|
|
News Releases
April 29, 2009
Kansas banks are doing okThe state's banking industry fared pretty well in the last quarter of 2008, according to local industry experts.
They said the banking statistics released late last week by the Federal Deposit Insurance Corp. show an industry affected, but still lending and holding its own despite one of the country's worst recessions.
"It looks like we're experiencing some of the slowdown in the economy," said Rick LeCompte, Wichita State University finance professor. "Obviously there are some write-offs going on, and earnings aren't as high.
"There are some influences dropping capital, but not nearly as rapidly as we have seen (in other parts of the country)."
The FDIC's Regional Economic Conditions report showed that the median for pre-tax return on assets was 0.74 percent in fourth quarter 2008 compared with 1.05 percent in the same period a year ago.
Pre-tax return on assets, a standard performance measurement, shows how much money a bank earns before taxes for each $100 it has in assets.
While the report shows bank earnings slipped in the quarter, other measures indicate that banks were moving part of their earnings to compensate for any loan losses in the future.
That's reflected in the industry's allowance for loans and lease losses, which increased from a median 1.22 percent in the fourth quarter of 2007 to 1.37 percent in the fourth quarter of last year.
But the industry's Tier 1 capital levels remained strong in the fourth quarter, experts said, despite pulling in lower earnings and setting aside more money for possible future losses.
The industry's fourth quarter 2008 Tier 1 leverage ratio was 9.43 percent, down slightly from 9.64 percent in the same period in 2007.
The FDIC considers any Tier 1 ratio higher than 6 percent to be well-capitalized.
"That seems to indicate capital is still strong in banks across the region," said Chuck Marshall, manager for the financial institutions group at accounting and consulting firm Kennedy and Coe.
The report "indicates that the industry realizes the challenges it is facing and is using all the tools it has to make sure it stays strong," he said.
Marshall added that the report shows that four months ago, when confidence in the economy was at one of its lowest points, the state's banks and thrifts "were already dealing with the issues at hand."
Adobe Reader is required for viewing many of the materials posted. Please click here to download free.
|
