Kansas banks and thrifts saw their profits fall to their lowest level in three years, according to the Federal Deposit Insurance Corp.' s State Banking Performance report for the first quarter 2010.
The report, released Thursday, shows bank and thrift net income fell to $74 million compared to $90 million in the year-ago quarter and $186 million in first quarter 2008.
Total assets declined 0.4 percent, to just over $62 billion, but deposits eked out a small gain to $47.7 billion.
Pre-tax return on assets, a key measure of bank and thrift performance, was down to 0.62 percent versus 0.68 percent in the same quarter a year ago.
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Pre-tax ROA shows how much money a bank earns before taxes for each $100 it has in assets.
The numbers show an industry that is a "lagging, lagging" economic indicator, said Kansas Bankers Association president Chuck Stones.
"We've got to get unemployment back (to low levels)," he said. "Business activity has to start increasing before (businesses) start taking out loans."
Kansas banks and thrifts had fewer loans on their books in the first quarter. Their total loans and leases were $37.5 billion compared with $40.5 billion in first quarter 2009.
While early economic indicators suggest a recovering national economy, Stones said it will take time for banks to benefit.
"I think it's still going to be a little while before we start seeing those filter into banking numbers," he said.
Chuck Marshall, a banking consultant with Kennedy and Coe, said banks are going to need to see a combination of a bump in the economy and a "little bit higher interest rates" to see an improvement in their earnings.
He said the report shows him that interest margins at banks and thrifts are being squeezed and that they are continuing to set aside more money for loan losses.
"They are two of the greatest factors impacting earnings at this point," Marshall said.
An encouraging part of the report, he said, was the increase in the percentage of institutions with earnings gains. The report said 42.6 percent of Kansas banks and thrifts saw earnings increases in the quarter versus 37.4 percent in the same period a year ago.