Business

Iowa banks report higher loan volume

Net income, deposits rise, bank charters fall

John Sorensen, Iowa Bankers Association
John Sorensen, Iowa Bankers Association

Iowa banks increased lending in the third quarter that ended Sept. 30. But that came at the same time the number of bank charters declined from the same quarter of the year before.

The Federal Deposit Insurance Corp. on Tuesday reported Iowa-chartered banks provided more than $63.7 billion in total loans as of the end of the third quarter, up 4.5 percent from $60.9 billion at the end of the same quarter of 2015.

“Iowa’s banks remain key drivers of our economy with nearly $3 billion in new loans generated over the past 12 months alone,” said John Sorensen, president and CEO of the Iowa Bankers Association.

Net loan charge-offs were at 0.10 percent, compared with 0.09 percent last quarter. At 0.73 percent, the non-current loan percentage of total loans is up from the year prior percentage of 0.70 percent.

Net income for the Iowa banking industry on a year-to-date basis was $883 million as of Sept. 30, above the $832 million for the first nine months of 2018.

Deposits in Iowa banks totaled $74.2 billion on Sept. 30, up from $69.6 billion on Sept. 30, 2018.

The number of Iowa bank charters continues to decline, down to 276 at the end of the third quarter of 2019 from 291 at the end of the same quarter last year.

Sorenson said rural-to-urban migration, which has been occurring in recent years, has driven banking consolidation as have advances in technology.

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The FDIC noted that low commodity prices and farm incomes persisted in the third quarter, resulting in modest deterioration in the agriculture sector.

Some banks with agricultural clients are reporting asset quality deterioration in farmland and production loans funding annual seat and fertilizer costs.

“The non-current rate for agriculture loans at community banks rose by 11 basis points from a year ago to 1.27 percent, but is below levels reached during previous downturns,” the FDIC stated in its quarterly report.

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