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Wisconsin Banks See Rise in Lending, Profits

(The Business Journal) Lending by Wisconsin's depository bank and thrift institutions grew in the first quarter of 2009, bucking the national trend, according to consolidated numbers released Wednesday by the Federal Deposit Insurance Corporation.

Mortgage refinancing and a stabilizing financial sector helped improve bank earnings in Wisconsin and nationally compared with the previous quarter.

Total loans and leases for FDIC-insured Wisconsin banks grew 2 percent in the first quarter compared with the same period a year ago. Nationally, total lending declined 2.1 percent over the same period.

Wisconsin's loan-to-deposit ratio dropped from 108 percent in the fourth quarter of 2008 to 107 percent in the first quarter of 2009, but is still well ahead of the national ratio of 84 percent, down from 85 percent in the previous quarter, noted the Wisconsin Bankers Association. The figure means the average bank in Wisconsin is lending $1.07 for every dollar received on deposit, the association said.

"The FDIC numbers prove that Wisconsin banks are lending," said Kurt Bauer, who is president and CEO of the Wisconsin Bankers Association. "But, the recession is clearly impacting commercial and retail borrowers' creditworthiness as well as overall loan demand."

Bauer also noted factors outside of a bank's control that influence credit availability, including the skyrocketing increase in the cost of FDIC deposit insurance for banks, mark-to-market accounting rules, a recent 15 percent state corporate income tax increase, intense regulatory pressure to tighten lending standards and to add to loan-loss reserves, and the exit of many non-bank lenders from credit markets.

 

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