Most respondents to the biannual Bank CEO Economic Conditions Survey issued by the Wisconsin Bankers Association say that while Wisconsin’s economy is improving, the current economic climate is not causing a significant increase in loan demand.
About 76 percent of the 106 bank executives who completed the survey said that the state’s economy is rebounding from the bottom – however, 92 percent said current economic conditions are fair or poor. The WBA said the rating of economic conditions is the lowest since it began the survey in 2004.
Ninety-two percent of the respondents also said that demand for commercial loans is fair to poor – 54 percent said it is fair, while 38 percent said it is poor. For the first six months of the year, 62 percent said they believe the commercial loan environment will not improve, but 34 percent believe it will increase.
Most bankers who completed the survey expect their compliance costs to rise during the coming year, largely because of the Dodd-Frank financial reform bill that passed last year. About 45 percent believe their compliance costs will rise six to 10 percent during the first six months of 2011, while 33 percent believe those costs will rise higher.
“There are two key factors that will determine how banks perform in 2011; the economy and regulation,” said Kurt Bauer, president and CEO of the WBA. “If the economy grows, banks will move from the ‘stabilizing’ to the ‘recovery’ phase. But the unknown variable is the ongoing implementation of Dodd-Frank.”