Feds give Equity-affiliated bank low community reinvestment rating

09/08/2012 7:21 AM

09/08/2012 7:22 AM

The Federal Deposit Insurance Corp. on Friday released its monthly list of banks examined for meeting the credit needs of their communities, and one Kansas bank with Wichita ties has received a low rating.

Signature Bank in Haddam received a “needs to improve” rating from the FDIC, after it was examined for compliance with the Community Reinvestment Act.

It was one of five Kansas banks to be examined, and the only one to receive a rating below “satisfactory.”

Signature is now part of Equity Bank. Last month regulators approved the merger of the two banks, both of which are owned by Wichita-based Equity Bancshares.

Equity is the succeeding institution and has 15 branches and $619 million in assets.

Signature originally was one of three branches of the former Signature Bank KC.

Equity Bancshares picked up the branches from its 2007 acquisition of Signature Bancshares, merged two of them into Equity Bank and made the Haddam location a standalone bank.

The CRA is a 1977 law that encourages banks and thrifts to provide loans to their local communities, including in low- and moderate-income neighborhoods.

Banks can receive one of four grades in the routine examination: outstanding, satisfactory, needs to improve and substantial noncompliance.

FDIC spokesman Greg Hernandez said a rating of “needs to improve” means that a bank will be examined more frequently than one with a satisfactory rating.

The CRA examination of a bank with less than $250 million in assets and a “needs to improve” rating will be examined every one to two years, compared with one to three years for a bank of similar size with a “satisfactory” rating. Hernandez said the CRA examination cycle is also influenced by a separate compliance rating for banks. CRA and compliance examinations occur at the same time.

Julie Huber, Equity’s executive vice president and chief operating officer, said when Equity acquired Signature, the Haddam office was part of a larger Kansas City area network, and so achieving a satisfactory CRA rating wasn’t difficult because loan demand was high in an urban area. According to the FDIC, Signature had its last CRA exam in 2007 and received a satisfactory rating.

But making it a standalone bank changed that, she said. Huber said Haddam is a town with a few more than 100 residents and Signature is the only bank within 18 miles; most of the residents are older and don’t need a lot of loans.

“Because there’s no lending appetite … they dinged us for it,” Huber said, adding that the bank has made several corporate donations to the community over the years and purchased bonds to improve the rural water district there.

Now that Signature has been merged into Equity, she said the focus of the next CRA examination will no longer be solely on Haddam.

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