Kentucky’s financial services industry weathered turmoil in 2020

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FRANKFORT, Ky. (WBKO) – The Kentucky Department of Financial Institutions (DFI) released its 2020 Annual Report today at https://kfi.ky.gov/Documents/KDFI2020AnnualReportWeb.pdf.

The report summarizes the status of state chartered banks, credit unions, trust companies, lenders and securities firms and professionals operating in Kentucky during the 2020 calendar year.

It highlights DFI’s work to promote consumer protection and reasonable regulation across the industry. The report also notes industry trends and changes across the state.

“In 2020, the COVID-19 pandemic had a significant impact on the economy,” Commissioner Charles A. Vice said. “However, Kentucky’s financial services industry has been able to navigate the uncertainties associated with the pandemic, while providing essential financial services and assistance to Kentuckians.”

Banks, credit unions and other lenders have provided much-needed economic relief through the federal Paycheck Protection Program (PPP), with approximately 50,655 PPP loans totaling nearly $5.3 billion approved in the Commonwealth.

Additionally, financial institutions have helped customers with loan modifications, payment extensions, lower interest rates, and reduced service charges.

The industry has accomplished all of this while adjusting its operations to meet the demands of Governor Andy Beshear’s executive orders and guidelines from the US Centers for Disease Control and Prevention.

“The department also made significant changes to our operations in 2020 to protect Kentuckians and save lives,” Vice said. “We performed the required monitoring activities, such as periodic reviews, 100% offsite. This has allowed us to meet all legal requirements, ensure the safety and health of our employees, and ensure that Kentucky’s financial services industry remains safe and sound.

Highlights of the 2020 report include the following:

  • DFI’s securities division worked closely with local and federal prosecutors to remedy investor harm when identified, resulting in $1.4 million in fines and more than $4 million restitution orders to aggrieved investors. Notable actions included a settlement agreement with JPMorgan Securities, which fined the company $325,000.
  • Investment activity continued to boom in Kentucky, with nearly 6,000 business filings including initial filings, renewals, advisory filings and exemption requests.
  • The banking sector continues to experience consolidation. The number of state-chartered banks fell 4.4%, from 114 in 2019 to 109 in 2020. The number of state-chartered banks fell 33.3% since 2010, when Kentucky had 156 banks state chartered. The number of state-chartered credit unions, 22, did not change in 2020.
  • The banking and credit union sectors saw strong asset growth in 2020, and liquidity, profitability and capital ratios remain strong.
  • Assets held by Kentucky banks rose 15% last year, fueled largely by economic stimulus funds kept in insured deposit accounts. Individual bank assets ranged from $21.7 million to nearly $6.2 billion. Collectively, Kentucky banks had nearly $61.4 billion in assets.
  • Kentucky credit union assets grew more than 15% last year, from $843,000 to nearly $1.7 billion. Together, the state-chartered credit unions held aggregate assets of more than $5.2 billion at the end of the year.
  • The complexity of noncustodial financial service providers registered or licensed in Kentucky continues to increase as consumers seek financial services from multiple sources. In 2020, DFI’s Non-custodial Division oversaw:
  • 9,662 mortgage originators.
  • 1,820 mortgage companies and brokers.
  • 389 check cashers/deferred deposit companies.
  • 128 money transmitters.

Copyright 2021 WBKO. All rights reserved.

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