Third quarter shows banking industry’s strength

FDIC data highlights continued growth for Iowa’s banking industry

JOHNSTON — Data released Monday by the Federal Deposit Insurance Corp. showed continued strength for the banking industry.

The state-specific data reported loan, deposit and asset growth in the third quarter despite continued inflationary pressures and economic uncertainty.

“The banking industry in Iowa remains competitive and continues to benefit the economy and the communities it serves,” said Adam Gregg, president and chief executive officer of the Iowa Bankers Association. ‘

“This quarter’s results reflect the industry’s ongoing stability and points to positive momentum heading into the close of 2025,” Gregg said.

Iowa banking results

The 232 Iowa-domiciled banks continued to see loan growth this quarter, with an increase of 1% from the previous quarter to $90.4 billion, and an increase of 4% from a year ago. Deposits also increased from the second quarter to $108.9 billion, a 3.6% increase from the same period in 2024.

Loan quality remains strong in the third quarter with average net loan charge-offs at just 0.10%, a slight increase from second quarter 2025, but still favorable credit quality.

The noncurrent percentage of total loans was 0.59% this quarter, which is a slight decrease from 0.66% at the end of the prior quarter and a slight increase from the same period 2024. This percentage indicates that Iowa continues to show financial stability.

Iowa banks reported a 1.6% increase in total assets this quarter over last to $131 billion, a 3% increase from the same period in 2024.

Iowa banks had $1.1 billion in net income through the third quarter. The competitive interest rate environment continues to have an impact on net interest margins, signifying the benefit of Iowa’s competitive banking sector to consumers and businesses.

The average return on assets, an overall indicator of bank performance, at Iowa banks was 1.17% in the third quarter, an increase from 0.86% in the third quarter 2024.

National banking results

The banking industry continues to show resilience through the third quarter. The industry continues to face weakness in certain loan portfolios and economic uncertainty, the FDIC reported.

The banking industry continued to report loan growth this quarter. Total loans grew by 1.2% from the previous quarter and 4.7% from the prior year to $13.2 trillion.

The FDIC reported quarterly loan growth was mostly attributed to loans to non-depository financial institutions and loans to purchase or carry securities, including margin loans. Community banks had broad-based loan growth with an increase of 1.3% from the previous quarter and 5.2% from the prior year.

Total deposits grew this quarter to $19.8 trillion, a slight increase from second quarter and a 3.6% increase from third quarter 2024. Domestic deposits increased for the fifth consecutive quarter.

Community banks saw a 1.6% increase in domestic deposits this quarter to $2.3 trillion, with 60% reporting an increase in deposit balances.

Asset quality metrics remain favorable, but the industry continues to see deterioration due to commercial real estate loans and credit card loan portfolios. Total assets grew to $25.1 trillion in the third quarter, a slight increase of 0.5% from the second quarter, and a 3.7% increase from the prior year. Community banks saw growth in total assets from the previous year and prior quarter.

In the third quarter, net interest margins increased from the prior quarter. The rise in net interest margins drove net income to $218.5 billion, up from $201.4 billion in third quarter 2024. Total net income increased from the prior quarter, driven by lower provision expense, mostly attributed to the Capital One Financial Corporation acquisition of Discover Financial Services, and higher net interest income. Community banks reported a 9.9% increase in net income from the previous quarter to $8.4 billion.

The FDIC’s “Problem Bank List” decreased by two to 57 banks this quarter. Only 1.3% of total banks are considered “problem banks” which is within the normal range. There were no bank failures in the third quarter.

Notably in the third quarter, the Deposit Insurance Fund balance increased $4.8 billion to $150.1 billion in the third quarter. The DIF reserve ratio — the fund balance relative to insured deposits — increased again by 4 basis points during the quarter to 1.4%.