IOWA NEWSPAPER ASSOCIATION
Iowa banks see slight improvement in interest rate environment in the first quarter
JOHNSTON, IOWA (May 28, 2014) - Iowa banks saw a slight improvement in the interest rate environment in the first quarter of 2014, which helped contribute to the industry's overall positive financial performance, according to results released by the Federal Deposit Insurance Corporation (FDIC) today. Net income for Iowa banks for the first quarter was $201.9 million, up from $196.3 million the year prior.
Net interest rate margins improved slightly to 3.31 percent, compared to 3.22 percent in the first quarter of 2013. Total interest income improved to $656.9 million, compared to $652.9 million the year prior.
Iowa banks provided more than $45.5 billion in total loans and leases, up from $43.1 billion in the first quarter of 2013. Loan quality also remained strong. Net loan charge-offs were at 0.10 percent, compared to 0.14 the year prior. Noncurrent loans were at 0.81 percent from 1.09 percent the year prior. Nonperforming loans were at 0.75 percent from 1.00 percent the year prior.
"We continue to see overall improvement in the health of the Iowa banking industry. Asset quality continues to improve. We've also seen modest increases in loan balances and a very slight improvement in margins," said John Sorensen, president and CEO of the Iowa Bankers Association. "Until we see further acceleration in economic activity, this trend of stable, but modest, growth will likely continue."
Overall, Iowa banks performed well and are well-positioned to meet the financial needs of Iowans. Total assets reached $73.5 billion, compared to $72.5 billion in the first quarter of 2013. Return on assets (ROA), another indicator of overall bank performance, also improved to 1.10 percent in the first quarter, compared to 1.08 percent the year prior.
Nationally, net income for banks declined slightly in the first quarter by $3.1 billion from the year prior, to $37.2 billion.
Interest income improved nationwide, with more than two-thirds of all banks reporting year-over-year increases in net interest income. The decline in net income was due primarily to a decrease in non-interest income because of a decline in mortgage lending activity. More than half (53.6 percent) of the $7.1 billion year-over-year decline in non-interest income was due to a $4 billion decline in income from mortgage sales, securitization and servicing.
"In Iowa, our banks recorded a 5.6 percent year-over-year increase in lending. The rate of growth exceeds the national average growth rate during the same period of 3.6 percent," said Sorensen. "Farm and business loans were primary contributors to this growth."
In Iowa, more than 96 percent of institutions were profitable in the first quarter. The number of banks on the FDIC "problem list" nationwide also fell for the 12th consecutive quarter to 411.
About the Iowa Bankers Association
The Iowa Bankers Association represents 344 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 $45.5 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.
President and CEO