Bankers are uniquely situated to understand the direction of the economy. Constant conversations with clients to meet their needs and monitor credit risk, plus a pipeline – or lack thereof – of loan demand provides insight on what businesses are planning.
To better understand the state of the regional economy, BizTimes reached out to a number of local banking leaders seeking their qualitative insights on topics like loan demand, economic uncertainty and business plans. A selection of those responses are presented below.
Are you seeing any shifts in loan demand, by sector or by product, from your clients?
Phillip Trier, EVP, head of corporate and commercial banking, Associated Bank: “At Associated, our commercial and business loan pipeline is at a record high. We think this reflects the investment we have made in growing our relationship manager team coupled with the continued demand we are seeing from our customers and prospects.”
Drew Slocum, president, Bank of America Wisconsin:“From a business standpoint, we saw an increase in working capital borrowing needs in Q1 and April, which we attribute to some pull forward of inventory purchases with companies seeking to invest more in inventory ahead of any tariff impacts. The consumer side remains very stable on a year over year basis across all product types with our small business loans up slightly year over year, while mortgage lending is down slightly and auto loans and credit card balances are essentially flat – this all combines to form our view of the consumer being in good shape.”
Chris Hermann, regional president, Wisconsin, PNC Bank: “PNC has seen notable loan growth in Wisconsin among our existing client base due to our steady and dependable approach that has helped businesses invest in their operations. There are a few key factors influencing loan demand: tariff uncertainty, interest rates, and geopolitical dynamics with some of these factors working in opposite directions. Tariff uncertainty has caused some modest increases in business borrowing related to working capital as businesses have sought to pull forward inventory purchases of imported inventory during perceived windows of lower tariffs. Higher interest rates have generally reduced loan demand across both consumer and business clients. Complicated geopolitical dynamics have caused businesses to, on the margin, delay investments until there is more clarity on policy and implementation.”
Michael Kellman, SVP commercial and consumer banking, North Shore Bank: “Yes, there’s growing demand for working capital lines and equipment financing, especially in manufacturing and professional services.”
Tony Laszewski, SVP, commercial banking manager, Waukesha State Bank: “Entrepreneurs, despite many headwinds, generally remain bullish and optimistic. This means loan demand is stable in sectors like manufacturing, logistics, and housing. SBA 7(a) and equipment financing requests have ticked up, especially among smaller firms pursuing efficiency upgrades or automation.”
Jim Popp, CEO, Johnson Financial Group: “Overall loan demand continues to be steady, while utilization on credit lines has actually ticked up a bit, likely due to increased input costs. This is especially true for those companies who import raw materials and are more heavily impacted by tariffs. M&A activity has also led to an increase in demand for credit in some cases.”
Jay Mack, president and CEO, Town Bank: “We have seen less loan demand from manufacturing and distribution clients due to tariff impacts and reduced orders over the past two years. We’ve also seen a slowdown in new construction loan requests partially driven by oversupply and economic uncertainty. However, commercial construction firms and general contractors still report strong backlogs with many infrastructure projects still being bid out.”
David Anderson, group head, Wisconsin commercial banking, BMO: “We’ve seen our clients build stronger balance sheets with less leverage over the past few years. Utilization on revolving lines of credit for our commercial clients are at historical lows. Having said that, our clients are following their strategic plans and look at the noise of the current environment as mostly short term.”
Ryan Gordon, EVP, chief credit officer, WaterStone Bank: “Refinance activity in the commercial real estate market has picked up. Loans are now maturing that were repriced in 2020 when interest rates initially dropped.”
Adam Newman, EVP, business lending and commercial services, Landmark Credit Union: “Loan demand remains strong in 2025. Regional manufacturing, medical and veterinary firms are still expanding. Multifamily acquisitions and rehabs continue at a strong pace. Larger retail acquisitions increased in 2024 and are continuing in 2025. Development outside of housing is limited but that is in line with 2024 activity levels. This indicates that economic unpredictability has not broadly stifled business activity – and that activity could increase with more certainty later in 2025 or early 2026.”
How are businesses responding to the current environment? Are they adjusting plans, holding off or moving ahead? What seem to be the top factors shaping those decisions.
Trier, Associated Bank “The first half of the year was rather turbulent, leading to some clients moving to a wait-and-see approach. As business owners and executives have been able to digest more economic data, it appears some of the market fears have abated. We’re now seeing clients begin to move forward with a renewed focus on expansion and investment. They have returned to a business-as-usual operating cadence.”
Slocum, Bank of America: “Companies in Wisconsin remain prudent and focused on the long term. As a result, we have seen many companies proceed with a wait and see approach on making any large scale, long term, decisions, however they have also been nimble to take advantage of near term opportunities. For example, as the financing markets have improved in 2025, we have been very busy helping companies with long term refinances of their existing debt at attractive terms. That nimbleness has also been seen on how quickly companies have been able to adjust to the volatile environment in front of them regarding interest rates, commodity costs, foreign exchange movements and the tariff announcements.”
