George C. Ford, CR Gazette –
Iowa banks and savings institutions recorded strong improvement in the quality of their assets in the first quarter of 2012, according to data provided by the Federal Deposit Insurance Corp. and the Iowa Bankers Association.
Net charge offs, a key indicator of asset quality, were down to 0.27 percent at the state’s 343 banks and savings institutions insured by the FDIC. That compares favorably with charge offs of 0.56 percent in 2011 and 1.02 percent in 2010, reaching the lowest level since 2008.
Iowa banks also performed much better than the 1.17 percent national average for net charge offs in the quarter that ended on March 31.
Delinquent loans and leases (those 90 days or more past due) and nonperforming loans (those 90 days or more delinquent and not accruing interest) also continued to improve. according to FDIC data. Roughly 1.53 percent of loans were delinquent and 1.44 percent of loans were nonperforming in the first quarter, compared to 1.91 percent for delinquent loans and 1.80 percent for nonperforming loans in the same quarter last year.
Iowa banks and savings institutions posted total loans and leases of $42.2 billion in the first quarter, up $136 million from the first quarter of 2011, but 1 percent lower than the $42.7 billion of total loans in the fourth quarter of 2011. Iowa financial institutions had recorded three consecutive quarters of total loans and leases in 2011.
The average return on assets for Iowa’s banks and savings institutions, an indicator of profitability, improved to 1.27 percent in the first three months of the year, up from 0.99 percent a year ago and higher than the national average of 1.02 percent. It marks the third consecutive quarter that return on assets for Iowa institutions has been above 1 percent and the highest return on assets rate since 2002.
Net income for Iowa financial institutions improved to $220 million from $164 million in the first quarter of 2011. Total earning assets also increased $3.1 billion to $65.2 billion.
More than 74 percent of Iowa’s banks and savings and loans reported earnings gains, and more than 96 percent were profitable in the first quarter. Capital levels also improved, topping $7 billion, up from $6.5 billion in the first quarter of 2011.
Total deposits increased to $57.6 billion, up $2.9 billion from $54.7 billion in the first quarter of 2011.