Kansas Banks Remain Financially Strong

The Wichita Regional Chamber of Commerce has been in contact with our local banking community and the Kansas Bankers Association in light of the recent issues in New York and California, and if those repercussions could impact businesses and individuals in our region. Local bankers, as well as the Kansas State Bank Commissioner and the President and CEO of the Kansas Bankers Association, emphasize Kansas banks are financially strong and your deposits are safe.       

Stability of Kansas Banking - David Herndon, Kansas State Bank Commissioner

The rapid rise in interest rates, after being so low for so long, certainly has created some challenges for bankers as they adjust to this economic environment. An apparent cause of the two banks that recently failed is from a lack of diversification and a concentration on particular industries. Silicon Valley Bank (SVB), California focused on the tech and venture capital industries, while Signature Bank, New York, focused on the crypto markets.

Kansas banks are diversified and not overly reliant on singular volatile markets, certainly not underperforming ones. I believe Kansas banks will effectively manage through this economic period. Kansas banks are well-capitalized and have strong reserves.

There is no reason for depositors to panic, even if other banks might fail. No depositor has ever lost FDIC-insured deposits in an FDIC-insured bank. Deposits are insured to $250,000 plus the government has decided to insure all deposits at the failed banks and has established a funding mechanism for banks to access if needed. The U.S. banking system is safe and sound, Kansas banks especially. The Office of the State Bank Commissioner has and will continue to strive to ensure the safety and soundness of Kansas banks.

Kansas Banks Financially Strong - Doug Wareham, Kansas Bankers Association President & CEO

Kansas banks are financially strong and proudly support the financial service needs of individual Kansans and Kansas businesses. Kansas banks maintain very strong capital levels that are well above current regulatory standards. They also maintain record levels of loan loss reserves, which serve as an additional buffer for potential shocks to the economy.

It is also important to note that in the 88-year history of the Federal Deposit Insurance Corporation, no one has ever lost a penny of an insured deposit. At a minimum, the Federal Deposit Insurance Corporation insures funds in bank deposit accounts up to $250,000 and Kansas bankers work closely with their customers to insure levels above that minimum.

In light of recent bank closures in California and New York, the Kansas Bankers Association (KBA) believes it is important that all Kansans recognize that Kansas banks are strong and resilient. These bank closures appear to be outliers and are not reflective of the norm or financial strength of banks across Kansas and across America.

Kansas Bank Performance Overview

FDIC recently released fourth quarter 2022 industry performance numbers, and the news was good for the 210 banks headquartered in Kansas. Loan growth and continued strong credit quality are particularly encouraging signs that Kansas’s economy is holding up in an uncertain environment, and bank performance reflects this.

In 2022 compared to 2021:
• Loans grew by 11.16%
• Deposits grew by 1.58%
• Assets grew by 1.71%
• Net income declined slightly by 1.61%
• Nonaccrual loans declined by 31.54% (ex: loans in default)

The chart below is from FDIC’s release and compares the banks headquartered in Kansas with peers around the United States.