Iowa banks reported an increase in loans in the third quarter, up 8.7% from the same period a year ago, information released by the Federal Deposit Insurance Corp. shows.

“Despite a challenging interest rate environment resulting from the Federal Reserve’s war on inflation, Iowa banks are growing loans and maintaining deposit levels,” John Sorensen, president and CEO of the Iowa Bankers Association, said in a prepared statement.

In the third quarter that ended Sept. 30, Iowa’s 246 domiciled banks reported:

• $82.9 billion in active loans on their books, an increase of 8.7% from a year ago when active loans totaled $76.2 billion. The quality of the loans in 2023’s third quarter was strong, as net loan charge-offs were 0.04% of total loans. The noncurrent percentage of total loans was 0.52%
• $101.6 billion in total deposits, down slightly from a year ago when deposits totaled $101.8 billion.
• $949 million in net income, down 11% from a year ago when net income totaled $1.07 billion. The decline is due to lower net interest margins and an increase in loan loss provisions, according to a news release.

“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,” according to the release.

In addition, average return on assets, another indicator of overall bank performance, decreased to 1.04% from 1.22% at the end of third quarter 2022. Total assets, mostly consisting of loans and investments, in the third quarter exceeded $122 billion.