FDIC Banking Data – 2011:Q4

By , February 29, 2012 4:10 PM

End-of-year banking data released by the FDIC yesterday showed that Arkansas banks generally continue to do better than the national average.  As covered in the Democrat-Gazette and The City Wire (here and here), the main story of the year in Arkansas banking was a decline in nonperforming loans and net charge-offs.   As shown in the figure below, the share of loans and leases classified as non-current at all Arkansas banks had been rising up through the second quarter of 2011, but declined in the second half of the year.

Source: FDIC

The high level of non-current loans in early 2011 is somewhat misleading.  Many of the assets acquired by Arkansas banks in the process of absorbing troubled out-of-state institutions are carried on the books as non-performing, even though arrangements with the FDIC partially indemnify the losses associated with the takeovers.  As shown in the second chart, below, the ratio of net charge-offs to loans and leases fell sharply in 2011, reflecting the reduced need to set aside funds to cover actual booked losses.

Source: FDIC

With troubled assets becoming somewhat less problematic, Arkansas banks reported improved profitability for the year.  As shown in the next chart, Arkansas banks managed to earn positive returns throughout the recession, even as the nation’s banks showed average losses in 2009.  In 2011, the rate of return on assets for Arkansas banks moved above the benchmark 1.0% rate, continuing to outpace the national average.

Source: FDIC

Many individual institutions in Arkansas continue to experience problems [see, for example, this analysis in The City Wire].  Nevertheless, even the proportion of Arkansas banks experiencing net losses is lower than the corresponding nationwide proportion.  At the end of 2009, nearly one-third of the nations banks were unprofitable, while the proportion of Arkansas banks with negative profits was less than 20%.  By the end of 2011, the share of unprofitable institutions nationwide had fallen to just over 15%, with the share in Arkansas falling to nearly 10%.

Source: FDIC

Arkansas House Prices – 2011:Q4

By , February 23, 2012 4:02 PM

New data from the Federal Housing Finance Agency show Arkansas house prices rising over the second half of 2011.  The statewide average “All-Transactions Index” increased 0.3% in the fourth quarter, following a revised 0.8% gain in the third quarter.  Comparable data for the U.S. showed a similar rebound in the second half, up 0.4% in the fourth quarter following a 1.0% increase in the third quarter.  Arkansas home prices are still down 0.7% from the end of 2010, but evidence is accumulating that the trend of declining prices has abated.

Source: Federal Housing Finance Agency

Of course, house prices in different areas of the state do not move in unison.  Fourth quarter changes in the FHFA indexes were mixed among the state’s metropolitan areas.

  • In the two metropolitan areas where prices have fallen the most over the past five years — Fayetteville-Springdale-Rogers and Memphis — fourth quarter data showed slight declines, but not enough to offset the increases of the previous quarter.
  • Prices in Texarkana also fell slightly, but the longer-term trend remains distinctly positive.
  • Hot Springs has seen rather dramatic price declines since the end of the recession, but had experienced rapid price increase over the previous three years.
  • In Pine Bluff, prices were up sharply in the fourth quarter, but not enough to erase price declines registered in 2010.
  • Prices in Fort Smith have risen slightly in the second half of 2011, and appear to have stabilized since the beginning of 2010.
  • Stability has characterized house prices in Central Arkansas.  On net, prices in the Little Rock-North Little Rock-Conway metro area have changed little since 2007, when prices in other areas of the nation began to decline.
  • Home prices in Jonesboro never did experience any substantial price declines.  Beyond some temporary ups and downs, prices have continued to rise steadily.

Source: Federal Housing Finance Agency

Although Arkansas house prices appear to have stabilized toward the end of 2011, downward price pressures remain.  In particular, ongoing foreclosure activity and other sales of “distressed” properties tend to drive average prices lower.  This is more likely to be a factor in areas of the state where general economic conditions remain weak.  Nevertheless, the fact that mortgage delinquency rates and foreclosure activity are lower in Arkansas than elsewhere in the nation bodes well for the outlook.

Home Foreclosures in Arkansas

By , February 14, 2012 3:40 PM

Last week, the data and analytics firm CoreLogic released home foreclosure data for December 2011.  The figures show that Arkansas homeowners continue to fare better than the national average.  The percent of homeowners who were more than 90 days late on their mortgage payments (including those in foreclosure) was 7.3% nationwide.  In Arkansas the comparable figure was 5.2%.  Among the 50 states, Arkansas was ranked #31 on this particular statistic.

Source: CoreLogic

Relatively speaking, Arkansas fared even better on foreclosure inventories.  Across the nation, 3.4% of all homes with a mortgage were classified as being at some stage of the foreclosure process in December.  In Arkansas, only 1.4% of all homes with mortgages fell into this category.  Only 6 states had a lower inventory rate.

