IDOB Update Vaughn Noring

Bank Bureau ChiefApril 8, 2011

Topics

• Background• Iowa Banking Environment• Areas to Monitor• Outlook for 2011• Questions

Iowa Bank Demographics• 360 banks and thrifts headquartered in Iowa.

– 311 state banks– 34 national banks– 15 thrifts– 13 out-of-state banks with 318 offices.

• Total assets of the state banks is $51.7B– $ 166,000,000 avg. size IA state-chartered bank– 2,000,000,000,000 BofA, Citibank, Chase

• Declining number of banks, but more locations• Economic engine for Iowa’s main streets &

communities

As of 12/31/10

42 Iowa Bank Failures• 1982 2 banks • 1983 1 bank• 1984 3 banks • 1985 11 banks• 1986 10 banks • 1987 6 banks• 1988 6 banks• 1993 1 bank• 2000 1 bank• 2001 0 banks• 2002 0 banks• 2003 0 banks• 2004 0 banks• 2005 0 banks• 2006 0 banks• 2007 0 banks• 2008 0 banks• 2009 1 bank (Vantus—OTS

Charter)• 2010 0 banks

Areas to Monitor

Farmland Prices

BUBBLE

Obtained from Mike Duffy at ISU

Interest Rate Risk

• Businesses and banks will need to do good job of risk management– Impact of rising interest rates – Don’t be over-reliant upon short-term funding

if rates increase– Maintain adequate capital and liquidity

Other Areas Worth Monitoring• Unemployment• Housing• Inflation• Legislation & Policies

– OD policy– Dodd-Frank implementation

• GSEs• Credit risk retention• Stress testing• CFPB• Durbin Amendment• $250,000 deposit insurance permanent• De Novo Interstate Branching

• Changes in regulatory personnel

Properly Evaluating Risks Remains Important

What’s the Outlook for 2011?

Predictions• The outlook is for the U.S. economy to expand at a solid

pace this year and next year• Employment is expected to rise moderately over the next

two years with the unemployment rate edging lower• Slackness in the economy will lead to a relatively

contained inflation rate• Low loan demand by consumers and businesses • Interest rates expected to stay low• Opportunities for businesses and individuals willing to

take calculated risks

Questions?