FDIC: Iowa bank earnings returning to normal

JOHNSTON - Iowa banks continued to outperform the rest of the nation in 2010, according to recent data released by the Federal Deposit Insurance Corp.

The 2010 year-end earnings for institutions with a banking charter in Iowa climbed to $487 million, a 23 percent increase over the prior year, moving the industry closer to a more normal earnings level and a 0.75 percent return on assets. The FDIC also showed that 93 percent of Iowa's 360 bank charters were profitable in the fourth quarter of 2010, compared to 79 percent nationally.

“The continued strong performance reflects sound loan underwriting and a commitment to providing products that best serve the interests of Iowa borrowers,” said John Sorensen, president and CEO of the Iowa Bankers Association. “Improving asset quality and increasing capital levels have helped solidify the base for making new loans to bolster Iowa's economy going forward.”

Sorensen said Iowa banks have continued their commitment to support consumer, agricultural and commercial business credit needs by funding $42.8 billion in loans. This is off just 4 percent from the high set at the end of 2008, despite caution on the part of consumers and business during this time.

The FDIC report shows that loan quality continues to improve for Iowa banks, as non-current loans fell to 1.79 percent of total loans – less than half of the national average. Iowa bank equity capital grew to 6.5 billion during the period.

In addition, the report shows that deposits in Iowa banks have continued to grow. “Bank deposits grew by 3 percent during 2010 as consumers continued to appreciate the value of federal deposit insurance and the benefits of doing business with their local bank,” Sorensen said, noting that banks with charters in Iowa currently manage $53.5 billion of Iowans' deposits.

Sorensen also noted that Iowa banks added 46 new employees in the fourth quarter of 2010, which can be attributed to efforts to keep up with the increasing regulatory burden banks are facing as a result of the Dodd-Frank Act that became law in July.