Hermann, PNC Bank: “The business and economic environment continues to move at breakneck pace. We’re focused on the things we can control and talk to our clients about that more than ever before. Wisconsin-based businesses are generally fiscally prudent and long-term focused. As a result, most businesses are able to move forward with their plans and are well-positioned to outperform in any environment. Wisconsin also has one of the most dense and vibrant manufacturing economies in the country. As a result, our businesses are well-positioned to benefit from enhanced focus and investment on domestic manufacturing should there be an increase.”
Kellman, North Shore Bank: “Most are proceeding cautiously. Decisions are shaped by interest rates, inflation, uncertainty regarding tariffs, labor availability and sector growth rate. Many are delaying expansion but still investing in efficiency and technology. Borrowers seem to be waiting for interest rates to decrease to take on more debt.”
Laszewski, Waukesha State Bank: “It is a mixed bag. Some businesses can’t afford to wait to expand or purchase additional equipment any longer. They have realized costs won’t come down and further delay may be costing them sales and revenue. Other industries are in a generally tariff-related fog that they do not see a clear path out of. Those folks are in a holding pattern until they understand how tariffs will affect them. Almost all businesses have found employee-related concerns to be a bit less acute though finding qualified employees is still a headache.”
Mack, Town Bank: “Businesses seem to be staying status quo given the geopolitical, tariff, tax and interest rate uncertainty. It seems like there would be more demand if there was more certainty on those fronts. We have seen some business owners, investors and real estate developers cancel or delay plans for new projects.”
Anderson, BMO: “Businesses in Wisconsin are resilient having been through many cycles previously. We have seen some projects get deferred due to the tariff noise and fresh geopolitical risk. Labor seems to be hanging in there in Wisconsin and many of our clients have figured out how to navigate the current business environment by being committed to their strategic plan.”
Newman, Landmark Credit Union: “Revenues and sales opportunities are up since COVID, but they plateaued recently. The national and international manufacturers are willing to wait for more economic certainty, which appears to be holding back growth in the short term. This pause is impacting new leasing and industrial construction as well. More certainty on construction costs and tariffs will obviously play a role in companies deciding to move forward.”
Brian Grossman, managing director, region manager – Wisconsin, JPMorgan Chase: “Many business leaders nationally and within Wisconsin are choosing to delay plans to some extent, as they wait for more clarity around key policies and keep an eye on uncertain economic conditions.”
Do you see any emerging concerns regarding credit quality and risk right now?
Trier, Associated Bank: “This is an area we watch very closely. Outside of a couple of specific industry sectors (transportation and CRE), we have not seen a material shift in credit quality.”
Slocum, Bank of America: “Our Bank of America Institute analyzes the bank’s proprietary data to develop a deep understanding in near real time of consumer behavior and the economy. It is informed by our unique perspective of 69 million consumer and small business clients, and $1.2 trillion of consumer and wealth management deposits. The foundation of the US economy remains the consumer and the strength of the consumer. From what we’re seeing, consumers continue to be in good shape and credit quality is in good shape, with money in their accounts. Unemployment is key to maintaining that consumer strength, so we are watching those trends closely.”
Kellman, North Shore Bank: “Yes, pressure is increasing in certain sectors tied to discretionary spending and subject to tariffs. There has been significant upward pressure on wages and salaries expenses. Margins are tightening, and we’re watching for early signs of stress.”
Laszewski, Waukesha State Bank: “Credit quality remains good. There was a small blip beginning about 18 months ago when pandemic liquidity ran out resulting in some attrition across the board. But that was worked out with minimal loss. Too, rising costs had introduced stress beginning during Covid but it seems most businesses have managed to adjust and this includes the run-up in interest rates. Strangely, spotty supply shortages still remain depending upon the industry: electrical components come to mind.”
Mack, Town Bank: “We have seen a reduction in revenues and earnings in manufacturing and distribution. That has been on a downward trend for the past 2 years.”
Gordon, WaterStone Bank: “Credit quality remains strong in the multifamily and industrial sectors. Higher interest rates and rising expenses have been offset by rental increases.”
Popp, Johnson Financial Group: “While we’ve seen a slight softening in overall credit quality, the portfolio remains very strong across our commercial banking, real estate, and consumer lending businesses. Tariffs, rates, employment, and geopolitical issues seem to be the primary drivers of uncertainty at the moment. The best way for us to understand and manage risk is to stay actively engaged with our customers to understand what they are seeing and how it is impacting them or their businesses.”
