PUBLIC DISCLOSURE
September 21, 2015
COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION
Arvest Bank RSSD# 311845
75 North East Street Fayetteville, Arkansas 72702
Federal Reserve Bank of St. Louis
P.O. Box 442 St. Louis, Missouri 63166-0442
NOTE: This document is an evaluation of this institution’s record of meeting the credit needs of its entire community, including low- and moderate- income neighborhoods, consistent with safe and sound operation of the institution. This evaluation is not, nor should it be construed as, an assessment of the financial condition of the institution. The rating assigned to this institution does not represent an analysis, conclusion, or opinion of the federal financial supervisory agency concerning the safety and soundness of this financial institution.
TABLE OF CONTENTS
I. Institution Rating a. Overall Rating ...... 1 b. Performance Test Ratings Table ...... 1 c. Summary of Major Factors Supporting Rating ...... 1
II. Institution a. Description of Institution ...... 2 b. Scope of Examination ...... 3 c. Conclusions with Respect to Performance Tests ...... 7
III. Fayetteville-Springdale-Rogers Multistate Metropolitan Statistical Area (Arkansas and Missouri) a. Multistate Metropolitan Statistical Area Rating ...... 16 b. Scope of Examination ...... 16 c. Description of Institution’s Operations ...... 17 d. Conclusions with Respect to Performance Tests ...... 21
IV. Fort Smith Multistate Metropolitan Statistical Area (Arkansas and Oklahoma) a. Multistate Metropolitan Statistical Area Rating ...... 29 b. Scope of Examination ...... 29 c. Description of Institution’s Operations ...... 30 d. Conclusions with Respect to Performance Tests ...... 33
V. Kansas City Multistate Metropolitan Statistical Area (Kansas and Missouri) a. Multistate Metropolitan Statistical Area Rating ...... 40 b. Scope of Examination ...... 40 c. Description of Institution’s Operations ...... 41 d. Conclusions with Respect to Performance Tests...... 45
VI. Arkansas a. Summary i. State Rating ...... 52 ii. Scope of Examination ...... 52 iii. Description of Institution’s Operations ...... 53 iv. Conclusions with Respect to Performance Tests ...... 54
b. Little Rock-North Little Rock-Conway Metropolitan Statistical Area (full-scope review) i. Description of Institution’s Operations...... 59 ii. Conclusions with Respect to Performance Tests ...... 62
Table of Contents
c. Hot Springs Metropolitan Statistical Area (limited-scope review) i. Description of Institution’s Operations ...... 70 ii. Conclusions with Respect to Performance Tests ...... 71
d. Nonmetropolitan Arkansas Statewide Area (full-scope review) i. Description of Institution’s Operations ...... 72 ii. Conclusions with Respect to Performance Tests ...... 75
VII. Kansas a. Summary i. State Rating ...... 82 ii. Scope of Examination ...... 82 iii. Description of Institution’s Operations ...... 83 iv. Conclusions with Respect to Performance Tests ...... 87
VIII. Missouri a. Summary i. State Rating ...... 93 ii. Scope of Examination ...... 93 iii. Description of Institution’s Operations ...... 94 iv. Conclusions with Respect to Performance Tests ...... 95
b. Joplin Metropolitan Statistical Area (full-scope review) i. Description of Institution’s Operations ...... 100 ii. Conclusions with Respect to Performance Tests ...... 103
c. Springfield Metropolitan Statistical Area (limited-scope review) i. Description of Institution’s Operations ...... 109 ii. Conclusions with Respect to Performance Tests ...... 110
d. Nonmetropolitan Missouri Statewide Area (limited-scope review) i. Description of Institution’s Operations ...... 112 ii. Conclusions with Respect to Performance Tests ...... 113
IX. Oklahoma a. Summary i. State Rating ...... 115 ii. Scope of Examination ...... 115 iii. Description of Institution’s Operations ...... 116 iv. Conclusions with Respect to Performance Tests ...... 117
b. Oklahoma City Metropolitan Statistical Area (full-scope review) i. Description of Institution’s Operations ...... 122 ii. Conclusions with Respect to Performance Tests ...... 125
Table of Contents (continued)
c. Tulsa Metropolitan Statistical Area (full-scope review) i. Description of Institution’s Operations ...... 132 ii. Conclusions with Respect to Performance Tests ...... 135
d. Lawton Metropolitan Statistical Area (limited-scope review) i. Description of Institution’s Operations ...... 142 ii. Conclusions with Respect to Performance Tests ...... 143
e. Nonmetropolitan Oklahoma Statewide Area (full-scope review) i. Description of Institution’s Operations ...... 145 ii. Conclusions with Respect to Performance Tests ...... 148
IX. Appendix a. Scope of Examination Tables ...... 155 b. Summary of State and Multistate Metropolitan Statistical Area Ratings...... 157 c. Primary Year (2014) Lending Performance Tables for Limited Scope Review Areas ...... 158 d. Secondary Year (2013) Lending Performance Tables for All Assessment Areas ...... 170 e. Assessment Areas Map ...... 212 f. Glossary ...... 213
Table of Contents (continued) Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
INSTITUTION’S CRA RATING
INSTITUTION’S CRA RATING: SATISFACTORY
The following table indicates the performance level of Arvest Bank with respect to the Lending, Investment, and Service Tests.
Arvest Bank Performance Tests Performance Levels Lending Test* Investment Test Service Test Outstanding High Satisfactory X X Low Satisfactory X Needs to Improve Substantial Noncompliance
*Note: The Lending Test is weighted more heavily than the Investment and Service Tests when arriving at an overall rating.
The major factors supporting the institution’s rating include the following:
• The bank’s lending levels reflect good responsiveness to assessment area credit needs.
• The bank makes a substantial majority of loans inside its designated assessment areas.
• The overall geographic distribution of the loans reflects good penetration throughout the bank’s assessment areas.
• Given the product lines offered, the distribution of borrowers reflects good penetration among customers of different income levels and businesses/farms of different sizes.
• Overall, the bank makes an adequate level of community development loans.
• The bank makes a significant level of qualified community development investments and grants, occasionally in a leadership position.
• Delivery systems are accessible to the bank’s geographies and individuals of different income levels in its assessment areas. Changes in branch locations have not adversely affected the accessibility of delivery systems, and services do not vary in a way that inconveniences its assessment areas, particularly low- and moderate-income (LMI) geographies and/or LMI individuals.
• The bank provides an adequate level of qualified community development services.
1 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
INSTITUTION
DESCRIPTION OF INSTITUTION
Arvest Bank is a multistate bank headquartered in Fayetteville, Arkansas, with total assets of $15.4 billion as of June 30, 2015. The bank is a wholly-owned subsidiary of Arvest Holdings, the parent holding company of which is Arvest Bank Group, Inc., of Bentonville, Arkansas. Arvest Bank has several finance-related affiliates, including the following subsidiaries: Security BankCard Center Inc., Superior Finance Company, Central Mortgage Company, and Waco Title Company.
The bank operates 267 ofices (including 4 drive-through only branches), across Arkansas, Kansas, Missouri, and Oklahoma. The bank’s most significant presence is in the northern and western portions of Arkansas, as well as central and eastern Oklahoma. Since the bank’s previous CRA evaluation, the bank closed 13 branches and opened 12 branches; this activity is most notable through a 2013 bank acquisition including seven offices in the Little Rock-North Little Rock-Conway, Arkansas, MSA. The bank currently operates in 14 CRA assessment areas, as detailed below:
• Fayetteville-Springdale-Rogers, Arkansas-Missouri MSA • Fort Smith, Arkansas-Oklahoma MSA • Kansas City, Missouri-Kansas MSA • Little Rock-North Little Rock-Conway, Arkansas MSA • Hot Springs, Arkansas MSA • NonMSA Arkansas • NonMSA Kansas • Joplin, Missouri MSA • Springfield, Missouri MSA • NonMSA Missouri • Oklahoma City, Oklahoma MSA • Tulsa, Oklahoma MSA • Lawton, Oklahoma MSA • NonMSA Oklahoma
For this review period, no legal impediments or financial constraints were identified that would have hindered the bank from serving the credit needs of its customers, and the bank is capable of meeting assessment area credit needs based on its available resources and financial products. Arvest Bank reported total assets of $15.4 billion as of June 30, 2015, which represents an increase in assets of 8.0 percent since the previous evaluation. Arvest Bank also reported total loans of $8.7 billion (56.7 percent of total assets) and total deposits of $13.3 billion. A distribution of the bank’s lending portfolio, by both dollar amount and percentage, is displayed in the following table:
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Distribution of Total Loans (as of June 30, 2015) Percentage of Credit Category Amount ($000s) Total Loans Construction and Development $620,640 7.1% Commercial Real Estate $2,104,941 24.1% Multifamily Residential $211,095 2.4% 1–4 Family Residential $2,881,075 33.0% Farmland $425,476 4.9% Farm Loans $129,767 1.5% Commercial and Industrial $1,341,713 15.4% Loans to Individuals $837,070 9.6% Total Other Loans and Leases $183,833 2.1% Less: Unearned Income ($1,305) 0.0% TOTAL LOANS AND LEASES $8,734,305 100%
Based on information presented in the previous table, the bank’s primary lending focus include residential real estate loans (33.0 percent) and commercial real estate-secured loans (24.1 percent). The bank also originates and subsequently sells a significant volume of loans related to residential real estate. Because these loans are typically sold on the secondary market shortly after origination, this activity is not fully captured in the table.
The bank received a satisfactory rating at its previous CRA evaluation conducted by this Reserve Bank on April 15, 2013.
SCOPE OF EXAMINATION
The bank’s CRA performance was reviewed using the Federal Financial Institutions Examination Council’s (FFIEC’s) Interagency CRA Procedures for Large Institutions. The large bank performance standards entail three performance tests: the Lending, Investment, and Service Tests. Bank performance under these tests is rated at the institution level, as well as at the state and multistate MSA level. As previously noted, Arvest Bank has 14 assessment areas, including three multistate MSAs and portions of four states. The following table details branch distribution, as well as the scope of review procedures performed by assessment area.
3 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
State/Multistate MSA/Assessment Area Number of Offices Review Type Multistate MSA Fayetteville-Springdale-Rogers, Arkansas-Missouri MSA 51 Full-Scope Review Fort Smith, Arkansas-Oklahoma MSA 16 Full-Scope Review Kansas City, Missouri-Kansas MSA 16 Full-Scope Review State of Arkansas Little Rock-North Little Rock-Conway, Arkansas MSA 25 Full-Scope Review Hot Springs, Arkansas MSA 6 Limited-Scope Review NonMSA Arkansas 24 Full-Scope Review State of Kansas NonMSA Kansas 3 Full-Scope Review State of Missouri
Joplin, Missouri MSA 12 Full-Scope Review Springfield, Missouri MSA 5 Limited-Scope Review NonMSA Missouri 14 Limited-Scope Review State of Oklahoma Oklahoma City, Oklahoma MSA 26 Full-Scope Review Tulsa, Oklahoma MSA 31 Full-Scope Review Lawton, Oklahoma MSA 6 Limited-Scope Review NonMSA Oklahoma 32 Full-Scope Review
In addition to the bank’s overall institution rating, the bank received three multistate MSA ratings and four state ratings (as well as individual Lending, Investment, and Service Test ratings under each rating category). The bank’s institution rating is a blend of these ratings, which are weighted based on significance to overall institution operations. In light of the bank’s branch structure, loan and deposit activity, and supervisory history, CRA performance in three rating categories received primary consideration: Fayetteville-Springdale-Rogers, Arkansas-Missouri MSA (Fayetteville MSA); Arkansas, and Oklahoma. The remaining rating categories received secondary consideration (in order of priority): Missouri; Fort Smith, Arkansas-Oklahoma MSA; Kansas City, Missouri-Kansas MSA; and Kansas.
To augment this evaluation, interviews were conducted with 21 community contacts throughout the bank’s assessment areas. In addition to the new community contacts completed as a part of this evaluation, numerous community contact interviews conducted in conjunction with other CRA evaluations were also referenced when available and pertinent to the subject assessment area being reviewed. The following table displays the number of community contacts used as part of each full-scope assessment area review.
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New Other Assessment Area Community Community TOTAL Contacts Contacts Fayetteville MSA 2 2 4 Fort Smith, Arkansas-Oklahoma MSA 2 1 3 Kansas City, Missouri-Kansas MSA 2 3 5 Little Rock-North Little Rock-Conway, Arkansas MSA 2 1 3 NonMSA Arkansas 2 1 3 NonMSA Kansas 3 0 3 Joplin, Missouri MSA 2 0 2 Oklahoma City, Oklahoma MSA 2 1 3 Tulsa, Oklahoma MSA 2 1 3 NonMSA Oklahoma 2 1 3 TOTAL 21 11 32
The information shared by the community contacts was used to help ascertain specific credit needs/opportunities and local market conditions within the bank’s assessment areas. Information from these interviews also assisted in evaluating the bank’s responsiveness to identified community credit needs and community development opportunities. Key points from these interviews are included in the Description of Institution’s Operations sections, as applicable to the assessment areas in which the community contacts were made.
Lending Test
Arvest Bank’s Lending Test performance was based on 2013 and 2014 lending activity, including home mortgage loans reported under the Home Mortgage Disclosure Act (HMDA) and small business/farm loans reported under the CRA. While the Lending Test analyses encompass lending activity from both 2013 and 2014, the body of this evaluation primarily details bank performance based on 2014 lending activity, noting significant divergences in performance between the two years as applicable (see Appendix D for detailed performance figures based on 2013 lending activity). Also, the review period for community development lending activity spanned from the date of the last evaluation, April 15, 2013, to the date of this evaluation.
Under the Lending Test, the bank’s performance is evaluated using the following criteria, as applicable.
• Level of lending activity.
• Assessment areas concentration.1
1 This review is performed at the institution level only, and it does not include affiliate lending activity.
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• Geographic distribution of loans.
• Distribution of loans by borrower’s income/revenue profile.
• Community development lending activity.
• Product innovation.2
• Responsiveness to credit needs of low-income individuals and geographies and very small businesses.
Under the Lending Test criteria noted above, analyses often entail comparisons of bank performance to assessment area demographics and the performance of other lenders (based on HMDA and CRA aggregate lending data). Unless otherwise noted, assessment area demographics are based on 2010 U.S. Census data. Certain business and farm demographics are based on Dun & Bradstreet data, as applicable to the year of bank lending activity being considered.
Investment Test
The review of community development investments and grants includes qualified activity from April 15, 2013 to September 21, 2015. In addition, investments made prior to the date of the previous CRA evaluation but still outstanding as of this review date were also considered. Community development investments can include various investment vehicles, such as bonds, individual equities, mutual fund shares, monetary donations or grants, etc. Qualified investments and grants were evaluated to determine the bank’s overall level of activity, use of innovative and/or complex investments,3 and responsiveness to assessment area credit and community development needs.
Service Test
The review period for retail and community development services includes activity from April 15, 2013 to September 21, 2015. The Service Test considers the distribution and accessibility of bank branches and alternative delivery systems, changes in branch locations, the reasonableness of business hours and retail services, and community development services.
2 Unlike other large bank CRA performance criteria, a lack of innovative and/or flexible lending practices does not necessarily impact the bank’s performance negatively, as these activities are largely used to augment consideration given to an institution’s performance under the quantitative criteria, resulting in a higher performance rating. 3 Unlike other large bank CRA performance criteria, a lack of innovative and/or complex investments does not necessarily impact the bank’s performance negatively, as these activities are largely used to augment consideration given to an institution’s performance under the quantitative criteria, resulting in a higher performance rating.
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CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS
LENDING TEST
Arvest Bank’s performance under the Lending Test is rated low satisfactory. Arvest Bank’s overall lending levels reflect good responsiveness to the credit needs of its combined assessment areas. An analysis of the bank’s lending activity revealed that a substantial majority of loans are made inside the bank’s assessment areas. Furthermore, the geographic distribution of loans reflects good penetration throughout the assessment areas, including LMI geographies. An analysis of the loan distribution by borrower income reflects good penetration among borrowers of different income levels and businesses and farms of different revenue sizes. Finally, Arvest Bank made an adequate level of community development loans. The following table reflects the corresponding Lending Test ratings for the multistate MSAs and states applicable to the bank’s combined assessment areas.
State/Multistate MSA Lending Test Rating Fayetteville MSA High Satisfactory Fort Smith, Arkansas-Oklahoma MSA High Satisfactory Kansas City, Missouri-Kansas MSA Low Satisfactory Arkansas Low Satisfactory Kansas Low Satisfactory Missouri Low Satisfactory Oklahoma Low Satisfactory OVERALL Low Satisfactory
As displayed in the previous table, the bank’s performance varied by state and multistate MSA. However, with the most weight being placed on the Fayetteville MSA, Arkansas, and Oklahoma, Arvest Bank’s overall Lending Test rating is low satisfactory.
7 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Lending Activity
Overall, the bank’s lending levels reflect good responsiveness to credit needs in the bank’s combined assessment areas. Lending activity from 2013 and 2014 based on the product lines reviewed during this evaluation is detailed in following table: 4
Summary of Lending Activity, 2013 and 2014 Loan Type # % $(000s) % Home Improvement 4,957 9.0% $79,860 1.4% Home Purchase 14,164 25.8% $2,027,269 34.9% Multifamily Housing 65 0.1% $57,526 1.0% Refinancing 12,141 22.1% $1,429,186 24.6% TOTAL HMDA 31,327 57.1% $3,593,841 61.9% Small Business 18,611 33.9% $1,897,783 32.7% Small Farm 4,916 9.0% $316,380 5.5% TOTAL LOANS 54,854 100% $5,808,004 100%
4 This table includes both bank-originated loans and affiliate-originated loans. While all bank activity is included (both to borrowers inside and outside of the bank’s assessment areas), only the affiliate-lending activity inside the bank’s combined assessment areas is included. In 2013, the total number of loans was 30,689, and in 2014, the total number of loans was 24,165.
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Assessment Areas Concentration
For the loan activity reviewed as part of this evaluation, the following table displays the number and dollar volume of loans inside and outside the bank’s assessment areas for both 2013 and 2014.5
Lending Inside and Outside of Assessment Area by Number and Dollar Volume ($000s) January 1, 2013 through December 31, 2014 Loan Type Inside Assessment Area Outside Assessment Area TOTAL 9,883 98.9% 110 1.1% 9,993 100% HMDA $533,255 95.7% $23,820 4.3% $557,075 100% 14,218 98.1% 268 1.9% 14,486 100% Small Business $1,779,578 96.8% $58,011 3.2% $1,837,589 100% 4,878 99.2% 38 0.8% 4,916 100% Small Farm $311,578 98.5% $4,802 1.5% $316,380 100% 28,979 98.6% 416 1.4% 29,395 100% TOTAL LOANS $2,624,411 96.8% $86,633 3.2% $2,711,044 100%
By number of total loans reviewed, 98.6 percent were made to borrowers within the bank’s assessment area; furthermore, by dollar, 96.8 percent of loans were made in the assessment area. Therefore, a substantial majority of loans (by both number and dollar amount of loans) are made inside the bank’s assessment areas for all three loan categories.
5 Loan activity displayed in this table does not include affiliate lending activity.
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Geographic and Borrower Distribution
As displayed in the following table, the bank’s overall geographic distribution of loans reflects good penetration throughout the bank’s assessment areas.
State/Multistate MSA Geographic Distribution of Loans Fayetteville MSA Good Fort Smith, Arkansas-Oklahoma MSA Good Kansas City, Missouri-Kansas MSA Good Arkansas Good Kansas Adequate Missouri Good Oklahoma Adequate OVERALL Good
Overall, performance by borrower’s income/revenue profile is good, as shown in the following table:
State/Multistate MSA Loan Distribution by Borrower’s Profile Fayetteville MSA Good Fort Smith, Arkansas-Oklahoma MSA Good Kansas City, Missouri-Kansas MSA Good Arkansas Good Kansas Excellent Missouri Good Oklahoma Excellent OVERALL Good
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Community Development Lending Activities
Overall, Arvest Bank maintains an adequate level of community development loans.
State/Multistate MSA Community Development Lending Fayetteville MSA Leader Fort Smith, Arkansas-Oklahoma MSA Low Level Kansas City, Missouri-Kansas MSA Low Level Arkansas Few, if any Kansas Few, if any Missouri Relatively High Level Oklahoma Adequate Level OVERALL Adequate Level
As displayed in the previous table, the bank’s performance varied significantly by state and multistate MSA. However, as the most weight is placed on the Fayetteville MSA, Arkansas, and Oklahoma, Arvest Bank’s overall community development lending performance reflects an adequate level of community development loans. The bank originated or renewed 50 community development loans and letters of credit within the combined assessment areas, totaling $118.3 million. The community development loans were for a variety of purposes, including affordable housing (26), economic development (12), revitalization/stabilization of LMI geographies (9), and community services (3).
INVESTMENT TEST
Overall, Arvest Bank is rated high satisfactory for the Investment Test. The bank made a significant level of qualified community development investments and grants and is occasionally in a leadership position. The following is a breakdown of the Investment Test rating for all rated areas.
State/Multistate MSA Investment Test Rating Fayetteville MSA High Satisfactory Fort Smith, Arkansas-Oklahoma MSA Low Satisfactory Kansas City, Missouri-Kansas MSA High Satisfactory Arkansas High Satisfactory Kansas Substantial Noncompliance Missouri Low Satisfactory Oklahoma High Satisfactory OVERALL High Satisfactory
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As displayed in the previous table, the bank’s Investment Test performance was rated high satisfactory in its most significant rated areas; the Fayetteville MSA, Arkansas, and Oklahoma. While the bank was rated substantial noncompliance in Kansas, performance in this rated area played a small role related to overall rating conclusions, as bank operations in Kansas have the least significance compared to other states and multistate MSAs.
The bank made a significant level of qualified community development investments and grants, particularly those not routinely provided by private investors. During the evaluation period, the bank made or participated in qualified community development investments of $61.7 million and made 58 grants totaling $234,979, reflecting a significant reduction of qualified grants from the previous evaluation. The majority of the bank’s investments consist of purchased portfolios of mortgage-backed securities (MBS) inside its assessment areas, totaling $48.9 million. These MBS are secured by affordable housing loans made to LMI individuals. The bank purchased $32.3 million in new qualified MBS during this review period, benefiting and attributable to 12 assessment areas. Furthermore, as of this evaluation date, the bank maintained $16.6 million of qualified MBS purchased prior to this evaluation, which are secured by loans throughout all 14 of the bank’s assessment areas. Moreover, an additional $268,409 in MBS was purchased during the review period that was outside of the bank’s assessment areas, and $301,320 in MBS purchased prior to this evaluation is still outstanding.
Other investments the bank makes are in Low Income Housing Tax Credits (LIHTCs) and municipal bonds. The bank has invested $5.3 million in LIHTCs that support affordable housing in two assessment areas and a total of $7.6 million throughout five assessment areas for bonds in school improvements where the majority of students are from LMI households. In addition, the bank invested $1.9 million outside of its assessment areas for bonds that improve schools where a majority of students are from LMI households.
SERVICE TEST
Overall, Arvest Bank’s performance is rated low satisfactory under the Service Test. The bank’s delivery systems are accessible to the bank’s geographies and individuals of different income levels in its assessment areas. In addition, the bank’s record of opening and closing branches has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals. Furthermore, services do not vary in a way that inconveniences the needs of its assessment area, particularly to LMI geographies and/or LMI individuals. Lastly, Arvest Bank provides an adequate level of community development services within the combined assessment areas. The following table reflects the bank’s Service Test ratings for all rated areas.
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State/Multistate MSA Service Test Rating Fayetteville MSA High Satisfactory Fort Smith, Arkansas-Oklahoma MSA High Satisfactory Kansas City, Missouri-Kansas MSA Low Satisfactory Arkansas High Satisfactory Kansas Low Satisfactory Missouri High Satisfactory Oklahoma Low Satisfactory OVERALL High Satisfactory
As displayed in the previous table, the bank’s Service Test performance was high satisfactory in four of seven rated areas, including two of the three primary rated areas.
Accessibility of Delivery Systems
Overall, the bank’s delivery systems are accessible to the geographies and individuals of different income levels in the bank’s assessment areas.
State/Multistate MSA Accessibility of Delivery Systems Fayetteville MSA Accessible Fort Smith, Arkansas-Oklahoma MSA Accessible Kansas City, Missouri-Kansas MSA Reasonably Accessible Arkansas Accessible Kansas Accessible Missouri Accessible Oklahoma Reasonably Accessible OVERALL Accessible
Changes in Branch Locations
The bank’s record of opening and closing bank facilities throughout its various assessment areas has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals. Several areas have experienced improvements due to new branches in LMI areas as a result of branch openings and acquisitions.
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State/Multistate MSA Changes in Branch Locations Fayetteville MSA Not Adversely Affected Fort Smith, Arkansas-Oklahoma MSA Generally Not Adversely Affected Kansas City, Missouri-Kansas MSA Generally Not Adversely Affected Arkansas Not Adversely Affected Kansas Not Adversely Affected Missouri Generally Not Adversely Affected Oklahoma Not Adversely Affected OVERALL Not Adversely Affected
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Overall, the bank’s services do not vary in a way that inconveniences its assessment areas, particularly LMI geographies and/or LMI individuals.
Reasonableness of Business State/Multistate MSA Hours and Services Fayetteville MSA Do Not Vary Fort Smith, Arkansas-Oklahoma MSA Do Not Vary Kansas City, Missouri-Kansas MSA Do Not Vary Arkansas Do Not Vary Kansas Do Not Vary Missouri Do Not Vary Oklahoma Do Not Vary OVERALL Do Not Vary
In addition to the stand-alone facilities, the bank operates some of its branches in a major retailer. The bank uses this channel to reach more customers given the traffic within the retail store. At several of these locations, the bank offers expanded hours on weekends (Saturday and Sunday). Additionally, many locations offer evening hours during the week to better serve the bank’s customers.
Community Development Services
Overall, the bank provides an adequate level of community development services throughout its various assessment areas, as displayed in the following table:
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State/Multistate MSA Community Development Services Fayetteville MSA Adequate Level Fort Smith, Arkansas-Oklahoma MSA Leader Kansas City, Missouri-Kansas MSA Relatively High Level Arkansas Adequate Level Kansas Few, if any Missouri Adequate Level Oklahoma Adequate Level OVERALL Adequate Level
The bank’s community development service performance was adequate in the majority of the rated areas, including the top three primary rated areas.
FAIR LENDING OR OTHER ILLEGAL CREDIT PRACTICES REVIEW
Based on findings from the Consumer Affairs examination, including a fair lending analysis performed under the Fair Housing Act requirements, conducted concurrently with this CRA evaluation, no evidence of discriminatory or other illegal credit practices inconsistent with helping to meet community credit needs was identified.
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FAYETTEVILLE-SPRINGDALE-ROGERS MULTISTATE MSA6
CRA RATING FOR FAYETTEVILLE-SPRINGDALE-ROGERS, ARKANSAS- MISSOURI MSA: SATISFACTORY The Lending Test is rated: High Satisfactory The Investment Test is rated: High Satisfactory The Service Test is rated: Low Satisfactory
Factors supporting the institution’s Fayetteville MSA rating include the following:
• Arvest Bank’s lending levels reflect good responsiveness to the credit needs in the Fayetteville MSA.
• The bank’s overall geographic distribution of loans reflects good penetration throughout the Fayetteville MSA.
• Given the product lines offered, the distribution of borrowers reflects good penetration among customers of different income levels and businesses and farms of different sizes.
• The bank is a leader in making community development loans within the Fayetteville MSA.
• The bank makes a significant level of qualified community development investments and grants within the Fayetteville MSA and is occasionally in a leadership position.
• Service delivery systems are accessible to geographies and individuals of different income levels in the Fayetteville MSA; furthermore, changes in branch locations have not adversely affected the accessibility of delivery systems, and services do not vary in a way that inconveniences this assessment area, particularly LMI geographies and/or LMI individuals.
• Arvest Bank personnel provide an adequate level of community development services in the Fayetteville MSA.
SCOPE OF EXAMINATION
Arvest Bank has one assessment area in the Fayetteville MSA, which includes the entire multistate MSA. The bank’s performance within the Fayetteville MSA was reviewed using full- scope examination procedures, and scoping considerations applicable to the review of this assessment area are consistent with the overall CRA examination scope as presented in the
6 This rating reflects performance within the multistate MSA. The Arkansas and Missouri statewide evaluations are adjusted and do not reflect performance in the parts of those states contained in the Fayetteville MSA.
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Institution, Scope of Examination section. Also, this evaluation included information obtained from two community contacts in the Fayetteville MSA, both completed as part of this evaluation. One community contact interview completed as part of this review took place with a representative of a local housing authority agency and the second community contact specializes in economic development. Key details from these community contact interviews are included in the next section, Description of Institution’s Operations. In addition, two previously conducted community contact interviews were used to ascertain the specific credit needs of this assessment area.
DESCRIPTION OF INSTITUTION’S OPERATIONS IN THE FAYETTEVILLE MSA
Bank Structure
Arvest Bank operates 51 of its 267 branches (19.1 percent), including one drive-through facility, within this assessment area. Of the total facilities, none are located in low-income census tracts; however, the bank does maintain multiple facilities in close proximity to the three low-income geographies. In addition, 10 facilities are in moderate-income census tracts, 32 are in middle- income census tracts, and 9 are in upper-income census tracts. During this review period, the bank relocated one branch in a moderate-income census tract. Based on this branch network and other service delivery systems, the bank is well positioned to deliver financial services to substantially all of the Fayetteville MSA assessment area.
This assessment area is a competitive banking market. According to the Federal Deposit Insurance Corporation (FDIC) Deposit Market Share Report as of June 30, 2015, a total of 38 FDIC-insured institutions operate 203 offices within the MSA. Of those 38 financial institutions, Arvest Bank held the largest proportion of deposit dollars by far, with a deposit market share of 48.3 percent (the next closest market share percentage was 7.5 percent). Furthermore, as of June 30, 2015, the deposits held at branches throughout the Fayetteville MSA represent 33.0 percent of all Arvest Bank deposits.
General Demographics
The Fayetteville MSA is a four-county multistate MSA; the Arkansas portion includes Benton, Madison, and Washington Counties, and the Missouri portion consists of McDonald County. The multistate MSA is located in the northwest corner of Arkansas and the southwest corner of Missouri. Based on 2010 U.S. Census data, the assessment area had a total population of 463,204. The majority of the population lives in Benton County (221,339) and Washington County (203,065). There are much smaller populations in McDonald County (23,083) and Madison County (15,717). The assessment area experienced a population increase of 33.5 percent since the 2000 U.S. Census.
The demographics of this assessment area cover a wide metropolitan area with some rural areas. Additionally, the population is diverse, and credit needs in the area are also varied, including a standard blend of consumer and business/farm credit products. Another particular need in the assessment area (as noted primarily during community contact interviews) is affordable housing
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in the assessment area. Furthermore, the Fayetteville MSA is an area with significant community development need and there is ample opportunity for financial institutions to participate.
Income and Wealth Demographics
Based on the 2010 U.S. Census, the median family income for the Fayetteville MSA was $54,186, which was significantly greater than the state of Arkansas ($48,491) but less than the state of Missouri ($57,661). As of 2014, the median family income for the Fayetteville MSA was $59,500, as estimated by the FFIEC. The following table summarizes the distribution of the 89 geographies in the MSA by income level and the family population of those census tracts within the assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 3 14 49 23 0 89 Census Tracts 3.4% 15.7% 55.1% 25.8% 0.0% 100%
Family 3,082 16,041 66,382 30,594 0 116,099 Population 2.7% 13.8% 57.2% 26.4% 0.0% 100%
The following table displays the distribution of assessment area families by income level, as well as family population income characteristics for the states of Arkansas and Missouri.
Family Population by Income Level Dataset Low- Moderate- Middle- Upper- TOTAL 23,489 21,253 23,889 47,468 116,099 Assessment Area 20.2% 18.3% 20.6% 40.9% 100% 162,389 137,133 153,290 309,951 762,763 Arkansas 21.3% 18.0% 20.1% 40.6% 100% 318,048 279,308 335,189 613,964 1,546,509 Missouri 20.6% 18.1% 21.7% 39.7% 100%
Housing Demographics
While income levels in the Fayetteville MSA assessment area are relatively high, housing costs in the assessment area appear less affordable than state comparisons, due largely to higher real estate values in the Fayetteville MSA. The assessment area housing affordability ratio was 30.2 percent as of the 2010 U.S. Census, which is below the housing affordability ratio for both the state of Arkansas (38.4 percent) and the state of Missouri (33.6 percent). As mentioned by a community contact, affordable housing appears to be a challenge to residents of the assessment area. The median housing value in the assessment area is $150,745, which is much higher than the state of Arkansas ($102,300) and more than the state of Missouri ($137,700). Median monthly gross rent in the Fayetteville MSA ($675) is also higher than both the state of Arkansas
18 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
($617) and the state of Missouri ($667). Based on information in the table below, housing is least affordable in Washington County and most affordable in McDonald County. Throughout the assessment area, homeownership does not appear easily within reach of LMI individuals and families.
Housing Affordability Dataset Affordability Ratio Median Housing Value Median Gross Rent Benton County 32.5% $155,000 $715 Madison County 37.4% $97,700 $500 Washington County 27.3% $154,900 $665 McDonald County 42.2% $86,800 $517 Fayetteville MSA 30.2% $150,745 $675 Arkansas 38.4% $102,300 $617 Missouri 33.6% $137,700 $667
Industry and Employment Demographics
According to 2013 County Business Patterns data, 10,883 business entities were operating within the Fayetteville MSA. The area is home to one of the world’s largest retail stores, a large meat and poultry producer, and a major North American transportation company. The largest industries by number of employees in the Fayetteville MSA are manufacturing, retail trade, and healthcare and social assistance.
According to the U.S. Department of Labor, Bureau of Labor Statistics, the recent annual average unemployment rates (not seasonally adjusted) for the Fayetteville MSA (5.6 percent in 2013 and 4.6 percent in 2014) were much lower than the rates for both the state of Arkansas (7.4 percent in 2013 and 6.1 percent in 2014) and the state of Missouri (6.7 percent in 2013 and 6.1 percent in 2014). Similar to the state of Arkansas and the state of Missouri, unemployment in the Fayetteville MSA experienced a generally decreasing trend throughout 2013 and 2014.
Local Area Unemployment Dataset 2014 2013 Benton County 4.7% 5.6% Madison County 4.6% 5.7% Washington County 4.5% 5.4% McDonald County 5.8% 6.5% Fayetteville MSA 4.6% 5.6% Arkansas 6.1% 7.4% Missouri 6.1% 6.7%
19 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Community Contact Information
The consensus of the community contact interviewees was that due to the area’s rapidly growing population base, infrastructure and transportation issues present hurdles to the area’s workforce. There are a variety of employers in the area, both large and small, and the unemployment rate is significantly lower than national averages. One of the interviewees stated that there is a lack of a skilled workforce in the area, which is being addressed through a workforce development program to direct middle and high school students into vocational programs. Affordable housing (both owner-occupied and rental) was another challenge identified by interviewees. Although there are a lot of banks in the area, the interviewees did not consider the area to be “overbanked.” It was noted that there is a need for credit and housing services to LMI people, including down- payment assistance programs and Individual Development Accounts (IDA), as well as funding for small business start-ups. As a whole, the community contacts noted that there are many opportunities in the area for bank participation and that the majority of credit needs are being met. Arvest Bank was specifically mentioned as actively participating in the area and being present in the community.
20 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN FAYETTEVILLE MSA
LENDING TEST
Arvest Bank’s Lending Test performance in the Fayetteville MSA is rated high satisfactory. Lending levels reflect good responsiveness to assessment area credit needs. The geographic distribution of loans reflects adequate penetration throughout the assessment area. The loan distribution by borrower’s income/revenue profile reflects good penetration among customers of different income levels and businesses/farms of different sizes. In addition, Arvest Bank is a leader in making community development loans in this assessment area.
Lending Activity
The following table displays the bank’s 2014 lending volume in this assessment area by number and dollar volume.
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 463 7.1% $7,228 1.0% Home Purchase 2,009 30.7% $318,002 44.0% Multifamily Housing 10 0.2% $6,068 0.8% Refinancing 905 13.8% $104,545 14.5% TOTAL HMDA 3,387 51.7% $435,843 60.4% Small Business 2,286 34.9% $234,881 32.5% Small Farm 874 13.3% $51,357 7.1% TOTAL LOANS 6,547 100% $722,081 100%
The bank’s lending activity in the Fayetteville MSA reflects good responsiveness to assessment area credit needs. Lending activity in the Fayetteville MSA represents 27.1 percent of total HMDA and CRA loans made within the bank’s combined assessment areas in 2014. This level of HMDA and CRA activity is well above that of the bank’s branch network in this assessment area, representing 19.1 percent of total bank branches. In contrast, the percentage of loans originated in this assessment area is below the proportion of total deposit holdings of 33.0 percent.
Geographic Distribution of Loans
The assessment area includes 3 low-income and 14 moderate-income census tracts, representing 19.1 percent of all assessment area census tracts. Overall, based on lending activity from all three loan categories reviewed, with primary consideration given to the HMDA category, the bank’s geographic distribution of loans reflects good penetration throughout this assessment area,
21 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
including the 17 LMI census tracts. The following table displays the geographic distribution of HMDA loans compared to owner-occupied housing demographics and aggregate performance for the assessment area.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 25 1.2% 169 8.4% 1,070 53.3% 745 37.1% 0 0.0% 2,009 100% Refinance 11 1.2% 75 8.3% 539 59.6% 280 30.9% 0 0.0% 905 100% Home Improvement 6 1.3% 36 7.8% 285 61.6% 136 29.4% 0 0.0% 463 100% Multifamily 2 20.0% 1 10.0% 7 70.0% 0 0.0% 0 0.0% 10 100% TOTAL HMDA 44 1.3% 281 8.3% 1,901 56.1% 1,161 34.3% 0 0.0% 3,387 100% Owner-Occupied Housing 1.5% 11.1% 57.9% 29.4% 0.0% 100% 2014 HMDA Aggregate 1.2% 8.8% 52.7% 37.3% 0.0% 100%
The bank’s HMDA lending in low-income geographies (1.3 percent) is adequate, as this performance is similar to the owner-occupied housing and aggregate percentages (1.5 percent and 1.2 percent, respectively). Bank lending in moderate-income census tracts is also adequate. While the bank’s lending in moderate-income census tracts (8.3 percent) is below the owner- occupied percentage (11.1 percent), it is similar to aggregate lending (8.8 percent). Therefore, overall combined performance in HMDA lending is considered to be adequate.
Second, the bank’s geographic distribution of small business loans compared to the location of businesses and aggregate performance in the bank’s assessment area was reviewed, as displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 64 2.8% 398 17.4% 1,175 51.4% 649 28.4% 0 0.0% 2,286 100% Loans Business 3.3% 19.1% 50.4% 27.2% 0.0% 100% Institutions 2014 Small Business 3.3% 16.7% 48.2% 29.7% 2.0% 100% Aggregate
While below comparison data levels, the geographic distribution of the bank’s small business loans reflects adequate penetration throughout the assessment area, including LMI geographies. The bank’s performance in low-income census tracts (2.8 percent) is slightly below the estimated
22 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
percentage of businesses located in low-income census tracts and aggregate performance in these tracts (both at 3.3 percent) and is considered adequate. The bank’s performance in moderate- income census tracts (17.4 percent) is slightly below the estimated percentage of businesses located in moderate-income census tracts (19.1 percent) but similar to aggregate performance of 16.7 percent and is considered adequate. Therefore, the bank’s overall geographic distribution of small business loans is adequate.
Finally, the geographic distribution of the bank’s small farm loans is displayed in the following table compared to the location of farms and aggregate performance in the assessment area.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 1 0.1% 176 20.1% 629 72.0% 68 7.8% 0 0.0% 874 100% Loans Agricultural 1.0% 15.4% 66.2% 17.4% 0.0% 100% Institutions 2014 Small Farm 0.1% 18.1% 72.6% 8.9% 0.3% 100% Aggregate
According to Dun & Bradstreet estimates, only 1.0 percent of farms in the assessment area reported being located in low-income census tracts. While the bank’s percentage of the small farm loans in low-income census tracts, 0.1 percent, is below the estimated percentage of farms in low-income census tracts, this performance remains adequate, as the number of farms in low- income census tracts is de minimus. The bank outperformed the Dun & Bradstreet estimate in moderate-income census tracts; bank performance of 20.1 percent is greater than the demographic of 15.4 percent and is considered good. The performance in moderate-income geographies carries significantly more weight than the performance in low-income census tracts based on loan volume and de minimus percentages in low-income census tracts. Therefore, the bank’s geographic distribution of small farm loans is good.
