Aug. 28--All of the area's 10 largest, Kansas-based banks turned a profit in the second quarter of 2014, but four of them saw lower profits compared with a year ago.
That's according to information made public Thursday by the Federal Deposit Insurance Corp.
In its release of financial information for the nation's commercial banks and thrifts in the quarter ended June 30, the FDIC said aggregate net income was $40.2 billion, a 5.3 percent increase from net income of $38.2 billion in the second quarter of 2013.
FDIC Chairman Martin Gruenberg said in a news release that there was additional improvement in the banking industry in the second quarter of 2014, including higher net income, better asset quality and loan balances that grew at their fastest pace since 2007.
"However, challenges remain," Gruenberg said. "Industry revenue has been under pressure from narrow net interest margins and lower mortgage-related income."
The Eagle looked at the 10 banks that are headquartered in Kansas and have the most deposits in the area, based on the FDIC's Deposit Market Share report for the Wichita metropolitan statistical area -- Butler, Harvey, Sedgwick and Sumner counties. The banks represent institutions that have a little more than $100 million in assets to a few billion dollars.
The four banks that saw their profits decrease in the 12-month period were: Wichita-based Fidelity Bank, Colwich-based Legacy Bank, Rose Hill Bank and First Bank Newton.
Roger Kepley, Rose Hill Bank president, said his bank's 30 percent decline in profit -- from $1.09 million in second quarter 2013 to $765,000 in this year's second quarter -- was a function of moving more money to loan loss reserves because the bank's loan portfolio has grown between $10 million and $12 million in the past year.
"As you add more of those (loans) you need to increase your provision proportionately," Kepley said.
Kepley called it a "belt-and-suspenders approach of being very conservative" to manage the $253 million-asset bank's risk in new commercial loans "in case there is a bolt of lightning out there."
At Fidelity, spokesman Al Sanchez said the $1.64 billion-asset bank's 19.5 percent decrease in profit came from a decline in investment income between the first half of 2013 and the first half of 2014.
"We had some investment income in first six months of calendar year '13 that did not reoccur in the first six months of this calendar year," Sanchez said.
Ron Lang, president of Midland National Bank in Newton -- one of the six area banks that posted a higher profit from a year ago -- said his bank's $115,000 increase in net income between the second quarters of 2013 and 2014 was mostly the result of moving money out of loan loss reserves.
"Some customers who went through tough times are starting to recover ... and we're starting to see some of those benefits," said Lang, whose bank has $136 million in assets.
The other five banks that earned higher profits in the second quarter of 2014 were Intrust Bank, Emprise Bank, Capitol Federal Savings, Southwest National Bank and Equity Bank.
Reach Jerry Siebenmark at 316-268-6576 or email@example.com. Follow him on Twitter: @jsiebenmark.
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