Kansas City Business Journal Ranks Great American Bank Number 4 Strongest Bank

Published by The Kansas City Business Journal, April 7, 2022

Kansas City’s top five strongest midsize banks of 2021

Kansas City has many strong banks that are big enough to offer a full slate of services, yet small enough to offer thoughtful customer attention. But which of Kansas City’s midsize banks – with between $250 million to $1 billion in assets – are the strongest?

To help readers find the area’s strongest banks, we went under the hood to look at Federal Deposit Insurance Corp. data on 2021 year-end numbers for every bank with a presence in the Kansas City area.

The strongest banks

No. 4:  Lawrence-based Great American Bank has branches in Kansas City, Lake Lotawana, and De Soto. The bank has no problem in loans in a $203.1 million portfolio and is backstopped by a 10.16% core-capital ratio and $34.1 million in equity capital. (Last year:  Unranked).

Judging criteria

The rankings were determined using six categories:

  • Problem-loan ratio shows the percentage of loans in a bank’s portfolio that are 90 days past due or no longer 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%, 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% 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 heft 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 are 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 a low problem-loan ratio becomes.

James Dornbrook
Staff Writer
Kansas City Business Journal