Loan Distribution by Borrower’s Profile
Overall, the bank’s loan distribution by borrower’s profile is good, based on performance from all three loan categories reviewed. Particular significance was placed on HMDA lending, as it equated to over half of the bank’s lending in this assessment area (51.7 percent in 2014). The following table shows the distribution of HMDA loans by borrower income level compared to family population income characteristics and 2014 aggregate performance.
23 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 176 8.8% 363 18.1% 440 21.9% 967 48.1% 63 3.1% 2,009 100% Refinance 106 11.7% 141 15.6% 191 21.1% 437 48.3% 30 3.3% 905 100% Home Improvement 45 9.7% 77 16.6% 105 22.7% 206 44.5% 30 6.5% 463 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 10 100.0% 10 100% TOTAL HMDA 327 9.7% 581 17.2% 736 21.7% 1,610 47.5% 133 3.9% 3,387 100%
Family Population 20.2% 18.3% 20.6% 40.9% 0.0% 100% 2014 HMDA 7.1% 15.6% 18.3% 41.0% 18.0% 100% Aggregate
The bank made 9.7 percent of HMDA loans to low-income borrowers, which is below the low- income family population percentage (20.2 percent), but above the aggregate lending level to low-income borrowers (7.1 percent), reflecting good performance. Similarly, the bank made 17.2 percent of HMDA loans to moderate-income borrowers, which is below the moderate-income family percentage (18.3 percent), but above the aggregate level of lending to moderate-income borrowers (15.6 percent), also reflecting good performance. Overall, the bank’s distribution of loans reflects good penetration among borrowers of different income levels.
24 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Next, small business loans were reviewed to determine the bank’s lending levels to businesses of different sizes. The following table shows the distribution of small business loans by loan amount and business revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 1,432 62.6% 231 10.1% 154 6.7% 1,817 79.5% Greater than $1 Million/Unknown 282 12.3% 79 3.5% 108 4.7% 469 20.5% TOTAL 1,714 75.0% 310 13.6% 262 11.5% 2,286 100% 2014 Dun & Bradstreet Businesses 90.1% < $1MM 2014 Small Business Aggregate 51.5% < $1MM
The bank originated the majority of its small business loans (79.5 percent) to businesses with revenues of $1 million or less. The highest concentration of loans to small businesses was for loan amounts of $100,000 or less (62.6 percent), which demonstrates the bank’s willingness to make credit available to small businesses in the assessment area. According to Dun & Bradstreet, 90.1 percent of businesses reporting for 2014 had revenues of $1 million or less. The bank’s lending is above 2014 CRA aggregate data (51.5 percent), which indicates good performance.
Finally, small farm loans were reviewed to determine the bank’s lending levels to farms of different sizes. The following table shows the distribution of small farm loans by loan amount and farm revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 703 80.4% 112 12.8% 29 3.3% 844 96.6% Greater than $1 Million/Unknown 21 2.4% 2 0.2% 7 0.8% 30 3.4% TOTAL 724 82.8% 114 13.0% 36 4.1% 874 100%
2014 Dun & Bradstreet Farms < $1MM 97.6% 2014 Small Farm Aggregate < $1MM 92.2%
Of the 874 farm loans the bank made in this assessment area, 96.6 percent were originated to farms with revenues of $1 million or less. Similar to that for loans to small businesses, the highest concentration of small farm loans was in loan amounts of $100,000 or less, which
25 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015 demonstrates the bank’s willingness to make credit available to small farms in the assessment area. According to Dun & Bradstreet, 97.6 percent of farms in the assessment area reported revenues of $1 million or less. The bank’s small farm lending is above 2014 CRA aggregate data, which indicates that 92.2 percent of farm loans originated by other lenders were to small businesses. Therefore, Arvest Bank’s lending to small farms is good.
Community Development Lending Activities
Arvest Bank continues to be a leader in making community development loans in the Fayetteville MSA assessment area. During the review period, the bank originated or renewed 25 community development loans totaling $46.1 million within this assessment area. Fourteen of the loans financed construction or renovation projects providing affordable housing to LMI individuals within the assessment area. Nine of the loans financed the purchase or refinance of a business loan for revitalization and stabilization, economic development, and creating or retaining over 300 jobs in the assessment area. The remaining two loans were for community services targeted to LMI individuals within the assessment area.
INVESTMENT TEST
Arvest Bank’s performance under the Investment Test is rated high satisfactory for the Fayetteville MSA. The bank made a significant level of qualified community development investments and grants, occasionally in a leadership position. The bank makes significant use of complex investments to support community development initiatives, and the bank exhibits good responsiveness to credit and community development needs in the Fayetteville MSA assessment area.
Arvest Bank has a significant level of qualified community development investments and grants, occasionally in a leadership position in the Fayetteville MSA. As of the review period, the bank has a balance of $4.6 million in qualified investments. The bank has $2.9 million invested in MBS that finance affordable housing and has $2.3 million from a previous review period still outstanding. In addition, the bank has investments in projects associated with LIHTCs that total $1.4 million. These investments fund the construction of new rental housing and rehabilitation of existing housing for low-income households. Finally, Arvest Bank has an investment of $282,785 in a municipal bond supporting improvements in a school district with a majority of students from LMI families. Additionally, the bank contributed $4,000 in qualified grants to organizations within the assessment area.
SERVICE TEST
Arvest Bank’s Service Test rating in the Fayetteville MSA is high satisfactory. Delivery systems are accessible to all geographies and individuals of different income levels in the Fayetteville MSA assessment area, and the bank’s record of opening and closing branches has not adversely affected the accessibility of its delivery systems to LMI geographies and/or LMI individuals. Business hours and services do not vary in a way that inconveniences LMI geographies and/or LMI individuals, and bank personnel provide an adequate level of community development services in this assessment area.
26 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Accessibility of Delivery Systems
Arvest Bank operates 51 branch facilities, including the main office, within the Fayetteville MSA assessment area. The following table illustrates the distribution of these facilities by income level of geography, as compared to key assessment area demographics.
Branch Distribution by Geography Income Level Geography Income Level Dataset TOTAL Low- Moderate- Middle- Upper- Unknown 0 10 32 9 0 51 Branches 0.0% 19.6% 62.7% 17.6% 0.0% 100% Census Tracts 3.4% 15.7% 55.1% 25.8% 0.0% 100% Household Population 4.3% 14.1% 56.4% 25.2% 0.0% 100%
As illustrated in the above table, Arvest Bank’s branches in moderate-income census tracts represent 19.6 percent of all facilities in the Fayetteville MSA assessment area. This dispersion of service delivery systems in moderate-income geographies is greater than the moderate-income demographics. While the bank does not have any branches in low-income geographies, it does have facilities located in close proximity to the three low-income geographies in this assessment area. The combined LMI branch distribution of 19.6 percent is consistent with both the proportion of LMI census tracts and the LMI household population residing in LMI tracts. Based on this information, Arvest Bank’s delivery systems are accessible to geographies and individuals of different income levels in the Fayetteville MSA.
Changes in Branch Locations
Based on the changes in branch locations during the review period, service accessibility to LMI customers and LMI areas has not changed significantly. The bank closed one branch in a moderate-income census tract and subsequently opened a branch in the same census tract during the review period. As mentioned previously, the bank maintains 19.6 percent of its branches in moderate-income census tracts. Therefore, the bank’s record of opening and closing branches in this assessment area has not adversely affected the accessibility of delivery systems, particularly to LMI geographies and LMI individuals.
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Business hours and banking products and services are relatively consistent across all branches in the Fayetteville MSA assessment area. Most branches have Saturday operating hours and offer extended hours of operations in lobby and drive-through facilities at some point during the week. Several facilities are open as late as 7:00 p.m., Monday through Friday, and 1:00 p.m. on Saturday. All branches offer the same standard products, including low-cost checking and savings accounts, certificates of deposit (CDs), real estate and consumer loans, and other services. Therefore, bank services do not vary in a way that inconveniences certain segments of this assessment area, particularly LMI geographies and/or LMI individuals.
27 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Community Development Services
Arvest Bank provides an adequate level of community development services within the Fayetteville MSA, as 54 employees provided 70 community service development activities during the review period. These activities include working with organizations that assist LMI individuals in obtaining higher education scholarships. Arvest employees also provided economic education to schools with a large portion of LMI students. Additionally, Arvest manages 24 IDA for LMI individuals and 90 Representative Payee Accounts (RPA) for LMI recipients of Social Security Assistance, which are considered innovative services in the assessment area.
28 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
FORT SMITH MULTISTATE MSA7
CRA RATING FOR FORT SMITH, ARKANSAS-OKLAHOMA MSA: SATISFACTORY The Lending Test is rated: High Satisfactory The Investment Test is rated: Low Satisfactory The Service Test is rated: High Satisfactory
Factors supporting the institution’s Fort Smith, Arkansas-Oklahoma MSA (Fort Smith MSA) rating include the following:
• Arvest Bank’s lending levels reflect adequate responsiveness to the credit needs of the Fort Smith MSA.
• The bank’s overall geographic distribution of loans reflects good penetration throughout the Fort Smith MSA.
• Given the product lines offered, the distribution of borrowers reflects good penetration among customers of different income levels and businesses/farms of different sizes.
• The bank made a low level of community development loans within the Fort Smith MSA.
• The bank makes an adequate level of qualified community development investments and grants within the Fort Smith MSA but is rarely in a leadership position.
• Service delivery systems are accessible to geographies and individuals of different income levels in the Fort Smith MSA; furthermore, changes in branch locations have not adversely affected the accessibility of delivery systems, and services do not vary in a way that inconveniences this assessment area, particularly LMI geographies and/or LMI individuals.
• Arvest Bank is a leader in providing community development services within the Fort Smith MSA.
SCOPE OF EXAMINATION
The bank’s Fort Smith MSA assessment area includes the entire multistate MSA. Arvest Bank’s performance within the Fort Smith MSA was reviewed using full-scope examination procedures, and scoping considerations applicable to the review of this assessment area are consistent with the overall CRA examination scope as presented in the Institution, Scope of Examination section. However, as the bank had a relatively low volume of and need for small farm loans in this assessment area, performance based on this loan category received less weight when making overall lending performance conclusions for this MSA. Finally, this evaluation included
7 This rating reflects performance within the multistate MSA. The Arkansas and Oklahoma statewide evaluations are adjusted and do not reflect performance in the parts of those states contained within the Fort Smith MSA.
29 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
information obtained from three community contacts in the Fort Smith MSA. The two new community contact interviews took place with an individual specializing in community services and an individual in an economic development role.
DESCRIPTION OF INSTITUTION’S OPERATIONS IN THE FORT SMITH MSA
Bank Structure
Arvest Bank operates 16 of its 267 branches (6.0 percent) in the Fort Smith MSA assessment area. Of the 16 branches, 4 are in moderate-income census tracts, 10 are in middle-income census tracts, and 2 are in upper-income census tracts (there are no low-income census tracts in the Fort Smith MSA). Each of the counties in the assessment area contains at least one branch. Fourteen of these branches are located in the Arkansas side of the multistate MSA, and the majority of branch locations in the multistate MSA are in or just outside the city of Fort Smith, Arkansas. Nevertheless, based on this branch network and other service delivery systems, the bank is well positioned to deliver financial services to substantially all of the Fort Smith MSA assessment area.
This assessment area is a competitive banking market. According to the FDIC Deposit Market Share Report as of June 30, 2015, 20 FDIC-insured institutions are operating 112 offices within the Fort Smith MSA. Of the 20 financial institutions with an office in the Fort Smith MSA, Arvest Bank ranked second, with a deposit market share of 18.2 percent. As of June 30, 2015, Arvest Bank deposits held at branches in this assessment area account for 5.9 percent of the bank’s total deposits.
General Demographics
The Fort Smith MSA is a four-county multistate MSA, including two counties in Arkansas and two counties in Oklahoma. Specifically, the Arkansas portion of the multistate MSA includes Crawford and Sebastian Counties. The Oklahoma portion of the multistate MSA consists of Le Flore and Sequoyah Counties. The multistate MSA is located along the western border of Arkansas and the eastern border of Oklahoma.
Based on 2010 U.S. Census data, the assessment area has a total population of 280,467. A significant portion of the population is concentrated in Sebastian County (125,744). Crawford County has a population of 61,948, followed by Le Flore County at 50,384, and Sequoyah County at 42,391.
As the demographics of this assessment area cover a wide metropolitan area and the population is diverse, credit needs in the area are also varied, including a standard blend of consumer and business credit products. Other particular credit needs in the assessment area (as noted primarily during community contact interviews) include affordable housing and home improvement lending, financial education, and programs designed to attract and retain small businesses. Furthermore, the Fort Smith MSA has ample community development opportunity for financial institutions’ participation.
30 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Income and Wealth Demographics
Based on the 2010 U.S. Census, the median family income for the Fort Smith MSA was $46,436, which is less than both the state of Arkansas ($48,491) and the state of Oklahoma ($53,607). As of 2014, the FFIEC-estimated median family income for the Fort Smith MSA is $49,900. The following table summarizes the distribution of the 58 geographies of the Fort Smith MSA by income level and the family population of those census tracts within the assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 0 15 33 10 0 58 Census Tracts 0.0% 25.9% 56.9% 17.2% 0.0% 100%
Family 0 14,922 44,988 14,464 0 74,374 Population 0.0% 20.1% 60.5% 19.4% 0.0% 100%
The following table displays the distribution of assessment area families by income level, as well as family population income characteristics for the states of Arkansas and Oklahoma.
Family Population by Income Level Dataset Low- Moderate- Middle- Upper- TOTAL 16,066 13,281 14,619 30,408 74,374 Assessment Area 21.6% 17.9% 19.7% 40.9% 100% 162,389 137,133 153,290 309,951 762,763 Arkansas 21.3% 18.0% 20.1% 40.6% 100% 203,343 169,025 195,448 383,426 951,242 Oklahoma 21.4% 17.8% 20.5% 40.3% 100%
Housing Demographics
Housing costs in the Fort Smith MSA assessment area appear to be affordable relative to comparable state data. The housing affordability ratio for the Fort Smith MSA is 41.3 percent as of the 2010 U.S. Census, indicating that housing affordability in the assessment area is consistent with the state of Oklahoma, at 41.2 percent, and is slightly above the state of Arkansas (38.4 percent). The median housing value in the assessment area is $93,272, which is lower than the figures for both the state of Arkansas ($102,300) and the state of Oklahoma ($104,300). Similarly, median gross monthly rent in the Fort Smith MSA ($566) is also less than both the state of Arkansas ($617) and the state of Oklahoma ($633). Based on information in the table below, housing is least affordable in Sebastian County and most affordable in Le Flore County. Homeownership does not appear easily within reach of LMI individuals and families in the Arkansas counties of Sebastian and Crawford.
31 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Housing Affordability Dataset Affordability Ratio Median Housing Value Median Gross Rent Crawford County 40.7% $98,800 $593 Sebastian County 36.6% $108,000 $577 Le Flore County 50.0% $72,700 $529 Sequoyah County 45.4% $80,100 $544 Fort Smith MSA 41.3% $93,272 $566 Arkansas 38.4% $102,300 $617 Oklahoma 41.2% $104,300 $633
Industry and Employment Demographics
According to 2013 County Business Patterns data, 5,921 business entities operate within the Fort Smith MSA. Despite high levels of job loss as described by community contacts, Fort Smith is a major manufacturing hub in Arkansas. The largest industries (by number of employees) in the Fort Smith MSA are health care and social assistance, manufacturing, and retail trade.
According to the Department of Labor, Bureau of Labor Statistics, the annual average unemployment rate in 2013 (not seasonally adjusted) for the Fort Smith MSA (7.8 percent) was slightly higher than the unemployment rates for the state of Arkansas (7.4 percent) and significantly higher than the state of Oklahoma (5.4 percent). Unemployment improved in all three areas in 2014, to 6.1 percent in the Fort Smith MSA, 6.1 percent in the state of Arkansas, and 4.5 percent in the state of Oklahoma.
Community Contact Information
Information from community contacts was used to help shape the performance context in which the bank’s activities in this assessment area were evaluated. Information obtained through the community contact interviews revealed that a major employer in the area recently closed, leaving many area residents jobless. Healthcare, education, and manufacturing represent major industries in the assessment area. It was noted that economic conditions for rural areas within the assessment area are declining and that availability of jobs is a major barrier for the area. However, one interviewee stated that job growth and housing values are on par with the state of Arkansas as a whole. Both interviewees felt that the Fort Chaffee region is actively growing, with new businesses coming in, new homes being built, and revitalization efforts evident in the downtown area of Fort Smith, both commercial- and residential-related. The interviewees stated that financial stability is a need in the community, as well as helping unemployed people through workforce development programs and adult education classes. Affordable housing and home improvement loans were also cited as a credit need, in addition to financing small businesses and start-ups.
32 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN THE FORT SMITH MSA
LENDING TEST
Arvest Bank’s Lending Test performance in the Fort Smith MSA is rated high satisfactory. Lending levels reflect adequate responsiveness to the Fort Smith MSA assessment area credit needs. The geographic distribution of loans reflects good penetration throughout the assessment area. The loan distribution by borrower’s income/revenue profile reflects good penetration among customers of different income levels and businesses/farms of different sizes. Additionally, the bank makes a low level of community development loans within this assessment area.
Lending Activity
The following table displays the bank’s 2014 lending volume in this assessment area by number and dollar volume.
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 215 16.0% $3,507 2.9% Home Purchase 374 27.8% $48,160 39.5% Multifamily Housing 4 0.3% $537 0.4% Refinancing 254 18.9% $25,705 21.1% TOTAL HMDA 847 62.9% $77,909 63.8% Small Business 443 32.9% $40,411 33.1% Small Farm 57 4.2% $3,757 3.1% TOTAL LOANS 1,347 100% $122,077 100%
The bank’s lending activity in the Fort Smith MSA reflects adequate responsiveness to assessment area credit needs. Lending activity in the Fort Smith MSA represents 5.6 percent of total HMDA and CRA loans made in the bank’s combined assessment areas in 2014. This level of HMDA and CRA activity is similar to the bank’s percentage of branches in this assessment area (6.0 percent). In addition, the percentage of loans originated in this assessment area is comparable to the area’s proportion of total deposit holdings of 5.9 percent.
Geographic Distribution of Loans
As noted in the Description of Institution’s Operations in Fort Smith MSA section, this assessment area has no low-income census tracts and 15 moderate-income census tracts, representing 25.9 percent of all assessment area census tracts. Overall, based on lending activity from all three loan categories reviewed, with primary weight given to HMDA lending, the
33 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
geographic distribution of loans reflects good penetration throughout the assessment area, including the moderate-income census tracts. The following table displays the geographic distribution of HMDA loans compared to owner-occupied housing demographics and aggregate performance for the assessment area.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 0 0.0% 50 13.4% 184 49.2% 140 37.4% 0 0.0% 374 100% Refinance 0 0.0% 49 19.3% 123 48.4% 82 32.3% 0 0.0% 254 100% Home Improvement 0 0.0% 37 17.2% 128 59.5% 50 23.3% 0 0.0% 215 100% Multifamily 0 0.0% 2 50.0% 1 25.0% 1 25.0% 0 0.0% 4 100% TOTAL HMDA 0 0.0% 138 16.3% 436 51.5% 273 32.2% 0 0.0% 847 100% Owner-Occupied Housing 0.0% 17.1% 62.5% 20.4% 0.0% 100% 2014 HMDA Aggregate 0.0% 15.8% 58.5% 25.7% 0.0% 100%
The analysis of the bank’s 2014 HMDA lending activity revealed that overall geographic distribution of loans is good. The bank’s loan penetration among moderate-income census tracts (16.3 percent) is slightly below the comparable owner-occupied housing figure (17.1 percent) and slightly above aggregate performance (15.8 percent), reflecting good performance. Included in the numbers are two United States Department of Housing and Urban Development (HUD) 184 loans which are specifically geared towards increasing homeownership to Native Americans, both on and off native lands.
Next, the bank’s geographic distribution of small business loans was reviewed, which is displayed in the following table compared to the location of businesses and aggregate lending throughout the bank’s assessment area.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 0 0.0% 112 25.3% 206 46.5% 125 28.2% 0 0.0% 443 100% Loans Business Institutions 0.0% 26.0% 52.6% 21.3% 0.0% 100% 2014 Small Business 0.0% 25.5% 46.3% 23.7% 4.5% 100% Aggregate
As it is comparable to comparison data levels, the geographic distribution of the bank’s small business loans reflects good penetration throughout the assessment area, including moderate- income geographies. The percentage of small business loans in moderate-income census tracts
34 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
(25.3 percent) is comparable to the estimated number of businesses located in moderate-income census tracts (26.0 percent) and to aggregate lending in moderate-income census tracts (25.5 percent). This is an upward trend for the bank, as 2013 small business lending was below both demographic and aggregate data.
Finally, the geographic distribution of small farm loans compared to the location of farms and aggregate lending throughout the assessment area is displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 10 17.5% 36 63.2% 11 19.3% 0 0.0% 57 100% Loans Agricultural 0.0% 16.5% 67.6% 15.9% 0.0% 100% Institutions 2014 Small Farm 0.0% 19.7% 64.8% 13.0% 2.6% 100% Aggregate
As displayed in the preceding table, the bank originated a relatively low level of small farm loans in this assessment area. Nevertheless, the geographic distribution of loans reflects a good level of small farm loans in moderate-income census tracts (17.5 percent). Bank performance is greater than Dun & Bradstreet’s estimates (16.5 percent) but lower than aggregate lending (19.7 percent).
35 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Loan Distribution by Borrower’s Profile
Overall, the bank’s loan distribution by borrower’s profile is good, based on performance from all three loan categories reviewed. The following table shows the distribution of HMDA-reported loans by the income level of the borrower compared to family population and 2014 aggregate data.
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 26 7.0% 63 16.8% 86 23.0% 189 50.5% 10 2.7% 374 100% Refinance 20 7.9% 42 16.5% 52 20.5% 119 46.9% 21 8.3% 254 100% Home Improvement 11 5.1% 42 19.5% 57 26.5% 93 43.3% 12 5.6% 215 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 4 100.0% 4 100% TOTAL HMDA 57 6.7% 147 17.4% 195 23.0% 401 47.3% 47 5.5% 847 100%
Family Population 21.6% 17.9% 19.7% 40.9% 0.0% 100% 2014 HMDA 6.4% 16.0% 21.0% 38.7% 17.9% 100% Aggregate
The bank’s level of lending to low-income borrowers (6.7 percent) is significantly lower than the low-income family population (21.6 percent) but slightly above aggregate lending levels (6.4 percent). Community contacts noted affordable housing as a need; furthermore, housing affordability levels suggest that homeownership is probably difficult for low-income borrowers. The bank’s level of home purchase loans to low-income borrowers is 7.0 percent compared to home purchase loans made by aggregate lenders of 6.2 percent. Based on this information, the bank’s level of lending to low-income borrowers is considered good. The bank’s lending to moderate-income borrowers (17.4 percent) is only slightly lower than the demographic (17.9 percent) and above aggregate lending levels (16.0 percent) and is considered good. Therefore, the bank’s overall level of lending to LMI borrowers for the HMDA loan category is good.
36 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Next, small business loans were reviewed to determine the bank’s lending levels to businesses of different sizes. The following table shows the distribution of small business loans by loan amount and business revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 284 64.1% 52 11.7% 26 5.9% 362 81.7% Greater than $1 Million/Unknown 57 12.9% 11 2.5% 13 2.9% 81 18.3% TOTAL 341 77.0% 63 14.2% 39 8.8% 443 100% 2014 Dun & Bradstreet Businesses < $1MM 87.8% 2014 Small Business Aggregate < $1MM 46.9%
The bank originated the majority of its small business loans (81.7 percent) to businesses with revenues of $1 million or less. The highest concentration of these loans (64.1 percent) was for loan amounts of $100,000 or less, which demonstrates the bank’s willingness to make credit available to small businesses. According to Dun & Bradstreet estimates, 87.8 percent of assessment area businesses had revenues of $1 million or less. Additionally, bank performance exceeds 2014 CRA aggregate performance (46.9 percent). Therefore, the bank’s level of lending to small businesses within the assessment area is good.
Small farm loans were reviewed to determine the bank’s lending levels to farms of different sizes. The following table shows the distribution of small farm loans by loan amount and farm revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500 $1 Million or Less 39 68.4% 6 10.5% 3 5.3% 48 84.2% Greater than $1 Million/Unknown 7 12.3% 1 1.8% 1 1.8% 9 15.8% TOTAL 46 80.7% 7 12.3% 4 7.0% 57 100%
2014 Dun & Bradstreet Farms < $1MM 98.6% 2014 Small Farm Aggregate < $1MM 70.5%
As previously noted, the bank had a relatively low volume of small farm lending in this assessment area; however, the distribution of small farm loans by borrower’s profile is good. The bank originated 84.2 percent of its farm loans to small farms. Comparatively, according to Dun
37 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
& Bradstreet, 98.6 percent of farms in the assessment area reported revenues of $1 million or less. Aggregate data reflected 70.5 percent of farms loans were made to small farms.
Community Development Lending Activities
Arvest Bank originated one community development loan totaling $594,161 in the Fort Smith assessment area during this review period. The loan was used to finance economic development in the assessment area. This performance is consistent with the previous evaluation and constitutes a low level of community development lending for this assessment area.
INVESTMENT TEST
Arvest Bank’s performance under the Investment Test is rated low satisfactory for the Fort Smith MSA. The bank makes an adequate level of qualified community development investments and grants and is rarely in a leadership position; this exhibits adequate responsiveness to credit and community development needs in the Fort Smith MSA assessment area. As of this evaluation date, the bank had a balance of $472,477 in qualified investments attributable to this assessment area, of which $158,270 were new investments and the remaining $314,207 were previous review period investments still outstanding. All of the bank’s community development investments in the Fort Smith MSA are in MBS that finance affordable housing. Additionally, Arvest Bank facilitated eight grants through the Federal Home Loan Bank (FHLB) grant programs totaling $43,603; of this total, $12,000 was through the Partnership Grant program for a local nonprofit that works with low-income families to obtain quality affordable housing, and the remaining $31,603 through the SNAP grant program provided funds for LMI families to make necessary modifications to their homes when there is a disabled family member. The bank also made one donation totaling $4,000.
SERVICE TEST
Arvest Bank’s Service Test rating in the Fort Smith MSA is high satisfactory. Service delivery systems are accessible to geographies and individuals of different income levels in the Fort Smith MSA assessment area, and the bank’s record of opening and closing branches has not adversely affected the accessibility of its delivery systems to LMI geographies and/or LMI individuals. Business hours and services do not vary in a way that inconveniences LMI geographies and/or LMI individuals, and the bank is a leader in providing community development services in the Fort Smith MSA.
Accessibility of Delivery Systems
Arvest Bank operates 16 branch facilities within the Fort Smith MSA assessment area. The following table illustrates the distribution of these facilities by income level of the geography, as compared to key assessment area demographics.
38 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Branch Distribution by Geography Income Level Geography Income Level Dataset TOTAL Low- Moderate- Middle- Upper- Unknown 0 4 10 2 0 16 Branches 0.0% 25.0% 62.5% 12.5% 0.0% 100% Census Tracts 0.0% 25.9% 56.9% 17.2% 0.0% 100% Household Population 0.0% 21.8% 59.2% 19.0% 0.0% 100%
Based on the information in the preceding table, Arvest Bank’s service delivery systems are accessible to the geographies and individuals of different income levels in the Fort Smith MSA assessment area. Of the 16 facilities the bank operates in this assessment area, 25.0 percent are located in moderate-income census tracts, which is similar to the percentage of moderate-income census tracts (25.9 percent) and exceeds the percentage of moderate-income households in the assessment area (21.8 percent).
Changes in Branch Locations
During the review period, no branches were opened or closed in this assessment area. Consequently, the bank’s record of opening and closing branches in the Fort Smith MSA assessment area has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals.
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Business hours and banking products and services are relatively consistent across all branches in the Fort Smith MSA assessment area. Most branches have Saturday operating hours and offer extended hours of operations in lobby and drive-through facilities at some point during the week. Most drive-through facilities remain open until 7:00 p.m., Monday through Friday, and are open until 1:00 p.m. on Saturday. All branches offer the same standard products, including low-cost checking and savings accounts, CDs, real estate and consumer loans, and other services. Therefore, bank services do not vary in a way that inconveniences certain segments of this assessment area, particularly LMI geographies and/or LMI individuals.
Community Development Services
Arvest Bank is a leader in providing community development services within the Fort Smith MSA assessment area, as 31 employees provided 35 qualifying services within the community. Employees taught financial literacy classes in schools with a majority of students from LMI households in addition to working with adult education institutions to provide financial aid for higher education for LMI adults. Employees also serve as board members for organizations working to provide affordable housing and healthcare for LMI families. In addition, Arvest has opened and manages 29 IDA accounts and 76 RPA accounts for LMI individuals, which is considered an innovative service in the assessment area.
39 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
KANSAS CITY MULTISTATE MSA8
CRA RATING FOR KANSAS CITY, MISSOURI-KANSAS MSA: SATISFACTORY The Lending Test is rated: Low Satisfactory The Investment Test is rated: High Satisfactory The Service Test is rated: Low Satisfactory
Factors supporting the institution’s Kansas City, Missouri-Kansas MSA (Kansas City MSA) rating include the following:
• Arvest Bank’s lending levels reflect adequate responsiveness to the credit needs of the Kansas City MSA.
• The bank’s overall geographic distribution of loans reflects good penetration throughout the Kansas City MSA.
• Given the product lines offered, the distribution of borrowers reflects good penetration among borrowers of different income levels and businesses/farms of different sizes.
• The bank makes a low level of community development loans within this assessment area.
• The bank makes a significant level of qualified community development investments and grants within the Kansas City MSA and is occasionally in a leadership position.
• Service delivery systems are accessible to geographies and individuals of different income levels in the Kansas City MSA; furthermore, changes in branch locations have generally not adversely affected the accessibility of delivery systems, and services do not vary in a way that inconveniences this assessment area, particularly LMI geographies and/or LMI individuals.
• Arvest Bank provides a relatively high level of community development services within the Kansas City MSA.
SCOPE OF EXAMINATION
Arvest Bank’s Kansas City MSA assessment area includes the entire MSA. Arvest Bank’s CRA performance in the Kansas City MSA was reviewed using full-scope examination procedures. Scoping considerations applicable to the review of this assessment area are consistent with the overall CRA examination scope as presented in the Institution, Scope of Examination section, with the exception of small farm lending; due to limited volume in this assessment area, the
8 This rating reflects performance within the multistate MSA. The Missouri and Kansas statewide evaluations are adjusted and do not reflect performance in the parts of those states contained in the multistate MSA.
40 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
small farm loan product was not analyzed. Information obtained through five community contact interviews completed in the Kansas City MSA was considered as a part of this evaluation.
DESCRIPTION OF INSTITUTION’S OPERATIONS IN THE KANSAS CITY MSA
Bank Structure
Arvest Bank operates 16 of its 267 branches (6.0 percent) within the Kansas City MSA assessment area. Of the 16 branches, 2 are located in low-income census tracts, 4 are in moderate-income census tracts, 6 are in middle-income census tracts, and 4 are in upper-income census tracts. During this review period, the bank closed one office in a moderate-income census tract and relocated two branches (one from a low-income census tract to another low-income census tract and one from a middle-income census tract to another middle-income census tract). Based on the number and location of these branches in relation to the size of the Kansas City MSA, Arvest Bank is not able to effectively serve all parts of this assessment area. More specifically, the bank’s current branch network is centered in the counties closest to Kansas City, Missouri, putting the bank at a competitive disadvantage in the southern and northeastern counties of the MSA.
This assessment area is a highly competitive banking market. According to the FDIC Deposit Market Share Report as of June 30, 2015, a total of 138 FDIC-insured institutions operate 715 offices within the MSA. Of the 138 financial institutions with an office in the Kansas City MSA, Arvest Bank ranked 19th with a deposit market share of 1.0 percent. As of June 30, 2015, Arvest Bank deposits held at branches throughout the Kansas City MSA represent 3.5 percent of the bank’s total deposits.
General Demographics
The Kansas City MSA is a 14-county multistate MSA, including 5 counties in Kansas and 9 counties in Missouri, covering a large portion of the border between Kansas and Missouri.9 The Kansas counties in the multistate MSA are Johnson, Leavenworth, Linn, Miami, and Wyandotte. The Missouri portion of the multistate MSA consists of Bates, Caldwell, Cass, Clay, Clinton, Jackson, Lafayette, Platte, and Ray Counties. Based on 2010 U.S. Census data, the assessment area has a total population of 2,009,342; this is a 10.9 percent increase from the 2000 U.S. Census. A significant portion of the population is concentrated in Jackson County, Missouri (674,158), and Johnson County, Kansas (544,179). The remaining eight Missouri counties report populations ranging from 9,424 to 221,939, while the remaining four counties in Kansas have populations ranging from 9,656 to 157,505.
As the demographics of this assessment area cover a wide metropolitan area, and the population is diverse, credit needs in the area are also varied, including a standard blend of consumer and business credit products. Other particular credit needs in the assessment area (as noted primarily during community contact interviews) include loans for small start-up businesses and flexible
9 In 2013, the Kansas City MSA contained 15 counties. The MSA designation change (effective January 1, 2014) removed Franklin County, Kansas from this MSA. See Appendix D for 2013 information in this assessment area.
41 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015 residential real estate loan programs. The Kansas City MSA has an ample source of community development intermediaries, and a high level of community development opportunity is available for financial institution participation.
Income and Wealth Demographics
The Kansas City MSA consists of 530 geographies. As of the 2010 U.S. Census, the median family income for the Kansas City MSA was $68,846, compared to $62,424 for the state of Kansas and $57,661 for the state of Missouri as a whole. More recently, the FFIEC estimates the 2014 median family income for the Kansas City MSA to be $73,300. The following table summarizes the distribution of geographies by income level and the family population of those census tracts within the assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 66 129 175 144 16 530 Census Tracts 12.5% 24.3% 33.0% 27.2% 3.0% 100%
Family 34,583 111,774 199,104 171,154 0 516,615 Population 6.7% 21.6% 38.5% 33.1% 0.0% 100%
The following table displays the distribution of families, by income level, that reside in this assessment area, as well as the statewide percentages for Kansas and Missouri.
Family Population by Income Level Dataset Low- Moderate- Middle- Upper- TOTAL 104,726 91,051 111,335 209,503 516,615 Assessment Area 20.3% 17.6% 21.6% 40.6% 100% 134,153 128,813 160,650 307,329 730,945 Kansas 18.4% 17.6% 22.0% 42.0% 100% 318,048 279,308 335,189 613,964 1,546,509 Missouri 20.6% 18.1% 21.7% 39.7% 100%
Based on the information above, the assessment area appears to be less affluent than the state of Kansas, but similarly affluent when compared to the state of Missouri.
42 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Housing Demographics
The Kansas City MSA assessment area has a housing affordability ratio of 35.1 percent as of the 2010 U.S. Census, which indicates less affordability than the state of Kansas overall (40.3 percent) but greater affordability than the state of Missouri (33.6 percent). Housing affordability varies significantly by county in the assessment area. The least affordable county is Clinton County, Missouri (34.6 percent), while Linn County, Kansas, is the most affordable (44.9 percent). The median housing value in the assessment area is $158,603, which is much higher than the state of Kansas ($122,600) and the state of Missouri ($137,700). Much like the affordability ratio, the median housing value also varies significantly by county. The median housing value is highest in Johnson County, Kansas, at $209,900, while the median housing value is lowest in Wyandotte County, Kansas, and Caldwell County, Missouri, both at $97,600. Median gross monthly rent of $760 in the Kansas City MSA is also significantly higher than both the state of Kansas ($671) and the state of Missouri ($667). Based on this information, housing costs in the Kansas City MSA appear to be less affordable relative to overall data for the state of Kansas and the state of Missouri.
Industry and Employment Demographics
According to 2013 County Business Patterns data, 50,197 business entities operate within the Kansas City MSA. The area’s largest private employers include several health care facilities and a major international telecommunications company. The largest industries (by number of employees) in the Kansas City MSA are health care and social assistance, retail trade, and accommodation and food services.
According to the Department of Labor, Bureau of Labor Statistics, the recent annual average unemployment rates (not seasonally adjusted) for the Kansas City MSA (6.4 percent in 2013 and 5.8 percent in 2014) are higher than the unemployment rates for the state of Kansas (5.3 percent in 2013 and 4.5 percent in 2014) but less than the state of Missouri (6.7 percent in 2013 and 6.1 percent in 2014).
Community Contact Information
Information from five community contacts was used to help shape the performance context in which the bank’s activities in this assessment area were evaluated. All of these interviews were conducted with individuals specializing in economic development. All of the community contact interviewees stated that the local economy has fared better than most of the country and has continued to improve. Major growth in the logistics/warehouse industry was spurred by the new intermodal transport facilities in South Johnson County. In addition, automobile industry suppliers and manufacturers are doing very well and no major employers have recently left the area. Two of the community contact interviewees stated that there is a need for affordable commercial real estate and that funds for start-up businesses are also a challenge for small businesses. Additionally, these two interviewees stated that technical knowledge and “finding good talent” are ongoing needs for the area.
43 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Housing stock is described as diverse, from starter homes to multimillion dollar homes, and rent prices are trending upwards. Interviewees mentioned that home loans are a primary credit need for the community. One referenced banks’ stringent underwriting standards as a challenge.
44 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN THE KANSAS CITY MSA
LENDING TEST
Arvest Bank’s Lending Test performance in the Kansas City MSA is rated low satisfactory. Lending levels reflect adequate responsiveness to assessment area credit needs. The geographic distribution of loans reflects good penetration throughout the assessment area. The loan distribution by borrower’s income/revenue profile reflects adequate penetration among customers of different income levels and businesses of different sizes. In addition, Arvest Bank makes a low level of community development loans in the Kansas City MSA assessment area.
Lending Activity
The bank’s lending levels within the Kansas City MSA reflect adequate responsiveness to assessment area credit needs based on the lending activity analyzed under the Lending Test. This lending activity is displayed by loan type in the following table:
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 73 7.9% $1,343 0.9% Home Purchase 390 42.3% $68,912 48.6% Multifamily Housing 0 0.0% $0 0.0% Refinancing 100 10.8% $19,208 13.5% TOTAL HMDA 563 61.0% $89,463 63.0% Small Business 356 38.6% $51,717 36.4% Small Farm 4 0.4% $726 0.5% TOTAL LOANS 923 100% $141,906 100%
The bank’s lending activity in the Kansas City MSA reflects adequate responsiveness to assessment area credit needs. Lending activity in the Kansas City MSA represents 3.8 percent of total HMDA and CRA loans made within the bank’s combined assessment areas in 2014. The level of HMDA and CRA activity is lower than the bank’s branch network in this assessment area, representing 6.0 percent of total bank branches. The percentage of loans originated in this assessment area is in line with the area’s proportion of total deposit holdings of 3.5 percent.
Geographic Distribution of Loans
As noted in the Description of Institution’s Operations in Kansas City MSA section, this assessment area has 66 low-income census tracts and 129 moderate-income census tracts, representing 36.8 percent of all assessment area census tracts. Overall, based on lending activity from the HMDA and small business loans reviewed, the geographic distribution of loans reflects
45 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
good penetration throughout the assessment area, including the LMI tracts. The following table displays the geographic distribution of HMDA loans compared to owner-occupied housing demographics and aggregate performance for the assessment area.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 10 2.6% 56 14.4% 155 39.7% 169 43.3% 0 0.0% 390 100% Refinance 2 2.0% 18 18.0% 19 19.0% 61 61.0% 0 0.0% 100 100%
Home Improvement 4 5.5% 7 9.6% 34 46.6% 28 38.4% 0 0.0% 73 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 16 2.8% 81 14.4% 208 36.9% 258 45.8% 0 0.0% 563 100%
Owner-Occupied Housing 4.9% 19.9% 39.6% 35.6% 0.0% 100% 2014 HMDA Aggregate 1.9% 14.2% 39.1% 44.7% 0.0% 100%
As displayed in the preceding table, the bank’s level of lending in low-income census tracts (2.8 percent) is below the percentage of owner-occupied housing (4.9 percent). However, the bank outperformed aggregate lending in low-income census tracts (1.9 percent), representing adequate performance. Similarly, the bank’s level of lending in moderate-income census tracts (14.4 percent) is below the percentage of owner-occupied housing (19.9 percent) and similar to the aggregate lending level (14.2 percent), representing adequate performance. Therefore, the bank’s combined HMDA performance in LMI census tracts is considered adequate.
