Where Kansas City Banks Put Their Money

The FDIC’s Call Report ledger is unambiguous. Kansas City’s locally headquartered banks kept the lending pump primed after 2020, but they reserved a smaller share of each new dollar for the category that looks most like operating-company credit.

At year-end 2020, 64 FDIC-insured institutions based in the Kansas City, Mo.-Kan., metropolitan area held $54.5 billion in loans and leases. By the end of last year, 51 surviving institutions held $74.2 billion—a $19.6 billion increase, or 36 percent, even as mergers and headquarters moves thinned the roster. 

Commercial and industrial loans, the line that most closely tracks working capital, equipment, inventory and other business credit, rose from $16.7 billion to $20.1 billion, a 20 percent gain. But real estate loans rose from $31.0 billion to $43.6 billion, a 41 percent gain. Of the net new loans in that locally chartered system, real estate accounted for 64 percent; C&I accounted for 17 percent. C&I’s share of the combined book slipped from 31 percent to 27 percent; real estate’s share moved from 57 percent to 59 percent.

That is the forest. The bankers who work the market say the trees reveal more than a simple change of direction.

Tyler Bachman, president of First Heritage Bank in Lenexa, argues the mix shift is less a decision by banks to become property lenders than a decision by their customers not to need old-fashioned C&I. “For a lot of community banks, our C&I customers are mostly small business or at most mid-market, with revenue of $100–$200 million and below,” he said. 

Those were the firms that received large sums of PPP and EIDL assistance during the pandemic—some because they needed the capital, others because the rules were loose enough that qualification, not distress, opened the window. “A lot of clients through the years were flush with capital and cash,” Bachman said. “They have not needed to borrow for much of anything if they are on a steady path of normal opportunities and growth.”

Inside his bank, C&I line-of-credit utilization is among the lowest he has seen. A fairly wide swath of borrowers are not using the line at all. That depresses Call Report C&I balances. When those same companies do borrow, “it’s almost always for equipment and real estate, and that always shows up as real estate on Call Reports.” Working-capital financing, outside of struggling firms, is scarce.

Jackson Hataway, president and CEO of the Missouri Bankers Association, puts a second demand-side engine under the same numbers: companies coming back to the office. “The demand for CRE investment has certainly increased,” he said. Concerns about loan repricing on commercial-property portfolios have faded, “which opens up more opportunity.” 

At the same time, metros are still working through return-to-office decisions. After COVID-era work-from-home policies, “many corporations have implemented return-to-office policies, and as a result, they have invested in either building new facilities or renovating existing facilities,” Hataway says. “All of this factors into more demand and appetite for CRE lending, especially if a given bank has less concentration in that area compared to other sectors.”

The classification point is the quiet correction to the metro scorecard. A distributor financing a second warehouse or a firm renovating its headquarters for a mandated return to the desk is still an operating company. The Call Report, following collateral rather than purpose, parks much of that loan with buildings. Bachman’s version of the six-year story is that cash-rich borrowers stopped drawing working-capital lines, and the borrowing they still wanted was the kind regulators code as real estate. Hataway adds that some of the new real estate demand is itself a business decision—space, not speculation.

A third force: Companies that still need a bank. Bachman has watched private-equity-driven acquisitions roll through manufacturing and distribution. “We’ve had a handful of clients sell in the last three or four years, and not a lot of new companies of that size taking their space. Companies are being combined with others, so you have the same production in a much larger entity.” Community banks become more real estate oriented, he said, “because that’s where the loan demand has been.”

Hataway will not pretend the FDIC file can be sliced into neat comparisons between localized markets in Jackson County vs. Johnson County, but notes that community banks remain “the key contributors to operating lines for businesses in their markets.” Given ongoing growth in the Kansas City region, he would expect more CRE demand—“it tends to close quicker than other loan types”—but “I know they are still doing ample volume in the C&I category, with some banks being predominantly C&I focused.” 

Speed of close is an underrated piece of the mix shift: if property deals fund faster than operating lines, the year-end snapshot will lean real estate even when bankers say they are still in the C&I business.

The construction file still has a cycle inside it. Construction and land-development loans in the KC-headquartered system jumped 66 percent, from $4.0 billion to $6.6 billion, peaked at 10.5 percent of total loans in 2023, at 10.5 percent, then eased to 8.9 percent in 2025 without reversing. Multifamily rose 74 percent, to $3.1 billion. Traditional 1- to 4-family mortgages grew more slowly than the overall book. Nonfarm nonresidential property grew 42 percent to $18.5 billion and held a stable quarter of combined loans.

Bachman splits that construction number the way a credit committee does. Owner-occupied projects, repaid from the cash flow of the business that will use the building, “continue to be good loans in general,” he says. Speculative development—projects built to sell or lease to a third party—is another book. “We’re operating more cautiously than we had been. We’re starting to heighten the underwriting standards because of a fear of where we are in the rate cycle.”

Two caveats still belong on the data, as the reports follow the charter, not the borrower’s street address, so the lending of national and super-regional banks isn’t included. Of the rest, the market is top-heavy: at year-end 2025, UMB Bank and Commerce Bank together held most of the locally headquartered C&I book and a large share of construction and multifamily credit. 

The Federal Reserve Bank of Kansas City reported that commercial real estate was the largest source of loan growth among Tenth District banks in late 2025 and also posted the largest increase in noncurrent loan rates. This extract does not test credit quality. Hataway’s read of the regulatory data is calmer than the district headline. 

“Every piece of regulatory data we have shows fairly strong credit conditions across the board,” Hataway says. Community and regional banks, he said, “will continue to be present for all areas of commercial lending as long as business fundamentals remain strong.” Any headwinds against middle-market owner-occupied CRE or working lines “will come from a wide variety of domestic and global economic factors rather than banks”—tariffs, global conflicts, interest-rate decisions that hit borrower financials. “At this point, both sectors are performing well for Kansas City area banks.”

Bachman closes with a line business owners will recognize. “It’s a good time to be a borrower right now.” Kansas City is not a super-high-growth economy, he said, but it is very competitively banked, so good credit risks draw thin spreads and multiple bids. “If we want high loan growth, we have to have good people and really hustle, because you have to go find them.”

The numbers from 2020 through 2025 still say the forest grew and that a larger share of the new timber is real estate. The bankers’ correction is that much of that timber was demand, not strategy: cash-flush companies that stopped drawing lines, employers that needed space more than working capital, and deals that closed as buildings. 

The risk they flag is not that local banks left the commercial market. It is that the next shock—if it comes—will show up first in borrower financials, not in a sudden loss of appetite on the other side of the table.  

Methodology

Universe: FDIC-insured institutions headquartered in the Kansas City, MO-KS CBSA as of each Dec. 31. Source: FDIC BankFind financials (Call Report–derived SDI). Measures locally headquartered portfolios, not all lending originated in the metro. 

PUBLISHED SEPTEMBER 2026