Iowa banks reported increases in loans and deposits in the fourth quarter, information released this week by the Federal Deposit Insurance Corp. shows.

“Despite headwinds from inflation, rising interest rates and geopolitical uncertainty, Iowa banks continue to drive economic growth and job creation in the communities they serve,” John Sorensen, president and CEO of the Iowa Bankers Association, said in a prepared statement.

In the period that ended Dec. 31, Iowa-domiciled banks reported:

• $79.2 billion in active loans on their books, an increase of 13.3% from a year ago. The quality of the loans was strong, as net loan charge-offs remained steady at 0.04% of total loans, the same percentage as the prior year. At 0.36%, the noncurrent percentage of total loans is down from the fourth quarter 2021 percentage of 0.53%.
• $102.5 billion in total deposits, up 3.2% from a year ago when deposits totaled $99.4 billion. The increase reflects a competitive rate environment for deposits and continued runoff of pandemic-induced government support programs, according to a news release.
• $1.4 billion in net income, a decline of 4.3%, or $63 million, from the same period in 2021. The year-over-year decline of Iowa banks’ net income is partly due to an increase in provisions, which are set aside by institutions to protect against future loan losses, the release said. The increase in provision expense reflects the banking industry’s recognition of risks related to persistent economic uncertainties and slowing economic growth, as well as the increase in loan balances.

In addition, average return on assets, another indicator of overall bank performance, decreased to 1.19% at the end of the 2022 fourth quarter from 1.33% the previous year. Iowa-chartered banks’ total assets amounted to $120.9 billion at the end of fourth quarter 2022.

Overall, the FDIC reported that key banking industry metrics remain favorable. Loan growth continued, net interest income grew, and asset quality measures remained favorable. However, the FDIC said the banking industry continues to face downside risks from the effects of inflation, rising market interest rates and continued geopolitical uncertainty. The challenges could hurt bank profitability, weaken credit quality and capital, and limit loan and deposit growth, the FDIC said.