Approximately 10 percent of Iowa banks have applied to participate in the U.S. Department of the Treasury’s Capital Purchase program, a lower percentage than nationally, according to data provided by the Federal Deposit Insurance Corp. to the Iowa Bankers Association this week.

Forty-five of Iowa’s 415 state- and federal-chartered banks have applied for the federal program, in which the FDIC is providing additional capital to banks in exchange for future ownership stakes. Approximately 33 percent of banks nationwide have applied to receive a share of $125 billion made available by the U.S. Treasury following the initial funding made available to the nation’s nine largest banks.

“It’s been a difficult (decision) for our banks,” said John Sorensen, president and CEO of the Iowa Bankers Association. “With the new information coming out on the programs, the economic circumstance that we’re currently in, I think it made it a very difficult short-term election: can you deploy this capital profitably? Frankly, most of our banks are not in need of additional capital.” Sorensen said the continued uncertainty over whether the program will apply to subchapter S banks may also account for the lower percentage of banks applying in Iowa.

The FDIC provided aggregate numbers to the bankers association but did not reveal which banks have applied. Only those institutions approved for funding will be released publicly. West Bank, which will receive $36 million, and Wells Fargo, which will receive $25 billion, are among the banks that have already received approval.

“We did hear from regulators that our lending in Iowa did increase over the past quarter,” Sorensen said. “So I think there is the commitment to extend credit, whether or not they participate in the Capital Purchase program.”

In another FDIC program, nearly half of Iowa’s banks have chosen to opt out of the Debt Guarantee Program, which guarantees certain newly-issued senior unsecured debt between banks. As of Dec. 16, the list reported that 173 eligible entities in Iowa had opted out. A total of 4,570 entities nationwide chose to opt out of the Debt Guarantee Program component of the FDIC’s Temporary Liquidity Guarantee Program. To see a list of Iowa banks that have opted out click here.

“That particular number is not surprising,” Sorensen said. “It would really just be attractive to banks that have longer term debt that would see some benefit to paying the guarantee. Others that haven’t opted out may not necessarily use the guarantee, because it wouldn’t apply to certain types of short-term debt. It really just depends on the business plan of the particular bank.”

The FDIC also released a list of the eligible insured depository institutions that opted out of the Transaction Account Guarantee Program component, for which banks pay higher fees to fully insure non-interest-bearing deposit transaction accounts. As of Dec. 16, this opt-out list included 33 institutions in Iowa and 941 institutions nationwide. To see the list of Iowa banks click here.