products, trust services, and cash management services along with more common checking accounts and loans. Many of the smaller banks in Texarkana do not offer all of these services. However, the smaller banks tend to make loan decisions locally and their lenders typically do their own credit analysis. The credit unions generally focus on consumer products. As a rule, they do not seek business customers. RRCU is the exception to this rule. RRCU has been making business loans for a few years and this effort has contributed to their growth. On October 3, 2008, President Bush signed the Emergency Economic Stabilization Act. Included in this Act was an increase in FDIC deposit insurance coverage and National Credit Union Share Insurance Fund (NCUSIF) deposit insurance coverage from $100,000 to $250,000. The increase in deposit insurance coverage may have encouraged investors to shift their wealth from a more risky and volatile stock market to liquid investments in insured financial institutions. The Dow Jones Industrial Average was at 11,350 as of June 30, 2008 and dropped to 8,447 as of June 30, 2009. These factors may have contributed to the growth in deposits in Texarkana during the recession of 2008-2009. Check out The Dean's Blog to comment on Mr. Reavis' column at www.EdBashaw.com.
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