LAKE OZARK, Mo. - Though pleased with overall bank performance in his state, Missouri Finance Commissioner Earl Manning said he is monitoring the situation as liquidity tightens and lending standards ease.

At June 30, assets of the state's banks were up 7.1% from the same time last year, to $74 billion, he said. He reported data for the 414 state banks he regulates as well as Missouri's nearly 60 national banks.

Net income jumped 10.1%, to $427 million, and equity capital was up 11.1%, to $6.2 billion.

"There are a lot of good things happening in the banking industry in Missouri," Mr. Manning told bankers assembled at the Missouri Independent Bankers Association's annual convention here last week.

However, Mr. Manning said he was beginning to be concerned about liquidity.

Loans increased 14.8%, to $45 billion, while deposits rose only 5.2%. To make loans, bankers freed up money from securities holdings, which were down 8.6%, he said.

"We also are a little concerned about lending standards," Mr. Manning said.

To bolster loan portfolios, some banks have been easing credit rules, he said. According to information from state bank examiners, nearly a quarter of Missouri banks have loosened credit standards.

Of banks that had relaxed standards, 31% were making collateral-based loans, 28% were not requiring cash flow projections, 17% were waiving guarantees, and 11% were allowing liberal repayment terms, he said.

It's "too early to know what will be classified" as a result of the changes, Mr. Manning said. "But it's something to worry about."

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At the Lodge of the Four Seasons in scenic Lake Ozark, attendees also heard from William D. Sones, president-elect of the Independent Bankers Association of America, who updated bankers on the IBAA's current lobbying push on the regulatory relief and savings association insurance funding debates in Washington.

He stressed the importance of community bank participation, both vocally and financially, in these and other legislative issues.

"It's really a crucial time for community bankers," said Mr. Sones, who is president and chief executive of State Bank and Trust in Brookhaven, Miss. "These issues will impact our lives for years."

Thrifts are increasing their influence, he said. In Mississippi, the American Bankers Association affiliate recently brought thrifts on board - and they have become some of the group's biggest contributors, despite their smaller numbers, he said.

You can't give $50 a year to your political action committee "and expect a big stick to be carried in Washington," he said.

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On a lighter note, those attending the convention determined their work personality types in a questionnaire administered by Georgia management consultant Nick Nicholas.

Before completing their responses, most participating bankers predicted that they would have "dominant" behavior.

But after choosing adjectives that they believed most and least described their demeanor at work from different groupings of words, they ended fairly evenly split among the four main behaviors, which also included influential, compliant, and steady.

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