Kansas banks report net loss in third quarter, thrifts show slight increase in profits

Kansas banks report net loss in third quarter

KANSAS CITY, Mo. — Kansas commercial banks posted a net loss for the third quarter as the recession and bad loans continued to punish the state’s lenders.

The state’s savings and loans, on the other hand, were able to eke out a slight increase in profits.

The Federal Deposit Insurance Corp. said Tuesday that Kansas’ commercial banks reported a net loss of $2.9 million during the three months ended Sept. 30. By comparison, the banks earned $90.4 million during the same period a year ago.

Kansas thrifts reported earning $16.3 million, a 3 percent increase from the $15.8 million they earned during the year-ago period.

The continuing pressure of commercial and residential foreclosures forced Kansas banks to write off 1.4 percent of loans and leases during the quarter, up from 0.55 percent a year ago. The percentage of assets that were nonperforming, or past due, rose to 3.3 percent from 1.5 percent a year ago. Money set aside to cover potential loan losses also jumped, rising 82 percent from $102.9 million to $187.7 million.

It was largely the same for savings and loans, which wrote off a net 0.43 percent of loans and leases, up from 0.14 percent a year ago, and reported that 1.22 percent of assets were past due, up from 0.54 percent a year ago.

Thrifts did reduce the amount of money set aside for potential loan losses by almost 30 percent from a year ago to $6.4 million.

The percentage of unprofitable commercial banks in Kansas increased from 12 percent a year ago to 18.5 percent this year and the percentage of banks reporting a year-over-year increase in earnings declined from 51.2 percent to 33.2 percent a year ago. The state had 325 banks in the third quarter, down from 332 a year ago.

Among Kansas thrifts, of which there were 16, down from 17 a year ago, the percentage of unprofitable ones increased to 31.3 percent from 23.5 percent a year ago. Almost 44 percent of savings and loans reported a year-over-year increase in profits, down from 52.9 percent a year ago.

Commercial banks reported total deposits during the quarter of $39.8 million, about level with $39.5 million a year ago. Thrifts, on the other hand, saw a 7 percent increase in deposits to $7.2 million.

Chuck Stones, president of the Kansas Bankers Association, said the FDIC’s numbers didn’t surprise him and demonstrated that more restrictive lending regulations are hurting both banks and the communities who rely on them for loans.

“For those earnings reports to go up we’ve got to have the ability to lend and right now we’re being cramped by our examiners,” Stones said. “It’s hard to make good loans now.”

Nationally, banks earned $2.8 billion in the third quarter, compared with $879 million during the same period a year ago. But they also wrote off $50.8 billion in loans and reported 4.9 percent of loans were 90 days or more overdue — the highest amount in 26 years.