Citizens Bank of Kansas on Monday will open its Western Credit consumer finance offices – including one in Wichita – as branches of the $217 million bank.
Citizens chairwoman Jane Deterding said Friday that the Kingman-based bank has received Federal Reserve approval for conversion of the Western offices at 615 E. 47th St. South and Salina.
The bank received its first regulatory approval, from the Kansas Office of the State Bank Commissioner, in June.
The two offices – which together employ seven workers – will be branded as Western Credit, a branch of Citizens Bank of Kansas, she said.
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The Fed approval ends a process begun several years ago to bring the consumer finance company under the bank and onto a single balance sheet. The move also allows Citizens to put to use some of its excess deposits.
Western had been owned and operated by Citizens’ holding company, King Bancshares. King acquired Western in 1997.
Western makes subprime loans to consumers, including those with a history of credit problems. Deterding said she hopes to get some Western customers to establish checking and savings accounts with the bank. That’s why the two Western offices will become bank branches.
“It’s a different clientele,” she said. “Frankly, many of the customers of Western Credit are underbanked or unbanked. They are comfortable with the (consumer) finance model but they are not comfortable with the whole commercial bank model.”
“We will be offering retail (banking) services there and can, perhaps, help these under-banked customers move into more traditional banking services,” she added. “Some of these customers are walking around with as good a credit score as you or I.”
Deterding said checking and savings account services will be offered at the Western offices starting in January.
She said the addition of a subprime loan portfolio won’t raise the bank’s capital requirements. It will have to set aside a slightly higher percentage of money in case any of the subprime loans go bad.
“They (subprime loans) are such a small percentage of our loan portfolio that the net effect (on the bank’s overall loan loss reserves) is virtually none,” Deterding said.
The addition of Western will increase its branches to eight in Wichita, Kingman, Medicine Lodge, Pretty Prairie, Salina and Windfield.
Deterding said it may be a few weeks before the Western offices get new signs. “We’ll have business cards and stationery (ready) for Monday,” she said.