Banks and consumers show signs of economic recovery
(MADISON) – Wisconsin’s economy is showing signs of recovery as consumers are in better positions to pay down debt and more banks return to profitability and show improved asset health, according to first-quarter data released today by the Federal Deposit Insurance Corporation (FDIC).
“Noncurrent loans are significantly down indicating consumers are more secure and able to meet their financial obligations,” said Rose Oswald Poels, president/CEO of the Wisconsin Bankers Association. “Other indicators in the FDIC numbers illustrate that the general conditions of both banks and consumers in Wisconsin are noticeably improving.”
Total amount of noncurrent loans (the number of loans and leases 90 days or more past due, and loans and leases in nonaccrual status) is down by 46 percent from the first quarter of 2011, demonstrating both the increased health of banks and consumers. Loan loss allowances are also down, shrinking from $3 billion in the first quarter of 2011 to just over $1.5 billion in the first quarter of this year.
“This latest improvement is a good indicator that banks, like many Wisconsin businesses, have worked through the challenges of the past few years and will be more aggressive in pursuing quality loan customers,” explained Oswald Poels. “When banks have to set aside less to cover anticipated loan losses, they have more capital to extend in new loans.”
Wisconsin consumers are also showing signs of economic recovery. Banks extended $462 million in credit card loans to consumers in the first quarter of 2012, down by nearly $1.5 billion from the first quarter of last year. Overall, consumers are reducing their debt and putting their finances in order.
Another positive sign for the economy is job growth within the banking industry as predicted by the WBA Bank CEO Economic Conditions Survey, conducted in Dec. 2011. FDIC numbers show 181 individuals were hired in the last quarter.
Wisconsin’s banking industry continues to mirror the state’s overall economy. Watch for the results of WBA’s May 2012 economic conditions survey to see a forecast of Wisconsin’s economic future.