PUBLIC DISCLOSURE COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION

Transcription

1 PUBLIC DISCLOSURE April 15, 2013 COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION RSSD# North East Street Fayetteville, Arkansas Federal Reserve Bank of St. Louis P.O. Box 442 St. Louis, Missouri NOTE: This document is an evaluation of this institution s record of meeting the credit needs of its entire community, including low- and moderateincome 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.

2 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. III. IV. Institution a. Description of Institution...2 b. Scope of Examination...4 c. Conclusions with Respect to Performance Tests...8 Fayetteville-Springdale-Rogers Multistate Metropolitan Statistical Area (Arkansas and Missouri) a. Multistate Metropolitan Statistical Area Rating...18 b. Scope of Examination...19 c. Description of Institution s Operations...19 d. Conclusions with Respect to Performance Tests...23 Fort Smith Multistate Metropolitan Statistical Area (Arkansas and Oklahoma) a. Multistate Metropolitan Statistical Area Rating...32 b. Scope of Examination...33 c. Description of Institution s Operations...33 d. Conclusions with Respect to Performance Tests...37 V. Kansas City Multistate Metropolitan Statistical Area (Kansas and Missouri) a. Multistate Metropolitan Statistical Area Rating...46 b. Scope of Examination...47 c. Description of Institution s Operations...47 d. Conclusions with Respect to Performance Tests VI. Arkansas a. Summary i. State Rating...59 ii. Scope of Examination...60 iii. Description of Institution s Operations...60 iv. Conclusions with Respect to Performance Tests...61 b. Little Rock-North Little Rock-Conway Metropolitan Statistical Area (full-scope review) i. Description of Institution s Operations ii. Conclusions with Respect to Performance Tests...71 Table of Contents

3 c. Hot Springs Metropolitan Statistical Area (limited-scope review) i. Description of Institution s Operations...81 ii. Conclusions with Respect to Performance Tests...82 d. Nonmetropolitan Arkansas Statewide Area (full-scope review) i. Description of Institution s Operations...84 ii. Conclusions with Respect to Performance Tests...88 VII. VIII. Kansas a. Summary i. State Rating...97 ii. Scope of Examination...98 iii. Description of Institution s Operations...98 iv. Conclusions with Respect to Performance Tests Missouri a. Summary i. State Rating ii. Scope of Examination iii. Description of Institution s Operations iv. Conclusions with Respect to Performance Tests b. Joplin Metropolitan Statistical Area (full-scope review) i. Description of Institution s Operations ii. Conclusions with Respect to Performance Tests c. Springfield Metropolitan Statistical Area (limited-scope review) i. Description of Institution s Operations ii. Conclusions with Respect to Performance Tests d. Nonmetropolitan Missouri Statewide Area (limited-scope review) i. Description of Institution s Operations ii. Conclusions with Respect to Performance Tests IX. Oklahoma a. Summary i. State Rating ii. Scope of Examination iii. Description of Institution s Operations iv. Conclusions with Respect to Performance Tests b. Oklahoma City Metropolitan Statistical Area (full-scope review) i. Description of Institution s Operations ii. Conclusions with Respect to Performance Tests Table of Contents (continued)

4 c. Tulsa Metropolitan Statistical Area (full-scope review) i. Description of Institution s Operations ii. Conclusions with Respect to Performance Tests d. Lawton Metropolitan Statistical Area (limited-scope review) i. Description of Institution s Operations ii. Conclusions with Respect to Performance Tests e. Nonmetropolitan Oklahoma Statewide Area (full-scope review) i. Description of Institution s Operations ii. Conclusions with Respect to Performance Tests IX. Appendix a. Scope of Examination Tables b. Summary of State and Multistate Metropolitan Statistical Area Ratings c. Primary Year (2012) Lending Performance Tables for Limited Scope Review Areas d. Secondary Year (2011) Lending Performance Tables for All Assessment Areas e. Assessment Areas Map f. Glossary Table of Contents (continued)

5 INSTITUTION S CRA RATING INSTITUTION S CRA RATING: SATISFACTORY The following table indicates the performance level of with respect to the Lending, Investment, and Service Tests. Performance Tests Performance Levels Lending Test* Investment Test Service Test Outstanding High Satisfactory X X Low Satisfactory Needs to Improve Substantial Noncompliance X *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 adequate penetration throughout the bank s assessment areas. The distribution of loans by borrower s income/revenue profile reflects good penetration among customers of different income levels and businesses/farms of different sizes. Overall, the bank makes a relatively high level of community development loans. The bank makes a significant level of qualified community development investments and grants. Service delivery systems are accessible to all portions of the bank s assessment areas, and changes in branch locations have not adversely affected the accessibility of delivery systems, particularly to low- and moderate-income (LMI) geographies and/or LMI individuals. The bank provides an adequate level of qualified community development services. 1

6 DESCRIPTION OF INSTITUTION INSTITUTION, headquartered in Fayetteville, Arkansas, is a wholly owned subsidiary of Arvest Bank Group, Inc., of Bentonville, Arkansas, a one-bank holding company reporting total assets of $14.3 billion as of March 31, has several finance-related affiliates, including the following subsidiaries: Arvest Mortgage Company, Security BankCard Center, Superior Finance Company, Central Mortgage Company, and Waco Title Company. The bank operates 268 branches (261 traditional bank offices and seven drive-thru only branches), across Arkansas, Kansas, Missouri, and Oklahoma. The bank s main office is located in Fayetteville, Arkansas, which is in the Fayetteville, Arkansas-Missouri metropolitan statistical area (MSA) in northwest Arkansas. 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 9 facilities and opened 40 branches, most notably through 2 bank branch acquisitions, which expanded banking facilities in 7 assessment areas. The bank currently operates in 14 CRA assessment areas, as detailed below. Fayetteville, Arkansas-Missouri MSA Fort Smith, Arkansas-Oklahoma MSA Kansas City, Kansas-Missouri MSA Little Rock, 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. reported total assets of $14.3 billion as of March 31, 2013, which represents an increase in assets of 23.9 percent since the previous evaluation. also reported total loans of $8.0 billion (56.2 percent of total assets) and total deposits of $11.9 billion. A distribution of the bank s lending portfolio, by both dollar amount and percentage, is displayed in the following table. 2

7 Distribution of Total Loans (as of March 31, 2013) Credit Product Type Amount in $000s Percentage of Total Loans Construction and Development $ 648, % Commercial Real Estate $ 2,142, % Multifamily Residential $ 281, % 1-4 Family Residential $ 2,430, % Farmland $ 384, % Farm Loans $ 88, % Commercial and Industrial $ 1,106, % Loans to Individuals $ 762, % Total Other Loans and Leases $ 171, % GROSS LOANS AND LEASES $ 8,016, % Based on information presented in the previous table, the bank s primary lending focus includes residential real estate loans (30.3 percent) and commercial real estate-secured loans (26.7 percent). 1 The bank received a satisfactory rating at its previous CRA evaluation conducted as of January 10, The bank and its mortgage company affiliates also originate and subsequently sell a significant volume of loans related to residential real estate; as these loans are typically sold on the secondary market shortly after origination, this activity would not be captured in the data discussed here. 3

8 SCOPE OF EXAMINATION 2 The bank s CRA performance was reviewed using the Federal Financial Institutions Examination Council s Interagency CRA Procedures for Large Institutions. The large bank performance standards entail three performance tests, including the Lending, Investment, and Service Tests. Bank performance under these tests is rated at the institution level, as well as by state and multistate MSA. As previously noted, 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. State/Multistate MSA/Assessment Area Number of Facilities Review Type Multistate MSA Fayetteville, Arkansas-Missouri MSA 51 Full-Scope Review Fort Smith, Arkansas-Oklahoma MSA 16 Full-Scope Review Kansas City, Kansas-Missouri MSA 17 Full-Scope Review State of Arkansas Little Rock, Arkansas MSA 24 Full-Scope Review Hot Springs, Arkansas MSA 7 Limited-Scope Review NonMSA Arkansas 24 Full-Scope Review State of Kansas NonMSA Kansas 2 Full-Scope Review State of Missouri Joplin, Missouri MSA 12 Full-Scope Review Springfield, Missouri MSA 5 Limited-Scope Review NonMSA Missouri 15 Limited-Scope Review State of Oklahoma Oklahoma City, Oklahoma MSA 27 Full-Scope Review Tulsa, Oklahoma MSA 29 Full-Scope Review Lawton, Oklahoma MSA 5 Limited-Scope Review NonMSA Oklahoma 34 Full-Scope Review 2 Information presented in this section (e.g., review period dates and loan sample details) pertains throughout the rest of this evaluation unless specifically noted otherwise. 4

9 The bank s CRA performance was rated under seven rating categories in addition to the bank s overall institution rating. As part of this evaluation, 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: Oklahoma; Fayetteville, Arkansas-Missouri MSA; and Arkansas. The remaining rating categories received secondary consideration (in order of priority): Missouri; Fort Smith, Arkansas-Oklahoma MSA; Kansas City, Missouri-Kansas MSA; and Kansas. Lending Test s Lending Test performance was based on 2011 and 2012 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 2011 and 2012, the body of this evaluation primarily details bank performance based on 2012 lending activity, noting significant divergences in performance between the two years as applicable (see Appendix D for detailed performance figures based on 2011 lending activity). Also, the review period for community development lending activity spanned from the date of the last evaluation, January 10, 2011, to the date of this evaluation. In addition to the direct lending activity noted above, certain 2011 and 2012 affiliate lending activity was also included in the scope of this evaluation at the bank s option. This affiliate lending activity is attributable to one of s subsidiaries, Arvest Mortgage Company, Lowell, Arkansas. Arvest Mortgage Company originates dwelling-related loans that are included in the bank s HMDA loan category. Under the Lending Test, the bank s performance is evaluated using the following criteria, as applicable. Level of lending activity. Assessment areas concentration. 3 Geographic distribution of loans. Distribution of loans by borrower s income/revenue profile. Community development lending activity. Product innovation. 4 Responsiveness to credit needs of low-income individuals and geographies and very small businesses. 3 This review is performed at the institution level only, and it does not include affiliate lending activity. 4 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. 5

10 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 January 11, 2011 to April 15, 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, 5 and responsiveness to assessment area credit and community development needs. Service Test The review period for retail and community development services includes activity from January 11, 2011 to April 15, 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. 5 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. 6

11 To augment this evaluation, interviews were conducted with 12 community contacts throughout the bank s assessment areas. In addition to the new community contacts completed as a part of this evaluation, numerous previously completed community contacts were also referenced when available and pertinent to the subject assessment area being reviewed. The following table displays the number of community contacts utilized as part of each full-scope assessment area review. Assessment Area New Community Contacts Other Community Contacts Fayetteville, Arkansas-Missouri MSA Fort Smith, Arkansas-Oklahoma MSA Kansas City, Kansas-Missouri MSA Little Rock, Arkansas MSA NonMSA Arkansas NonMSA Kansas Joplin, Missouri MSA Oklahoma City, Oklahoma MSA Tulsa, Oklahoma MSA NonMSA Oklahoma 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. 6 6 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. 7

12 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS LENDING TEST s performance under the Lending Test is rated high satisfactory. 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 adequate penetration throughout the assessment areas, including LMI geographies. An analysis of the loan distribution by borrower income reflects good penetration among customers of different income levels and businesses and farms of different revenue sizes. In addition, Arvest Bank made a relatively high level of community development loans. Finally, the bank makes limited use of innovative and flexible lending practices in order to better serve the credit needs of its assessment areas. 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 Fayetteville, Arkansas-Missouri MSA Fort Smith, Arkansas-Oklahoma MSA Kansas City, Kansas-Missouri MSA Arkansas Kansas Missouri Oklahoma OVERALL Lending Test Rating High Satisfactory Low Satisfactory Low Satisfactory High Satisfactory Low Satisfactory High Satisfactory Low Satisfactory HIGH SATISFACTORY As displayed in the previous table, the bank s performance varied by state and multistate MSA. However, with the most weight being placed, in part, on the Fayetteville, Arkansas-Missouri MSA and the state of Arkansas, s Lending Test rating is high satisfactory. 8

13 Lending Activity Overall, the bank s lending levels reflect good responsiveness to credit needs in the bank s combined assessment areas. Lending activity from 2012 based on the product lines reviewed during this evaluation is detailed in following table. 7 Summary of Lending Activity Loan Type # % $(000s) % Home Improvement 2, % $31, % Home Purchase 6, % $883, % Multifamily Housing % $65, % Refinancing 12, % $1,619, % Total HMDA 21, % $2,600, % Small Business 8, % $890, % Small Farm 2, % $129, % LOANS 32, % $3,620, % 7 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 9

14 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 2011 and Lending Inside and Outside of Assessment Area by Number and Dollar Volume ($000s) HMDA Loan Type Small Business Small Farm Inside Assessment Area Outside Assessment Area 10, , % 1.1% 100% $ 610,792 $ 26,270 $ 637, % 4.1% 100% 13, , % 1.7% 100% $ 1,750,732 $ 42,174 $ 1,792, % 2.4% 100% 3, , % 0.8% 100% $ 209,996 $ 3,402 $ 213, % 1.6% 100% 27, , % 1.4% 100% $ 2,571,520 $ 71,846 $ 2,643, % 2.7% 100% By number of total loans reviewed, 98.6 percent were made to borrowers within the bank s assessment area. Furthermore, data in the previous table demonstrate that a substantial majority of loans (by both number and dollar amount of loans) are extended to borrowers residing inside the bank s assessment areas for all three loan categories. 8 Loan activity displayed in this table does not include affiliate lending activity. 10

15 Geographic and Borrower Distribution As is displayed in the following table, the bank s overall geographic distribution of loans reflects adequate penetration throughout the bank s assessment areas in the various states and multistate MSAs. State/Multistate MSA Fayetteville, Arkansas-Missouri MSA Fort Smith, Arkansas-Oklahoma MSA Kansas City, Kansas-Missouri MSA Arkansas Kansas Missouri Oklahoma OVERALL Geographic Distribution of Loans Adequate Adequate Adequate Adequate Adequate Good Good ADEQUATE Overall, performance by borrower s income/revenue profile is good, as shown in the following table. State/Multistate MSA Fayetteville, Arkansas-Missouri MSA Fort Smith, Arkansas-Oklahoma MSA Kansas City, Kansas-Missouri MSA Arkansas Kansas Missouri Oklahoma OVERALL Loan Distribution by Borrower s Profile Good Adequate Adequate Good Adequate Good Adequate GOOD 11

16 Community Development Lending Activities Overall, maintains a relatively high level of community development loans. State/Multistate MSA Fayetteville, Arkansas-Missouri MSA Fort Smith, Arkansas-Oklahoma MSA Kansas City, Kansas-Missouri MSA Arkansas Kansas Missouri Oklahoma OVERALL Community Development Lending Leader Low Level Relatively High Level Relatively High Level Adequate Level Leader Low Level RELATIVELY HIGH 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, Arkansas-Missouri MSA, the state of Oklahoma, and the state of Arkansas, s overall community development lending performance reflects a relatively high level of community development loans. The bank originated or renewed 55 community development loans and letters of credit within the combined assessment areas, totaling $157.8 million. The community development loans were for a variety of purposes, including affordable housing (31), economic development (9), revitalization/ stabilization of LMI geographies (7), and community development services (8). Community development activities also included several loans for projects associated with the New Markets Tax Credit Program (NMTC), which is considered an innovative program that provides equity capital to further commercial economic development activities in underserved geographies. To qualify for NMTCs, entities must be a domestic corporation that has a mission of serving lowincome communities or individuals, must maintain accountability to the residents of low-income communities, and must be certified by the United States Department of the Treasury s Community Development Financial Institutions (CDFI) Fund. This CDFI certification facilitates the credit flow to businesses serving the needs of LMI individuals and ensures these businesses continue to benefit LMI areas. 12

17 INVESTMENT TEST Overall, 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. makes occasional use of complex investments to support community development initiatives. The following is a breakdown of the Investment Test rating for all rated areas. State/Multistate MSA Fayetteville, Arkansas-Missouri MSA Fort Smith, Arkansas-Oklahoma MSA Kansas City, Kansas-Missouri MSA Arkansas Kansas Missouri Oklahoma OVERALL Investment Test Rating Outstanding Low Satisfactory High Satisfactory High Satisfactory Needs to Improve High Satisfactory High Satisfactory HIGH SATISFACTORY As displayed in the previous table, the bank s Investment Test performance was outstanding in its most significant rated area, the Fayetteville, Arkansas-Missouri MSA. While the bank was rated needs to improve in the state of 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 state/multistate MSAs. During the evaluation period, the bank made or participated in qualified CRA investments for a total investment balance of $63.2 million. The majority of the bank s investments consists of purchased portfolios of mortgage-backed securities (MBS), totaling $37.9 million. These MBS are secured by affordable housing loans made to LMI individuals. The bank purchased $13.1 million of qualified MBS during this review period, benefiting and attributable to eight assessment areas. Furthermore, as of this evaluation date, the bank maintained $23.8 million of qualified MBS purchased prior to this evaluation, which are secured by loans throughout all 14 of the bank s assessment areas. Consequently, the estimated community development investment benefit used here for evaluation purposes was divided among the assessment areas based on the bank s deposit market share by assessment area. Another noteworthy investment the bank makes is in Low Income Housing Credits and NMTC. The bank has invested $20.7 million in these tax credits across three assessment areas. Furthermore, the bank made an adequate level of community development grants during this evaluation period. The bank made 689 grants totaling over $897,503, reflecting less than half of grant monies from the previous evaluation. 13

18 SERVICE TEST Overall, s performance is rated low satisfactory under the Service Test. The bank s delivery systems are accessible to all geographies and individuals of different income levels throughout the combined 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, 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. State/Multistate MSA Fayetteville, Arkansas-Missouri MSA Fort Smith, Arkansas-Oklahoma MSA Kansas City, Kansas-Missouri MSA Arkansas Kansas Missouri Oklahoma OVERALL Service Test Rating Low Satisfactory Outstanding Low Satisfactory Low Satisfactory Low Satisfactory Low Satisfactory High Satisfactory LOW SATISFACTORY As displayed in the previous table, the bank s Service Test performance was low satisfactory in five of seven rated areas; the exceptions were the Fort Smith, Arkansas-Oklahoma MSA and the state of Oklahoma, which received higher ratings primarily due to the relatively higher level of community development services attributable to these rating areas. 14

19 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 Fayetteville, Arkansas-Missouri MSA Fort Smith, Arkansas-Oklahoma MSA Kansas City, Kansas-Missouri MSA Arkansas Kansas Missouri Oklahoma OVERALL Accessibility of Delivery Systems Accessible Readily Accessible Accessible Accessible Reasonably Accessible Accessible Reasonably Accessible ACCESSIBLE In addition to the standard retail services and community development services evaluated at the state/multistate MSA and assessment area levels, 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. 15

20 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 openings and branch acquisitions. State/Multistate MSA Fayetteville, Arkansas-Missouri MSA Fort Smith, Arkansas-Oklahoma MSA Kansas City, Kansas-Missouri MSA Arkansas Kansas Missouri Oklahoma OVERALL Changes in Branch Locations Not Adversely Affected Generally Not Adversely Affected Improved Not Adversely Affected Improved Not Adversely Affected Not Adversely Affected NOT ADVERSELY AFFECTED 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. State/Multistate MSA Fayetteville, Arkansas-Missouri MSA Fort Smith, Arkansas-Oklahoma MSA Kansas City, Kansas-Missouri MSA Arkansas Kansas Missouri Oklahoma OVERALL Community Development Services Adequate Level Leader Limited Level Adequate Level Few, If Any Few, If Any Relatively High Level ADEQUATE LEVEL While the bank s level of community development services is below satisfactory performance standards in three rated areas (Kansas City, Kansas-Missouri MSA; Kansas; and Missouri), the 16

21 bank s community development service performance was adequate or better in the remaining rated areas, including the top three primary rating areas. FAIR LENDING OR OTHER ILLEGAL CREDIT PRACTICES REVIEW Based upon 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. 17

22 FAYETTEVILLE-SPRINGDALE-ROGERS MULTISTATE MSA 9 CRA RATING FOR FAYETTEVILLE, ARKANSAS-MISSOURI MSA: SATISFACTORY The Lending Test is rated: High Satisfactory The Investment Test is rated: Outstanding The Service Test is rated: Low Satisfactory Factors supporting the institution s Fayetteville, Arkansas-Missouri MSA (Fayetteville MSA) rating include the following: s lending levels reflect good responsiveness to the credit needs in the Fayetteville MSA. The bank s overall geographic distribution of loans reflects adequate penetration throughout the Fayetteville MSA. The distribution of loans by borrower s income/revenue profile reflects good penetration among borrowers 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 an excellent level of qualified community development investments and grants within the Fayetteville MSA. 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, particularly to LMI geographies and/or LMI individuals. personnel provide an adequate level of community development services in the Fayetteville MSA. 9 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 within the Fayetteville MSA. 18

23 SCOPE OF EXAMINATION 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 fullscope 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. Also, this evaluation included information obtained from three community contacts in the Fayetteville MSA, including one completed as part of this evaluation. The community contact interview completed as part of this review took place with a representative of a local housing authority agency. 10 DESCRIPTION OF INSTITUTION S OPERATIONS IN FAYETTEVILLE MSA Bank Structure operates 51 of its 268 branches (19.0 percent), including one drive-thru facility, within this assessment area. Of the total facilities, none are located in low-income census tracts; however, the bank does maintain multiple facilities within close proximity of a low-income geography. In addition, 10 facilities are in moderate-income census tracts, 32 are in middleincome census tracts, and 9 are located in upper-income census tracts. During this review period, the bank did not open or close any facilities. 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, with a total of 38 Federal Deposit Insurance Corporation (FDIC)-insured institutions operating within the MSA, based on the FDIC Deposit Market Share Report as of June 30, Of those 38 financial institutions, held the majority of deposit dollars, with a deposit market share of 51.4 percent (the next closest market share percentage was 7.0 percent). Furthermore, the deposits held at branches throughout the Fayetteville MSA represent 39.4 percent of all deposits. 10 Key details from these community contact interviews are included in the next section, Description of Institution s Operations. 19

24 General Demographics The Fayetteville MSA is a four-county multistate MSA including three counties in Arkansas and one county in Missouri. Specifically, the Arkansas portions of the multistate MSA include Benton, Madison, and Washington Counties. The Missouri portion of the multistate MSA consists of McDonald County. The multistate MSA is located in the far northwest corner of Arkansas and the far southwest corner of Missouri. Based on 2010 census data, the assessment area had a total population of 463,204. The majority of the population lives in Washington County (203,065) and Benton County (221,339). There are much smaller populations in McDonald County (23,083) and Madison County (15,717). Based on previous census data, the assessment area experienced a population increase of 33.5 percent since the 2000 census. The demographics of this assessment area cover a wide metropolitan area with some more 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 credit need in the assessment area (as noted primarily during community contact interviews) is affordable housing in the more rural portions of the assessment area. Furthermore, as the Fayetteville MSA is an area with significant community development need, coupled with an ample source of community development organizations (such as nonprofit agencies, higher education institutions, and government assistance entities), a high level of community development opportunity is available for financial institution participation. Income and Wealth Demographics Based on the 2010 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 2012, the median family income for the Fayetteville MSA was $58,200, as estimated by the U.S. Department of Housing and Urban Development (HUD). 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 Census Tracts % 15.7% 55.1% 25.8% 0.0% 100% Family 3,082 16,041 66,382 30, ,099 Population 2.7% 13.8% 57.2% 26.4% 0.0% 100% 20

25 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- Assessment Area 23,489 21,253 23,889 47, , % 18.3% 20.6% 40.9% 100% Arkansas 162, , , , , % 18.0% 20.1% 40.6% 100% Missouri 320, , , ,047 1,546, % 18.1% 21.7% 39.5% 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 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). Of the four MSA counties, housing is most affordable in McDonald County (42.2 percent), followed by Madison County, Benton County, and Washington County (37.4, 32.5, and 27.3 percent, respectively). The median housing value in the assessment area is $150,700, which is much higher than the state of Arkansas ($102,300) and also 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 ($617) and the state of Missouri ($667). 21

