ANB Bank Recognized as #3 of KC’s Top Five Banks
KC’s five strongest large banks at midyear
Sept. 11, 2017
James Dornbrook, Reporter
Kansas City Business Journal
When it comes to choosing a bank, strength should be one of the top factors considered. That's because it offers peace of mind to know a bank will be at your side to provide vital financing no matter what the economic cycle brings.
To help our readers find the strongest banks, we took a look at the midyear numbers for every bank with a presence in the Kansas City area. Because different size banks typically service different types of clients, giving them different loan portfolios, we divided the banks into three groups to make for better comparisons:
Here, in reverse order, are the midyear 2017 top five large banks (and two honorable… more
- Small: less than $250 million in assets
- Midsize: $250 million to $1 billion in assets
- Large: more than $1 billion in assets
This article ranks the strongest of the 37 banks in the large group. Future articles will rank the strongest small banks and strongest midsize banks.
Large banks are an interesting study because they offer a wide range of services to a diverse mix of clients. You can find details on the judging criteria at the end of this article.
Because Kansas City is home to so many strong banks, it's important to name a couple of honorable mentions.
Founded about 30 years ago and based in St. Louis, Enterprise Bank & Trust has substantially grown its presence in the Kansas City during the past 10 years, now having about half of its branches in the area. Its wise and measured growth has included finding good-quality loans and leaving enough capital aside to jump on new acquisitions or continue growing its loan portfolio. The $5 billion-asset bank once again just barely missed making our list at midyear. (Previous: Honorable mention at year-end 2016)
Kansas City-based UMB Bank certainly fits every definition of a strong and reliable bank. It was a stalwart presence in our area during the Great Recession, garnering national attention for its strength during a period of financial crisis. UMB just barely missed making our top five and could easily push its way onto the list in the future by stockpiling a bit more capital reserves. (Previous: Unranked at year-end 2016)
The strongest banks
No. 5: Leawood-based CrossFirst Bank not only has been one of the fastest-growing banks in the Kansas City area during the past 10 years, but it is also one of the strongest. Founded in 2007, CrossFirst now has $2.39 billion in assets, making it the fourth-largest bank based in the area. It's led by Chairman Ron Baldwin, who has more than 40 years of banking experience, including his time at Bank IV Oklahoma, where he used a mergers-and-acquisitions strategy to build it into the second-largest bank in Oklahoma in the mid-1990s. It's also led by CEO Mike Maddox, a former basketball star at the University of Kansas who has been spending most of his time these days attracting some of the most experienced bankers in the industry to join the bank. (Previous: No. 3 at year-end 2016)
No. 4: Security Bank of Kansas City is new to the $1 billion-asset club in Kansas City, the result of merging the seven BancAbility brands under one charter. Given that virtually all of the individual bank brands made regular appearances on our smaller Strongest Banks lists, it's really not too big a surprise to see the newly combined $3.09 billion-asset bank immediately jump into the top five of the large banks. (Previous: Unranked at year-end 2016)
No. 3: Denver-based ANB Bank has regularly made appearances on our strong bank lists and now is climbing up the ranks once again. The bank posted a minuscule 0.14 percent problem loan ratio in a $1.38 billion loan portfolio. The only factor keeping this bank from jumping higher on the list is a need for a bit more reserve capital, though the bank logged an extremely healthy 8.42 percent core-capital ratio at midyear. (Previous: No. 5 at year-end 2016)
No. 2: Capitol Federal Savings Bank has been a regular presence on our list. Based in Topeka and with 47 branches throughout Kansas and the Kansas City area, Capitol Federal has built a stellar reputation for strength and resilience since its founding in 1893. The bank's effective, hands-on management helped it put together a $7.24 billion portfolio with a virtually nonexistent 0.30 percent problem loan ratio. The bank has a solid income stream and set aside plenty of reserves to use as growth capital. (Previous: No. 2 at year-end 2016)
No. 1: Once again the strongest large bank in the Kansas City area is also the largest bank based in the city. Originally founded in 1865, only 12 years after Kansas City was incorporated, Commerce Bank & Trust has built a sound reputation for strength and endurance. Its numbers are hard to wrap your head around, with only 0.21 percent problem loans in a $13.49 billion portfolio. That's a difficult feat for a bank one-fifth its size, which proves the bank knows how to hire experienced people and build solid and enduring relationships of mutual respect with its clients. (Previous: No. 1 at year-end 2016)
The rankings were determined using six categories, in the following order of significance:
Problem-loan ratio shows the percentage of loans in a bank's portfolio that are 90 days past due or no longer are accruing interest at the stated rate. The more problem loans a bank accrues, the weaker it becomes. This is the category first used to sort all the banks in each size group for comparison.
Texas ratio measures the credit problems of a bank. It is determined by adding up the problem loans and dividing them by a bank's equity capital and loan-loss reserves. The smaller the number, the better. If a bank has a Texas ratio that exceeds 100 percent, it's in serious jeopardy of being shut down by regulators. We use the Texas ratio to separate banks with similar problem loan ratios.
Core-capital ratio measures the amount of reserves a bank sets aside. Banks are required to hold a minimum of 6.5 percent core capital in reserve to be considered well capitalized by regulators. The more core capital a bank has, the better it can handle problems, so this is a category that carries hefty weight in the rankings.
Equity capital is capital set aside that is free of debt and available to be used in the interest of the business. Equity capital gives a bank versatility to continue making loans and seeking growth, so the more a bank has, the stronger it becomes.
Income is used to gauge a bank's prospects for a strong future. A bank might have few problem loans and large capital reserves, yet still be losing money. So it isn't going to be as strong in the long run as a bank that is profitable.
Total loans and leases were used to help separate banks with similar numbers, giving more emphasis to the banks with larger portfolios. The more loans a bank has, the more impressive it makes a low problem loan ratio.
James reports about banking, financial services and law.