Next, the bank’s geographic distribution of small business loans compared to the location of businesses and aggregate performance throughout the bank’s assessment area was reviewed, as displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 33 9.3% 77 21.6% 106 29.8% 139 39.0% 1 0.3% 356 100% Loans Business 6.7% 20.7% 34.6% 36.6% 1.4% 100% Institutions 2014 Small Business 5.2% 17.9% 30.7% 42.9% 3.2% 100% Aggregate
The analysis of small business loans reflects excellent penetration throughout the assessment area. The bank’s lending in low-income census tracts is excellent, as the level of lending (9.3
46 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015 percent) is higher than the percentage of business institutions located in low-income census tracts (6.7 percent) and higher than aggregate performance (5.2 percent). In addition, the level of lending to small businesses in moderate-income census tracts (21.6 percent) is considered excellent compared to the percentage of business institutions in moderate-income census tracts (20.7 percent) and aggregate lending (17.9 percent).
As the bank originated very few small farm loans in this assessment area during the review period, there was not enough data to support meaningful conclusions. Consequently, a geographic distribution analysis of small farm loans was not completed.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 2 50.0% 0 0.0% 2 50.0% 0 0.0% 4 100% Loans Agricultural 0.9% 23.8% 53.8% 21.3% 0.1% 100% Institutions 2014 Small Farm 0.5% 27.8% 52.0% 18.1% 1.5% 100% Aggregate
Loan Distribution by Borrower’s Profile
Overall, the bank’s loan distribution by borrower’s profile is good, based on performance from both loan categories reviewed. The following table shows the distribution of HMDA-reported loans by the income level of the borrower compared to family population and aggregate data.
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 49 12.6% 95 24.4% 78 20.0% 157 40.3% 11 2.8% 390 100% Refinance 4 4.0% 13 13.0% 23 23.0% 52 52.0% 8 8.0% 100 100% Home Improvement 4 5.5% 17 23.3% 20 27.4% 28 38.4% 4 5.5% 73 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 57 10.1% 125 22.2% 121 21.5% 237 42.1% 23 4.1% 563 100%
Family Population 20.3% 17.6% 21.6% 40.6% 0.0% 100% 2014 HMDA 8.9% 18.4% 20.6% 32.5% 19.6% 100% Aggregate
The bank’s level of lending to LMI borrowers within the assessment area is good. Based on the previous table, the bank’s level of lending to low-income borrowers (10.1 percent) is below the
47 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
low-income family population (20.3 percent) but exceeds aggregate performance (8.9 percent), representing good performance. The bank’s HMDA lending to moderate-income borrowers (22.2 percent) is higher than the percentage of moderate-income borrowers within the assessment area (17.6 percent) and aggregate performance (18.4 percent), representing excellent performance.
Next, small business loans were reviewed to determine the bank’s lending levels to businesses of different sizes. The following table shows the distribution of small business loans by loan amount and business revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 150 42.1% 29 8.1% 20 5.6% 199 55.9% Greater than $1 Million/Unknown 95 26.7% 25 7.0% 37 10.4% 157 44.1% TOTAL 245 68.8% 54 15.2% 57 16.0% 356 100% Dun & Bradstreet Businesses < $1MM 88.5% Small Business Aggregate < $1MM 42.0%
The bank originated a majority (55.9 percent) of its small business loans to businesses with revenues of $1 million or less. The bank’s loans to small businesses is trending upward compared to 2013, and community contacts noted the need for loans to small start-up businesses. Therefore, the bank’s level of lending to small businesses is considered adequate.
As noted previously, the bank originated very few small farm loans in this assessment area during the review period, and there was not enough data to support meaningful conclusions. Consequently, a borrower profile analysis of small farm loans was not completed.
48 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014
Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500 $1 Million or Less 1 25.0% 2 50.0% 1 25.0% 4 100.0% Greater than $1 Million/Unknown 0 0.0% 0 0.0% 0 0.0% 0 0.0% TOTAL 1 25.0% 2 50.0% 1 25.0% 4 100%
Dun & Bradstreet Farms < $1MM 98.9% Small Farm Aggregate < $1MM 59.7%
Community Development Lending Activities
Arvest Bank provides a low level of community development loans in the Kansas City MSA assessment area. During the review period, the bank originated two loans totaling $3.1 million to revitalize and stabilize the assessment area by working with the Community Development Corporation of Kansas City to develop opportunities for LMI individuals to gain employment.
INVESTMENT TEST
Overall, Arvest Bank’s performance under the Investment Test is rated high satisfactory for the Kansas City MSA. The bank made a significant level of qualified community development investments and grants and is occasionally in a leadership position; this exhibits good responsiveness to credit and community development needs in the Kansas City MSA assessment area. As of this evaluation date, the bank had a balance of $18.9 million in qualified investments attributable to this assessment area, including $11.7 million new investments in qualifying MBS. All of the bank’s community development investments in the Kansas City MSA are in MBS that finance affordable housing and school municipal bonds. Arvest Bank made three qualified grants totaling $2,000 in the assessment area to organizations that provide services to LMI families.
SERVICE TEST
Arvest Bank’s Service Test performance in the Kansas City MSA is rated low satisfactory. Service delivery systems are reasonably accessible to geographies and individuals of different income levels in the Kansas City MSA assessment area, and the bank’s record of opening and closing branches has generally not adversely affected the accessibility of its delivery systems to LMI geographies and/or LMI individuals. Business hours and services do not vary in a way that inconveniences LMI geographies and/or LMI individuals. However, Arvest Bank provides a relatively high level of community development services in the Kansas City MSA assessment area.
49 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Accessibility of Delivery Systems
Arvest Bank operates 16 branch facilities within the Kansas City MSA assessment area. The following table illustrates the distribution of these branches by income level of the geography, as compared to key assessment area demographics.
Branch Distribution by Geography Income Level Geography Income Level Dataset TOTAL Low- Moderate- Middle- Upper- Unknown 2 4 6 4 0 16 Branches 12.5% 25.0% 37.5% 25.0% 0.0% 100%
Census Tracts 12.5% 24.3% 33.0% 27.2% 3.0% 100%
Household Population 8.1% 24.3% 37.8% 29.9% 0.0% 100%
As illustrated in the above table, Arvest Bank’s branches in LMI census tracts represent 37.5 percent of all branches in the Kansas City MSA assessment area, which is similar to the total number of LMI census tracts in the assessment area (36.8 percent) and greater than the LMI demographic figures (32.4 percent). Overall, the bank’s delivery systems are accessible to the geographies and individuals of different income levels in the Kansas City MSA assessment area.
Changes in Branch Locations
As mentioned previously, the bank closed one office in a moderate-income census tract and relocated two branches, one from a low-income census tract to another low-income tract and one from a middle-income census tract to another middle-income census tract. The record of opening and closing branches has generally not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and LMI individuals.
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Business hours and banking products and services are relatively consistent across all branches in the Kansas City MSA assessment area. Most branches have Saturday operating hours and offer extended hours of operations in lobby and drive-through facilities at some point during the week. Most drive-through facilities remain open until at least 6:00 p.m., Monday through Friday, and most are open until 1:00 p.m. on Saturday. All branches offer the same standard products, including low-cost checking and savings accounts, CDs, real estate and consumer loans, and other services. Therefore, bank services do not vary in a way that inconveniences certain segments of this assessment area, particularly LMI geographies and/or LMI individuals.
50 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Community Development Services
Arvest Bank provides a relatively high level of community development services within the Kansas City MSA assessment area, as 10 employees conducted 44 qualifying services in the community. Several employees work with organizations that provide a variety of community development services including shelters, income tax preparation for LMI individuals, financial literacy for adults, and education to small businesses. Other organizations include financial education for students in schools with a majority of LMI students and a program that helps build affordable housing for LMI families. Additionally, Arvest Bank manages ten RPA accounts for LMI individuals.
51 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
ARKANSAS10
CRA RATING FOR ARKANSAS: SATISFACTORY The Lending Test is rated: Low Satisfactory The Investment Test is rated: High Satisfactory The Service Test is rated: High Satisfactory
Factors supporting the institution’s CRA rating for Arkansas include the following:
• Arvest Bank’s lending levels reflect good responsiveness to the credit needs of its Arkansas assessment areas.
• The bank’s overall geographic distribution of loans reflects good penetration throughout the Arkansas assessment areas.
• Given the product lines offered, the distribution of borrowers reflects good penetration among borrowers of different income levels and businesses/farms of different sizes.
• The bank makes few, if any, community development loans in Arkansas.
• The bank makes a significant level of qualified community development investments and grants throughout the Arkansas assessment areas and is occasionally in a leadership position.
• Service delivery systems are accessible to geographies and individuals of different income levels in Arkansas assessment areas; furthermore, changes in branch locations have not adversely affected the accessibility of delivery systems, and service does not vary in a way that inconveniences the Arkansas assessment areas, particularly LMI geographies and/or LMI individuals.
• Arvest Bank personnel provide an adequate level of community development services in Arkansas assessment areas.
SCOPE OF EXAMINATION
Arvest Bank has three separate assessment areas in the state of Arkansas. The bank’s performance in two of these assessment areas was reviewed using full-scope CRA examination procedures, and scoping considerations applicable to the review of the Arkansas assessment areas are consistent with the overall CRA examination scope as presented in the Institution, Scope of Examination section. Arvest Bank’s ratings in Arkansas are based largely on
10 The bank has branches located in Arkansas that are also part of the Fayetteville MSA and the Fort Smith MSA. Consequently, this statewide evaluation is adjusted so as not to reflect performance in the parts of Arkansas contained within a multistate MSA. Refer to the multistate MSA sections of this report for the ratings and related evaluations of the institution’s performance in those areas.
52 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
performance in the assessment areas reviewed under full-scope CRA examination procedures; furthermore, in light of the bank’s branch structure, loan and deposit activity, and supervisory history, performance in the two full-scope review assessment areas was given near equal weighting.
To augment the evaluations of full-scope review assessment areas in Arkansas, four community contact interviews were conducted (and three community contact interviews previously completed as part of separate supervisory events were referenced) in order to ascertain specific community credit needs, community development opportunities, and local market conditions.
DESCRIPTION OF INSTITUTION’S OPERATIONS IN ARKANSAS
The bank operates 55 branches (20.6 percent of total branches) throughout the three CRA assessment areas in Arkansas. The following table gives additional detail regarding the bank’s operations in Arkansas.
CRA Review Assessment Area Offices # Offices % Deposits ($000s) Deposits % Procedures Little Rock MSA 25 45.5% $1,217,865 56.7% Full Scope
Hot Springs MSA 6 10.9% $228,046 10.6% Limited Scope
NonMSA Arkansas 24 43.6% $702,062 32.7% Full Scope
STATE TOTAL 55 100% $2,147,973 100% N/A
As displayed in the table above, the bank’s deposits in Arkansas total $2.1 billion, which equates to 16.2 percent of total bank deposits. Furthermore, the majority of these Arkansas deposits and branch resources are attributable to the full-scope review assessment areas.
53 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN ARKANSAS
LENDING TEST
Arvest Bank’s Lending Test performance in Arkansas is rated low satisfactory. Lending levels reflect good responsiveness to Arkansas assessment area credit needs. The bank’s overall geographic distribution of loans reflects good penetration throughout Arkansas assessment areas. The overall distribution of loans by borrower’s income/revenue profile reflects excellent penetration among customers of different income levels and businesses/farms of different sizes. Finally, Arvest Bank makes few, if any, community development loans in its Arkansas assessment areas.
Lending Activity
The bank’s lending levels in Arkansas reflect good responsiveness to assessment area credit needs based on the lending activity analyzed under the Lending Test. This lending activity is displayed by loan type in the following table:
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 477 11.4% $6,130 1.5% Home Purchase 1,026 24.5% $136,540 34.5% Multifamily Housing 9 0.2% $7,883 2.0% Refinancing 497 11.8% $57,170 14.4% TOTAL HMDA 2,009 47.9% $207,723 52.4% Small Business 1,747 41.6% $157,410 39.7% Small Farm 439 10.5% $31,181 7.9% TOTAL LOANS 4,195 100.00% $396,314 100.00%
The bank’s lending activity in Arkansas represents 17.4 percent of total HMDA and CRA loans made within the bank’s combined assessment areas. The level of HMDA and CRA activity is lower than the bank’s branch network in this assessment area, representing 20.6 percent of total bank branches. In contrast, the percentage of loans originated in this assessment area is higher than the area’s proportion of total deposit holdings of 16.2 percent. In light of these factors, the bank’s lending activity in Arkansas reflects good responsiveness to assessment area credit needs.
54 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Geographic and Borrower Distribution
As displayed in the following tables, the bank’s overall geographic distribution of loans reflects good penetration throughout the bank’s Arkansas assessment areas.
Assessment Area (Full-Scope Review) Geographic Distribution of Loans Little Rock MSA Good Arkansas NonMSA Good
Assessment Area (Limited-Scope Review) Geographic Distribution of Loans Hot Springs MSA Consistent
Arvest Bank’s overall loan distribution by borrower’s profile reflects good performance in Arkansas assessment areas, as displayed in the following tables:
Assessment Area (Full-Scope Review) Loan Distribution by Borrower’s Profile Little Rock MSA Excellent Arkansas NonMSA Good
Assessment Area (Limited-Scope Review) Loan Distribution by Borrower’s Profile Hot Springs MSA Consistent
Community Development Lending Activities
Arvest Bank makes few, if any, community development loans within Arkansas. The following table displays community development lending performance in the bank’s three Arkansas assessment areas.
Assessment Area (Full-Scope Review) Community Development Lending Little Rock MSA Low Level Arkansas NonMSA Few, if any
Assessment Area (Limited-Scope Review) Community Development Lending Hot Springs MSA Consistent
Arvest Bank’s performance in the Little Rock MSA and nonMSA Arkansas assessment areas was weighted nearly equally in order to develop overall conclusions. However, the bank’s community development lending declined significantly from the previous evaluation despite the continued need for community development activities throughout these assessment areas. In all, the bank made two community development loans totaling $7.2 million in the Little Rock MSA
55 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
and no community development loans in the NonMSA Arkansas or Hot Springs MSA assessment areas.
INVESTMENT TEST
For the state of Arkansas, Arvest Bank’s performance under the Investment Test is rated high satisfactory. The following tables display investment and grant activity performance for the Arkansas assessment areas.
Assessment Area (Full-Scope Review) Investment and Grant Activity Little Rock MSA Significant Level Arkansas NonMSA Adequate Level
Assessment Area (Limited-Scope Review) Investment and Grant Activity Hot Springs MSA Consistent
Arvest Bank’s performance in the Little Rock MSA and nonMSA Arkansas assessments areas was weighted nearly equally in order to develop overall conclusions. However, in light of the increased significance and opportunity for community development investment activity in the Little Rock MSA assessment area, the bank’s overall level of community development investment/grant activity in Arkansas is significant. Community development investments in Arkansas assessment areas totaled $4.5 million, all of which were made in MBS. The bank also worked in conjunction with the FHLB to initiate over $133,379 in grants related to housing for LMI individuals in Arkansas assessment areas and an additional $2,500 grant for affordable housing.
SERVICE TEST
Overall, Arvest Bank’s performance in Arkansas is rated high satisfactory under the Service Test. The bank’s delivery systems are accessible to geographies and individuals of different income levels in its Arkansas assessment areas. In addition, the bank’s record of opening and closing branches has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals. Business hours and services in Arkansas do not vary in a way that inconveniences portions of Arkansas assessment areas, particularly LMI geographies and/or LMI individuals. Lastly, Arvest Bank provides an adequate level of community development services within its Arkansas assessment areas.
56 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Accessibility of Delivery Systems
As displayed in the following tables, the bank’s delivery systems in Arkansas assessment areas are accessible to geographies and individuals of different income levels.
Assessment Area (Full-Scope Review) Accessibility of Delivery Systems Little Rock MSA Accessible Arkansas NonMSA Accessible
Assessment Area (Limited-Scope Review) Accessibility of Delivery Systems Hot Springs MSA Consistent
Changes in Branch Locations
Arvest Bank’s record of opening and closing branches in its three Arkansas assessment areas has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals. The bank’s performance under this Service Test criterion is displayed by Arkansas assessment areas in the following tables:
Assessment Area (Full-Scope Review) Changes in Branch Locations Little Rock MSA Generally Not Adversely Affected Arkansas NonMSA Not Adversely Affected
Assessment Area (Limited-Scope Review) Changes in Branch Locations Hot Springs MSA Consistent
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Overall, banking services and business hours do not vary in a way that inconveniences certain portions of the bank’s Arkansas assessment areas, particularly LMI geographies and/or LMI individuals. The bank’s performance under this Service Test criterion is displayed by Arkansas assessment area in the following tables:
Reasonableness of Business Assessment Area (Full-Scope Review) Hours and Services Little Rock MSA Do Not Vary in a Way that Inconveniences Arkansas NonMSA Do Not Vary in a Way that Inconveniences
Reasonableness of Business Assessment Area (Limited-Scope Review) Hours and Services Hot Springs MSA Below
57 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Community Development Services
Arvest Bank provides an adequate level of community development services across its Arkansas assessment areas. The bank’s performance under this Service Test criterion is displayed by Arkansas assessment areas in the following tables:
Assessment Area (Full-Scope Review) Community Development Services Little Rock MSA Adequate Level Arkansas NonMSA Relatively High Level
Assessment Area (Limited-Scope Review) Community Development Services Hot Springs MSA Below
Arvest Bank’s performance in the Little Rock MSA and nonMSA Arkansas assessment areas were weighted nearly equally in order to develop Service Test conclusions. Employees of the bank provided services to 30 different organizations that offer a variety of services to LMI individuals. Examples include teaching financial literacy in schools with over 50 percent LMI students, working with organizations to improve available affordable housing, and assisting organizations that offer services to LMI individuals and families.
58 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
LITTLE ROCK-NORTH LITTLE ROCK- CONWAY, ARKANSAS MSA (Full-Scope Review)
DESCRIPTION OF INSTITUTION’S OPERATIONS IN THE LITTLE ROCK-NORTH LITTLE ROCK-CONWAY, ARKANSAS MSA
Bank Structure
The bank has designated the entire Little Rock-North Little Rock-Conway, Arkansas MSA (Little Rock MSA) as an assessment area, within which the bank operates 25 of its 267 branches (9.4 percent). Of the 25 branches, none are located in a low-income census tract, 8 are in moderate-income census tracts, 9 are in middle-income census tracts, and 8 are in upper-income census tracts. During this review period, the bank opened eight branches, with seven coming from the acquisition of another bank, and subsequently closed four of them; of the remaining branches opened, one is located in a moderate-income census tract, two are in middle-income census tracts, and one is in an upper-income census tract. The bank closed three additional branches including one in a moderate-income census tract and two in upper-income census tracts in this assessment area. The bank operates branches in four of the assessment area’s six counties; the counties without branches are more rural. Therefore, based on this branch network and other service delivery systems, the bank is adequately positioned to deliver financial services to substantially all of the Little Rock MSA assessment area.
This assessment area is a competitive banking market. According to the FDIC Deposit Market Share Report as of June 30, 2015, a total of 33 FDIC-insured institutions operate 314 offices within the MSA. Of those 33 financial institutions, the bank is ranked 6th with a deposit market share of 7.4 percent. The deposits held at branches throughout the Little Rock MSA represent 9.2 percent of all Arvest Bank deposits.
General Demographics
The Little Rock MSA is a six-county area in central Arkansas anchored by the state’s capital and largest city, Little Rock. The six counties comprising the MSA are Faulkner, Grant, Lonoke, Perry, Pulaski, and Saline. Based on 2010 U.S. Census data, the assessment area had a total population of 699,757. The majority of the population lives in the city and surrounding suburbs of Little Rock in Pulaski County (382,748). The remaining counties range in population from 10,445 to 113,237. Based on previous census data, the Little Rock MSA has experienced a total population increase of 14.6 percent since the 2000 U.S. Census.
As the demographics of this assessment area cover a wide metropolitan area and the population is diverse, credit needs in the area are also varied, including a standard blend of consumer and business/farm credit products. Other particular credit needs in the assessment area (as noted primarily during community contact interviews) include new and first-time homebuyer residential real estate loan programs and small business financing. Furthermore, as the Little
59 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Rock MSA has a strong source of community development intermediaries, and a high level of community development opportunity is available for financial institution participation.
Income and Wealth Demographics
Based on the 2010 U.S. Census, the median family income for the Little Rock MSA is $58,911, which is greater than the state of Arkansas at $48,491. As of 2014, the FFIEC-estimated median family income for the Little Rock MSA was $60,100. The following table summarizes the distribution of the 164 geographies in the MSA by income level and the family population of those census tracts within the assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 11 39 77 36 1 164 Census Tracts 6.7% 23.8% 47.0% 22.0% 0.6% 100%
Family 7,454 35,698 87,817 49,076 0 180,045 Population 4.1% 19.8% 48.8% 27.3% 0.0% 100%
The following table displays the distribution of assessment area families by income level, as well as the income distribution of all Arkansas families.
Family Population by Income Level Dataset Low- Moderate- Middle- Upper- TOTAL 38,497 32,262 36,876 72,410 180,045 Assessment Area 21.4% 17.9% 20.5% 40.2% 100% 162,389 137,133 153,290 309,951 762,763 Arkansas 21.3% 18.0% 20.1% 40.6% 100%
Housing Demographics
While income levels in the assessment area are relatively higher than income levels for the state of Arkansas overall, higher housing costs in the Little Rock MSA keep overall housing in the assessment area less affordable than in the state as a whole. The Little Rock MSA assessment area housing affordability ratio (36.6 percent) is slightly lower than that of the state of Arkansas (38.4 percent). Of the six MSA counties, buying a home is most affordable in Perry County (54.4 percent) and least affordable in Pulaski County (33.6 percent). The median housing value in the assessment area is $127,849, which is much higher than the state of Arkansas at $102,300. The median monthly gross rent in the Little Rock MSA ($709) is also higher than in the state of Arkansas ($617).
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Industry and Employment Demographics
According to 2013 County Business Patterns data, 17,669 business entities were operating within the Little Rock MSA. The largest industries (by number of employees) in the Little Rock MSA are health care and social assistance, retail trade, and accommodation and food services. According to the Department of Labor, Bureau of Labor Statistics, the recent annual average unemployment rates (not seasonally adjusted) for the Little Rock MSA (6.6 percent in 2013 and 5.6 percent in 2014) were lower than rates for the state of Arkansas (7.4 percent in 2013 and 6.1 percent in 2014). Similar to the state of Arkansas, the unemployment level in the Little Rock MSA decreased significantly throughout 2013 and 2014.
Community Contact Information
Information from three community contacts was used to help shape the performance context in which the bank’s activities in this assessment area were evaluated. Of these interviews, two were with individuals working in an economic development role and the other was with an individual specializing in microenterprise lending. One of the community contact interviewees characterized the local economy as slowly improving and stated that small businesses were cautiously optimistic about the future. A previous contact noted there are numerous community development projects taking place in the urban areas, and previous revitalization projects have been successful.
While the housing market is slowly improving and there is good supply of affordable rent options, borrowers are facing challenges qualifying for home loans due to income and debt levels. Down payment and closing cost assistance programs are available to assist LMI families through the Arkansas Development Finance Authority. The interviewees cited a need for credit counseling and/or financial literacy education for businesses and individuals. Additionally, one of the interviewees stated the need for revolving lines-of-credit in most of the area’s communities, as well as online lending options.
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CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN THE LITTLE ROCK MSA
LENDING TEST
Lending levels reflect adequate responsiveness to the Little Rock MSA assessment area credit needs. The bank’s overall geographic distribution of loans reflects good penetration throughout the assessment area. Furthermore, the overall distribution of loans by borrower’s income/revenue profile reflects good penetration among customers of different income levels and businesses/farms of different sizes. Lastly under the Lending Test, Arvest Bank made a low level of community development loans in the Little Rock MSA assessment area.
Lending Activity
The following table displays the bank’s 2014 lending volume in this assessment area by number and dollar volume.
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 188 10.6% $2,684 1.4% Home Purchase 546 30.9% $79,255 41.7% Multifamily Housing 1 0.1% $812 0.4% Refinancing 203 11.5% $27,108 14.2% TOTAL HMDA 938 53.0% $109,859 57.7% Small Business 790 44.7% $77,074 40.5% Small Farm 41 2.3% $3,342 1.8% TOTAL LOANS 1,769 100% $190,275 100%
The bank’s lending activity in the Little Rock MSA reflects adequate responsiveness to assessment area credit needs. Lending activity in the Little Rock MSA represents 7.3 percent of total HMDA and CRA loans made within the bank’s combined assessment areas in 2014. This level of HMDA and CRA activity is below that of the bank’s branch network in this assessment area, representing 9.4 percent of total bank branches. In addition, the percentage of loans originated in this assessment area is below the area’s proportion of total deposit holdings of 9.2 percent.
Geographic Distribution of Loans
As noted in the Description of Institution’s Operations in Little Rock MSA section, this assessment area includes 11 low-income census tracts and 39 moderate-income census tracts, representing 30.5 percent of all assessment area census tracts. Overall, based on lending activity from all three loan categories reviewed (with primary emphasis granted to HMDA lending,
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followed by small business lending), the bank’s geographic distribution of loans reflects good penetration throughout this assessment area, including the 50 LMI census tracts. The following table displays the geographic distribution of HMDA loans compared to owner-occupied housing demographics and aggregate performance for the assessment area.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 10 1.8% 68 12.5% 241 44.1% 227 41.6% 0 0.0% 546 100% Refinance 3 1.5% 19 9.4% 102 50.2% 79 38.9% 0 0.0% 203 100% Home Improvement 6 3.2% 27 14.4% 99 52.7% 56 29.8% 0 0.0% 188 100% Multifamily 0 0.0% 1 100.0% 0 0.0% 0 0.0% 0 0.0% 1 100% TOTAL HMDA 19 2.0% 115 12.3% 442 47.1% 362 38.6% 0 0.0% 938 100%
Owner-Occupied Housing 2.8% 17.5% 50.8% 29.0% 0.0% 100% 2014 HMDA Aggregate 1.5% 11.8% 50.9% 35.8% 0.0% 100%
Based on the information in the preceding table, the bank’s lending performance in low-income geographies is good. Total HMDA lending in low-income census tracts (2.0 percent) is lower than the owner-occupied housing percentage (2.8 percent) but above aggregate lending (1.5 percent). Similarly, the bank’s performance in moderate-income census tracts is good. The amount of lending in moderate-income geographies (12.3 percent) is less than the demographic comparator (17.5 percent) and above aggregate lending (11.8 percent). Therefore, the bank’s geographic distribution of HMDA loans in LMI geographies is good.
Second, the bank’s geographic distribution of small business loans compared to the location of businesses and aggregate lending throughout the bank’s assessment area was reviewed, as displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 28 3.5% 181 22.9% 337 42.7% 244 30.9% 0 0.0% 790 100% Loans Business 4.4% 24.1% 42.2% 29.3% 0.0% 100% Institutions 2014 Small Business 4.4% 20.7% 40.7% 31.9% 2.3% 100% Aggregate
63 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
The bank’s percentage of small business loans in low-income census tracts (3.5 percent) is adequate compared to the estimated percentage of businesses within low-income census tracts (4.4 percent) and aggregate lending performance (4.4 percent). Similarly, the bank’s performance in moderate-income census tracts is considered adequate. Lending in moderate- income census tracts (22.9 percent) is less than the percentage of businesses in moderate-income census tracts (24.1 percent) but above the aggregate performance (20.7 percent). The bank’s overall geographic distribution of small business loans reflects adequate penetration throughout the assessment area.
Finally, the geographic distribution of small farm loans compared to the location of farms and aggregate lending throughout the assessment area is considered good and is displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 9 22.0% 26 63.4% 6 14.6% 0 0.0% 41 100% Loans Agricultural 1.6% 21.6% 55.0% 21.8% 0.0% 100% Institutions 2014 Small Farm 0.6% 22.7% 60.2% 15.6% 0.9% 100% Aggregate
As shown in the preceding table, the bank had a relatively low level of small farm lending in this assessment area. However, based on the limited loan activity available for review, the geographic distribution of small farm loans is good. While the bank did not make any small farm loans in low-income census tracts, this is considered adequate performance in light of the very small percentage of farms located in low-income census tracts (1.6 percent) and even smaller percentage of loans from aggregate lenders (0.6 percent). The bank’s percentage of small farm loans in moderate-income census tracts (22.0 percent) reflects good performance, as it is in line with the estimated percentage of farms with in moderate-income geographies (21.6 percent) and aggregate performance (22.7 percent).
64 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Loan Distribution by Borrower’s Profile
Overall, the bank’s loan distribution by borrower’s profile is excellent, based on performance from all three loan categories reviewed. The following table shows the distribution of HMDA loans by the income level of the borrower compared to family population demographics and aggregate performance.
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 50 9.2% 123 22.5% 135 24.7% 219 40.1% 19 3.5% 546 100% Refinance 16 7.9% 27 13.3% 58 28.6% 97 47.8% 5 2.5% 203 100% Home Improvement 20 10.6% 28 14.9% 41 21.8% 89 47.3% 10 5.3% 188 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 1 100.0% 1 100% TOTAL HMDA 86 9.2% 178 19.0% 234 24.9% 405 43.2% 35 3.7% 938 100%
Family Population 21.4% 17.9% 20.5% 40.2% 0.0% 100% 2014 HMDA 6.2% 16.4% 19.6% 33.2% 24.7% 100% Aggregate
As indicated in the preceding table, the bank’s level of lending to low-income borrowers (9.2 percent) is lower than the low-income family population percentage (21.4 percent). However, this level of lending is considered good, as it is well above the aggregate performance (6.2 percent). Furthermore, the bank’s lending level to moderate-income borrowers (19.0 percent) is excellent, as it is higher than the percentage of moderate-income borrowers within the assessment area (17.9 percent) and the level of aggregate lending to moderate-income borrowers (16.4 percent). This performance is highlighted by community contacts who stated that LMI borrowers are facing challenges with qualifying for home loans due to income and debt levels. Overall, the bank’s level of HMDA lending to LMI borrowers is excellent.
65 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Next, small business loans were reviewed to determine the bank’s lending levels to businesses of different sizes. The following table shows the distribution of small business loans by loan amount and business revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 505 63.9% 80 10.1% 54 6.8% 639 80.9% Greater than $1 Million/Unknown 104 13.2% 21 2.7% 26 3.3% 151 19.1% TOTAL 609 77.1% 101 12.8% 80 10.1% 790 100% Dun & Bradstreet Businesses < $1MM 89.0% Small Business Aggregate < $1MM 47.0%
The bank originated a majority of its small business loans (80.9 percent) to businesses with gross annual revenues of $1 million or less. The highest concentration of small business loans is for loan amounts of $100,000 or less, which further demonstrates the bank’s willingness to make credit available to small businesses in the assessment area. According to Dun & Bradstreet estimates, 89.0 percent of assessment area businesses had revenues of $1 million or less. Furthermore, 2014 CRA aggregate data shows 47.0 percent of loans to small businesses. Based on this information, the bank’s level of lending to small businesses is good.
Small farm lending performance was analyzed to determine the bank’s lending levels to farms of different sizes. The following table shows the distribution of small farm loans by loan amount and farm revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500
$1 Million or Less 29 70.7% 7 17.1% 2 4.9% 38 92.7%
Greater than $1 Million/Unknown 1 2.4% 1 2.4% 1 2.4% 3 7.3%
TOTAL 30 73.2% 8 19.5% 3 7.3% 41 100%
Dun & Bradstreet Farms < $1MM 98.0%
Small Farm Aggregate < $1MM 78.1%
As displayed in the preceding table, the bank had a relatively low level of small farm loan activity in this assessment area. However, based on the limited loan activity available for review,
66 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
the distribution of small farm loans by borrower’s profile is good. In 2014, 92.7 percent of the bank’s small farm loans were made to farmers with revenues of $1 million or less. Additionally, the majority of these loans were in amounts of $100,000 or less, which demonstrates the bank’s willingness to make credit available to small farms. According to 2014 Dun & Bradstreet estimates, 98.0 percent of farms in the assessment area reported revenues of $1 million or less. In addition, CRA aggregate performance was 78.1 percent.
Community Development Lending Activities
Arvest Bank made a low level of community development loans in the Little Rock MSA assessment area. The bank renewed one community development loan for $3.3 million and originated one community development loan for $3.9 million, for a total of $7.2 million within this assessment area since the previous examination. The new loan ($3.9 million), which was to construct a new apartment building for LMI tenants, is considered innovative due to the variety of funding sources, including low-income housing tax credits and funds from the federal HOME Investment Partnership program.
INVESTMENT TEST
The bank made a significant level of qualified community development investments and grants and is occasionally in a leadership position; this exhibits good responsiveness to credit and community development needs in the Little Rock MSA assessment area. As of this evaluation date, the bank had a balance of $3.0 million in qualified investments attributable to this assessment area. All of the bank’s qualified investments are in MBS that finance affordable housing ($1.2 million in new investments and $1.9 million in previous review period investments still outstanding). Additionally, Arvest Bank made a significant level of community development grants within the Little Rock MSA. While only one donation ($2,500) was made, the bank partnered with the FHLB to provide 29 grants totaling $125,657 to assist LMI borrowers purchase or renovate their homes and to provide funds to build the capacity of a local affordable housing organization.
SERVICE TEST
Arvest Bank’s service delivery systems are accessible to the geographies and individuals of different income levels in this assessment area. The bank’s record of opening and closing branches has generally not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals. Business hours and retail services do not vary in a way that inconveniences LMI geographies and/or individuals. Finally, under the Service Test, Arvest Bank personnel provide an adequate level of community development services within this assessment area.
67 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Accessibility of Delivery Systems
Arvest Bank operates 25 branch facilities within the Little Rock MSA assessment area. The following table illustrates the distribution of these facilities by income level of geography compared to key assessment area demographics.
Branch Distribution by Geography Income Level Geography Income Level Dataset TOTAL Low- Moderate- Middle- Upper- Unknown 0 8 9 8 0 25 Branches 0.0% 32.0% 36.0% 32.0% 0.0% 100% Census Tracts 6.7% 23.8% 47.0% 22.0% 0.6% 100% Household Population 5.1% 20.8% 47.4% 26.7% 0.0% 100%
As illustrated in the above table, Arvest Bank’s branches in LMI census tracts represent 32.0 percent of all branches in the Little Rock MSA assessment area. Although the bank has no branches in low-income census tracts, several of those in moderate-income geographies are located in close proximity to low-income census tracts. Meanwhile, the dispersion of branches in moderate-income census tracts (32.0 percent) is greater than the percentage of moderate-income geographies (23.8 percent) and households (20.8 percent). Therefore, overall service delivery systems are accessible to geographies and individuals of different income levels in the assessment area.
Changes in Branch Locations
The bank’s record of opening and closing branches has generally not adversely affected the accessibility of its delivery systems, particularly in LMI geographies and/or to LMI individuals. During the review period, the bank closed three existing branches in the Little Rock MSA. The bank also opened eight branches and subsequently closed four of those branches, leaving four newly opened branches. One of the remaining new branches is located in a moderate-income census tract, two are in middle-income census tracts, and one is in an upper-income census tract. Of the three existing branches that were closed, one was located in a moderate-income census tract and two were in upper-income census tracts. One of the four subsequently closed branches was in a moderate-income census tract, one was in a middle-income census tract, and two were in upper-income census tracts.
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Business hours and banking products and services are relatively consistent across all branches in the Little Rock MSA assessment area. Most branches have Saturday operating hours and offer extended hours of operation in lobby and drive-through facilities at some point during the week. Most drive-through facilities remain open until 7:00 p.m., Monday through Friday, and 1:00 p.m. on Saturday. All branches offer the same standard products, including low-cost checking and savings accounts, CDs, real estate and consumer loans, and other services. Therefore, bank
68 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015 services do not vary in a way that inconveniences certain segments of this assessment area, particularly LMI geographies and/or LMI individuals.
Community Development Services
Arvest Bank staff members provided an adequate level of community development services in the Little Rock MSA assessment area. During the review period, 22 employees participated in a total of 26 qualifying community development services in this assessment area. Employees worked with 16 different organizations providing financial literacy and education to homeless shelters and schools with a majority of the students from LMI households. In addition, employees worked with organizations dedicated to improving availability of affordable housing to LMI individuals and financial education for small businesses. In addition, Arvest Bank opened and managed 1 IDA and 47 RPA accounts in the assessment area during the review period.
69 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
HOT SPRINGS, ARKANSAS MSA (Limited-Scope Review)
DESCRIPTION OF INSTITUTION’S OPERATIONS IN THE HOT SPRINGS, ARKANSAS MSA
This assessment area includes the entire Hot Springs, Arkansas MSA, which is comprised of Garland County. Arvest Bank operates six branch offices in this assessment area, including one branch that was opened during this review period. The tables below detail key demographics relating to this assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 1 4 10 5 0 20 Census Tracts 5.0% 20.0% 50.0% 25.0% 0.0% 100% 407 3,687 13,880 7,757 0 25,731 Family Population 1.6% 14.3% 53.9% 30.1% 0.0% 100%
Household 794 6,361 21,199 11,792 0 40,146 Population 2.0% 15.8% 52.8% 29.4% 0.0% 100%
Business 91 890 2,289 1,471 0 4,741 Institutions 1.9% 18.8% 48.3% 31.0% 0.0% 100%
Agricultural 1 6 38 26 0 71 Institutions 1.4% 8.5% 53.5% 36.6% 0.0% 100%
Assessment Area Demographics by Population Income Level Population Income Classification Demographic Type TOTAL Low- Moderate- Middle- Upper- 5,342 4,439 5,434 10,516 25,731 Family Population 20.8% 17.3% 21.1% 40.9% 100% 9,285 6,642 7,425 16,794 40,146 Household Population 23.1% 16.5% 18.5% 41.8% 100%
70 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN THE HOT SPRINGS, ARKANSAS MSA
LENDING TEST
Arvest Bank’s overall lending performance in this assessment area is consistent with the Lending Test performance for the Little Rock MSA assessment area (full-scope MSA assessment area), as displayed in the following table. For more detailed information relating to the bank’s Lending Test performance in this assessment area, see the tables contained in Appendix C.
Lending Test Criteria Performance Lending Activity Below Geographic Distribution of Loans Consistent Distribution of Loans by Borrower’s Profile Consistent Community Development Lending Activities Consistent OVERALL Consistent
The bank’s lending performance in the Hot Springs MSA assessment area is consistent with the bank’s lending performance in the Little Rock MSA assessment area; yet, the bank did not make any community development loans in this assessment area.
INVESTMENT TEST
Arvest Bank’s investment performance in the Hot Springs MSA assessment area is consistent to the investment performance in the Little Rock MSA assessment area. Arvest Bank made $175,064 in new community development investments during this review period and held $137,286 in investments attributable to this assessment area that were made during a previous review period but were still outstanding. Additionally, the bank partnered with the FHLB to make one grant totaling $4,975 to provide a home modification for a disabled low-income veteran.
SERVICE TEST
The bank’s service performance in the Hot Springs MSA assessment area is consistent with the bank’s service performance in the Little Rock MSA assessment area, as detailed in the following table:
Service Test Criteria Performance Accessibility of Delivery Systems Consistent Changes in Branch Locations Consistent Reasonableness of Business Hours and Services Below Community Development Services Below OVERALL Consistent
71 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
NONMETROPOLITAN ARKANSAS STATEWIDE AREA (Full-Scope Review)
DESCRIPTION OF INSTITUTION’S OPERATIONS IN NONMETROPOLITAN ARKANSAS
Bank Structure
Arvest Bank has one assessment area within nonMSA Arkansas consisting of 23 counties, where it operates 24 of its 267 branches (9.0 percent). Of the 24 branches, 3 are located in moderate- income census tracts, 18 are in middle-income census tracts, and 3 are in upper-income census tracts. During this review period, one branch in a middle-income census tract was relocated. Based on the branch network and other service delivery systems, the bank is largely able to serve the primary areas of central-west Arkansas and the far northern portion of the assessment area (near the Arkansas-Missouri border), with secondary accessibility to the far eastern portion of the assessment area and the north-central section of Arkansas.
Based on the FDIC Deposit Market Share Report as of June 30, 2015, 48 FDIC-insured institutions operated at least one office in this assessment area, and the bank had the third highest deposit market share percentage (7.4 percent). The deposits held at branches throughout the nonMSA Arkansas assessment area represent 5.3 percent of all Arvest Bank deposits.
