Department of Financial Institutions
Kentucky Financial Institutions Weather Economic Changes
FRANKFORT, KY (July 8, 2009) – The Kentucky Department of Financial Institutions (DFI) today released its 2008 Annual Report. Despite the national economic downturn, state-regulated financial institutions in Kentucky remain strong and able to serve their customers.
“On several occasions, Governor Steve Beshear characterized financial times in 2008 as difficult, unprecedented and tumultuous,” said DFI Commissioner Charles Vice. “Despite this challenge, financial institutions operating in Kentucky have continued to provide growth opportunities and financing solutions within their communities.”
State-chartered banks and credit unions continue to lend responsibly to their customers. The total assets of both increased during 2008 – state-chartered bank assets increased approximately $2.4 billion and state-chartered credit union assets increased $153 million. For the majority of state-chartered financial institutions, capital ratios reflect well-capitalized levels, and earning performance declined only moderately during 2008.
While the recession has revealed some national Ponzi and fraud schemes in the securities industry, DFI has continued to ensure that the investment companies, broker-dealers and advisers serving Kentucky citizens are operating legally and ethically. For example, DFI participated in the national auction rate securities settlement, which will result in investment companies paying over $1 million in fines in Kentucky in 2009.
“Our staff works closely with local and federal law enforcement agencies to convict those who attempt to operate outside the law,” Vice said. “DFI also provides financial literacy resources to Kentucky citizens to help them avoid becoming victims of fraud. We’re continually working to increase these educational outreach opportunities.”
While the number of mortgage companies and brokers declined in Kentucky in 2008, the industry remains strong and well-regulated. Passed in the 2008 session, House Bill 552 added a number of consumer protections, such as establishing the Kentucky Homeownership Protection Center, limiting prepayment penalties and capping broker fees, among other things. Additional changes are on the way, as DFI begins to implement House Bill 106, which passed in the 2009 session and will bring Kentucky laws into compliance with the requirements of the new federal S.A.F.E. Act. Another bill that will bring changes in 2009 is House Bill 444, regarding enhanced oversight of the payday lending industry.
“While these are difficult economic times, Gov. Beshear has the ability to lead the Commonwealth through this recession and to oversee the economic expansion that will follow,” Vice said. “DFI will continue to fulfill its mission and closely monitor the financial services industry in Kentucky.”
The DFI Annual Report contains statistical and historical information regarding the financial services industry in Kentucky. For more information, or to view or download the entire report, visit www.kfi.ky.gov/aboutus/annualreports.htm.
DFI is an agency in the Public Protection Cabinet. It supervises the financial services industry by examining, chartering, licensing and registering various financial institutions, securities firms and professionals operating in Kentucky. DFI’s mission is to serve Kentucky residents by maintaining a stable financial industry, continuing effective and efficient regulatory oversight, promoting consumer confidence, and encouraging economic opportunities.