Data from the Federal Deposit Insurance Corporation shows Wisconsin banks continued to be in a healthy position through the third quarter.
Residential real estate lending dipped slightly over the prior year (-2.34%). But farm lending held steady (-0.29%) and commercial lending increased (2.50%). Deposits increased year over year (3.53%). This was in part due to the high interest rates offered on certificates of deposit (CDs) and money market accounts.
Farm loans held steady year over year (-0.29%) and increased quarter over quarter (4.68%). Farmers sought to upgrade equipment, make capital improvements, or manage operational costs affected by tighter margins.
Wisconsin Bankers Association President and CEO Rose Oswald Poels says the latest FDIC report underscores the continued adaptability of banks.
“While monitoring the effects of inflation, Wisconsin’s banks remain well capitalized and continue to meet the needs of their communities,” Oswald Poels says. “A decrease in interest rates in September helped commercial borrowers’ lending needs and allowed banks the opportunity to support those customers’ growth and financial goals.”
Other notable indicators:
- Residential real estate loans decreased slightly year over year (-2.34%). Inventory continues to be very limited. Homeowners who refinanced at low interest rates during the pandemic have little incentive to move. Seasonal trends in housing sales played into the decrease from the prior quarter (-11.70%). Spring is typically the most popular time to move in Wisconsin.
- Commercial lending saw modest growth year over year (2.50%) and quarter over quarter (1.19%). The Fed began easing interest rates in September.
- Past-due loans were elevated year over year (19.30%) and quarter over quarter (6.55%). Inflation and the high cost of living impacts borrowers. While banks continue to monitor credit quality, the current level of past-due loans remains above recessionary levels.