Wisconsin Banks Ended ’23 On A ‘Positive Note’

Numbers from the Federal Deposit Insurance Corporation showed Wisconsin banks remained healthy through the final quarter of 2023.

Banks continued to meet the borrowing needs of their customers, as evidenced by year-over-year lending increases in all categories — commercial, residential, and farm loans.

Farm loans increased year over year (10.3%) as farmers looked to upgrade equipment, make capital improvements, or expand. The decrease in farm loans quarter over quarter (-22.31%) reflects seasonal demand fluctuation.

“The year 2023 ended on a positive note with banks in a solid position. Residential loans are picking up, while many business owners are tending more toward a ‘wait-and-see’ approach on borrowing,” says Wisconsin Bankers Association President and CEO Rose Oswald Poels. “Bankers, consumers, and business owners alike are hopeful that the Federal Reserve will lower interest rates in 2024. Inflation, the potential for a recession, and geopolitical issues remain top concerns for the year ahead.”

Deposits were up both quarter over quarter (1.12%) and year over year (2%), demonstrating public trust in Wisconsin banks as safe places to keep money. While net interest margin has decreased slightly from 3.27% to 3.20% year over year, capital levels are healthy.

Residential loans grew quarter over quarter (7.64%) and year over year (5.62%). With low inventory, homes continue to sell quickly. The Fed did not raise interest rates in the last quarter of 2023, and rates remain good in historical context.

Commercial lending increased only slightly year over year (0.2%) and decreased slightly quarter over quarter (-0.6%) as business owners continued monitoring economic trends and interest rates.

Past-due loans increased as inflation, the lag effect of interest rate hikes earlier in 2023, and slowed income growth challenged borrowers in paying back their loans. Banks anticipated and were prepared for more net charge-offs (loans that are unlikely to be repaid).