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FDIC says profitability at Kansas banks and thrifts rises in third quarter

  • The Wichita Eagle
  • Published Tuesday, Dec. 4, 2012, at 9:38 a.m.
  • Updated Tuesday, Dec. 4, 2012, at 10:39 p.m.

Total net income for Kansas banks and thrifts increased nearly 18 percent for the quarter, and the percent of unprofitable institutions fell to its lowest level in three years, according to the Federal Deposit Insurance Corp.’s third-quarter 2012 State Banking Performance Summary.

The report released Tuesday said net income for the state’s 306 banks and thrifts was $440 million, compared with $374 million in the third quarter of 2011.

The percentage of unprofitable institutions dropped to 5.56 percent from 7.5 percent in the third quarter of 2011, and from 17.22 percent in the third quarter of 2010.

Noncurrent loans were also at their lowest point in the past three years, at 1.96 percent, according to the report.

The report also showed that loans — based on the percentage of net loans and leases to assets — were nearly flat to last year.

Shawn Mitchell, president of the Community Bankers Association of Kansas, said lending activity is down because businesses and farmers in the state aren’t borrowing. He said uncertainty about what will happen with federal taxes is keeping borrowers on the sidelines.

“They aren’t spending right now so they aren’t borrowing,” Mitchell said. “(Lending is) not dead right now, but it sure is stagnant.”

Mitchell and Chuck Stones, president of the Kansas Bankers Association, said they think income is up and profitability is higher because banks have resolved many of their troubled loans from a few years ago and are able to put that extra income back into the bank instead of using it to bolster their loan loss reserves.

“I would guess that what most of that is that banks have kind of ridden out the storm, they’ve gotten their loan portfolios straightened out … they’re back on level footing again and just dealing with the business of banking on normal ground again,” Stones said. “That’s probably what’s making that difference.”

According to the FDIC, the industry nationally earned net income of $37.6 billion as of Sept. 30, a 6.6 percent increase from the same period a year ago.

Reach Jerry Siebenmark at 316-268-6576 or jsiebenmark@wichitaeagle.com.

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