Two Topeka Banks Report Year-End Losses

By: Posted by Melissa Brunner
By: Posted by Melissa Brunner

(WIBW) - A pair of Topeka banks report ending the year with losses.

CoreFirst Bank and Trust said it ended 2012 with a $23 million loss. Bank officials say it's largely due to increasing the bank's loan loss reserves to support troubled loan customers. They say the move is part of a planned strategy to enhance operations.

Also, information on the FDIC's web site shows Kaw Valley Bank reported a $5 million loss for 2012.

Capitol Federal's year end report wasn't posted, but in a release Tuesday, the bank said it earned $17.6 million in the fourth quarter. The amount is about $1.2 million less than the fourth quarter of 2011.

Complete news release from CoreFirst:
CoreFirst Bank & Trust, recognized over the past 53 years as a leading community lender for meeting the credit needs of the greater Topeka community and the other communities in which it serves, posted a total 2012 year-end loss of $23 million. The loss in large part is the result of increasing the bank’s loan loss reserves to support troubled loan customers. The bank announced the increase in reserves is part of an ongoing strategy to strengthen its loan portfolio and provide flexibility in working with customers who are still struggling due to continuing weakness in the economy. Based on the current outlook and taking into consideration the present economy, the bank is expecting positive results in the future.

Duane Fager, CoreFirst’s chairman, president and CEO reported, “Increasing reserves to support our troubled customers in our loan portfolio is just one part of an ongoing four-year strategic initiative to
enhance our operations. CoreFirst remains strong and stable, and our capital ratio remains above that required for a well-capitalized bank. Although our bank has recently sacrificed traditional levels of
performance and profitability to help our customers through the ongoing economic downturn, our actions have been a good community investment and are exactly what community banks should do.

“This action is one of the steps in a four-year strategic initiative that began in mid-year 2009 to address the challenges some of the bank’s customers have been experiencing – primarily related to the steep
decline in real estate values but also to stubbornly high unemployment and a stagnant economy,” Fager said. “While real estate values have not rebounded as expected, the bank has reduced its real estate
exposure to the point where the bank believes the majority of the issues have been addressed.

“Generally, when customers experience loan difficulties, it can take up to three to five years to get them back on track – some sooner and others later,” Fager explained. “At the beginning of the program, the
bank had $820 million in loans. That has been reduced to $530 million in loans with strategic reductions in the higher-risk areas of construction and development lending. Customers have been assisted though partial liquidation of their assets, restructuring with terms commensurate with their financial situation, revised payment schedules and other means of providing forbearance – all actions designed to stabilize and help them rebound.

“Our strategic plan includes a lot of positive changes for CoreFirst,” Fager said. “We have grown to more than $1 billion in assets and more than $95 million in capital and reserves. We will soon hire a new
President and Chief Executive Officer with added experience in managing a $1-billion bank. This is all part of enhancing our operations and customer service, and will lead us to future progress and profitability.”

The bank has been able to be a positive force where possible by using current earnings that have been historically strong as well as millions of dollars of excess capital that has been built up and retained over the years to assist customers through this economic downturn. The bank has accomplished many of the goals of this initiative and still has more than $1 billion in total assets and more than $95 million in capital and reserves. CoreFirst Bank & Trust remains strong, stable and has the capacity and expertise to serve the needs of our communities.

CoreFirst Bank & Trust headquarters is in Topeka, Kansas with locations from Johnson County to Denver.


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