Friday, September 9, 2022 15:19
Iowa banks’ lending activity increased more than 7% in the second quarter of 2022, but cumulatively, Iowa banks’ net profits were up year-over-year, according to the latest data released by the Federal Deposit on Thursday. decreased by more than 10% in comparison. Insurer Iowa and national revenue declines reflect perceptions of risks associated with slower economic growth and higher loan balances, officials said.
John Sorensen, president and CEO of the Iowa Bankers Association, said Iowa banks are well positioned to continue supporting the state’s economy during difficult times.
“We are experiencing strong loan demand from consumers and businesses, while the surge in deposits caused by the pandemic is waning,” Sorensen said in an email. “Our bank remains well capitalized and highly liquid.”
Net income for Iowa banks was $680 million through the first two quarters of 2022, down 10.4%, or $79 million, from the same period in 2021.
The FDIC said the nationwide decline in bank net income was due to an increase in reserves held by institutions to protect against future credit losses. The increase in provision costs reflects the banking industry’s perception of risks associated with continued economic uncertainty and slowing economic growth, as well as higher loan balances, said Martin of the FDIC. Acting Chairman Gruenberg said. press release. Rising labor costs also weighed on profits in the period at community banks, according to the FDIC.
The Iowa-based bank reported $72.8 billion in active loans on its books as of June 30, up 7.54% from the previous year. The quality of these loans remained strong, with net charge-offs of 0.02% of total loans, down from 0.05% a year earlier. At 0.46%, the illiquid share of total loans is down from the Q2 2021 share of 0.68%.
Iowa bank deposits totaled $101.4 billion as of June 30, up 9.4% from Q2 2021 when total deposits were $92.7 billion. However, deposits trended down slightly from the previous quarter, closing at $102 billion on March 31.
Return on assets, another indicator of overall bank performance, fell to 1.17% from 1.4% at the end of Q2 2021.
Overall, the FDIC reported on Thursday that key banking industry indicators remain favorable so far. Loan growth strengthened, net interest income increased, and most asset quality indicators improved, despite higher early delinquency rates. Moreover, the industry remains well capitalized and highly liquid.
At the same time, the FDIC said the banking industry continues to face downside risks stemming from pervasive economic uncertainty, inflationary pressures, a rising interest rate environment, and geopolitical concerns. These factors could undermine bank profitability, weaken credit quality and capital, limit loan growth, and will be of continued supervisory attention by the FDIC over the next year. .
