IOWA NEWSPAPER ASSOCIATION
Iowa Banks Post Positive Year-End Results for 2013
JOHNSTON, IOWA (Feb. 26, 2014) – Iowa bank financial results were released today for the last quarter of 2013, showing an overall positive performance and continued recovery from the economic downturn of the past few years. “Our industry continues its gradual return to pre-crisis performance levels,” said John Sorensen, president and CEO of the Iowa Bankers Association. “This means Iowa banks are in excellent health and stand ready to serve Iowa consumers, businesses and farmers. Throughout this period, Iowa banks have not wavered in their commitment to lend responsibly and build healthy communities.”
Iowa banks provided more than $45.7 billion in total loans and leases by the end of 2013, up from $43.9 billion, or 4 percent, since the end of 2012. Loan demand in most segments saw increases from 2012. One exception was consumer loans, with demand for credit cards, auto loans and other consumer loans down slightly, by 2 percent, from 2012 to $1.3 billion in 2013. Demand for farmland and farm loans saw the largest increase across all loan categories, reaching $14.8 billion at the end of 2013, up 8 percent from $13.7 billion at the end of 2012.
Loan quality also remained strong. Net loan charge-offs ended the year at 0.19 percent, compared to 0.34 percent the year prior. Other loan quality indicators, such as noncurrent and nonperforming loans also remained positive. Noncurrent loans were at 0.82 percent from 1.12 percent the year prior. Nonperforming loans were at 0.78 percent from 1.07 percent the year prior.
Iowa banks also effectively managed their expenses — even with growing regulatory requirements throughout the year, especially in the area of mortgage lending. Non-interest expenses decreased to 2.66 percent in the fourth quarter, compared to 2.78 percent the year prior.
Net operating income for Iowa banks for all of 2013 was $801 million, up from $760 million the year prior, due in large part to the responsible lending and cost management practices of Iowa banks. Return on assets (ROA), another indicator of overall bank performance, also remained strong at 1.13 percent at the end of 2013, compared to 1.16 percent at the end of 2012. Iowa bank ROA has been above 1.00 percent each quarter since mid-2011. Total assets reached $72.9 billion in 2013.
“Looking ahead to 2014, Iowa banks are well positioned to meet the needs of their customers. They will continue to keep a close eye on regulatory costs, the economy and the interest rate environment, and respond accordingly to best serve their communities,” added Sorensen.
Net interest rate margins continued to tighten to 3.29 percent at the end of 2013, from 3.42 percent the year prior, demonstrating the continued impact of Federal Reserve’s low interest rate monetary policy. However, the margin was slightly better than the national net interest margin average at 3.26 percent. Nationally, bank net operating income for 2013 improved by 13 percent from the year prior, to $152 billion, driven in part by better loss provisioning results. Loan loss allowances declined 16 percent to $135 billion. The number of banks on the FDIC “problem list” fell for the 11th consecutive quarter to 467, and the number of bank failures across the nation was at the lowest level since 2007, with only two failures in the fourth quarter and 24 total failures in 2013.
About the Iowa Bankers Association
The Iowa Bankers Association represents 345 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 more than $45.7 billion to help individuals, business owners and agriculture. More than 14,000 Iowans work at an Iowa bank, and Iowa banks donate more than $28 million and 800,000 volunteer hours to support local communities each year. To learn more, visit MyIowaBank.com.
(Contact: John Sorensen, President and CEO, 515-286-4313, email@example.com)