26 Industry and Employment Demographics According to 2011 County Business Patterns data, 10,552 business entities were operating within the Fayetteville MSA. The area is the 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. The recent annual average unemployment rates for the Fayetteville MSA (6.2 percent in 2011 and 5.5 percent in 2012) were much lower than rates for both the state of Arkansas (8.0 percent in 2011 and 7.3 percent in 2012) and the state of Missouri (8.6 percent in 2011 and 7.1 percent in 2012). 11 Similar to the state of Arkansas and the state of Missouri, unemployment in the Fayetteville MSA experienced a generally decreasing trend throughout 2011 and Community Contact Information Community contacts consistently stated that the economic conditions of the Fayetteville area are more positive compared to the nation overall. This conclusion is partially supported by a lower unemployment rate compared to the national average. The area has individuals of all income levels, while the economy is supported by many large businesses in the area due to one major retailer s involvement in the region. The assessment area has mixed needs. In the more rural portion of the Fayetteville MSA, one contact noted that affordable housing is a need, along with corresponding residential real estate loans. In contrast, a contact in the urban core of the MSA stated that new housing projects have been on the rise with the area s rapid expansion. This contact stated that a large amount of lowincome housing has been invested in recently, and the needs for this type of housing are being met. As a whole, the community contacts noted that there are many opportunities in the area for banks to participate in and that the majority of credit needs are being met. was specifically mentioned as actively participating in the area and being present in the community. The contacts were not aware of any fair lending complaints or discrimination concerns in the area. 11 Source: Bureau of Labor Statistics, U.S. Department of Labor (not seasonally adjusted). 22

27 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN FAYETTEVILLE MSA LENDING TEST 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, is a leader in making community development loans in this assessment area. Lending Activity The following table displays the bank s 2012 lending volume in this assessment area by number and dollar volume. Summary of Lending Activity Loan Type # % $(000s) % Home Improvement % $8, % Home Purchase 1, % $284, % Multifamily Housing % $21, % Refinancing 5, % $664, % Total HMDA 7, % $978, % Small Business 2, % $261, % Small Farm % $42, % LOANS 10, % $1,282, % The bank s lending activity in the Fayetteville MSA represents 32.4 percent of total HMDA and CRA loans made within the bank s combined assessment areas. This level of HMDA and CRA activity is well above that of the bank s branch network in this assessment area, representing 19.0 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 39.4 percent. In light of these factors, the bank s lending activity in the Fayetteville MSA reflects good responsiveness to assessment area credit needs. 23

28 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 adequate penetration throughout this assessment area, including the 17 LMI census tracts. The following table displays the geographic distribution of HMDA loans compared to owner-occupied housing demographics for the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase , % 9.1% 49.3% 40.3% 0.0% 100% Refinance ,757 1, , % 8.3% 52.9% 37.8% 0.0% 100% Home Improvement 0.3% 9.7% 58.5% 31.5% 0.0% 100% Multifamily % 27.3% 36.4% 13.6% 0.0% 100% ,894 2, ,459 LOANS 1.1% 8.6% 52.2% 38.1% 0.0% 100% Owner-Occupied Housing 1.5% 11.1% 57.9% 29.4% 0.0% 100% The bank s HMDA lending in low-income geographies (1.1 percent) is adequate, as this performance mirrors the owner-occupied housing percentage. Similarly, bank lending in moderateincome census tracts is also adequate. While the bank s lending in moderate-income tracts (8.6 percent) is below the owner-occupied percentage (11.1 percent), it is an improvement on 2011 performance in which the bank originated 5.1 percent of its HMDA loans in moderate-income tracts. Additionally, 2011 performance of 5.1 percent compared favorably to 2011 HMDA aggregate data in which lenders originated 4.9 percent of their loans, collectively, in moderateincome geographies. Consequently, the bank s overall geographic distribution of HMDA loans reflects adequate penetration throughout this assessment area. 24

29 Second, the bank s geographic distribution of small business loans was reviewed, which is displayed in the following table in comparison to the location of businesses throughout the bank s assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Business Loans Business Institutions Geography Income Level Low- Moderate- Middle- Upper- Unknown , , % 16.2% 52.4% 29.2% 0.0% 100% 3.1% 18.1% 51.5% 27.3% 0.0% 100% 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 tracts (2.2 percent) is below but within adequate range of the estimated percentage of businesses located in low-income census tracts (3.1 percent). Similarly, the bank s performance in moderate-income tracts (16.2 percent) is slightly below the estimated percentage of businesses located in moderate-income census tracts (18.1 percent). 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 in comparison to the location of farms throughout the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0.3% 16.3% 73.7% 9.6% 0.0% 100% Agricultural Institutions 0.6% 12.8% 67.3% 19.3% 0.0% 100% According to Dun & Bradstreet estimates, only 0.6 percent of farms in the assessment area reported being located in low-income tracts. While the bank s percentage of the small farm loans in low-income census tracts, 0.3 percent, is below the estimated percentage of farms in lowincome 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 moderateincome census tracts; bank performance of 16.3 percent is greater than its comparator at 12.8 percent, which is considered excellent. The performance in moderate-income geographies carries significantly more weight than the performance in low-income tracts based on loan volume. Therefore, the bank s geographic distribution of small farm loans is excellent. 25

30 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 72.0 percent of the bank s lending in this assessment area. The following table shows the distribution of HMDA loans by borrower income level compared to family population income characteristics. Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase , % 19.3% 20.3% 48.1% 0.3% 100% Refinance ,093 2, , % 15.1% 21.0% 53.3% 1.4% 100% Home Improvement 9.7% 13.5% 24.1% 43.8% 8.8% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% 741 1,197 1,559 3, ,459 LOANS 9.9% 16.0% 20.9% 51.4% 1.7% 100% Family Population 20.2% 18.3% 20.6% 40.9% 0.0% 100% Based on the above table, the bank s level of lending to low-income borrowers (9.9 percent) is significantly lower than the low-income family population (20.2 percent). Bank performance from 2011 suggests better results, as the bank s lending to low-income borrowers of 9.9 percent compared favorably to 2011 aggregate data of 7.8 percent. Taking into account both years of data, bank performance is adequate. Similarly, the bank s HMDA lending to moderate-income borrowers (16.0 percent) is less than the percentage of moderate-income borrowers within the assessment area (18.3 percent). The bank s HMDA lending in 2011 reveals that 17.2 percent of HMDA loans were originated in moderate-income geographies, compared to 14.7 percent by aggregate lenders, revealing good penetration. Additionally, in both low- and moderate-income categories, the bank performs the majority of its lending as home purchase loans. In light of this performance, the bank s level of lending to LMI borrowers within the assessment area is good. 26

31 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1,000 1, , % 11.0% 8.4% 82.4% % 3.1% 5.0% 17.6% 1, , % 14.1% 13.4% 100% The bank originated the majority of its small business loans (82.4 percent) to businesses with revenues of $1 million or less, which is less than the percentage originated in 2011, 95.2 percent. The highest concentration of 2012 loans to small businesses was for loan amounts of $100,000 or less (62.9 percent), which demonstrates the bank s willingness to make credit available to small businesses in the assessment area. According to Dun & Bradstreet, 90.9 percent of businesses reporting for 2012 had revenues of $1 million or less. Therefore, the bank s level of lending to small businesses in the assessment area is adequate. 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 13.2% 4.0% 90.8% % 1.5% 0.4% 9.2% % 14.7% 4.5% 100% Of the 674 small farm loans the bank made in this assessment area, 90.8 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 demonstrates the bank s willingness to make credit available to small farms in the assessment 27

32 area. According to Dun & Bradstreet, 98.6 percent of farms in the assessment area reported revenues of $1 million or less. Therefore, s lending to small farms is adequate. Community Development Lending Activities 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 13 community development loans totaling $19.7 million within this assessment area. Nine of the loans financed construction or renovation projects providing affordable housing to LMI individuals within the assessment area, while the remaining four loans were for community services targeted to LMI individuals within the assessment area. 28

33 INVESTMENT TEST s performance under the Investment Test is rated outstanding for the Fayetteville MSA. The bank made an excellent level of qualified community development investments and grants. The bank makes significant use of complex investments to support community development initiatives, and the bank exhibits excellent responsiveness to credit and community development needs in the Fayetteville MSA assessment area. Investment and Grant Activity has an excellent level of qualified community development investments and grants within the Fayetteville MSA. As of the review period, the bank has a balance of $9.0 million in qualified investments. The bank has $7.3 million invested in MBS ($6.1 million of which is in previous review period investments, still outstanding) that finance affordable housing. In addition, the bank has investments in projects associated with Low Income Housing Tax Credits (LIHTCs) that total $1.7 million. also made an adequate level of community development grants within the Fayetteville MSA 93 grants totaling $150,899. Among these contributions were significant donations to schools serving a majority of LMI students, affordable housing organizations, and community service organizations that target the homeless and children from LMI families. Community Development Initiatives In the Fayetteville MSA, the bank makes significant use of investments in LIHTCs. These investments fund the construction of new rental housing and rehabilitation of existing housing for low-income households. Responsiveness to Credit and Community Development Needs exhibits excellent responsiveness to credit and community development needs. Community contacts noted that the major credit needs in this assessment area are low-income housing throughout the assessment area, particularly in the rural geographies. The bank s previously mentioned investments and grants target these needs by providing liquidity in the secondary market for home loans made to LMI borrowers and by making capital available for low-income housing projects. 29

34 SERVICE TEST s Service Test rating in the Fayetteville MSA is low 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. Accessibility of Delivery Systems 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. Branches Dataset Branch Distribution by Geography Income Level Geography Income Level Low- Moderate- Middle- Upper- Unknown % 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, 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 within close proximity of the three low-income geographies in this assessment area. The combined LMI branch distribution of 19.6 percent is greater than both the proportion of LMI census tracts and the LMI household population residing in LMI tracts. Based on this information, s delivery systems are accessible to geographies and individuals of different income levels in the Fayetteville MSA. Changes in Branch Locations During the review period, the bank did not open or close any branches in the Fayetteville MSA assessment area. 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/or LMI individuals. 30

35 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-thru facilities at some point during the week. Several facilities are open as late as 7:00 p.m., Monday through Friday, and are open until as late as 1:00 p.m. on Saturdays. 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. Community Development Services staff members within the Fayetteville MSA provide an adequate level of community development services. Bank employees provided 13 community development services during the review period, including shelters for the needy and organizations that assist low-income individuals in obtaining higher education scholarships. Additionally, Arvest employees provided economic education to schools with a large proportion of LMI students. 31

36 FORT SMITH MULTISTATE MSA 12 CRA RATING FOR FORT SMITH, ARKANSAS-OKLAHOMA MSA: SATISFACTORY The Lending Test is rated: Low Satisfactory The Investment Test is rated: Low Satisfactory The Service Test is rated: Outstanding Factors supporting the institution s Fort Smith, Arkansas-Oklahoma MSA (Fort Smith MSA) rating include the following: s lending levels reflect good responsiveness to the credit needs of the Fort Smith MSA. The bank s overall geographic distribution of loans reflects adequate penetration throughout the Fort Smith MSA. The distribution of loans by borrower s income/revenue profile reflects adequate penetration among borrowers 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. Service delivery systems are readily accessible to geographies and individuals of different income levels in the Fort Smith MSA; furthermore, changes in branch locations have generally not adversely affected the accessibility of delivery systems, particularly to LMI geographies and/or LMI individuals. is a leader in providing community development services within the Fort Smith MSA. 12 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. 32

37 SCOPE OF EXAMINATION has one assessment area in the Fort Smith MSA, which includes the entire multistate MSA. 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 information obtained from three community contacts within the Fort Smith MSA, including one completed as part of this review. The community contact completed as part of this review took place with a director of an affordable housing agency. DESCRIPTION OF INSTITUTION S OPERATIONS IN FORT SMITH MSA Bank Structure operates 16 of its 268 branches (6.0 percent) within the Fort Smith MSA assessment area. Of the 16 branches, 5 are in moderate-income census tracts, 9 are in middle-income census tracts, and 2 are located in upper-income census tracts (there are no low-income census tracts in the Fort Smith MSA). During this review period, the bank closed one drive-thru branch in this assessment area. Each of the counties in the assessment area contains at least one branch, with the exception of Franklin County, Arkansas. Additionally, all but two branches are located on the Arkansas side of the multistate MSA; therefore, the majority of branch locations in the multistate MSA are in or just outside of 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 and has a total of 23 FDIC-insured institutions operating within the Fort Smith MSA, based on the FDIC Deposit Market Share Report as of June 30, Of the 23 financial institutions with an office in the Fort Smith MSA, ranked second with a deposit market share of 12.5 percent. Based on this information, deposits held at branches in this assessment area account for 4.7 percent of the bank s total deposits. General Demographics The Fort Smith MSA is a five-county multistate MSA including three counties in Arkansas and two counties in Oklahoma. Specifically, the Arkansas portions of the multistate MSA include Crawford, Franklin, 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. 33

38 Based on 2010 census data, the assessment area has a total population of 298,592. Although a significant portion of the population is concentrated in Sebastian County (125,744), several other counties have sizeable populations. Crawford County has a population of 61,948, followed by Le Flore County at 50,384, Sequoya County at 42,391, and Franklin County at 18,125. Based on previous census data, the MSA population increased 9.3 percent since the 2000 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 low-income housing lending, financial education, and programs designed to attract and retain small businesses. Furthermore, as the Fort Smith MSA is an environment with significant need, coupled with an ample source of community development intermediaries (such as nonprofit agencies, higher education institutions, and government assistance entities), there is ample community development opportunity available for financial institution participation. Income and Wealth Demographics Based on the 2010 census, the median family income for the Fort Smith MSA was $46,201, which is less than both the state of Arkansas ($48,491) and the state of Oklahoma ($53,607). As of 2012, the HUD-estimated median family income for the Fort Smith MSA is $48,400. The following table summarizes the distribution of the 61 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 Census Tracts % 26.2% 57.4% 16.4% 0.0% 100% Family 0 16,928 47,615 14, ,007 Population 0.0% 21.4% 60.3% 18.3% 0.0% 100% 34

39 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- Assessment Area 16,992 14,334 15,298 32,383 79, % 18.1% 19.4% 41.0% 100% Arkansas 162, , , , , % 18.0% 20.1% 40.6% 100% Oklahoma 203, , , , , % 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 41.4 percent as of the 2010 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). Of the five MSA counties, housing is more affordable in the Oklahoma counties than in Arkansas; Le Flore County and Sequoyah County have affordability ratios of 50.0 and 45.4 percent, respectively. The median housing value in the assessment area is $92,400, 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 ($564) is also less than both the state of Arkansas ($617) and the state of Oklahoma ($633). 35

40 Industry and Employment Demographics According to 2011 County Business Patterns data, 6,228 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 manufacturing, health care and social assistance, and retail trade. The recent annual average unemployment rates for the Fort Smith MSA (8.6 percent in 2011 and 8.0 percent in 2012) were higher than the unemployment rates for both the state of Arkansas (8.0 percent in 2011 and 7.3 percent in 2012) and the state of Oklahoma (6.2 percent in 2011 and 5.2 percent in 2012). Similar to the state of Arkansas and the state of Oklahoma, unemployment in the Fort Smith MSA generally declined throughout 2011 and 2012, though the area experienced seasonal shifts upward during the winter months of each of the calendar years. Community Contact Information The community contacts characterized the Fort Smith economy as having been sluggish compared to the larger area, due to major companies leaving the area. The area has historically relied on the manufacturing industry, which has continuously shed jobs in the past ten years. One community contact noted that as job opportunities in the manufacturing industry have disappeared, other sectors such as transportation, utilities, education, and health services have increased. Additionally, while multiple small businesses have entered the area, they have been unable to outweigh the unemployment effects of larger industries leaving the area. Contacts stated that Fort Smith did not experience the housing bubble like other parts of the country, but home prices have remained depressed, largely due to a decrease in the desire to own a home, which is partially related to uncertainty about continued employment. Additionally, a significant portion of single-family housing has deteriorated, so there are needs for programs aimed at rehabilitating owner-occupied and rental properties alike. The contacts believe that there are ample community development opportunities and that, in addition to a need for quality low-income housing, there are needs for financial education, including helping individuals build and maintain good credit. was mentioned as a major financial institution in the area that is very involved with the community and local housing initiatives. Along with Arvest, the contacts mentioned that all the banks in the area are doing an adequate job in meeting the credit needs in the area. 36

41 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN FORT SMITH MSA LENDING TEST s Lending Test performance in the Fort Smith MSA is rated low satisfactory. Lending levels reflect good responsiveness to the Fort Smith MSA 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 adequate 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 2012 lending volume in this assessment area by number and dollar volume. Summary of Lending Activity Loan Type # % $(000s) % Home Improvement % $1, % Home Purchase % $44, % Multifamily Housing % $6, % Refinancing % $107, % Total HMDA 1, % $159, % Small Business % $47, % Small Farm % $5, % LOANS 1, % $211, % The bank s lending activity in the Fort Smith MSA represents 6.0 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 that of the bank s branch network in this assessment area, also representing 6.0 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 4.7 percent. In light of these factors, the bank s lending activity in the Fort Smith MSA reflects good responsiveness to assessment area credit needs. 37

42 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 16 moderate-income census tracts, representing 26.2 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 geographic distribution of loans reflects adequate penetration throughout the assessment area, including the moderate-income census tracts. The following table displays the geographic distribution of HMDA loans in comparison to owner-occupied housing demographics for the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 15.3% 55.6% 29.2% 0.0% 100% Refinance % 13.9% 57.4% 28.7% 0.0% 100% Home Improvement 0.0% 17.1% 64.2% 18.7% 0.0% 100% Multifamily % 52.9% 5.9% 41.2% 0.0% 100% ,483 LOANS 0.0% 15.0% 56.9% 28.1% 0.0% 100% Owner- Occupied Housing 0.0% 18.8% 62.2% 19.0% 0.0% 100% The analysis of the bank s 2012 HMDA lending activity revealed that lending in moderateincome census tracts is adequate. While the bank s loan penetration among moderate-income census tracts (15.0 percent) is below the comparable owner-occupied housing figure (18.8 percent), it is still within an acceptable range. 38

43 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 throughout the bank s assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Business Loans Business Institutions Geography Income Level Low- Moderate- Middle- Upper- Unknown % 22.1% 47.7% 30.2% 0.0% 100% 0.0% 26.1% 54.1% 19.8% 0.0% 100% While below comparison data levels, the geographic distribution of the bank s small business loans reflects adequate penetration throughout the assessment area, including moderate-income geographies. The percentage of small business loans in moderate-income tracts (22.1 percent) is below but within adequate range of the estimated percentage of businesses located in moderateincome census tracts (26.1 percent). Finally, the geographic distribution of small farm loans is displayed in the following table in comparison to the location of farms throughout the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0.0% 21.8% 63.6% 14.5% 0.0% 100% Agricultural Institutions 0.0% 17.8% 70.1% 12.1% 0.0% 100% As displayed in the preceding table, the bank originated a relatively low level of small farm loans in this assessment area. Nevertheless, the bank made a high level of small farm loans in moderateincome census tracts (21.8 percent). Bank performance is greater than Dun & Bradstreet s estimate that 17.8 percent of small farms are located in moderate-income geographies. Based on this performance, the bank s geographic distribution for this loan category is excellent. 39

44 Loan Distribution by Borrower s Profile Overall, the bank s loan distribution by borrower s profile is adequate, 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 data. Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 18.9% 26.7% 43.6% 0.3% 100% Refinance % 15.5% 24.8% 50.7% 1.0% 100% Home Improvement 9.8% 16.3% 26.8% 43.9% 3.3% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% ,483 LOANS 8.7% 16.2% 25.2% 47.8% 2.2% 100% Family Population 21.5% 18.1% 19.4% 41.0% 0.0% 100% Based on the above table, the bank s level of lending to low-income borrowers (8.7 percent) is significantly lower than the low-income family population (21.5 percent). The bank s lending to moderate-income borrowers is higher (16.2 percent) but is also below the performance comparator (18.1 percent). An assessment of the bank s 2011 HMDA lending to LMI borrowers reveals performance well above aggregate lending. In 2011, 8.2 percent of Arvest s HMDA lending was originated to low-income borrowers, compared to 6.4 percent by aggregate lenders, revealing good performance. Similarly, 18.9 percent of HMDA lending was originated to borrowers in the moderate-income category, as compared to 16.8 percent for aggregate lenders. Furthermore, community contact information revealed that due to heightened levels of unemployment, as well as worries about future job stability, fewer individuals are purchasing homes in the Fort Smith assessment area. Therefore, in light of this performance context, the bank s overall level of lending to LMI borrowers is good. 40

45 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 12.9% 7.6% 81.5% % 4.1% 5.3% 18.5% % 17.0% 12.9% 100% The bank originated the majority of its small business loans (81.5 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. According to Dun & Bradstreet estimates, 89.4 percent of assessment area businesses had revenues of $1 million or less. Therefore, the bank s level of lending to small businesses within the assessment area is adequate. 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 10.9% 7.3% 83.6% % 3.6% 3.6% 16.4% % 14.5% 10.9% 100% As previously noted, the bank had a relatively low volume of small farm lending in this assessment area. However, based on the limited loan activity available for review, the distribution of small farm loans by borrower s profile is poor. The bank originated 83.6 percent of its farm loans to small farms. Comparatively, according to Dun & Bradstreet, 99.0 percent of farms in the assessment area reported revenues of $1 million or less. 41

46 Community Development Lending Activities originated one community development loan in the Fort Smith MSA during this review period. This loan ($1.0 million) was used to finance a mixed-use property in a moderateincome census tract. Although this performance is better than the previous examination in which the bank did not make any community development loans, it remains as a low level of community development lending for this assessment area. 42

47 INVESTMENT TEST Overall, 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, exhibiting 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 $1.0 million in qualified investments attributable to this assessment area (all are 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, made 34 grants totaling $21,266 throughout the assessment area during this review period. Among the qualifying contributions were significant donations to schools serving a majority of LMI students and community service organizations that target children from LMI families. 43

48 SERVICE TEST s Service Test rating in the Fort Smith MSA is outstanding. Service delivery systems are readily 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 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, and the bank is a leader in providing community development services in the Fort Smith MSA. Accessibility of Delivery Systems 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. Branches Dataset Branch Distribution by Geography Income Level Geography Income Level Low- Moderate- Middle- Upper- Unknown % 31.3% 56.3% 12.5% 0.0% 100% Census Tracts 0.0% 26.2% 57.4% 16.4% 0.0% 100% Household Population 0.0% 23.2% 58.9% 17.9% 0.0% 100% Based on the information in the preceding table, s service delivery systems are readily 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, 31.3 percent are located in moderate-income census tracts, which is above both the percentage of moderateincome census tracts (26.2 percent) and the percentage of moderate-income households in the assessment area (23.2 percent). Changes in Branch Locations During the review period, the bank closed one drive-thru only branch. While this branch was located in a moderate-income geography, it was in close proximity of existing full-service Arvest Bank locations. Consequently, the bank s record of opening and closing branches in the Fort Smith MSA assessment area has generally not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals. 44

49 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-thru facilities at some point during the week. Most drive-thru facilities remain open until 7:00 p.m., Monday through Friday, and are open until 1:00 p.m. on Saturdays. 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 is a leader in providing community development services within the Fort Smith MSA, as 20 qualifying services were provided within the community. Several employees work with an organization that provides childcare services for LMI families. Other organizations served include adult education institutions for LMI individuals, a school with a majority of LMI students, and a program that helps build affordable housing for LMI families. 45

50 KANSAS CITY MULTISTATE MSA 13 CRA RATING FOR KANSAS CITY, KANSAS-MISSOURI 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, Kansas-Missouri MSA (Kansas City MSA) rating include the following: s lending levels reflect poor responsiveness to the credit needs of the Kansas City MSA. The bank s overall geographic distribution of loans reflects adequate penetration throughout the Kansas City MSA. The distribution of loans by borrower s income/revenue profile reflects adequate penetration among borrowers of different income levels and businesses of different sizes. The bank makes a relatively high 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. Service delivery systems are accessible to geographies and individuals of different income levels in the Kansas City MSA; furthermore, changes in branch locations have improved the accessibility of delivery systems, particularly to LMI geographies and/or LMI individuals. provides a limited level of community development services within the Kansas City MSA. 13 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 within the multistate MSA. 46

51 SCOPE OF EXAMINATION has one assessment area in the Kansas City MSA, which includes the entire multistate MSA. s CRA performance within the Kansas City 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. The bank entered this market largely through a 2009 bank acquisition (followed by subsequent acquisition activity), and banking operations are still relatively low compared to the market size. Consequently, overall lending volume in the Kansas City MSA was relatively low, and the bank had limited small farm lending activity during the review period. Finally, 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 KANSAS CITY MSA Bank Structure operates 17 of its 268 branches (6.3 percent) within the Kansas City MSA assessment area. Of the 17 branches, 3 are located in low-income census tracts, 5 are in moderate-income census tracts, 5 are in middle-income census tracts, and 4 are in upper-income census tracts. During this review period, the bank opened one office in an upper-income census tract and closed two branches in upper-income census tracts. Of the total branches, the bank acquired two branches in low-income census tracts, four branches in moderate-income census tracts, two branches in middle-income census tracts, and one branch in an upper-income census tract. Based on the number and location of these branches in relation to the size of the Kansas City MSA, is not able to effectively serve all parts of this assessment area. More specifically, the bank s current branch network is centered in the western core of the MSA, putting the bank at a competitive disadvantage in the southernmost, easternmost, and northernmost counties of the MSA. This assessment area is a highly competitive banking market, with a total of 145 FDIC-insured institutions operating within the MSA, based on the FDIC Deposit Market Share Report as of June 30, Of the 145 financial institutions with an office in the Kansas City MSA, Arvest Bank ranked fourteenth with a deposit market share of 1.4 percent. Based on this information, deposits held at branches throughout the Kansas City MSA represent 5.3 percent of the bank s total deposits. 47