General Demographics
The nonMSA Arkansas assessment area covers the central-west and north-central portions of Arkansas, including the contiguous counties of Baxter, Boone, Carroll, Cleburne, Conway, Franklin, Fulton, Hot Spring, Izard, Johnson, Logan, Marion, Montgomery, Newton, Polk, Pope, Prairie, Scott, Searcy, Stone, Van Buren, White, and Yell. The assessment area is generally rural with very few large cities. Based on 2010 U.S. Census data, the assessment area had a total population of 551,966. The county with the largest population is White County (77,076), which contains the city of Searcy. The remaining counties range in population from 8,195 to 61,754. While several counties experienced population shrinkages since the previous census, the overall assessment area grew 11.3 percent since the 2000 U.S. Census.
As the demographics of this assessment area cover an expansive part of rural Arkansas, credit needs in the area are also varied, including a standard blend of consumer and business/farm credit products. Other particular credit needs in the assessment area (noted primarily during community contact interviews) include increased access to financial and workforce education. Furthermore, many parts of this assessment area are sparsely populated, and there is a significant need for community development involvement, specifically affordable housing; however, rural areas often lack community development resources. Of the 95 middle-income census tracts in this assessment area, 20 were categorized as underserved and 50 were distressed due to poverty in 2014; additionally, 20 of these census tracts were both underserved and distressed.
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Income and Wealth Demographics
Based on 2010 U.S. Census data, the median family income for the assessment area was $43,011, which is slightly higher than the nonMSA Arkansas statewide figure, $42,175. As of 2014, the FFIEC-estimated median family income for nonMSA Arkansas was $45,300. The following table summarizes the distribution of the 124 geographies by income level and the family population of those census tracts within the assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 0 10 95 19 0 124 Census Tracts 0.0% 8.1% 76.6% 15.3% 0.0% 100%
Family 0 10,413 113,420 26,270 0 150,103 Population 0.0% 6.9% 75.6% 17.5% 0.0% 100%
The following table displays the distribution of assessment area families by income level, as well as the distribution of families for the state of Arkansas overall.
Family Population by Income Level Dataset Low- Moderate- Middle- Upper- TOTAL
Assessment 27,592 28,240 31,959 62,312 150,103 Area 18.4% 18.8% 21.3% 41.5% 100%
NonMSA 65,135 57,160 62,634 128,266 313,195 Arkansas 2 0.8% 18.3% 20.0% 41.0% 100%
Housing Demographics
According to 2010 U.S. Census demographics, housing in the assessment area is slightly less affordable compared to statewide nonMSA Arkansas. The nonMSA Arkansas assessment area has a housing affordability ratio of 39.3 percent, which indicates that housing in the assessment area is less affordable than nonMSA Arkansas overall (42.0 percent). Of the 23 counties in this assessment area, housing is most affordable in Scott County (52.4 percent), while Carroll County has the lowest affordability ratio (28.7 percent). The median housing value in the assessment area is $89,561, which is higher than nonMSA Arkansas ($78,904). The median gross monthly rent in the assessment area ($545) is slightly higher than the figure for nonMSA Arkansas overall ($535).
Industry and Employment Demographics
According to 2013 County Business Patterns data, 10,727 business entities were operating within the nonMSA Arkansas assessment area. The largest industries in the assessment area (by number of employees) are manufacturing, health care and social assistance, and retail trade.
73 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
According to the Department of Labor, Bureau of Labor Statistics, the annual unemployment rates (not seasonally adjusted) in the assessment area (7.6 percent in 2013 and 6.4 percent in 2014) closely mirror that of the state of Arkansas overall (7.4 percent in 2013 and 6.1 percent in 2014). Both the assessment area and the state of Arkansas have experienced decreasing levels of unemployment throughout 2013 and 2014.
Community Contact Information
Information from three community contacts was used to help shape the performance context in which the bank’s activities in this assessment area were evaluated. Of these interviews, one was with a person specializing in affordable housing, one was with an individual working with agricultural services, and the third was with an individual specializing in small business development. One of the contact interviewees characterized the local economy of Baxter, Boone, Carroll, and Marion Counties (all in northern Arkansas) as steady. The other interviewee stated that the economy of Fulton County is very depressed and the population is decreasing as residents leave to find employment opportunities. There have been no changes in the major industries or employers in the area, and there is a need for jobs and business growth, especially those that will provide a decent living wage. A large percentage of Fulton County residents rely on food stamps. In addition, there is a lack of access to health care and healthy food options. One of the interviewees stated that there is an overall lack of affordable housing in northern Arkansas areas compared to larger regions of Arkansas. Housing needs for this area include single family homes, multifamily complexes, Section 8 housing, and affordable housing for seniors (age 62 and older). Other needs for the assessment area include financial and workforce education.
74 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN NONMETROPOLITAN ARKANSAS
LENDING TEST
Lending levels reflect good responsiveness to nonMSA Arkansas assessment area credit needs. The bank’s overall geographic distribution of loans reflects good penetration throughout the assessment area. Furthermore, the overall distribution of loans by borrower’s income/revenue profile reflects good penetration among customers of different income levels and businesses/ farms of different sizes. Lastly, Arvest Bank makes few, if any, community development loans in the nonMSA Arkansas assessment area.
Lending Activity
The following table displays the bank’s 2014 lending volume in this assessment area by number and dollar volume.
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 240 11.2% $2,958 1.6% Home Purchase 423 19.7% $48,758 27.0% Multifamily Housing 6 0.3% $6,167 3.4% Refinancing 265 12.3% $26,055 14.4% TOTAL HMDA 934 43.4% $83,938 46.4% Small Business 824 38.3% $69,784 38.6% Small Farm 394 18.3% $27,062 15.0% TOTAL LOANS 2,152 100% $180,784 100%
The bank’s lending activity in nonMSA Arkansas reflects good responsiveness to assessment area credit needs. Lending activity in nonMSA Arkansas represents 8.9 percent of total HMDA and CRA loans made in the bank’s combined assessment areas in 2014. This level of HMDA and CRA activity is similar to the bank’s branch network in this assessment area, representing 9.0 percent of total bank branches. However, the percentage of loans originated in this assessment area is above the area’s proportion of total deposit holdings of 5.3 percent.
Geographic Distribution of Loans
As noted in the Description of Institution’s Operations in nonMSA Arkansas section, this assessment area does not contain any low-income census tracts and has ten moderate-income census tracts (8.1 percent of all assessment area census tracts). Overall, based on lending activity from all three loan categories reviewed, the geographic distribution of loans reflects good penetration throughout the assessment area. The following table displays the geographic
75 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
distribution of HMDA loans compared to owner-occupied housing demographics and aggregate performance for the assessment area.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 0 0.0% 18 4.3% 320 75.7% 85 20.1% 0 0.0% 423 100% Refinance 0 0.0% 17 6.4% 200 75.5% 48 18.1% 0 0.0% 265 100% Home Improvement 0 0.0% 15 6.3% 182 75.8% 43 17.9% 0 0.0% 240 100% Multifamily 0 0.0% 0 0.0% 6 100.0% 0 0.0% 0 0.0% 6 100% TOTAL HMDA 0 0.0% 50 5.4% 708 75.8% 176 18.8% 0 0.0% 934 100%
Owner-Occupied Housing 0.0% 6.4% 75.7% 17.9% 0.0% 100% 2014 HMDA Aggregate 0.0% 4.9% 73.8% 21.2% 0.1% 100%
As displayed in the previous table, the bank’s level of lending in moderate-income census tracts (5.4 percent) is above aggregate lending (4.9 percent) and below the percentage of owner- occupied housing in moderate-income census tracts (6.4 percent) and is considered adequate.
Next, the bank’s geographic distribution of small business loans compared to the location of businesses and aggregate lending throughout the bank’s assessment area was reviewed, as displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 0 0.0% 58 7.0% 625 75.8% 141 17.1% 0 0.0% 824 100% Loans Business 0.0% 5.8% 79.1% 15.1% 0.0% 100% Institutions 2014 Small 0.0% 6.0% 72.2% 17.9% 3.9% 100% Business
As displayed in the previous table, the bank’s level of lending in moderate-income census tracts is excellent. The bank’s level of lending in moderate-income census tracts (7.0 percent) is above both the percentage of businesses and the level of aggregate lending in moderate-income census tracts (5.8 percent and 6.0 percent, respectively).
Finally, the geographic distribution of small farm loans compared to the location of farms and aggregate lending throughout the assessment area is displayed in the following table:
76 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 30 7.6% 308 78.2% 56 14.2% 0 0.0% 394 100% Loans Agricultural 0.0% 6.6% 76.2% 17.2% 0.0% 100% Institutions
2014 Small 0.0% 9.5% 75.4% 14.0% 1.1% 100% Farm Aggregate
As displayed in the previous table, the bank’s level of lending in moderate-income census tracts aligns with comparison data. The bank’s level of lending in moderate-income census tracts (7.6 percent) compares favorably to the percentage of farms in moderate-income census tracts (6.6 percent). However, the bank’s lending levels are below aggregate (9.5 percent). Therefore, the bank’s geographic distribution of small farm loans is adequate.
Loan Distribution by Borrower’s Profile
Overall, the bank’s loan distribution by borrower’s profile is good, based on performance from all three loan categories reviewed. The following table shows the distribution of HMDA-reported loans by the income level of the borrower compared to family population demographics and aggregate performance.
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 26 6.1% 72 17.0% 86 20.3% 224 53.0% 15 3.5% 423 100% Refinance 13 4.9% 38 14.3% 56 21.1% 144 54.3% 14 5.3% 265 100%
Home Improvement 32 13.3% 33 13.8% 50 20.8% 116 48.3% 9 3.8% 240 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 6 100.0% 6 100% TOTAL HMDA 71 7.6% 143 15.3% 192 20.6% 484 51.8% 44 4.7% 934 100%
Family Population 18.4% 18.8% 21.3% 41.5% 0.0% 100% 2014 HMDA 5.3% 15.2% 19.1% 41.6% 18.9% 100% Aggregate
The bank’s level of lending to low-income borrowers within the assessment area is adequate. While the bank’s lending level to low-income borrowers (7.6 percent) is lower than the low- income family population (18.4 percent), it is above aggregate (5.3 percent). The bank’s HMDA lending to moderate-income borrowers (15.3 percent) is considered good, as it is below the percentage of moderate-income families within the assessment area (18.8 percent) and in line
77 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
with aggregate (15.2 percent). Therefore, the bank’s distribution of HMDA loans among customers of different income levels is good.
Next, small business loans were reviewed to determine the bank’s lending levels to businesses of different sizes. The following table shows the distribution of small business loans by loan amount and business revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 561 68.1% 79 9.6% 37 4.5% 677 82.2% Greater than $1 Million/Unknown 87 10.6% 29 3.5% 31 3.8% 147 17.8% TOTAL 648 78.6% 108 13.1% 68 8.3% 824 100%
2014 Dun & Bradstreet Businesses < $1MM 90.6%
2014 Small Business Aggregate < $1MM 55.8%
The bank’s level of lending to small businesses is good. The bank originated a majority of its small business loans (82.2 percent) to businesses with revenues of $1 million or less. The highest concentration of these loans was for loan amounts of $100,000 or less, which demonstrates the bank’s willingness to make credit available to small businesses in the assessment area. According to Dun & Bradstreet estimates, 90.6 percent of businesses reporting for 2014 had revenues of $1 million or less. Furthermore, the bank exceeded aggregate performance of 55.8 percent.
Small farm lending performance was analyzed to determine the bank’s lending levels to farms of different sizes. The following table shows the distribution of small farm loans by loan amount and farm revenue size compared to 2014 Dun & Bradstreet and aggregate data.
78 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 302 76.6% 58 14.7% 21 5.3% 381 96.7% Greater than $1 Million/Unknown 8 2.0% 4 1.0% 1 0.3% 13 3.3% TOTAL 310 78.7% 62 15.7% 22 5.6% 394 100%
Dun & Bradstreet Farms < $1MM 99.3% Small Farm Aggregate < $1MM 86.3%
As seen in the above table, a substantial majority of the bank’s small farm loans (96.7 percent) made in this assessment area were originated to farmers with revenues of $1 million or less. Additionally, the largest concentration of these loans was in loan amounts of $100,000 or less (76.6 percent), further demonstrating the bank’s willingness to make credit available to small farms in the assessment area. According to Dun & Bradstreet estimates, 99.3 percent of farms in the assessment area reported revenues of $1 million or less. Additionally, bank performance exceeded aggregate performance of 86.3 percent. Therefore, the bank’s distribution of small farm loans by borrower’s revenue profile is good.
Community Development Lending Activities
The bank makes few, if any, loans in the nonMSA Arkansas assessment area. During this examination period, the bank made no community development loans within this assessment area. This is a decline from the previous evaluation.
INVESTMENT TEST
The bank made an adequate level of qualified community development investments and grants and is rarely in a leadership position. The bank’s investments exhibit adequate responsiveness to credit and community development needs in the nonMSA Arkansas assessment area. As of the evaluation date, the bank had a balance of $1.1 million in qualified investments attributable to this assessment area, $380,000 of which is in previous review period investments still outstanding. All of the bank’s qualified investments are in MBS that finance affordable housing. Additionally, Arvest Bank partnered with the FHLB to make one qualified grant during this review period, which totaled $2,747. The grant was to provide funds for a LMI family to modify their home for a disabled family member.
SERVICE TEST
Arvest Bank’s service delivery systems are accessible to the geographies and individuals of different income levels in the nonMSA Arkansas assessment area. The bank’s record of opening and closing branches has not adversely affected the accessibility of its delivery systems,
79 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
particularly to LMI geographies and/or LMI individuals. Business hours and retail services do not vary in a way that inconveniences LMI geographies and/or LMI individuals. Finally, Arvest Bank personnel provide a relatively high level of community development services within this assessment area.
Accessibility of Delivery Systems
Arvest Bank operates 24 branch facilities within the nonMSA Arkansas assessment area. The following table illustrates the distribution of these facilities by income level of the geography compared to key assessment area demographics.
Branch Distribution by Geography Income Level Geography Income Level Dataset TOTAL Low- Moderate- Middle- Upper- Unknown 0 3 18 3 0 24 Branches 0.0% 12.5% 75.0% 12.5% 0.0% 100% Census Tracts 0.0% 8.1% 76.6% 15.3% 0.0% 100% Household Population 0.0% 7.0% 76.3% 16.7% 0.0% 100%
The bank operates three branches in moderate-income census tracts within the nonMSA Arkansas assessment area (12.5 percent), which compares favorably to both the number of census tracts (8.1 percent) and the household population residing in moderate-income geographies (7.0 percent). As displayed in the table above, the substantial majority of the bank’s branches are located in middle-income census tracts, which is commensurate with the overall makeup of the assessment area. However, as noted above in the Bank Structure section there is only secondary accessibility for the far eastern portion of the assessment area and the north- central section of Arkansas. Therefore, the bank’s delivery systems are accessible to the geographies and individuals of different income levels in the assessment area.
Changes in Branch Locations
The bank’s record of opening and closing branches has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or to LMI individuals. During the review period, the bank relocated one branch in a middle-income census tract.
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Business hours and banking products and services are relatively consistent across all branches in the nonMSA Arkansas assessment area. Most branches have Saturday operating hours and offer extended hours of operations in their lobby and drive-through facilities at some point during the week. Most drive-through facilities remain open until 7:00 p.m., Monday through Friday, and 1:00 p.m. on Saturday. All branches offer the same standard products, including low-cost checking and savings accounts, CDs, real estate and consumer loans, and other services.
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Therefore, bank services do not vary in a way that inconveniences certain segments of this assessment area, particularly LMI geographies and/or LMI individuals.
Community Development Services
Arvest Bank staff members provided a relatively high level of community development services within the nonMSA Arkansas assessment area. During the review period, 14 employees performed a total of 21 qualifying community development services in this assessment area. Bank employees provided financial expertise on an ongoing basis to community development organizations. Additionally, one employee assisted an affordable housing organization, and several more served an organization that helps low-income students obtain education scholarships. In addition, the bank opened and managed 4 IDA accounts and 45 RPA accounts during this review period.
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KANSAS11
CRA RATING FOR KANSAS: SATISFACTORY The Lending Test is rated: Low Satisfactory The Investment Test is rated: Substantial Noncompliance The Service Test is rated: Low Satisfactory
Factors supporting the institution’s state of Kansas rating include the following:
• Arvest Bank’s lending levels reflect good responsiveness to the credit needs of its Kansas assessment area.
• The bank’s overall geographic distribution of loans reflects adequate penetration throughout the Kansas assessment area.
• Given the product lines offered, the distribution of borrowers reflects excellent penetration among borrowers of different income levels and businesses and farms of different sizes.
• The bank makes few, if any, community development loans in the Kansas assessment area.
• The bank makes few, if any, qualified investments and grants in the Kansas assessment area.
• Service delivery systems are reasonably accessible to geographies and individuals of different income levels in the Kansas assessment area; furthermore, the bank’s record of opening and closing branches has not adversely affected the accessibility of delivery systems, and services do not vary in a way that inconveniences this assessment area, particularly LMI geographies and/or LMI individuals.
• For the fourth consecutive CRA evaluation period, the bank provided few, if any, community development services within the Kansas assessment area.
SCOPE OF EXAMINATION
Arvest Bank has two assessment areas in Kansas (Eastern Kansas and Southeastern Kansas). The Eastern Kansas assessment area consists solely of Franklin County, which was a part of the Kansas City MSA in 2013, but became part of nonMSA Kansas in 2014. Scoping considerations applicable to the review of the Kansas assessment areas are consistent with the overall CRA
11 The bank has branches located in Kansas that are also part of the Kansas City multistate MSA. Consequently, this statewide evaluation is adjusted so as not to reflect performance in the parts of Kansas contained within a multistate MSA. Refer to the multistate MSA section of this report for the rating and related evaluation of the institution’s performance in that area.
82 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
examination scope, as presented in the Institution, Scope of Examination section. The bank’s state ratings reflect a composite of performance in both Kansas assessment areas, which were reviewed using full-scope procedures. Furthermore, most of the demographics and performance analysis was completed at the individual assessment area level. Performance divergences between the two assessment areas are noted as applicable. In such cases, performance in the assessment areas received equal consideration when making statewide performance conclusions, in light of branch structure, loan/deposit activity, and the bank’s CRA evaluation history.
To augment the evaluation of the bank’s Kansas assessment area, three community contact interviews were completed as part of this evaluation. Two of the community contacts specialize in economic development targeted to the southeast corner of Kansas, and the other works in community services. Information from these community contacts was used to ascertain specific credit needs and local market conditions in the bank’s assessment area. In addition, this information aided in evaluating the bank’s responsiveness to identified community credit needs and community development opportunities. Key details from these community contacts are included in the Description of Institution’s Operations section.
DESCRIPTION OF INSTITUTION’S OPERATIONS IN KANSAS
Bank Structure
As displayed in the table below, the bank operates three branches in the Kansas assessment areas.
CRA Deposits $000s Assessment Area Branches # Branches % Deposits % Review (as of 6/30/15) Procedures Eastern Kansas (nonMSA) 1 33.3% $58,943.00 50.6% Full Scope Southeastern Kansas (nonMSA) 2 66.7% $57,455.00 49.4% Full Scope OVERALL 3 100% $116,398.00 100% 2 Full Scope
The bank did not open or close any branch offices during the review period in the Kansas assessment areas. The branch in the Eastern Kansas assessment area is located in a middle- income census tract. In the Southeastern Kansas assessment area, one branch is located in middle-income census tract and one branch is located in a moderate-income census tract. Based on the bank’s limited branch presence in the Southeastern Kansas assessment area, Arvest Bank is not able to effectively serve all parts of the assessment area, particularly the counties of Bourbon and Labette. Although there are branches in only three of the seven counties within nonMSA Kansas, bank branches are located in proximity to the counties of Chautauqua and Cherokee.
These assessment areas are competitive banking markets. According to the FDIC Deposit Market Share Report as of June 30, 2015, a total of 35 FDIC-insured institutions operate within the combined nonMSA Kansas assessment areas. Of the 35 financial institutions with an office in these assessment areas, the bank ranked 8th overall with a deposit market share of 4.1 percent. As
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of the same date, Arvest Bank deposits held at branches throughout nonMSA Kansas assessment areas represent 0.9 percent of the bank’s total deposits.
General Demographics
The bank’s combined Kansas assessment area is comprised of seven counties in their entirety. The Southeastern Kansas assessment area (which is just south of the Kansas City MSA) is comprised of the following contiguous counties: Bourbon, Chautauqua, Cherokee, Crawford, Labette, and Montgomery. The Eastern Kansas assessment area (which is just west of and contiguous to the Kansas City MSA) is comprised of Franklin County. As of the 2010 U.S. Census, the population of the combined nonMSA Kansas assessment area was 162,649. The county with the largest population is Crawford County (39,134). The remaining counties range in population from 3,669 to 35,471.
As the demographics of this assessment area cover an expansive part of rural Kansas, credit needs in the area are varied and include a mix of consumer and business/farm credit products. The primary credit needs in the assessment area (noted mainly through community contact interviews) include increased access to credit for small businesses, construction loans to build affordable housing, home improvement loans, and small-dollar consumer loans. Furthermore, many parts of this assessment area are sparsely populated, and while there is significant need for community development involvement, often these rural areas lack community development resources from which to draw. The assessment area consists of 49 geographies. Of the 39 middle-income census tracts in this assessment area, 1 was categorized as “underserved” and “distressed” due to population loss and another 22 were categorized as “distressed” due to poverty in 2014.
Income and Wealth Demographics
The FFIEC estimated median family income in nonMSA Kansas was $55,900 in 2014. Based on the 2010 U.S. Census, the median family income for the assessment area is $51,045, which is below the nonMSA Kansas figure, $52,419. The following table summarizes the distribution of geographies by income level and the family population of those census tracts within the assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 1 5 39 4 0 49 Census Tracts 2.0% 10.2% 79.6% 8.2% 0.0% 100%
Family 377 3,042 33,354 5,910 0 42,683 Population 0.9% 7.1% 78.1% 13.8% 0.0% 100%
The following table displays the distribution of assessment area families by income level compared to the family distribution for nonMSA Kansas.
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Family Population by Income Level Dataset Low- Moderate- Middle- Upper- TOTAL 8,113 8,368 10,412 15,790 42,683 Assessment Area 19.0% 19.6% 24.4% 37.0% 100% 45,860 47,701 58,535 99,720 251,816 NonMSA Kansas 18.2% 18.9% 23.2% 39.6% 100%
As shown in the table above, 38.6 percent of families within the combined nonMSA Kansas assessment area were considered LMI, which is similar to LMI family percentage of 37.1 percent in Kansas.
Housing Demographics
Housing in the combined assessment areas appears to be slightly more affordable than nonMSA Kansas. The nonMSA Kansas assessment area has a housing affordability ratio of 50.7 percent as of the 2010 U.S. Census, which is in line with affordability throughout nonMSA Kansas (51.0 percent). Of the seven counties in these assessment areas, housing is most affordable in Chautauqua County (72.0 percent), while Crawford County (42.1 percent) has the lowest affordability ratio. The remaining five counties have affordability ratios ranging from 42.2 to 60.5 percent. The median housing value in the assessment area is $77,894, which is slightly lower than nonMSA Kansas at $81,447. Median gross monthly rent in the assessment area ($578) is slightly higher than nonMSA Kansas ($560).
Industry and Employment Demographics
According to 2013 County Business Patterns data, there are 3,543 business entities operating within the nonMSA Kansas assessment area, with the majority of business entities located in Crawford (903) and Montgomery (820) Counties. The largest industries (by number of employees) in the assessment area are health care and social assistance, manufacturing, retail trade, and accommodation and food services.
According to the Department of Labor, Bureau of Labor Statistics, the average annual unemployment rates (not seasonally adjusted) in the nonMSA Kansas assessment area (6.0 percent in 2013 and 5.1 percent in 2014) were higher than the state of Kansas overall (5.3 percent in 2013 and 4.5 percent in 2014). Similar to the state of Kansas, unemployment in the nonMSA Kansas assessment area is trending downwards.
Community Contact Information
Information from three community contacts was used to help shape the performance context in which the bank’s activities in this assessment area were evaluated. Of these interviews, two were with individuals specializing in economic development in the Southeastern Kansas assessment area and the other was with a person working in community services in the Eastern Kansas assessment area. The consensus of the community contact interviewees is that the local economy
85 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015 is weak, with most families “just getting by.” In the Southeastern Kansas assessment area, the Montgomery County area has not fully recovered from major flooding events in 2007 and 2009, and the decrease in oil and natural gas prices has had a negative impact on the area. Most of the area has seen a decrease in population; however, Crawford County has recently seen an increase in population and is showing an upward economic trend, and Montgomery County has seen an influx of Hispanic population. Financial needs for the assessment area include community projects, funding for construction loans for affordable housing, loans to small businesses, and small-dollar loans. Financial education is also a current need of the assessment area.
In the Eastern Kansas assessment area, many residents drive into urban areas for employment, as there are few job opportunities in the smaller communities. The housing supply is very limited and is not targeted to LMI families. Some of the area’s needs noted by the interviewee include affordable housing, home repair loans, small-dollar loans, and financial literacy education.
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CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN KANSAS
LENDING TEST
Arvest Bank’s Lending Test performance for Kansas is rated low satisfactory. Overall lending levels reflect good responsiveness to Kansas assessment area credit needs. The geographic distribution of loans reflects adequate penetration throughout the assessment areas. The loan distribution by borrower’s income/revenue profile reflects excellent penetration among customers of different income levels and businesses/farms of different sizes. However, the bank makes few, if any, community development loans throughout the assessment areas.
Lending Activity
The bank’s lending levels in Kansas reflect good responsiveness to assessment area credit needs, based on the lending activity analyzed under the Lending Test. This lending activity in both assessment areas is displayed by loan type in the following table:
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 26 11.9% $287 1.9% Home Purchase 42 19.2% $3,927 25.4% Multifamily Housing 0 0.0% $0 0.0% Refinancing 15 6.8% $1,545 10.0% TOTAL HMDA 83 37.9% $5,759 37.2% Small Business 76 34.7% $7,813 50.5% Small Farm 60 27.4% $1,907 12.3% TOTAL LOANS 219 100% $15,479 100%
The bank’s lending activity in Kansas reflects good responsiveness to assessment area credit needs. Lending activity in Kansas represents 0.9 percent of total HMDA and CRA loans made within the bank’s combined assessment areas. This level of HMDA and CRA activity is commensurate with the bank’s branch network in this assessment area, representing 1.1 percent of total branches. In addition, total deposits in this assessment area represent 0.9 percent of the bank’s total deposits.
Geographic Distribution of Loans
As noted in the Description of Institution’s Operations in Kansas section, this assessment area contains one low-income census tract and five moderate-income census tracts. Overall, based on lending activity from all three loan categories reviewed, the geographic distribution of loans reflects adequate penetration throughout the assessment area. The following table displays the
87 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015 geographic distribution of HMDA loans compared to owner-occupied housing demographics and aggregate performance for the assessment area.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 0 0.0% 6 14.3% 29 69.0% 7 16.7% 0 0.0% 42 100% Refinance 0 0.0% 1 6.7% 13 86.7% 1 6.7% 0 0.0% 15 100% Home Improvement 0 0.0% 0 0.0% 24 92.3% 2 7.7% 0 0.0% 26 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 0 0.0% 7 8.4% 66 79.5% 10 12.0% 0 0.0% 83 100%
Owner-Occupied Housing 0.8% 5.9% 79.0% 14.4% 0.0% 100% 2014 HMDA Aggregate 0.1% 5.2% 73.8% 20.9% 0.0% 100%
As displayed in the preceding table, the bank has no HMDA loans in the sole low-income census tract in this assessment area. While the bank’s lending in low-income census tracts is considered poor, little weight is placed on this conclusion, given the location of the only bank branch in the county containing the low-income census tract and the remote location of the one low-income census tract. Bank lending in moderate-income census tracts (8.4 percent) is above the percentage of owner-occupied housing in nonMSA Kansas (5.9 percent) and aggregate data (5.2 percent) and is considered excellent. Bank lending in LMI geographies throughout the assessment area is excellent overall.
Next, the bank’s geographic distribution of small business loans compared to the location of businesses and aggregate lending throughout the bank’s assessment area was reviewed, as displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 0 0.0% 3 3.9% 66 86.8% 7 9.2% 0 0.0% 76 100% Loans Business 1.1% 10.4% 74.7% 13.8% 0.0% 100% Institutions 2014 Small Business 0.6% 11.0% 67.4% 14.9% 6.2% 100% At The overall analysis of small business loans reflects poor penetration throughout the assessment area. Although community contacts referenced a need for small business lending within the southeastern assessment area, the bank made no small business loans in low-income census tracts
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and only 3.9 percent of small business loans were to businesses located in a moderate-income census tract, each reflecting poor performance. In comparison, Dun & Bradstreet data reflects 1.1 percent of small businesses are located in a low-income census tract and 10.4 percent are located in a moderate-income census tract in the assessment area.
Finally, the geographic distribution of small farm loans compared to the location of farms and aggregate lending throughout the assessment area is displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 0 0.0% 57 95.0% 3 5.0% 0 0.0% 60 100% Loans Agricultural 0.0% 2.5% 77.5% 20.0% 0.0% 100% Institutions
2014 Small Farm 0.0% 2.1% 89.7% 8.1% 0.0% 100% Aggregate
The bank originated no small farm loans in either low- or moderate-income census tracts within the nonMSA Kansas assessment area, each reflecting poor performance. Despite the relatively low number of farms in LMI census tracts in the assessment area, the geographic distribution of loans for LMI farms reflects poor penetration throughout the assessment area.
Loan Distribution by Borrower’s Profile
Overall, the bank’s loan distribution by borrower’s profile is excellent, based on performance from all three loan categories reviewed. The following table shows the distribution of HMDA- reported loans by the income level of the borrower compared to family population demographics and aggregate performance.
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 4 9.5% 14 33.3% 7 16.7% 16 38.1% 1 2.4% 42 100% Refinance 3 20.0% 3 20.0% 3 20.0% 5 33.3% 1 6.7% 15 100% Home Improvement 7 26.9% 7 26.9% 4 15.4% 8 30.8% 0 0.0% 26 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 14 16.9% 24 28.9% 14 16.9% 29 34.9% 2 2.4% 83 100% Family Population 19.0% 19.6% 24.4% 37.0% 0.0% 100% 2014 HMDA Aggregate 7.9% 19.7% 20.5% 31.0% 20.9% 100%
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The analysis of the bank’s HMDA loans within the nonMSA Kansas assessment area reveals excellent overall lending levels to LMI borrowers. While the percentages of these loans to low- income borrowers (16.9 percent) is lower than the percentage of low-income families in the assessment area (19.0 percent), the bank is above aggregate (7.9 percent) and is considered good. Additionally, the level of lending to moderate-income borrowers (28.9 percent) is greater than the number of moderate-income families that reside within the assessment area (19.6 percent) and aggregate lending (19.7 percent) and is considered excellent. In addition, the bank’s percentage of home purchase loans to moderate-income borrowers (33.3 percent) and home improvement loans (26.9 percent) is well above the percentage of moderate-income families within the assessment area. This performance shows responsiveness to community contact statements indicating the need for affordable housing.
Next, small business loans were reviewed to determine the bank’s lending levels to businesses of different sizes. The following table shows the distribution of small business loans by loan amount and business revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 45 59.2% 8 10.5% 4 5.3% 57 75.0% Greater than $1 Million/Unknown 11 14.5% 4 5.3% 4 5.3% 19 25.0% TOTAL 56 73.7% 12 15.8% 8 10.5% 76 100% 2014 Dun & Bradstreet Businesses < $1MM 88.7% 2014 Small Business Aggregate < $1MM 39.4%
As the data indicates, the bank’s overall lending to small businesses is adequate. The bank originated 75.0 percent of its loans to small businesses, which is less than the Dun & Bradstreet estimate of small businesses in the assessment area (88.7 percent) but above aggregate lending (39.4 percent). Also, this level of performance is higher than 2013 lending to small businesses (69.6 percent). In addition, the fact that 59.2 percent of loans to small businesses were in amounts of $100,000 or less further illustrates the bank’s adequate performance in meeting the credit needs of small businesses within its entire assessment area.
Small farm lending performance was analyzed by the revenue size of the farm and by the dollar amount of the loan. The following table shows the distribution of small farm loans by loan amount and farm revenue size compared to 2014 Dun & Bradstreet and aggregate data.
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Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 57 95.0% 3 5.0% 0 0.0% 60 100.0% Greater than $1 Million/Unknown 0 0.0% 0 0.0% 0 0.0% 0 0.0% TOTAL 57 95.0% 3 5.0% 0 0.0% 60 100%
2014 Dun & Bradstreet Farms < $1MM 99.6% 2014 Small Farm Aggregate < $1MM 70.9%
All of the bank’s small farm loans were made to farmers with revenues of $1 million or less, reflecting excellent performance. In comparison, Dun & Bradstreet estimates that 99.6 percent of farms had revenues of $1 million or less. Additionally, the largest concentration of these loans (95.0 percent) was in loan amounts of $100,000 or less, which further demonstrates the bank’s willingness to make credit available to small farms in the assessment area.
Community Development Lending Activities
Arvest Bank makes few, if any community development loans in the assessment area. The bank originated one community development loan in the nonMSA Kansas assessment area totaling $226,000. The loan was to refinance an apartment building where the majority of the tenants are LMI.
INVESTMENT TEST
Overall, Arvest Bank’s performance under the Investment Test is rated substantial noncompliance for Kansas. Although there are fewer community development opportunities in this rural assessment area than larger metropolitan areas, the bank made few, if any community development investments and grants, exhibiting very poor responsiveness to credit and community development needs in the assessment area. During this review period, the bank had $14,833 in qualified investments attributable to this assessment area; these investments are in MBS that finance affordable housing and were made prior to the 2011 evaluation and are still outstanding. Additionally, Arvest Bank made no qualified community development grants within the assessment area, as was the case at the bank’s three previous CRA evaluations.
SERVICE TEST
Arvest Bank’s Service Test rating in Kansas is low satisfactory. The bank’s service delivery systems are reasonably accessible to the assessment area, and the bank’s record of opening and closing branches has generally not affected the accessibility of its delivery systems to LMI geographies and/or LMI individuals. Business hours and services do not vary in a way that inconveniences LMI geographies and/or LMI individuals. Conversely, for the fourth consecutive
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CRA evaluation, the bank provides few, if any, community development services in the nonMSA Kansas assessment area.
Accessibility of Delivery Systems
The bank operates three branch offices in this assessment area, as noted in the table below. Arvest Bank’s delivery systems are reasonably accessible to the geographies and individuals of different income levels in the assessment area.
Branch Distribution by Geography Income Level Geography Income Level Dataset TOTAL Low- Moderate- Middle- Upper- Unknown 0 1 2 0 0 3 Branches 0.0% 33.3% 66.7% 0.0% 0.0% 100% Census Tracts 2.0% 10.2% 79.6% 8.2% 0.0% 100% Household Population 0.9% 7.1% 78.1% 13.8% 0.0% 100%
Changes in Branch Locations
The bank’s record of opening and closing branches in the nonMSA Kansas assessment area has not affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals. The bank did not open or close any branches in nonMSA Kansas during this examination period.
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
While the bank only operates three branches in the nonMSA Kansas assessment area, its business hours, banking products, and services are consistent with the majority of all other Arvest Bank offices. Therefore, bank services do not vary in a way that inconveniences certain segments of this assessment area, particularly LMI geographies and/or LMI individuals.
Community Development Services
Arvest Bank provided few, if any, community development services in the nonMSA Kansas assessment area during the review period. One employee is a board member of an organization that services LMI individuals.
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MISSOURI12
CRA RATING FOR MISSOURI: SATISFACTORY The Lending Test is rated: Low Satisfactory The Investment Test is rated: Low Satisfactory The Service Test is rated: High Satisfactory
Factors supporting the institution’s CRA rating for Missouri include the following:
• Arvest Bank’s lending levels reflect adequate responsiveness to the credit needs of its Missouri assessment areas.
• The bank’s overall geographic distribution of loans reflects good penetration throughout the Missouri assessment areas.
• Given the product lines offered, the overall distribution of borrowers reflects good penetration among borrowers of different income levels and businesses/farms of different sizes.
• The bank makes a relatively high level of community development loans in Missouri.
• The bank has an adequate level of qualified community development investments and grants throughout the Missouri assessment areas but is rarely in a leadership position.
• Service delivery systems are accessible to geographies and individuals of different income levels in Missouri assessment areas; furthermore, changes in branch locations have generally not adversely affected the accessibility of delivery systems, and services do not vary in a way that inconveniences the Missouri assessment areas, particularly LMI geographies and/or LMI individuals.
• Arvest Bank personnel provide an adequate level of community development services in Missouri assessment areas.
SCOPE OF EXAMINATION
Arvest Bank has three assessment areas in Missouri, and scoping considerations applicable to the review of the Missouri assessment areas are consistent with the overall CRA examination scope, as presented in the Institution, Scope of Examination section. The bank’s performance within the Joplin assessment area was reviewed using full-scope CRA examination procedures, which formed the primary basis for the bank’s overall ratings in Missouri.
12The bank has branches located in Missouri that are also part of the Fayetteville-Springdale-Rogers multistate MSA and the Kansas City multistate MSA. Consequently, this statewide evaluation is adjusted so as not to reflect performance in the parts of Missouri contained within a multistate MSA. Refer to the multistate MSA sections of this report for the ratings and related evaluations of the institution’s performance in those areas.
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To augment the evaluation of the Missouri full-scope review assessment area, two community contact interviews were used to determine specific community credit needs, community development opportunities, and local market conditions. Both interviews took place with representatives from community organizations that focus on the Joplin area. One interview was with an economic development specialist, and the other was with a person specializing in services for LMI individuals.
DESCRIPTION OF INSTITUTION’S OPERATIONS IN MISSOURI
The bank operates 31 branches (11.6 percent of total branches) throughout the three CRA assessment areas in Missouri. The following table gives additional detail regarding the bank’s operations in Missouri. Deposits are based on the FDIC Deposit Market Share report as of June 30, 2015.
CRA Review Assessment Area Offices # Offices % Deposits Deposits % ($000s) Procedures Joplin MSA 12 38.7% $414,481 49.3% Full Scope Springfield MSA 5 16.1% $99,126 11.8% Limited Scope NonMSA Missouri 14 45.2% $326,712 38.9% Limited Scope STATE TOTAL 31 100% $840,319 100% N/A
Deposits attributable to the 31 Missouri branches total $840.3 million, which equates to 6.3 percent of total bank deposits.
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CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN MISSOURI
LENDING TEST
Arvest Bank’s Lending Test performance in Missouri is rated low satisfactory. Lending levels reflect adequate responsiveness to the credit needs in Missouri assessment areas. The bank’s overall geographic distribution of loans reflects good penetration throughout Missouri assessment areas. Furthermore, the overall distribution of loans by borrower’s income/revenue profile reflects good penetration among customers of different income levels and businesses/farms of different sizes. Lastly, Arvest Bank makes an adequate level of community development loans within its Missouri assessment areas.
Lending Activity
The bank’s lending levels in Missouri reflect adequate responsiveness to assessment area credit needs, based on the lending activity analyzed under the Lending Test. This lending activity is displayed by loan type in the following table:
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 143 6.7% $2,457 1.1% Home Purchase 699 32.7% $79,073 35.7% Multifamily Housing 2 0.1% $2,980 1.3% Refinancing 293 13.7% $35,261 15.9% TOTAL HMDA 1,137 53.2% $119,771 54.1% Small Business 722 33.8% $75,901 34.3% Small Farm 277 13.0% $25,776 11.6% TOTAL LOANS 2,136 100% $221,448 100%
The bank’s lending activity in the combined assessment areas in Missouri reflects adequate responsiveness to assessment area credit needs. Lending activity in Missouri represents 8.8 percent of total HMDA and CRA loans made within the bank’s combined assessment areas. This level of HMDA and CRA activity is lower than the bank’s branch network in this assessment area, representing 11.6 percent of total bank branches. In addition, the percentage of loans originated in this assessment area is above the area’s proportion of total deposit holdings of 6.3 percent.
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Geographic and Borrower Distribution
The following tables show Arvest Bank’s good overall performance under the geographic distribution of loans within Missouri.
Assessment Area (Full-Scope Review) Geographic Distribution of Loans Joplin MSA Good
Assessment Area (Limited-Scope Review) Geographic Distribution of Loans Springfield MSA Consistent NonMSA Missouri Below
Arvest Bank’s overall loan distribution by borrower’s profile reflects good performance, based on activity in three Missouri assessment areas, as detailed in the following tables:
Assessment Area (Full-Scope Review) Loan Distribution by Borrower’s Profile Joplin MSA Excellent
Assessment Area (Limited-Scope Review) Loan Distribution by Borrower’s Profile Springfield MSA Below NonMSA Missouri Consistent
Community Development Lending Activities
Overall, Arvest Bank is a leader in making community development loans in Missouri. The following table displays community development lending performance in the bank’s three Missouri assessment areas.
