Iowa banks statewide are still financially strong, despite the prolonged recession and problems with the national economy. Iowa is a farm state, and the sound performance of the agricultural economy is helping to bolster the rest of the state, says Iowa Secretary of Agriculture Bill Northey. Data released earlier this week by the Federal Deposit Insurance Corporation for the third quarter of 2010 show that banks are performing well.
"The FDIC report reaffirms the strength of Iowa's banking industry," says John Sorensen, president and CEO of the Iowa Bankers Association or IBA. "In the first three quarters, the net earnings of Iowa banks increased by 24% compared to one year ago, and 92% of Iowa's 363 bank charters were profitable, compared to 80% nationally. As economic conditions improve, Iowa banks are well positioned to seek new lending opportunities and meet loan demands in their communities," he says.
Iowa banks recorded $390 million in net earnings for the nine-month period ending Sept. 30, up from $314 million during the same period in 2009. The FDIC data also showed an increase in Iowa banks' net earnings relative to total assets, nearing the historical industry benchmark of 1% return on assets (ROA).
Deposits in Iowa banks are continuing to grow at steady pace
Sorensen says lending to consumers and businesses remained stable despite pay-downs of existing loans and a lack of loan demand accompanying an uncertain economy. The latest FDIC data shows that Iowa banks reported approximately $43 billion in outstanding loans and leases over the past four quarters.
Iowa banks also experienced a decline in their non-current loans ratio, which dropped from 2.19% of total loans to just under 2% of total loans. This is less than half of the national average.
In addition, Sorensen notes that deposits in Iowa banks continue to grow at a steady pace. "Bank deposits grew at a 2% annual pace as consumers continue to elect the safety of federally-insured deposits through the FDIC," Sorensen says, noting that Iowa banks currently manage more than $67 billion of Iowans' deposits. "Those deposits are used to make loans directly to Iowa families, businesses, farmers and communities. Meeting the needs of customers and local communities is what Iowa banks do best," he adds.