Kansas Banks

Kansas banks posted a return on assets of 1.41% in Q1 2026, up 16 basis points from 1.25% in Q4 2025 and up 17 basis points from 1.24% a year earlier, marking the strongest ROA in the data shown. The improvement accelerated on both timeframes, with quarter-over-quarter and year-over-year gains nearly identical at 16 and 17 basis points respectively. Kansas banks now operate 21 basis points above the national ROA benchmark of 1.20%, a performance gap that has widened from prior periods.

Two forces are driving the profitability improvement. First, net interest margin expanded to 3.92%, up 8 basis points quarter-over-quarter from 3.85% and up 19 basis points year-over-year from 3.74%. The year-over-year expansion pace (19 basis points) is more than double the quarter-over-quarter pace (8 basis points), indicating the NIM widening is decelerating but still positive. Kansas NIM now sits 11 basis points above the national benchmark of 3.82%. Second, the efficiency ratio improved sharply to 60.51%, down 3.01 percentage points quarter-over-quarter from 63.52% and down 3.26 percentage points year-over-year from 63.77%. The efficiency improvement was nearly identical on both timeframes, suggesting sustained operational discipline rather than a one-time event. Kansas banks now operate 3.64 percentage points below the national efficiency ratio of 64.14%, meaning they convert revenue to profit more efficiently than the broader FDIC-insured universe.

Specialization patterns are pronounced. Credit Card specialists within Kansas posted NIM of 13.80%, nearly 10 percentage points above the national benchmark of 3.82%, and efficiency ratio of 54.43%, 9.71 percentage points below the national 64.14%. Mortgage specialists trailed at 76.96% on efficiency ratio, 12.81 percentage points above the national benchmark, reflecting the structural cost burden of mortgage origination and servicing. Agricultural banks, representing 21.3% of Kansas institutions, posted ROA of 1.37% and NIM of 3.84%, both above the national benchmarks and consistent with the state's agricultural specialization. If the efficiency ratio continues its current pace of improvement (approximately 3 percentage points per year over the two periods shown), Kansas banks will approach 57% efficiency by Q1 2027.

Kansas banks grew assets at 5.69% year-over-year in Q1 2026, decelerating from 6.21% in Q4 2025 (down 8.45 percentage points quarter-over-quarter) but accelerating from 4.22% a year earlier (up 34.75 percentage points year-over-year). The year-over-year acceleration is the headline: asset growth in Q1 2026 ran 35 percentage points faster than the same quarter a year earlier, though the quarter-over-quarter deceleration of 8.45 percentage points signals the expansion is slowing. Kansas banks now grow assets 53 basis points faster than the national benchmark of 5.15%.

Loan growth drove the asset expansion, rising 7.37% year-over-year in Q1 2026, decelerating from 7.58% in Q4 2025 (down 2.77 percentage points quarter-over-quarter) but accelerating from 7.28% a year earlier (up 1.24 percentage points year-over-year). The year-over-year acceleration is modest (1.24 percentage points) relative to the asset-growth acceleration (34.75 percentage points), suggesting the asset expansion was driven by a broader balance-sheet build rather than loan growth alone. Kansas loan growth now exceeds the national benchmark of 6.20% by 1.17 percentage points. Deposit growth followed a similar pattern: 5.72% year-over-year in Q1 2026, decelerating from 6.50% in Q4 2025 (down 11.93 percentage points quarter-over-quarter) but accelerating from 5.69% a year earlier (up 0.57 percentage points year-over-year). The quarter-over-quarter deposit deceleration (11.93 percentage points) was sharper than the loan deceleration (2.77 percentage points), mechanically compressing the loan-to-deposit ratio from 72.96% to 71.79%. Kansas deposit growth exceeds the national benchmark of 5.02% by 70 basis points.

The growth profile is decelerating quarter-over-quarter but accelerating year-over-year, a tension that reflects the comparison base: Q4 2025 was a strong growth quarter, while Q1 2025 was weaker. Loan growth continues to outpace deposit growth on a year-over-year basis (7.37% versus 5.72%), though the gap narrowed quarter-over-quarter as deposit growth decelerated more sharply. If loan growth continues to outpace deposit growth at the current spread (1.65 percentage points year-over-year), the loan-to-deposit ratio will rise toward the national benchmark of 76.38% over the next four quarters.

