Profits plummet at Wisconsin banks

Higher interest expense, fewer commercial loans drive first-half fall

Last updated on July 2nd, 2019 at 09:09 am

Profits fell sharply at Wisconsin banks in the first half of the year, even though assets and deposits increased.

Total net income at all FDIC-insured Wisconsin banks was $518 million in the first half of 2016, down from $614 million in the first half of 2015, according to the Quarterly Banking Profile released today by the FDIC.

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There were 231 banks reporting in the second quarter, down from 246 banks at the same time last year. Consolidation has swept across the banking industry as financial institutions work to increase revenue despite low interest rates and community banks spend more on regulation compliance.

Total interest expense was $194.4 million in the first six months of the year, up from $175 million in the first half of 2015.

Wisconsin banks had $107.2 billion in total assets as of June 30, up from $103.7 billion at the end of 2015’s second quarter.

Total loans and leases were $76.8 billion at the end of the second quarter, up from $73.3 billion at the same time last year. Real estate loans were $54.5 billion in the first half of the year, up from $52.6 million in the first six months of 2015. But commercial and industrial loans were just $12.8 billion in the first six months of the year, down from $13.1 billion in the first half of 2015.

Deposits were also up, at $83.1 billion, compared with $81.7 million a year ago.

Green Bay-based Associated Bank N.A. had the highest net income of Wisconsin banks in the second quarter, with $55.6 million. It had assets of $29 billion.

Madison-based John Deere Financial f.s.b. had the second-highest second-quarter profit, with $10.6 million. It had $2.9 million in assets.

Third-highest was Wauwatosa-based WaterStone Bank SSB, with $7.8 million in net income and $1.8 billion in total assets.

Racine-based Johnson Bank and Milwaukee-based Northwestern Mutual Wealth Management rounded out the top five with $6.6 million and $5.7 million in net income, respectively.

“Wisconsin banks continue to prove how far we have come in the last few years, according to the latest FDIC quarterly numbers,” said Rose Oswald Poels, president and chief executive officer of the Wisconsin Bankers Association. “Despite a modest decrease in commercial loans, overall lending grew to over $75 billion, a 5 percent increase when compared to the same time frame in 2015.

“The banking industry also hit a benchmark this quarter with the Deposit Insurance Fund’s Reserve Ratio surpassing 1.15 percent. The reserve is currently at 1.17 percent. This is the reservoir, fully funded by the financial industry, which protects taxpayers from the financial fallout of a failed bank.”

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Molly Dill, former BizTimes Milwaukee managing editor.

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