52 General Demographics The Kansas City MSA is a 15-county multistate MSA, including 6 counties in Kansas and 9 counties in Missouri, covering a large portion of the border between Kansas and Missouri. The Kansas counties in the multistate MSA are Franklin, 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 census data, the assessment area has a total population of 2,035,334. 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 five counties in Kansas have populations ranging from 9,656 to 157,505. The total MSA population in 2000 was estimated at 1,836,038, which indicates there has been a total MSA population increase of approximately 10.9 percent since the 2000 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 credit products. Other particular credit needs in the assessment area (as noted primarily during community contact interviews) include flexible residential real estate loan programs (specifically, subsidized programs aimed at assisting first-time homebuyers) and financial counseling and loan programs for small start-up businesses. Furthermore, as the Kansas City MSA is an environment with significant need, coupled with an ample 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. Income and Wealth Demographics The Kansas City MSA consists of 535 geographies. As of the 2010 census, the median family income for the Kansas City MSA was $69,313, compared to $62,424 for the state of Kansas and $57,661 for the state of Missouri as a whole. More recently, HUD estimates the 2012 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 Census Tracts % 24.3% 33.6% 26.5% 3.0% 100% Family 35, , , , ,744 Population 6.7% 21.6% 39.5% 32.2% 0.0% 100% 48

53 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- Assessment 107,190 93, , , ,744 Area 20.5% 17.8% 21.7% 40.0% 100% Kansas 135, , , , , % 17.7% 22.0% 41.8% 100% Missouri 320, , , ,047 1,546, % 18.1% 21.7% 39.4% 100% Housing Demographics The Kansas City MSA assessment area has a housing affordability ratio of 35.3 percent as of the 2010 census, which indicates less affordability than the state of Kansas overall (40.3 percent) but more similar affordability to 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 $158,000, 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 in Johnson County, Kansas, is $209,900, while the median housing values in both Wyandotte County, Kansas, and Caldwell County, Missouri, are only $97,600. Median gross monthly rent of $759 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. 49

54 Industry and Employment Demographics According to 2011 County Business Patterns data, 50,129 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. The recent annual average unemployment rates for the Kansas City MSA (8.1 percent in 2011 and 6.8 percent in 2012) are higher than the unemployment rates for the state of Kansas (6.7 percent in 2011 and 5.9 percent in 2012), but less than the state of Missouri (8.6 percent in 2011 and 7.1 percent in 2012). Community Contact Information The community contacts noted that there is a need for affordable housing options in the urban areas of Kansas City. Subsidized lending assistance, such as first-time homebuyer programs, are needed as the LMI population has limited options to attain homeownership. Individuals who are successful are moving out of the urban core and finding affordable homes in the suburbs of Kansas City where housing stock is in better condition. While the housing market is improving in some areas, the urban core of Kansas City and other LMI geographies in the area have been slower to recover. Housing stock in the urban core is older and in need of renovation. Builders are having a difficult time obtaining construction and rehabilitation loans, but homes sell quickly upon completion. Meanwhile, banks continue to tighten their underwriting standards, making it more difficult to obtain financing for the construction and improvement of affordable housing. According to the contacts throughout the Kansas City area, there are opportunities for banks to lend in the communities. In addition to affordable housing, a primary concern is that small businesses and start-up businesses are having a difficult time getting funding in all income geographies. One contact commented on the need for financial counseling, education, and training targeted to small business owners to help them better understand what products are available to them. The contacts who specialize in economic development noted that while the community is showing signs of improvement, new businesses have been emerging, and the city has been addressing housing needs for LMI families. Meanwhile, area retailers continue to struggle due to the sustained impact of the economic decline. The level of opportunity for bank involvement is abundant, with the need for small business loans, development and redevelopment loans, and affordable housing. 50

55 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN KANSAS CITY MSA LENDING TEST s Lending Test performance in the Kansas City MSA is rated low satisfactory. Lending levels reflect poor 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 adequate penetration among customers of different income levels and businesses of different sizes. In addition, makes a relatively high 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 poor 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 Loan Type # % $(000s) % Home Improvement % $ % Home Purchase % $46, % Multifamily Housing 0 0.0% $0 0.0% Refinancing % $56, % Total HMDA % $103, % Small Business % $44, % Small Farm 6 0.5% $ % LOANS 1, % $149, % The bank s lending activity in the Kansas City MSA represents 3.7 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 6.3 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 5.3 percent. In light of these factors, the bank s lending activity in the Kansas City MSA reflects poor responsiveness to assessment area credit needs. 51

56 Geographic Distribution of Loans As noted in the Description of Institution s Operations in Kansas City MSA section, this assessment area has 67 low-income census tracts and 130 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 adequate 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 for the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown Home Purchase 5.2% 14.8% 42.6% 37.3% 0.0% 100% Refinance Home Improvement Multifamily LOANS Owner- Occupied Housing % 9.9% 35.4% 53.8% 0.0% 100% % 24.1% 50.0% 25.9% 0.0% 100% % 0.0% 0.0% 0.0% 0.0% 0% % 13.2% 39.7% 44.4% 0.0% 100% 5.0% 19.8% 40.6% 34.6% 0.0% 100% As displayed in the preceding table, the bank s level of lending in low-income census tracts (2.7 percent) is below the percentage of owner-occupied housing (5.0 percent). However, the bank s level of purchase lending in low-income census tracts (5.2 percent) is above the percentage of owner-occupied housing. According to community contacts, affordable housing in areas of need was cited as important in the assessment area economy. Therefore, the bank s performance in low-income census tracts is adequate. While 24.1 percent of the bank s home improvement loans are secured by property located in a moderate-income census tract, the bank s lending level in moderate-income census tracts (13.2 percent) is below the percentage of owner-occupied housing (19.8 percent). Review of 2011 bank performance reveals that 9.3 percent of the bank s HMDA loans were originated in moderate-income census tracts, which compares very favorably to HMDA aggregate lenders that originated 7.3 percent. With the increase in lending of 9.3 percent in 2011 to 13.2 percent in 2012, the bank s performance is good. Furthermore, the bank s overall HMDA lending in LMI census tracts is good. 52

57 Next, the bank s geographic distribution of small business loans was reviewed, which is displayed in the following table in comparison to the location of businesses throughout the bank s assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Business Loans Business Institutions Geography Income Level Low- Moderate- Middle- Upper- Unknown % 11.2% 16.7% 67.4% 0.2% 100% 6.9% 20.7% 36.2% 35.0% 1.3% 100% The analysis of small business loans reflects poor penetration throughout the assessment area. The bank s lending in low-income census tracts is adequate as the level of lending (4.6 percent) is slightly lower than the percentage of business institutions located in low-income census tracts (6.9 percent). However, the level of lending to small businesses in moderate-income census tracts (11.2 percent) is considered poor compared to the percentage of business institutions in moderate-income census tracts. The combined percent of lending to LMI geographies in 2012 (15.8 percent) significantly dropped from the 2011 combined performance (26.3 percent). Overall, lending levels to small businesses in LMI census tracts is considered poor. 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. 53

58 Loan Distribution by Borrower s Profile Overall, the bank s loan distribution by borrower s profile is adequate, 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 data. Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 23.8% 22.8% 27.8% 0.0% 100% Refinance % 17.8% 26.1% 47.3% 0.6% 100% Home Improvement 5.2% 20.7% 32.8% 36.2% 5.2% 100% Multifamily Loans 0.0% 0.0% 0.0% 0.0% 0.0% 0% HMDA % 20.7% 25.2% 37.8% 0.7% 100% Family Population 20.5% 17.8% 21.7% 40.0% 0.0% 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 (15.6 percent) is lower than the low-income family population (20.5 percent). However, the bank s HMDA lending to moderateincome borrowers (20.7 percent) is higher than the percentage of moderate-income borrowers within the assessment area (17.8 percent). The level of lending to LMI borrowers in 2011 further indicates good performance, as 8.7 and 20.5 percent of loans were made to low- and moderateincome borrowers, respectively. In comparison, 2011 HMDA aggregate lenders originated 8.3 and 16.3 percent of loans to the same borrower categories. 54

59 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 4.8% 4.6% 38.8% % 8.7% 6.2% 61.2% % 13.5% 10.7% 100% The bank originated very few of its small business loans (38.8 percent) to businesses with revenues of $1 million or less, while a majority of the bank s loans were to large businesses (61.2 percent). In addition, the bank s lending level to large businesses has increased drastically since 2011 (20.7 percent). Therefore, the bank s level of lending to small businesses is very poor. 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 geographic distribution analysis of small farm loans was not completed. Community Development Lending Activities made a relatively high level of community development loans. The bank renewed ten community development loans totaling $50.9 million within this assessment area. Seven of the loans were renewals of loans on mixed-use properties located in an Enhanced Enterprise Zone in Kansas City, two were renewals of loans that were used to help build senior living facilities in conjunction with New Markets Tax Credits, and one was the renewal of a loan for an affordable housing project. 55

60 INVESTMENT TEST Overall, 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, exhibiting 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 $11.7 million in qualified investments attributable to this assessment area (all of these investments were made in a previous review period, still outstanding). All of the bank s community development investments in the Kansas City MSA are in MBS that finance affordable housing and school municipal bonds. Additionally, made 27 qualified grants totaling $57,824 throughout the assessment area during this review period. Among the contributions were significant donations to affordable housing organizations, food banks, and community service organizations that target children from LMI families. 56

61 SERVICE TEST s Service Test performance in the Kansas City MSA is rated low satisfactory. Service delivery systems are 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 improved 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, provides a limited level of community development services in the Kansas City MSA assessment area. Accessibility of Delivery Systems operates 17 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. Branches Dataset Branch Distribution by Geography Income Level Geography Income Level Low- Moderate- Middle- Upper- Unknown % 29.4% 29.4% 23.5% 0.0% 100% Census Tracts 12.5% 24.3% 33.6% 26.5% 3.0% 100% Household Population 23.2% 16.8% 18.5% 41.5% 0.0% 100% As illustrated in the above table, s branches in LMI census tracts represent 47.0 percent of all branches in the Kansas City MSA assessment area, which is significantly more than LMI demographic figures. The bank has only recently expanded the Kansas City MSA market through bank acquisition activity. Therefore, 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 opened one office in an upper-income census tract and closed two branches in upper-income census tracts. The bank also acquired two branches in low-income census tracts, four branches in moderate-income census tracts, two branches in middle-income census tracts, and one branch in an upper-income census tract. In addition, the bank relocated one of its branch offices within a middle-income census tract during this review period. The record of opening and closing branches has improved the accessibility of its delivery systems, particularly to LMI geographies and LMI individuals. 57

62 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-thru facilities at some point during the week. Most drive-thru facilities remain open until at least 6:00 p.m., Monday through Friday, and most are open until 1:00 p.m. on Saturdays. 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 The bank provides a limited level of community development services in the Kansas City MSA. personnel hold board positions with eight different community organizations. These organizations focus on providing financial education, affordable housing, promoting economic development, and providing social services such as child care, health care, job training, and shelter to LMI families and individuals. One employee volunteers for a nonprofit that provides affordable housing to LMI families. 58

63 ARKANSAS 14 CRA RATING FOR ARKANSAS: The Lending Test is rated: The Investment Test is rated: The Service Test is rated: SATISFACTORY High Satisfactory High Satisfactory Low Satisfactory Factors supporting the institution s CRA rating for Arkansas include the following: s lending levels reflect good responsiveness to the credit needs of its Arkansas assessment areas. The bank s overall geographic distribution of loans reflects adequate penetration throughout the Arkansas assessment areas. The distribution of loans by borrower s income/revenue profile 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 Arkansas. makes a significant level of qualified community development investments and grants throughout the Arkansas assessment areas. 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, particularly to LMI geographies and/or LMI individuals. personnel provides an adequate level of community development services in Arkansas assessment areas. 14 The bank has branches located in Arkansas that are also part of the Fayetteville-Springdale-Rogers multistate MSA and the Fort Smith multistate 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. 59

64 SCOPE OF EXAMINATION has three separate assessment areas within the state of Arkansas. The bank s performance within 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. s ratings in the state of Arkansas are largely based on 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, two community contact interviews were conducted (and four 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. The community contacts completed as part of this review were with a community development professional in Little Rock and an affordable housing director in nonmsa Arkansas. DESCRIPTION OF INSTITUTION S OPERATIONS IN ARKANSAS The bank operates 55 branches (20.5 percent of total branches) throughout the three CRA assessment areas in the state of Arkansas. The following table gives additional detail regarding the bank s operations within Arkansas. Assessment Area Offices # Offices % Deposits ($000s) Deposits % CRA Review Procedures Little Rock MSA % $860, % Full Scope Hot Springs MSA % $95, % Limited Scope NonMSA Arkansas % $515, % Full Scope STATE % $1,471, % N/A As displayed in the table above, the bank s deposits in Arkansas total $1.5 billion, which equates to 12.7 percent of total bank deposits. Furthermore, the vast majority of these Arkansas deposits and branch resources are attributable to the full-scope review assessment areas. 60

65 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN ARKANSAS LENDING TEST s Lending Test performance in the state of Arkansas is rated high satisfactory. Lending levels reflect good responsiveness to Arkansas assessment area credit needs. The bank s overall geographic distribution of loans reflects adequate penetration throughout Arkansas 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. Finally, makes a relatively high level of community development loans within Arkansas assessment areas. Lending Activity The bank s lending levels within the state of 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 Loan Type # % $(000s) % Home Improvement % 3, % Home Purchase 1, % 150, % Multifamily Housing % 11, % Refinancing 2, % 262, % Total HMDA 3, % 427, % Small Business 1, % 155, % Small Farm % 19, % LOANS 5, % 603, % The bank s lending activity in the state of Arkansas represents 17.1 percent of total HMDA and CRA loans made within the bank s combined assessment areas. The level of HMDA and CRA activity is somewhat lower than the bank s branch network in this assessment area, representing 20.5 percent of total bank branches. In contrast, the percentage of loans originated in this assessment area is significantly greater than the area s proportion of total deposit holdings of 12.7 percent. In light of these factors, the bank s lending activity in the state of Arkansas reflects good responsiveness to assessment area credit needs. 61

66 Geographic and Borrower Distribution As displayed in the following tables, the bank s overall geographic distribution of loans reflects adequate penetration throughout the bank s Arkansas assessment areas. Assessment Area (full-scope review) Little Rock MSA Arkansas NonMSA Geographic Distribution of Loans Adequate Good Assessment Area (limited-scope review) Hot Springs MSA Geographic Distribution of Loans Below Performance in the Little Rock MSA and nonmsa Arkansas assessment areas were given similar weight in developing overall conclusions. However, because the majority of loans in this analysis are attributable to the Little Rock MSA assessment area, the bank s overall geographic distribution of loans performance is adequate. 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) Little Rock MSA Arkansas NonMSA Loan Distribution by Borrower s Profile Good Good Assessment Area (limited-scope review) Hot Springs MSA Loan Distribution by Borrower s Profile Below 62

67 Community Development Lending Activities makes a relatively high level of community development loans within the state of Arkansas. The following table displays community development lending performance in the bank s three Arkansas assessment areas. Assessment Area (full-scope review) Little Rock MSA Arkansas NonMSA Community Development Lending Relatively High Level Adequate Level Assessment Area (limited-scope review) Hot Springs MSA Community Development Lending Below s performance in the Little Rock MSA and nonmsa Arkansas assessment areas was weighted nearly equally in order to develop overall conclusions. However, in light of the particularly strong community development loan performance in the Little Rock MSA assessment area, paired with the increased significance and opportunity for community development loan activity in the Little Rock MSA assessment area, the bank s overall level of community development lending in the state of Arkansas is relatively high. Additionally, while the bank made just two community development loans in the nonmsa Arkansas assessment area, they totaled $5.8 million. In sum, the bank made seven community development loans totaling $17.4 million in Arkansas assessment areas. 63

68 INVESTMENT TEST For the state of Arkansas, 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) Little Rock MSA Arkansas NonMSA Investment and Grant Activity Significant Adequate Assessment Area (limited-scope review) Hot Springs MSA Investment and Grant Activity Consistent 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 the state of Arkansas is significant. Community development investments in Arkansas assessment areas totaled $5.9 million, all of which were made in MBS. The bank also made community development grants totaling $134,361 in Arkansas assessment areas. 64

69 SERVICE TEST Overall, s performance in Arkansas is rated low 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, provides an adequate level of community development services within its Arkansas assessment areas. 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) Little Rock MSA Arkansas NonMSA Accessibility of Delivery Systems Accessible Accessible Assessment Area (limited-scope review) Hot Springs MSA Accessibility of Delivery Systems Consistent 65

70 Changes in Branch Locations 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) Little Rock MSA Arkansas NonMSA Changes in Branch Locations Generally Not Adversely Affected Improved Assessment Area (limited-scope review) Hot Springs MSA Changes in Branch Locations 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. Assessment Area (full-scope review) Little Rock MSA Arkansas NonMSA Reasonableness of Business Hours and Services Do Not Vary/Inconvenience Do Not Vary/Inconvenience Assessment Area (limited-scope review) Hot Springs MSA Reasonableness of Business Hours and Services Consistent 66

71 Community Development Services 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 area in the following tables. Assessment Area (full-scope review) Little Rock MSA Arkansas NonMSA Community Development Services Limited Level Relatively High Level Assessment Area (limited-scope review) Hot Springs MSA Community Development Services Below 67

72 LITTLE ROCK-NORTH LITTLE ROCK- CONWAY, ARKANSAS MSA (Full-Scope Review) DESCRIPTION OF INSTITUTION S OPERATIONS IN 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 24 of its 268 branches (9.0 percent). Of the 24 branches, none are located in a low-income census tract, 7 are in moderate-income census tracts, 7 are in middle-income census tracts, and 10 are located in upper-income census tracts. During this review period, the bank opened one branch in a middleincome census tract and closed two branches (one in a moderate-income census tract and one in a middle-income census tract) in this assessment area. The bank operates branches in all but two of the assessment area s counties, both of which are more rural in nature. 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, with a total of 36 FDIC-insured institutions operating within the MSA, based on the FDIC Deposit Market Share Report as of June 30, Of those 36 financial institutions, the bank is ranked fifth with a deposit market share of 6.1 percent. The deposits held at branches throughout the Little Rock MSA represent 7.5 percent of all 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 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 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 flexible residential real estate loan programs and small business financing. Furthermore, as the Little Rock MSA is an area 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. 68

73 Income and Wealth Demographics Based on the 2010 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 2012, the HUD-estimated median family income for the Little Rock MSA was $62,300. 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 Census Tracts % 23.8% 47.0% 22.0% 0.6% 100% Family 7,454 35,698 87,817 49, ,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- Assessment 38,497 32,262 36,876 72, ,045 Area 21.4% 17.9% 20.5% 40.2% 100% Arkansas 162, , , , , % 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 $127,800, which is much higher than the state of Arkansas at $102,300. The median monthly gross rent in the Little Rock MSA is also higher ($710) than in the state of Arkansas ($617). Industry and Employment Demographics According to 2011 County Business Patterns data, there were 17,486 business entities 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. 69

74 The recent annual average unemployment rates for the Little Rock MSA (7.0 percent in 2011 and 6.5 percent in 2012) were lower than rates for the state of Arkansas (8.0 percent in 2011 and 7.3 percent in 2012). Similar to the state of Arkansas, the unemployment level in the Little Rock MSA followed a generally decreasing trend throughout 2011 and Community Contact Information Community contacts stated that the economic conditions in the Little Rock MSA are stronger than other areas in the region. This is due to stability of employment, including several large employers entering the market or expanding within it in recent years. One contact noted that the demographic makeup of the area is diverse and is trending younger, with many job opportunities for recent college graduates. Furthermore, the housing stock has been increasing, and there is an adequate supply of affordable housing. The contacts felt that banking competition in the area is at a high level and that the majority of the credit needs are being met, while the most significant credit need is small business financing. One contact highlighted the willingness of local lenders to work with first-time homebuyers and applicants with credit report blemishes. Overall, the perception of local banks was very favorable, as area banks have been proactive in many community initiatives. 70

75 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN LITTLE ROCK- NORTH LITTLE ROCK-CONWAY, ARKANSAS MSA LENDING TEST Lending levels reflect good responsiveness to the Little Rock MSA 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, under the Lending Test, made a relatively high level of community development loans within the Little Rock MSA assessment area. Lending Activity The following table displays the bank s 2012 lending volume in this assessment area by number and dollar volume. Summary of Lending Activity Loan Type # % $(000s) % Home Improvement % $1, % Home Purchase % $95, % Multifamily Housing 9 0.3% $8, % Refinancing 1, % $151, % Total HMDA 1, % $257, % Small Business % $76, % Small Farm % $2, % LOANS 2, % $336, % The bank s lending activity in the Little Rock MSA represents 8.5 percent of total HMDA and CRA loans made within the bank s combined assessment areas. This level of HMDA and CRA activity is only slightly below that of the bank s branch network in this assessment area, representing 9.0 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 7.5 percent. In light of these factors, the bank s lending activity in the Little Rock MSA reflects good responsiveness to assessment area credit needs. 71

76 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 followed by small business lending), the bank s geographic distribution of loans reflects adequate 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 for the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 13.3% 45.2% 41.1% 0.0% 100% Refinance , % 8.8% 47.2% 43.4% 0.0% 100% Home Improvement 0.8% 17.5% 50.8% 31.0% 0.0% 100% Multifamily % 22.2% 44.4% 11.1% 0.0% 100% ,856 LOANS 0.6% 11.0% 46.7% 41.6% 0.0% 100% Owner- Occupied Housing 2.8% 17.5% 50.8% 29.0% 0.0% 100% Based on the information in the preceding table, the bank s lending performance in low-income geographies is poor. Total HMDA lending in low-income census tracts (0.6 percent) is lower than the owner-occupied housing percentage (2.8 percent). The bank s performance in moderateincome census tracts shows more favorable results. While the amount of lending in moderateincome geographies (11.0 percent) is less than the demographic comparator (17.5 percent), the bank shows stronger performance in individual categories, including home purchase (13.3 percent), home improvement (17.5 percent), and multifamily (22.2 percent). Additionally, performance in 2011 in moderate-income tracts (6.9 percent) compares well to 2011 aggregate data in this category (5.9 percent), reflecting overall adequate penetration within moderate-income census tracts. Therefore, the bank s geographic distribution of HMDA loans in LMI geographies is adequate. 72

77 Second, the bank s geographic distribution of small business loans was reviewed, which is displayed in the following table in comparison to the location of businesses throughout the bank s assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Business Loans Business Institutions Geography Income Level Low- Moderate- Middle- Upper- Unknown % 18.8% 39.8% 39.2% 0.0% 100% 4.5% 23.9% 43.1% 28.5% 0.0% 100% The bank s percentage of small business loans in low-income census tracts (2.3 percent) is adequate. Although it is below the estimated percentage of businesses within low-income census tracts (4.5 percent), bank performance in 2011 shows that 6.2 percent of s small business loans were originated in low-income census tracts. In comparison, 4.9 percent of business institutions were located in low-income geographies. The bank s performance in moderate-income tracts, however, is considered poor. Lending in moderate-income tracts (18.8 percent) is less than the percentage of businesses in moderate-income census tracts (23.9 percent). The 2011 performance level reveals similar results, as the bank s penetration of 13.0 percent in moderate-income geographies was less than both the number of business institutions in moderate-income geographies (17.2 percent) and the aggregate performance (16.2 percent). Overall, the bank s overall geographic distribution of small business loans reflects adequate penetration throughout the assessment area. 73

78 Finally, the geographic distribution of small farm loans compared to the location of farms throughout the assessment area is displayed in the following table. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Agricultural Institutions Geography Income Level Low- Moderate- Middle- Upper- Unknown % 26.9% 69.2% 3.8% 0.0% 100% 1.2% 22.9% 56.2% 19.7% 0.0% 100% 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 tracts, this is not considered poor performance in light of the very small percentage of farms located in low-income census tracts (1.2 percent). The bank s percentage of small farm loans in moderate-income census tracts (26.9 percent) reflects excellent performance, as it is well above the estimated percentage of farms with in moderate-income geographies (22.9 percent). 74

