More money loaned by Iowa banks, thrifts in second quarter

Iowa's banks and savings institutions posted an increase in loans and leases in the second quarter, according to a quarterly banking profile released Wednesday by the Federal Deposit Insurance Corp.

For the three-month period that ended June 30, the state's 341 banks and thrifts experienced a $155 million growth in loans and leases to $42.3 billion. Loan balances nationwide also increased to $7.3 trillion.

Farm loans, commercial and industrial loans, and loans to individuals in Iowa increased in the quarter. Residential real estate loans declined by 0.59 percent.

Total deposits dropped slightly from $57.6 billion in the first quarter to $56.6 billion in the second quarter, but were $2.6 billion higher than the $54 billion reported in the second quarter of 2011.

Capital levels improved, remaining above $7 billion for the second quarter in a row.

Net charge-offs, a key indicator of asset quality, were down to 0.33 percent, compared with 0.57 percent in the second quarter of 2011, and reaching the lowest level since 2008.

Nationally, net charge offs averaged 1.13 percent in the second quarter.

Non-current loans and leases (those more than 90 days past due) and nonperforming loans continued to decline . Approximately 1.4 percent of loans were non-current and 1.33 percent of loans were nonperforming in the second quarter, compared with 1.52 percent for non-current loans and 1.44 percent for nonperforming loans in the first quarter.

The average return on assets for Iowa's banks and thrifts, a measure of profitability and performance, was 1.25 percent and better than the national average of 0.99 percent. Net income improved to $430 million in the second quarter of 2012 from $314 million a year ago.

More than 75 percent of Iowa's financial institutions reported improved earnings and more than 96 percent were profitable in the first six months of the year.

John Sorensen, president of the

Iowa Bankers Association, said the steady improvement in loan and lease balances is "definitely encouraging."