Deposits and loans at Wisconsin banks continued to grow in the third quarter, but the pace of growth in deposits slowed as some consumers tapped into savings to deal with rising inflation, according to the latest data from the FDIC.
Bank customers had $120.3 billion in deposits at Wisconsin banks, up 3.8% from the same time in 2021. In June, the year-over-year growth was 5.8%, itself a slowdown from 7.1% and 10.9% in March and December respectively.
Lending, on the other hand, picked up with 11.7% year-over-year growth in net loans and leases. In the June quarter, banks saw 8% growth, up from 2.5% in March and 2.1% in December.
The Wisconsin Bankers Association noted residential loan demand grew 5.3%, even with rising interest rates as home prices declined or at least stabilized.
Commercial lending was up 10% year-over-year, although the pace of growth slowed from 7.8% between the first and second quarters to 2.3% from the second to the third quarter. The WBA attributed the decline to businesses holding off on borrowing because of election uncertainty and recession concerns. Commercial lending also saw a quarter-to-quarter decline in lending to start the year attributed to worker shortages and supply chain issues.
Farm loans were up 5.8% from June and 6.8% from 2021. The WBA attributed that growth to farmers more frequently turning to borrowing because of higher input costs after relying more on stimulus packages and strong balance sheets in recent years.
Even with growing economic uncertainty and inflation challenges, credit quality has generally remained strong. The percentage of loans 30 to 89 days past due dipped from 0.19% in June to 0.17% in the third quarter. Noncurrent loans, those beyond 90 days past due or in nonaccrual status, dropped from 0.42% to 0.4%.
A year ago, 30 to 89-day past due loans were at 0.19% and noncurrent loans were at 0.55%.
While the Federal Reserves continued interest rate hikes aimed at cooling the economy and controlling inflation, they have provided a tailwind for banks.
In Wisconsin, net interest margin increased from 3.07% in the second quarter to 3.19% in the third. It was at 2.95% in the first quarter.
Net interest income for banks year-to-date is up 8.1% while noninterest income is off 7.3%. Overall, net income is down 11.3% year-to-date, although that is an improvement from 14.7% through the second quarter and 18.4% after the first quarter.