JOHNSTON, Iowa (Aug. 26, 2025) — Despite continued inflationary pressures and economic uncertainty, Iowa’s banking industry finished the second quarter with year-over-year growth. The Federal Deposit Insurance Corp. (FDIC) state-specific data released Tuesday showed loan, deposit and asset growth from the prior year.
“This quarter’s results illustrate the strength of Iowa’s banking system and how it benefits Iowans – with loan growth to drive the state’s economy forward and a highly competitive financial marketplace,” said Adam Gregg, president and CEO of the Iowa Bankers Association. “Iowa banks are proud to be a trusted financial partner Iowans can count on.”
Iowa Banking Results
The 233 Iowa-domiciled banks saw an increase in loans this quarter to $89.4 billion, an increase of 4% from a year ago and a 1% increase from the previous quarter. Deposits decreased slightly from last quarter; however, total deposits for the second quarter were $107.5 billion, compared to $103.5 billion the prior year.
Loan quality remains strong with average net loan charge-offs at just 0.05%, which signifies strong loan portfolios. The noncurrent percentage of total loans at 0.66% for Iowa banks shows financial stability in the state, lower than the nation’s 0.96%.
Total assets remain stable for Iowa banks this quarter at $129 billion, a slight increase from $128.9 billion in the first quarter. Second quarter total assets were 2.9% higher than the same period in 2024.
Iowa banks had $725 million in net income through the second quarter. The competitive interest rate environment continues to have an impact on net interest margins, especially in Iowa, where there are more banks per capita than most states in the nation. The average return on assets (ROA), an overall indicator of bank performance, at Iowa banks was 1.13% in the second quarter, an increase from 0.97% in the second quarter 2024.
National Banking Results
The FDIC said Tuesday that the banking industry continued to show ongoing strength through the second quarter. The FDIC reported “the industry still faces weakness in certain loan portfolios, economic uncertainty, and elevated unrealized losses.”
Total deposits in the second quarter were $19.7 trillion, a slight increase from first quarter and a 4.4% increase from second quarter 2024. Domestic deposits increased for the fourth consecutive quarter. Community banks saw a $1.8 billion increase in domestic deposits this quarter, with half reporting an increase in deposit balances.
The nation’s banks had loan growth of 2.1% from the prior quarter to $13.1 trillion. The FDIC reported, “The banking industry continued to have strong capital and liquidity levels, which support lending and protect against potential losses.” Community banks reported broad-based loan growth again this quarter, increasing by 1.7% from the prior quarter, with the strongest growth in nonfarm, nonresidential commercial real estate loans.
Asset quality metrics remain favorable, but the industry continues to see deterioration due to commercial real estate loans and credit card portfolios. Total assets were $25 trillion in the second quarter, a 4.4% increase from last year’s second quarter total, and a 1.8% increase from the prior quarter. Likewise, community banks saw growth in total assets from the previous year and prior quarter.
Total net income decreased from the prior quarter, largely due to an increase in provision expenses, mostly attributed to the Capital One Financial Corporation acquisition of Discover Financial Services. Outside of this provision expense increase, net income would have increased in the second quarter. Community banks reported an increase in net income to $7.6 billion, up 12.5% from the prior quarter.
The number of banks on the FDIC’s “Problem Bank List” decreased by four to 59 banks in the second quarter. Only 1.3% of total banks are considered “problem banks” which is within the normal range. There was one bank failure in the second quarter.
Notably in the second quarter, the Deposit Insurance Fund (DIF) balance reached $145.3 billion, and the DIF reserve ratio — the fund balance relative to insured deposits — increased by 5 basis points to 1.36%. The FDIC is no longer operating under a Restoration Plan as the DIF reserve ratio reached the statutory minimum of 1.35% three years before the statutory deadline.