How Strong is the State Bank of Kimball?
There has been a lot written and said recently about the soundness of the American banking system. It has even been suggested that the federal government might nationalize some U.S. banks. What does that have to do with State Bank of Kimball?
First of all, we are in an excellent capital position. Capital is the measure of assets which exceed liabilities. Capital is the source of funds that allows a bank to withstand adversity. We are considered “well capitalized” by bank regulatory standards. There is not a higher classification. Our capital ratio has, in fact, strengthened over the past few years.
Another measure is our “coverage” ratio, or as it has recently been redefined, the Texas Ratio. That is the ratio of repossessions (called “Other Real Estate” on our books) and non-performing loans (past due 90 days or more) to total capital. Our Texas Ratio is under 20%; problem banks are those approaching 100%. As of this writing (9/30/10) we have no real estate repossessions.
State newspapers have also looked at the percentage of commercial real estate in the loan portfolio. At 26% ours is manageable. We have made the preponderance of loans in our local area, thus avoiding the pitfalls of large, speculative lending in the formerly “hot spots” of commercial growth.
Another strength is that we do not have a single bond in our investment portfolio (where we put the money we have in excess of the loans we made) that has been downgraded. This is not the case with every bank.
How do we explain this strength? We have been careful to maintain our lending standards despite the fact that some competitors (mostly the very largest financial institutions) had been lowering theirs. We have followed the advice of bank regulators who said, “if you don’t understand the investment don’t buy it.” We did not chase after sub-prime borrowers or cut corners to make a quick buck. And we have done business with providers whom we know and trust. And by the way, we have not borrowed a single penny from the federal government’s Troubled Asset Relief Program (TARP) either.
We are fortunate to be located in an area where our customers are hard working, reasonable and honest. We have been around since 1901 and hope to be around for many more years to come. Thank you for your continued support.
Why do business with a smaller bank?
If you are new to the area, or even if you have been here awhile, you may be inclined to think that larger banking institutions have more to offer, more sophisticated products, and maybe even more reliable service. Some of that may be true, in certain circumstances. However, I would like to give you some serious reasons to consider working with a smaller institution such as ours.
First, our service charges are far more reasonable than larger banks. We don’t nickel & dime our customers. We don’t charge you for checking your balance, for producing a courtesy checking account statement or amortization schedule. We don’t offer misleading “services” such as overdraft “protection” that carries an annual fee and an activation fee in addition to the overdraft fee (we do it the old fashioned way — by charging just the overdraft fee). On the loan side, we don’t up-charge for appraisals, credit bureau reports or legal opinions. We don’t pull fast ones. Not even slow ones. We have a conscience.
More broadly, we are accessible. You can talk to the decision maker on your account, or regarding bank policy. You don’t have to find your way through a maze of menus at an impersonal call center — we have live people answering our phones (though you can communicate electronically during or after hours). Our doors are open convenient hours, including Saturdays until noon. If you have a problem where you don’t quite fit into our guidelines, we will talk about it and try to find a way to accommodate you. If we can’t be all things to all people, we try to be most things. Our practice is to put ourselves in your shoes and try to find a way to make it work.
As for reliability, we have been in business for over a hundred years. We are regulated by the same agencies that regulate other banks. We may be small, but we think that allows us the opportunity to get through the cracks. And you can be certain of one thing: WE WANT YOUR BUSINESS!
A Word about Disclosure, Regulation, Paperwork and other Gobbledygook
While setting up this web site, we were confronted by an old nemesis: DISCLOSURE. For us it is a nuisance. It means smothering our customers in paper-based (or web cluttering) legalese. It costs us time and money. It represents documentation busywork when we are audited by our bank regulators. Did you read our Copyright, Security, Privacy or Electronic Funds Transfer notice? Our guess is that only 1 in a hundred, 3 at most, actually bother to do so.
On the other hand, every one of these disclosures has a history in law and politics. Just as an example, the Privacy disclosure originates in a problem that actually occurred right here in Minnesota. One of the larger banks in the state gave name and address information to a third party vendor. Unfortunately, the computer file listing happened to contain other information as well, namely account numbers and balances. The bank claimed this was done in error. Whether that was true or not, Congress passed a law to prevent it from happening again. As a result, financial institutions now have to disclose their information sharing practices. That is a good thing, sort of.
The problem is that consumers are inundated with so many of these disclosures, that they have stopped reading them. That is, until there is a problem. Then the financial institution is held up to the standard it has publicly announced. Still, given the paperwork blizzard created by all these disclosures do consumers really know the law? Should we present disclosures to everyone, or just to those who request them? If we don’t present them unrequested, how do consumers learn they are available? Is there a method for accessing the disclosures simply, or does it require electronic or other kinds of sophistication? Do disclosures represent inoculation against unfair practices, or only against real curiosity about bank practices? Are they actually worth the trouble?
Whatever the answers to these questions, the State Bank of Kimball will comply with regulatory requirements. In fact, we will do more than comply; we will make sure that we adhere to the highest ethical standards! And when we make a mistake (which is inevitable) we will make sure we correct it as quickly as possible. That is our pledge to you!
