Banks bullish about Wisconsin’s economy

A great deal of positive chatter about Wisconsin’s economy in 2013 is coming out of the state’s banking sector.

Ninety-eight percent of the banks that responded to the latest Wisconsin Bankers Association (WBA) Bank CEO Economic Conditions Survey classified the current health of the state’s economy as “good” or “fair.”

The rating confirms the prediction made by the same survey conducted in June last year, when 50 percent of respondents said they expected the state’s economy to grow. Data from the bank executives who completed the survey reflects slow, yet steady progress in the health of the banking industry and Wisconsin’s economy.

“The role bankers play in their communities gives them a unique perspective on the economy to offer,” said Rose Oswald Poels, WBA president and chief executive officer. “Wisconsin’s economy is getting stronger.”

The most recent survey also indicates current loan demand for residential real estate is strong, rated as “good” or “excellent” by 53 percent of respondents. Growth in real estate lending is an indicator that the state’s housing market is also on its way back to healthy levels, the WBA said.

Banks predict continued healthy levels for Wisconsin’s economy, with 90 percent indicating they expect the economy to remain steady or improve over the next six months.

WBA members also were told recently by Federal Reserve Bank of St. Louis President James Bullard that he believes the U.S. gross domestic product (GDP) will grow by around 3.2 percent in 2013 and 2014, a more bullish estimation than some economists are forecasting.

Bullard attributed the faster economic growth to three main factors: easier monetary policy, reduced headwinds and reduced uncertainty. Bullard added that he believed “unemployment will fall and inflation will remain near target.” On unemployment, Bullard noted that it has improved over the past three years despite sluggish GDP growth.

“The U.S. housing market has improved during 2012, and I expect this will continue in 2013,” Bullard said.
In addition, he noted that some aspects of the U.S. fiscal situation have been addressed and that he expects more to come.

“Overall, U.S. monetary policy looks more accommodative today compared to six months ago,” Bullard said. “This may combine with reduced headwinds and reduced uncertainty in the U.S. to produce a better growth environment during 2013.”

Several publicly traded banks with a significant presence in the Wisconsin market recently reported strong quarterly earnings reports.

Brown Deer-based Bank Mutual Corp. reported fourth quarter net income of $2.3 million, or 5 cents per share, up from $1.4 million, or 3 cents per share, in the same period a year ago. For the full year, Bank Mutual reported net income of $6.8 million, 15 cents per share, compared with a net loss of $47.6 million or $1.03 per share, in 2011.

Associated Banc-Corp, the Green Bay-based parent company of Associated Bank, reported fourth quarter net income $45 million, or 26 cents per share, up from $40 million, or 23 cents per share, in the same period a year ago. For the full year ended Dec. 31, 2012, the company reported net income of $174 million, or $1.00 per share, up from $115 million, or 66 cents per share, for the previous year.

Minneapolis-based U.S. Bank reported record full-year net income of $5.6 billion in 2012, while Chicago-based Northern Trust Bank reported full-year net income of $687.3 million and Pittsburgh-based PNC Bank reported fiscal third quarter net income of $925 million.

BMO Financial Group, the Toronto-based parent company of BMO Harris Bank, reported fiscal 2012 net income of $4.2 billion (Canadian), up from $1.1 billion a year earlier.

Steve Jagler is executive editor of BizTimes.

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