State bankers say uncertainties still stifling business growth

Wisconsin business owners are letting out more of a whimper than a roar as they enter the new year, according to a new survey from the Wisconsin Bankers Association.

Business loan approvals are expected to remain flat in 2014, despite a 75-percent approval rate on business loan applications from most of the banks that responded to the WBA’s Bank CEO Economic Conditions Survey.

The survey, conducted between Nov. 20 and Dec. 9, polled 64 banks across the state.

“A year ago, we were seeing low loan demand, particularly on the business side. This year, we’re seeing the same thing,” said Rose Oswald Poels, president and chief executive officer of the WBA.

Many of those surveyed said business loan demand is currently fair to poor. The culprit: lingering uncertainty.

Despite a slowly improving economy, some issues are continuing to weigh on employers. Among them are the difficulties surrounding the federal health care exchange and the brinksmanship displayed by Congress.

“Health care is a big cost for all employers and it’s definitely a critical benefit for individuals,” Oswald Poels said. “All that uncertainty, if it were cleared up, would help ease the concern of business owners.”

Tuesday’s federal budget deal compromise could reduce some uneasiness, but not all of it.

Over the next six months, bank leaders anticipate commercial real estate, residential and agricultural loan demand will also stay flat.

All of the respondents agreed that Wisconsin’s economy is in “fair” or “good” health. About two-thirds expect current conditions to endure for the first half of 2014, while 30 percent expect economic growth.

“I do see some continued economic growth,” Oswald Poels said. “I think it will pick up a little bit, but I do not see it dramatically increasing.”

And for that reason, loan demand will remain low, she said.

Looking ahead, Oswald Poels expects continued consolidation for Wisconsin’s banks in 2014, at about the same rate as in 2013.

The WBA has worked to alleviate regulatory burdens on banks, particularly in the mortgage lending area, she said.

“We think the Dodd-Frank pendulum swung too far and we’d like to bring that back,” Oswald Poels said. “We were able to streamline some of the Basel rules and the impact there.”

The bank hiring outlook is about the same, and all layoffs due to the rapid decline of mortgage refinancing have likely been completed, she said.

Compliance officers and commercial lenders will continue to be in demand in 2014, while teller hiring is on the downswing.

“As more banks go towards automation, they probably need (fewer) tellers than they have over the last five years,” Oswald Poels said. “I think branching will remain flat and possibly even start to have a net decrease.”

Molly Dill is a reporter at BizTimes Milwaukee.

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Molly Dill, former BizTimes Milwaukee managing editor.

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