Lawrence area bank leaders say the Kansas economy has helped their institutions avoid the major financial struggles that other parts of the nation are having.

“Kansas is fortunate right now,” said Ted Haggart, president and CEO of Lawrence-based Douglas County Bank, citing a strong agriculture, energy and aviation economy in the state, as well as conservative business and banking practices that are keeping banks in Kansas on higher ground. “That stands us in good stead in situations like this.”

As credit stresses plague the country, locally-owned community banks in the area haven’t stopped lending money, though it’s on a conservative basis, said Haggart and Bill Grant, president and CEO of Tonganoxie-based First State Bank, which is typical.

“Ninety-nine percent of our lending is done in our communities, to people and businesses that we know,” Grant said. “We’re trying to make their lives better so that the community as a whole betters. That pays off when things turn down a little bit.”

The nation’s problems aren’t stemming from responsible community-based commercial banks like theirs, the local bank presidents said, but instead from large financial institutions, many of which specialize in home loans.

“Some of them got rather carried away in making the very risky, subprime loans,” Haggart said. “We follow sound banking practices, sound lending practices, very safe investment practices.”

The high number of mortgage-backed securities at larger investment banks created an illiquid market, which is at the center of the nation’s economic problems. Mortgage-backed securities aren’t as common in community-based banks in the area.

While they said banks in Kansas likely won’t need to sell many of their assets to the federal government, if a national bailout plan is adopted, Haggart and Grant said their institutions do feel ripple effects from the rocky financial situation.

“Anytime the economic system, the banking system, feels a liquidity pinch … and people are uncertain about the future, it’s going to hurt a local economy,” said Haggart.

Haggart and Grant both said they feel some sort of a government bailout would help stabilize the market, but they also realize it will require patience and strong oversight.

“Things are going to work their way out,” Grant said. “They always do.”