FDIC reports Wisconsin banks are in solid position

Data released this week by the Federal Deposit Insurance Corporation (FDIC) shows Wisconsin banks remained in a healthy position through the second quarter of 2024. Lending held steady or increased in Q2 2024 over the prior year in all categories (commercial, residential, and farm loans), as banks responded to the borrowing needs of their customers. Deposits increased year over year (2.00%), due in part to the high interest rates offered on certificates of deposit (CDs) and money market accounts. The Q2 2024 net interest margin of 3.15% is a slight decrease over the prior year (3.24%) but an increase over the prior quarter (3.10%). Wisconsin banks remain well capitalized.

Notable indicators include:

• Residential real estate loans were up quarter over quarter (15.21%) and year over year (11.55%). With spring being a popular time to move, homes continue to sell quickly. Borrowers have become accustomed to the current home prices and interest rates. Wisconsin’s housing shortage persists, particularly as many homeowners refinanced into low-interest rate mortgages in prior years and have little appetite to sell.

• Commercial lending held steady quarter over quarter (0.75%) and year over year (-0.33%) as business owners await potential interest rate cuts by the Fed and potential economic changes following the November election before making significant operational changes.

• Farm loans increased quarter over quarter (20.59%) and year over year (2.44%) as farmers entered planting season and sought to upgrade equipment, make capital improvements, or manage operational costs affected by tighter margins.

• Past-due loans were elevated year over year (33.76%) as inflation and the high cost of living impacts borrowers. Past due loans eased, however, quarter over quarter (-5.92%), and the current level of past-due loans remains above recessionary levels.

Statement on the release of second-quarter 2024 Federal Deposit Insurance Corporation (FDIC) numbers from Rose Oswald Poels, president and CEO of the Wisconsin Bankers Association: “The latest FDIC report underscores the strength and adaptability of Wisconsin banks. Despite economic and geopolitical concerns, banks remain well capitalized and continue to meet the needs of their communities, as evidenced by steady or increased lending across sectors and a steady deposit base. As indicators point toward a likely interest rate cut by the Fed in September, borrowing costs could ease and provide additional opportunities for banks to support their customers’ growth and financial goals.”