Iowa’s banking industry demonstrated strength and met Iowans’ financial needs amid persistent inflationary pressures and rising interest rates in the third quarter, according to recently released data from the Federal Deposit Insurance Corp.

Iowa banks continued to increase lending, and asset quality measures remained favorable, John Sorensen, president and CEO of the Iowa Bankers Association, said in a prepared statement.

“Although provisions for expected credit losses are rising, loan delinquencies have behaved to date,” Sorensen said. “Iowa bankers will continue to monitor economic circumstances to advise their clients as they plan their financial futures.”

Net income for Iowa banks was $1.07 billion through the first three quarters of 2022 — down 6.3%, or $72 million, from the same period in 2021.

The decline was due to an increase in provisions, which are set aside by institutions to protect against future loan losses, Sorensen 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.

Iowa-domiciled banks reported $76.2 billion in active loans on their books as of Sept. 30, an increase of 11.9% from the prior year. The quality of the loans remained strong, as net loan charge-offs were 0.02% of total loans outstanding, a slight decline from 0.03% the year prior.

Total deposits at Iowa banks were $101.8 billion as of Sept. 30, up 6.8% from third quarter 2021 when deposits totaled $95.3 billion.

Return on assets, another indicator of overall bank performance, declined to 1.22% from 1.39% at the end of third quarter 2021. Iowa-chartered banks’ total assets amounted to $118.3 billion at the end of third quarter 2022.

Overall, the FDIC reported Thursday that key banking industry metrics remain favorable at this time. Loan growth continued, net income grew nationally and asset quality measures remained favorable, despite a rise in early delinquencies. Further, the industry remains well-capitalized and highly liquid.

However, the FDIC reported that the banking industry continues to face downside risks resulting from economic uncertainties, inflationary pressures, rising interest rates and geopolitical concerns. The factors could hamper bank profitability, weaken credit quality and capital, and limit loan growth, the FDIC said.