79 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 loans by the income level of the borrower compared to family population demographics. Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 29.1% 16.7% 36.8% 0.3% 100% Refinance , % 18.1% 24.6% 48.6% 1.5% 100% Home Improvement 7.1% 15.1% 23.8% 42.1% 11.9% 100% Multifamily % 0.0% 0.0% 0.0% 100.0% 100% ,856 LOANS 10.7% 21.7% 21.6% 43.8% 2.3% 100% Family Population 21.4% 17.9% 20.5% 40.2% 0.0% 100% As indicated in the preceding table, the bank s level of lending to low-income borrowers (10.7 percent) is lower than the low-income family population percentage (21.4 percent). However, this level of lending has improved from the bank s rate in 2011 for the same category (7.7 percent), which is greater than 2011 HMDA aggregate lending (6.5 percent). Taking into account both years of lending, bank performance is good. Furthermore, the bank s lending level to moderate-income borrowers (21.7 percent) is excellent, as it is higher than the percentage of moderate-income borrowers within the assessment area (17.9 percent). By product type, the bank is particularly excellent in the home purchase category, originating 29.1 percent of purchase loans in moderate-income geographies. This performance is highlighted by community contacts, who stated that affordable housing has been on the rise and credit needs are adequately being met. Overall, the bank s overall level of lending to LMI borrowers is excellent. 75

80 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 8.8% 4.6% 83.3% % 4.6% 4.1% 16.7% % 13.5% 8.7% 100% The bank originated a majority of its small business loans (83.3 percent) to businesses with gross annual revenues of $1 million or less. The highest concentration of these loans is 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, 90.3 percent of assessment area businesses had revenues of $1 million or less. Based on this information, the bank s level of lending to small businesses is adequate. 76

81 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 19.2% 0.0% 88.5% % 3.8% 7.7% 11.5% % 23.1% 7.7% 100% 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, the distribution of small farm loans by borrower s profile is adequate. In 2012, 88.5 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 2012 Dun & Bradstreet estimates, 98.1 percent of farms in the assessment area reported revenues of $1 million or less. Community Development Lending Activities makes a relatively high level of community development loans in the Little Rock MSA assessment area. The bank originated or renewed five community development loans totaling $11.6 million within this assessment area since the previous evaluation. One new loan totaling $6.6 million that was used for affordable housing is considered innovative due to the variety of funding sources and the collaboration with the Arkansas Development Finance Authority. Additionally, the bank originated two new loans on properties that provide affordable housing to LMI tenants and renewed one loan that was originated to help revitalize an LMI neighborhood. Lastly, one loan was for community services to LMI individuals. 77

82 INVESTMENT TEST The bank made a significant level of qualified community development investments and grants, exhibiting 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 $4.0 million in qualified investments attributable to this assessment area, which is slightly more than the investment level ($3.8 million) at the last CRA evaluation. All of the bank s qualified investments are in MBS that finance affordable housing ($1.0 million in new investments and $3.0 million in previous review period investments, still outstanding). Additionally, made an adequate level of community development grants within the Little Rock MSA. The bank made 72 grants and donations totaling $75,566 during this review period. Among these grants were donations to affordable housing organizations, food banks, and community service organizations that target children from LMI families. 78

83 SERVICE TEST 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, personnel provides a limited level of community development services within this assessment area. Accessibility of Delivery Systems operates 24 branch facilities within the Little Rock MSA assessment area. The following table illustrates the distribution of these facilities by income level of geography, as compared to key assessment area demographics. Branches Dataset Branch Distribution by Geography Income Level Geography Income Level Low- Moderate- Middle- Upper- Unknown % 29.2% 29.2% 41.7% 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, s branches in LMI census tracts represent 29.2 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 within close proximity of low-income census tracts. Meanwhile, the dispersion of branches in moderate-income tracts (29.2 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 opened one branch and closed two branches in the Little Rock MSA. The branch opening was in a middle-income census tract, and the two closures occurred in moderate- and middle-income census tracts. 79

84 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-thru facilities at some point during the week. Most drive-thru facilities remain open until 7:00 p.m., Monday through Friday, and are open until 1:00 p.m. on Saturdays. 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 staff members provided a limited level of community development services within the Little Rock MSA assessment area. One bank employee provided educational assistance to LMI adults, and three employees provided economic information to schools with predominantly LMI students. 80

85 HOT SPRINGS, ARKANSAS MSA (Limited-Scope Review) DESCRIPTION OF INSTITUTION S OPERATIONS IN HOT SPRINGS, ARKANSAS MSA This assessment area includes the entire Hot Springs, Arkansas MSA, which is comprised of Garland County. operates seven branch offices in this assessment area, including four branches that were acquired 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 Census Tracts 5.0% 20.0% 50.0% 25.0% 0.0% 100% Family Population Household Population Business Institutions Agricultural Institutions 407 3,687 13,880 7, , % 14.3% 53.9% 30.1% 0.0% 100% 794 6,361 21,199 11, , % 15.8% 52.8% 29.4% 0.0% 100% 113 1,124 2,990 1, , % 18.4% 49.0% 30.8% 0.0% 100% % 9.5% 52.6% 36.8% 0.0% 100% Assessment Area Demographics by Population Income Level Demographic Type Population Income Classification Low- Moderate- Middle- Upper- Family Population 5,342 4,439 5,434 10,516 25, % 17.3% 21.1% 40.9% 100% Household Population 9,285 6,642 7,425 16,794 40, % 16.5% 18.5% 41.8% 100% 81

86 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN HOT SPRINGS, ARKANSAS MSA LENDING TEST s overall lending performance in this assessment area is below 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 Lending Activity Geographic Distribution of Loans Distribution of Loans by Borrower s Profile Community Development Lending Activities OVERALL Performance Below Below Below Below BELOW The bank s performance under all aspects of the Lending Test is below the Little Rock MSA assessment area performance, and the bank did not make any community development loans in this assessment area, reflecting less than adequate performance. Although the bank s performance in this assessment area was below that of the full-scope MSA in Arkansas, it did not change overall conclusions. INVESTMENT TEST s community development investment and grant levels in the Hot Springs MSA assessment area are consistent to the Investment Test performance for the Little Rock MSA given the relatively small size of the Hot Springs MSA assessment area. made $152,868 in new community development investments during this review period and held $135,471 in investments attributable to this assessment area that were made during a previous review period but are still outstanding. Additionally, the bank made five grants totaling $2,740 during the review period. 82

87 SERVICE TEST The bank s Service Test performance in this assessment area is consistent with the bank s Service Test performance in the Little Rock MSA, as detailed in the following table. Service Test Criteria Accessibility of Delivery Systems Changes in Branch Locations Reasonableness of Business Hours and Services Community Development Services OVERALL Performance Consistent Consistent Consistent Below CONSISTENT 83

88 NONMETROPOLITAN ARKANSAS STATEWIDE AREA (Full-Scope Review) DESCRIPTION OF INSTITUTION S OPERATIONS IN NONMETROPOLITAN ARKANSAS Bank Structure has one assessment area within nonmsa Arkansas, where it operates 24 of its 268 branches (9.0 percent). Of the 24 branches, 3 are in moderate-income census tracts, 18 are in middle-income census tracts, and 3 are located in upper-income census tracts. During this review period, the bank acquired three full-service branches and one drive-thru only branch, and one branch was closed. 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 north 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, 2012, 52 FDIC-insured institutions operated at least one office within this assessment area, and the bank had the fourth highest deposit market share percentage (5.8 percent). The deposits held at branches throughout the nonmsa Arkansas assessment area represent 4.5 percent of all deposits. General Demographics The nonmsa Arkansas assessment area is a 22-county area that covers the central-west and north-central portions of Arkansas, including the counties of Baxter, Boone, Carroll, Cleburne, Conway, 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 census data, the assessment area had a total population of 533,841. 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 7.6 percent since the 2000 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 credit for businesses (particularly as related to business expansion), flexible consumer loan products, and second-chance programs to assist those with poor credit histories. Furthermore, many parts of this assessment area are sparsely populated, and, while there is a significant need for community development involvement, oftentimes these rural areas lack community development resources from which to draw. Of the 94 middle-income census tracts in this assessment area, 9 were categorized as underserved, 84

89 and 16 were distressed due to poverty in 2012; additionally, 16 of these census tracts were both underserved and distressed. 15 Income and Wealth Demographics Based on 2010 census data, the median family income for the assessment area was $43,079, which is slightly higher than the nonmsa Arkansas statewide figure, $42,249. As of 2012, the HUD-estimated median family income for nonmsa Arkansas was $43,900. The following table summarizes the distribution of the 121 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 Census Tracts % 8.3% 77.7% 14.0% 0.0% 100% Family 0 10, ,641 23, ,470 Population 0.0% 7.2% 76.7% 16.1% 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- Assessment 26,782 27,266 31,173 60, ,470 Area 18.4% 18.8% 21.4% 41.4% 100% Arkansas 162, , , , , % 18.0% 20.1% 40.6% 100% 15 See the glossary in Appendix E for additional details regarding the categories underserved and distressed under the definition of community development. 85

90 Housing Demographics According to 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 as of the 2010 census, which indicates that housing in the assessment area is more affordable than in the state of Arkansas (38.4 percent) but is less affordable than nonmsa Arkansas overall (43.0 percent). Of the 22 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 $89,827, which is lower than the state of Arkansas ($102,300) but higher than nonmsa Arkansas ($78,792). The median gross monthly rent in the assessment area ($545) is also lower than the state of Arkansas figure ($617) but is slightly higher than the figure for nonmsa Arkansas overall ($535). Industry and Employment Demographics According to 2011 County Business Patterns data, there were 10,511 business entities operating within the nonmsa Arkansas assessment area. The largest industries in the assessment area are manufacturing, health care and social assistance, and retail trade. The annual unemployment rates in the assessment area (8.0 percent in 2011 and 7.2 percent in 2012) closely mirror that of the state of Arkansas overall (8.0 percent in 2011 and 7.3 percent in 2012). Both the assessment area and the state of Arkansas have experienced generally decreasing levels of unemployment throughout 2011 and

91 Community Contact Information According to the community contacts, economic conditions are mixed throughout nonmsa Arkansas. Some areas have experienced positive economic growth with decreasing unemployment. Other individual areas have been struggling, with many people fleeing the area to find work because key employers have left and there is very little new business growth. A large portion of the assessment area is rural, with few opportunities for advanced education. Additionally, one contact noted that many rural areas struggle because of the distances required to travel to obtain health care, jobs, and food. There are several opportunities for community involvement in the area, primarily related to lowincome individuals. Per the contacts, small business loans are becoming more available, but it has been difficult for individuals to obtain loans due to the qualifying requirements (primarily down payment and credit standards). Additionally, one contact noted that a second-chance checking product would be beneficial and should be marketed in the community. Fortunately, the financial institutions in the area are willing to partner with organizations that can provide assistance. Overall, community contacts spoke favorably of banks being good corporate citizens with commitments to their communities. 87

92 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, makes an adequate level of community development loans in the nonmsa Arkansas assessment area. Lending Activity The following table displays the bank s 2012 lending volume in this assessment area by number and dollar volume. Summary of Lending Activity 2012 Loan Type # % $(000s) % Home Improvement % $1, % Home Purchase % $46, % Multifamily Housing 5 0.2% $1, % Refinancing % $99, % Total HMDA 1, % $149, % Small Business % $67, % Small Farm % $16, % LOANS 2, % $232, % The bank s lending activity in nonmsa Arkansas represents 7.8 percent of total HMDA and CRA loans made within the bank s combined assessment areas. This level of HMDA and CRA activity is below that of 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 is well above the area s proportion of total deposit holdings of 4.5 percent. In light of these factors, the bank s lending activity in nonmsa Arkansas reflects good responsiveness to assessment area credit needs. 88

93 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 (8.3 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 distribution of HMDA loans compared to owner-occupied housing demographics for the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 5.3% 75.0% 19.8% 0.0% 100% Refinance % 6.8% 77.9% 15.3% 0.0% 100% Home Improvement 0.0% 3.7% 81.7% 14.7% 0.0% 100% Multifamily % 20.0% 60.0% 20.0% 0.0% 100% , ,487 LOANS 0.0% 6.2% 77.3% 16.5% 0.0% 100% Owner- Occupied Housing 0.0% 6.6% 76.9% 16.4% 0.0% 100% As displayed in the previous table, the bank s level of lending in moderate-income census tracts (6.2 percent) is slightly below the percentage of owner-occupied housing in moderate-income census tracts (6.6 percent) and is considered good. 89

94 Next, the bank s geographic distribution of small business loans was reviewed, which is displayed in the following table in comparison to the location of businesses throughout the bank s assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Business Loans Business Institutions Geography Income Level Low- Moderate- Middle- Upper- Unknown % 6.3% 78.2% 15.4% 0.0% 100% 0.0% 6.0% 79.8% 14.2% 0.0% 100% As displayed in the previous table, the bank s level of lending in moderate-income census tracts is good. The bank s level of lending in moderate-income census tracts (6.3 percent) is above the percentage of businesses in moderate-income census tracts (6.0 percent). Finally, the geographic distribution of small farm loans is displayed in the following table in comparison to the location of farms throughout the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0.0% 11.7% 76.5% 11.7% 0.0% 100% Agricultural Institutions 0.0% 6.5% 78.8% 14.7% 0.0% 100% As displayed in the previous table, the bank s level of lending in moderate-income census tracts is significantly above comparison data. The bank s level of lending in moderate-income census tracts (11.7 percent) compares very favorably to the percentage of businesses in moderate-income census tracts (6.5 percent). Therefore, the bank s geographic distribution of small farm loans is excellent. 90

95 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. Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 19.3% 24.5% 51.0% 0.5% 100% Refinance % 13.8% 21.8% 54.8% 1.8% 100% Home Improvement 9.2% 19.3% 21.1% 34.9% 15.6% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% ,487 LOANS 7.1% 15.6% 22.4% 52.1% 2.8% 100% Family Population 18.4% 18.7% 21.4% 41.4% 0.0% 100% 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 (7.1 percent) is lower than the low-income family population (18.4 percent), performance in 2011 is relevant in the analysis. In 2011, the bank s penetration of HMDA loans to low-income borrowers was 6.7 percent, which was higher than the 2011 HMDA aggregate (5.4 percent). Similarly, the bank s HMDA lending to moderate-income borrowers (15.6 percent) is also below the percentage of moderate-income families within the assessment area (18.7 percent). However, good performance is noted in 2012, specifically in home purchase loans and home improvement loans (both at 19.0 percent) made to moderate-income borrowers. Numbers for 2011 also reveal good performance, as the bank s lending to moderateincome borrowers (17.1 percent) was higher than the 2011 HMDA aggregate of 15.3 percent and only slightly below the proportion of moderate-income families (18.7 percent). Therefore, the bank s distribution of HMDA loans among customers of different income levels is good. 91

96 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 10.2% 5.0% 85.5% % 2.4% 3.6% 14.5% % 12.5% 8.6% 100% The bank s level of lending to small businesses is adequate. The bank originated a majority of its small business loans (85.5 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, 91.4 percent of businesses reporting for 2012 had revenues of $1 million or less. 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 15.9% 2.3% 94.3% % 1.1% 0.4% 5.7% % 17.0% 2.7% 100% As seen in the above table, a substantial majority of the bank s small farm loans (94.3 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 (76.1 percent), further demonstrating the bank s willingness to make credit available to small farms in the assessment area. According to Dun & Bradstreet estimates, 99.4 percent of farms in 92

97 the assessment area reported revenues of $1 million or less. Therefore, the bank s distribution of small farm loans by borrower s revenue profile is good. Community Development Lending Activities makes an adequate level of community development loans in the nonmsa Arkansas assessment area. Although the bank originated or renewed $5.8 million of community development loans in this assessment area, it was split between two different loans. Each loan was for construction of living facilities to provide affordable housing to LMI senior citizens. 93

98 INVESTMENT TEST The bank made an adequate level of qualified community development investments and grants, exhibiting 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 $1.6 million in qualified investments attributable to this assessment area, $1.0 million of which is in previous review period investments, still outstanding. The majority of the bank s qualified investments ($1.2 million) are in MBS that finance affordable housing. The remaining $450,000 investment was in a municipal bond for a school made up of students who predominantly come from LMI families. Additionally, made an adequate level of community development grants within the assessment area. The bank made 35 qualified grants during this review period, which totaled $56,055. Among these grants were donations to affordable housing organizations, food banks, and organizations that promote economic development. 94

99 SERVICE TEST 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 improved 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 LMI individuals. Finally, personnel provide a relatively high level of community development services within this assessment area. Accessibility of Delivery Systems 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, as compared to key assessment area demographics. Branches Dataset Branch Distribution by Geography Income Level Geography Income Level Low- Moderate- Middle- Upper- Unknown % 12.5% 75.0% 12.5% 0.0% 100% Census Tracts 0.0% 8.3% 77.7% 14.0% 0.0% 100% Household Population 0.0% 7.2% 77.4% 15.3% 0.0% 100% The bank operates three branches in moderate-income census tracts within the nonmsa Arkansas assessment area (12.5 percent), which compares very favorably to both the number of census tracts (8.3 percent) and the household population residing in moderate-income geographies (7.2 percent). Two of the three branches in moderate-income geographies were acquired since the previous evaluation. 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. 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 improved the accessibility of its delivery systems, particularly to LMI geographies and/or to LMI individuals. During the review period, the bank closed one branch in a middle-income census tract but acquired four branches in this assessment area (two located in moderate-income census tracts and two located in middle-income census tracts). 95

100 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-thru facilities at some point during the week. Most drive-thru facilities remain open until 7:00 p.m., Monday through Friday, and are open until 1:00 p.m. on Saturdays. All branches offer the same standard products, including lowcost 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 staff members provided a relatively high level of community development services within the nonmsa Arkansas assessment area. During the review period, a total of 13 qualifying community development services were performed in this assessment area. Numerous 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 two different organizations that help low-income students obtain higher education scholarships. 96

101 KANSAS 16 CRA RATING FOR KANSAS: The Lending Test is rated: The Investment Test is rated: The Service Test is rated: SATISFACTORY Low Satisfactory Needs to Improve Low Satisfactory Factors supporting the institution s state of Kansas rating include the following: 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. The distribution of loans by borrower s income/revenue profile reflects adequate penetration among borrowers of different income levels and businesses and farms of different sizes. The bank makes an adequate level of community development loans in the Kansas assessment area. makes a poor level of 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 improved the accessibility of delivery systems, particularly to LMI geographies and/or LMI individuals. For the third consecutive CRA evaluation period, the bank did not provide any community development services within the Kansas assessment area. 16 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. 97

102 SCOPE OF EXAMINATION has one assessment area within the state of Kansas, which was reviewed using fullscope CRA examination procedures. Consequently, s ratings in the state of Kansas are based solely on this single assessment area. Scoping considerations applicable to the review of the Kansas assessment area are consistent with the overall CRA examination scope as presented in the Institution, Scope of Examination section. To augment the evaluation of the bank s Kansas assessment area, two community contact interviews were conducted in order to ascertain specific community credit needs, community development opportunities, and local market conditions. Both community contacts specialize in economic development targeted to the southeast corner of Kansas. DESCRIPTION OF INSTITUTION S OPERATIONS IN KANSAS Bank Structure operates 2 of its 268 branches (0.7 percent) within the nonmsa Kansas assessment area. One is located in a middle-income census tract. The second branch, which was acquired during this review period, is located in a moderate-income census tract. Since the acquisition date of this branch was in 2013 before the start of this evaluation, lending tables do not reflect any loans made at this branch. Based on the bank s limited branch presence in this assessment area, is not able to effectively serve all parts of the assessment area, particularly the northernmost county of Bourbon. This assessment area is a competitive banking market, with a total of 33 FDIC-insured institutions operating within the assessment area, based on the FDIC Deposit Market Share Report as of June 30, Of the 33 financial institutions with an office in this assessment area, the bank ranked twenty-sixth with a deposit market share of 1.1 percent. Based on this information, deposits held at branches throughout nonmsa Kansas assessment area represent 0.2 percent of the bank s total deposits. General Demographics The nonmsa Kansas assessment area is a six-county area that covers the southeastern corner of the state of Kansas; it includes the following counties: Bourbon, Chautauqua, Cherokee, Crawford, Labette, and Montgomery. According to U.S. Census Bureau 2010 census data, the largest city in this assessment area is Pittsburg in Crawford County, with a population of 20,233. Based on 2010 census data, the assessment area has a total population of 136,657. The county with the largest population is Crawford County (39,134). The remaining counties range in population from 3,669 to 35,471. According to 2000 census data, the same assessment area had a total population of 139,672. This marks a total population decrease of approximately 2.2 percent since the 2000 census. 98

103 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 (as noted primarily during community contact interviews) include increased access to credit for small businesses and construction loans to build affordable housing. Furthermore, many parts of this assessment area are sparsely populated, and while there is significant need for community development involvement, oftentimes these rural areas lack community development resources from which to draw. Of the 36 middle-income census tracts in this assessment area, one was categorized as underserved and another six were categorized as distressed in Income and Wealth Demographics The assessment area consists of 44 geographies. Based on the 2010 census, the median family income for the assessment area is $37,754, which is below the nonmsa Kansas figure, $42,014. 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 Census Tracts % 11.4% 81.8% 4.5% 0.0% 100% Family 377 3,042 29,903 2, ,554 Population 1.1% 8.6% 84.1% 6.3% 0.0% 100% The following table displays the distribution of assessment area families by income level, compared to the family distribution for nonmsa Kansas. Family Population by Income Level Dataset Low- Moderate- Middle- Upper- Assessment 7,274 7,108 8,619 12,553 35,554 Area 20.5% 20.0% 24.2% 35.3% 100% NonMSA 43,872 45,265 55,139 94, ,853 Kansas 18.4% 19.0% 23.1% 39.6% 100% Housing Demographics Housing in the assessment area appears to be affordable. The nonmsa Kansas assessment area has a housing affordability ratio of 52.5 percent as of the 2010 census, which indicates greater affordability than nonmsa Kansas overall (40.3 percent). Of the six counties in this assessment 17 See the glossary in Appendix E for additional details regarding the term underserved and distressed under the definition of community development. 99

104 area, housing is most affordable in Chautauqua County (72.0 percent), while Crawford County (42.6 percent) has the lowest affordability ratio. The remaining four counties have affordability ratios ranging from 49.8 to 60.5 percent. The median housing value in the assessment area is $71,983, which is significantly lower than nonmsa Kansas at $80,024. Median gross monthly rent in the assessment area ($559) is similar to nonmsa Kansas ($547). Industry and Employment Demographics According to 2011 County Business Patterns data, there are 3,127 business entities operating within the nonmsa Kansas assessment area. 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. The average annual unemployment rates in the nonmsa Kansas assessment area (8.5 percent in 2011 and 7.4 percent in 2012) were significantly higher than the state of Kansas overall (6.7 percent in 2011 and 5.9 percent in 2012). Community Contact Information Two community contacts were used to evaluate the nonmsa Kansas assessment area. Both of the contacts mentioned that the local economy was impacted by the financial crisis, but the area has recently been in a state of improvement. The job market has improved, but it was noted that there is a need for skilled and educated workers given the improved and advanced technology in the workforce. Housing is a concern in that housing prices are high and there is a shortage of affordable homes under construction. Another area for improvement in the assessment area is providing more flexible lending opportunities to small businesses and start-ups. Although the contacts feel that the financial institutions are adequately meeting the needs of the community, lending is conservative in the area, and there are opportunities for financial institutions to improve affordable housing and to assist individuals in establishing new businesses. Both contacts stated that banks in the area are active in the community and willing to meet the needs of the area. 100

105 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN KANSAS LENDING TEST s Lending Test performance in Kansas is rated low 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 adequate penetration among customers of different income levels and businesses/farms of different sizes. Additionally, the bank makes an adequate level of community development loans throughout the assessment area. Lending Activity The bank s lending levels reflect good responsiveness to nonmsa Kansas 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 Loan Type # % $(000s) % Home Improvement 9 4.4% $ % Home Purchase % $2, % Multifamily Housing 0 0.0% $0 0.0% Refinancing % $3, % Total HMDA related % $6, % Small Business % $9, % Small Farm % $1, % LOANS % $17, % The bank s lending activity in the nonmsa Kansas assessment area represents 0.6 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 0.7 percent of total branches. In addition, total deposits in this assessment area represent 0.2 percent of the bank s total deposits. In light of these factors, the bank s lending activity in the nonmsa Kansas assessment area reflects good responsiveness to assessment area credit needs. 101

