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Kansas banks in good shape
Well the challenges that most of our banks are facing today are asset quality issues, which is loan quality, primarily in commercial real estate. That's been the problem that's plagued the banking industry throughout the country, not just Kansas, but yes asset quality with commercial loans, commercial real estate primarily.
If you think that more commercial real estate loans take place in eastern Kansas you'd be right. More of the banks facing challenges are in the eastern part of the state.
No, they're, they're across the state. I will to be brutally honest, probably more of our banks with challenges are in the eastern part of the state and I think most of us would understand why. Because if you look where most of the population growth and economic growth is happening, it's east.
Of course that doesn't mean that banks in the western part of the state haven't been involved in commercial real estate, some have been or have branches in the east that have. Frank Reifschneider is the president and CEO of Garden City State Bank, a community bank. He says the bank has a good-sized business portfolio, but has not taken additional risks.
We have a pretty good sized business and industy portfolio, which involves commercial real estate and agricultural real estate as well, but we've kept our real estate numbers under the threshold that the FDIC and the regulators look at it, so as far as taking additional risk anyways, we're below that threshold. So our risk is very well managed.
Reifschneider says that community banks in general haven't had the issues that larger banks have been dealing with in the last year.
Last year was a tough year for all banks, even community banks and community banks weren't really a part of the I guess you can call it the blowup, you know the things that happened last year with the subprime lending. Most community banks like us didn't get involved in subprime lending so we didn't have the issues and problems that larger banks did, but the bank is doing well, we're very pleased.
Garden City State Bank hasn't had to make changes to its conservative policy since the subprime lending crisis. Though like all banks it's had to react to the Federal Reserve changing interest rates and Reifschneider says they tried to put floors on some of their loans so that risk could be mitigated if interest rates dropped. His bank isn't part of the 15% of Kansas state-chartered banks with lower ratings. Bank Commissioner Thull says that most of those banks are dealing with loan quality issues and they've been improving.
The banks are working diligently with the customers to shore up those credits. Additional collateral sometimes is pledged and loans may be renegotiated to get more workable terms with respect to repayment ability. There are some, however, that are just up against a wall and banks are seeing more real estate owned by the real estate that they've had to foreclose and they're in the process of selling that, but they're on the mend.
The invasiveness that these banks encounter from the banking board ranges from minimal with the board coming in for a six-month progress check following an examination and a resolution, to much higher scrutiny and involvement.
If it's a little bit more deteriorated we can do a memorandum of understanding, which is a little bit stricter, it's an order. Or we can do a cease and desist. Now that doesn't mean that they stop operating, it just means they have a little tighter controls on what they can do with respects to their lending. What they might need to get cleaned up as far as their problem loans. What they might have to make additional provisions in regards to their loan allowances. What they might have to do with the real estate they own.
Thull recommends that consumers who are worried about their banks should talk to them. He says otherwise the only concern for consumers is the safety of their deposits. The FDIC now covers up to 250,000 dollars. For more information, visit fdic dot gov. I'm Lindsey Fields, HPPR News.
© Copyright 2012, hppr
(2009-09-15)
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GARDEN CITY, KAN.
(hppr) -
A year has passed since the economic crisis began and banks are still recovering. Here in Kansas banks are in great shape, so says Tom Thull the state bank commissioner. There are 248 state-chartered banks in Kansas and they're all rated on a scale of one to five. One and two being the best rating. Thull says over 85% of those banks have a rating of one or two. The problem facing most banks is loan quality.
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Well the challenges that most of our banks are facing today are asset quality issues, which is loan quality, primarily in commercial real estate. That's been the problem that's plagued the banking industry throughout the country, not just Kansas, but yes asset quality with commercial loans, commercial real estate primarily.
If you think that more commercial real estate loans take place in eastern Kansas you'd be right. More of the banks facing challenges are in the eastern part of the state.
No, they're, they're across the state. I will to be brutally honest, probably more of our banks with challenges are in the eastern part of the state and I think most of us would understand why. Because if you look where most of the population growth and economic growth is happening, it's east.
Of course that doesn't mean that banks in the western part of the state haven't been involved in commercial real estate, some have been or have branches in the east that have. Frank Reifschneider is the president and CEO of Garden City State Bank, a community bank. He says the bank has a good-sized business portfolio, but has not taken additional risks.
We have a pretty good sized business and industy portfolio, which involves commercial real estate and agricultural real estate as well, but we've kept our real estate numbers under the threshold that the FDIC and the regulators look at it, so as far as taking additional risk anyways, we're below that threshold. So our risk is very well managed.
Reifschneider says that community banks in general haven't had the issues that larger banks have been dealing with in the last year.
Last year was a tough year for all banks, even community banks and community banks weren't really a part of the I guess you can call it the blowup, you know the things that happened last year with the subprime lending. Most community banks like us didn't get involved in subprime lending so we didn't have the issues and problems that larger banks did, but the bank is doing well, we're very pleased.
Garden City State Bank hasn't had to make changes to its conservative policy since the subprime lending crisis. Though like all banks it's had to react to the Federal Reserve changing interest rates and Reifschneider says they tried to put floors on some of their loans so that risk could be mitigated if interest rates dropped. His bank isn't part of the 15% of Kansas state-chartered banks with lower ratings. Bank Commissioner Thull says that most of those banks are dealing with loan quality issues and they've been improving.
The banks are working diligently with the customers to shore up those credits. Additional collateral sometimes is pledged and loans may be renegotiated to get more workable terms with respect to repayment ability. There are some, however, that are just up against a wall and banks are seeing more real estate owned by the real estate that they've had to foreclose and they're in the process of selling that, but they're on the mend.
The invasiveness that these banks encounter from the banking board ranges from minimal with the board coming in for a six-month progress check following an examination and a resolution, to much higher scrutiny and involvement.
If it's a little bit more deteriorated we can do a memorandum of understanding, which is a little bit stricter, it's an order. Or we can do a cease and desist. Now that doesn't mean that they stop operating, it just means they have a little tighter controls on what they can do with respects to their lending. What they might need to get cleaned up as far as their problem loans. What they might have to make additional provisions in regards to their loan allowances. What they might have to do with the real estate they own.
Thull recommends that consumers who are worried about their banks should talk to them. He says otherwise the only concern for consumers is the safety of their deposits. The FDIC now covers up to 250,000 dollars. For more information, visit fdic dot gov. I'm Lindsey Fields, HPPR News.
© Copyright 2012, hppr
