Kansas City Business Journal

The Kansas City area includes some great regional and national banks offering a wide variety ofservices and capable of handling the business of large companies. But which ones are the strongest?

We studied the numbers for every bank with a presence in the Kansas City area to find out. We’ve divided the banks into three categories:

less than $250 million in assets
$250 million to $1 billion in assets
more than $1 billion in assets

This story ranks the strongest banks in the midsize category. A previous story ranked the largest banks and a future story will rank the strongest small banks.

We determined the rankings using five 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.
Texas ratio measures the credit problems of a bank. It ¡s determined by adding up the problem loans and dividing them by a bank’s equity capital and loan-loss reserves. If a bank has a Texas ratio that exceeds 100 peroent, it’s in serious jeopardy of being shut down by regulators.
Core capital ratio measures the amount of reserves a bank sets aside. Banks are required to hold a minimum of 4 percent core capital in reserve to be considered well capitalized by regulators. If this ratio drops to less than 2 percent, regulators step in and shut a bank down.
Equity capital is capital set aside that is free of debt and available to be used in the interest of the business.
Total loans and leases was used to help separate banks with similar numbers, giving more emphasis to the banks with larger portfolios.

Honorable mentions

Some difficult choices were made in putting the list together, so its important to identify three honorable mentions.

CrossFirst Bank was ranked fifth on our list last quarter, and while its numbers improved across the board, several banks on our list experienced even greater improvement.

The Mission Bank was also on our list last quarter, ranked fourth. It showed minor
improvement in problem loans, Texas ratio and core capital, but its equity capital and lending dropped. While still an incredibly strong bank, other banks posted better numbers.

First Federal Bank also deserves an honorable mention, posting a problem loan ratio similar to our other honorable mentions and an incredibly strong core capital ratio. The institution’s Texas ratio and equity capital, while strong, didn’t measure up to the leaders.

The Strongest Banks
Here, in reverse order, are the second-quarter 2014 top five strongest banks in the Kansas City area with $250 million and $1 billion in assets.

No. 5: Platte Valley Bank of Missouri has niœ strength in its loan portfolio and solid equity capital for a bank its size. Honorable mentions like CrossFirst Bank and Mission Bank are nipping at its heels, but more equity and core capital would solidify this bank on our list. (Previous: Honorable mention in Ql 2014)

No. 4: Central National Bank is once again deserving of being on our list with only 0.27 percent of its $391.4 million in loans facing any trouble. The bank, which faced trouble during the recession, has been reinvigorated. With nearly $102 million in equity capital saved up, this bank is strong and has lots of options for quality growth. (Previous: No. 3 in Ql 2014)

No. 3: Missouri Bank & Trust posted the lowest problem loan ratio of in the entire category at 0.05 percent. That’s an incredible accomplishment for a bank with $393.6 million in loans — and something the bank has been doing for many quarters. If Missouri Bank can add some more core capital, it will become a long-term fixture on the strongest banks list. (Previous: Unlisted in Ql 2014)

No. 2: Morrill & Janes Bank & Trust is an impressively strong bank, with only 0.09 percent of its $425.98 million in loans facing any trouble. The bank also has $76.87 million in equity capital. The bank topped our list last quarter, but just missed repeating this quarter. (Previous: No. 1 in Ql 2014)

No. 1: Our new top strongest bank in the Kansas City area in the midsized bank category Bank of Lee’s Summit. Last quarter this bank ranked second, but its loan portfolio improved enough to grab the top spot this time around. Although the bank is smaller than others on the list, it has impressive capital reserves for its size, which points to quality management that is preparing the bank for future growth opportunities. (Previous: No. 2 in Ql 2014)

James reports about banking, financial services, manufacturing and sports business.