Compared to a year earlier, Arkansas’ foreclosure inventory was down 0.4%.  This was twice the size of the decline registered for the nation.

The CoreLogic press release quoted chief economist Mark Fleming as noting “the inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing.”  This is clearly good news, and Arkansas continues to fare better than many other parts of the country.

Arkansas Taxable Sales – 2011:Q4 (Preliminary)

By , February 2, 2012 12:58 PM

Preliminary data show that Arkansas Taxable Sales Including Gasoline (ATSIG) rose by 1.8% in the fourth quarter of 2011, and were up 5.1% from the previous year.  Excluding gasoline, Arkansas Taxable Sales (ATS) were up 1.9% in the fourth quarter.  After a period of approximately zero growth from mid-2010 through mid-2011, ATS expanded by 4.2% in the second half of 2011.

Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement


Sources: Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

The preliminary ATS data are based on monthly revenue reports from the Department of Finance and Administration.  Their latest report indicated fairly strong growth in Gross Receipts in January (+4.9% from the previous year).  Gross Receipts is a measure that primarily reflects sales and use taxes, with approximately a one month lag.  Hence, the report suggests that holiday sales in December 2011 were much improved over the previous year.  Final figures for Arkansas sales and use tax receipts will be available with the release of the January 2012 issue of Arkansas Fiscal Notes.

Gasoline sales data for the fourth quarter are incomplete, but preliminary estimates suggest an increase of approximately 1% — in spite of lower gas prices.  According to the oil price information service, the average price of gasoline in Arkansas was $3.22 in the fourth quarter — down from $3.49 in the third quarter.

The growth in ATSIG in the second half of 2011 brings Arkansas sales growth back in line with national retail sales.  According to the Census Bureau, U.S. Retail Sales increased by 1.2% in the third quarter and 1.9% in the fourth quarter.  ATSIG had been lagging behind in early 2011, but slightly outpaced U.S. retail sales in the second half of the year.  For the year as a whole, U.S. retail sales rose 6.9% compared to the 5.1% figure for ATSIG.

Sources: Census Bureau, Department of Finance and Administration, Oil Price Information Service, Institute for Economic Advancement

 #  #  #

Arkansas Taxable Sales (ATS) is calculated by the Institute for Economic Advancement to serve as a timely proxy for Arkansas retail sales.  The series is derived from sales and use tax data, adjusting for the relative timing of tax collections and underlying sales, changes in tax laws, and seasonal patterns in the data.  Arkansas Taxable Sales Including Gasoline (ATSIG) incorporates data on the state motor fuel tax and gasoline prices from the Oil Price Information Service.

A spreadsheet of the data is available here:  Arkansas Taxable Sales Data 2011:Q4 (Excel file)

* Data are preliminary until the release of the DFA report, Arkansas Fiscal Notes for January 2012, and will be updated when information becomes available.

Metro Unemployment Rates End 2011 Sharply Lower

By , February 1, 2012 2:52 PM

Unemployment rates in Arkansas Metropolitan Statistical Areas (MSAs) declined in December — the third consecutive month of across-the-board reductions in jobless rates (seasonally-adjusted).  Previously-released statewide data showed that the Arkansas unemployment rate fell from 8.3 percent in September to 7.7 percent in December.  Rates in Arkansas metro areas showed even sharper declines over the three-month period–ranging from 0.7 percentage points in Hot Springs to 1.7 percent in the Memphis MSA.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

As shown in the table below, the raw data from the Bureau of Labor Statistics showed unemployment rates rising from November to December.  However, these increases were entirely seasonal in nature.  After seasonal adjustment, the monthly change in unemployment rates was negative for every MSA except Texarkana, where the rate was unchanged at 7.1%.  The end-of-year declines in unemployment bring Arkansas metro areas back into the set of MSAs with unemployment rates lower than a year earlier.  According to the BLS press release this morning, 329 of the nation’s 372 metro areas fell into this category in December.

Sources: Bureau of Labor Statistics, Institute for Economic Advancement

Independent data on nonfarm payroll employment was not as unambiguously positive as the household unemployment data.  Employment was up in 5 MSAs, but declined in Hot Springs, Jonesboro and Fort Smith.  Since statewide employment reached a low-point in February 2010, most of the state’s MSAs have seen positive employment growth.  However, Fort Smith and Pine Bluff have continued to experience job losses.  Compared to the start of the recession in December 2007, only Hot Springs has seen net positive job growth.

Source: Bureau of Labor Statistics

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