May 18, 2013

Kingman bank looks to merge its consumer finance business

Citizens Bank of Kansas hopes to roll a consumer finance business — and its sister company — into the bank later this year.

Citizens Bank of Kansas hopes to roll a consumer finance business — and its sister company — into the bank later this year.

Jane Deterding, chairman of the Kingman-based bank, who offices from its west Wichita branch, said Friday that the bank has applied with the Kansas bank commissioner to merge Western Credit into the bank, which also would add two new branch offices.

“Our plan is to bring that together so we just have the one entity instead of separate companies,” she said.

Western Credit makes subprime loans to consumers, including those with a history of credit problems. It is owned by Citizens’ holding company, King Bancshares.

The business, which King acquired in 1997, has offices in south Wichita, 615 E. 47th St. South, and Salina. It has seven employees.

Citizens’ conversion from a national bank charter to a state one allows the roll-up of Western Credit into the bank.

Deterding said she expects approval for the state charter to come this month.

She hopes approval of the Western deal will come this summer. Once it’s approved, Western’s staff will become bank employees and its offices will become branches of the bank.

But that doesn’t mean they will become full-service branches, Deterding said.

“Initially we’ll stick with just the loan products that cater to that consumer finance crowd,” she said.

A portion of Western’s $7 million in loan assets will become the bank’s assets, she said. Because of bank regulations, “we’re going to have to hold a certain amount of those assets at the holding company level,” Deterding said.

Over time, the bank will look at converting some of Western’s loan customers to deposit customers.

“Many of those customers over at Western Credit would have the credit level to be (bank) customers,” she said.

Those customers who don’t have good credit, or have a history of overdrawing checking accounts, also will have the opportunity to become deposit customers of the bank.

Deterding said that will be accomplished through a “second-chance” checking account that Citizens is developing and hopes to put in place in the fourth quarter of this year.

The $226 million bank operates six branches in Wichita, Kingman, Medicine Lodge, Pretty Prairie and Winfield.

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