Kansas bank loan concentrations increased in 2012 in residential real estate and multi-family, or apartments, but decreased in commercial and industrial and commercial real estate, according to a Federal Deposit Insurance Corp. report.
Loan concentrations were among some of the key pieces of data showing movement and contained in the FDIC’s State Profile report for Kansas in the fourth quarter and year-end 2012, released on Monday.
The report said Kansas banks’ median loan concentrations in residential real estate increased from 102.5 percent in 2011 to 105.5 percent of total risk-based capital in 2012. And loan concentrations for multi-family increased slightly from 1.75 percent to 1.86 percent, in the same period.
Loan concentrations for commercial and industrial loans, however, fell from 70.02 percent to 65.19 percent in 2012, the report said. Commercial real estate loan concentrations also fell year over year, from 86 percent to 78.6 percent.
FDIC spokesman David Barr said the loan concentration numbers are representative of banks’ lending activity for the period. But, he said he was uncertain what, if any, factors were driving residential and multi-family higher and commercial and industrial and commercial real estate lower.
The Eagle has previously reported gains in area home sales as well as in home and apartment construction activity.
The report also contained a broader set of data showing that bank profitability continues to improve, assets are climbing, and the number of financial institutions in Kansas is shrinking.
The median return on assets – a measure of bank profitability that shows how much money a bank earns for each $100 it has in assets – was 0.88 percent compared with 0.81 percent a year ago.
During the period, total assets increased to $63.6 billion from $61.9 billion.
And, the report said, the number of institutions in Kansas was 300, compared with 318 in 2011. That’s a number that continues to decline every year.
“It’s absolutely frightening,” said Shawn Mitchell, president and CEO of the Community Bankers Association of Kansas.
“I know of several deals in the works right now where we’re going to lose more charters in the state of Kansas,” he said. “I have no idea where we’re going to end up ... but we’re not done with the mergers and consolidation.”
Mitchell said those mergers and consolidations are driven by bankers who are getting out of the business because of the burden of increased regulation.
Other bankers have said declining rural populations are driving some bank consolidation, as are the inability of owners to transfer bank ownership to younger generations, either because they don’t exist or don’t have an interest in owning a bank.