JOHNSTON, Iowa (May 28, 2025) — According to data released Wednesday by the Federal Deposit Insurance Corp. (FDIC), banks reported both loan and deposit growth in the first quarter. The banking industry continued to show resiliency and strong performance through ongoing economic uncertainty and inflationary pressures.
“While uncertainties in the market continue to exist, Iowa banks remain strong, resilient, and committed to local economic growth,” said Adam Gregg, president and CEO of the Iowa Bankers Association. “Iowa banks are actively fueling communities, providing the funds necessary to protect deposits while meeting credit and investment needs across the state. The industry is diligently monitoring increases in delinquencies to ensure economic strength and vitality.”
Iowa Banking Results
Iowa banks started the year strong with both loan and deposit growth. Total loans were $88.5 billion as of March 31, an increase of 0.8% from the previous quarter. Deposit growth slightly outpaced loan growth, up 1.7% from year-end. Total deposits for the first quarter were $108.8 billion, compared to $104.2 billion the prior year. Both total loans and deposits increased slightly from first quarter 2024.
The quality of these loans remains exceptional with average net loan charge-offs at just 0.04%. The financial health of Iowa borrowers remains strong with the non-current percentage of total loans at 0.62%, up slightly from 0.52% in first quarter 2024.
Iowa banks also saw an increase in total assets to begin the year. First-quarter total assets were $128.9 billion, a 2.7% increase compared to the same period in 2024.
Iowa banks had $342 million in net income in the first quarter. The competitive interest rate environment continues to have an impact on net interest income. Iowa has more banks per capita than most states, creating a competitive interest rate environment for consumers and businesses. This contributes to a lower average net interest margin. The average return on assets (ROA), an overall indicator of bank performance, at Iowa banks increased to 1.07% in the first quarter from 0.92% in the first quarter 2024.
National Banking Results
The FDIC reported that the nation’s banking industry had a stable start to the year with increased deposits and modest loan growth. According to the FDIC, “With strong capital and liquidity levels to support lending and protect against potential losses, the banking industry continued to support the country’s needs for financial services while navigating the challenges presented by economic uncertainty, elevated inflation and interest rates, tighter credit, and elevated unrealized losses.”
Total deposits rose this quarter to $19.5 trillion, a slight increase from both year-end and first quarter 2024. Domestic deposits increased for the third straight quarter, this quarter by $180.9 billion. Brokered deposits declined for the fifth consecutive quarter. Community banks saw a 1.6% increase in domestic deposits this quarter with more than 69% of community banks reporting an increase in deposit account balances.
The nation’s banks saw modest loan growth in the first quarter. Total loans increased by 0.5% from the previous quarter and 2.9% from first quarter 2024 to $12.8 trillion. Reclassifications had the greatest impact on loan balance fluctuations. Community banks also reported modest loan growth this quarter, an increase of $15.1 billion from the previous quarter, with the strongest growth in nonfarm nonresidential commercial real estate. The FDIC noted, “growth was broad-based across all major portfolios, except agricultural production loans, auto loans, and credit card loans.”
Asset quality metrics remain favorable, with the past-due and nonaccrual loan ratio at 1.59% – still below the pre-pandemic average. Weaknesses still exist in some portfolios – specifically commercial real estate and multifamily commercial real estate loan portfolios. Total assets were $24.5 trillion in the first quarter, an increase of 2.4% from the prior year. Community banks also saw a slight increase in assets quarter-over-quarter to $32.2 billion – an increase of 4% year-over-year.
Total net income increased 5.8% from the previous quarter to $70.6 billion in the first quarter, largely due to higher noninterest income. The FDIC reported the “gains in noninterest income were due to market movements and volatility as several large firms reported mark-to-market gains on certain financial instruments in the quarter.” Community banks also reported a 10% increase in net income from the previous quarter to $6.8 billion, and an 8.5% increase from first quarter 2024 – primarily due to higher net interest income.
The number of banks on the FDIC’s “problem bank list” decreased by three to 63 banks. Only 1.4% of total banks are considered “problem banks” which is within the normal range. There was one community bank failure in the first quarter.
The Deposit Insurance Fund (DIF) balance was $140.9 billion on March 31, an increase of $3.8 billion from year-end. The DIF reserve ratio — the fund balance relative to insured deposits — increased again by 3 basis points to 1.31%. The FDIC noted that based on projections, “the reserve ratio is likely to reach the statutory minimum of 1.35% by year-end 2025.”
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About the Iowa Bankers Association
The Iowa Bankers Association represents 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 135 years. Iowa banks offer FDIC insurance and lend over $88 billion to help individuals, business owners and agriculture. Nearly 40,000 Iowans work at an Iowa bank, and bank employees volunteer more than 300,000 hours to support local communities each year. To learn more, visit www.iowabankers.com.