Assessment Area (Full-Scope Review) Community Development Lending Joplin MSA Leader
Assessment Area (Limited-Scope Review) Community Development Lending Springfield MSA Below NonMSA Missouri Below
In the three assessment areas within the state, the bank made six community development loans totaling $20.7 million.
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INVESTMENT TEST
For Missouri, Arvest Bank’s overall performance under the Investment Test is rated low satisfactory. The following tables display investment and grant activity performance by Missouri assessment areas.
Assessment Area (Full-Scope Review) Investment and Grant Activity Joplin MSA Adequate Level
Assessment Area (Limited-Scope Review) Investment and Grant Activity Springfield MSA Exceeds NonMSA Missouri Exceeds
Community development investments in Missouri assessment areas totaled $7.7 million; however, only $832,000 was invested in the Joplin MSA assessment area, which carries the most weight in this examination. Community development investments in both the Springfield MSA and nonMSA Missouri assessment areas were significantly higher ($3.8 million and $3.1 million, respectively). The investments were in a combination of MBS and municipal bonds.
SERVICE TEST
Overall, Arvest Bank’s performance in Missouri is rated high satisfactory under the Service Test. The bank’s delivery systems are accessible to geographies and individuals of different income levels throughout Missouri assessment areas. In addition, the bank’s record of opening and closing branches has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals. Business hours and services do not vary in a way that inconveniences portions of Missouri assessment areas, particularly LMI geographies and/or LMI individuals. Finally, Arvest Bank provides an adequate level of community development services within its Missouri assessment areas.
Accessibility of Delivery Systems
As displayed in the following tables, the bank’s delivery systems in Missouri assessment areas are accessible to geographies and individuals of different income levels.
Assessment Area (Full-Scope Review) Accessibility of Delivery Systems Joplin MSA Readily Accessible
Assessment Area (Limited-Scope Review) Accessibility of Delivery Systems Springfield MSA Consistent NonMSA Missouri Below
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Changes in Branch Locations
As displayed in the following tables, Arvest Bank’s record of opening and closing branches in its three Missouri assessment areas has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals.
Assessment Area (Full-Scope Review) Changes in Branch Locations Joplin MSA Not Adversely Affected
Assessment Area (Limited-Scope Review) Changes in Branch Locations Springfield MSA Consistent NonMSA Missouri Consistent
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Overall, banking services and business hours do not vary in a way that inconveniences the bank’s Missouri assessment areas, particularly LMI geographies and/or LMI individuals. The bank’s performance under this Service Test criterion is displayed by Missouri assessment areas in the following tables:
Reasonableness of Business Assessment Area (Full-Scope Review) Hours and Services Joplin MSA Do Not Vary in a Way that Inconveniences
Reasonableness of Business Assessment Area (Limited-Scope Review) Hours and Services Springfield MSA Consistent NonMSA Missouri Consistent
Community Development Services
Arvest Bank provides an adequate level of community development services across its Missouri assessment areas. The bank’s performance under this Service Test criterion is displayed by Missouri assessment areas in the following tables:
Assessment Area (Full-Scope Review) Community Development Services Joplin MSA Adequate Level
Assessment Area (Limited-Scope Review) Community Development Services Springfield MSA Below Missouri nonMSA Below
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Arvest Bank provided 28 community development services in Missouri, with 21 employees working with 18 different organizations throughout the assessment areas. In addition, the bank manages 41 RPA accounts for LMI individuals in Missouri.
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JOPLIN, MISSOURI MSA (Full-Scope Review)
DESCRIPTION OF INSTITUTION’S OPERATIONS IN THE JOPLIN, MISSOURI MSA
Bank Structure
Arvest Bank operates 12 of its 267 branches (4.5 percent) in the Joplin, Missouri MSA (Joplin MSA) assessment area. Of the 12 branches, none are located in low- or upper-income census tracts, two are in moderate-income census tracts, and ten are in middle-income census tracts. During this review period, the bank did not open or close any branches in this assessment area. Based on the branch network and other delivery systems, the bank is largely able to serve the Joplin MSA.
This assessment area is a competitive banking market. According to the FDIC Deposit Market Share Report as of June 30, 2015, a total of 14 FDIC-insured institutions operate within the MSA. Of the 14 financial institutions with an office in this assessment area, Arvest Bank ranked second with a deposit market share of 16.2 percent. As of June 30, 2015, Arvest Bank deposits held at branches throughout the Joplin MSA represent 3.1 percent of the bank’s total deposits.
General Demographics
This assessment area includes the entire Joplin MSA, which is comprised of Jasper County and Newton County. Based on 2010 U.S. Census data, the assessment area has a total population of 175,518; this marks a total MSA population increase of approximately 11.6 percent since the 2000 U.S. Census. A significant portion of the population is concentrated in Jasper County, Missouri (117,404).
As the demographics of this assessment area cover a wide metropolitan area and the population is diverse, credit needs in the area are also varied, including a standard blend of consumer and business/farm credit products. Other particular credit needs in the assessment area (as noted primarily during community contact interviews) are flexible residential real estate loan programs, including new construction of residential properties, and small business loans.
Income and Wealth Demographics
As of the 2010 U.S. Census, the median family income for the Joplin MSA was $46,381, which is less than the value for the state of Missouri as a whole, $57,661. More recently, the FFIEC estimates the 2014 median family income to be $51,000. The following table summarizes the distribution of geographies by income level and the family population of those census tracts within the assessment area.
100 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 0 5 26 3 0 34 Census Tracts 0.0% 14.7% 76.5% 8.8% 0.0% 100%
Family 0 5,057 37,084 3,142 0 45,283 Population 0.0% 11.2% 81.9% 6.9% 0.0% 100%
The following table displays the distribution of assessment area families by income level, as well as the distribution of families for the state of Missouri overall.
Family Population by Income Level Dataset Low- Moderate- Middle- Upper- TOTAL 9,205 8,590 9,021 18,467 45,283 Assessment Area 20.3% 19.0% 19.9% 40.8% 100% 318,048 279,308 335,189 613,964 1,546,509 Missouri 20.6% 18.1% 21.7% 39.7% 100%
Housing Demographics
The Joplin MSA assessment area has a housing affordability ratio of 40.5 percent as of the 2010 U.S. Census, which indicates more affordability than the state of Missouri overall (33.6 percent). Housing affordability was comparable among the two counties in the assessment area. The median housing value in the assessment area was $96,022, which is significantly lower than the state of Missouri ($137,700). Unlike the affordability ratio, the median housing value varied significantly by county. The median housing value in Jasper County was $93,400, while the median housing value in Newton County was $103,400. Median gross monthly rent in the Joplin MSA was also significantly lower at $596 than the state of Missouri ($667). Based on this information, housing costs in the Joplin MSA appear to be more affordable relative to overall data for the state of Missouri.
Industry and Employment Demographics
According to 2013 County Business Patterns data, 4,160 business entities operate in the Joplin MSA. The largest industries (by number of employees) in the Joplin MSA are health care and social assistance, manufacturing, and retail trade.
According to the Department of Labor, Bureau of Labor Statistics, the recent annual average unemployment rates (not seasonally adjusted) for the Joplin MSA (5.8 percent in 2013 and 5.2 percent in 2014) were lower than the unemployment rates for the state of Missouri (6.7 percent in 2013 and 6.1 percent in 2014).
101 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Community Contact Information
Information from two community contacts was used to help shape the performance context in which the bank’s activities in this assessment area were evaluated. Of these interviews, one was with an individual specializing in services to LMI individuals and the other was with a person working in an economic development role. The Joplin area has been steadily rebuilding since the May 2011 tornado. One of the interviewees stated that the rebuilding has focused primarily on “middle class” people. Surprisingly, the area has not experienced any significant level of population loss, credited to the local communities pulling together after the tornado. Like before the tornado, the majority of the area consists of renters; however, concerted efforts were made among several organizations to transition renters into homeowners. The local economy was characterized as fair to good, with fairly low unemployment levels. Since the tornado, there has been an influx of over 250 new businesses that have entered the Joplin area, representing a combination of small retailers to larger manufacturers. Financial education and funding for small businesses were identified as specific needs of the area, as well as the need for affordable housing options.
102 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN THE JOPLIN, MISSOURI MSA
LENDING TEST
Arvest Bank’s Lending Test performance in the Joplin MSA is rated high satisfactory. Lending levels reflect good responsiveness to assessment area credit needs. The geographic distribution of loans reflects good penetration throughout the assessment area. The loan distribution by borrower’s income/revenue profile reflects good penetration among customers of different income levels and businesses of different sizes. In addition, Arvest Bank is a leader in making community development loans in the Joplin MSA assessment area.
Lending Activity
The bank’s lending levels within the Joplin MSA reflect good responsiveness to assessment area credit needs based on the lending activity analyzed under the Lending Test. This lending activity is displayed by loan type in the following table:
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 55 6.5% $1,072 1.2% Home Purchase 257 30.4% $28,749 32.0% Multifamily Housing 1 0.1% $330 0.4% Refinancing 127 15.0% $12,635 14.1% Total HMDA 440 52.1% $42,786 47.7% Small Business 299 35.4% $38,288 42.7% Small Farm 106 12.5% $8,643 9.6% TOTAL LOANS 845 100% $89,717 100%
The bank’s lending activity in the Joplin MSA assessment area reflects good responsiveness to assessment area credit needs. Lending activity in the Joplin assessment area represents 3.5 percent of total HMDA and CRA loans made within the bank’s combined assessment areas. This level of HMDA and CRA activity is lower than the bank’s percentage of branches in this assessment area (4.5 percent). In addition, the percentage of loans originated in this assessment area is comparable to the area’s proportion of total deposit holdings of 3.1 percent.
Geographic Distribution of Loans
As noted in the Description of Institution’s Operations in Joplin MSA section, this assessment area has zero low-income census tracts and five moderate-income census tracts, representing 14.7 percent of all assessment area census tracts. Overall, based on lending activity from loan categories reviewed, the geographic distribution of loans reflects good penetration throughout the assessment area, including the LMI tracts. The following table displays the geographic distribution
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of HMDA loans compared to owner-occupied housing demographics and aggregate performance for the assessment area.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 0 0.0% 35 13.6% 208 80.9% 14 5.4% 0 0.0% 257 100% Refinance 0 0.0% 13 10.2% 106 83.5% 8 6.3% 0 0.0% 127 100% Home Improvement 0 0.0% 7 12.7% 46 83.6% 2 3.6% 0 0.0% 55 100% Multifamily 0 0.0% 0 0.0% 1 100.0% 0 0.0% 0 0.0% 1 100% TOTAL HMDA 0 0.0% 55 12.5% 361 82.0% 24 5.5% 0 0.0% 440 100%
Owner-Occupied Housing 0.0% 10.4% 82.1% 7.5% 0.0% 100% 2014 HMDA Aggregate 0.0% 11.0% 82.3% 6.7% 0.0% 100%
As displayed in the preceding table, bank lending in moderate-income census tracts (12.5 percent) is excellent compared with the percentage of owner-occupied housing in the Joplin MSA (10.4 percent) and aggregate data (11.0 percent). In addition, the bank’s penetration of home purchase loans in moderate-income census tracts is excellent (13.6 percent), which was noted as a need by one of the community contacts. Accordingly, the bank’s level of lending for HMDA loans in LMI geographies is excellent.
Next, the bank’s geographic distribution of small business loans compared to the location of businesses and aggregate lending throughout the bank’s assessment area was reviewed, as displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 0 0.0% 45 15.1% 233 77.9% 21 7.0% 0 0.0% 299 100% Loans Business 0.0% 15.1% 77.6% 7.2% 0.0% 100% Institutions 2014 Small Business 0.0% 15.9% 75.8% 6.1% 2.2% 100% Aggregate
The analysis of small business loans reflects good penetration throughout the assessment area. The bank’s lending levels in the moderate-income census tract category in 2014 was commensurate with the percentage of businesses in moderate-income census tracts. This reflects an improvement over 2013 data.
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The bank’s geographic distribution of small farm loans compared to the location of farms and aggregate lending throughout the bank’s assessment area was reviewed, as displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0 0.0% 0 0.0% 106 100.0% 0 0.0% 0 0.0% 106 100% Agricultural Institutions 0.0% 1.3% 97.1% 1.6% 0.0% 100% 2014 Small Farm Aggregate 0.0% 0.0% 97.6% 0.6% 1.8% 100%
Although the bank did not make any small farm loans in moderate-income census tracts, this is not considered poor performance in light of the very small number of farms located in moderate- income census tracts (1.3 percent). Additionally, aggregate data reflected no loans in moderate- income census tracts, which indicates a lack of availability of lending opportunities. All of the bank’s small farm loans were made in middle-income census tracts, which is in line with the percentage of farms located in middle-income census tracts (97.1 percent). Overall, the bank’s lending levels for small farm loans in moderate-income census tracts is considered adequate.
Loan Distribution by Borrower’s Profile
Overall, the bank’s loan distribution by borrower’s profile is excellent, based on performance in all three loan categories. The following table shows the distribution of HMDA-reported loans by the income level of the borrower compared to family population and aggregate data.
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 27 10.5% 68 26.5% 77 30.0% 82 31.9% 3 1.2% 257 100% Refinance 16 12.6% 22 17.3% 30 23.6% 52 40.9% 7 5.5% 127 100% Home Improvement 5 9.1% 11 20.0% 9 16.4% 24 43.6% 6 10.9% 55 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 1 100.0% 1 100% TOTAL HMDA 48 10.9% 101 23.0% 116 26.4% 158 35.9% 17 3.9% 440 100%
Family Population 20.3% 19.0% 19.9% 40.8% 0.0% 100% 2014 HMDA 8.4% 17.8% 20.4% 31.7% 21.7% 100% Aggregate
Based on the above table, the bank’s level of lending to low-income borrowers (10.9 percent) is significantly lower than the low-income family population (20.3 percent) but greater than aggregate lending (8.4 percent) and is considered good. Lending to moderate-income borrowers
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(23.0 percent) is higher than the percentage of moderate-income borrowers within the assessment area (19.0 percent) and aggregate (17.8 percent) and is considered excellent. Overall, the bank’s level of HMDA lending to LMI borrowers is excellent.
Next, small business loans were reviewed to determine the bank’s lending levels to businesses of different sizes. The following table shows the distribution of small business loans by loan amount and business revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 174 58.2% 27 9.0% 17 5.7% 218 72.9% Greater than $1 Million/Unknown 44 14.7% 12 4.0% 25 8.4% 81 27.1% TOTAL 218 72.9% 39 13.0% 42 14.0% 299 100% 2014 Dun & Bradstreet Businesses < $1MM 90.6% 2014 Small Business Aggregate < $1MM 41.4%
The bank originated 72.9 percent of its small business loans to businesses with revenues of $1 million or less, which is less than the Dun & Bradstreet estimate of small businesses in the assessment area (90.6 percent). However, aggregate lending (41.4 percent) is below the bank’s level of lending to small businesses. The majority of small business loans are below $100,000 (58.2 percent), which reflects the bank’s willingness to extend credit to small businesses. Therefore, the bank’s level of lending to small businesses is adequate.
Small farm lending performance was analyzed by the revenue size of the farm and by the dollar amount of the loan. The following table shows the distribution of small farm loans by loan amount and farm revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 82 77.4% 18 17.0% 3 2.8% 103 97.2% Greater than $1 Million/Unknown 0 0.0% 0 0.0% 3 2.8% 3 2.8% TOTAL 82 77.4% 18 17.0% 6 5.7% 106 100%
2014 Dun & Bradstreet Farms < $1MM 99.7%
2014 Small Farm Aggregate < $1MM 81.4%
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During the review period, 97.2 percent of the bank’s small farm loans were made to farmers with revenues of $1 million or less. In comparison, Dun & Bradstreet reported that 99.7 percent of small farms in the assessment area had revenues of $1 million or less. Additionally, the largest concentration of these loans was in loan amounts of $100,000 or less, which further demonstrates the bank’s willingness to make credit available to small farms in the assessment area. The bank’s borrower distribution of small farm loans in this assessment area is excellent.
Community Development Lending Activities
Arvest Bank makes a relatively high level of community development loans in the Joplin MSA. During this examination period, the bank originated six community development loans totaling $20.7 million. Three of the community development loans ($11.6 million) are to renew loans originated to assist in the revitalization and stabilization of the Joplin area in response to the destruction by the tornado on May 22, 2011. One community development loan ($3.0 million) is a line of credit to work in conjunction with obtaining tax credits through the Missouri Department of Economic Development for future economic development projects. The remaining loans ($6.1 million) are for affordable housing for LMI individuals and are considered innovative due to the variety of funding sources, including low-income housing tax credits and funds from the Missouri Housing Development Commission.
INVESTMENT TEST
Arvest Bank has an adequate level of qualified community development investments and grants and is rarely in a leadership position. Additionally, the bank exhibits adequate responsiveness to credit and community development needs. As of the review period, the bank held investments in this assessment area totaling $831,915. Of this amount, $322,350 were investments in MBS and the remaining $509,565 were investments in school municipal bonds.
SERVICE TEST
Arvest Bank’s service delivery systems are readily accessible to the Joplin MSA assessment area, and the bank’s record of opening and closing branches has not adversely affected the accessibility of its delivery systems to LMI geographies and/or LMI individuals. Business hours and services do not vary in a way that inconveniences LMI geographies and/or LMI individuals. The bank provided an adequate level of community development services in the Joplin MSA assessment area.
Accessibility of Delivery Systems
Arvest Bank operates 12 branch facilities within the Joplin MSA assessment area. The following table illustrates the distribution of these branches by income level of the geography compared to key assessment area demographics.
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Branch Distribution by Geography Income Level Geography Income Level Dataset TOTAL Low- Moderate- Middle- Upper- Unknown 0 2 10 0 0 12 Branches 0.0% 16.7% 83.3% 0.0% 0.0% 100% Census Tracts 0.0% 14.7% 76.5% 8.8% 0.0% 100% Household Population 0.0% 13.8% 79.8% 6.4% 0.0% 100%
As illustrated in the above table, Arvest Bank’s branches in moderate-income census tracts represent 16.7 percent of all branches in the Joplin MSA assessment area. Considering that only 13.8 percent of the household population resides in a moderate-income census tract and 14.7 percent of the assessment area is designated as a moderate-income geography, the bank’s delivery systems are considered readily accessible to the geographies and individuals of different income levels in the assessment area.
Changes in Branch Locations
As mentioned previously, the bank did not open or close any branches in this assessment area. The bank’s record of opening and closing branches in the Joplin MSA assessment area has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or to LMI individuals.
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Business hours and banking products and services are relatively consistent across all branches in the Joplin MSA assessment area. Most branches have Saturday operating hours and offer extended hours of operations in lobby and drive-through facilities at some point during the week. Most drive-through facilities remain open until 7:00 p.m., Monday through Friday, and until at least 12:00 p.m. on Saturday. All branches offer the same standard products, including low-cost checking and savings accounts, CDs, real estate and consumer loans, and other services. Therefore, bank services do not vary in a way that inconveniences certain segments of this assessment area, particularly LMI geographies and/or LMI individuals.
Community Development Services
Arvest Bank staff members within the Joplin MSA provide an adequate level of community development services. In this assessment area, 14 bank employees provided 21 community development services during the review period, including serving in an advisory role for organizations that provide affordable legal services and economic opportunities to LMI individuals. Additionally, Arvest Bank employees provided economic education to schools with a large proportion of LMI students. In addition, the bank opened and managed 21 RPA accounts during the review period.
108 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
SPRINGFIELD, MISSOURI MSA (Limited-Scope Review)
DESCRIPTION OF INSTITUTION’S OPERATIONS IN THE SPRINGFIELD, MISSOURI MSA
This assessment area includes the entire Springfield, Missouri MSA (Springfield MSA), which is comprised of the following counties: Christian, Dallas, Greene, Polk, and Webster. Arvest Bank operates five branch offices in this assessment area. During this review period, the bank did not open or close any branches. The tables below detail key demographics relating to this assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 3 22 50 16 0 91 Census Tracts 3.3% 24.2% 54.9% 17.6% 0.0% 100% 1,015 18,602 70,171 23,432 0 113,220 Family Population 0.9% 16.4% 62.0% 20.7% 0.0% 100%
Household 3,566 34,144 101,338 33,420 0 172,468 Population 2.1% 19.8% 58.8% 19.4% 0.0% 100%
Business 126 4,729 10,604 3,718 0 19,177 Institutions 0.7% 24.7% 55.3% 19.4% 0.0% 100%
Agricultural 2 95 841 83 0 1,021 Institutions 0.2% 9.3% 82.4% 8.1% 0.0% 100%
Assessment Area Demographics by Population Income Level Population Income Classification Demographic Type TOTAL Low- Moderate- Middle- Upper- 22,058 20,860 25,066 45,236 113,220 Family Population 19.5% 18.4% 22.1% 40.0% 100% 39,946 29,005 33,447 70,070 172,468 Household Population 23.2% 16.8% 19.4% 40.6% 100%
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CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN THE SPRINGFIELD, MISSOURI MSA
LENDING TEST
Arvest Bank’s lending performance in this assessment area is consistent with the bank’s lending performance in the Joplin MSA assessment area (full-scope MSA assessment area), as displayed in the following table. For more detailed information relating to the bank’s Lending Test performance in this assessment area, see the tables in Appendix C.
Lending Test Criteria Performance Lending Activity Consistent Geographic Distribution of Loans Consistent Distribution of Loans by Borrower’s Profile Below Community Development Lending Activities Below OVERALL Consistent
During the review period, the bank made no qualifying community development loans in the Springfield MSA. This is a decline from the previous examination period, when the bank originated three community development loans.
INVESTMENT TEST
Arvest Bank’s investment performance in the assessment area exceeds the investment performance in the Joplin MSA assessment area; however, it does not change the conclusion for the MSA portion of the state. The bank had new community development investments of $3.2 million (MBS and school municipal investments purchased in this review period), in addition to $514,774 MBS outstanding from the prior review period for a total of $3.8 million in community development investments.
SERVICE TEST
The bank’s sevice performance in this assessment area is consistent with service performance in the Joplin MSA assessment area, as detailed in the following table:
Service Test Criteria Performance Accessibility of Delivery Systems Consistent Changes in Branch Locations Consistent Reasonableness of Business Hours and Services Consistent Community Development Services Below OVERALL Consistent
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Two Arvest Bank employees provided community development services in the Springfield MSA assessment area during this review period, which is below the level of community development services in the Joplin MSA assessment area.
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NONMETROPOLITAN MISSOURI STATEWIDE AREA (Limited-Scope Review)
DESCRIPTION OF INSTITUTION’S OPERATIONS IN NONMETROPOLITAN MISSOURI
The nonMSA Missouri assessment area is a 13-county area in the southwestern portion of Missouri, including the counties of Barry, Barton, Cedar, Dade, Douglas, Howell, Laclede, Lawrence, Ozark, Stone, Taney, Vernon, and Wright. Arvest Bank operates 14 branches in this assessment area. During this review period, the bank did not open or close any branches within this assessment area. The tables below detail key demographics relating to this assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 0 12 54 1 0 67 Census Tracts 0.0% 17.9% 80.6% 1.5% 0.0% 100% 0 13,009 78,367 1,027 0 92,403 Family Population 0.0% 14.1% 84.8% 1.1% 0.0% 100%
Household 0 19,219 111,418 1,328 0 131,965 Population 0.0% 14.6% 84.4% 1.0% 0.0% 100%
Business 0 1,621 12,378 226 0 14,225 Institutions 0.0% 11.4% 87.0% 1.6% 0.0% 100%
Agricultural 0 230 1,366 3 0 1,599 Institutions 0.0% 14.4% 85.4% 0.2% 0.0% 100%
Assessment Area Demographics by Population Income Level Population Income Classification Demographic Type TOTAL Low- Moderate- Middle- Upper- 19,489 18,128 21,727 33,059 92,403 Family Population 21.1% 19.6% 23.5% 35.8% 100% 30,674 22,968 25,523 52,800 131,965 Household Population 23.2% 17.4% 19.3% 40.0% 100%
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CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN NONMETROPOLITAN MISSOURI
LENDING TEST
The bank’s lending performance in the assessment area is below the lending performance in the Joplin MSA assessment area; however, it does not change the conclusion for the Joplin MSA assessment area. For more detailed information relating to the bank’s Lending Test performance in this assessment area, see the tables in Appendix C.
Lending Test Criteria Performance Lending Activity Consistent Geographic Distribution of Loans Below Distribution of Loans by Borrower’s Profile Consistent Community Development Lending Activities Below OVERALL Below
During the review period, the bank made no qualifying community development loans in nonMSA Missouri. This is a decline from the previous examination period, when the bank originated three community development loans.
INVESTMENT TEST
The bank’s investment performance in the nonMSA Missouri assessment area exceeds performance in the Joplin MSA assessment area; however, it does not change the conclusion for the Joplin MSA assessment area. During this review period, the bank had $3.1 million in qualified investments attributable to this assessment area, which represents a significant increase since the last CRA evaluation. Most of the bank’s qualified investments are in school municipal bonds purchased during this examination period ($2.5 million), while the remaining qualified investments are in MBS that finance affordable housing (MBS of $240,111 were purchased during this review period, and $313,603 purchased in a previous review period are still outstanding).
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SERVICE TEST
The bank’s service performance in this assessment area is consistent with service performance in the Joplin MSA assessment area, as detailed in the following table:
Service Test Criteria Performance Accessibility of Delivery Systems Consistent Changes in Branch Locations Consistent Reasonableness of Business Hours and Services Consistent Community Development Services Below OVERALL Consistent
Arvest Bank did not open or close any branches within the assessment area. Five bank employees provided community development services across this assessment area.
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OKLAHOMA13
CRA RATING FOR OKLAHOMA: SATISFACTORY The Lending Test is rated: Low Satisfactory The Investment Test is rated: High Satisfactory The Service Test is rated: Low Satisfactory
Factors supporting the institution’s CRA rating for Oklahoma include the following:
• Arvest Bank’s lending levels reflect adequate responsiveness to the credit needs of its Oklahoma assessment areas.
• The bank’s overall geographic distribution of loans reflects adequate penetration throughout the Oklahoma assessment areas.
• Given the product lines offered, the overall distribution of borrowers reflects excellent penetration among borrowers of different income levels and businesses/farms of different sizes.
• The bank makes an adequate level of community development loans in the Oklahoma assessment areas.
• The bank makes a significant level of qualified community development investments and grants throughout the Oklahoma assessment areas and is occasionally in a leadership position.
• Service delivery systems are reasonably accessible to geographies and individuals of different income levels in Oklahoma assessment areas; furthermore, changes in branch locations have not adversely affected the accessibility of delivery systems, and services do not vary in a way that inconveniences the Oklahoma assessment areas, particularly LMI geographies and/or LMI individuals.
• Arvest Bank personnel provide a relatively high level of community development services throughout the Oklahoma assessment areas.
SCOPE OF EXAMINATION
Arvest Bank has four separate assessment areas within Oklahoma, and scoping considerations applicable to the review of the Oklahoma assessment areas are consistent with the overall CRA examination scope, as presented in the Institution, Scope of Examination section. The bank’s
13 The bank has branches located in Oklahoma that are also part of the Fort Smith multistate MSA. Consequently, this statewide evaluation is adjusted so as not to reflect performance in the parts of Oklahoma contained within a multistate MSA. Refer to the multistate MSA section of this report for the rating and evaluation of the institution’s performance in that area.
115 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015 performance in three of these assessment areas was reviewed using full-scope CRA examination procedures, which formed the primary basis for the bank’s overall ratings in Oklahoma. In light of branch structure, loan and deposit activity, and supervisory history, performance in the Tulsa MSA assessment area received primary consideration, followed by the Oklahoma City MSA assessment area and the nonMSA Oklahoma assessment area.
To augment the full-scope assessment area evaluations in Oklahoma, six community contact interviews were conducted (and three community contacts previously completed as part of separate supervisory events were referenced) in order to ascertain specific community credit needs, community development opportunities, and local market conditions. One interview was conducted with a small business development specialist in the Oklahoma City MSA. Two contacts were conducted with individuals specializing in economic development, one in Tulsa and one in Oklahoma City. One interview was with a person who provides community services to LMI individuals in Tulsa. Lastly, two interviews took place in nonMSA Oklahoma, one with a person familiar with affordable housing for the nonmetropolitan portions of the state and the other with an individual who worked in an organization that provides community services to LMI individuals.
DESCRIPTION OF INSTITUTION’S OPERATIONS IN OKLAHOMA
The bank operates 95 branches (35.6 percent of total branches) throughout the 4 CRA assessment areas in Oklahoma. The following table gives additional detail regarding the bank’s Oklahoma operations. Deposit information is from the FDIC Deposit Market Share report as of June 30, 2015.
Deposits CRA Review Assessment Area Offices # Offices % Deposits % ($000s) Procedures Oklahoma City MSA 26 27.4% $1,119,266 24.8% Full Scope Tulsa MSA 31 32.6% $1,733,904 38.3% Full Scope Lawton MSA 6 6.3% $214,740 4.7% Limited Scope NonMSA Oklahoma 32 33.7% $1,453,948 32.2% Full Scope STATE TOTAL 95 100% $4,521,858 100% N/A
Deposits attributable to the 95 Oklahoma branches total $4.5 billion, which equates to 34.1 percent of total bank deposits.
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CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN OKLAHOMA
LENDING TEST
Arvest Bank’s Lending Test performance in Oklahoma is rated low satisfactory. Lending levels reflect adequate responsiveness to Oklahoma assessment area credit needs. The geographic distribution of loans analyses reflects adequate penetration throughout the Oklahoma assessment areas. The loan distribution by borrower’s income/revenue profile reflects good penetration among customers of different income levels and businesses/farms of different sizes. Lastly, Arvest Bank makes an adequate level of community development loans in Oklahoma assessment areas.
Lending Activity
The bank’s lending levels in Oklahoma reflect adequate responsiveness to assessment area credit needs, based on the lending activity analyzed under the Lending Test. The 2014 lending activity is displayed by loan type in the following table:
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 1,280 14.9% $18,357 2.3% Home Purchase 2,176 25.3% $310,750 39.0% Multifamily Housing 3 0.0% $1,520 0.2% Refinancing 921 10.7% $109,880 13.8% TOTAL HMDA 4,380 50.8% $440,507 55.2% Small Business 3,399 39.4% $311,003 39.0% Small Farm 837 9.7% $45,982 5.8% TOTAL LOANS 8,616 100.00% $797,492 100.00%
The bank’s lending activity in the combined assessment areas in Oklahoma reflects adequate responsiveness to assessment area credit needs. Lending activity in Oklahoma represents 35.7 percent of total HMDA and CRA loans made within the bank’s combined assessment areas. This level of HMDA and CRA activity is similar to the bank’s overall percentage of branches in this assessment area (35.6 percent). The percentage of loans originated in this assessment area is slightly above the area’s proportion of total deposit holdings of 34.1 percent.
Geographic and Borrower Distribution
As displayed in the following tables, Arvest Bank’s overall performance under the geographic distribution of loans criterion within Oklahoma is adequate.
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Assessment Area (Full-Scope Review) Geographic Distribution of Loans Oklahoma City MSA Good Tulsa MSA Adequate NonMSA Oklahoma Adequate
Assessment Area (Limited-Scope Review) Geographic Distribution of Loans Lawton MSA Exceeds
Arvest Bank’s overall loan distribution by borrower’s profile reflects good performance, based on activity in the four Oklahoma assessment areas, as detailed in the following tables:
Assessment Area (Full-Scope Review) Loan Distribution by Borrower’s Profile Oklahoma City MSA Good Tulsa MSA Good NonMSA Oklahoma Excellent
Assessment Area (Limited-Scope Review) Loan Distribution by Borrower’s Profile Lawton MSA Exceeds
Community Development Lending Activities
Arvest Bank makes an adequate level of community development loans within Oklahoma. The following table displays community development loan performance in the bank’s four Oklahoma assessment areas.
Assessment Area (Full-Scope Review) Community Development Lending Oklahoma City MSA Relatively High Level Tulsa MSA Low Level nonMSA Oklahoma Adequate Level
Assessment Area (Limited-Scope Review) Community Development Lending Lawton MSA Exceeds
The bank made 13 community development loans totaling $40.4 million in Oklahoma assessment areas.
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INVESTMENT TEST
Overall, the bank’s performance in the Oklahoma assessment areas is rated high satisfactory under the Investment Test. The following tables display investment and grant activity performance by Oklahoma assessment areas.
Assessment Area (Full-Scope Review) Investment and Grant Activity Oklahoma City MSA Excellent Level Tulsa MSA Significant Level NonMSA Oklahoma Significant Level
Assessment Area (Limited-Scope Review) Investment and Grant Activity Lawton MSA Exceeds
Community development investments in Oklahoma assessment areas totaled $25.6 million and consisted of $3.9 million in community development-related tax credits purchased in previous review periods and $21.7 million in MBS (approximately $16.5 million in new securities and $5.2 million in previous review period investments still outstanding). The bank also made community development grants totaling $45,496 in Oklahoma assessment areas.
SERVICE TEST
Overall, Arvest Bank’s Service Test performance is rated low satisfactory in Oklahoma. The bank’s service delivery systems are reasonably accessible to geographies and individuals of different income levels throughout Oklahoma assessment areas. In addition, the bank’s record of opening and closing branches has generally not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals. Business hours and services do not vary in a way that inconveniences portions of Oklahoma assessment areas, particularly LMI geographies and/or LMI individuals. Lastly, Arvest Bank provides a relatively high level of community development services within Oklahoma assessment areas.
Accessibility of Delivery Systems
As displayed in the following tables, the bank’s delivery systems in Oklahoma assessment areas are reasonably accessible to geographies and individuals of different income levels.
Assessment Area (Full-Scope Review) Accessibility of Delivery Systems Oklahoma City MSA Inaccessible to Portions Tulsa MSA Reasonably Accessible NonMSA Oklahoma Readily Accessible
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Assessment Area (Limited-Scope Review) Accessibility of Delivery Systems Lawton MSA Consistent
Changes in Branch Locations
Arvest Bank’s record of opening and closing branches in its four Oklahoma assessment areas has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals.
Assessment Area (Full-Scope Review) Changes in Branch Locations Oklahoma City MSA Not Adversely Affected Tulsa MSA Not Adversely Affected NonMSA Oklahoma Generally Not Adversely Affected
Assessment Area (Limited-Scope Review) Changes in Branch Locations Lawton MSA Consistent
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Overall, banking services and business hours do not vary in a way that inconveniences certain portions of the bank’s Oklahoma assessment areas, particularly LMI geographies and/or LMI individuals. The bank’s performance under this Service Test criterion is displayed by assessment area in the following tables:
Assessment Area (Full-Scope Review) Reasonableness of Business Hours and Services Oklahoma City MSA Do Not Vary Tulsa MSA Tailored to Convenience and Needs NonMSA Oklahoma Do Not Vary
Assessment Area (Limited-Scope Review) Reasonableness of Business Hours and Services Lawton MSA Consistent
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Community Development Services
Arvest Bank provides an adequate level of community development services in its Oklahoma assessment areas. The bank’s performance under this Service Test criterion is displayed by assessment area in the following tables:
Assessment Area (Full-Scope Review) Community Development Services Oklahoma City MSA Adequate Level Tulsa MSA Adequate Level NonMSA Oklahoma Relatively High Level
Assessment Area (Limited-Scope Review) Community Development Services Lawton MSA Below
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OKLAHOMA CITY, OKLAHOMA MSA (Full-Scope Review)
DESCRIPTION OF INSTITUTION’S OPERATIONS IN THE OKLAHOMA CITY, OKLAHOMA MSA
Bank Structure
Arvest Bank has designated the entire Oklahoma City, Oklahoma MSA (Oklahoma City MSA) as an assessment area, which is comprised of seven counties in their entireties: Canadian, Cleveland, Grady, Lincoln, Logan, McClain, and Oklahoma. The bank operates 26 of its 267 branches (9.7 percent) in this assessment area. Of the 26 branches, 1 is in a low-income census tract, 3 are in moderate-income census tracts, 11 are in middle-income census tracts, 10 are in upper-income census tracts, and 1 branch is in a census tract in which the income designation is unknown. During the review period, the bank relocated one branch in an upper-income census tract to another upper-income census tract and closed one branch in a middle-income census tract. All counties in the assessment area contain a branch facility except for Logan and Lincoln Counties to the north and McClain County to the south. Based on the bank’s branch network and other service delivery systems, the bank is positioned to deliver financial services to substantially all of the Oklahoma City MSA.
The assessment area is a very competitive banking market. According to the FDIC Deposit Market Share Report as of June 30, 2015, 70 FDIC-insured institutions operate 407 offices in the Oklahoma City MSA. Of those 70 financial institutions, Arvest Bank ranked 6th with a deposit market share of 3.9 percent. The deposits held at branches throughout the Oklahoma City MSA represent 8.4 percent of all Arvest Bank deposits.
General Demographics
The seven-county Oklahoma City MSA is located in central Oklahoma. Based on 2010 U.S. Census data, the assessment area has a total population of 1,252,987. The county with the largest population, by far, is Oklahoma County (718,633), which is the location of Oklahoma City. The remaining six counties in the assessment area have populations ranging from 34,273 to 255,755. The MSA population has increased 14.4 percent since the 2000 U.S. Census.
As the demographics of this assessment area cover an MSA with a diverse population, credit needs in the area are also varied, including a standard blend of consumer and business credit products. Other particular credit needs in the assessment area (as noted primarily during community contact interviews) include creative business lending for start-up businesses. Furthermore, as the Oklahoma City MSA is an environment with need, coupled with an adequate source of community development intermediaries (such as nonprofit agencies, higher education institutions, and government assistance entities), a high level of community development opportunity is available for financial institution participation.
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Income and Wealth Demographics
Based on the 2010 U.S. Census, the median family income for the Oklahoma City MSA was $58,775, which is above that of the state of Oklahoma at $53,607. As of 2014, the FFIEC- estimated median family income for the Oklahoma City MSA was $61,400. The following table summarizes the distribution of the 363 geographies by income level and the family population of those census tracts within the assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 32 97 139 91 4 363 Census Tracts 8.8% 26.7% 38.3% 25.1% 1.1% 100% 14,308 67,558 134,385 93,317 10 309,578 Family Population 4.6% 21.8% 43.4% 30.1% 0.0% 100%
The following table displays the distribution of families by income level, as well as the income distribution of all Oklahoma families.
Family Population by Income Level Dataset Low- Moderate- Middle- Upper- TOTAL 65,967 54,957 63,640 125,014 309,578 Assessment Area 21.3% 17.8% 20.6% 40.4% 100% 203,343 169,025 195,448 383,426 951,242 Oklahoma 21.4% 17.8% 20.5% 40.3% 100%
Housing Demographics
Housing in the Oklahoma City MSA appears to be less affordable compared to the overall state of Oklahoma. As of the 2010 U.S. Census, the Oklahoma City MSA affordability ratio (38.7 percent) was below the affordability ratio for the state of Oklahoma (41.2 percent). Within the assessment area, housing is most affordable in Lincoln County (48.2 percent) and least affordable in Oklahoma County (36.5 percent). The median housing value in the Oklahoma City MSA was $121,318, which is significantly above the state of Oklahoma ($104,300). Furthermore, the median gross monthly rent in the Oklahoma City MSA ($680) is also above that of the state of Oklahoma ($633).
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Industry and Employment Demographics
According to 2013 County Business Patterns data, 34,197 business entities were operating within the Oklahoma City MSA. The largest industries (by number of employees) in the Oklahoma City MSA are health care and social assistance, retail trade, and accommodation and food services. Education also plays a big role in employment, as several large universities are located in the assessment area. Most of the business entities are located in Oklahoma County (22,949), followed by Cleveland County (5,529).
According to the Department of Labor, Bureau of Labor Statistics, recent annual average unemployment rates (not seasonally adjusted) for the Oklahoma City MSA were 5.1 percent in 2013 and 4.3 percent in 2014, which were slightly lower than the averages for the state of Oklahoma (5.4 percent in 2013 and 4.5 percent in 2014). Over the two-year period, unemployment rates have been on a decreasing trend for both the Oklahoma MSA and the state of Oklahoma.
Community Contact Information
Information from three community contacts was used to help shape the performance context in which the bank’s activities in this assessment area were evaluated. Of the interviews conducted as a part of this evaluation, one was with an individual specializing in business education services and the other was with a person working in an economic development role. The third contact, referenced from a recent, previously conducted evaluation, was with an individual working in affordable housing. Community contact interviewees stated that the local economy has seen excellent conditions over the past few years and is performing well. Unemployment has been on the downward trend. Credit counseling and business education have been regularly offered over the last couple of years. The downtown area of Oklahoma City has been an area of rapid growth, and there is a steady demand for apartments. The assessment area has realized an increase in its population as a result of residents of neighboring states moving into Oklahoma. The aerospace and hospitality sectors in the area are performing well; however, it was noted that some start-ups and newer companies are experiencing difficulty obtaining financing via traditional avenues.