106 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 geographic distribution of HMDA loans in comparison to owner-occupied housing demographics for the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 0.0% 79.3% 20.7% 0.0% 100% Refinance % 0.0% 91.2% 8.8% 0.0% 100% Home Improvement 0.0% 11.1% 88.9% 0.0% 0.0% 100% Multifamily Loans 0.0% 0.0% 0.0% 0.0% 0.0% 0% LOANS % 1.4% 86.1% 12.5% 0.0% 100% Owner-Occupied Housing 0.9% 7.0% 85.1% 7.0% 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. Bank lending in moderate-income census tracts (1.4 percent) is low compared with the percentage of owner-occupied housing in nonmsa Kansas. However, the majority of census tracts in this assessment area are designated as middle-income (81.8 percent), and the vast majority of households (84.1 percent) live in middle-income census tracts In addition, the assessment area is largely rural, and there are vast distances from bank branches to moderateincome census tracts. Furthermore, the recent addition of the branch in Pittsburg, located in a moderate-income census tract, did not impact this analysis but will carry significance in future review periods. Given this performance context, bank penetration throughout the assessment area is adequate. 102

107 Next, the bank s geographic distribution of small business loans was reviewed, which is displayed in the following table in comparison to the location of businesses throughout the bank s assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Business Loans Business Institutions Geography Income Level Low- Moderate- Middle- Upper- Unknown % 0.0% 97.8% 0.0% 0.0% 100% 1.3% 12.0% 80.4% 6.3% 0.0% 100% The overall analysis of small business loans reflects adequate penetration throughout the assessment area. The bank made 2.2 percent of small business loans in low-income census tracts, which is excellent given the previously mentioned rural nature of the assessment area and distance from the established bank branch to the LMI census tracts. No small business loans were originated in moderate-income census tracts, reflecting very poor penetration, especially considering that the community contacts noted needs for flexible lending options for small businesses and start-ups. Finally, the geographic distribution of small farm loans is displayed in the following table in comparison to the location of farms throughout the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0.0% 0.0% 100% 0.0% 0.0% 100% Agricultural Institutions 0.1% 2.8% 94.5% 2.5% 0.0% 100% The bank originated no small farm loans in either low- or moderate-income census tracts within the nonmsa Kansas assessment area. Despite the relatively low number of farms in LMI census tracts in the assessment area, the geographic distribution of loans reflects poor penetration throughout the assessment area. 103

108 Loan Distribution by Borrower s Profile Overall, the bank s loan distribution by borrower s profile is adequate, 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 in comparison to family population demographics. Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 34.5% 17.2% 34.5% 0.0% 100% Refinance % 14.7% 35.3% 41.2% 0.0% 100% Home Improvement 11.1% 11.1% 22.2% 22.2% 33.3% 100% Multifamily % 0.0% 0.0% 0.0% 0.0% 0% LOANS 11.1% 22.2% 26.4% 36.1% 4.2% 100% Family Population 20.5% 20.0% 24.2% 35.3% 0.0% 100% The analysis of the bank s HMDA loans within the nonmsa Kansas assessment area reveals adequate overall lending levels to LMI borrowers. While the percentages of these loans to lowincome borrowers (11.1 percent) is poor compared to the percentage of low-income families in the assessment area (20.5 percent), the level of lending to moderate-income borrowers (22.2 percent) is excellent compared to the number of moderate-income families that reside within the assessment area (20.0 percent). In addition, the bank s percentage of home purchase loans to moderate-income borrowers (34.5 percent) is well above the percentage of moderate-income families within the assessment area (20.0 percent). This performance mirrors community contact statements indicating the need for affordable housing. 104

109 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >100<$250 >$250<$1, % 6.6% 3.3% 71.4% % 6.6% 11.0% 28.6% % 13.2% 14.3% 100% As the data indicates, the bank s overall lending to small businesses is poor. The bank originated only 71.4 percent of its loans to small businesses, which is less than the Dun & Bradstreet estimate of small businesses in the assessment area (89.1 percent). Also, this level of performance is significantly lower than 2011 lending to small businesses (93.3 percent). In addition, the fact that only 61.5 percent of loans to small businesses were in amounts of $100,000 or less (as opposed to 83.1 percent in 2011) further illustrates the bank s poor 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 2.4% 0.0% 100% % 0.0% 0.0% 0.0% % 2.4% 0.0% 100% 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 99.7 percent of farms had revenues of $1 million or less. Additionally, the largest concentration of these loans 105

110 (97.6 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 The bank makes an adequate level of community development loans throughout the assessment area. One new loan totaling $3.8 million was originated to finance the construction of a 36-unit multifamily apartment complex targeting elderly LMI households located in a moderate-income tract. State and federal tax credits are involved in the transaction. 106

111 INVESTMENT TEST Overall, s performance under the Investment Test is rated needs to improve for the state of Kansas. Although there are fewer community development opportunities in this rural assessment area than larger metropolitan areas, the bank made a poor level of community development investments and grants, exhibiting poor responsiveness to credit and community development needs in the assessment area. During this review period, the bank had $54,188 in qualified investments attributable to this assessment area; these investments are in MBS that finance affordable housing and were made prior to the 2011 examination but are still outstanding. Additionally, made no qualified community development grants within the assessment area, as was the case at the bank s two previous CRA evaluations. 107

112 SERVICE TEST s Service Test rating in the state of 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 improved 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 third consecutive CRA evaluation, the bank provides few, if any community development services in the nonmsa Kansas assessment area. Accessibility of Delivery Systems The bank operates two branch offices in this assessment area, one branch in a moderate-income census tract, and one branch in a middle-income census tract. As mentioned previously, the strong majority of census tracts in this assessment area are designated as middle-income (81.8 percent), and the vast majority of households are within middle-income census tracts (84.1 percent). Therefore, s delivery systems are reasonably 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 in the nonmsa Kansas assessment area has improved the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals. The bank acquired one branch in a moderate-income census tract during this review period. Reasonableness of Business Hours and Services in Meeting Assessment Area Needs While the bank only operates two branches in the nonmsa Kansas assessment area, its business hours and 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 did not provide any community development services in the nonmsa Kansas assessment area during the review period, as was the case for the bank s two previous CRA evaluations. 108

113 MISSOURI 18 CRA RATING FOR MISSOURI: The Lending Test is rated: The Investment Test is rated: The Service Test is rated: SATISFACTORY High Satisfactory High Satisfactory Low Satisfactory Factors supporting the institution s CRA rating for Missouri include the following: s lending levels reflect good 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. The overall distribution of loans by borrower s income/revenue profile reflects good penetration among borrowers of different income levels and businesses/farms of different sizes. is a leader in making community development loans in Missouri. makes a significant level of qualified community development investments and grants throughout the Missouri assessment areas. Service delivery systems are accessible to geographies and individuals of different income levels in Missouri assessment areas; furthermore, changes in branch locations have not adversely affected the accessibility of delivery systems, particularly to LMI geographies and/or LMI individuals. personnel provides few, if any, community development services in Missouri assessment areas. 18 The 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. 109

114 SCOPE OF EXAMINATION has three separate assessment areas within the state of 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 areas was reviewed using full-scope CRA examination procedures, which formed the primary basis for the bank s overall ratings in the state of Missouri. To augment the evaluation of the Missouri full-scope review assessment area, three community contact interviews were used to determine specific community credit needs, community development opportunities, and local market conditions. All three interviews took place with representatives from community organizations that focus on the Joplin area. One interview was with an educator, one was with a housing specialist, and one was with an economic development specialist. DESCRIPTION OF INSTITUTION S OPERATIONS IN MISSOURI The bank operates 32 branches (11.9 percent of total branches) throughout the three CRA assessment areas in the state of Missouri. The following table gives additional detail regarding the bank s operations within Missouri. Assessment Area Offices # Offices % Deposits 19 CRA Review Deposits % ($000s) Procedures Joplin MSA % $343, % Full Scope Springfield MSA % $39, % Limited Scope NonMSA Missouri % $57, % Limited Scope STATE % $439, % N/A Deposits attributable to 32 Missouri branches total $439.8 million, which equates to 3.8 percent of total bank deposits. 19 Source: FDIC Deposit Market Share Report as of June 30,

115 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN MISSOURI LENDING TEST s Lending Test performance in the state of Missouri is rated high satisfactory. Lending levels reflect good responsiveness to the credit needs in Missouri assessment areas. The bank s overall geographic distribution of loans reflects adequate 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, is a leader in making community development loans within Missouri assessment areas. Lending Activity The bank s lending levels in the state of Missouri 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 Loan Type # % $(000s) % Home Improvement % $1, % Home Purchase % $88, % Multifamily Housing 6 0.2% $5, % Refinancing 1, % $131, % Total HMDA 1, % $227, % Small Business % $64, % Small Farm % $10, % LOANS 2, % $302, % The bank s lending activity in the state of Missouri represents 7.7 percent of total HMDA and CRA loans made within the bank s combined assessment areas. This level of HMDA and CRA activity is slightly lower than the bank s branch network in this assessment area, representing 11.9 percent of total bank branches. In addition, the percentage of loans originated in this assessment area is well above the area s proportion of total deposit holdings of 3.8 percent. In light of these factors, the bank s lending activity in the combined assessment areas in the state of Missouri reflects good responsiveness to assessment area credit needs. 111

116 Geographic and Borrower Distribution The following tables show s good overall performance under the geographic distribution of loans within the state of Missouri. Assessment Area (full-scope review) Joplin MSA Geographic Distribution of Loans Good Assessment Area (limited-scope review) Springfield MSA Missouri nonmsa Geographic Distribution of Loans Below Below s overall loan distribution by borrower s profile reflects good performance, based on activity in three Missouri assessment areas, as is detailed in the following tables. Assessment Area (full-scope review) Joplin MSA Loan Distribution by Borrower s Profile Good Assessment Area (limited-scope review) Springfield MSA Missouri nonmsa Loan Distribution by Borrower s Profile Consistent Consistent 112

117 Community Development Lending Activities Overall, is a leader in making community development loans within the state of Missouri. The following table displays community development lending performance in the bank s three Missouri assessment areas. Assessment Area (full-scope review) Joplin MSA Community Development Lending Leader Assessment Area (limited-scope review) Springfield MSA Missouri nonmsa Community Development Lending Below Below is a leader in making community development loans in the state of Missouri. In the three assessment areas within the state, the bank made 17 community development loans totaling $37.0 million. 113

118 INVESTMENT TEST For the state of Missouri, s overall performance under the Investment Test is rated high satisfactory. The following tables display investment and grant activity performance by Missouri assessment areas. Assessment Area (full-scope review) Joplin MSA Investment and Grant Activity Significant Assessment Area (limited-scope review) Springfield MSA Missouri nonmsa Investment and Grant Activity Consistent Consistent Community development investments in Missouri assessment areas totaled $3.9 million, of which $2.3 million was made in MBS (nearly $1.0 million in new investments and $1.3 million in previous review period investments, still outstanding), and $1.6 million was invested in qualifying municipal bonds. The bank also made community development grants totaling $37,366 in Missouri assessment areas. 114

119 SERVICE TEST Overall, s performance in Missouri is rated low 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. Conversely, provides few, if any, 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) Joplin MSA Accessibility of Delivery Systems Accessible Assessment Area (limited-scope review) Springfield MSA Missouri nonmsa Accessibility of Delivery Systems Consistent Consistent Changes in Branch Locations As displayed in the following tables, 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) Joplin MSA Changes in Branch Locations Not Adversely Affected Assessment Area (limited-scope review) Springfield MSA Missouri nonmsa Changes in Branch Locations Below Consistent 115

120 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 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. Assessment Area (full-scope review) Joplin MSA Assessment Area (limited-scope review) Springfield MSA Missouri nonmsa Reasonableness of Business Hours and Services Do Not Vary/Inconvenience Reasonableness of Business Hours and Services Consistent Consistent Community Development Services provides few, if any, 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) Joplin MSA Community Development Services Few, If Any Assessment Area (limited-scope review) Springfield MSA Missouri nonmsa Community Development Services Consistent Consistent provided one community development service in the Missouri nonmsa assessment area. The bank did not provide any community development services in the Springfield MSA assessment area, nor did it provide community development services in the Joplin MSA assessment area. 116

121 JOPLIN, MISSOURI MSA (Full-Scope Review) DESCRIPTION OF INSTITUTION S OPERATIONS IN JOPLIN, MISSOURI MSA Bank Structure operates 12 of its 268 branches (4.5 percent) within the Joplin, Missouri MSA (Joplin MSA) assessment area. Of the 12 branches, none are located in low-income census tracts, two are in moderate-income census tracts, ten are in middle-income census tracts, and none are in upper-income census tracts. During this review period, the bank acquired two offices, one in a moderate-income census tract and one in a middle-income census tract. During the same period, the bank closed the newly acquired branch located in a middle-income census tract. 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, with a total of 16 FDIC-insured institutions operating within the MSA, based on the FDIC Deposit Market Share Report as of June 30, Of the 16 financial institutions with an office in this assessment area, ranked third with a deposit market share of 13.0 percent. Based on this information, deposits held at branches throughout the Joplin MSA represent 3.0 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 census data, the assessment area has a total population of 175,518. A significant portion of the population is concentrated in Jasper County, Missouri (117,404). The total MSA population in 2000 was estimated at 157,322. This marks a total MSA population increase of approximately 11.6 percent since the 2000 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) are flexible residential real estate loan programs, including new construction of residential properties, and small business loans. 117

122 Income and Wealth Demographics As of the 2010 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, HUD estimates the 2012 median family income to be $48,200. 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 Census Tracts % 14.7% 76.5% 8.8% 0.0% 100% Family 0 5,057 37,084 3, ,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 Joplin MSA overall. Family Population by Income Level Dataset Low- Moderate- Middle- Upper- Assessment Area 50,941 43,238 49,328 98, , % 17.9% 20.4% 40.6% 100% Missouri 320, , , ,047 1,546, % 18.1% 21.7% 39.4% 100% Housing Demographics The Joplin MSA assessment area has a housing affordability ratio of 40.5 percent as of the 2010 census, which indicates more affordability than the state of Missouri overall (33.6 percent). Housing affordability was comparable in the counties in the assessment area. The median housing value in the assessment area was $96,000, 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 $597 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. 118

123 Industry and Employment Demographics According to 2011 County Business Patterns data, 4,196 business entities are operating within the Joplin MSA. The largest industries (by number of employees) in the Joplin MSA are health care and social assistance, manufacturing, and retail trade. The recent annual average unemployment rates for the Joplin MSA (7.8 percent in 2011 and 6.1 percent in 2012) were lower than the unemployment rates for the state of Missouri (8.6 percent in 2011 and 7.1 percent in 2012). Community Contact Information Community contacts noted that current economic conditions in the Joplin area are fair to good. The stability of the local economy is due largely to the rebuilding of the community after the May 2011 tornado. The larger employers have remained in business, and the unemployment tied to the tornado devastation was short-term; however, smaller businesses have yet to reopen. While economic recovery has been steady in part because the area is economically diverse, the area lacks higher paying jobs to attract more educated employees. Homebuilders are somewhat backlogged as they continue to rebuild the many homes destroyed in the tornado. Community contacts also stated that local banks appear to be serving the credit needs of the community, although there is room for improvement. Besides housing-related credit and small business loans, small consumer loans for personal expenses are a credit need in the area. Although banks are limited as to what they can do, more flexibility in home purchase and improvement loans and small business loans would benefit the community. In addition, many low-income people cannot meet the minimum deposit requirements for deposit accounts and remain unbanked. 119

124 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN JOPLIN, MISSOURI MSA LENDING TEST 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, 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 2012 Loan Type # % $(000s) % Home Improvement % $ % Home Purchase % $28, % Multifamily Housing 4 0.4% $2, % Refinancing % $48, % Total HMDA % $79, % Small Business % $35, % Small Farm % $6, % LOANS 1, % $121, % The bank s lending activity in the Joplin assessment area represents 3.2 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 4.5 percent of total bank branches. In addition, the percentage of loans originated in this assessment area is slightly above the area s proportion of total deposit holdings of 3.0 percent. In light of these factors, the bank s lending activity in the Joplin, Missouri, assessment area reflects good responsiveness to assessment area credit needs. 120

125 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 of HMDA loans compared to owner-occupied housing demographics for the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 11.2% 83.3% 5.6% 0.0% 100% Refinance % 8.9% 83.4% 7.7% 0.0% 100% Home Improvement 0.0% 2.3% 86.4% 11.4% 0.0% 100% Multifamily % 25.0% 75.0% 0.0% 0.0% 100% LOANS 0.0% 9.3% 83.5% 7.2% 0.0% 100% Owner- Occupied Housing 0.0% 10.4% 82.1% 7.5% 0.0% 100% As displayed in the preceding table, bank lending in moderate-income census tracts (9.3 percent) is good compared with the percentage of owner-occupied housing in the Joplin MSA (10.4 percent). In addition, the bank s penetration of home purchase loans in moderate-income census tracts is excellent (11.2 percent). Accordingly, the bank s overall level of lending in LMI geographies is good. 121

126 Next, the bank s geographic distribution of small business loans was reviewed, which is displayed in the following table in comparison to the location of businesses throughout the bank s assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Business Loans Business Institutions Geography Income Level Low- Moderate- Middle- Upper- Unknown % 12.8% 78.7% 8.5% 0.0% 100% 0.0% 14.7% 77.9% 7.4% 0.0% 100% The analysis of small business loans reflects adequate penetration throughout the assessment area. The bank s lending levels in the moderate-income census tract category was slightly lower than the percentage of businesses in moderate-income census tracts. The bank s geographic distribution of small farm loans was reviewed, which is displayed in the following table in comparison to the location of farms throughout the bank s assessment area. Distribution of Bank Loans Inside Assessment Area by Income Level of Geography Loan Type Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0.0% 0.0% 97.3% 2.7% 0.0% 100% Agricultural Institutions 0.0% 1.2% 96.3% 2.5% 0.0% 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 moderateincome census tracts (1.2 percent). The strong majority of the bank s small farms loans (97.3 percent) were made in middle-income census tracts, which is in line with the percentage of farms located in middle-income census tracts (96.3 percent). Overall, the bank s lending levels in moderate-income census tracts is considered adequate. 122

127 Loan Distribution by Borrower s Profile Overall, the bank s loan distribution by borrower s profile is good, 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 in comparison to family population data. Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 22.7% 22.7% 44.2% 0.4% 100% Refinance % 16.8% 21.8% 55.0% 1.4% 100% Home Improvement 6.8% 18.2% 22.7% 50.0% 2.3% 100% Multifamily Loans 0.0% 0.0% 0.0% 0.0% 100% 100% HMDA % 18.7% 22.1% 50.9% 1.7% 100% Family Population 20.3% 19.0% 19.9% 40.8% 0.0% 100% Based on the above table, the bank s level of lending to low-income borrowers (6.7 percent) is significantly lower than the low-income family population (20.3 percent). Lending to moderateincome borrowers (18.7 percent) is similar to the percentage of moderate-income borrowers within the assessment area (19.0 percent). Furthermore, upon review of 2011 data, lending to low-income borrowers (7.4 percent) was considered good as it was above aggregate (6.0 percent), and moderate income borrowers had excellent penetration (19.9 percent) compared to aggregate (15.8 percent). Overall, the bank s level of HMDA lending to LMI borrowers is good. 123

128 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 10.2% 9.4% 73.2% % 4.7% 10.6% 26.8% % 14.9% 20.0% 100% The bank originated 73.2 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 (91.2 percent). In addition, small business lending declined from 2011 (86.1 percent). Therefore, the bank s level of lending to small businesses is poor. 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 20.0% 5.3% 93.3% % 1.3% 1.3% 6.7% % 21.3% 6.7% 100% During the review period, 93.3 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 99.6 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 adequate. 124

129 Community Development Lending Activities is a leader in making community development loans in the Joplin MSA. During this review period, the bank originated 11 community development loans totaling $23.2 million. Of these loans, six loans (totaling $8.0 million) were originated to assist in the revitalization and stabilization of the Joplin area in response to the destruction by the tornado on May 22, 2011, and five loans (totaling $15.2 million) were originated to finance the construction or repair of affordable housing to LMI individuals within the assessment area. In addition, a letter of credit for $967,050 was issued to rebuild 38 homes that had been destroyed by the tornado. 125

130 INVESTMENT TEST has a significant level of community development investments and exhibits good responsiveness to credit and community development needs. As of the review period, the bank held investments in this assessment area totaling $865,644 ($643,036 of which is invested in MBS purchased in a previous review period, still outstanding) and grants totaling $31,

131 SERVICE TEST s service delivery systems are accessible to the Joplin 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. Conversely, the bank provided few, if any, community development services in the Joplin assessment area. Accessibility of Delivery Systems 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, as compared to key assessment area demographics: Branches Dataset Branch Distribution by Geography Income Level Geography Income Level Low- Moderate- Middle- Upper- Unknown % 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, s branches in moderate-income census tracts represent 16.7 percent of all branches in the Joplin assessment area. Considering that only 13.8 percent of the household population reside 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 accessible to the geographies and individuals of different income levels in the assessment area. Changes in Branch Locations As mentioned previously, the bank acquired two offices, one in a moderate-income census tract and one in a middle-income census tract. During the same period, the bank closed the newly acquired branch located in a middle-income census tract. 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 assessment area. Most branches have Saturday operating hours and offer extended hours of operations in lobby and drive-thru facilities at some point during the week. Most drive- 127

132 thru facilities remain open until 7:00 p.m., Monday through Friday, and are open until at least 12:00 p.m. on Saturdays. 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 did not provide any community development services within the Joplin MSA assessment area during the review period. 128

133 SPRINGFIELD, MISSOURI MSA (Limited-Scope Review) DESCRIPTION OF INSTITUTION S OPERATIONS IN 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. operates five branch offices in this assessment area. During this review period, the bank closed one branch located in a moderate-income census tract and opened two branches in a middleincome census tract. The tables below detail key demographics relating to this assessment area. Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown Census Tracts % 24.2% 54.9% 17.6% 0.0% 100% Family 1,015 18,602 70,171 23, ,220 Population 0.9% 16.4% 62.0% 20.7% 0.0% 100% Household 3,566 34, ,338 33, ,468 Population 2.1% 19.8% 58.8% 19.4% 0.0% 100% Business 156 5,371 13,005 4, ,096 Institutions 0.7% 23.3% 56.3% 19.8% 0.0% 100% Agricultural , ,325 Institutions 0.2% 9.1% 81.5% 9.2% 0.0% 100% Assessment Area Demographics by Population Income Level Demographic Type Population Income Classification Low- Moderate- Middle- Upper- Family Population 22,058 20,860 25,066 45, , % 18.4% 22.1% 40.0% 100% Household Population 39,946 29,005 33,447 70, , % 16.8% 19.4% 40.6% 100% 129

134 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN SPRINGFIELD, MISSOURI MSA LENDING TEST s overall lending performance in this assessment area is consistent with Lending Test performance for 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 contained in Appendix C. Lending Test Criteria Lending Activity Geographic Distribution of Loans Distribution of Loans by Borrower s Profile Community Development Lending Activities OVERALL Performance Exceeds Below Consistent Below CONSISTENT Three loans totaling $4.3 million were originated to projects that will provide housing to LMI tenants. 130

135 INVESTMENT TEST had new community development investments of $393,670 (MBS purchased in this review period), in addition to $508,614 MBS and $552,888 school municipal investments remaining from prior to this review period for a total of $1.5 million in community development investments. In addition, the bank provided grants for $6,063 attributable to this assessment area, which is consistent with the Investment Test performance for the Joplin MSA assessment area. 131

136 SERVICE TEST The bank s Service Test performance in this assessment area is consistent with Service Test performance for the Joplin MSA assessment area, as is detailed in the following table. Service Test Criteria Accessibility of Delivery Systems Changes in Branch Locations Reasonableness of Business Hours and Services Community Development Services OVERALL Performance Consistent Below Consistent Consistent CONSISTENT closed one branch located in a moderate-income census tract in the Springfield MSA since the previous evaluation. This performance is below the performance for the Joplin MSA. personnel did not provide any community development services in this assessment area, which is consistent with the Joplin MSA community development services. 132

137 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 the state of Missouri, including the counties of Barry, Barton, Cedar, Dade, Douglas, Howell, Laclede, Lawrence, Ozark, Stone, Taney, Vernon, and Wright. operates 15 branches in this assessment area. During this review period, the bank acquired nine branches in middle-income census tracts within this assessment area. The bank also acquired a branch that it closed during the same period. Since two of the acquired branches are located in counties not included in the bank s assessment area in the previous examination, the bank adjusted the Missouri nonmsa assessment area to include the counties of Howell, Laclede, and Wright. The tables below detail key demographics relating to this assessment area. Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown Census Tracts % 17.9% 80.6% 1.5% 0.0% 100% Family 0 13,009 78,367 1, ,403 Population 0.0% 14.1% 84.8% 1.1% 0.0% 100% Household 0 19, ,418 1, ,965 Population 0.0% 14.6% 84.4% 1.0% 0.0% 100% Business 0 1,971 15, ,539 Institutions 0.0% 11.2% 87.0% 1.8% 0.0% 100% Agricultural , ,955 Institutions 0.0% 14.2% 85.7% 0.1% 0.0% 100% Assessment Area Demographics by Population Income Level Demographic Type Population Income Classification Low- Moderate- Middle- Upper- Family Population 19,550 18,159 21,750 32,944 92, % 19.7% 23.5% 35.7% 100% Household Population 30,701 22,979 25,532 52, , % 17.4% 19.3% 40.0% 100% 133

