Iowa’s banks showed growth in loan and deposit activity but a decrease in net income in the fourth quarter of 2023, according to data released Thursday from the Federal Deposit Insurance Corp.

A news release from the Iowa Bankers Association that outlined the report said Iowa banks ended 2023 with an average loan growth of 6% from the previous year and a 1.2% increase from the third quarter last year. Banks also reported a 0.3% growth in deposits from the third quarter, according to the release.

The Iowa Bankers Association said Iowa banks saw a slight decrease in deposits year-over-year to $101.9 billion but was up slightly from the third quarter. Total assets for Iowa banks were more than $123 billion to close out 2023, an increase of 2% over 2022.

According to the release, 240 Iowa-domiciled banks provided nearly $84 billion in loans as of the end of 2023, up from $79 million in 2022.

“Demand for credit traditionally mirrors economic activity in our state. So, it’s not surprising that a year-over-year 6% increase in Iowa bank lending would correspond with a similar increase in our gross state product,” Iowa Bankers Association President and CEO John Sorensen said in the release.

“This positive loan growth occurred despite continuing bank funding and regulatory pressures and borrower apprehension due to economic and geopolitical risks,” he said.

Iowa banks ended 2023 with $1.2 billion in net income, a 15.7% decrease from 2022, according to the release.

“The decline is due in large part to lower net interest margins and additions to bank loan loss reserves due to forecasts of slower economic growth in 2024,” the release said. “The average return on assets at Iowa banks fell to 0.98% in Q4 from 1.19% the year prior.”

On the state of banking in the U.S., FDIC Chairman Martin Gruenberg said in the release that the industry has “shown resilience after a period of liquidity stress in 2023.”

“Full-year net income remained high, overall asset quality metrics were favorable, and the industry’s liquidity was stable,” Gruenberg said. “Ongoing economic and geopolitical uncertainty, continuing inflationary pressures, volatility in market interest rates and emerging risks in some bank commercial real estate portfolios pose significant downside risks to the banking industry. These issues, together with funding and earnings pressures, will remain matters of ongoing supervisory attention by the FDIC.”