Area suffers another bank failure

First National Bank of Johnson CountyThe First National Bank of Anthony, known in this market as the First National Bank of Johnson County, became the nation’s 40th bank to fail this year.

The bank’s failure was the third to hit the Kansas City area in four months. TeamBank failed on March 20, followed by American Sterling Bank on April 17.

Columbian Bank and Trust had failed in August 2008 and Douglass National Bank failed in January of that year.

Regulators also closed banks in Georgia and North Carolina today.

First National of Johnson County's failure has opened the market to an Oklahoma-based lender that already operates in several Kansas markets.

SNB Bank of Kansas, based in South Hutchinson, Kan., will take over the failed bank’s offices, including one in Olathe and one in Overland Park. All $142.5 million of deposits in the bank will transfer automatically to the new bank, according to the Federal Deposit Insurance Corp.

SNB Bank is owned by Southwest Bancorp. which also owns Stillwater National Bank in Stillwater, Okla. Southwest’s two banks combined have roughly $3 billion in assets.

First National customers can continue to use their checks, debit cards and automatic teller machines. The branches will maintain normal business hours.

SNB Bank of Kansas also agreed to buy nearly all of the failed bank’s $156.9 million in assets, with the FDIC agreeing to share in losses on $130.5 million of the assets. The FDIC said it expects its deposit insurance fund to lose $32.2 million from the failure.

Customers with questions can contact the FDIC at 877-367-2719 through 9 p.m. today, from 9 a.m. to 6 p.m. Saturday and from noon to 6 p.m. Sunday.

Kansas City’s troubled real estate market had slain the Anthony, Kan.-based bank southwest of Wichita.

Federal regulators seized the more than 100-year-old bank after mounting real estate foreclosures and loan problems overwhelmed its capital reserves.

The bank had been under regulatory orders to boost its capital to higher than normal levels by March 20. But its March 31 financial report showed instead that capital dwindled to perilously low levels.

Bank officials did not respond to calls about the capital condition, but they had previously ascribed those problems to the bank’s entry into Johnson County just a few years ago.

First National, which opened in Anthony in 1885, sought growth after the turn of this century by opening loan offices in Overland Park and Olathe. It then converted them to branches to accept deposits and provide a complete line of banking services.

Thanks to its expansion into Johnson County, the bank doubled in size between the end of 2001 and the end of last year. But that expansion also sewed the seeds for Friday’s failure.

As problem loans piled up last year, CEO Richard Ciemny tied them to problems here.

“It is the Kansas City market. It is not the Wichita market, it is not the Harper market or the Anthony market or Mayfield market. Kansas City has not been good to this bank,” Ciemny had said in February, after becoming CEO in January.

The depth of problems surfaced amid the details of that March 31 financial report submitted to regulators at the end of April.
Problem loans had more than doubled. Foreclosed properties lingered on the bank’s books.

The bank had lost nearly 60 percent of its already strained capital since the start of the year. Capital stood at only 1.6 percent of assets, far below the 5 percent minimum expected of a well capitalized bank.

Regulators previously had ordered the bank to boost its capital to 8 percent of assets before the end of March. Ciemny had said in February that the bank was working on a capital plan but would not discuss it.

He’d also said the bank was trying to sell its Johnson County branches and focus on its traditional markets in and near Wichita.