138 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN NONMETROPOLITAN MISSOURI LENDING TEST Lending levels reflect consistent responsiveness to nonmsa Missouri assessment area credit needs. Lending Test performance for the nonmsa Missouri assessment area is compared to the state of Missouri overall, 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 Lending Activity Geographic Distribution of Loans Distribution of Loans by Borrower s Profile Community Development Lending Activities OVERALL Performance Consistent Below Consistent Below CONSISTENT makes an adequate level of community development loans within this assessment area. During this examination period, three community development loans were originated totaling $9.4 million. Two of the loans financed a project that provides affordable housing to LMI individuals within the assessment area, and one was originated to assist in the revitalization and stabilization of the Branson area in response to tornado destruction. 134

139 INVESTMENT TEST The bank made a significant level of qualified community development investments and grants in the nonmsa Missouri assessment area, exhibiting good responsiveness to the credit and community development needs in the assessment area. During this review period, the bank had $1,567,833 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 ($1.0 million), while the remaining qualified investments are in MBS that finance affordable housing (MBS of $372,038 were purchased during this review period, and $189,205 purchased in a previous review period are still outstanding). Additionally, made community development donations totaling $303 during this review period. Overall, this investment activity is consistent with the state of Missouri performance. 135

140 SERVICE TEST The bank s Service Test performance in this assessment area is consistent with overall Service Test performance for the state of Missouri, as is detailed in the following table. Service Test Criteria Accessibility of Delivery Systems Changes in Branch Locations Reasonableness of Business Hours and Services Community Development Services OVERALL Performance Consistent Consistent Consistent Consistent CONSISTENT acquired nine branches in middle-income census tracts within this assessment area. The bank also acquired a branch that it closed during the same period. This performance is consistent with the overall performance for the state of Missouri. provides few, if any, community development services across its Missouri assessment areas, which is consistent with the overall Missouri community development service performance. 136

141 OKLAHOMA 20 CRA RATING FOR OKLAHOMA: The Lending Test is rated: The Investment Test is rated: The Service Test is rated: SATISFACTORY Low Satisfactory High Satisfactory High Satisfactory Factors supporting the institution s CRA rating for Oklahoma include the following: s lending levels reflect adequate responsiveness to the credit needs of its Oklahoma assessment areas. The bank s overall geographic distribution of loans reflects good penetration throughout the Oklahoma assessment areas. The overall distribution of loans by borrower s income/revenue profile reflects adequate penetration among borrowers of different income levels and businesses/farms of different sizes. makes a low level of community development loans within the Oklahoma assessment areas. makes a significant level of qualified community development investments and grants throughout the Oklahoma assessment areas. 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, particularly to LMI geographies and/or LMI individuals. personnel provides a relatively high level of community development services throughout the Oklahoma assessment areas. 20 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. 137

142 SCOPE OF EXAMINATION 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 performance within 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 the state of 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, four community contact interviews were conducted (and seven 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. Another contact was performed with an individual specializing in economic development for the city of Tulsa. Lastly, two interviews took place in nonmsa Oklahoma, one with familiarity of affordable housing for the nonmetropolitan portions of the state and the other a representative of a statewide agricultural organization. DESCRIPTION OF INSTITUTION S OPERATIONS IN OKLAHOMA The bank operates 95 branches (35.4 percent of total branches) throughout the four CRA assessment areas in the state of Oklahoma. The following table gives additional detail regarding the bank s Oklahoma operations. Assessment Area Offices # Offices % Deposits ($000s) Deposits % CRA Review Procedures Oklahoma City MSA % $998, % Full Scope Tulsa MSA % $1,464, % Full Scope Lawton MSA 5 5.3% $180, % Limited Scope NonMSA Oklahoma % $1,263, % Full Scope STATE % $3,906, % N/A Deposits attributable to the 95 Oklahoma branches total $3.9 billion, which equates to 33.8 percent of total bank deposits. 138

143 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN OKLAHOMA LENDING TEST s Lending Test performance in the state of Oklahoma is rated low satisfactory. Lending levels reflect adequate responsiveness to Oklahoma assessment area credit needs. The geographic distribution of loans analyses reflects good penetration throughout the Oklahoma assessment areas. The loan distribution by borrower s income/revenue profile reflects adequate penetration among customers of different income levels and businesses/farms of different sizes. Lastly, makes a low level of community development loans in Oklahoma assessment areas. Lending Activity The bank s lending levels in the state of Oklahoma reflect adequate responsiveness to assessment area credit needs, based on the lending activity analyzed under the Lending Test. The 2012 lending activity is displayed by loan type in the following table. Summary of Lending Activity Loan Type # % $(000s) % Home Improvement 1, % $15, % Home Purchase 1, % $266, % Multifamily Housing % $21, % Refinancing 3, % $393, % Total HMDA 6, % $696, % Small Business 3, % $306, % Small Farm % $49, % LOANS 10, % $1,053, % The bank s lending activity in the state of Oklahoma represents 32.5 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 branch network in this assessment area, representing 35.4 percent of total bank branches. The percentage of loans originated in this assessment area is also slightly below the area s proportion of total deposit holdings of 33.8 percent. In light of these factors, the bank s lending activity in the combined assessment areas in the state of Oklahoma reflects adequate responsiveness to assessment area credit needs. 139

144 Geographic and Borrower Distribution As displayed in the following tables, s overall performance under the geographic distribution of loans criterion within the state of Oklahoma is good. Assessment Area (full-scope review) Oklahoma City MSA Tulsa MSA Oklahoma NonMSA Geographic Distribution of Loans Good Adequate Good Assessment Area (limited-scope review) Lawton MSA Geographic Distribution of Loans Below s overall loan distribution by borrower s profile reflects adequate performance, based on activity in the four Oklahoma assessment areas, as is detailed in the following tables. Assessment Area (full-scope review) Oklahoma City MSA Tulsa MSA Oklahoma NonMSA Loan Distribution by Borrower s Profile Adequate Adequate Good Assessment Area (limited-scope review) Lawton MSA Loan Distribution by Borrower s Profile Consistent 140

145 Community Development Lending Activities makes a low level of community development loans within the state of Oklahoma. The following table displays community development loan performance in the bank s four Oklahoma assessment areas. Assessment Area (full-scope review) Oklahoma City MSA Tulsa MSA Oklahoma NonMSA Community Development Lending Few, if Any Adequate Level Low Level Assessment Area (limited-scope review) Lawton MSA Community Development Lending Exceeds The bank made six community development loans totaling $28.0 million in Oklahoma assessment areas. 141

146 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 area. Assessment Area (full-scope review) Oklahoma City MSA Tulsa MSA Oklahoma NonMSA Investment and Grant Activity Significant Excellent Significant Assessment Area (limited-scope review) Lawton MSA Investment and Grant Activity Consistent Community development investments in Oklahoma assessment areas totaled $31.6 million and consisted of $19.0 million in community development-related tax credits purchased during this review period and $12.6 million in MBS (approximately $3.0 million in new securities and $9.6 million in previous review period investments, still outstanding). The bank also made community development grants totaling $495,786 in Oklahoma assessment areas. 142

147 SERVICE TEST Overall, s Service Test performance is rated high satisfactory in the state of 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 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, 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) Oklahoma City MSA Tulsa MSA Oklahoma NonMSA Accessibility of Delivery Systems Unreasonably Inaccessible Reasonably Accessible Readily Accessible Assessment Area (limited-scope review) Lawton MSA Accessibility of Delivery Systems Below 143

148 Changes in Branch Locations 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) Oklahoma City MSA Tulsa MSA Oklahoma NonMSA Changes in Branch Locations Not Adversely Affected Not Adversely Affected Improved Access Assessment Area (limited-scope review) Lawton MSA Changes in Branch Locations 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) Oklahoma City MSA Tulsa MSA Oklahoma NonMSA Assessment Area (limited-scope review) Lawton MSA Reasonableness of Business Hours and Services Do Not Vary in a Way that Inconveniences Tailored to Convenience and Needs Do Not Vary in a Way that Inconveniences Reasonableness of Business Hours and Services Consistent 144

149 Community Development Services provides a relatively high 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) Oklahoma City MSA Tulsa MSA Oklahoma NonMSA Community Development Services Few, if Any Leader Leader Assessment Area (limited-scope review) Lawton MSA Community Development Services Below 145

150 OKLAHOMA CITY, OKLAHOMA MSA (Full-Scope Review) DESCRIPTION OF INSTITUTION S OPERATIONS IN OKLAHOMA CITY, OKLAHOMA MSA Bank Structure 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 27 of its 268 branches (10.1 percent) in this assessment area. Of the 27 branches, 1 is in a low-income census tract, 3 are in moderate-income census tracts, 11 are in middle-income census tracts, 11 are located 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 did not open or close any branches in this assessment area. 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. However, each of these counties is in close proximity to other Arvest locations. Based on the bank s branch network and other service delivery systems, the bank is adequately positioned to deliver financial services to substantially all of the Oklahoma City MSA. The assessment area is a very competitive banking market, with 70 FDIC-insured institutions operating within the Oklahoma City MSA, based on the FDIC Deposit Market Share Report as of June 30, Of those 70 financial institutions, ranked seventh with a deposit market share of 3.9 percent. The deposits held at branches throughout the Oklahoma City MSA represent 8.6 percent of all deposits. General Demographics The seven-county Oklahoma City MSA is located in central Oklahoma. Based on 2010 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 and its surrounding suburbs. The remaining six counties in the assessment area have populations ranging from 34,273 to 255,755. Based on the previous census, the MSA population has increased 14.4 percent since 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 revitalization in several low-income areas throughout Oklahoma City, as well as enhanced servicing efforts in an attempt to minimize foreclosures. 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. 146

151 Income and Wealth Demographics Based on the 2010 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 2012, the HUD-estimated median family income for the Oklahoma City MSA was $61,500. 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 Census Tracts % 26.7% 38.3% 25.1% 1.1% 100% Family 14,308 67, ,385 93, ,578 Population 4.6% 21.8% 43.5% 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- Assessment Area 65,967 54,957 63, , , % 17.8% 20.5% 40.4% 100% Oklahoma 203, , , , , % 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 census, the Oklahoma City MSA affordability ratio (38.8 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 $121,300, which is significantly above the state of Oklahoma ($104,300). Furthermore, the median gross monthly rent in the Oklahoma City MSA ($681) is also above that of the state of Oklahoma ($633). 147

152 Industry and Employment Demographics According to 2011 County Business Patterns data, 33,111 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. Recent annual average unemployment rates for the Oklahoma City MSA were 5.7 percent in 2011 and 4.8 percent in 2012, which were generally lower than the averages for the state of Oklahoma (6.2 percent in 2011 and 5.2 percent in 2012). 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 The consensus of the community contacts was that the Oklahoma City area was affected very little by the financial crisis in 2009 and has been growing rapidly. This was primarily due to the lack of speculative building and the lack of large national real estate developers. Housing prices have remained consistent, and housing stock is in high demand. Unemployment has remained low, and there are many thriving small businesses in the area. Furthermore, one contact noted that loan demand is very good for residential, business, and consumer loans due to the overall state of the local economy and the number of well-paying jobs. According to the contacts, the needs of the community are generally being met, but it was mentioned that banks need to continue to build and maintain relationships with borrowers, particularly those who may be experiencing some kind of financial hardship. Proactive and enhanced servicing efforts could prevent any further defaults and foreclosures. Another area for improvement was noted by one community contact who stated that parts of Oklahoma City are in need of revitalization. Some area banks and community development groups have begun to discuss how to best pool resources to provide redevelopment. Despite these areas for improvement, community contacts stated that banks are doing a satisfactory job of working with the community and participating in community-based events. 148

153 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN OKLAHOMA CITY, OKLAHOMA MSA LENDING TEST Lending levels reflect poor 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 adequate penetration among customers of different income levels and businesses/ farms of different sizes. Lastly, makes few, if any community development loans in the Oklahoma City MSA assessment area. Lending Activity The following table displays the bank s 2012 lending volume in this assessment area by number and dollar volume. Summary of Lending Activity Loan Type # % $(000s) % Home Improvement % $2, % Home Purchase % $68, % Multifamily Housing 1 0.1% $ % Refinancing % $102, % Total HMDA 1, % $173, % Small Business % $58, % Small Farm % $2, % LOANS 1, % $234, % The bank s lending activity in the Oklahoma City MSA represents 6.2 percent of total HMDA and CRA loans made within the bank s combined assessment areas. This level of HMDA and CRA activity is well below that of the bank s branch network in this assessment area, representing 10.1 percent of total bank branches. Similarly, the percentage of loans originated in this assessment is also below the area s proportion of total deposit holdings of 8.6 percent. In light of these factors, the bank s lending activity in the Oklahoma City MSA reflects poor responsiveness to assessment area credit needs. 149

154 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 distribution of HMDA loans in comparison to owner-occupied housing data for the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 12.4% 48.2% 39.4% 0.0% 100% Refinance % 7.9% 43.3% 48.5% 0.1% 100% Home Improvement 2.5% 16.8% 51.5% 29.2% 0.0% 100% Multifamily % 0.0% 100.0% 0.0% 0.0% 100% ,379 LOANS 0.4% 10.7% 46.2% 42.6% 0.1% 100% Owner- Occupied Housing 3.2% 18.7% 45.0% 33.1% 0.0% 100% As seen in the table above, the bank s performance based on the geographic distribution was less than the percentage of owner-occupied housing for both low- and moderate-income geographies. The bank originated only six of its HMDA loans (0.4 percent) in low-income census tracts in this assessment area, which compares poorly to the percent of owner-occupied housing (3.2 percent). The bank s HMDA penetration in moderate-income geographies was 10.7 percent, which was less than the owner-occupied housing percentage of 18.7 percent. However, this performance is consistent with that of 2011, whereby the bank originated 10.5 percent of its HMDA loans in moderate-income census tracts. The bank s performance was consistent with 2011 HMDA aggregate data that shows that 10.6 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. 150

155 Secondly, the bank s geographic distribution of small business loans was reviewed, which is displayed in the following table in comparison to the location of businesses throughout the bank s assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Business Loans Business Institutions Geography Income Level Low- Moderate- Middle- Upper- Unknown % 20.2% 39.3% 32.2% 1.2% 100% 5.8% 20.7% 39.8% 32.8% 1.0% 100% The bank s performance based on the geographic distribution of small business loans is good. As noted in the table above, 7.1 percent of the bank s small business loans were made in low-income census tracts, which is excellent compared to the estimated percentage of businesses located in low-income census tracts, 5.8 percent. Additionally, the bank s performance in moderate-income tracts is good. The bank s lending percentage in moderate-income tracts, 20.2 percent, is just slightly below the estimated percentage of businesses in moderate-income census tracts, 20.7 percent. Therefore, the bank s overall geographic distribution of small business loans is good. Finally, the geographic distribution of small farm loans is displayed in the following table in comparison to the location of farms throughout the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Farm Loans 5.9% 32.4% 55.9% 5.9% 0.0% 100% Agricultural Institutions 1.1% 12.0% 57.8% 29.0% 0.1% 100% As displayed in the preceding table, the bank had a relatively low level of small farm lending in this assessment area. However, based on this limited loan volume, the geographic distribution of small farm loans is excellent. The bank originated 5.9 percent of its small farm loans in lowincome census tracts, which is excellent compared to Dun & Bradstreet s estimated percentage of agricultural institutions in low-income geographies, 1.1 percent. Performance in moderateincome census tracts is also excellent, as the bank s percentage of small farm loans (32.4 percent) significantly exceeds the percentage of agricultural institutions (12.0 percent). 151

156 Loan Distribution by Borrower s Profile Overall, the bank s loan distribution by borrower s profile is adequate, based on performance from all three loan categories reviewed. The following table shows the distribution of HMDAreported loans by borrower income level in comparison to family population data. Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 25.5% 21.8% 43.5% 0.4% 100% Refinance % 14.8% 19.0% 60.5% 0.7% 100% Home Improvement 7.9% 15.3% 23.3% 50.5% 3.0% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% ,379 LOANS 6.7% 18.5% 20.6% 53.2% 1.0% 100% Family Population 21.3% 17.8% 20.6% 40.4% 0.0% 100% The bank s level of lending to LMI borrowers within the assessment area is adequate. Based on the above table, the bank s level of lending to low-income borrowers (6.7 percent) is lower than the low-income family population (21.3 percent). While this borrowing level is below that of 2011 (8.5 percent), 2011 HMDA aggregate lending data show that lenders originated 7.3 percent of HMDA loans to low-income borrowers. The bank s performance to moderate-income borrowers reflects that the bank originated 18.5 percent of its HMDA loans in this category, which is good compared to the percent of families in the assessment area (17.8 percent). Overall, the bank s HMDA lending to LMI borrowers is adequate. 152

157 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 6.6% 5.4% 77.2% % 4.8% 5.0% 22.8% % 11.4% 10.4% 100% The bank s level of lending to small businesses is adequate. The bank originated 77.2 percent of its business loans to those 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, 90.2 percent of businesses reporting for 2012 had revenues of $1 million or less. 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 11.8% 5.9% 91.2% % 0.0% 0.0% 8.8% % 11.8% 5.9% 100% 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, the distribution of small farm loans by borrower s profile is adequate, as 91.2 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 153

158 make credit available to small farms in the assessment area. According to Dun & Bradstreet estimates, 98.7 percent of farms in the assessment area reported revenues of $1 million or less. Community Development Lending Activities During the review period, made no qualifying community development loans in the Oklahoma City MSA. 154

159 INVESTMENT TEST makes a significant level of qualified community development investments and grants within the Oklahoma City assessment area, exhibiting 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 $4.4 million attributable to this assessment area. All of these community development investments are in MBS that finance affordable housing (MBS of $921,432 were purchased during this review period, while the remaining $3.4 million were purchased in a previous review period and are still outstanding). Additionally, made 95 grants totaling $163,651 throughout the assessment area. Among these numerous grants were significant donations to schools serving a majority of students from LMI families, affordable housing organizations, and community service organizations that assist LMI individuals. 155

160 SERVICE TEST 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 few, if any community development services in the Oklahoma City MSA assessment area. Accessibility of Delivery Systems operates 27 branch facilities within the Oklahoma City MSA. The following table illustrates the distribution of these facilities by income level of the geography, as compared to key assessment area demographics. Branches Dataset Branch Distribution by Geography Income Level Geography Income Level Low- Moderate- Middle- Upper- Unknown % 11.1% 40.7% 40.7% 3.7% 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 just one branch (3.7 percent) in a low-income census tract and three branches (11.1 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 moderateincome, 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. 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 did not open or close any branches during this review period. 156

161 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-thru facilities at some point during the week. Most drive-thru facilities remain open until 8:00 p.m., Monday through Friday, and are open until 1:00 p.m. on Saturdays. All branches offer the same standard products, including lowcost 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 During the review period, provided no qualifying community development services in the Oklahoma City MSA. 157

162 TULSA, OKLAHOMA MSA (Full-Scope Review) DESCRIPTION OF INSTITUTION S OPERATIONS IN TULSA, OKLAHOMA MSA Bank Structure has designated the entire Tulsa, Oklahoma MSA (Tulsa MSA) as an assessment area, within which the bank operates 29 of its 268 branches (10.8 percent). Of the 29 branches, 1 is in a low-income census tract, 7 are in moderate-income census tracts, 10 are in middle-income census tracts, and 11 are located in upper-income census tracts. During the review period, the bank closed two branches: one in a moderate-income census tract and one in a middle-income census tract. Additionally, Arvest opened one branch in a middle-income census tract. The vast majority of the branches in this assessment area are in the city of Tulsa or its surrounding suburbs. While does not have a branch presence in three of the counties in this assessment area, these areas are more rural in nature 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, with a total of 63 FDIC-insured institutions operating within the Tulsa MSA, based on the FDIC Deposit Market Share Report as of June 30, Of those 63 financial institutions, ranked fourth with a deposit market share of 6.8 percent. The deposits held at branches throughout the Tulsa MSA represent 12.7 percent of all 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 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. Based on data from the previous census, the population in the Tulsa MSA has grown 9.1 percent since 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 redevelopment in some of Tulsa s urban areas, 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. 158

163 Income and Wealth Demographics Based on the 2010 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 2012, the HUD-estimated median family income for the Tulsa MSA was $60,400. 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 Census Tracts % 28.3% 36.4% 27.9% 0.0% 100% Family 12,504 56,490 94,366 78, ,646 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- Assessment Area 50,941 43,238 49,328 98, , % 17.9% 20.4% 40.6% 100% Oklahoma 203, , , , , % 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 census, the Tulsa MSA assessment area housing affordability ratio (38.1 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 ($121,900) is significantly higher than that of the state of Oklahoma ($104,300). The median gross monthly rent in the Tulsa MSA is also higher ($677) 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. 159

164 Industry and Employment Demographics According to 2011 County Business Patterns data, 23,852 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. The recent annual average unemployment rates for the Tulsa MSA (6.9 percent in 2011 and 5.6 percent in 2012) are higher than the average unemployment rates for the state of Oklahoma (6.2 percent in 2011 and 5.2 percent in 2012). Both the assessment area and the state of Oklahoma have experienced a decrease in unemployment over the 2-year period. Community Contact Information Community contact information reveals that portions of the Tulsa MSA continue to struggle while others weathered the economic downtown well. A community contact from one of Tulsa s suburban areas stated that unemployment is down and there is an adequate supply of housing, for varying income levels. Contacts familiar with Tulsa s urban core stated, however, that some areas still lack sufficient amenities, such as grocery stores and healthcare facilities. Another contact noted that with people working fewer hours or being laid off altogether, many are living paycheckto-paycheck and cannot manage personal debts. Contacts agreed that financial institution involvement is pivotal in creating a stronger economy. The area has experienced some redevelopment; specifically, areas in and around downtown that were once populated with industrial and manufacturing are now being developed into retail, social, and sport facilities. One contact mentioned that the local financial institutions have played a major role in these redevelopment efforts. While the community contacts acknowledged that some redevelopment projects are too speculative and risky for some banks to get involved with, the area remains in need of financial literacy and affordable housing for working families. Additionally, one contact noted the need for banks to close the gap between personal financing and lending when funding small businesses. 160

165 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN TULSA, OKLAHOMA MSA LENDING TEST Lending levels reflect good responsiveness to 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 an adequate level of community development loans in the Tulsa MSA assessment area. Lending Activity The following table displays the bank s 2012 lending volume in this assessment area by number and dollar volume. Summary of Lending Activity Loan Type # % $(000s) % Home Improvement % $7, % Home Purchase % $111, % Multifamily Housing 8 0.2% $14, % Refinancing 1, % $157, % Total HMDA 2, % $290, % Small Business 1, % $120, % Small Farm % $6, % LOANS 3, % $417, % The bank s lending activity in the Tulsa MSA represents 11.4 percent of total HMDA and CRA loans made within the bank s combined assessment areas. This level of HMDA and CRA activity is above that of the bank s branch network in this assessment area, representing 10.8 percent of total bank branches. However, the percentage of loans originated in this assessment is below the assessment area s proportion of total deposit holdings of 12.7 percent. In light of these factors, the bank s lending activity in the Tulsa MSA reflects good responsiveness to assessment area credit needs. 161

166 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 penetration throughout this assessment area, particularly among the 97 LMI census tracts. The following table displays the geographic distribution of HMDA loans in comparison to owner-occupied housing demographics for the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 13.6% 29.3% 56.4% 0.0% 100% Refinance , % 12.0% 33.9% 53.2% 0.0% 100% Home Improvement 1.8% 21.0% 39.6% 37.6% 0.0% 100% Multifamily % 37.5% 12.5% 25.0% 0.0% 100% , ,459 LOANS 1.1% 14.6% 33.7% 50.6% 0.0% 100% Owner- Occupied Housing 3.4% 20.9% 40.8% 34.9% 0.0% 100% While overall lending levels to borrowers in LMI census tracts were lower than performance comparators, the bank s geographic distribution of HMDA loans still appears to be adequate. As displayed in the table above, the bank s level of lending in low-income census tracts (1.1 percent) is less than the percentage of owner-occupied housing units in low-income geographies (3.4 percent). Similarly, the bank s level of lending in moderate-income census tracts (14.6 percent) is less than the percentage of owner-occupied housing units in moderate-income geographies (20.9 percent). However, based on performance context garnered from community contacts, the LMI areas of Tulsa have struggled to maintain basic amenities for its residents, which indicates it is an economically depressed area. Therefore, considering this information, the bank s performance is adequate. 162

