Magazine article American Banker

Rural Banks Buy Neighbors in Rapid Kan. Consolidation

Magazine article American Banker

Rural Banks Buy Neighbors in Rapid Kan. Consolidation

Article excerpt

Mergers of neighboring institutions of similar size are happening all over Kansas as bankers there try to build assets to boost returns.

All but one of the 30 banks acquired in Kansas in the three years ended June 30 had less than $600 million of assets, according to SNL Bank M&A DataSource. More than half those deals involved community banks buying like-sized competitors.

"To thrive over the next three to five years, it's going to take critical mass," said William J. Schlobohm, who as president of Freedom Bancshares, Osage Beach, recently agreed to be bought by MNB Bancshares, a $102 million-asset bank holding company in Manhattan.

In another example of the trend, $103 million-asset Gold Banc Corp., Leawood, has deals pending to buy Farmers Bancshares, a $55.5 million-asset-institution in Oberline, and Peoples Bancshares with assets of $72 million in Clay Center.

Undoubtedly, the merger drive in Kansas is fueled, too, by the fact that state branching restrictions had caused hundreds of banks to be chartered. Seventy percent of all Kansas banks are in towns with fewer than 5,000 people.

"We're dealing with a large number of charters and a relatively small number of people," said Jim Maag, executive vice president of the Kansas Bankers Association. "Demographics are playing a big part in this continuing consolidation."

Today 290 state-chartered banks do business in Kansas, down from 437 in 1987. (Another 110 national banks operate in the state.)

MNB Bancshares president Patrick L. …

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