One of the many bright spots of the Wisconsin economy is the financial health of the 199 state-chartered banks and 187 credit unions regulated by the state Department of Financial Institutions, of which I serve as secretary. Over the past two years, the performance of banks and credit unions has continued to improve. For example:
- Earnings have rebounded strongly. In 2012, Wisconsin banks improved earnings by 53 percent over 2011, while state credit unions grew net income by 81 percent over the previous year.
- Capital – a key measure of health for financial institutions – is back to or better than pre-recession levels. As of Dec. 31, 2012, bank capital levels stood at 11.12 percent, the highest in 10 years, while the net worth of state credit unions was 10.25 percent, the best in five years.
Why is this good news for Wisconsin? Banks and credit unions are a key component of the state’s private-sector economic engine. These institutions make loans to help businesses expand and create more jobs. They help drive the real estate market by originating mortgages, allowing people to achieve the dream of owning their own home. They provide products and services that give consumers access to credit and allow them to better manage their money.
Like many industries, financial services institutions have faced significant challenges over the past five years. Borrowers have become more wary. For good reasons, compliance and regulatory responsibilities have increased. But Wisconsin banks and credit unions have weathered the economic storm well and most find themselves in the best position they’ve been in for many years. In fact, many institutions are reporting record earnings.
Make no mistake about it: banks and credit unions are eager to lend, since the interest they earn on loans is their largest source of income. Admittedly, loan standards have changed somewhat since the recession, but that is not necessarily bad. In order to survive, banks and credit unions have to make loans, but in order to thrive, they must make good loans.
Like most of our state’s financial institutions, Gov. Scott Walker, his cabinet and the Legislature made a lot of prudent decisions over the past two years to put Wisconsin on solid financial footing. As our economy continues to pick up, Wisconsin banks and credit unions are well-positioned to help fuel the state’s economic growth.
Peter Bildsten is the secretary of the Wisconsin Department of Financial Institutions. He has more than 30 years of experience in the state’s banking and credit union industries.
