State's banks see rise in loan-loss reserves.(NW JOURNAL: A Look at News From Northwest Arkansas)

In the first quarter of 2009, Arkansas banks collectively had a loan-loss reserve ratio of 1.65 percent, up from 1.60 percent in the first quarter of last year.

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.

On average, banks in Arkansas reserved 1.65 percent of outstanding loan value as a hedge against potential losses, making the state the fourth-highest in the U.S. Federal Reserve Bank's 8th District in terms of reserves.

As of March 31, the most recent data available from the Federal Deposit Insurance Corp., loan-loss ratios were 1.71 percent for Fayetteville-chartered Arvest Bank, 2.12 percent at Chambers Bank of Danville, 0.98 percent at United Bank of Springdale and 2.14 percent at Huntsville-chartered First State Bank of Northwest Arkansas.

The collective reserve ratio for the 8th District, which includes all of Arkansas and parts of six other states, was 1.96 percent. The U.S. average was 2.64 percent, the highest since the early 1990s.

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