167 Next, the bank s geographic distribution of small business loans was reviewed, which is displayed in the following table in comparison to the distribution of assessment area businesses by geography income level. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Business Loans Business Institutions Geography Income Level Low- Moderate- Middle- Upper- Unknown , % 19.1% 29.2% 47.5% 0.0% 100% 5.4% 24.8% 35.4% 34.3% 0.0% 100% 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 (4.2 percent) is under the percentage of businesses within these geographies (5.4 percent). The bank s performance in moderate-income tracts is similar, as the bank s percentage of small business loans in moderateincome tracts (19.1 percent) is less than the percentage of businesses located in these geographies (24.8 percent). As mentioned previously in the HMDA geographic distribution section for this assessment area, LMI areas in Tulsa are economically depressed. Therefore, while the bank s performance is below the percentage of businesses located in LMI geographies, it is still within an adequate range given performance context. Finally, the geographic distribution of small farm loans is displayed in the following table, compared to the distribution of assessment area farms by geography income level. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0.0% 15.7% 54.3% 30.0% 0.0% 100% Agricultural Institutions 0.9% 18.5% 55.4% 25.2% 0.0% 100% The bank s geographic distribution of small farm loans is adequate. The level of opportunity to make small farm loans in low-income census tracts is very small, and 18.5 percent of assessment area farms are located in moderate-income census tracts. While the bank s level of lending in moderate-income geographies, 15.7 percent, is below the demographic figure, this level of lending is deemed adequate. 163

168 Loan Distribution by Borrower s Profile Overall, the bank s loan distribution by borrower s profile is adequate, 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 in comparison to family population demographics. Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 22.8% 19.7% 43.3% 0.5% 100% Refinance , % 17.5% 23.8% 48.6% 1.2% 100% Home Improvement 8.3% 17.5% 22.5% 49.0% 2.8% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% , ,459 LOANS 10.2% 19.0% 22.2% 46.9% 1.7% 100% Family Population 21.1% 17.9% 20.4% 40.6% 0.0% 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 (10.2 percent) is lower than the percentage of low-income families (21.1 percent); however, the bank s performance to low-income borrowers in 2011 (7.7 percent) is above that of the 2011 HMDA aggregate data (6.8 percent). Additionally, 2012 performance shows an increase from Considering these factors, the bank s performance in reaching low-income borrowers is adequate. The bank s HMDA lending percentage to moderate-income borrowers (19.0 percent) is above the percentage of moderateincome borrowers within the assessment area (17.9 percent), which is excellent, especially considering the percentage of home purchase loan originations (22.8 percent). Overall, the bank s lending to LMI borrowers within Tulsa is good. 164

169 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 7.9% 5.3% 71.4% % 4.9% 7.8% 28.6% , % 12.8% 13.1% 100% The bank s level of lending to small businesses is poor. The bank originated 71.4 percent of its small business loans to businesses with gross annual revenues of $1 million or less. According to Dun & Bradstreet estimates, however, 89.8 percent of businesses reporting for 2012 had revenues of $1 million or less. 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 8.6% 10.0% 90.0% % 0.0% 1.4% 10.0% % 8.6% 11.4% 100% s lending to small farms is adequate. The bank originated 90.0 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, 99.4 percent of farms in the assessment area reported revenues of $1 million or less. 165

170 Community Development Lending Activities makes an adequate level of community development loans in the Tulsa MSA. The bank originated or renewed three community development loans totaling $16.3 million during this review period. Two community development loans were made to organizations with the purpose of providing community services within the assessment area. One loan was originated to finance the purchase and renovation of a property that will provide affordable housing to LMI tenants within the assessment area. 166

171 INVESTMENT TEST makes an excellent level of qualified community development investments and grants within the Tulsa MSA. As of the evaluation date, the bank had a community development investment balance of $19.2 million attributable to this assessment area. Of this balance, $4.4 million is invested in MBS that finance affordable housing (MBS of $1.1 million were purchased during this review period, while $3.3 million were purchased in a previous review period, still outstanding). In addition, the bank has investments in projects associated with NMTCs that total $14.8 million. also made an adequate level of qualified community development grants within the Tulsa MSA. The bank made 87 community development grants totaling $177,880 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. Community Development Initiatives As noted above, the bank makes excellent use of NMTC investments to further community development in the Tulsa MSA. NMTCs provide equity capital to further commercial economic development activities in underserved geographies. Responsiveness to Credit and Community Development Needs exhibits excellent responsiveness to credit and community development needs in the Tulsa MSA assessment area. Community contacts noted that the major credit needs in the area are related to residential real estate and redevelopment of struggling communities. The bank made numerous donations to affordable housing agencies and invested in MBS that finance affordable housing for LMI homeowners. Additionally, NMTC investments further commercial economic development where it is needed most in the Tulsa MSA. 167

172 SERVICE TEST 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 is a leader in providing community development services in the Tulsa MSA assessment area. Accessibility of Delivery Systems operates 29 branch facilities within the Tulsa MSA. The following table illustrates the distribution of these facilities by income level of the geography, as compared to key assessment area demographics. Branches Dataset Branch Distribution by Geography Income Level Geography Income Level Low- Moderate- Middle- Upper- Unknown % 24.1% 34.5% 37.9% 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 seven branches in moderate-income census tracts (24.1 percent), which is only slightly under 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. Changes in Branch Locations During this review period, the bank closed one branch in a moderate-income census tract and one branch in a middle-income census tract; additionally, the bank opened one branch in a middleincome census tract. Although a branch was closed in a moderate-income geography, there are three additional facilities located less than three miles from the closed location. Therefore, the bank s record of opening and closing branches in the Tulsa MSA assessment area has generally not adversely affected the accessibility of its delivery systems, particularly to LMI geographies and/or to LMI individuals. 168

173 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-thru facilities at some point during the week. Most facilities remain open until 8:00 p.m., Monday through Friday, and are open until 1:00 p.m. on Saturdays. 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 convenience and needs of this assessment area, particularly LMI geographies and/or LMI individuals. Community Development Services is a leader in providing community development services within the Tulsa MSA, as 29 qualifying services were provided within the community. Numerous employees work with organizations that provides childcare and 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. 169

174 LAWTON, OKLAHOMA MSA (Limited-Scope Review) DESCRIPTION OF INSTITUTION S OPERATIONS IN LAWTON, OKLAHOMA MSA designated the entire Lawton, Oklahoma MSA (Lawton MSA) as an assessment area. The Lawton MSA is located in central Oklahoma and is comprised solely of Comanche County. The bank operates five branches in the Lawton MSA, and, during the review period, the bank did not open or close any facilities. Assessment Area Demographics by Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown Census Tracts % 28.1% 37.5% 21.9% 3.1% 100% Family 1,124 5,719 13,708 9, ,269 Population 3.7% 18.9% 45.3% 32.1% 0.0% 100% Household 2,268 8,867 19,749 12, ,757 Population 5.2% 20.3% 45.1% 29.4% 0.0% 100% Business 711 1,055 1,986 1, ,082 Institutions 14.0% 20.8% 39.1% 25.9% 0.3% 100% Agricultural Institutions 1.3% 3.5% 42.9% 52.0% 0.3% 100% Assessment Area Demographics by Income Level of Population Demographic Type Population Income Classification Low- Moderate- Middle- Upper- Family Population 6,667 5,335 6,373 11,894 30, % 17.6% 21.1% 39.3% 100% Household Population 10,439 7,084 8,078 18,156 43, % 16.2% 18.5% 41.5% 100% 170

175 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN LAWTON, OKLAHOMA MSA LENDING TEST s overall lending performance in this assessment area is consistent with Lending Test performance for the Oklahoma City MSA assessment area and the Tulsa MSA assessment area (full-scope MSA assessment areas), 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 Lending Activity Geographic Distribution of Loans Distribution of Loans by Borrower s Profile Community Development Lending Activities OVERALL Performance Consistent Below Consistent Exceeds CONSISTENT 171

176 INVESTMENT TEST had community development investments of $650,290 (MBS purchased during this review period as well as those purchased in a previous review period, still outstanding) and 60 grants for $50,305 attributable to this assessment area, which is consistent with overall Investment Test performance for the full-scope MSA assessment areas. 172

177 SERVICE TEST The bank s Service Test performance in this assessment area is below the bank s overall Service Test performance in the full-scope MSA assessment areas, as detailed in the following table. Service Test Criteria Accessibility of Delivery Systems Changes in Branch Locations Reasonableness of Business Hours and Services Community Development Services OVERALL Performance Below Consistent Consistent Below BELOW The Lawton MSA has only one branch location in an LMI census tract, which is below the percent of census tracts in the assessment area and the household population residing in those tracts. As a result, this performance is below that of the full-scope MSA assessment areas in Oklahoma. In addition, the bank provided only one community development service during the review period in the Lawton MSA, which is also below the performance level in the full-scope MSA assessment areas in Oklahoma. 173

178 NONMETROPOLITAN OKLAHOMA STATEWIDE AREA (Full-Scope Review) DESCRIPTION OF INSTITUTION S OPERATIONS IN NONMETROPOLITAN OKLAHOMA Bank Structure has one assessment area within nonmsa Oklahoma, where it operates 34 of its 268 branches (12.7 percent), 3 of which are drive-thru only facilities. Of the 34 branches, 1 is in a lowincome census tract, 11 are in moderate-income census tracts, 16 are in middle-income census tracts, and 6 are located in upper-income census tracts. During the review period, the bank acquired four branches, including two drive-thru only facilities, and closed no branches in this assessment area. The 34 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, with secondary accessibility in the extreme northwest and southeast portions of the assessment area. This assessment area covers a large portion of the state of Oklahoma, where 142 FDIC-insured institutions operate at least one office, based on the FDIC Deposit Market Share Report as of June 30, Of these 142 financial institutions, ranked third with a deposit market share of 6.5 percent. Based on this information, deposits held at branches throughout nonmsa Oklahoma represent 10.9 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 43 counties: Adair, Atoka, Blaine, Bryan, Caddo, Carter, Cherokee, Choctaw, Coal, Cotton, 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 census data, the assessment area had a total population of 1,160,017. 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). Based on previous census data, the population in the nonmsa Oklahoma assessment area has grown 4.3 percent since 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) relate to credit products and programs designed to help improve individuals 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 174

179 populated, and while there is significant need for community development involvement, oftentimes these rural areas lack community development resources from which to draw. Of the 202 middleincome census tracts in this assessment area, 89 were categorized as distressed due to poverty, population loss, or a combination of both. Additionally, 13 were categorized as both underserved and distressed in Income and Wealth Demographics Based on 2010 census data, the median family income for the assessment area was $46,959, which was less than the state of Oklahoma figure, $53,607, but more similar to the figure for nonmsa Oklahoma overall, $47,891. As of 2012, the HUD-estimated median family income for nonmsa Oklahoma was $49,500. The following table summarizes the distribution of the 302 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 Census Tracts % 17.5% 66.9% 12.9% 0.3% 100% Family 3,586 47, ,451 46, ,644 Population 1.2% 16.1% 67.0% 15.7% 0.0% 100% The following table displays the distribution of families by income level, as well as the distribution of families for the state of for Oklahoma overall. Family Population by Income Level Dataset Low- Moderate- Middle- Upper- Assessment Area 65,197 53,671 61, , , % 18.0% 20.7% 39.3% 100% Oklahoma 203, , , , , % 17.8% 20.5% 40.3% 100% 175

180 Housing Demographics While income levels in the nonmsa Oklahoma assessment area are slightly lower than those for state of Oklahoma overall, housing in the assessment appears to be relatively more affordable due to lower housing costs. The nonmsa Oklahoma assessment area has a housing affordability ratio of 45.5 percent as of the 2010 census, which indicates greater affordability relative to the state of Oklahoma figure, 41.2 percent, and similar affordability relative to the statewide nonmsa Oklahoma figure of 46.0 percent. The median housing value in the assessment area is $81,988, which is much lower than the state of Oklahoma at $104,300 and similar to the statewide nonmsa Oklahoma figure of $81,706. Median gross monthly rent of $553 in the assessment area is also lower than the state of Oklahoma ($663) and similar to the statewide nonmsa Oklahoma ($555). Industry and Employment Demographics According to 2011 County Business Patterns data, 23,599 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. Recent unemployment data reveal that the assessment area s unemployment rates were 6.2 percent in 2011 and 5.2 percent in 2012, which is similar to the state as a whole. Both the assessment area and the state of Oklahoma have experienced a generally decreasing trend in unemployment throughout 2011 and Community Contact Information Community contacts feel that the local economy of nonmsa Oklahoma is stable and growing steadily. Agricultural operations have been consistent, and according to the contacts, credit is available to farmers, if desired. As far as residential real estate goes, housing is favorable due to affordability, active homebuyers, and low interest rates. One contact believes that the ability for homeowners to obtain credit is adequate but is less than satisfactory for builders and developers. This has created strain, because many portions of rural Oklahoma are in need of new housing. While the community contacts feel that local financial institutions are meeting the credit needs of their communities and banks are competitive and active in the community, both acknowledge there is room for improvement. One contact mentioned that special programs designed to improve individuals credit has been and will continue to be important. The community contacts expressed no knowledge of discrimination of any kind. 176

181 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 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, the bank makes a low level of community development loans in the nonmsa Oklahoma assessment area. Lending Activity The following table displays the bank s 2012 lending volume in this assessment area by number and dollar volume. Summary of Lending Activity Loan Type # % $(000s) % Home Improvement % $4, % Home Purchase % $75, % Multifamily Housing 5 0.1% $4, % Refinancing 1, % $116, % Total HMDA 2, % $201, % Small Business 1, % $93, % Small Farm % $40, % LOANS 4, % $335, % The bank s lending activity in nonmsa Oklahoma represents 12.7 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 that of the bank s branch network in this assessment area, representing 12.7 percent of total bank branches. Additionally, the percentage of loans originated in this assessment is higher than the area s proportion of total deposit holdings of 10.9 percent. In light of these factors, the bank s lending activity in nonmsa Oklahoma reflects good responsiveness to assessment area credit needs. 177

182 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 19.8 percent of all assessment area geographies. 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 distribution of HMDA loans in comparison to owner-occupied housing demographics for the assessment area. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 9.5% 59.6% 30.6% 0.0% 100% Refinance , % 15.6% 58.8% 25.4% 0.0% 100% Home Improvement 0.3% 13.1% 62.5% 24.0% 0.0% 100% Multifamily % 40.0% 20.0% 40.0% 0.0% 100% , ,014 LOANS 0.2% 13.5% 59.5% 26.8% 0.0% 100% Owner- Occupied Housing 0.8% 15.1% 67.3% 16.7% 0.0% 100% While the bank originated only 0.2 percent of its HMDA loans in the low-income category, the 2 low-income census tracts are located in the far southwestern and southeastern counties in the assessment area and are geographically far from branch locations. Therefore, as compared to the 0.8 percent demographic comparator, 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, 13.5 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 (15.1 percent) but within an adequate range. Overall, the bank s HMDA geographic distribution in this assessment area is adequate. 178

183 Next, the bank s geographic distribution of small business loans was reviewed, which is displayed in the following table in comparison to the distribution of assessment area businesses by geography income level. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Business Loans Business Institutions Geography Income Level Low- Moderate- Middle- Upper- Unknown , % 18.3% 58.2% 21.6% 0.0% 100% 2.4% 18.9% 63.4% 15.3% 0.0% 100% While the bank had a small percentage of small business loans in the two low-income census tracts (1.9 percent), business lending opportunities in these geographies appear to be minimal, especially considering the vast distances between these census tracts and bank branches. The level of small business loans within moderate-income census tracts (18.3 percent) is only slightly below the percentage of businesses within moderate-income census tracts (18.9 percent). Therefore, the analysis of small business loans reflects adequate penetration throughout the assessment area. Finally, the geographic distribution of small farm loans is displayed in the following table in comparison to the distribution of assessment area farms by geography income level. Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0.8% 24.1% 65.5% 9.6% 0.0% 100% Agricultural Institutions 0.6% 10.2% 72.3% 16.9% 0.0% 100% The bank s level of small farm loans made in low-income census tracts (0.8 percent) is good, as it is just above the percentage of agricultural institutions located in low-income census tracts (0.6 percent). Analysis of the penetration in moderate-income census tracts reveals excellent performance. The bank originated 24.1 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 (10.2 percent). Based on this performance, the bank s overall geographic distribution of small farm loans is excellent. 179

184 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 in comparison to family population demographics. Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 19.6% 21.3% 51.3% 0.0% 100% Refinance , % 17.2% 21.5% 55.8% 0.7% 100% Home Improvement 8.3% 14.1% 28.8% 44.2% 4.5% 100% Multifamily Loans 0.0% 0.0% 0.0% 0.0% 100% 100% HMDA , , % 17.4% 22.5% 52.5% 1.3% 100% Family Population 21.9% 18.0% 20.7% 39.3% 0.0% 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 (6.3 percent) is lower than the percentage of low-income families (21.9 percent); however, the bank s performance in lowincome geographies in 2011 (8.1 percent) is above that of the 2011 HMDA aggregate data performance (6.1 percent). Considering both years of data, the bank s performance in reaching low-income borrowers is adequate. In terms of HMDA lending within this assessment area to moderate-income borrowers, the bank s performance is good. Although the bank s percentage to moderate-income borrowers (17.4 percent) is below that of moderate-income borrowers within the assessment area (18.0 percent), referencing 2011 data helps form the basis for conclusions. In 2011, the bank originated 18.0 percent of its HMDA loans in this assessment area to moderateincome borrowers. This penetration compares favorably to all HMDA aggregate lenders of 15.7 percent. Overall, the bank s HMDA lending to LMI borrowers within the assessment area is good. 180

185 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >100<$250 >$250<$1, , % 6.8% 4.3% 86.6% % 2.2% 2.3% 13.4% 1, , % 9.0% 6.6% 100% The bank s level of lending to small businesses is good. The bank originated a majority of its small business loans (86.6 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 further 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 2012 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. Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 8.0% 4.2% 92.3% % 1.0% 0.3% 7.7% % 9.1% 4.5% 100% The bank s level of lending to small farms is good. A substantial majority of the bank s small farm loans (92.3 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 181

186 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. Community Development Lending Activities makes a low level of community development loans in the nonmsa Oklahoma assessment area. During the review period, the bank renewed only one community development loan of $4.1 million within this assessment area. This loan was made to an organization that provides community services to LMI individuals. 182

187 INVESTMENT TEST has a significant level of qualified community development investments and grants within the nonmsa Oklahoma assessment area, exhibiting 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 $7.3 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 $2.4 million, as well as new MBS investments of $757,166. Furthermore, during this review period, the bank invested $4.2 million in a tax credit equity fund that provides affordable housing for low-income families. Additionally, made an adequate level of qualified community development grants within the assessment area. The bank made 165 qualified grants totaling $103,950 during this review period. Among the numerous qualifying contributions were significant donations to schools with a large majority of students from LMI families, affordable housing organizations, food banks serving the homeless, and community service organizations targeting the needs of LMI families. 183

188 SERVICE TEST s service delivery systems are readily accessible to the nonmsa Oklahoma assessment area, and the bank s record of opening and closing branches improved 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. Lastly, the bank is a leader in providing community development services in the nonmsa Oklahoma assessment area. Accessibility of Delivery Systems operates 34 branch facilities within the nonmsa Oklahoma assessment area. The following table illustrates the distribution of these facilities by income level of the geography, as compared to key assessment area demographics. Branches Dataset Branch Distribution by Geography Income Level Geography Income Level Low- Moderate- Middle- Upper- Unknown % 32.4% 47.1% 17.6% 0.0% 100% Census Tracts 2.3% 17.5% 66.9% 12.9% 0.3% 100% Household Population 1.5% 17.0% 66.4% 15.1% 0.0% 100% As illustrated in the table above, 35.3 percent of s nonmsa Oklahoma assessment area branches are located in LMI census tracts, which is significantly greater than both the percentage of LMI census tracts (19.8 percent) and households in LMI census tracts (18.5 percent). Based on this information, s delivery systems are readily accessible to geographies and individuals of different income levels in the nonmsa Oklahoma assessment area. Changes in Branch Locations During the review period, the bank acquired four branches in this assessment area, two in moderate-income census tracts and two in middle-income census tracts. Consequently, the bank s record of opening and closing branches in the nonmsa Oklahoma assessment area improved the accessibility of its delivery systems, particularly to LMI geographies and/or LMI individuals. 184

189 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-thru facilities at some point during the week. Most drive-thru facilities remain open until at least 6 p.m., Monday through Friday, and are open until at least noon on Saturdays. 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 is a leader in providing community development services in the nonmsa Oklahoma assessment area. Throughout the review period, employees provided 40 community development services. Many of these organizations assist schools with a majority of students from LMI families, offer community services targeted to LMI individuals and families, and promote economic development and revitalization and stabilization of LMI areas. 185

190 Appendix A SCOPE OF EXAMINATION TABLES SCOPE OF EXAMINATION TIME PERIOD REVIEWED January 1, 2011 through December 31, 2012 (HMDA, small business, and small farm data) January 11, 2011 through April 15, 2013 (community development loans, investment, and service activities) FINANCIAL INSTITUTION Fayetteville, Arkansas PRODUCTS REVIEWED HMDA Small Business Small Farm AFFILIATE(S) AFFILIATE RELATIONSHIP PRODUCTS REVIEWED Arvest Mortgage Company Bank subsidiary Mortgage Loans 186

191 Appendix A (continued) Assessment Area State MSA Fayetteville-Springdale- Rogers, AR-MO MSA # of Offices % of Offices CRA Review Procedures AR-MO MSA % Full Scope Fort Smith, AR-MO MSA AR-OK MSA % Full Scope Kansas City, MO-KS MSA MO-KS MSA % Full Scope Little Rock-North Little Rock- Conway, AR MSA AR MSA % Full Scope Hot Springs, AR MSA AR MSA 7 2.6% Limited Scope NonMSA AR AR Non % Full Scope NonMSA KS KS Non 2 0.7% Full Scope Joplin, MO MSA MO MSA % Full Scope Springfield, MO MSA MO MSA 5 1.9% Limited Scope NonMSA MO MO Non % Limited Scope Oklahoma City, OK MSA OK MSA % Full Scope Tulsa, OK MSA OK MSA % Full Scope Lawton, OK MSA OK MSA 5 1.9% Limited Scope NonMSA OK OK Non % Full Scope Overall Bank N/A N/A % 10 Full Scope 187

192 Appendix B SUMMARY OF STATE AND MULTISTATE MSA RATINGS State or Multistate MSA Name Fayetteville AR-MO MSA Fort Smith AR-OK MSA Kansas City KS-MO MSA Arkansas Kansas Missouri Oklahoma Lending Test Rating High Satisfactory Low Satisfactory Low Satisfactory High Satisfactory Low Satisfactory High Satisfactory Low Satisfactory Investment Test Rating Outstanding Low Satisfactory High Satisfactory High Satisfactory Needs to Improve High Satisfactory High Satisfactory Service Test Rating Low Satisfactory Outstanding Low Satisfactory Low Satisfactory Low Satisfactory Low Satisfactory High Satisfactory Overall Rating Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory 188

193 Appendix C PRIMARY YEAR (2012) LENDING PERFORMANCE TABLES FOR LIMITED-SCOPE REVIEW AREAS ARKANSAS Hot Springs, Arkansas MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 2.5% 57.5% 40.0% 0.0% 100% % 10.0% 47.1% 42.9% 0.0% 100% % 30.0% 40.0% 30.0% 0.0% 100% % 0.0% 100.0% 0.0% 0.0% 100% % 10.7% 49.6% 39.7% 0.0% 100% 1.2% 11.6% 55.4% 31.7% 0.0% 100% 189

194 Appendix C (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Business Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 10.4% 54.7% 32.1% 0.0% 100% Business Institutions 1.9% 18.4% 49.0% 30.8% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0.0% 0.0% 50.0% 50.0% 0.0% 100% Agricultural Institutions 1.1% 9.5% 52.6% 36.8% 0.0% 100% 190

195 Appendix C (continued) Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Borrower Income Level Low- Moderate- Middle- Upper- Unknown % 15.0% 10.0% 67.5% 0.0% 100% % 10.0% 12.9% 71.4% 1.4% 100% % 20.0% 10.0% 50.0% 15.0% 100% % 0.0% 0.0% 0.0% 100.0% 100% % 13.0% 11.5% 66.4% 3.8% 100% Family Population 20.8% 17.3% 21.1% 40.9% 0.0% 100% Lending Distribution by Business Revenue Level Gross Revenue Loan Amounts in $000s <$100 >100<250 >250<1,000 $1 Million or Less % 9.4% 9.4% 83.0% Greater than $ Million/Unknown 7.5% 3.8% 5.7% 17.0% % 13.2% 15.1% 100% 191

