Midwest earnings figures show larger banks out-pace smaller banks

Income trends among banks in the Midwest tracked with the nation overall, as first quarter earnings across the banking industry exceeded last year’s first quarter earnings by 27.5 percent. First quarter earnings at Illinois’s 450 banks exceeded last year’s first quarter earnings by 24.4 percent. In Wisconsin, where there are 201 banks, the gain was 21.8 percent; in Minnesota where there are 304 banks it was 17.6 percent and in Iowa (294 banks) it was 13.5 percent.

Larger banks are generally reporting stronger earnings than smaller banks. In Colorado, for example, banks with fewer than $100 million in assets reported an average return on assets of 0.76 percent for the first quarter, compared to banks with more than $100 million in assets which reported an ROA of 1.33. Return on equity numbers reflect the same pattern, coming in at 6.53 percent for smaller banks and 13.47 percent for larger banks.

In Indiana, ROA at small banks was 0.94 percent, at larger banks it was 1.25 percent; ROE came in at 6.36 percent at small banks and 10.75 percent at large banks. In Iowa, large banks topped smaller banks with 1.27 percent ROA compared to 1.01 percent, and for ROE it was large banks 11.94 percent compared to 7.72 percent at smaller banks. The difference between large and small banks was least pronounced in Illinois, where large banks reported first quarter ROA of 0.97 percent compared to 0.82 percent for smaller banks, and 8.5 percent ROE for larger banks compared to 6.78 percent for smaller banks.

Asset quality appears to be improving in some states. In South Dakota, the average ratio of nonperforming assets to assets decreased to 0.81 percent at the end of the first quarter from 1.22 percent two years ago. In Minnesota, the ratio is down to 0.86 percent compared to 1.02 two years ago. In Wisconsin the ratio has fallen to 0.71 percent from 1.08 percent in the same time frame, and in Illinois, it has dropped to 0.64 percent from 0.82 percent.

In some areas, particularly areas with a strong agricultural influence, credit quality appears to be deteriorating. In North Dakota, nonperforming assets to assets was 0.71 percent at the end of the first quarter, compared to 0.64 percent two years ago. In Nebraska, it was 0.62 percent compared to 0.54 percent, and in Iowa it was 0.58 percent compared to 0.56 percent.