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CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN THE OKLAHOMA CITY, OKLAHOMA MSA
LENDING TEST
Lending levels reflect adequate responsiveness to Oklahoma City MSA assessment area credit needs. The bank’s overall geographic distribution of loans reflects good penetration throughout the assessment area. Furthermore, the overall distribution of loans by borrower’s income/revenue profile reflects good penetration among customers of different income levels and businesses/ farms of different sizes. Lastly, Arvest Bank makes a relatively high level of community development loans in the Oklahoma City MSA assessment area.
Lending Activity
The following table displays the bank’s 2014 lending volume in this assessment area by number and dollar volume.
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 289 15.5% $3,999 2.0% Home Purchase 595 32.0% $89,544 45.2% Multifamily Housing 0 0.0% $0 0.0% Refinancing 190 10.2% $26,098 13.2% TOTAL HMDA 1,074 57.7% $119,641 60.3% Small Business 743 39.9% $75,208 37.9% Small Farm 45 2.4% $3,444 1.7% TOTAL LOANS 1,862 100% $198,293 100%
The bank’s lending activity in the Oklahoma City MSA reflects adequate responsiveness to assessment area credit needs. Lending activity in the Oklahoma City MSA represents 7.7 percent of total HMDA and CRA loans made within the bank’s combined assessment areas in 2014. This level of HMDA and CRA activity is below that of the bank’s branch network in this assessment area, representing 9.7 percent of total bank branches. The percentage of loans originated in this assessment is also below the area’s proportion of total deposit holdings of 8.4 percent.
Geographic Distribution of Loans
As noted in the Description of Institution’s Operations in Oklahoma City MSA section, this assessment area includes 32 low-income census tracts and 97 moderate-income census tracts, representing 35.5 percent of all assessment area census tracts. Overall, based on lending activity from all three loan categories reviewed, the bank’s geographic distribution of loans reflects good penetration throughout this assessment area. The following table displays the geographic
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distribution of HMDA loans compared to owner-occupied housing data and aggregate performance for the assessment area.
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 4 0.7% 76 12.8% 266 44.7% 249 41.8% 0 0.0% 595 100% Refinance 1 0.5% 20 10.5% 103 54.2% 66 34.7% 0 0.0% 190 100% Home Improvement 5 1.7% 52 18.0% 126 43.6% 106 36.7% 0 0.0% 289 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 10 0.9% 148 13.8% 495 46.1% 421 39.2% 0 0.0% 1,074 100% Owner-Occupied 3.2% 18.7% 45.0% 33.1% 0.0% 100% Housing 2014 HMDA 1.3% 13.7% 42.4% 42.5% 0.0% 100% Aggregate
As seen in the table above, the bank originated ten of its HMDA loans (0.9 percent) in low- income census tracts in this assessment area, which is less than the percent of owner-occupied housing (3.2 percent) but similar to the performance of the aggregate (1.3 percent) and is considered adequate. The bank’s HMDA penetration in moderate-income geographies was 13.8 percent, which was less than the owner-occupied housing percentage of 18.7 percent but consistent with 2014 HMDA aggregate data that shows that 13.7 percent of loans were originated in moderate-income geographies. Therefore, the bank’s performance in moderate- income census tracts is adequate, as is the overall geographic distribution of HMDA loans in this assessment area.
Secondly, the bank’s geographic distribution of small business loans compared to the location of businesses and aggregate lending throughout the bank’s assessment area was reviewed, as displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 40 5.4% 176 23.7% 256 34.5% 265 35.7% 6 0.8% 743 100% Loans Business 5.7% 20.8% 39.4% 33.1% 1.0% 100% Institutions 2014 Small Business 5.9% 17.4% 35.9% 37.0% 3.8% 100% Aggregate
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The bank’s performance based on the geographic distribution of small business loans is good. As noted in the table above, 5.4 percent of the bank’s small business loans were made in low- income census tracts, which is adequate compared to the estimated percentage of businesses located in low-income census tracts (5.7 percent) and aggregate lending (5.9 percent). Additionally, the bank’s performance in moderate-income census tracts is good. The bank’s lending percentage in moderate-income census tracts (23.7 percent) is above the estimated percentage of businesses in moderate-income census tracts (20.8 percent) and aggregate (17.4 percent).
Finally, the geographic distribution of small farm loans compared to the location of farms and aggregate lending throughout the assessment area is displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 3 6.7% 19 42.2% 18 40.0% 5 11.1% 0 0.0% 45 100% Loans Agricultural 1.2% 11.1% 57.6% 30.1% 0.0% 100% Institutions
2014 Small Farm 0.7% 15.7% 64.4% 18.7% 0.5% 100% Aggregate
As displayed in the preceding table, the bank had a relatively low level of small farm lending in this assessment area. However, the geographic distribution of small farm loans is excellent. The bank originated 6.7 percent of its small farm loans in low-income census tracts, which is excellent compared to Dun & Bradstreet’s estimated percentage of agricultural institutions in low-income geographies (1.2 percent) and aggregate (0.7 percent). Performance in moderate- income census tracts is also excellent, as the bank’s percentage of small farm loans (42.2 percent) significantly exceeds the percentage of agricultural institutions (11.1 percent) and aggregate (15.7 percent).
Loan Distribution by Borrower’s Profile
Overall, the bank’s loan distribution by borrower’s profile is good, based on performance from all three loan categories reviewed. The following table shows the distribution of HMDA-reported loans by borrower income level compared to family population and aggregate data.
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Distribution of Loans Inside Assessment Area by Borrower Income
January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 34 5.7% 130 21.8% 148 24.9% 265 44.5% 18 3.0% 595 100% Refinance 9 4.7% 33 17.4% 40 21.1% 102 53.7% 6 3.2% 190 100% Home Improvement 21 7.3% 48 16.6% 62 21.5% 147 50.9% 11 3.8% 289 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100%
TOTAL HMDA 64 6.0% 211 19.6% 250 23.3% 514 47.9% 35 3.3% 1,074 100% Family Population 21.3% 17.8% 20.6% 40.4% 0.0% 100% 2014 HMDA 5.6% 16.2% 19.5% 39.2% 19.6% Aggregate 100%
The bank’s level of lending to LMI borrowers within the assessment area is good. Based on the above table, the bank’s level of lending to low-income borrowers (6.0 percent) is adequate, as it is lower than the low-income family population (21.3 percent) but in line with aggregate data (5.6 percent). The bank’s performance to moderate-income borrowers reflects that the bank originated 19.6 percent of its HMDA loans in this category, which is good compared to the percent of families in the assessment area (17.8 percent) and aggregate lending (16.2 percent). Furthermore, home purchase loans were mentioned by community contacts as a need, and the bank’s level of home purchase loans to moderate-income borrowers shows responsiveness to that need.
Next, small business loans were reviewed to determine the bank’s lending levels to businesses of different sizes. The following table shows the distribution of small business loans by loan amount and business revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 366 49.3% 56 7.5% 20 2.7% 442 59.5% Greater than $1 Million/Unknown 206 27.7% 35 4.7% 60 8.1% 301 40.5% TOTAL 572 77.0% 91 12.2% 80 10.8% 743 100% 2014 Dun & Bradstreet Businesses < $1MM 89.9% 2014 Small Business Aggregate < $1MM 42.3%
The bank’s level of lending to small businesses is adequate. The bank originated 59.5 percent of its business loans to those with revenues of $1 million or less. The highest concentration of these
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loans was for loan amounts of $100,000 or less, which demonstrates the bank’s willingness to make credit available to small businesses in the assessment area. According to Dun & Bradstreet estimates, 89.9 percent of businesses reporting for 2014 had revenues of $1 million or less. Aggregate data reflects 42.3 percent of lending from other lenders was to small businesses.
Small farm lending performance was analyzed to determine the bank’s lending levels to farms of different sizes. The following table shows the distribution of small farm loans by loan amount and farm revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 37 82.2% 4 8.9% 3 6.7% 44 97.8% Greater than $1 Million/Unknown 1 2.2% 0 0.0% 0 0.0% 1 2.2% TOTAL 38 84.4% 4 8.9% 3 6.7% 45 100%
2014 Dun & Bradstreet Farms < $1MM 98.6% 2014 Small Farm Aggregate < $1MM 75.8%
As displayed in the preceding table, the bank had a relatively low level of small farm loan activity in this assessment area. However, the distribution of small farm loans by borrower’s profile is excellent, as 97.8 percent of farm loans were made to farms with revenues of $1 million or less. The highest concentration of these loans was in loan amounts of $100,000 or less, which demonstrates the bank’s willingness to make credit available to small farms in the assessment area. According to Dun & Bradstreet estimates, 98.6 percent of farms in the assessment area reported revenues of $1 million or less. Aggregate data reflects 75.8 percent of lending from other lenders was to small farms.
Community Development Lending Activities
Arvest Bank provides a relatively high level of community development loans totaling $13.2 million in the Oklahoma City MSA assessment area. During the review period, the bank originated or renewed four community development loans to renovate affordable housing complexes in conjunction with a HUD program specific to LMI individuals.
Product Innovation
Arvest Bank makes limited use of the HUD Section 184 Program in the Oklahoma City MSA, which helps increase financing to Native Americans.
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INVESTMENT TEST
Arvest Bank makes an excellent level of qualified community development investments and grants within the Oklahoma City assessment area, and is often in a leadership position. The bank’s investment exhibit excellent responsiveness to credit and community development needs in the assessment area. As of this evaluation date, the bank had a community development investment balance of $10.5 million attributable to this assessment area. All of these community development investments are in MBS that finance affordable housing (MBS of $8.5 were purchased during this review period, while the remaining $2.0 million were purchased in a previous review period and are still outstanding).
SERVICE TEST
Arvest Bank’s service delivery systems are unreasonably inaccessible to portions of the Oklahoma City assessment area. The bank’s record of opening and closing branches has not adversely affected the accessibility of its delivery systems to LMI geographies and/or LMI individuals, and business hours and services do not vary in a way that inconveniences LMI geographies and/or LMI individuals. Lastly, the bank provides an adequate level of community development services in the Oklahoma City MSA assessment area.
Accessibility of Delivery Systems
Arvest Bank operates 26 branch facilities within the Oklahoma City MSA. The following table illustrates the distribution of these facilities by income level of the geography compared to key assessment area demographics.
Branch Distribution by Geography Income Level Geography Income Level Dataset TOTAL Low- Moderate- Middle- Upper- Unknown 1 3 11 10 1 26 Branches 3.8% 11.5% 42.3% 38.5% 3.8% 100% Census Tracts 8.8% 26.7% 38.3% 25.1% 1.1% 100% Household Population 5.0% 25.1% 42.1% 27.7% 0.0% 100%
The bank operates one branch (3.8 percent) in a low-income census tract and three branches (11.5 percent) in moderate-income census tracts. In comparison, 8.8 percent of the census tracts are designated as low-income, and 5.0 percent of the household population resides within these tracts. For the moderate-income designation, 26.7 percent of the census tracts are moderate- income, and 25.1 percent of the household population lives in these geographies. While the bank has additional branches that are near the urban core of Oklahoma City within proximity to the LMI areas, delivery systems remain unreasonably inaccessible to portions of the assessment area.
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Changes in Branch Locations
The bank’s record of opening and closing branches in the Oklahoma City MSA assessment area has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or to LMI individuals. The bank closed one branch in a middle-income census tract and relocated a branch in an upper-income census tract.
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Business hours and banking products and services are relatively consistent across all branches in the Oklahoma City MSA assessment area. Most branches have Saturday operating hours and offer extended hours of operations in their lobby and drive-through facilities at some point during the week. Most drive-through facilities remain open until 8:00 p.m., Monday through Friday, and until 1:00 p.m. on Saturday. All branches offer the same standard products, including low-cost checking and savings accounts, CDs, real estate and consumer loans, and other services. Therefore, bank services do not vary in a way that inconveniences certain segments of this assessment area, particularly LMI geographies and/or LMI individuals.
Community Development Services
Arvest Bank provides an adequate level of community services in the Oklahoma City MSA assessment area. During the review period, 19 employees worked with 11 different organizations that provide financial literacy to students in schools that are predominately LMI, in addition to budget and credit classes for LMI adults. Also, the bank opened and manages 60 RPA accounts.
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TULSA, OKLAHOMA MSA (Full-Scope Review)
DESCRIPTION OF INSTITUTION’S OPERATIONS IN THE TULSA, OKLAHOMA MSA
Bank Structure
Arvest Bank has designated the entire Tulsa, Oklahoma MSA (Tulsa MSA) as an assessment area, within which the bank operates 31 of its 267 branches (11.6 percent). Of the 31 branches, 1 is in a low-income census tract, 8 are in moderate-income census tracts, 12 are in middle-income census tracts, and 10 are in upper-income census tracts. During the review period, the bank opened one branch in a middle-income census tract and relocated one branch located in an upper-income census tract into a middle-income census tract. The majority of the branches in this assessment area are in the city of Tulsa or its surrounding suburbs. While Arvest Bank does not have a branch presence in two of the counties in this assessment area, these areas are more rural and remain in proximity to additional bank branches. Therefore, based on this branch network and other service delivery systems, the bank is adequately positioned to deliver financial services to substantially all of the Tulsa MSA.
This assessment area is a highly competitive banking market. According to the FDIC Deposit Market Share Report as of June 30, 2015, a total of 58 FDIC-insured institutions operate 289 offices in the Tulsa MSA. Of those 58 financial institutions, Arvest Bank ranked third with a deposit market share of 7.0 percent. The deposits held at branches throughout the Tulsa MSA represent 13.1 percent of all Arvest Bank deposits.
General Demographics
The Tulsa MSA is a seven-county area in northeastern Oklahoma. The seven counties comprising the MSA are Creek, Okmulgee, Osage, Pawnee, Rogers, Tulsa, and Wagoner. Based on 2010 U.S. Census data, the assessment area has a total population of 937,478. The majority of the population lives in Tulsa County (603,403). The remaining counties range in population from 16,577 to 86,905. The population in the Tulsa MSA has grown 9.1 percent since the 2000 U.S. Census.
As the demographics of this assessment area cover a wide metropolitan area and the population is diverse, credit needs in the area are also varied, including a standard blend of consumer and business/farm credit products. Other particular credit needs in the assessment area (as noted primarily during community contact interviews) include small business resources, affordable housing for working families, and financial literacy. Furthermore, as the Tulsa MSA is an environment with significant need coupled with a strong source of community development intermediaries (such as nonprofit agencies, higher education institutions, and government assistance entities), a high level of community development opportunity is available for financial institution participation.
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Income and Wealth Demographics
Based on the 2010 U.S. Census, the median family income for the Tulsa MSA was $58,038, which was greater than the state of Oklahoma at $53,607. As of 2014, the FFIEC-estimated median family income for the Tulsa MSA was $59,200. The following table summarizes the distribution of the 272 geographies by income level and the family population of those census tracts within the assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 20 77 99 76 0 272 Census Tracts 7.4% 28.3% 36.4% 27.9% 0.0% 100% 12,504 56,490 94,366 78,286 0 241,646 Family Population 5.2% 23.4% 39.1% 32.4% 0.0% 100%
The following table displays the distribution of families, by income level, that reside in this assessment area, as well as the statewide percentage for Oklahoma.
Family Population by Income Level Dataset Low- Moderate- Middle- Upper- TOTAL 50,941 43,238 49,328 98,139 241,646 Assessment Area 21.1% 17.9% 20.4% 40.6% 100% 203,343 169,025 195,448 383,426 951,242 Oklahoma 21.4% 17.8% 20.5% 40.3% 100%
Housing Demographics
While income levels in the assessment area are relatively higher than income levels for the state of Oklahoma overall, higher housing costs in the Tulsa MSA keep overall housing affordability in the assessment area below that of the state. As of the 2010 U.S. Census, the Tulsa MSA assessment area housing affordability ratio (38.2 percent) was less than the affordability ratio for the state of Oklahoma (41.2 percent). Of the seven MSA counties, buying a home is most affordable in Pawnee County (51.3 percent) and least affordable in Tulsa County (36.1 percent). The median housing value in the assessment area ($121,879) is significantly higher than that of the state of Oklahoma ($104,300). The median gross monthly rent in the Tulsa MSA ($676) is also higher than the state of Oklahoma figure ($633). These numbers show that the Tulsa MSA is less affordable than the state of Oklahoma as a whole. Overall housing is less affordable than the state of Oklahoma and homeownership may be out of reach for LMI individuals and households.
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Industry and Employment Demographics
According to 2013 County Business Patterns data, 24,113 business entities are operating within the Tulsa MSA. The largest industries (by number of employees) in the Tulsa MSA are health care and social assistance, manufacturing, and retail trade. Tulsa County by far has the majority of business entities (18,583) followed by Rogers County (1,702) and Creek County (1,382).
According to the Department of Labor, Bureau of Labor Statistics, the recent annual average unemployment rates (not seasonally adjusted) for the Tulsa MSA (5.6 percent in 2013 and 4.7 percent in 2014) are in line with the average unemployment rates for the state of Oklahoma (5.4 percent in 2013 and 4.5 percent in 2014). Both the assessment area and the state of Oklahoma have experienced a decrease in unemployment over the two-year period.
Community Contact Information
Information from three community contacts was used to help shape the performance context in which the bank’s activities in this assessment area were evaluated. Of the interviews conducted as part of this evaluation, one was with an individual in community services and the other was with a person working in an economic development role. Information from an existing contact was also considered. The local economy was described as strong but on a slight decline, with residents on the lower side of middle-income. No significant employers have left the area. Unemployment has remained stable or has slightly decreased; however, lack of transportation and/or infrastructure represents a barrier to employment in the Tulsa metro area. Business development and industrial park space were also noted as needs for the area. Affordable housing was identified as a continuing need for the “working poor,” and there is always a waiting list for Section 8 housing facilities. Additionally, rental prices for multifamily complexes and single family homes are high, sometimes higher than the cost of a mortgage payment for the area. New housing construction has slowed, and it was noted that houses have sold relatively quickly. One of the interviewees stated that small business resources, home improvement loans, and financial/homebuyer education are needs of the area.
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CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN THE TULSA, OKLAHOMA MSA
LENDING TEST
Lending levels reflect good responsiveness to the Tulsa MSA assessment area credit needs. The geographic distribution of loans reflects adequate penetration throughout the assessment area, and the loan distribution by borrower’s income/revenue profile also reflects adequate penetration among customers of different income levels and businesses/farms of different sizes. Lastly, Arvest Bank makes a low level of community development loans in the Tulsa MSA assessment area.
Lending Activity
The following table displays the bank’s 2014 lending volume in this assessment area by number and dollar volume.
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 552 19.0% $8,378 2.7% Home Purchase 845 29.1% $136,551 44.1% Multifamily Housing 2 0.1% $713 0.2% Refinancing 326 11.2% $41,868 13.5% TOTAL HMDA 1,725 59.4% $187,510 60.6% Small Business 1,115 38.4% $116,542 37.7% Small Farm 64 2.2% $5,486 1.8% TOTAL LOANS 2,904 100% $309,538 100%
The bank’s lending activity in the Tulsa MSA reflects good responsiveness to assessment area credit needs. Lending activity in the Tulsa MSA represents 12.0 percent of total HMDA and CRA loans made within the bank’s combined assessment areas in 2014. This level of HMDA and CRA activity is in line with the bank’s branch network in this assessment area, representing 11.6 percent of total bank branches. However, the percentage of loans originated in this assessment is slightly below the assessment area’s proportion of total deposit holdings of 13.1 percent.
Geographic Distribution of Loans
As noted in the Description of Institution’s Operations in Tulsa MSA section, this assessment area includes 20 low-income census tracts and 77 moderate-income census tracts, representing 35.7 percent of all assessment area census tracts. Overall, based on lending activity from all three loan categories reviewed, the bank’s geographic distribution of loans reflects adequate
135 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
penetration throughout this assessment area, particularly among the 97 LMI census tracts. The following table displays the geographic distribution of HMDA loans compared to owner- occupied housing demographics and aggregate performance for the assessment area.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 10 1.2% 116 13.7% 296 35.0% 423 50.1% 0 0.0% 845 100%
Refinance 8 2.5% 49 15.0% 121 37.1% 148 45.4% 0 0.0% 326 100%
Home Improvement 7 1.3% 83 15.0% 223 40.4% 239 43.3% 0 0.0% 552 100%
Multifamily 0 0.0% 2 100.0% 0 0.0% 0 0.0% 0 0.0% 2 100%
TOTAL HMDA 25 1.4% 250 14.5% 640 37.1% 810 47.0% 0 0.0% 1,725 100%
Owner-Occupied Housing 3.4% 20.9% 40.8% 34.9% 0.0% 100%
2014 HMDA Aggregate 1.3% 13.4% 38.5% 46.7% 0.0% 100%
The bank’s geographic distribution of HMDA loans is adequate. As displayed in the table above, the bank’s level of lending in low-income census tracts (1.4 percent) is less than the percentage of owner-occupied housing units in low-income geographies (3.4 percent) but similar to aggregate lending (1.3 percent) and is considered adequate. Similarly, the bank’s level of lending in moderate-income census tracts (14.5 percent) is less than the percentage of owner-occupied housing units in moderate-income geographies (20.9 percent) but greater than aggregate lending (13.4 percent) and is considered adequate.
Next, the bank’s geographic distribution of small business loans was reviewed, which is displayed in the following table compared to the distribution of assessment area businesses and aggregate lending by geography income level.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 51 4.6% 254 22.8% 332 29.8% 478 42.9% 0 0.0% 1,115 100% Loans Business 5.9% 25.3% 34.4% 34.4% 0.0% 100% Institutions 2014 Small Business 5.7% 21.2% 31.8% 38.8% 2.6% 100% Aggregate
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The analysis of the bank’s small business loan activity reflects adequate penetration throughout the assessment area. The bank’s low-income census tract lending level (4.6 percent) is under the percentage of businesses within these geographies (5.9 percent) and aggregate lending (5.7 percent) and is considered poor. The bank’s performance in moderate-income census tracts is also considered adequate. Although the bank’s percentage of small business loans in moderate- income census tracts (22.8 percent) is less than the percentage of businesses located in these geographies (25.3 percent), it is above aggregate (21.2 percent) and is considered good.
Finally, the geographic distribution of small farm loans compared to the distribution of assessment area farms and aggregate lenders by geography income level is displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 16 25.0% 36 56.3% 12 18.8% 0 0.0% 64 100% Loans Agricultural 0.6% 17.2% 55.9% 26.3% 0.0% 100% Institutions 2014 Small Farm 0.0% 24.9% 56.7% 16.7% 1.7% 100% Aggregate
The bank’s geographic distribution of small farm loans is good. The level of opportunity to make small farm loans in low-income census tracts is low, as only .6 percent of agricultural institutions are located in low-income census tracts. The bank’s level of lending in moderate-income geographies (25.0 percent) is well above the level of agricultural institutions (17.2 percent) and similar to aggregate data (24.9 percent).
Loan Distribution by Borrower’s Profile
Overall, the bank’s loan distribution by borrower’s profile is good, based on performance from all three loan categories reviewed. The following table shows the distribution of HMDA-reported loans by the income level of the borrower compared to family population demographics and aggregate performance.
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Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 75 8.9% 159 18.8% 195 23.1% 394 46.6% 22 2.6% 845 100% Refinance 13 4.0% 54 16.6% 67 20.6% 169 51.8% 23 7.1% 326 100% Home Improvement 27 4.9% 73 13.2% 116 21.0% 326 59.1% 10 1.8% 552 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 2 100.0% 2 100% TOTAL HMDA 115 6.7% 286 16.6% 378 21.9% 889 51.5% 57 3.3% 1,725 100% Family Population 21.1% 17.9% 20.4% 40.6% 0.0% 100% 2014 HMDA 5.0% 16.2% 20.4% 39.8% 18.6% Aggregate 100%
The bank’s level of lending to LMI borrowers within the assessment area is good. Based on the above table, the bank’s level of lending to low-income borrowers (6.7 percent) is lower than the percentage of low-income families (21.1 percent); however, the bank’s performance is above that of aggregate data (5.0 percent). Additionally, the bank’s level of lending to moderate-income borrowers (16.6 percent) is only slightly lower than demographic (17.9 percent) and in line with aggregate (16.2 percent), which is good. Additionally, a community contact stated that rent is nearly as high as a mortgage payment in the assessment area and the bank’s percentage of home purchase originations to moderate-income borrowers (18.8 percent) is above the family population; furthermore, the bank’s level of home purchase loans to low-income borrowers (8.9 percent) is also considered good. Therefore, the bank’s HMDA lending to LMI borrowers in Tulsa is good.
Next, small business loans were reviewed to determine the bank’s lending levels to businesses of different sizes. The following table shows the distribution of small business loans by loan amount and business revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 564 50.6% 85 7.6% 65 5.8% 714 64.0% Greater than $1 Million/Unknown 298 26.7% 37 3.3% 66 5.9% 401 36.0% TOTAL 862 77.3% 122 10.9% 131 11.7% 1,115 100% 2014 Dun & Bradstreet Businesses < $1MM 89.2% 2014 Small Business Aggregate < $1MM 45.2%
138 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
The bank’s level of lending to small businesses is adequate. The bank originated 64.0 percent of its small business loans to businesses with gross annual revenues of $1 million or less. According to Dun & Bradstreet estimates, 89.2 percent of businesses reporting for 2014 had revenues of $1 million or less. The bank’s lending to small businesses in the assessment area is above aggregate numbers (45.2 percent).
Small farm lending performance was analyzed to determine the bank’s lending levels to farms of different sizes. The following table shows the distribution of small farm loans by loan amount and farm revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 43 67.2% 7 10.9% 7 10.9% 57 89.1% Greater than $1 Million/Unknown 7 10.9% 0 0.0% 0 0.0% 7 10.9% TOTAL 50 78.1% 7 10.9% 7 10.9% 64 100%
2014 Dun & Bradstreet Farms < $1MM 99.3% 2014 Small Farm Aggregate < $1MM 73.7%
Arvest Bank’s lending to small farms is good. The bank originated 89.1 percent of small farm loans made in this assessment area to farmers with gross annual revenues of $1 million or less. The highest concentration of these loans were in loan amounts of $100,000 or less, which further demonstrates the bank’s willingness to make credit available to small farms in the assessment area. According to Dun & Bradstreet estimates, 99.3 percent of farms in the assessment area reported revenues of $1 million or less. Furthermore, the bank outperforms the aggregate (73.7 percent).
Community Development Lending Activities
Arvest Bank makes a low level of community development loans in the Tulsa MSA. The bank originated or renewed four community development loans totaling $6.7 million during this review period. Two community development loans were made to an organization with the purpose of providing community services in the assessment area. Two community development loans were originated to revitalize and stabilize the community; one loan was to renovate a commercial building to attract businesses to a moderate-income area of Tulsa; and the final loan was to improve infrastructure in the assessment area.
Product Innovation
While the numbers are included in HMDA lending numbers, Arvest Bank makes use of the HUD Section 184 Program by originating 159 loans on this loan product, which helps increase financing to Native Americans.
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INVESTMENT TEST
Arvest Bank makes a significant level of qualified community development investments and grants within the Tulsa MSA and is occasionally in a leadership position. As of the evaluation date, the bank had a community development investment balance of $6.5 million attributable to this assessment area, all invested in affordable housing MBS ($4.7 million were purchased during this review period, while $1.8 million were purchased in a previous review period and are still outstanding). Arvest Bank also made an adequate level of qualified community development grants within the Tulsa MSA. The bank made nine community development grants totaling $43,746 during this review period. Among the numerous contributions were significant grants to schools serving a majority of students from LMI families, affordable housing organizations, and community service organizations targeting the needs of LMI families.
SERVICE TEST
Arvest Bank’s service delivery systems are reasonably accessible to the Tulsa MSA assessment area, and the bank’s record of opening and closing branches has generally not adversely affected the accessibility of its delivery systems to LMI geographies and/or LMI individuals. Business hours and services are convenient and are tailored to the needs of this assessment area, including LMI geographies and/or LMI individuals. Lastly, the bank provides an adequate level of community development services in the Tulsa MSA assessment area.
Accessibility of Delivery Systems
Arvest Bank operates 31 branch facilities in the Tulsa MSA. The following table illustrates the distribution of these facilities by income level of the geography compared to key assessment area demographics.
Branch Distribution by Geography Income Level Geography Income Level Dataset TOTAL Low- Moderate- Middle- Upper- Unknown 1 8 12 10 0 31 Branches 3.2% 25.8% 38.7% 32.3% 0.0% 100% Census Tracts 7.4% 28.3% 36.4% 27.9% 0.0% 100% Household Population 6.1% 25.9% 38.6% 29.4% 0.0% 100%
While the bank only operates one branch in low-income census tracts within the Tulsa MSA assessment area, these geographies represent a small part of the overall assessment area, based on location of households (6.1 percent). The bank operates eight branches in moderate-income census tracts (25.8 percent), which is in line with the percentage of households within moderate- income census tracts (25.9 percent). Based on this information, the bank’s service delivery systems are reasonably accessible to geographies and individuals of different income levels in the Tulsa MSA assessment area.
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Changes in Branch Locations
During this review period, the bank opened one branch in a middle-income census tract; additionally, the bank relocated one branch from an upper-income census tract to a middle- income census tract. Therefore, the bank’s record of opening and closing branches in the Tulsa MSA assessment area has not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or to LMI individuals.
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Business hours, products, and services are relatively consistent across all branches in the Tulsa MSA assessment area. Most branches have Saturday operating hours and offer extended hours of operations in lobbies and drive-through facilities at some point during the week. Most facilities remain open until 8:00 p.m., Monday through Friday, and until 1:00 p.m. on Saturday. Additionally, several branches operate within large retail establishments with hours of banking service on Sundays. All branches offer the same standard products, including low-cost checking and savings accounts, CDs, real estate and consumer loans, and other services. Due primarily to the expanded hours, bank services are tailored to the convenience and needs of this assessment area, particularly to LMI geographies and/or LMI individuals.
Community Development Services
Arvest Bank provides an adequate level of community development services within the Tulsa MSA, as 18 employees provided 20 qualifying services within the community. Numerous employees work with organizations that provide education services for LMI families. Other organizations served include community service organizations that primarily serve LMI individuals, community and economic development organizations, and institutions that help locate affordable housing for LMI families. Finally, Arvest Bank makes extensive use of both IDA and RPA accounts. During this review period, the bank opened and managed 299 IDA accounts and 83 RPA accounts, which benefit low-income individuals.
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LAWTON, OKLAHOMA MSA (Limited-Scope Review)
DESCRIPTION OF INSTITUTION’S OPERATIONS IN THE LAWTON, OKLAHOMA MSA
Arvest Bank designated the entire Lawton, Oklahoma MSA (Lawton MSA) as an assessment area. The Lawton MSA is located in central Oklahoma and is comprised of both Comanche and Cotton Counties. The bank operates six branches in the Lawton MSA assessment area, and, during the review period, the bank did not open or close any facilities. Five branches are located in Comanche County, and one branch is located in Cotton County.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 3 9 14 7 1 34 Census Tracts 8.8% 26.5% 41.2% 20.6% 2.9% 100% 1,124 5,719 15,398 9,718 0 31,959 Family Population 3.5% 17.9% 48.2% 30.4% 0.0% 100%
Household 2,268 8,867 22,191 12,873 0 46,199 Population 4.9% 19.2% 48.0% 27.9% 0.0% 100%
Business 566 823 1,676 1,004 9 4,078 Institutions 13.9% 20.2% 41.1% 24.6% 0.2% 100%
Agricultural 3 9 154 137 0 303 Institutions 1.0% 3.0% 50.8% 45.2% 0.0% 100%
Assessment Area Demographics by Income Level of Population Population Income Classification Demographic Type TOTAL Low- Moderate- Middle- Upper- 6,991 5,604 6,809 12,555 31,959 Family Population 21.9% 17.5% 21.3% 39.3% 100% 10,996 7,377 8,642 19,184 46,199 Household Population 23.8% 16.0% 18.7% 41.5% 100%
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CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN THE LAWTON, OKLAHOMA MSA
LENDING TEST
Arvest Bank’s lending performance in this assessment area exceeds the lending performance in the assessment areas within the MSA that were reviewed using the examination procedures; however, it does not change the conclusion for the MSA portion of the state. For more detailed information relating to the bank’s Lending Test performance in this assessment area, see the tables contained in Appendix C.
Lending Test Criteria Performance Lending Activity Consistent Geographic Distribution of Loans Exceeds Distribution of Loans by Borrower’s Profile Exceeds Community Development Lending Activities Exceeds OVERALL Exceeds
INVESTMENT TEST
Arvest Bank’s investment performance in this assessment area is below the investment performance in the assessment areas in the MSA that were reviewed using the examination procedures; however, it does not change the conclusion for the MSA portion of the state. Arvest Bank had community development investments of $555,073 (MBS purchased during this review period, as well as those purchased in a previous review period and still outstanding).
SERVICE TEST
The bank’s service performance in this assessment area is consistent with the bank’s one service performance in the assessment areas within the MSA that were reviewed using the examination procedures, as detailed in the following table:
Service Test Criteria Performance Accessibility of Delivery Systems Consistent Changes in Branch Locations Consistent Reasonableness of Business Hours and Services Consistent Community Development Services Below OVERALL Consistent
While the Lawton MSA has only one branch location in an LMI census tract, some branches in middle-income census tracts are in close proximity to LMI geographies, giving residents of LMI geographies reasonable access to banking facilities. There have been no changes in branch
143 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015 locations. Community development services have improved from the last examination but are considered limited and below the performance in the full-scope MSA assessment areas.
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NONMETROPOLITAN OKLAHOMA STATEWIDE AREA (Full-Scope Review)
DESCRIPTION OF INSTITUTION’S OPERATIONS IN NONMETROPOLITAN OKLAHOMA
Bank Structure
Arvest Bank has one assessment area within nonMSA Oklahoma, where it operates 32 of its 267 branches (12.0 percent), 1 of which is a drive-through only facility. Of the 32 branches, 1 is in a low-income census tract, 9 are in moderate-income census tracts, 16 are in middle-income census tracts, and 6 are in upper-income census tracts. During the review period, the bank did not open or close any bank branches. The 32 branches are scattered among this large assessment area, but most are located in the northeast corner of the state, which borders Kansas to the north and Missouri and Arkansas to the east. Based on the bank’s branch network and other service delivery systems, the bank is largely able to serve most of this geographically expansive assessment area; however, there is significantly less accessibility in the extreme northwest and southern portions of the assessment area. Several of the most southernmost counties, including Atoka, Bryan, Carter, Chotctaw, Love, McCurtain, and Marshall Counties do not have accessible bank branches.
This assessment area covers a large portion of the state of Oklahoma, where 133 FDIC-insured institutions operate at least one office, based on the FDIC Deposit Market Share Report as of June 30, 2015. Of these 133 financial institutions, Arvest Bank ranked third with a deposit market share of 6.9 percent. As of June 30, 2015, Arvest Bank deposits held at branches throughout nonMSA Oklahoma represent 11.0 percent of the bank’s total deposits.
General Demographics
The nonMSA Oklahoma assessment area covers most of the central and eastern portions of the state of Oklahoma and includes the following 42 counties: Adair, Atoka, Blaine, Bryan, Caddo, Carter, Cherokee, Choctaw, Coal, Craig, Delaware, Garfield, Garvin, Grant, Haskell, Hughes, Jefferson, Johnston, Kay, Kingfisher, Kiowa, Latimer, Love, McCurtain, McIntosh, Marshall, Mayes, Murray, Muskogee, Noble, Nowata, Okfuskee, Ottawa, Payne, Pittsburg, Pontotoc, Pottawatomie, Pushmataha, Seminole, Stephens, Tillman, and Washington. Based on 2010 U.S. Census data, the assessment area had a total population of 1,153,824. The county with the largest population is Payne County (77,350). The remaining counties ranged in population from 4,527 (Grant County) to 70,990 (Muskogee County).
As the demographics of this assessment area cover an expansive part of rural Oklahoma, business and personal credit needs in the area are varied, but there is heightened demand for agricultural credit and housing-related credit. Other particular credit needs in the assessment area (as noted primarily during community contact interviews) include affordable housing loans for first-time homebuyers and credit products and programs designed to help improve individuals’
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credit. Also, portions of the assessment area are in need of loans to developers for new housing stock. Furthermore, many parts of this assessment area are sparsely populated, and, while there is significant need for community development involvement, often these rural areas lack community development resources from which to draw. Of the 200 middle-income census tracts in this assessment area, 107 were categorized as “distressed” due to poverty, population loss, or a combination of both. Additionally, 13 were categorized as both “distressed” and “underserved” in 2014.
Income and Wealth Demographics
Based on 2010 U.S. Census data, the median family income for the assessment area was $46,930, which was less than the state of Oklahoma figure, $53,607, but more similar to the figure for nonMSA Oklahoma overall, $47,864. As of 2014, the FFIEC-estimated median family income for nonMSA Oklahoma was $51,200. The following table summarizes the distribution of the 300 geographies by income level and the family population of those census tracts within the assessment area.
Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown TOTAL 7 53 200 39 1 300 Census Tracts 2.3% 17.7% 66.7% 13.0% 0.3% 100% 3,586 47,918 197,761 46,677 12 295,954 Family Population 1.2% 16.2% 66.8% 15.8% 0.0% 100%
As referenced in the Bank Structure section, some counties in the southernmost area of the assessment area do not have easily accessible branches. Four of these counties, Bryan, McCurtain, Payne, and Tillman include low-income geographies.
The following table displays the distribution of families by income level, as well as the distribution of families for nonMSA Oklahoma overall.
Family Population by Income Level Dataset Low- Moderate- Middle- Upper- TOTAL 64,843 53,388 61,218 116,505 295,954 Assessment Area 21.9% 18.0% 20.7% 39.4% 100%
NonMSA 73,396 60,817 70,849 138,535 343,597 Oklahoma 21.4% 17.7% 20.6% 40.3% 100%
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Housing Demographics
While income levels in the nonMSA Oklahoma assessment area are slightly lower than those for nonMSA Oklahoma overall, housing in the assessment appears to be similarly affordable. The nonMSA Oklahoma assessment area has a housing affordability ratio of 45.4 percent as of the 2010 U.S. Census, which indicates similar affordability relative to the statewide nonMSA Oklahoma figure of 46.0 percent. The median housing value in the assessment area is $82,051, which is also similar to the statewide nonMSA Oklahoma figure of $81,758. In addition, median gross monthly rent of $553 in the assessment area is similar to the statewide nonMSA Oklahoma ($555).
Industry and Employment Demographics
According to 2013 County Business Patterns data, 24,056 business entities are operating within the nonMSA Oklahoma assessment area. The largest industries (by number of employees) in the assessment area are health care and social assistance, retail trade, and manufacturing.
According to the Department of Labor, Bureau of Labor Statistics, recent unemployment data (not seasonally adjusted) reveal that the assessment area’s unemployment rates were 5.5 percent in 2013 and 4.6 percent in 2014, which is similar to the state as a whole (5.4 and 4.5, respectively). Both the assessment area and the state of Oklahoma have experienced a generally decreasing trend in unemployment throughout 2013 and 2014.
Community Contact Information
Information from three community contacts was used to help shape the performance context in which the bank’s activities in this assessment area were evaluated. Of the interviews conducted as part of this evaluation, one was with an individual in community services and the other was with a person specializing in affordable housing. A third community contact was referenced from a recent evaluation with an individual working in an economic development role. Community contact interviewees characterize the local economy as stable to slightly improving. While no new employers have moved into the area, some local employers have increased hiring. One of the interviewees stated that a substantial portion of the population is LMI.
One contact said that the community has adequate opportunities for the bank to provide community development activities, including funding for financial literacy programs and creative down-payment assistance programs. Affordable housing is a need for the area, as well as construction loans to build safe, affordable, housing for LMI families. Other credit-related needs include loans for first-time homebuyers and loans to help individuals build or improve their credit.
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CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN NONMETROPOLITAN OKLAHOMA
LENDING TEST
Lending levels reflect good responsiveness to nonMSA Oklahoma assessment area credit needs. The bank’s overall geographic distribution of loans reflects adequate penetration throughout the assessment area. Furthermore, the overall distribution of loans by borrower’s income/revenue profile reflects good penetration among customers of different income levels and businesses/ farms of different sizes. Lastly, the bank makes an adequate level of community development loans in the nonMSA Oklahoma assessment area.
Lending Activity
The following table displays the bank’s 2014 lending volume in this assessment area by number and dollar volume.
