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The strength and stability of
community banks in Arkansas

BY ChatGPT

Continuing with our fascination with the new demonstrated a high level of financial stability. According to a
artificial intelligence platforms, we’ve decided to report by the Federal Reserve Bank of St. Louis, community
include articles for a few editions relating to banks in Arkansas have consistently maintained strong capital
ratios and have weathered economic downturns better than
current issues that will be written by ChatGPT. their larger counterparts. This resilience is due, in part, to the
conservative lending practices of community banks, which focus
Our instructions were to “write 1,500 words about on building relationships with customers and making loans
the strength and stability of community banks in based on the borrower's ability to repay.
Arkansas”. In less The stability of community banks in Arkansas is also reflected in
than one minute the their low default rates on loans. According to data from the
FDIC, community banks in Arkansas had a noncurrent loan rate
following article of just 0.38% in the third quarter of 2022, which is significantly
appeared as “What AI lower than the national average of 0.55%. This low default rate
Says”. is a testament to the quality of lending practices at community
banks in Arkansas and their commitment to responsible lending.
Community banks are an essential part of the financial industry, In addition to their financial stability, community banks in
providing valuable services to individuals and businesses in their Arkansas are also known for their commitment to their
local areas. In Arkansas, community banks play a critical role in communities. These banks often sponsor local events and
the state's economy, serving as a reliable source of credit and organizations and participate in community development
financial support for local communities. These banks have projects. For example, many community banks in Arkansas have
demonstrated a remarkable strength and stability over the partnered with the Arkansas Community Foundation, a
years, making them a trusted partner for their customers. nonprofit organization that supports community development
projects throughout the state.
Community banks are defined as banks with less than $10
billion in assets and operate in a limited geographic area, Another strength of community banks in Arkansas is their ability
generally serving a particular town or region. In Arkansas, to adapt to changing market conditions. Despite the challenges
community banks account for a significant share of the banking posed by the COVID-19 pandemic, community banks in
industry, with over 80% of the state's banks considered Arkansas have remained steadfast in their commitment to
community banks. Despite the challenges of operating in a serving their customers. Many banks quickly implemented new
competitive industry, these banks have demonstrated an technologies and services to better serve their customers, such
impressive level of resilience and longevity. as online and mobile banking, which became critical during the
pandemic.
One of the key strengths of community banks in Arkansas is
their focus on relationship-based banking. Unlike larger banks Community banks in Arkansas have also been proactive in
that prioritize transactional banking, community banks prioritize addressing the unique financial needs of their customers during
building relationships with their customers, which allows them the pandemic. For example, many banks offered loan
to better understand their needs and provide tailored solutions. modifications and payment deferrals to help customers weather
This approach allows community banks to offer personalized the economic impacts of the pandemic. Additionally,
and flexible services to their customers, which can be community banks in Arkansas participated in the Paycheck
particularly beneficial for small businesses and individuals with Protection Program (PPP), which provided loans to small
unique financial needs. businesses impacted by the pandemic.

Another advantage of community banks is their local knowledge In conclusion, community banks are an integral part of the
and expertise. These banks are typically owned and operated by financial industry in Arkansas. These banks provide personalized
members of the local community, which gives them a deep and flexible services to their customers, and their local
understanding of the local economy and the financial needs of knowledge and expertise allows them to make informed lending
their customers. This knowledge allows community banks to decisions. The financial stability of community banks in
make informed lending decisions and provide valuable advice to Arkansas is a testament to their conservative lending practices
their customers. Additionally, community banks often partner and their commitment.
with local organizations and businesses, helping to support

economic growth and development in their communities.

Despite their smaller size, community banks in Arkansas have
A RKANSAS | 22 | Spring 2023
COMMUNITY BANKER