MANHATTAN, Kan. -- Don't tell Larry J. Stutz that running a country bank in Kansas is dull business.

The president and chief executive of First National Bank in Alma recently repossessed a car. He also has received death threats from the Posse Comitatus, a militant group whose members carry weapons.

"I know bankers who started packing guns because of the Posse," Mr. Stutz said.

But it's not the Posse or delinquent auto-loan customers that community bankers in Kansas are worried about. In a roundtable discussion here with a halfdozen members of the Community Bankers Association of Kansas, bankers voiced concerns over a range of topics, including the economic health and image of the state, competition, and regulation.

Plenty to Cheer About

Nevertheless, this group of bankers, who are generally very conservative, has plenty to cheer about. Profits are up, loan problems are down, and most of the banks are experiencing brisk growth.

"In our case the future is bright," said Theodore J. McVay, president of First National Bank of Kingman. "We are getting some growth."

Mr. McVay, whose $54 million-asset bank is on the outskirts of Wichita, says loan demand for houses is up as people trade city living for the country. He said the bank's loan portfolio is becoming more diversified -- with less of it in agriculture.

"The farms, just like banks, are dwindling, that is why we are diversifying," he said.

'Really Starting to Jell'

Freeport State Bank has tripled its assets in five years to $27 million, said its president, Patrick Kerschen. As of June 30, assets were up 29% compared with a year ago.

"It is really starting to jell for us now," he said.

While profits have been good for Kansas' community banks, the group sees a slowdown as margins shrink. Its members also fret about increased competition for loans and deposits.

State Bank of Colwich is offering a one-year certificate of deposit that pays 5.05% interest.

"It hasn't had a substantial impact," said the bank's president, Frank A. Suellentrop.

Mr. Suellentrop said he has considered offering a mutual fund to bring more customers into the bank, but he's not sure he likes the idea.

"Once you direct people in that direction you are going to lose some of that deposit base on a long-term basis," he said.

On the loan side, the bankers complain that the Farm Credit Services is engaging in aggressive price cutting on farm loans. They said the agency sometimes undercuts their loans by two and three percentage points.

"In our area they are worse than the credit unions," Mr. Kerschen said.

An Image Problem

Another worry is the state's economy and image. The bankers said towns in the western part of the state are losing population as jobs dry up. Mr. McVay recently met with executives who are considering bringing business into the state.

"I think they [corporate executives] still think we are fighting Indians out here," he said.

Among the things bankers don't worry about are interstate banking and competition from larger institutions. They say many big banks won't touch the loans they make because they are either too small or too labor intensive. Mr. Stutz, for instance, lends a customer $200 each year so he can buy firewood to heat his home.

"The big guys, they are in the massproduction market," he said. "We will structure it [a loan] any way we need to do it to fit the customer."

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