Utah is leader in growth of deposits

Utah's banks again led the nation in deposit growth last year, thanks in large part to the growth of industrial loan banks, the industry's primary insurer reported Wednesday.

However, while deposits continue to show impressive growth — Utah ranks fifth in the nation when industrial loan deposits are excluded — the Federal Deposit Insurance Corp. also reported that past-due loan levels remain "elevated" at Utah's commercial banks.

In its Winter 2004 State Profiles released Wednesday, the FDIC reported that there were 66 insured financial institutions in Utah as of September 2004, compared to 62 the prior year. Total assets jumped to $198 billion, from $137 billion in September 2003. Eight FDIC-insured institutions were classified as "unprofitable" in September 2004, compared to four the year before.

"Utah reported the highest deposit growth rate in the nation during the past decade," the report stated. Industrial banks (ILCs) accounted for the lion's share of that growth, or 71 percent market share of the state's deposits.

Last year saw impressive job growth and strong residential building activity in Utah, the report stated. However, those were tempered by anemic home-price appreciation, which, the FDIC said, may have contributed to weak consumer fundamentals, as evidenced by the state's personal bankruptcy filings.

Utah ranked fifth highest in both personal bankruptcy filings and foreclosures for the year ending second quarter 2004, the report stated, an improvement from its second-place ranking a year ago.

In addition, the FDIC detected sluggishness in Utah's year-over-year growth in home equity lines of credit. At 8 percent, home equity lines growth was slower than the state's total loan growth rate of 13 percent and much slower than the national median growth rate of 24 percent.

"Going forward, strong residential construction, if not met with strong demand, could be a drag on home price appreciation and could also challenge credit quality," the report stated.

On a brighter note, Utah's FDIC-insured institutions reported significant improvement in their median loan past-due ratio, which fell from 2.85 percent to 1.69 percent year-over-year as of Sept. 30, 2004. Though that ratio remains high relative to other states (Utah ranked 15th highest in the nation), the agency reported improvement across all loan categories, with the exception of commercial and industrial loans. The past-due ratio for those loans inched higher to 3.22 percent from 2.67 percent year-over-year as of Sept. 30, ranking Utah second in the nation.

"Utah's financial institutions are doing well," said Edward Leary, commissioner of the Utah Department of Financial Institutions. "Delinquency in loan levels, compared to other states in the nation, are a little bit high. But deposits in Utah are up dramatically, largely as a result of the ILCs, and even excluding ILC deposits, Utah's deposit growth ranks fifth in the nation. What that means is that people are putting money into savings."

Leary declined to speculate on causes for the dichotomy, or guess about which Utahns were saving money and which were reflected in the FDIC's loan delinquency and personal bankruptcy statistics.

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E-mail: jnii@desnews.com