Summary of Lending Activity January 1, 2014 – December 31, 2014 Loan Type # % $(000s) % Home Improvement 364 11.2% $5,019 2.1% Home Purchase 670 20.7% $76,487 32.6% Multifamily Housing 1 0.0% $807 0.3% Refinancing 352 10.9% $35,903 15.3% TOTAL HMDA 1,387 42.8% $ 118,216 50.3% Small Business 1,154 35.6% $81,602 34.7% Small Farm 699 21.6% $35,107 14.9% TOTAL LOANS 3,240 100% $234,925 100%
The bank’s lending activity in nonMSA Oklahoma reflects good responsiveness to assessment area credit needs. Lending activity in nonMSA Oklahoma represents 13.4 percent of total HMDA and CRA loans made within the bank’s combined assessment areas. This level of HMDA and CRA activity is higher than the bank’s branch network in this assessment area, representing 12.4 percent of total bank branches. Similarly, the percentage of loans originated in this assessment is higher than the area’s proportion of total deposit holdings of 11.0 percent.
Geographic Distribution of Loans
As noted in the Description of Institution’s Operations in nonMSA Oklahoma section, this assessment area includes 7 low-income census tracts and 53 moderate-income census tracts, representing 20.0 percent of all assessment area geographies. Overall, based on lending activity from all three loan categories reviewed, the geographic distribution of loans reflects adequate penetration throughout the assessment area. The following table displays the geographic
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distribution of HMDA loans compared to owner-occupied housing demographics and aggregate performance for the assessment area.
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 2 0.3% 66 9.9% 381 56.9% 221 33.0% 0 0.0% 670 100% Refinance 0 0.0% 56 15.9% 213 60.5% 83 23.6% 0 0.0% 352 100% Home Improvement 0 0.0% 69 19.0% 218 59.9% 77 21.2% 0 0.0% 364 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 1 100.0% 0 0.0% 1 100% TOTAL HMDA 2 0.1% 191 13.8% 812 58.5% 382 27.5% 0 0.0% 1,387 100%
Owner-Occupied Housing 0.9% 15.2% 67.1% 16.8% 0.0% 100% 2014 HMDA Aggregate 0.5% 11.0% 64.9% 22.8% 0.7% 100%
The bank originated only two of its HMDA loans in the low-income category (0.1 percent), However, as compared to the 0.9 percent demographic and 0.5 percent aggregate lending and the proximity of the bank’s branches to the low-income census tracts, the bank’s performance in low-income geographies is adequate. HMDA lending performance in moderate-income census tracts is also adequate. As displayed in the preceding table, 13.8 percent of the bank’s loans were made in moderate-income census tracts, which is below the percentage of owner-occupied housing units in moderate-income census tracts (15.2 percent) but above aggregate (11.0 percent). Overall, the bank’s HMDA geographic distribution in this assessment area is adequate.
Next, the bank’s geographic distribution of small business loans compared to the distribution of assessment area businesses and aggregate lending by geography income level was reviewed, as displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small 13 1.1% 186 16.1% 655 56.8% 300 26.0% 0 0.0% 1,154 100% Business Business 2.5% 19.1% 62.9% 15.6% 0.0% 100% Institutions 2014 Small Business 2.2% 13.8% 59.4% 17.4% 7.3% 100% Aggregate
While the bank had a small percentage of small business loans in low-income census tracts (1.1 percent), lending is considered adequate, as business lending opportunities in these geographies appear to be minimal, especially considering the vast distances between these census tracts and
149 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
bank branches. However, the level of small business loans within moderate-income census tracts (16.1 percent) is considered adequate as it is below the percentage of businesses within moderate-income census tracts (19.1 percent) but above aggregate lending (13.8 percent). Therefore, the analysis of small business loans reflects adequate penetration throughout the assessment area.
Finally, the geographic distribution of small farm loans compared to the distribution of assessment area farms and aggregate lending by geography income level is displayed in the following table:
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 1 0.1% 133 19.0% 489 70.0% 76 10.9% 0 0.0% 699 100% Loans Agricultural 0.7% 9.4% 72.8% 17.2% 0.0% 100% Institutions 2014 Small Farm 0.7% 8.7% 73.4% 12.3% 4.8% 100% Aggregate
The bank had only one small farm loan made in low-income census tracts (0.1 percent) but is considered adequate. As mentioned above, it appears lending opportunities in these geographies are minimal and the bank’s branches are not in close proximity to low-income census tracts. Analysis of the penetration in moderate-income census tracts reveals excellent performance. The bank originated 19.0 percent of its small farm loans in moderate-income geographies, which was more than double that of the percent of agricultural institutions in moderate-income census tracts (9.4 percent). Based on this performance, the bank’s overall geographic distribution of small farm loans is excellent.
Loan Distribution by Borrower’s Profile
Overall, the bank’s loan distribution by borrower’s profile is excellent, based on performance from all three loan categories reviewed. The following table shows the distribution of HMDA- reported loans by the income level of the borrower compared to family population demographics and aggregate performance.
150 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 42 6.3% 131 19.6% 145 21.6% 337 50.3% 15 2.2% 670 100% Refinance 22 6.3% 62 17.6% 86 24.4% 164 46.6% 18 5.1% 352 100% Home Improvement 42 11.5% 72 19.8% 71 19.5% 167 45.9% 12 3.3% 364 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 1 100.0% 1 100% TOTAL HMDA 106 7.6% 265 19.1% 302 21.8% 668 48.2% 46 3.3% 1,387 100%
Family Population 21.9% 18.0% 20.7% 39.4% 0.0% 100% 2014 HMDA 4.9% 14.3% 19.8% 43.8% 17.3% 100% Aggregate
The bank’s level of lending to LMI borrowers within the assessment area is excellent. Based on the above table, the bank’s level of lending to low-income borrowers (7.6 percent) is lower than the percentage of low-income families (21.9 percent); however, the bank’s lending level is higher than aggregate (4.9 percent) and is considered good. In terms of HMDA lending within this assessment area to moderate-income borrowers, the bank’s performance is excellent. The bank’s percentage to moderate-income borrowers (19.1 percent) is above both the number of moderate-income borrowers within the assessment area (18.0 percent) and aggregate lending (14.3 percent). In addition, lending levels increased slightly from 2013 levels. Overall, the bank’s HMDA lending to LMI borrowers within the assessment area is excellent.
Next, small business loans were reviewed to determine the bank’s lending level to businesses of different sizes. The following table shows the distribution of small business loans by loan amount and business revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 806 69.8% 81 7.0% 37 3.2% 924 80.1% Greater than $1 Million/Unknown 174 15.1% 18 1.6% 38 3.3% 230 19.9% TOTAL 980 84.9% 99 8.6% 75 6.5% 1,154 100% 2014 Dun & Bradstreet Businesses < $1MM 89.3% 2014 Small Business Aggregate < $1MM 50.0%
The bank’s level of lending to small businesses is good. The bank originated a majority of its small business loans (80.1 percent) to businesses with gross annual revenues of $1 million or less. The highest concentration of these loans was for loan amounts of $100,000 or less, which
151 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
further demonstrates the bank’s willingness to make credit available to small businesses in the assessment area. Small business aggregate reflects 50.0 percent of loans in the assessment area are to small businesses, and, according to Dun & Bradstreet estimates, 89.3 percent of businesses reporting for 2014 had revenues of $1 million or less.
Small farm lending performance was analyzed by the revenue size of the farm and by the dollar amount of the loan. The following table shows the distribution of small farm loans by loan amount and farm revenue size compared to 2014 Dun & Bradstreet and aggregate data.
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500 $1 Million or Less 576 82.4% 69 9.9% 22 3.1% 667 95.4% Greater than $1 24 3.4% 4 0.6% 4 0.6% 32 4.6% Million/Unknown TOTAL 600 85.8% 73 10.4% 26 3.7% 699 100% 2014 Dun & Bradstreet 99.3% Farms < $1MM 2014 Small Farm 86.8% Aggregate < $1MM
The bank’s level of lending to small farms is good. A substantial majority of the bank’s small farm loans (95.4 percent) made in this assessment area were originated to farmers with gross annual revenues of $1 million or less. Additionally, the largest concentration of these loans was in loan amounts of $100,000 or less, which further demonstrates the bank’s willingness to make credit available to small farms in the assessment area. According to Dun & Bradstreet estimates, 99.3 percent of farms in the assessment area reported revenues of $1 million or less and aggregate performance (86.8 percent) is below performance of the bank.
Community Development Lending Activities
Arvest Bank makes an adequate level of community development loans in nonMSA Oklahoma. During the review period, the bank originated or renewed five community development loans totaling $11.6 million; $7.6 million was to finance affordable housing within the assessment area. The loans used low-income housing tax credits and tax-exempt bonds through the state of Oklahoma. The remaining two loans were made in conjunction with an economic development program available through the FHLB of Dallas.
152 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
INVESTMENT TEST
Arvest Bank has a significant level of qualified community development investments and grants within the nonMSA Oklahoma assessment area and is occasionally in a leadership position; this exhibits good responsiveness to credit and community development needs in the assessment area. As of this evaluation date, the bank had a community development investment balance of $8.0 million attributable to this assessment area. The bank had qualified investments in MBS that finance affordable housing made in a previous review period, still outstanding, of $1.1 million, as well as new MBS investments of $3.0 million. Furthermore, during this review period, the bank invested $3.9 million in a tax credit equity fund that provides affordable housing for low- income families. Additionally, Arvest Bank made three qualified grants totaling $1,750 during this review period.
SERVICE TEST
Arvest Bank’s service delivery systems are readily accessible to the nonMSA Oklahoma assessment area, and the bank’s record of opening and closing branches has not adversely affected its delivery systems to LMI geographies and/or LMI individuals. Business hours and services do not vary in a way that inconveniences LMI geographies and/or LMI individuals. Lastly, the bank provides a relatively high level of community development services in the nonMSA Oklahoma assessment area.
Accessibility of Delivery Systems
Arvest Bank operates 32 branch facilities within the nonMSA Oklahoma assessment area. The following table illustrates the distribution of these facilities by income level of the geography compared to key assessment area demographics.
Branch Distribution by Geography Income Level Geography Income Level Dataset TOTAL Low- Moderate- Middle- Upper- Unknown
1 9 16 6 0 32 Branches 3.1% 28.1% 50.0% 18.8% 0.0% 100% Census Tracts 2.3% 17.7% 66.7% 13.0% 0.3% 100% Household Population 1.5% 17.1% 66.2% 15.2% 0.0% 100%
As illustrated in the table above, 31.2 percent of Arvest Bank’s nonMSA Oklahoma assessment area branches are located in LMI census tracts, which is significantly greater than both the percentage of LMI census tracts (20.0 percent) and households in LMI census tracts (18.6 percent). Based on this information, Arvest Bank’s delivery systems are readily accessible to geographies and individuals of different income levels in the nonMSA Oklahoma assessment area.
153 Arvest Bank CRA Performance Evaluation Fayetteville, Arkansas September 21, 2015
Changes in Branch Locations
During the review period, the bank did not open or close any branches in this assessment area. Consequently, the bank’s record of opening and closing branches in the nonMSA Oklahoma assessment area has not adversely affected its delivery systems, particularly to LMI geographies and/or LMI individuals.
Reasonableness of Business Hours and Services in Meeting Assessment Area Needs
Business hours and banking products and services are relatively consistent across all branches in the nonMSA Oklahoma assessment area. Most branches have Saturday operating hours and offer extended hours of operations in their lobby and drive-through facilities at some point during the week. Most drive-through facilities remain open until at least 6 p.m., Monday through Friday, and until at least noon on Saturday. All branches offer the same standard products, including low-cost checking and savings accounts, CDs, real estate and consumer loans, and other services. Therefore, bank services do not vary in a way that inconveniences certain segments of this assessment area, particularly LMI geographies and/or LMI individuals.
Community Development Services
Arvest Bank provides a relatively high level of community development services within the nonMSA Oklahoma assessment area, as 24 employees provided 28 qualifying services within the community. Numerous employees work with organizations that provide education services for LMI families. Other organizations served include community service organizations that primarily serve LMI individuals, community and economic development organizations, and institutions that help locate affordable housing for LMI families.
154 Appendix A
SCOPE OF EXAMINATION TABLES
SCOPE OF EXAMINATION
January 1, 2013 through December 31, 2014 (HMDA, small business, and small farm data) TIME PERIOD
REVIEWED April 15, 2013 through September 21, 2015 (community development loans, investment, and service activities)
FINANCIAL PRODUCTS REVIEWED INSTITUTION HMDA Arvest Bank Small Business Fayetteville, Arkansas Small Farm
AFFILIATE AFFILIATE(S) PRODUCTS REVIEWED RELATIONSHIP
Arvest Mortgage Company Bank Subsidiary Mortgage Loans
155 Appendix A (continued)
# of CRA Review Assessment Area State MSA % of Offices Offices Procedures Fayetteville-Springdale-Rogers, AR-MO MSA 51 19.1% Full Scope AR-MO MSA Fort Smith, AR-MO MSA AR-OK MSA 16 6.0% Full Scope Kansas City, MO-KS MSA MO-KS MSA 16 6.4% Full Scope Little Rock-North Little Rock- AR MSA 25 9.4% Full Scope Conway, AR MSA Hot Springs, AR MSA AR MSA 6 2.2% Limited Scope NonMSA AR AR Non 24 9.0% Full Scope NonMSA KS KS Non 3 0.7% Full Scope Joplin, MO MSA MO MSA 12 4.5% Full Scope Springfield, MO MSA MO MSA 5 1.9% Limited Scope NonMSA MO MO Non 14 5.2% Limited Scope Oklahoma City, OK MSA OK MSA 26 9.7% Full Scope Tulsa, OK MSA OK MSA 31 11.6% Full Scope Lawton, OK MSA OK MSA 6 2.2% Limited Scope NonMSA OK OK Non 32 12.0% Full Scope OVERALL BANK N/A N/A 267 100% 10 Full Scope
156 Appendix B
SUMMARY OF STATE AND MULTISTATE MSA RATINGS
State or Multistate Lending Test Investment Test Service Test Overall Rating MSA Name Rating Rating Rating Fayetteville AR-MO MSA High Satisfactory High Satisfactory Low Satisfactory Satisfactory Fort Smith AR-OK MSA High Satisfactory Low Satisfactory High Satisfactory Satisfactory Kansas City KS-MO MSA Low Satisfactory High Satisfactory Low Satisfactory Satisfactory Arkansas Low Satisfactory High Satisfactory High Satisfactory Satisfactory Substantial Kansas Low Satisfactory Low Satisfactory Satisfactory Noncompliance Missouri Low Satisfactory Low Satisfactory High Satisfactory Satisfactory Oklahoma Low Satisfactory High Satisfactory Low Satisfactory Satisfactory
157 Appendix C
PRIMARY YEAR (2014) LENDING PERFORMANCE TABLES FOR LIMITED-SCOPE REVIEW AREAS
ARKANSAS Hot Springs, Arkansas MSA Assessment Area
Summary of Lending Activity January 1, 2014 through December 2014
Loan Type # % $(000s) %
Home Improvement 49 17.9% $488 1.9%
Home Purchase 57 20.8% $8,527 33.8%
Multifamily Housing 2 0.7% $904 3.6%
Refinancing 29 10.6% $4,007 15.9%
TOTAL HMDA 137 50.0% $13,926 55.1%
Small Business 133 48.5% $10,552 41.8%
Small Farm 4 1.5% $777 3.1%
TOTAL LOANS 274 100% $25,255 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 2 3.5% 4 7.0% 25 43.9% 26 45.6% 0 0.0% 57 100% Refinance 0 0.0% 4 13.8% 14 48.3% 11 37.9% 0 0.0% 29 100% Home Improvement 1 2.0% 7 14.3% 23 46.9% 18 36.7% 0 0.0% 49 100% Multifamily 0 0.0% 0 0.0% 2 100.0% 0 0.0% 0 0.0% 2 100% TOTAL HMDA 3 2.2% 15 10.9% 64 46.7% 55 40.1% 0 0.0% 137 100%
Owner-Occupied Housing 1.2% 11.6% 55.4% 31.7% 0.0% 100% 2014 HMDA Aggregate 1.1% 7.7% 49.7% 41.5% 0.0% 100%
158 Appendix C (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 3 2.3% 27 20.3% 64 48.1% 39 29.3% 0 0.0% 133 100% Loans Business 1.9% 18.8% 48.3% 31.0% 0.0% 100% Institutions 2014 Small 0.9% 17.6% 46.1% 33.0% 2.4% 100% Business Aggregate
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0 0.0% 0 0.0% 1 25.0% 3 75.0% 0 0.0% 4 100% Agricultural 1.4% 8.5% 53.5% 36.6% 0.0% 100% Institutions 2014 Small Farm 0.0% 0.0% 37.5% 62.5% 0.0% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 4 7.0% 11 19.3% 8 14.0% 31 54.4% 3 5.3% 57 100% Refinance 3 10.3% 2 6.9% 3 10.3% 18 62.1% 3 10.3% 29 100% Home Improvement 6 12.2% 6 12.2% 5 10.2% 28 57.1% 4 8.2% 49 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 2 100.0% 2 100% TOTAL HMDA 13 9.5% 19 13.9% 16 11.7% 77 56.2% 12 8.8% 137 100%
Family Population 20.8% 17.3% 21.1% 40.9% 0.0% 100% 2014 HMDA 4.4% 12.8% 16.8% 46.8% 19.3% 100% Aggregate
159 Appendix C (continued)
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 87 65.4% 14 10.5% 6 4.5% 107 80.5% Greater than $1 Million/Unknown 21 15.8% 1 0.8% 4 3.0% 26 19.5% TOTAL 108 81.2% 15 11.3% 10 7.5% 133 100% Dun & Bradstreet Businesses < $1MM 91.0% Small Business Aggregate < $1MM 51.7%
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 1 25.0% 1 25.0% 2 50.0% 4 100.0%
Greater than $1 Million/Unknown 0 0.0% 0 0.0% 0 0.0% 0 0.0%
TOTAL 1 25.0% 1 25.0% 2 50.0% 4 100%
Dun & Bradstreet Farms < $1MM 98.6% Small Farm Aggregate < $1MM 62.5%
160 Appendix C (continued)
MISSOURI Springfield, Missouri MSA Assessment Area
Summary of Lending Activity January 1, 2014 through December 31, 2014 Loan Type # % $(000s) % Home Improvement 29 5.8% $312 0.6% Home Purchase 223 44.8% $26,379 48.3% Multifamily Housing 1 0.2% $2,650 4.9% Refinancing 52 10.4% $6,533 12.0% TOTAL HMDA 305 61.2% $35,874 65.7% Small Business 175 35.1% $17,337 31.7% Small Farm 18 3.6% $1,405 2.6%
TOTAL LOANS 498 100% $54,616 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 1 0.4% 26 11.7% 140 62.8% 56 25.1% 0 0.0% 223 100% Refinance 0 0.0% 8 15.4% 30 57.7% 14 26.9% 0 0.0% 52 100% Home Improvement 0 0.0% 3 10.3% 14 48.3% 12 41.4% 0 0.0% 29 100% Multifamily 0 0.0% 1 100.0% 0 0.0% 0 0.0% 0 0.0% 1 100% TOTAL HMDA 1 0.3% 38 12.5% 184 60.3% 82 26.9% 0 0.0% 305 100% Owner-Occupied Housing 0.5% 16.0% 61.2% 22.4% 0.0% 100% 2014 HMDA Aggregate 0.6% 12.2% 62.8% 24.4% 0.0% 100%
161 Appendix C (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 0 0.0% 46 26.3% 91 52.0% 38 21.7% 0 0.0% 175 100% Loans Business 0.7% 24.7% 55.3% 19.4% 0.0% 100% Institutions 2014 Small Business 0.4% 24.5% 50.0% 23.1% 2.0% 100% Aggregate
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 0 0.0% 16 88.9% 2 11.1% 0 0.0% 18 100% Loans Agricultural 0.2% 9.3% 82.4% 8.1% 0.0% 100% Institutions 2014 Small Farm 0.0% 7.8% 87.9% 4.1% 0.2% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 29 13.0% 48 21.5% 45 20.2% 83 37.2% 18 8.1% 223 100% Refinance 3 5.8% 11 21.2% 7 13.5% 25 48.1% 6 11.5% 52 100%
Home Improvement 0 0.0% 2 6.9% 7 24.1% 20 69.0% 0 0.0% 29 100%
Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 1 100.0% 1 100% TOTAL HMDA 32 10.5% 61 20.0% 59 19.3% 128 42.0% 25 8.2% 305 100%
Family Population 19.5% 18.4% 22.1% 40.0% 0.0% 100% 2014 HMDA 6.4% 16.5% 20.3% 31.7% 25.1% 100% Aggregate
162 Appendix C (continued)
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 95 54.3% 19 10.9% 14 8.0% 128 73.1% Greater than $1 Million/Unknown 37 21.1% 5 2.9% 5 2.9% 47 26.9% TOTAL 132 75.4% 24 13.7% 19 10.9% 175 100% Dun & Bradstreet Businesses < $1MM 89.6% Small Business Aggregate < $1MM 47.2%
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 11 61.1% 6 33.3% 0 0.0% 17 94.4% Greater than $1 Million/Unknown 1 5.6% 0 0.0% 0 0.0% 1 5.6% TOTAL 12 66.7% 6 33.3% 0 0.0% 18 100%
Dun & Bradstreet Farms < $1MM 99.7% Small Farm Aggregate < $1MM 82.4%
163 Appendix C (continued)
NonMSA Missouri Assessment Area
Summary of Lending Activity January 1, 2014 through December 31, 2014 Loan Type # % $(000s) % Home Improvement 59 7.4% $1,073 1.4% Home Purchase 219 27.6% $23,945 31.1% Multifamily Housing 0 0.0% $0 0.00% Refinancing 114 14.4% $16,093 20.9% TOTAL HMDA 392 49.4% $41,111 53.3% Small Business 248 31.3% $20,276 26.3% Small Farm 153 19.3% $15,728 20.4% TOTAL LOANS 793 100% $77,115 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 0 0.0% 13 5.9% 204 93.2% 2 0.9% 0 0.0% 219 100% Refinance 0 0.0% 10 8.8% 102 89.5% 2 1.8% 0 0.0% 114 100% Home Improvement 0 0.0% 7 11.9% 51 86.4% 1 1.7% 0 0.0% 59 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 0 0.0% 30 7.7% 357 91.1% 5 1.3% 0 0.0% 392 100% Owner-Occupied Housing 0.0% 13.6% 85.3% 1.2% 0.0% 100% 2014 HMDA Aggregate 0.0% 12.0% 85.5% 2.4% 0.1% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 0 0.0% 19 7.7% 228 91.9% 1 0.4% 0 0.0% 248 100% Loans Business 0.0% 11.4% 87.0% 1.6% 0.0% 100% Institutions 2014 Small Business 0.0% 9.8% 80.7% 3.5% 6.0% 100% Aggregate
164 Appendix C (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 22 14.4% 131 85.6% 0 0.0% 0 0.0% 153 100% Loans Agricultural 0.0% 14.4% 85.4% 0.2% 0.0% 100% Institutions 2014 Small Farm 0.0% 20.1% 77.8% 0.0% 2.1% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014 Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 25 11.4% 53 24.2% 42 19.2% 97 44.3% 2 0.9% 219 100% Refinance 9 7.9% 29 25.4% 19 16.7% 55 48.2% 2 1.8% 114 100% Home Improvement 2 3.4% 11 18.6% 7 11.9% 36 61.0% 3 5.1% 59 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 36 9.2% 93 23.7% 68 17.3% 188 48.0% 7 1.8% 392 100% Family Population 21.1% 19.6% 23.5% 35.8% 0.0% 100% 2014 HMDA 7.7% 18.0% 19.2% 36.6% 18.5% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 146 58.9% 16 6.5% 12 4.8% 174 70.2% Greater than $1 Million/Unknown 59 23.8% 5 2.0% 10 4.0% 74 29.8% TOTAL 205 82.7% 21 8.5% 22 8.9% 248 100% Dun & Bradstreet Businesses < $1MM 90.9% Small Business Aggregate < $1MM 47.0%
165 Appendix C (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500
$1 Million or Less 100 65.4% 32 20.9% 12 7.8% 144 94.1% Greater than $1 Million/Unknown 3 2.0% 1 0.7% 5 3.3% 9 5.9% TOTAL 103 67.3% 33 21.6% 17 11.1% 153 100%
Dun & Bradstreet Farms < $1MM 99.8% Small Farm Aggregate < $1MM 80.6%
166 Appendix C (continued)
OKLAHOMA Lawton, Oklahoma MSA Assessment Area
Summary of Lending Activity January 1, 2014 through December 31, 2014 Loan Type # % $(000s) % Home Improvement 75 12.3% $961 1.8% Home Purchase 66 10.8% $8,168 14.9% Multifamily Housing 0 0.0% $0 0.0% Refinancing 53 8.7% $6,011 11.0% TOTAL HMDA 194 31.8% $15,140 27.7% Small Business 387 63.4% $37,651 68.8% Small Farm 29 4.8% $1,945 3.6% TOTAL LOANS 610 100% $54,736 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 0 0.0% 6 9.1% 25 37.9% 35 53.0% 0 0.0% 66 100% Refinance 1 1.9% 5 9.4% 25 47.2% 22 41.5% 0 0.0% 53 100% Home Improvement 1 1.3% 7 9.3% 40 53.3% 27 36.0% 0 0.0% 75 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 2 1.0% 18 9.3% 90 46.4% 84 43.3% 0 0.0% 194 100% Owner-Occupied Housing 2.7% 10.5% 50.8% 36.0% 0.0% 100% 2014 HMDA Aggregate 1.0% 6.2% 49.6% 43.1% 0.2% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 41 10.6% 69 17.8% 144 37.2% 131 33.9% 2 0.5% 387 100% Loans Business 13.9% 20.2% 41.1% 24.6% 0.2% 100% Institutions 2014 Small Business 11.6% 19.0% 36.2% 29.9% 3.3% 100% Aggregate
167 Appendix C (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2014 through December 31, 2014 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 4 13.8% 14 48.3% 11 37.9% 0 0.0% 29 100% Loans Agricultural 1.0% 3.0% 50.8% 45.2% 0.0% 100% Institutions 2014 Small Farm 0.5% 4.6% 56.1% 34.2% 4.6% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2014 through December 31, 2014 Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 0 0.0% 8 12.1% 14 21.2% 34 51.5% 10 15.2% 66 100% Refinance 2 3.8% 10 18.9% 9 17.0% 28 52.8% 4 7.5% 53 100% Home Improvement 2 2.7% 11 14.7% 17 22.7% 40 53.3% 5 6.7% 75 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 4 2.1% 29 14.9% 40 20.6% 102 52.6% 19 9.8% 194 100% Family Population 21.9% 17.5% 21.3% 39.3% 0.0% 100% 2014 HMDA 4.9% 11.7% 19.4% 35.4% 28.7% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 265 68.5% 45 11.6% 27 7.0% 337 87.1% Greater than $1 Million/Unknown 36 9.3% 8 2.1% 6 1.6% 50 12.9% TOTAL 301 77.8% 53 13.7% 33 8.5% 387 100% Dun & Bradstreet Businesses < $1MM 91.0% Small Business Aggregate < $1MM 60.3%
168 Appendix C (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2014 through December 31, 2014 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 23 79.3% 4 13.8% 1 3.4% 28 96.6% Greater than $1 Million/Unknown 0 0.0% 1 3.4% 0 0.0% 1 3.4% TOTAL 23 79.3% 5 17.2% 1 3.4% 29 100%
Dun & Bradstreet Farms < $1MM 99.0% Small Farm Aggregate < $1MM 87.2%
169 Appendix D
SECONDARY YEAR (2013) LENDING PERFORMANCE TABLES FOR ALL ASSESSMENT AREAS
Fayetteville-Springdale-Rogers, Arkansas-Missouri MSA Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 352 3.9% $6,567 0.6% Home Purchase 2,305 25.5% $352,334 32.4% Multifamily Housing 14 0.2% $5,976 0.6% Refinancing 3,280 36.2% $397,692 36.6% TOTAL HMDA 5,951 65.7% $762,569 70.1% Small Business 2,355 26.0% $276,723 25.5% Small Farm 751 8.3% $47,854 4.4% TOTAL LOANS 9,057 100% $1,087,146 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 35 1.5% 239 10.4% 1,145 49.7% 886 38.4% 0 0.0% 2,305 100% Refinance 37 1.1% 288 8.8% 1,848 56.3% 1,107 33.8% 0 0.0% 3,280 100% Home Improvement 4 1.1% 40 11.4% 221 62.8% 87 24.7% 0 0.0% 352 100% Multifamily 3 21.4% 4 28.6% 7 50.0% 0 0.0% 0 0.0% 14 100% TOTAL HMDA 79 1.3% 571 9.6% 3,221 54.1% 2,080 35.0% 0 0.0% 5,951 100% Owner-Occupied 1.5% 11.1% 57.9% 29.4% 0.0% 100% Housing 2013 HMDA 1.4% 8.9% 51.2% 38.5% 0.0% 100% Aggregate
170 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business Loans 71 3.0% 384 16.3% 1,200 51.0% 700 29.7% 0 0.0% 2,355 100% Business Institutions 3.1% 18.8% 51.0% 27.1% 0.0% 100% 2013 Small Business 3.3% 16.6% 47.1% 31.2% 1.7% 100% Aggregate
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm Loans 2 0.3% 147 19.6% 522 69.5% 80 10.7% 0 0.0% 751 100% Agricultural Institutions 0.8% 14.1% 66.7% 18.4% 0.0% 100% 2013 Small Farm Aggregate 0.3% 18.4% 69.8% 11.3% 0.1% 100%
Distribution of Loans Inside Assessment Area by Borrower Income
January 1, 2013 through December 31, 2013
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 196 8.5% 428 18.6% 457 19.8% 1,136 49.3% 88 3.8% 2,305 100%
Refinance 303 9.2% 543 16.6% 717 21.9% 1,665 50.8% 52 1.6% 3,280 100%
Home Improvement 33 9.4% 53 15.1% 76 21.6% 145 41.2% 45 12.8% 352 100%
Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 14 100% 14 100%
TOTAL HMDA 532 8.9% 1,024 17.2% 1,250 21.0% 2,946 49.5% 199 3.3% 5,951 100%
Family Population 20.2% 18.3% 20.6% 40.9% 0.0% 100% 2013 HMDA 6.9% 14.2% 18.0% 44.5% 16.4% 100% Aggregate
171 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 1,327 56.3% 313 13.3% 243 10.3% 1,883 80.0% Greater than $1 Million/Unknown 364 15.5% 39 1.7% 69 2.9% 472 20.0%
TOTAL 1,691 71.8% 352 14.9% 312 13.2% 2,355 100%
Dun & Bradstreet Businesses < $1MM 90.6%
Small Business Aggregate < $1MM 53.8%
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 603 80.3% 113 15.0% 25 3.3% 741 98.7% Greater than $1 Million/Unknown 6 0.8% 2 0.3% 2 0.3% 10 1.3% TOTAL 609 81.1% 115 15.3% 27 3.6% 751 100%
Dun & Bradstreet Farms < $1MM 98.5% Small Farm Aggregate < $1MM 92.3%
172 Appendix D (continued)
Fort Smith, Arkansas-Oklahoma MSA Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 183 10.5% $3,660 2.1% Home Purchase 398 22.9% $52,445 29.9% Multifamily Housing 2 0.1% $2,192 1.3% Refinancing 728 41.8% $73,307 41.8% TOTAL HMDA 1,311 75.3% $131,604 75.1% Small Business 390 22.4% $41,191 23.5% Small Farm 39 2.2% $2,467 1.4% TOTAL LOANS 1,740 100% $175,262 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 0 0.0% 53 13.3% 210 52.8% 135 33.9% 0 0.0% 398 100% Refinance 0 0.0% 126 17.3% 415 57.0% 187 25.7% 0 0.0% 728 100% Home Improvement 0 0.0% 31 16.9% 110 60.1% 42 23.0% 0 0.0% 183 100% Multifamily 0 0.0% 0 0.0% 1 50.0% 1 50.0% 0 0.0% 2 100% TOTAL HMDA 0 0.0% 210 16.0% 736 56.1% 365 27.8% 0 0.0% 1,311 100%
Owner-Occupied Housing 0.0% 17.1% 62.5% 20.4% 0.0% 100% 2013 HMDA Aggregate 0.0% 14.7% 58.2% 27.1% 0.0% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small 0 0.0% 73 18.7% 181 46.4% 136 34.9% 0 0.0% 390 100% Business Business 0.0% 25.3% 53.6% 21.1% 0.0% 100% Institutions 2013 Small Business 0.0% 25.3% 46.4% 24.3% 4.1% 100% Aggregate
173 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 6 15.4% 26 66.7% 7 17.9% 0 0.0% 39 100% Loans Agricultural 0.0% 17.7% 67.6% 14.8% 0.0% 100% Institutions 2013 Small Farm 0.0% 20.8% 63.2% 15.3% 0.7% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2013 through December 31, 2013
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 30 7.5% 79 19.8% 84 21.1% 194 48.7% 11 2.8% 398 100% Refinance 56 7.7% 110 15.1% 174 23.9% 368 50.5% 20 2.7% 728 100% Home Improvement 19 10.4% 31 16.9% 34 18.6% 91 49.7% 8 4.4% 183 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 2 100.0% 2 100% TOTAL HMDA 105 8.0% 220 16.8% 292 22.3% 653 49.8% 41 3.1% 1,311 100%
Family Population 21.4% 17.8% 19.6% 41.2% 0.0% 100% 2013 HMDA 6.5% 15.0% 20.9% 42.3% 15.3% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 229 58.7% 38 9.7% 37 9.5% 304 77.9% Greater than $1 Million/Unknown 67 17.2% 10 2.6% 9 2.3% 86 22.1% TOTAL 296 75.9% 48 12.3% 46 11.8% 390 100% Dun & Bradstreet Businesses < $1MM 88.6% Small Business Aggregate < $1MM 44.6%
174 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500 $1 Million or Less 32 82.1% 5 12.8% 2 5.1% 39 100% Greater than $1 Million/Unknown 0 0.0% 0 0.0% 0 0.0% 0 0.0% TOTAL 32 82.1% 5 12.8% 2 5.1% 39 100%
Dun & Bradstreet Farms < $1MM 98.8% Small Farm Aggregate < $1MM 81.3%
175 Appendix D (continued)
Kansas City, Missouri-Kansas MSA Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 57 5.3% $707 0.5% Home Purchase 396 36.7% $61,082 38.7% Multifamily Housing 0 0.0% $0 0.0% Refinancing 228 21.1% $34,368 21.8% TOTAL HMDA 681 63.1% $96,157 60.9% Small Business 387 35.9% $60,288 38.2% Small Farm 11 1.0% $1,393 0.9% TOTAL LOANS 1,079 100% $157,838 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 11 2.8% 55 13.9% 177 44.7% 153 38.6% 0 0.0% 396 100% Refinance 4 1.8% 32 14.0% 89 39.0% 103 45.2% 0 0.0% 228 100%
Home Improvement 4 7.0% 12 21.1% 23 40.4% 18 31.6% 0 0.0% 57 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 19 2.8% 99 14.5% 289 42.4% 274 40.2% 0 0.0% 681 100%
Owner-Occupied Housing 5.1% 19.8% 40.1% 35.1% 0.0% 100% 2013 HMDA Aggregate 1.8% 13.0% 38.8% 46.4% 0.0% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small 38 9.8% 69 17.8% 116 30.0% 159 41.1% 5 1.3% 387 100% Business Business 6.9% 20.5% 35.5% 35.6% 1.3% 100% Institutions 2013 Small Business 5.4% 18.7% 32.0% 40.4% 3.5% 100% Aggregate
176 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 2 18.2% 3 27.3% 6 54.5% 0 0.0% 11 100% Loans Agricultural 1.0% 23.1% 55.2% 20.7% 0.1% 100% Institutions 2013 Small Farm 0.6% 30.0% 56.0% 12.9% 0.4% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2013 through December 31, 2013
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 72 18.2% 101 25.5% 91 23.0% 129 32.6% 3 0.8% 396 100% Refinance 12 5.3% 50 21.9% 59 25.9% 101 44.3% 6 2.6% 228 100% Home Improvement 4 7.0% 6 10.5% 15 26.3% 26 45.6% 6 10.5% 57 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 88 12.9% 157 23.1% 165 24.2% 256 37.6% 15 2.2% 681 100%
Family Population 20.5% 17.8% 21.6% 40.2% 0.0% 100% 2013 HMDA 7.8% 17.3% 21.4% 35.2% 18.2% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 106 27.4% 32 8.3% 24 6.2% 162 41.9% Greater than $1 Million/Unknown 147 38.0% 34 8.8% 44 11.4% 225 58.1% TOTAL 253 65.4% 66 17.1% 68 17.6% 387 100% Dun & Bradstreet Businesses < $1MM 89.2% Small Business Aggregate < $1MM 44.2%
177 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500 $1 Million or Less 4 36.4% 7 63.6% 0 0.0% 11 100.0% Greater than $1 Million/Unknown 0 0.0% 0 0.0% 0 0.0% 0 0.0% TOTAL 4 36.4% 7 63.6% 0 0.0% 11 100%
Dun & Bradstreet Farms < $1MM 99.1% Small Farm Aggregate < $1MM 61.4%
178 Appendix D (continued)
Little Rock-North Little Rock-Conway, Arkansas MSA Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 142 5.5% $2,683 0.9% Home Purchase 688 26.7% $97,131 32.9% Multifamily Housing 4 0.2% $4,109 1.4% Refinancing 798 30.9% $103,330 35.0% TOTAL HMDA 1,632 63.2% $207,253 70.2% Small Business 917 35.5% $85,157 28.9% Small Farm 33 1.3% $2,648 0.9% TOTAL LOANS 2,582 100% $295,058 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 13 1.9% 94 13.7% 333 48.4% 248 36.0% 0 0.0% 688 100% Refinance 7 0.9% 103 12.9% 393 49.2% 295 37.0% 0 0.0% 798 100% Home Improvement 3 2.1% 28 19.7% 81 57.0% 30 21.1% 0 0.0% 142 100% Multifamily 1 25.0% 2 50.0% 0 0.0% 1 25.0% 0 0.0% 4 100% TOTAL HMDA 24 1.5% 227 13.9% 807 49.4% 574 35.2% 0 0.0% 1,632 100%
Owner-Occupied Housing 2.8% 17.5% 50.8% 29.0% 0.0% 100% 2013 HMDA Aggregate 1.2% 10.8% 49.2% 38.9% 0.0% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small 33 3.6% 177 19.3% 373 40.7% 334 36.4% 0 0.0% 917 100% Business Business 4.6% 24.2% 42.6% 28.5% 0.0% 100% Institutions 2013 Small Business 4.1% 20.7% 40.9% 32.2% 2.1% 100% Aggregate
179 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0 0.0% 8 24.2% 23 69.7% 2 6.1% 0 0.0% 33 100% Agricultural 1.5% 22.9% 55.2% 20.3% 0.0% 100% Institutions 2013 Small Farm 1.0% 26.4% 58.0% 13.4% 1.3% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2013 through December 31, 2013
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 87 12.6% 202 29.4% 176 25.6% 202 29.4% 21 3.1% 688 100% Refinance 65 8.1% 155 19.4% 210 26.3% 349 43.7% 19 2.4% 798 100% Home Improvement 20 14.1% 16 11.3% 39 27.5% 44 31.0% 23 16.2% 142 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 4 100.0% 4 100% TOTAL HMDA 172 10.5% 373 22.9% 425 26.0% 595 36.5% 67 4.1% 1,632 100%
Family Population 21.4% 17.9% 20.5% 40.2% 0.0% 100% 2013 HMDA 6.8% 15.8% 19.3% 33.4% 24.6% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 548 59.8% 104 11.3% 63 6.9% 715 78.0% Greater than $1 Million/Unknown 162 17.7% 26 2.8% 14 1.5% 202 22.0% TOTAL 710 77.4% 130 14.2% 77 8.4% 917 100% Dun & Bradstreet Businesses < $1MM 89.9% Small Business Aggregate < $1MM 49.0%
180 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500
$1 Million or Less 22 66.7% 8 24.2% 0 0.0% 30 90.9% Greater than $1 Million/Unknown 2 6.1% 0 0.0% 1 3.0% 3 9.1% TOTAL 24 72.7% 8 24.2% 1 3.0% 33 100%
Dun & Bradstreet Farms < $1MM 98.0% Small Farm Aggregate < $1MM 69.7%
181 Appendix D (continued)
