More Iowa banks are getting satisfactory ratings from examiners, according to a report from the Iowa Division of Banking. Banking Superintendent Jim Schipper says Iowa’s banks were at their weakest in the height of the recession three years ago.
“All banks are rated on a scale of one through five and any bank rated less than two is considered less than satisfactory. In the fourth quarter of 2010, approximately 15-percent of the state-chartered banks in Iowa were considered less than satisfactory,” Schipper says.
The situation has improved as the economy has recovered. “This month, we only have 9 or 10 banks, only about three-percent, are considered less than satisfactory. So we have had a significant improvement in the condition of Iowa banks,” Schipper says. Iowa banks were weakened during the recession, according to Schipper, due to connections with real estate developers, poor underwriting decisions, and bad loans from outside the state. Only one community bank in Iowa failed during the recession and was turned over to federal receivership. That was the Polk County Bank in Johnston.
Schipper says that compares to the Farm Crisis of the 1980’s when 50 banks failed statewide. The Iowa Division of Banking oversees roughly 300 community banks in the state.