Business : FDIC Quarterly Results Show Banking Industry Ended 2018 Strong

Iowa-chartered banks provided $62.0 billion in total loans to Iowa businesses, farmers and consumers in 2018, up 5.05 percent from the prior year, according to results released by the Federal Deposit Insurance Corporation (FDIC) this afternoon. Loan quality at Iowa banks remains strong. Net loan charge-offs were at 0.11 percent, compared to 0.15 percent the year prior. At 0.62 percent, the noncurrent loan percentage of total loans did not see any change from the year prior. “We’re continuing to see the benefits of the second longest economic expansion on record,” said John Sorensen, president and CEO of the Iowa Bankers Association. “Our community banks are benefiting from higher revenue and a lower effective tax rate, allowing them to keep a greater percentage of each dollar earned for local investment. This means Iowans are benefiting from a healthy, competitive banking industry.” On Thursday, the FDIC reported that the nation’s strong fourth quarter has several highlights, including that loan balances continued to increase, net interest margins improved and the number of “problem banks” remains low. The FDIC continues to monitor trends in the agricultural sector, reporting that commodity prices remain low, and net farm income has declined by roughly 50 percent since reaching its peak in 2013. Farmland loan delinquencies have risen, but remain relatively low. In addition to providing access to quality credit, banks provide consumers with a safe place to keep deposits. Total deposits at Iowa banks were $71.4 billion at year-end 2018, up nearly 3.9 percent from the year prior. Deposit growth, which provides the funds needed for lending, has not kept pace with the increase in loan demand. The number of banks across the nation on the FDIC “problem list” declined from 71 to 60 during the fourth quarter, which is the lowest number of problem banks since the first quarter of 2007. No banks failed in 2018 — the first year with no failures since 2006. The FDIC Deposit Insurance Fund, supported by bank premiums, rose by $2.4 billion from the end of the third quarter to $102.6 billion. The increase was mainly driven by assessment income, unrealized gains and interest income on securities, the FDIC reported. Net income for the Iowa banking industry was nearly $1.1 billion for the year ending Dec. 31, 2018, and total assets were more than $86 billion. Return on assets (ROA), another indicator of overall bank performance, improved to 1.28 percent, compared to 1.15 percent at the end of the fourth quarter the year prior. About the Iowa Bankers Association The Iowa Bankers Association represents Iowa banks and savings institutions. Iowa bankers are committed to the values of honesty, hard work and community service, and have been a trusted resource for Iowans for more than 100 years. Iowa banks offer FDIC insurance and lend $62 billion to help individuals, business owners and agriculture. More than 30,000 Iowans work at an Iowa bank, and bank employees volunteer more than 300,000 hours to support local communities each year. To learn more, visit iowabankers.com.