Hot Springs, Arkansas MSA Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 35 10.7% $388 1.1% Home Purchase 68 20.7% $11,923 33.5% Multifamily Housing 0 0.0% $0 0.0% Refinancing 88 26.8% $13,292 37.4% TOTAL HMDA 191 58.2% $25,603 71.9% Small Business 135 41.2% $9,522 26.8% Small Farm 2 0.6% $465 1.3% TOTAL LOANS 328 100% $35,590 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 2 2.9% 3 4.4% 32 47.1% 31 45.6% 0 0.0% 68 100% Refinance 3 3.4% 11 12.5% 49 55.7% 25 28.4% 0 0.0% 88 100% Home Improvement 1 2.9% 2 5.7% 16 45.7% 16 45.7% 0 0.0% 35 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 6 3.1% 16 8.4% 97 50.8% 72 37.7% 0 0.0% 191 100% Owner-Occupied Housing 1.2% 11.6% 55.4% 31.7% 0.0% 100% 2013 HMDA Aggregate 0.8% 7.7% 52.1% 39.4% 0.0% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 3 2.2% 15 11.1% 65 48.1% 52 38.5% 0 0.0% 135 100% Loans Business 1.8% 18.8% 48.5% 30.9% 0.0% 100% Institutions 2013 Small Business 1.1% 17.2% 46.6% 32.9% 2.2% 100% Aggregate
182 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 0 0.0% 0 0.0% 2 100.0% 0 0.0% 2 100% Loans Agricultural 1.3% 7.9% 53.9% 36.8% 0.0% 100% Institutions 2013 Small Farm 0.0% 6.7% 60.0% 33.3% 0.0% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2013 through December 31, 2013 Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 0 0.0% 9 13.2% 11 16.2% 46 67.6% 2 2.9% 68 100% Refinance 1 1.1% 13 14.8% 21 23.9% 52 59.1% 1 1.1% 88 100% Home Improvement 5 14.3% 4 11.4% 8 22.9% 15 42.9% 3 8.6% 35 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 6 3.1% 26 13.6% 40 20.9% 113 59.2% 6 3.1% 191 100% Family Population 20.8% 17.3% 21.1% 40.9% 0.0% 100% 2013 HMDA 5.2% 12.9% 18.3% 48.5% 15.2% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 74 54.8% 14 10.4% 7 5.2% 95 70.4% Greater than $1 Million/Unknown 36 26.7% 1 0.7% 3 2.2% 40 29.6% TOTAL 110 81.5% 15 11.1% 10 7.4% 135 100% Dun & Bradstreet Businesses < $1MM 91.2% Small Business Aggregate < $1MM 51.3%
183 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500 $1 Million or Less 0 0.0% 1 50.0% 1 50.0% 2 100% Greater than $1 Million/Unknown 0 0.0% 0 0.0% 0 0.0% 0 0.0% TOTAL 0 0.0% 1 50.0% 1 50.0% 2 100%
Dun & Bradstreet Farms < $1MM 98.7% Small Farm Aggregate < $1MM 46.7%
184 Appendix D (continued)
Nonmetropolitan Arkansas Statewide Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 185 7.4% $3,665 1.7% Home Purchase 403 16.1% $46,014 21.1% Multifamily Housing 3 0.1% $955 0.4% Refinancing 808 32.4% $73,597 33.7% TOTAL HMDA 1,399 56.0% $124,231 57.0% Small Business 789 31.6% $73,518 33.7% Small Farm 310 12.4% $20,390 9.4% TOTAL LOANS 2,498 100% $218,139 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 0 0.0% 29 7.2% 288 71.5% 86 21.3% 0 0.0% 403 100% Refinance 0 0.0% 43 5.3% 646 80.0% 119 14.7% 0 0.0% 808 100% Home Improvement 0 0.0% 13 7.0% 151 81.6% 21 11.4% 0 0.0% 185 100% Multifamily 0 0.0% 0 0.0% 3 100.0% 0 0.0% 0 0.0% 3 100% TOTAL HMDA 0 0.0% 85 6.1% 1,088 77.8% 226 16.2% 0 0.0% 1,399 100%
Owner-Occupied Housing 0.0% 7.8% 76.3% 15.9% 0.0% 100% 2013 HMDA Aggregate 0.0% 5.6% 73.8% 20.4% 0.2% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 0 0.0% 32 4.1% 633 80.2% 124 15.7% 0 0.0% 789 100% Loans Business 0.0% 7.2% 79.1% 13.7% 0.0% 100% Institutions 2013 Small Business 0.0% 7.7% 71.8% 16.9% 3.7% 100% Aggregate
185 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 33 10.6% 247 79.7% 30 9.7% 0 0.0% 310 100% Loans Agricultural 0.0% 7.3% 78.7% 14.0% 0.0% 100% Institutions 2013 Small Farm 0.0% 10.8% 79.2% 9.4% 0.6% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2013 through December 31, 2013
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 23 5.7% 75 18.6% 73 18.1% 222 55.1% 10 2.5% 403 100% Refinance 55 6.8% 151 18.7% 186 23.0% 395 48.9% 21 2.6% 808 100% Home 19 10.3% 34 18.4% 44 23.8% 72 38.9% 16 8.6% 185 100% Improvement Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 3 100.0% 3 100% TOTAL HMDA 97 6.9% 260 18.6% 303 21.7% 689 49.2% 50 3.6% 1,399 100%
Family Population 18.5% 18.9% 21.2% 41.3% 0.0% 100% 2013 HMDA 5.2% 15.5% 18.7% 43.9% 16.6% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 515 65.3% 86 10.9% 47 6.0% 648 82.1% Greater than $1 Million/Unknown 94 11.9% 18 2.3% 29 3.7% 141 17.9% TOTAL 609 77.2% 104 13.2% 76 9.6% 789 100% Dun & Bradstreet Businesses < $1MM 91.2% Small Business Aggregate < $1MM 53.7%
186 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500 $1 Million or Less 249 80.3% 46 14.8% 13 4.2% 308 99.4% Greater than $1 Million/Unknown 0 0.0% 2 0.6% 0 0.0% 2 0.6% TOTAL 249 80.3% 48 15.5% 13 4.2% 310 100%
Dun & Bradstreet Farms < $1MM 99.4% Small Farm Aggregate < $1MM 80.8%
187 Appendix D (continued)
Nonmetropolitan Kansas Statewide Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 18 6.3% $398 1.6% Home Purchase 50 17.5% $5,862 23.7% Multifamily Housing 0 0.0% $0 0.0% Refinancing 58 20.3% $4,818 19.5% TOTAL HMDA 126 44.1% $11,078 44.7% Small Business 112 39.2% $11,893 48.0% Small Farm 48 16.8% $1,796 7.3% TOTAL LOANS 286 100% $24,767 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 0 0.0% 9 18.0% 38 76.0% 3 6.0% 0 0.0% 50 100% Refinance 0 0.0% 8 13.8% 47 81.0% 3 5.2% 0 0.0% 58 100% Home Improvement 0 0.0% 1 5.6% 16 88.9% 1 5.6% 0 0.0% 18 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 0 0.0% 18 14.3% 101 80.2% 7 5.6% 0 0.0% 126 100% Owner-Occupied Housing 0.8% 9.9% 83.4% 5.9% 0.0% 100% 2013 HMDA Aggregate 0.1% 11.6% 80.2% 7.9% 0.1% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 0 0.0% 7 6.3% 105 93.8% 0 0.0% 0 0.0% 112 100% Loans Business 1.1% 16.2% 77.2% 5.5% 0.0% 100% Institutions 2013 Small Business 0.7% 15.8% 72.5% 6.3% 4.7% 100% Aggregate
188 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 0 0.0% 47 97.9% 1 2.1% 0 0.0% 48 100% Loans Agricultural 0.1% 3.9% 94.0% 2.1% 0.0% 100% Institutions 2013 Small Farm 0.0% 3.4% 94.3% 1.9% 0.4% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income
January 1, 2013 through December 31, 2013
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 6 12.0% 13 26.0% 13 26.0% 17 34.0% 1 2.0% 50 100%
Refinance 5 8.6% 16 27.6% 16 27.6% 20 34.5% 1 1.7% 58 100%
Home Improvement 0 0.0% 5 27.8% 5 27.8% 3 16.7% 5 27.8% 18 100%
Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100%
TOTAL HMDA 11 8.7% 34 27.0% 34 27.0% 40 31.7% 7 5.6% 126 100%
Family Population 20.5% 20.8% 24.8% 33.9% 0.0% 100% 2013 HMDA 9.7% 20.8% 23.2% 31.0% 15.2% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 66 58.9% 7 6.3% 5 4.5% 78 69.6% Greater than $1 Million/Unknown 20 17.9% 5 4.5% 9 8.0% 34 30.4% TOTAL 86 76.8% 12 10.7% 14 12.5% 112 100% Dun & Bradstreet Businesses < $1MM 89.2% Small Business Aggregate < $1MM 42.0%
189 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500 $1 Million or Less 44 91.7% 3 6.3% 1 2.1% 48 100.0% Greater than $1 Million/Unknown 0 0.0% 0 0.0% 0 0.0% 0 0.0% TOTAL 44 91.7% 3 6.3% 1 2.1% 48 100%
Dun & Bradstreet Farms < $1MM 99.7% Small Farm Aggregate < $1MM 68.3%
190 Appendix D (continued)
Joplin, Missouri MSA Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 35 3.2% $659 0.5% Home Purchase 273 24.7% $29,486 23.3% Multifamily Housing 4 0.4% $4,475 3.5% Refinancing 390 35.3% $39,876 31.6% TOTAL HMDA 702 63.5% $74,496 59.0% Small Business 310 28.0% $42,430 33.6% Small Farm 94 8.5% $9,410 7.5% TOTAL LOANS 1,106 100% $126,336 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 0 0.0% 34 12.5% 220 80.6% 19 7.0% 0 0.0% 273 100%
Refinance 0 0.0% 49 12.6% 308 79.0% 33 8.5% 0 0.0% 390 100%
Home Improvement 0 0.0% 7 20.0% 26 74.3% 2 5.7% 0 0.0% 35 100%
Multifamily 0 0.0% 0 0.0% 3 75.0% 1 25.0% 0 0.0% 4 100%
TOTAL HMDA 0 0.0% 90 12.8% 557 79.3% 55 7.8% 0 0.0% 702 100%
Owner-Occupied Housing 0.0% 10.4% 82.1% 7.5% 0.0% 100%
2013 HMDA Aggregate 0.0% 9.6% 83.4% 7.0% 0.0% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 0 0.0% 32 10.3% 257 82.9% 21 6.8% 0 0.0% 310 100% Loans Business 0.0% 15.2% 77.6% 7.2% 0.0% 100% Institutions 2013 Small Business 0.0% 15.8% 75.0% 6.7% 2.4% 100% Aggregate
191 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 0 0.0% 92 97.9% 2 2.1% 0 0.0% 94 100% Loans Agricultural 0.0% 1.1% 96.2% 2.7% 0.0% 100% Institutions 2013 Small Farm 0.0% 2.1% 94.7% 1.6% 1.6% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income
January 1, 2013 through December 31, 2013
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 30 11.0% 63 23.1% 71 26.0% 89 32.6% 20 7.3% 273 100%
Refinance 37 9.5% 77 19.7% 95 24.4% 169 43.3% 12 3.1% 390 100%
Home Improvement 0 0.0% 5 14.3% 13 37.1% 14 40.0% 3 8.6% 35 100%
Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 4 100% 4 100%
TOTAL HMDA 67 9.5% 145 20.7% 179 25.5% 272 38.7% 39 5.6% 702 100%
Family Population 20.3% 19.0% 19.9% 40.8% 0.0% 100% 2013 HMDA 8.5% 19.0% 20.1% 30.9% 21.5% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 153 49.4% 40 12.9% 37 11.9% 230 74.2% Greater than $1 Million/Unknown 55 17.7% 9 2.9% 16 5.2% 80 25.8% TOTAL 208 67.1% 49 15.8% 53 17.1% 310 100% Dun & Bradstreet Businesses < $1MM 91.2% Small Business Aggregate < $1MM 45.6%
192 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 64 68.1% 19 20.2% 9 9.6% 92 97.9% Greater than $1 Million/Unknown 0 0.0% 2 2.1% 0 0.0% 2 2.1% TOTAL 64 68.1% 21 22.3% 9 9.6% 94 100%
Dun & Bradstreet Farms < $1MM 99.6% Small Farm Aggregate < $1MM 75.9%
193 Appendix D (continued)
Springfield, Missouri MSA Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 15 1.9% $416 0.4% Home Purchase 343 43.5% $45,014 42.6% Multifamily Housing 2 0.3% $686 0.7% Refinancing 249 31.6% $34,703 32.8% TOTAL HMDA 609 77.2% $80,819 76.4% Small Business 170 21.6% $24,089 22.8% Small Farm 10 1.3% $824 0.8% TOTAL LOANS 789 100% $105,732 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 3 0.9% 37 10.8% 192 56.0% 111 32.4% 0 0.0% 343 100%
Refinance 2 0.8% 21 8.4% 156 62.7% 70 28.1% 0 0.0% 249 100%
Home Improvement 0 0.0% 2 13.3% 10 66.7% 3 20.0% 0 0.0% 15 100%
Multifamily 0 0.0% 0 0.0% 2 100% 0 0.0% 0 0.0% 2 100%
TOTAL HMDA 5 0.8% 60 9.9% 360 59.1% 184 30.2% 0 0.0% 609 100%
Owner-Occupied Housing 0.5% 16.0% 61.2% 22.4% 0.0% 100%
2013 HMDA Aggregate 0.7% 12.0% 60.2% 27.1% 0.0% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 0 0.0% 34 20.0% 83 48.8% 53 31.2% 0 0.0% 170 100% Loans Business 0.7% 24.1% 56.0% 19.3% 0.0% 100% Institutions 2013 Small Business 0.8% 25.6% 49.6% 22.1% 1.9% 100% Aggregate
194 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 2 20.0% 5 50.0% 3 30.0% 0 0.0% 10 100% Loans Agricultural 0.3% 9.7% 81.7% 8.4% 0.0% 100% Institutions 2013 Small Farm 0.1% 9.0% 87.7% 2.7% 0.6% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2013 through December 31, 2013 Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 44 12.8% 86 25.1% 77 22.4% 132 38.5% 4 1.2% 343 100% Refinance 17 6.8% 42 16.9% 53 21.3% 128 51.4% 9 3.6% 249 100% Home 0 0.0% 2 13.3% 3 20.0% 6 40.0% 4 26.7% 15 100% Improvement Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 2 100.0% 2 100% TOTAL HMDA 61 10.0% 130 21.3% 133 21.8% 266 43.7% 19 3.1% 609 100% Family Population 19.5% 18.4% 22.1% 40.0% 0.0% 100% 2013 HMDA 7.4% 17.8% 18.9% 34.2% 21.6% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 72 42.4% 29 17.1% 22 12.9% 123 72.4% Greater than $1 Million/Unknown 38 22.4% 2 1.2% 7 4.1% 47 27.6% TOTAL 110 64.7% 31 18.2% 29 17.1% 170 100% Dun & Bradstreet Businesses < $1MM 90.3% Small Business Aggregate < $1MM 46.9%
195 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500 $1 Million or Less 7 70.0% 3 30.0% 0 0.0% 10 100% Greater than $1 Million/Unknown 0 0.0% 0 0.0% 0 0.0% 0 0.0% TOTAL 7 70.0% 3 30.0% 0 0.0% 10 100%
Dun & Bradstreet Farms < $1MM 99.7% Small Farm Aggregate < $1MM 38.5%
196 Appendix D (continued)
Nonmetropolitan Missouri Statewide Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 27 3.0% $822 0.8% Home Purchase 301 32.9% $36,650 35.3% Multifamily Housing 0 0.0% $0 0.0% Refinancing 310 33.8% $36,003 34.6% TOTAL HMDA 638 69.7% $73,475 70.7% Small Business 192 21.0% $18,593 17.9% Small Farm 86 9.4% $11,876 11.4% TOTAL LOANS 916 100% $103,944 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 0 0.0% 27 5.2% 484 93.1% 9 1.7% 0 0.0% 520 100% Refinance 0 0.0% 27 6.4% 383 90.3% 14 3.3% 0 0.0% 424 100% Home Improvement 0 0.0% 10 11.6% 75 87.2% 1 1.2% 0 0.0% 86 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100% TOTAL HMDA 0 0.0% 64 6.2% 942 91.5% 24 2.3% 0 0.0% 1,030 100% Owner-Occupied 0.0% 13.6% 85.3% 1.2% 0.0% 100% Housing 2013 HMDA Aggregate 0.0% 11.3% 85.9% 2.6% 0.2% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 0 0.0% 39 8.9% 397 90.2% 4 0.9% 0 0.0% 440 100% Loans Business 0.0% 11.3% 87.0% 1.7% 0.0% 100% Institutions 2013 Small Business 0.0% 10.5% 80.1% 3.5% 5.9% 100% Aggregate
197 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 0 0.0% 17 19.8% 69 80.2% 0 0.0% 0 0.0% 86 100% Loans Agricultural 0.0% 14.6% 85.2% 0.2% 0.0% 100% Institutions 2013 Small 0.0% 17.5% 80.0% 0.0% 2.5% 100% Farm Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income
January 1, 2013 through December 31, 2013
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 48 9.2% 106 20.4% 109 21.0% 252 48.5% 5 1.0% 520 100%
Refinance 31 7.3% 82 19.3% 94 22.2% 210 49.5% 7 1.7% 424 100%
Home Improvement 4 4.7% 14 16.3% 18 20.9% 42 48.8% 8 9.3% 86 100%
Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 100%
TOTAL HMDA 83 8.1% 202 19.6% 221 21.5% 504 48.9% 20 1.9% 1,030 100%
Family Population 21.1% 19.6% 23.5% 35.7% 0.0% 100% 2013 HMDA 8.1% 17.5% 19.4% 38.9% 16.2% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 251 57.0% 38 8.6% 24 5.5% 313 71.1% Greater than $1 Million/Unknown 100 22.7% 9 2.0% 18 4.1% 127 28.9% TOTAL 351 79.8% 47 10.7% 42 9.5% 440 100% Dun & Bradstreet Businesses < $1MM 91.1% Small Business Aggregate < $1MM 47.7%
198 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 147 61.5% 50 20.9% 25 10.5% 222 92.9% Greater than $1 Million/Unknown 5 2.1% 5 2.1% 7 2.9% 17 7.1% TOTAL 152 63.6% 55 23.0% 32 13.4% 239 100%
Dun & Bradstreet Farms < $1MM 99.8% Small Farm Aggregate < $1MM 72.2%
199 Appendix D (continued)
Oklahoma City, Oklahoma MSA Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 245 12.6% $3,289 1.5% Home Purchase 573 29.5% $88,208 40.3% Multifamily Housing 1 0.1% $6,802 3.1% Refinancing 463 23.8% $62,908 28.8% TOTAL HMDA 1,282 65.9% $161,207 73.7% Small Business 623 32.0% $54,770 25.0% Small Farm 41 2.1% $2,752 1.3% TOTAL LOANS 1,946 100% $218,729 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 0 0.0% 71 12.4% 259 45.2% 243 42.4% 0 0.0% 573 100% Refinance 1 0.2% 47 10.2% 223 48.2% 192 41.5% 0 0.0% 463 100% Home Improvement 2 0.8% 42 17.1% 109 44.5% 92 37.6% 0 0.0% 245 100% Multifamily 0 0.0% 0 0.0% 1 100% 0 0.0% 0 0.0% 1 100% TOTAL HMDA 3 0.2% 160 12.5% 592 46.2% 527 41.1% 0 0.0% 1,282 100% Owner-Occupied Housing 3.2% 18.7% 45.0% 33.1% 0.0% 100% 2013 HMDA Aggregate 1.1% 12.5% 41.2% 45.2% 0.0% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 28 4.5% 129 20.7% 235 37.7% 216 34.7% 15 2.4% 623 100% Loans Business 5.8% 20.8% 39.7% 32.8% 1.0% 100% Institutions 2013 Small Business 6.1% 17.9% 35.6% 36.6% 3.8% 100% Aggregate
200 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 2 4.9% 15 36.6% 21 51.2% 3 7.3% 0 0.0% 41 100% Loans Agricultural 1.1% 12.3% 57.1% 29.3% 0.2% 100% Institutions 2013 Small Farm 1.1% 16.1% 63.7% 18.3% 0.9% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income
January 1, 2013 through December 31, 2013
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 38 6.6% 108 18.8% 121 21.1% 286 49.9% 20 3.5% 573 100%
Refinance 20 4.3% 63 13.6% 117 25.3% 253 54.6% 10 2.2% 463 100% Home 14 5.7% 46 18.8% 58 23.7% 118 48.2% 9 3.7% 245 100% Improvement Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 1 100.0% 1 100%
TOTAL HMDA 72 5.6% 217 16.9% 296 23.1% 657 51.2% 40 3.1% 1,282 100% Family 21.3% 17.8% 20.6% 40.4% 0.0% 100% Population 2013 HMDA 5.3% 15.0% 20.0% 40.3% 19.5% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 236 37.9% 51 8.2% 26 4.2% 313 50.2% Greater than $1 Million/Unknown 259 41.6% 23 3.7% 28 4.5% 310 49.8% TOTAL 495 79.5% 74 11.9% 54 8.7% 623 100% Dun & Bradstreet Businesses < $1MM 90.2% Small Business Aggregate < $1MM 43.6%
201 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500 $1 Million or Less 33 80.5% 5 12.2% 1 2.4% 39 95.1% Greater than $1 Million/Unknown 0 0.0% 2 4.9% 0 0.0% 2 4.9% TOTAL 33 80.5% 7 17.1% 1 2.4% 41 100%
Dun & Bradstreet Farms < $1MM 98.8% Small Farm Aggregate < $1MM 80.8%
202 Appendix D (continued)
Tulsa, Oklahoma MSA Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) %
Home Improvement 572 16.6% $9,084 2.3%
Home Purchase 859 24.9% $136,195 34.5%
Multifamily Housing 2 0.1% $4,530 1.2%
Refinancing 782 22.7% $103,312 26.2%
TOTAL HMDA 2,215 64.2% $253,121 64.1%
Small Business 1,163 33.7% $134,887 34.2%
Small Farm 72 2.1% $6,921 1.8%
TOTAL LOANS 3,450 100% $394,929 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 8 0.9% 104 12.1% 294 34.2% 453 52.7% 0 0.0% 859 100% Refinance 11 1.4% 120 15.3% 257 32.9% 394 50.4% 0 0.0% 782 100% Home Improvement 13 2.3% 98 17.1% 205 35.8% 256 44.8% 0 0.0% 572 100% Multifamily 0 0.0% 1 50.0% 0 0.0% 1 50.0% 0 0.0% 2 100% TOTAL HMDA 32 1.4% 323 14.6% 756 34.1% 1,104 49.8% 0 0.0% 2,215 100% Owner-Occupied Housing 3.4% 20.9% 40.8% 34.9% 0.0% 100% 2013 HMDA Aggregate 1.3% 12.7% 37.4% 48.5% 0.0% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 44 3.8% 265 22.8% 344 29.6% 510 43.9% 0 0.0% 1,163 100% Loans Business 5.5% 24.8% 35.4% 34.4% 0.0% 100% Institutions 2013 Small Business 5.4% 21.0% 30.6% 40.6% 2.4% 100% Aggregate
203 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 1 1.4% 13 18.1% 40 55.6% 18 25.0% 0 0.0% 72 100% Loans Agricultural 0.8% 17.4% 56.1% 25.7% 0.0% 100% Institutions 2013 Small Farm 0.7% 24.2% 54.2% 19.3% 1.6% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income
January 1, 2013 through December 31, 2013
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 81 9.4% 166 19.3% 175 20.4% 411 47.8% 26 3.0% 859 100%
Refinance 41 5.2% 140 17.9% 201 25.7% 361 46.2% 39 5.0% 782 100%
Home Improvement 40 7.0% 84 14.7% 143 25.0% 293 51.2% 12 2.1% 572 100%
Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 2 100.0% 2 100%
TOTAL HMDA 162 7.3% 390 17.6% 519 23.4% 1,065 48.1% 79 3.6% 2,215 100%
Family Population 21.1% 17.9% 20.4% 40.6% 0.0% 100% 2013 HMDA 6.2% 17.0% 21.2% 41.1% 14.5% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 562 48.3% 110 9.5% 72 6.2% 744 64.0% Greater than $1 Million/Unknown 305 26.2% 42 3.6% 72 6.2% 419 36.0% TOTAL 867 74.5% 152 13.1% 144 12.4% 1,163 100% Dun & Bradstreet Businesses < $1MM 89.3% Small Business Aggregate < $1MM 46.9%
204 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 52 72.2% 11 15.3% 6 8.3% 69 95.8% Greater than $1 Million/Unknown 0 0.0% 0 0.0% 3 4.2% 3 4.2% TOTAL 52 72.2% 11 15.3% 9 12.5% 72 100%
Dun & Bradstreet Farms < $1MM 99.4% Small Farm Aggregate < $1MM 79.4%
205 Appendix D (continued)
Lawton, Oklahoma MSA Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 67 10.2% $1,352 2.2% Home Purchase 62 9.5% $8,804 14.6% Multifamily Housing 1 0.2% $145 0.2% Refinancing 111 16.9% $14,169 23.5% TOTAL HMDA 241 36.7% $24,470 40.5% Small Business 394 60.1% $34,112 56.5% Small Farm 21 3.2% $1,830 3.0% TOTAL LOANS 656 100% $60,412 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 0 0.0% 5 8.1% 26 41.9% 31 50.0% 0 0.0% 62 100% Refinance 2 1.8% 12 10.8% 46 41.4% 51 45.9% 0 0.0% 111 100% Home Improvement 0 0.0% 8 11.9% 35 52.2% 24 35.8% 0 0.0% 67 100% Multifamily 1 100% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 1 100% TOTAL HMDA 3 1.2% 25 10.4% 107 44.4% 106 44.0% 0 0.0% 241 100% Owner-Occupied Housing 2.7% 10.5% 50.8% 36.0% 0.0% 100% 2013 HMDA Aggregate 1.4% 6.4% 46.8% 45.3% 0.1% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 46 11.7% 70 17.8% 131 33.2% 144 36.5% 3 0.8% 394 100% Loans Business 13.6% 20.3% 41.4% 24.4% 0.3% 100% Institutions 2013 Small Business 12.8% 19.9% 34.7% 30.7% 1.9% 100% Aggregate
206 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 1 4.8% 0 0.0% 13 61.9% 7 33.3% 0 0.0% 21 100% Loans Agricultural 1.3% 2.9% 52.7% 43.1% 0.0% 100% Institutions 2013 Small Farm 3.1% 3.1% 32.3% 61.5% 0.0% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income January 1, 2013 through December 31, 2013 Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Home Purchase 4 6.5% 10 16.1% 10 16.1% 36 58.1% 2 3.2% 62 100% Refinance 2 1.8% 18 16.2% 24 21.6% 59 53.2% 8 7.2% 111 100% Home Improvement 4 6.0% 6 9.0% 21 31.3% 31 46.3% 5 7.5% 67 100% Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 1 100.0% 1 100% TOTAL HMDA 10 4.1% 34 14.1% 55 22.8% 126 52.3% 16 6.6% 241 100% Family Population 21.8% 17.5% 21.3% 39.4% 0.0% 100% 2013 HMDA 3.7% 10.0% 18.8% 35.0% 32.5% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 278 70.6% 47 11.9% 18 4.6% 343 87.1% Greater than $1 Million/Unknown 35 8.9% 5 1.3% 11 2.8% 51 12.9% TOTAL 313 79.4% 52 13.2% 29 7.4% 394 100% Dun & Bradstreet Businesses < $1MM 91.2% Small Business Aggregate < $1MM 60.2%
207 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$500 $1 Million or Less 15 71.4% 5 23.8% 0 0.0% 20 95.2% Greater than $1 Million/Unknown 0 0.0% 0 0.0% 1 4.8% 1 4.8% TOTAL 15 71.4% 5 23.8% 1 4.8% 21 100%
Dun & Bradstreet Farms < $1MM 99.5% Small Farm Aggregate < $1MM 91.7%
208 Appendix D (continued)
Nonmetropolitan Oklahoma Statewide Assessment Area
Summary of Lending Activity January 1, 2013 through December 31, 2013 Loan Type # % $(000s) % Home Improvement 298 7.4% $5,923 2.0% Home Purchase 690 17.2% $80,222 26.7% Multifamily Housing 2 0.1% $245 0.1% Refinancing 843 21.0% $80,573 26.8% TOTAL HMDA 1,833 45.3% $166,963 55.5% Small Business 1,377 34.2% $93,463 31.1% Small Farm 812 20.2% $40,266 13.4% TOTAL LOANS 4,022 100% $300,692 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013
Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 1 0.1% 89 12.9% 399 57.8% 201 29.1% 0 0.0% 690 100%
Refinance 0 0.0% 120 14.2% 542 64.3% 181 21.5% 0 0.0% 843 100%
Home Improvement 2 0.7% 46 15.4% 198 66.4% 52 17.4% 0 0.0% 298 100%
Multifamily 0 0.0% 0 0.0% 0 0.0% 2 100.0% 0 0.0% 2 100%
TOTAL HMDA 3 0.2% 255 13.9% 1,139 62.1% 436 23.8% 0 0.0% 1,833 100%
Owner-Occupied Housing 0.9% 15.2% 67.1% 16.8% 0.0% 100%
2013 HMDA Aggregate 0.6% 11.0% 64.2% 23.5% 0.8% 100%
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Business 26 1.9% 225 16.3% 757 55.0% 369 26.8% 0 0.0% 1,377 100% Loans Business 2.5% 19.0% 63.2% 15.3% 0.0% 100% Institutions 2013 Small Business 2.3% 13.8% 60.9% 17.1% 5.8% 100% Aggregate
209 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Income Level of Geography January 1, 2013 through December 31, 2013 Geography Income Level TOTAL Low- Moderate- Middle- Upper- Unknown Small Farm 2 0.2% 186 22.9% 535 65.9% 89 11.0% 0 0.0% 812 100% Loans Agricultural 0.6% 9.9% 72.2% 17.2% 0.0% 100% Institutions 2013 Small Farm 0.9% 9.8% 75.0% 13.7% 0.6% 100% Aggregate
Distribution of Loans Inside Assessment Area by Borrower Income
January 1, 2013 through December 31, 2013
Borrower Income Level TOTAL Low- Moderate- Middle- Upper- Unknown
Home Purchase 32 4.6% 166 24.1% 143 20.7% 317 45.9% 32 4.6% 690 100%
Refinance 61 7.2% 123 14.6% 186 22.1% 435 51.6% 38 4.5% 843 100%
Home Improvement 28 9.4% 46 15.4% 51 17.1% 153 51.3% 20 6.7% 298 100%
Multifamily 0 0.0% 0 0.0% 0 0.0% 0 0.0% 2 100.0% 2 100%
TOTAL HMDA 121 6.6% 335 18.3% 380 20.7% 905 49.4% 92 5.0% 1,833 100%
Family Population 21.9% 18.0% 20.7% 39.3% 0.0% 100% 2013 HMDA 4.8% 14.9% 19.9% 47.1% 13.4% 100% Aggregate
Distribution of Loans Inside Assessment Area by Business Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue >$100 and >$250 and TOTAL <$100 <$250 <$1,000 $1 Million or Less 919 66.7% 110 8.0% 63 4.6% 1,092 79.3% Greater than $1 Million/Unknown 245 17.8% 20 1.5% 20 1.5% 285 20.7% TOTAL 1,164 84.5% 130 9.4% 83 6.0% 1,377 100% Dun & Bradstreet Businesses < $1MM 89.7% Small Business Aggregate < $1MM 52.7%
210 Appendix D (continued)
Distribution of Loans Inside Assessment Area by Farm Revenue January 1, 2013 through December 31, 2013 Loan Amounts in $000s Gross Revenue TOTAL <$100 >$100 and <$250 >$250 and <$500 $1 Million or Less 709 87.3% 72 8.9% 28 3.4% 809 99.6% Greater than $1 Million/Unknown 1 0.1% 1 0.1% 1 0.1% 3 0.4% TOTAL 710 87.4% 73 9.0% 29 3.6% 812 100%
Dun & Bradstreet Farms < $1MM 99.2% Small Farm Aggregate < $1MM 89.1%
211 Appendix E
ASSESSMENT AREAS MAP
212 Appendix F
GLOSSARY
Aggregate lending: The number of loans originated and purchased by all reporting lenders in specified income categories as a percentage of the aggregate number of loans originated and purchased by all reporting lenders in the metropolitan area/assessment area.
Assessment area: One or more of the geographic areas delineated by the bank and used by the regulatory agency to assess an institution’s record of CRA performance.
Census tract: A small subdivision of metropolitan and nonmetropolitan counties. Census tract boundaries do not cross county lines; however, they may cross the boundaries of metropolitan statistical areas. Census tracts usually have between 2,500 and 8,000 persons, and their physical size varies widely depending on population density. Census tracts are designed to be homogeneous with respect to population characteristics, economic status, and living conditions to allow for statistical comparisons.
Community contact: Interviews conducted as part of the CRA examination to gather information that might assist examiners in understanding the bank’s community, available opportunities for helping to meet local credit and community development needs, and perceptions on the performance of financial institutions in helping meet local credit needs. Communications and information gathered can help to provide a context to assist in the evaluation of an institution’s CRA performance.
Community development: An activity associated with one of the following five descriptions: (1) affordable housing (including multifamily rental housing) for low- and moderate-income (LMI) individuals; (2) community services targeted to LMI individuals; (3) activities that promote economic development by financing businesses or farms that meet the size eligibility standards of the Small Business Administration’s Development Company or Small Business Investment Company programs (13 CFR 121.301) or have gross annual revenues of $1 million or less; (4) activities that revitalize or stabilize LMI geographies, designated disaster areas, or distressed or underserved nonmetropolitan middle-income geographies; or (5) Neighborhood Stabilization Program (NSP) eligible activities in areas with HUD-approved NSP plans, which are conducted within two years after the date when NSP program funds are required to be spent and benefit low-, moderate-, and middle-income individuals and geographies.
Consumer loan(s): A loan(s) to one or more individuals for household, family, or other personal expenditures. A consumer loan does not include a home mortgage, small business, or small farm loan. This definition includes the following categories: motor vehicle loans, credit card loans, home equity loans, other secured consumer loans, and other unsecured consumer loans.
Demographics: The statistical characteristics of human populations (such as age, race, sex, income, etc.) used especially to identify markets.
213 Appendix F (continued)
Distressed nonmetropolitan middle-income geography: A middle-income, nonmetropolitan geography will be designated as distressed if it is in a county that meets one or more of the following triggers: (1) an unemployment rate of at least 1.5 times the national average, (2) a poverty rate of 20 percent or more, or (3) a population loss of 10 percent or more between the previous and most recent decennial census or a net migration loss of 5 percent or more over the 5-year period preceding the most recent census.
Family: Includes a householder and one or more other persons living in the same household who are related to the householder by birth, marriage, or adoption. The number of family households always equals the number of families; however, a family household may also include nonrelatives living with the family. Families are classified by type as either a married-couple family or other family, which is further classified into “male householder” (a family with a male householder and no wife present) or “female householder” (a family with a female householder and no husband present).
Full-scope review: Performance under the Lending, Investment, and Service Tests is analyzed considering performance context, quantitative factors (e.g., geographic distribution, borrower distribution, and total number and dollar amount of investments), and qualitative factors (e.g., innovativeness, complexity, and responsiveness).
Geography: A census tract delineated by the United States Bureau of the Census in the most recent decennial census.
Home Mortgage Disclosure Act (HMDA): The statute that requires certain mortgage lenders who do business or have banking offices in a metropolitan statistical area to file annual summary reports of their mortgage lending activity. The reports include such data as the race, gender, and the income of applications, the amount of loan requested, and the disposition of the application (e.g., approved, denied, and withdrawn).
Home mortgage loans: Includes home purchase and home improvement loans as defined in the HMDA regulation. This definition also includes multifamily (five or more families) dwelling loans, loans for the purchase of manufactured homes, and refinancing of home improvement and home purchase loans.
Household: One or more persons who occupy a housing unit. The occupants may be a single family, one person living alone, two or more families living together, or any other group of related or unrelated persons who share living arrangements.
Housing affordability ratio: Is calculated by dividing the median household income by the median housing value. It represents the amount of single family, owner-occupied housing that a dollar of income can purchase for the median household in the census tract. Values closer to 100 percent indicate greater affordability.
Limited-scope review: Performance under the Lending, Investment, and Service Tests is analyzed using only quantitative factors (e.g., geographic distribution, borrower distribution, total number and dollar amount of investments, and branch distribution).
214 Appendix F (continued)
Low-income: Individual income that is less than 50 percent of the area median income, or a median family income that is less than 50 percent, in the case of a geography.
Market share: The number of loans originated and purchased by the institution as a percentage of the aggregate number of loans originated and purchased by all reporting lenders in the metropolitan area/assessment area.
Median family income: The dollar amount that divides the family income distribution into two equal groups, half having incomes above the median, half having incomes below the median. The median family income is based on all families within the area being analyzed.
Metropolitan area (MA): A metropolitan statistical area (MSA) or a metropolitan division (MD) as defined by the Office of Management and Budget. An MSA is a core area containing at least one urbanized area of 50,000 or more inhabitants, together with adjacent communities having a high degree of economic and social integration with that core. An MD is a division of an MSA based on specific criteria including commuting patterns. Only an MSA that has a population of at least 2.5 million may be divided into MDs.
Middle-income: Individual income that is at least 80 percent and less than 120 percent of the area median income, or a median family income that is at least 80 percent and less than 120 percent in the case of a geography.
Moderate-income: Individual income that is at least 50 percent and less than 80 percent of the area median income, or a median family income that is at least 50 percent and less than 80 percent in the case of a geography.
Multifamily: Refers to a residential structure that contains five or more units.
Nonmetropolitan statistical area (nonMSA): Not part of a metropolitan area. (See metropolitan area.)
Other products: Includes any unreported optional category of loans for which the institution collects and maintains data for consideration during a CRA examination. Examples of such activity include consumer loans and other loan data an institution may provide concerning its lending performance.
Owner-occupied units: Includes units occupied by the owner or co-owner, even if the unit has not been fully paid for or is mortgaged.
Performance context: The performance context is a broad range of economic, demographic, and institution- and community-specific information that an examiner reviews to understand the context in which an institution’s record of performance should be evaluated. The performance context is not a formal or written assessment of community credit needs.
215 Appendix F (continued)
Performance criteria: These are the different criteria against which a bank’s performance in helping to meet the credit needs of its assessment area(s) is measured. The criteria relate to lending, investment, retail service, and community development activities performed by a bank. The performance criteria have both quantitative and qualitative aspects. There are different sets of criteria for large banks, intermediate small banks, small banks, wholesale/limited purpose banks, and strategic plan banks.
Performance evaluation (PE): A written evaluation of a financial institution’s record of meeting the credit needs of its community, as prepared by the federal financial supervision agency responsible for supervising the institution.
Qualified investment: A qualified investment is defined as any lawful investment, deposit, membership share, or grant that has as its primary purpose community development.
Rated area: A rated area is a state or multistate metropolitan area. For an institution with domestic branches in only one state, the institution’s CRA rating would be the state rating. If an institution maintains domestic branches in more than one state, the institution will receive a rating for each state in which those branches are located. If an institution maintains domestic branches in two or more states within a multistate metropolitan area, the institution will receive a rating for the multistate metropolitan area.
Small businesses/small farms: A small business/farm is considered to be one in which gross annual revenues for the preceding calendar year were $1 million or less.
Small loan(s) to business(es): That is, “small business loans” are included in “loans to small businesses” as defined in the Consolidated Reports of Condition and Income (Call Report) and the Thrift Financial Reporting (TFR) instructions. These loans have original amounts of $1 million or less and typically are secured by either nonfarm or nonresidential real estate or are classified as commercial and industrial loans. However, thrift institutions may also exercise the option to report loans secured by nonfarm residential real estate as “small business loans” if the loans are reported on the TFR as nonmortgage, commercial loans.
Small loan(s) to farm(s): That is, “small farm loans” are included in “loans to small farms” as defined in the instructions for preparation of the Consolidated Reports of Condition and Income (Call Report). These loans have original amounts of $500,000 or less and are either secured by farmland or are classified as loans to finance agricultural production and other loans to farmers.
Underserved middle-income geography: A middle-income, nonmetropolitan geography will be designated as underserved if it meets criteria for population size, density, and dispersion that indicate the area’s population is sufficiently small, thin, and distant from a population center that the tract is likely to have difficulty financing the fixed costs of meeting essential community needs.
Upper-income: Individual income that is 120 percent or more of the area median income, or a median family income that is 120 percent or more, in the case of a geography.
216