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Bankers Association president says Iowa institutions are sound

News

March 14th, 2023 by Ric Hanson

(Radio Iowa) – With the recent collapse of two U.S. banks, one based in California, the other in New York, some Iowans may be concerned about the stability of their local financial institutions.

Ron Sorensen, president and CEO of the Iowa Bankers Association, says there’s nothing to worry about, as the banks that failed were run much differently from how banks operate in Iowa. “Not only were these banks that we’re talking about, on the East and West coasts, using very unique business models, primarily tech companies who were funded through venture capital and crypto, they had issues in regards to liquidity,” Sorensen says. “The venture funding fell off from some of their local small business customers.”

That led to a critical drop in deposits, plus, Sorensen says the banks also had issues with their securities portfolios. “None of that exists in our banks here in Iowa, frankly, we have record capital levels in Iowa banks,” he says. “We still have strong liquidity. Our banks are based on a very safe and sound business model. They know their customers. They’re on Main Street every day.”

John Sorenson. (IBA photo)

Sorensen says Iowa banks are typically relationship-based, and their biggest depositors are in areas like agriculture, small businesses, and local companies and manufacturers. “These are strong businesses that have shown the same things that our banks are showing, right?” he says. “They’re consistently strong. They’ve been in the community for a long time, so as a result, it’s just a very different environment in Iowa.”

Iowa banks are well capitalized and highly liquid, Sorensen says, and they’re backed by FDIC insurance. Sorensen recommends customers talk with their local banking officials about the institution’s security. There are over 280 members of the Iowa Bankers Association.