196 Appendix C (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 33.3% 16.7% 100% % 0.0% 0.0% 0.0% % 33.3% 16.7% 100% 192

197 Appendix C (continued) MISSOURI Springfield, Missouri MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 10.7% 61.9% 27.4% 0.0% 100% % 6.2% 62.3% 31.5% 0.0% 100% % 42.9% 57.1% 0.0% 0.0% 100% % 50.0% 0.0% 50.0% 0.0% 100% % 8.7% 61.8% 29.5% 0.0% 100% 0.5% 16.0% 61.2% 22.4% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 0.0% 22.8% 42.1% 35.2% 0.0% 100% Business Institutions 0.7% 23.3% 56.3% 19.8% 0.0% 100% 193

198 Appendix C (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 0.0% 66.7% 33.3% 0.0% 100% Agricultural Institutions 0.2% 9.1% 81.5% 9.2% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 30.7% 23.7% 31.1% 0.0% 100% Refinance % 14.1% 17.2% 64.5% 0.3% 100% Home Improvement 0.0% 28.6% 28.6% 28.6% 14.3% 100% Multifamily Loans 0.0% 0.0% 0.0% 0.0% 100% 100% HMDA % 21.3% 20.0% 49.7% 0.6% 100% Family Population 19.5% 18.4% 22.1% 40.0% 0.0% 100% 194

199 Appendix C (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 13.1% 7.6% 77.2% % 6.9% 3.4% 22.8% % 20.0% 11.0% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 16.7% 16.7% 100% % 0.0% 0.0% 0.0% % 16.7% 16.7% 100% 195

200 Appendix C (continued) NonMSA Missouri Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 1.4% 93.8% 4.8% 0.0% 100% % 2.1% 96.2% 1.7% 0.0% 100% % 8.3% 91.7% 0.0% 0.0% 100% % 0.0% 0.0% 0.0% 0.0% 0.0% % 2.0% 95.1% 3.0% 0.0% 100% 0.0% 13.6% 85.3% 1.2% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 0.0% 0.9% 96.3% 2.8% 0.0% 100% Business Institutions 0.0% 11.2% 87.0% 1.8% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Farm Loans 0.0% 12.1% 87.9% 0.0% 0.0% 100% Agricultural Institutions 0.0% 14.2% 85.7% 0.1% 0.0% 100% 196

201 Appendix C (continued) Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Borrower Income Level Low- Moderate- Middle- Upper- Unknown % 22.9% 22.9% 47.6% 0.0% 100% % 18.9% 22.4% 53.1% 0.0% 100% % 25.0% 25.0% 41.7% 0.0% 100% % 0.0% 0.0% 0.0% 0.0% 0.0% % 20.7% 22.6% 50.6% 0.0% 100% Family Population 21.2% 19.7% 23.5% 35.7% 0.0% 100% Lending Distribution by Business Revenue Level Gross Revenue Loan Amounts in $000s <$100 >$100<$250 >$250<$1,000 $1 Million or Less % 9.3% 10.3% 90.7% Greater than $ Million/Unknown 1.9% 4.7% 2.8% 9.3% % 14.0% 13.1% 100% 197

202 Appendix C (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 15.2% 9.1% 93.9% % 0.0% 6.1% 6.1% % 15.2% 15.2% 100% 198

203 Appendix C (continued) OKLAHOMA Lawton, Oklahoma MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 3.1% 46.2% 47.7% 0.0% 100% % 4.8% 37.6% 56.0% 0.0% 100% % 9.6% 46.5% 42.1% 0.0% 100% % 0.0% 50.0% 16.7% 0.0% 100% % 6.1% 42.9% 48.4% 0.0% 100% 2.9% 11.2% 47.4% 38.5% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 15.2% 17.1% 32.5% 34.9% 0.3% 100% Business Institutions 14.0% 20.8% 39.1% 25.9% 0.3% 100% 199

204 Appendix C (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 7.1% 50.0% 35.7% 0.0% 100% Agricultural Institutions 1.3% 3.5% 42.9% 52.0% 0.3% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 20.0% 16.9% 61.5% 0.0% 100% Refinance % 10.4% 20.8% 64.0% 0.0% 100% Home Improvement 4.4% 8.8% 20.2% 65.8% 0.9% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA % 11.6% 19.4% 62.9% 2.3% 100% Family Population 22.0% 17.6% 21.1% 39.3% 0.0% 100% 200

205 Appendix C (continued) Lending Distribution by Business Revenue Level Gross Revenue Loan Amounts in $000s <$100 >$100<$250 >$250<$1,000 $1 Million or Less % 6.8% 5.2% 82.2% Greater than $1 Million % 3.9% 3.1% 17.8% % 10.8% 8.4% 100% Lending Distribution by Farm Revenue Level Gross Revenue Loan Amounts in $000s <$100 >$100<$250 >$250<$500 $1 Million or Less % 7.1% 7.1% 85.7% Greater than $1 Million % 0.0% 0.0% 14.3% % 7.1% 7.1% 100% 201

206 Appendix D SECONDARY YEAR (2011) LENDING PERFORMANCE TABLES FOR ALL ASSESSMENT AREAS Fayetteville-Springdale-Rogers, Arkansas-Missouri MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily Loans HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown , , % 3.4% 78.6% 17.8% 0.0% 100% , , % 5.6% 73.8% 20.4% 0.0% 100% % 5.7% 75.0% 19.3% 0.0% 100% % 20.0% 51.4% 14.3% 0.0% 100% , , % 5.1% 75.2% 19.5% 0.0% 100% 0.2% 11.7% 71.9% 16.2% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Geography Income Level Dataset Low- Moderate- Middle- Upper- Unknown Small Business Loans , , % 11.9% 66.3% 21.3% 0.0% 100% Business Institutions 0.8% 13.1% 67.5% 18.6% 0.0% 100% 202

207 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 19.0% 77.6% 3.4% 0.0% 100% Agricultural Institutions 0.0% 15.2% 74.7% 10.1% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase , % 22.5% 21.5% 44.9% 0.4% 100% Refinance , , % 15.1% 21.8% 51.8% 2.9% 100% Home Improvement 11.4% 15.8% 23.2% 42.5% 7.0% 100% Multifamily Loans 0.0% 0.0% 0.0% 0.0% 100% 100% HMDA ,105 2, , % 17.2% 21.6% 49.0% 3.0% 100% Family Population 18.5% 18.7% 24.0% 38.8% 0.0% 100% 203

208 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1,000 1, , % 13.0% 11.7% 95.2% % 1.2% 2.2% 4.8% 1, , % 14.2% 13.9% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 8.5% 2.3% 99.5% % 0.0% 0.2% 0.5% % 8.5% 2.5% 100% 204

209 Appendix D (continued) Fort Smith, Arkansas-Oklahoma MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 2.4% 77.6% 19.9% 0.0% 100% % 2.3% 73.5% 24.2% 0.0% 100% % 1.3% 82.6% 16.1% 0.0% 100% % 43.8% 50.0% 6.3% 0.0% 100% , % 2.7% 75.4% 21.9% 0.0% 100% 0.0% 3.5% 84.0% 12.5% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 0.0% 7.5% 65.5% 27.0% 0.0% 100% Business Institutions 0.0% 7.8% 75.0% 17.2% 0.0% 100% 205

210 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 0.0% 89.1% 10.9% 0.0% 100% Agricultural Institutions 0.0% 1.0% 91.2% 7.9% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 19.9% 27.2% 43.5% 0.9% 100% Refinance % 19.2% 19.6% 51.5% 1.6% 100% Home Improvement 8.7% 17.4% 19.5% 51.7% 2.7% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA , % 18.9% 21.3% 48.8% 2.8% 100% Family Population 19.7% 17.9% 22.9% 39.5% 0.0% 100% 206

211 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 14.4% 5.0% 93.5% % 1.0% 2.9% 6.5% % 15.5% 7.9% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 15.2% 2.2% 97.8% % 0.0% 0.0% 2.2% % 15.2% 2.2% 100% 207

212 Appendix D (continued) Kansas City, Missouri-Kansas MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 6.5% 43.9% 49.6% 0.0% 100% % 9.2% 33.5% 56.1% 0.0% 100% % 6.7% 43.3% 46.7% 0.0% 100% % 83.3% 16.7% 0.0% 0.0% 100% % 9.3% 38.0% 51.8% 0.0% 100% 2.9% 18.1% 47.9% 31.1% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 7.8% 18.4% 33.0% 40.8% 0.0% 100% Business Institutions 3.2% 16.3% 44.2% 35.5% 0.7% 100% 208

213 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 16.7% 66.7% 16.7% 0.0% 100% Agricultural Institutions 0.2% 20.4% 60.0% 19.3% 0.2% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 28.5% 19.5% 37.4% 0.0% 100% Refinance % 14.5% 19.7% 60.1% 0.0% 100% Home Improvement 3.3% 26.7% 33.3% 30.0% 6.7% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA % 20.5% 20.5% 47.9% 2.4% 100% Family Population 18.3% 18.8% 23.6% 39.3% 0.0% 100% 209

214 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 12.3% 5.6% 79.3% % 6.1% 14.0% 20.7% % 18.4% 19.6% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 16.7% 16.7% 83.3% % 0.0% 16.7% 16.7% % 16.7% 33.3% 100% 210

215 Appendix D (continued) Little Rock-North Little Rock-Conway, Arkansas MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily Loans HMDA Geography Income Level Low- Moderate- Middle- Upper- Unknown % 6.5% 55.2% 36.1% 0.0% 100% % 6.3% 53.6% 39.5% 0.0% 100% % 13.8% 53.4% 31.0% 0.0% 100% % 28.6% 14.3% 0.0% 0.0% 100% , % 6.9% 53.9% 37.6% 0.0% 100% Owner- Occupied Housing 1.5% 15.0% 55.4% 28.2% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 6.2% 13.0% 53.5% 27.3% 0.0% 100% Business Institutions 4.9% 17.2% 50.6% 27.3% 0.0% 100% 211

216 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 15.8% 57.9% 26.3% 0.0% 100% Agricultural Institutions 1.5% 15.6% 62.1% 20.8% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 26.9% 22.0% 42.6% 0.2% 100% Refinance % 17.6% 24.7% 49.0% 2.1% 100% Home Improvement 17.2% 13.8% 17.2% 31.0% 20.7% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA , % 20.7% 23.2% 45.4% 3.0% 100% Family Population 19.7% 18.1% 22.5% 39.7% 0.0% 100% 212

217 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 12.2% 6.9% 95.1% % 1.3% 1.4% 4.9% % 13.5% 8.3% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 15.8% 10.5% 100% % 0.0% 0.0% 0.0% % 15.8% 10.5% 100% 213

218 Appendix D (continued) Hot Springs, Arkansas MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 12.1% 75.8% 12.1% 0.0% 100% % 9.8% 70.6% 19.6% 0.0% 100% % 16.7% 66.7% 16.7% 0.0% 100% % 0.0% 0.0% 0.0% 0.0% 0% % 11.1% 72.2% 16.7% 0.0% 100% 0.0% 15.1% 71.4% 13.5% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 0.0% 21.9% 68.6% 9.5% 0.0% 100% Business Institutions 0.0% 24.9% 61.4% 13.7% 0.0% 100% 214

219 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 0.0% 100% 0.0% 0.0% 100% Agricultural Institutions 0.0% 7.8% 80.6% 11.7% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 3.0% 12.1% 78.8% 3.0% 100% Refinance % 13.7% 21.6% 60.8% 2.0% 100% Home Improvement 0.0% 0.0% 16.7% 33.3% 50.0% 100% Multifamily % 0.0% 0.0% 0.0% 0.0% 0% HMDA % 8.9% 17.8% 65.6% 5.6% 100% Family Population 19.0% 18.1% 23.1% 39.9% 0.0% 100% 215

220 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 15.2% 7.6% 95.2% % 1.0% 2.9% 4.8% % 16.2% 10.5% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 0.0% 0.0% 100% % 0.0% 0.0% 0.0% % 0.0% 0.0% 100% 216

221 Appendix D (continued) Nonmetropolitan Arkansas Statewide Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 0.3% 79.4% 20.3% 0.0% 100% % 0.0% 86.1% 13.9% 0.0% 100% % 0.0% 95.9% 4.1% 0.0% 100% % 0.0% 90.9% 9.1% 0.0% 100% , % 0.1% 84.8% 15.1% 0.0% 100% 0.0% 2.4% 87.4% 10.3% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 0.0% 0.1% 87.6% 12.3% 0.0% 100% Business Institutions 0.0% 1.6% 87.0% 11.4% 0.0% 100% 217

222 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 0.4% 90.9% 8.7% 0.0% 100% Agricultural Institutions 0.0% 1.6% 88.9% 9.5% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 18.5% 22.1% 53.5% 0.0% 100% Refinance % 16.1% 21.6% 53.0% 2.2% 100% Home Improvement 6.8% 23.0% 23.0% 43.2% 4.1% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA , % 17.1% 21.6% 52.0% 2.6% 100% Family Population 18.1% 18.7% 23.1% 40.1% 0.0% 100% 218

223 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 12.5% 6.7% 95.2% % 0.8% 2.5% 4.8% % 13.3% 9.2% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 8.7% 1.7% 98.7% % 0.0% 0.0% 1.3% % 8.7% 1.7% 100% 219

224 Appendix D (continued) Nonmetropolitan Kansas Statewide Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 0.0% 100.0% 0.0% 0.0% 100% % 6.9% 93.1% 0.0% 0.0% 100% % 20.0% 80.0% 0.0% 0.0% 100% % 0.0% 0.0% 0.0% 0.0% 0% % 5.1% 94.9% 0.0% 0.0% 100% 0.0% 13.9% 82.9% 3.2% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 0.0% 9.0% 91.0% 0.0% 0.0% 100% Business Institutions 0.0% 18.9% 77.6% 3.5% 0.0% 100% 220

225 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 1.6% 98.4% 0.0% 0.0% 100% Agricultural Institutions 0.0% 4.9% 93.8% 1.4% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 16.0% 20.0% 52.0% 0.0% 100% Refinance % 17.2% 44.8% 37.9% 0.0% 100% Home Improvement 0.0% 20.0% 20.0% 40.0% 20.0% 100% Multifamily % 0.0% 0.0% 0.0% 0.0% 0% HMDA % 16.9% 32.2% 44.1% 1.7% 100% Family Population 20.2% 20.7% 25.0% 34.1% 0.0% 100% 221

226 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 6.7% 3.4% 93.3% % 1.1% 0.0% 6.7% % 7.9% 3.4% 100% Lending Distribution by Farm Revenue Level Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 1.6% 1.6% 100.0% % 0.0% 0.0% 0.0% % 1.6% 1.6% 100% 222

227 Appendix D (continued) Joplin, Missouri MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 6.7% 78.7% 14.6% 0.0% 100% % 3.2% 87.2% 9.6% 0.0% 100% % 23.5% 58.8% 17.6% 0.0% 100% % 0.0% 100% 0.0% 0.0% 100% % 5.3% 82.7% 12.0% 0.0% 100% 0.0% 8.1% 84.2% 7.7% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 0.0% 21.3% 69.7% 9.0% 0.0% 100% Business Institutions 0.0% 13.3% 79.2% 7.5% 0.0% 100% 223

228 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 2.3% 97.7% 0.0% 0.0% 100% Agricultural Institutions 0.0% 1.1% 97.2% 1.7% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 22.6% 23.8% 43.1% 0.0% 100% Refinance % 17.4% 21.0% 54.8% 2.1% 100% Home Improvement 11.8% 29.4% 17.6% 29.4% 11.8% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA % 19.9% 21.9% 48.3% 2.6% 100% Family Population 17.4% 19.4% 24.6% 38.6% 0.0% 100% 224

229 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 14.2% 11.0% 86.1% % 3.2% 5.8% 13.9% % 17.4% 16.8% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 11.4% 2.3% 100% % 0.0% 0.0% 0.0% % 11.4% 2.3% 100% 225

230 Appendix D (continued) Springfield, Missouri MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily Loans HMDA Geography Income Level Low- Moderate- Middle- Upper- Unknown % 6.9% 56.4% 36.8% 0.0% 100% % 4.3% 54.3% 41.5% 0.0% 100% % 0.0% 0.0% 100.0% 0.0% 100% % 100% 0.0% 0.0% 0.0% 100% % 5.8% 55.1% 39.1% 0.0% 100% Owner-Occupied Housing 0.0% 16.2% 56.8% 27.0% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 3.5% 13.3% 39.2% 44.1% 0.0% 100% Business Institutions 2.1% 15.1% 53.8% 29.0% 0.0% 100% 226

231 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 33.3% 66.7% 0.0% 0.0% 100% Agricultural Institutions 0.2% 13.2% 70.4% 16.2% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 23.0% 23.0% 33.8% 0.5% 100% Refinance % 13.8% 22.9% 57.4% 1.1% 100% Home Improvement 0.0% 100.0% 0.0% 0.0% 0.0% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA % 18.8% 22.8% 44.9% 1.0% 100% Family Population 17.4% 19.6% 24.1% 38.9% 0.0% 100% 227

232 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 18.2% 16.8% 88.8% % 2.1% 7.0% 11.2% % 20.3% 23.8% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 0.0% 0.0% 100% % 0.0% 0.0% 0.0% % 0.0% 0.0% 100% 228

233 Appendix D (continued) Nonmetropolitan Missouri Statewide Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 0.0% 100.0% 0.0% 0.0% 100% % 2.6% 97.4% 0.0% 0.0% 100% % 0.0% 100.0% 0.0% 0.0% 100% % 0.0% 100% 0.0% 0.0% 100% % 1.2% 98.8% 0.0% 0.0% 100% 0.0% 6.8% 93.2% 0.0% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 0.0% 0.0% 100% 0.0% 0.0% 100% Business Institutions 0.0% 6.8% 93.2% 0.0% 0.0% 100% 229

234 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 0.0% 100% 0.0% 0.0% 100% Agricultural Institutions 0.0% 5.8% 94.2% 0.0% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase 8.2% 23.0% 20.8% 48.1% 0.0% 100% Refinance % 14.2% 25.8% 53.5% 1.3% 100% Home Improvement 25.0% 12.5% 37.5% 12.5% 12.5% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA % 18.7% 23.3% 49.6% 1.2% 100% Family Population 19.5% 20.0% 24.2% 36.3% 0.0% 100% 230

235 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 7.9% 3.1% 93.7% % 1.6% 3.1% 6.3% % 9.4% 6.3% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 21.4% 3.6% 100% % 0.0% 0.0% 0.0% % 21.4% 3.6% 100% 231

236 Appendix D (continued) Oklahoma City, Oklahoma MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 10.3% 40.9% 47.9% 0.0% 100% % 7.8% 37.8% 53.9% 0.0% 100% % 17.9% 39.3% 42.1% 0.0% 100% % 50.0% 25.0% 8.3% 16.7% 100% , % 10.5% 38.8% 49.9% 0.2% 100% 1.8% 21.8% 41.2% 35.2% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 3.3% 17.9% 38.0% 38.7% 2.1% 100% Business Institutions 3.5% 20.9% 37.3% 36.5% 1.8% 100% 232

237 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 44.4% 29.6% 18.5% 7.4% 100% Agricultural Institutions 0.5% 15.3% 50.1% 33.8% 0.3% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 24.4% 19.7% 44.7% 0.3% 100% Refinance % 14.2% 18.4% 60.3% 0.9% 100% Home Improvement 12.4% 21.4% 22.8% 40.7% 2.8% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA , % 18.3% 19.2% 51.9% 2.1% 100% Family Population 20.0% 18.2% 21.7% 40.1% 0.0% 100% 233

238 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 8.3% 4.4% 85.2% % 2.8% 4.4% 14.8% % 11.1% 8.8% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 3.7% 7.4% 100% % 0.0% 0.0% 0.0% % 3.7% 7.4% 100% 234

239 Appendix D (continued) Tulsa, Oklahoma MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily Loans HMDA Geography Income Level Low- Moderate- Middle- Upper- Unknown % 6.6% 38.1% 55.1% 0.0% 100% % 6.0% 37.6% 56.4% 0.0% 100% % 10.3% 48.1% 41.1% 0.0% 100% % 53.8% 46.2% 0.0% 0.0% 100% , % 7.5% 40.2% 52.1% 0.0% 100% Owner- Occupied Housing 0.9% 20.8% 47.4% 30.8% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business ,096 Loans 0.4% 14.8% 32.4% 52.5% 0.0% 100% Business Institutions 1.0% 22.3% 40.7% 35.9% 0.0% 100% 235

240 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 12.3% 78.1% 9.6% 0.0% 100% Agricultural Institutions 0.2% 22.0% 55.7% 22.2% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 24.8% 24.6% 39.8% 0.0% 100% Refinance % 15.6% 24.4% 52.2% 1.7% 100% Home Improvement 7.5% 13.8% 28.4% 48.4% 1.9% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA , % 17.6% 25.2% 47.5% 2.0% 100% Family Population 19.9% 18.3% 21.6% 40.1% 0.0% 100% 236

241 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 7.8% 8.7% 83.4% % 3.2% 6.2% 16.6% , % 11.0% 14.9% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 8.2% 5.5% 98.6% % 0.0% 1.4% 1.4% % 8.2% 6.8% 100% 237

242 Appendix D (continued) Lawton, Oklahoma MSA Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 9.1% 78.2% 12.7% 0.0% 100% % 8.4% 67.9% 22.9% 0.0% 100% % 12.5% 71.9% 14.1% 0.0% 100% % 33.3% 66.7% 0.0% 0.0% 100% % 9.9% 71.1% 18.2% 0.0% 100% 1.6% 15.8% 64.8% 17.9% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business Loans 9.7% 26.5% 44.4% 19.4% 0.0% 100% Business Institutions 9.7% 26.9% 48.9% 14.6% 0.0% 100% 238

243 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 0.0% 54.5% 45.5% 0.0% 100% Agricultural Institutions 1.2% 10.7% 69.4% 18.7% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 10.9% 16.4% 61.8% 0.0% 100% Refinance % 9.2% 26.0% 58.0% 1.5% 100% Home Improvement 1.6% 18.8% 21.9% 56.3% 1.6% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA % 11.9% 22.5% 57.7% 2.4% 100% Family Population 20.5% 17.1% 22.2% 40.3% 0.0% 100% 239

244 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1, % 12.3% 4.8% 96.0% % 0.3% 2.0% 4.0% % 12.5% 6.8% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 18.2% 9.1% 100% % 0.0% 0.0% 0.0% % 18.2% 9.1% 100% 240

245 Appendix D (continued) Nonmetropolitan Oklahoma Statewide Assessment Area Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Home Purchase Refinance Home Improvement Multifamily HMDA Owner- Occupied Housing Geography Income Level Low- Moderate- Middle- Upper- Unknown % 6.9% 61.7% 31.4% 0.0% 100% % 8.3% 68.5% 23.3% 0.0% 100% % 12.3% 64.1% 23.6% 0.0% 100% % 33.3% 66.7% 0.0% 0.0% 100% , , % 8.5% 65.6% 25.9% 0.0% 100% 0.0% 13.1% 70.8% 16.0% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Geography Income Level Low- Moderate- Middle- Upper- Unknown Small Business ,318 Loans 0.1% 13.8% 65.5% 20.6% 0.0% 100% Business Institutions 0.5% 16.8% 65.1% 17.7% 0.0% 100% 241

246 Appendix D (continued) Distribution of Loans Inside Assessment Area by Income Level of Geography Dataset Small Farm Loans Geography Income Level Low- Moderate- Middle- Upper- Unknown % 6.9% 87.0% 6.1% 0.0% 100% Agricultural Institutions 0.0% 9.7% 76.0% 14.3% 0.0% 100% Distribution of Loans Inside Assessment Area by Income Level of Borrower Dataset Borrower Income Level Low- Moderate- Middle- Upper- Unknown Home Purchase % 23.1% 22.9% 46.5% 0.2% 100% Refinance % 15.7% 22.4% 52.1% 2.3% 100% Home Improvement 12.3% 15.0% 23.2% 42.7% 6.8% 100% Multifamily % 0.0% 0.0% 0.0% 100% 100% HMDA , % 18.0% 22.6% 48.9% 2.5% 100% Family Population 20.6% 18.2% 21.5% 39.6% 0.0% 100% 242

247 Appendix D (continued) Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Business Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$1,000 1, , % 5.8% 3.7% 92.6% % 1.4% 2.1% 7.4% 1, , % 7.3% 5.8% 100% Gross Revenue $1 Million or Less Greater than $1 Million/Unknown Lending Distribution by Farm Revenue Level Loan Amounts in $000s <$100 >$100<$250 >$250<$ % 5.7% 2.2% 98.2% % 0.1% 0.0% 1.8% % 5.8% 2.2% 100% 243

248 Appendix E ASSESSMENT AREAS MAP 244