Newman, Landmark Credit Union: “Smaller businesses have the least leverage with suppliers and customers, so they bear the most risk when input and sales prices continue to increase. Not surprisingly, Fed surveys from banks have reported 11 straight quarters of declining credit quality of small businesses.”
Are there any particular sectors in your portfolio that are outperforming or under pressure?
Trier, Associated Bank: “Overall, we remain comfortable with our portfolio and remain committed to helping our clients grow. Our loan pipeline is at a record high, reflecting our clients’ desire to grow and invest.”
Slocum, Bank of America: “Businesses within the data center supply chain have certainly seen an increase in demand over the recent past, and they continue to share a strong growth outlook going forward.”
Kellman, North Shore Bank: “Service sectors continue to perform well. The trucking industry is underperforming due to weak freight demand.”
Laszewski, Waukesha State Bank: “The run-up in construction costs is concerning in every sector and while many businesses would like more space, they are reshuffling and reconfiguring to put off the large investment. No particular sectors are either outperforming or underperforming. It does seem the CRE office market remains under pressure but as we have little exposure there, we watch it more out of curiosity than concern. One constant across the business environment is pandemic-related liquidity is long gone; though, a few Employee Retention Credits (ERC) seem to be trickling out again. So, businesses that were feeling financial pressure pre-Covid are finding the crows coming home to roost. Lastly here, an industry annoyance experienced across the board is the amount of time and effort to receive Economic Injury Disaster Loans (EIDL) Loan subordinations from the Department of Treasury.”
Mack, Town Bank: “Commercial construction firms, general contractors and sub-contractors continue to perform well. Multi-Family and Industrial real estate development projects are also performing well but there are concerns of an over-supply in some sub-markets. Office remains the biggest challenge.”
Anderson, BMO: “Consumer discretionary has been stressed the past few years, since the boon days of COVID.”
Popp, Johnson Financial Group: “Our commercial real estate portfolio – in particular, our multifamily and industrial properties – continues to perform well despite the market dynamics. Commercial businesses with an outsized reliance on foreign raw materials, particularly from China, are obviously feeling a bit more tariff-related pressure.”
Newman, Landmark Credit Union: “All areas of our portfolio are performing well. Loans repricing at higher rates are still achieving acceptable cash flow due to increased rents and high occupancy levels. We have some exposure to office properties, but many are medical or corporate headquarters which have seen less vacancy issues.”
What’s different in your conversations with business owners and leaders compared to the start of the year and this time last year?
Trier, Associated Bank: “Earlier in the year we were having regular conversations regarding trade, tariffs, inflation, supply chain, etc. Those topics have become less common as clients have more certainty about the direction of the administration and the economy.”
Slocum, Bank of America: “While many things have changed over the past year, and there have been several significant macro events both nationally and internationally, there has been one consistent theme: uncertainty. Whether that was leading up to the election last year, or regarding tax policy or tariff policy, businesses are still waiting for clarity on what the end states will look like so they can plan accordingly.”
Hermann, PNC Bank: “The broader economic and geopolitical landscape has gotten more volatile. As a result, we are counseling many more business leaders on how to best manage through the evolving landscape and help them best position their companies for growth. This has generally meant we have had more discussions on increased liquidity options and enhancing supply chain durability.”
Kellman, North Shore Bank: “There’s more focus on cost control, managing rates, and long-term planning. Compared to last year, optimism is more tempered, but business owners are better prepared and more proactive.”
Laszewski, Waukesha State Bank: “The business community expected a super-strong 2025. The tariff’s specter threw a wet blanket across the economy!”
Mack, Town Bank: “Most are still bullish and believe when clarity returns to the market as it relates to inflation, interest rates, tariffs, etc. they are ready to go with new projects.”
Anderson, BMO: “The pace and unpredictability of the change is different this year than last. The markets reward consistency: when nothing is consistent, planning becomes nearly impossible. Many of our clients are taking a ‘wait-and-see’ attitude towards major decisions.”
Popp, Johnson Financial Group: “This time last year it was all about the election and what might happen. At the start of the year, the election was over, so the conversation turned to speculation about what changes the new administration might make to policy, regulation, tariffs, etc. Today, it’s about trying to make the best possible long-term decisions – both personally and for the company – amid the uncertainty of the present.”
Newman, Landmark Credit Union: “Conversations with business owners are little different over the last two years. Interest rates and rising input costs are continuing topics at top of mind. Measuring these challenges against opportunities for growth are different for each company. What they are looking for is a lender who customizes loan structures and terms that can accommodate their growth and minimize their risk.”
Grossman, JPMorgan: “Wisconsin business leaders seem particularly cautious about the national and global economies but express more confidence in the local economy. While recession fears have increased since the start of the year, the majority of Wisconsin leaders do not see us entering a recession in 2025. Even against this uncertain backdrop, middle market businesses are showing their resilience.”
