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State's reserve ratio ties for second in region.

In the third quarter of 2005, Arkansas banks collectively had a loan-loss-reserve ratio of 1.47 percent, down from 1.57 percent for the same period in 2004.

Banks maintain a reserve adequate to absorb estimated credit losses associated with their loan and lease portfolios. The ratio is a percentage of a bank's outstanding loans.

Therefore, on average, banks in Arkansas reserved 1.47 percent of outstanding loan value as a hedge against potential losses.

As of Sept. 30, Fayetteville's Signature Bank of Arkansas had a loan-loss ratio of 1.25 percent; Springdale's Legacy National Bank had a ratio of 1.24 percent; the Bank of Rogers had a ratio of 1.02 percent; and Bentonville's Pinnacle Bank had a ratio of 1 percent.

The collective reserve ratio for the U.S. Federal Reserve Bank's 8th District, which includes all of Arkansas and parts of six other states, was 1.35 percent.

Arkansas ranked as the second highest in reserve for the district in a tie with Indiana. The two were just below Kentucky's 1.49 percent ratio and above the U.S. average of 1.35 percent.
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Title Annotation:banks
Author:Sparkman, Worth
Publication:Arkansas Business
Article Type:Brief Article
Geographic Code:1U7AR
Date:Feb 13, 2006
Words:188
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