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Iowa banks’ net income up 30.3% in 2021; loan balances up 2.7%


U.S. banks reported year-over-year increases in key financial measures for the fourth quarter and for full-year 2021, reflecting stronger economic growth, higher loan demand and improved credit conditions, according to the Federal Deposit Insurance Corp.’s fourth-quarter banking report released on Tuesday.

Iowa banks reported $69.9 billion in active loans on their books as of Dec. 31, an increase of 2.7% from the prior year, according to a summary provided by the Iowa Bankers Association. The quality of these loans remained strong, as net loan charge-offs decreased to 0.04% of total loans, compared with 0.15% the prior year. At 0.53%, the noncurrent percentage of total loans is down from the fourth quarter 2020 percentage of 0.83%.

Total deposits at Iowa banks were $99.4 billion as of Dec. 31, up 12.9% from fourth quarter 2020 when deposits totaled $88 billion.

“We are beginning to see consumer spending and business investment return to more normal patterns,” said John Sorensen, president and CEO of the Iowa Bankers Association. “Credit demand and availability are rising, as risks from the pandemic subside. Iowa banks are poised to continue supporting economic growth in our communities.”  

Net income for Iowa banks was $1.5 billion for the 12 months ending Dec. 31 — up 30.3%, or $341 million, from the same period in 2020. A key driver to the quarterly earnings spike was the recapture of loan loss reserves, as banks adjusted their expectations for potential future credit losses.

Return on assets, another indicator of overall bank performance, increased to 1.33% from 1.14% at the end of fourth quarter 2020. Iowa-chartered banks’ total assets amounted to $116.2 billion at the end of fourth quarter 2021.

Nationally, net income for U.S. banks rebounded sharply year-over-year. Full-year 2021 net income was $279.1 billion, up $132 billion, or 89.7%, from 2020. The increase was primarily attributable to negative loan-loss provision expenses, supported by continued economic growth and further improvements in credit quality. The average return-on-assets ratio increased from 0.72% in 2020 to 1.23% in 2021.

“With strong capital and liquidity levels to support lending and protect against potential losses, the banking industry continued to meet the country’s credit needs while navigating the economic effects of the pandemic,” FDIC Acting Chairman Martin Gruenberg said in a statement. “Still, challenges remain, as rising interest rates and geopolitical uncertainty could negatively affect bank profitability, credit quality, and loan growth going forward.”

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