Executive Q&A: Banking Remains Strong in Arkansas

A year and a half into the COVID-19 pandemic, Susannah Marshall says Arkansas banks are strong and continue to outperform the national average in most areas. She should know. Last year, she was appointed by Gov. Asa Hutchinson to replace the retiring Candace Franks as commissioner of the Arkansas State Bank Department.

Franks had been with the department for 40 years, and Marshall was the logical choice to succeed her. Marshall had served as deputy bank commissioner since 2007 and had been with the department since 1995, when she started as a commercial bank examiner. Then in 2005, she became a financial analyst and was promoted to financial analyst supervisor.

Marshall is a graduate of Arkansas State University and the Southwestern Graduate School of Banking in Dallas. She holds the designation of Commissioned Senior Examiner and is a certified examination manager.

Marshall serves the Conference of State Bank Supervisors as vice chair of a multistate regional regulatory committee and a national committee of state and federal regulators, and previously sat on its board.

She recently visited with Arkansas Money & Politics about the state of the banking industry in Arkansas, some of the pressing issues related to COVID that the state’s financial institutions still face, and more.

AMP: How would you assess the overall state of the industry in Arkansas right now? How has the pandemic impacted banks’ books?

Marshall: The banking industry in Arkansas is healthy and operating in an overall strong position given the ongoing pandemic. During the past 12 months, Arkansas banks’ operations have rebounded from the initial impact of the pandemic. As of June 30, the financial performance of Arkansas banks continues to outperform the national average in most all trends and ratios.

However, the prolonged period of historically low interest rates has continued to place pressure on margins, and Arkansas banks are currently challenged with higher levels of liquidity coupled with overall lower loan demand.

The exceptional growth in total assets continues to be driven by the impact of the various governmental relief programs and the resulting response from bank customers to preserve cash and operate in a conservative posture. Arkansas banks maintain higher levels of capital, which provide protection against unforeseen operational weaknesses and deterioration in economic conditions.

Lastly, loan portfolio performance has been generally sustained, and I remain very optimistic, yet cautious, regarding the overall soundness of the banking industry in Arkansas.

AMP: How are Arkansas banks dealing with staffing challenges that come with the pandemic?

Marshall: Staffing challenges are present across many business sectors nationally and in Arkansas. Banks, like other industries, are managing multiple issues as they pertain to the workforce. Arkansas banks are challenged with evaluating the impact of remote work opportunities, safely providing services to customers and adequately protecting staff members across all levels of operations.

Banks are reporting a high level of vacancies for skilled and experienced employees and the need to seek alternatives and incentives to attract and retain staff in a fiercely competitive job market. As essential workers, it is critically important that we maintain a robust supply of personnel to lead and operate the financial institutions that serve Arkansas communities and meet the needs of our citizens and customers.

AMP: In Arkansas, women increasingly are enjoying more prominent roles in the industry and assuming positions of leadership. Why do you think that is, and what took so long?

Marshall: Women are integral in the success of banking operations both in Arkansas and across the country. I am proud to see more female bankers serving in leadership roles within the industry, and I strongly encourage women, at any stage of their professional development, to consider choosing a career in banking.

I see many different areas within institutions where women are becoming more active such as department managers, executive officer positions and board membership. I applaud women who are looking for opportunities where they can showcase their education, skillset and talents in the financial services sector. Today, women are more engaged with managing their financial independence. And with additional emphasis on female banker positions, I think banks may often attract female customers or female staff members to mentor other women and help them navigate their own financial goals. I hope this trend continues, and I see the industry is becoming more holistically focused on discussions regarding diversity in banking and financial service providers.

AMP: How has climate change and green financing impacted the state banking industry?

Marshall: Climate change and the impact of climate-related issues have been highlighted within the banking industry in recent months. I fully expect this trend to continue, and although the discussions are often initiated at a high level among the largest financial institutions, topics such as climate will often filter into narratives with all banks, regardless of asset size and geographic footprint.

The federal regulatory agencies are beginning to address and evaluate the financial-system impact associated with climate risk. Today, I would say that most community banks in Arkansas and across the country have not elevated the topic of climate risk within their bank’s risk matrix; however, for some institutions, it is likely that they have anecdotally addressed this topic for quite some time as it relates to various loan customers.

I believe climate change, environmental initiatives and green financing are industry hot topics that will continue to be present and expand in the coming years.