Iowa Bankers Association pleased with latest FDIC figures

Iowa’s banking industry continued to gain strength in the first quarter of 2011, noted state banking advocates in the wake of the latest bank performance data released by the Federal Deposit Insurance Corporation this week.

“Iowa banks continue to reap the benefits of being responsible lenders with a long-term goal of building healthy, thriving communities,” said John Sorenson, president and chief executive of the Iowa Bankers Association.

According to the FDIC report, first quarter earnings of banks chartered in Iowa increased by 14 percent from the same period in 2010, growing to $167 million. In addition, the average after-tax return on assets (ROA) reached 1 percent – a standard industry benchmark – for the first time since March of 2008. The performance is 13 basis points better than the national average.

Total assets of Iowa banks grew slightly to $67 billion.

“Asset quality continues to show improvement with non-current loans to total loans declining to 1.83 percent. This is significantly better than the national average of 4.71 percent,” Sorensen said. “Non-performing assets to total assets also recorded a significant decline to 1.75 percent, compared to nearly 3 percent nationally.”

Despite a struggling economy and slower demand for loans, Sorenson noted Iowa banks have continued to meet the credit needs of consumer, agricultural and commercial customers by funding $42.1 billion in loans. Iowa bank lending peaked in December of 2008 at $44.8 billion.

The continued low interest rate environment has squeezed interest rate margins to 3.55 percent, which is lower than the national average of 3.66 percent.

Deposits grew by 4 percent during the first quarter of 2011, reaching $54.7 billion. Equity capital continues to show improvement, growing to $6.5 billion. Iowa banks core capital to average assets (leverage ratio) continues to be strong at 9.32 percent, slightly better than the national average.