Kansas banks reported a delinquency rate of 0.53% in Q1 2026, up 6 basis points from 0.48% in Q4 2025 and up 18 basis points from 0.35% a year earlier. The year-over-year increase of 18 basis points is the more significant move, marking a sustained rise in problem loans over the past four quarters, though the quarter-over-quarter increase of 6 basis points signals the pace of deterioration is slowing. Kansas banks remain 16 basis points below the national delinquency benchmark of 0.70%, indicating credit quality that is stronger than the broader FDIC-insured universe despite the upward trend.

The nonperforming asset ratio held stable at 0.38% in Q1 2026, up just 3 basis points from 0.34% in Q4 2025 but up 12 basis points from 0.26% a year earlier. The year-over-year increase of 12 basis points is the headline: NPA has risen steadily over the past year, though the quarter-over-quarter stability (3 basis points) suggests the rate of increase is moderating. Kansas banks sit 13 basis points below the national NPA benchmark of 0.51%. Tier 1 capital rose to 13.70% in Q1 2026, up 10 basis points from 13.60% in Q4 2025 but down 25 basis points from 13.95% a year earlier. The year-over-year decline of 25 basis points is the more meaningful trend, reflecting capital deployment into growth (asset growth of 5.69% year-over-year) rather than capital erosion. Kansas banks now sit 56 basis points below the national Tier 1 capital benchmark of 14.26%, a gap that has widened from prior periods.

The risk profile is worsening on credit quality but stable on capital. Delinquency and NPA both rose year-over-year, with delinquency increasing 18 basis points and NPA rising 12 basis points, though both metrics remain well below national benchmarks. The quarter-over-quarter increases (6 basis points on delinquency, 3 basis points on NPA) are smaller than the year-over-year increases, suggesting the deterioration is slowing. Tier 1 capital declined 25 basis points year-over-year but rose 10 basis points quarter-over-quarter, consistent with a bank deploying capital into growth rather than facing profitability pressure. If delinquency continues to rise at the current quarterly pace (6 basis points per quarter over the two periods shown), Kansas banks will reach the national benchmark of 0.70% by Q3 2026.

Kansas banks held a loan-to-deposit ratio of 71.79% in Q1 2026, down 1.17 percentage points from 72.96% in Q4 2025 but up 82 basis points from 70.97% a year earlier. The quarter-over-quarter decline reflects deposit growth outpacing loan growth: deposits expanded 5.72% year-over-year while loans grew 7.37%, but the quarterly deceleration in loan growth (from 7.58% to 7.37%, down 2.77 percentage points) was sharper than the deposit deceleration (from 6.50% to 5.72%, down 11.93 percentage points). The LDR now sits 4.58 percentage points below the national benchmark of 76.38%, signaling a more conservative liquidity posture than the broader FDIC-insured banking universe.

Noninterest-bearing deposit share held stable at 21.95% in Q1 2026, up just 2 basis points from 21.92% in Q4 2025 and down 24 basis points from 22.19% a year earlier. The year-over-year decline is modest relative to the national benchmark of 21.60%, which Kansas banks now exceed by 35 basis points. Net interest income as a percentage of revenue fell sharply to 0.28% from 1.21% in Q4 2025, a decline of 93 basis points quarter-over-quarter, though year-over-year the metric was stable at just 1 basis point below the prior year's 0.29%. The quarter-over-quarter drop suggests a compositional shift in revenue mix, with noninterest income rising as a share of total revenue. Kansas banks now trail the national NII-to-revenue benchmark of 0.32% by 4 basis points.

The engagement profile is mixed: the loan-to-deposit ratio declined quarter-over-quarter as deposit growth outpaced loan growth, but year-over-year the ratio rose, reflecting sustained lending expansion. Noninterest-bearing share remains stable and above the national benchmark, a sign of deposit-franchise strength. The sharp quarter-over-quarter decline in NII as a percentage of revenue warrants monitoring; if the trend persists, it may signal a structural shift in revenue composition rather than a seasonal fluctuation.