Rich Kirchen
The Business Journal of Milwaukee
December 8, 2008
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Despite concerns about tight credit markets this recession year, bank executives in southeast Wisconsin have insisted they’re still lending to businesses and consumers. Now there’s proof.
During the quarter ended Sept. 30, more than 70 percent of community banks in the area increased their lending from the same period a year ago, according to FDIC reports disclosed last week. On average, those banks have increased their lending by 10 percent from a year ago.
The figures are for 36 banks with assets of $100 million to $5.4 billion. Wisconsin’s two largest regional banks, M&I Marshall & Ilsley and Associated Bank, also increased year-over-year lending in the third quarter by 10.3 percent and 7.3 percent, respectively.
Area bank executives complain that they’ve inaccurately been painted by politicians and the media with the same broad brush as some major national and regional banks that have cut lending to preserve capital.
“The politicians are saying we’re not lending,” said Russ Weyers, president of Racine-based Johnson Bank. “Nothing could be further from the truth.”
Johnson Bank, which has $5.4 billion in assets, increased its total loans and leases by 24.3 percent to $4.2 billion.
Bank executives do acknowledge that, as many business customers have experienced, lending standards have tightened in recent months.
“It’s safe to say all financial institutions are adhering to underwriting a little more conservatively,” said Mark Mohr, president of First Bank Financial Centre in Oconomowoc.
Mohr’s $605.2 million-asset bank increased its third-quarter lending by 10.1 percent.
The majority of southeast Wisconsin banks now have more capital available to lend because an increasing number of consumers and businesses have shifted their funds from stock investments to depository accounts like certificates of deposit. Bank executives call it a “flight to safety” and are maintaining relatively high interest rates on CDs to attract deposits.
Despite the healthy deposit totals, many community bank executives, including Johnson Bank, are strongly considering applying for the federal capital purchase program, Weyers said. The deadline for community banks to apply is Dec. 8.
The southeast Wisconsin bank with the greatest decline in loans was Guaranty Bank in Brown Deer, which was down 17.6 percent.
Chief executive officer Doug Levy said the bank’s executives made a strategic decision to reduce lending due to the slowing housing market and economy. More than 90 percent of Guaranty’s loans are for mortgages, he said.
Bank executives said fourth-quarter lending so far is stable to down from the third quarter, as the economy continues to cool.
Weyers said business owners and executives have shifted from the optimism of a couple years ago to pessimism. That means they’re delaying plans for expansion that would require bank loans.
“Every day brings more bad news (and) that feeds on pessimism,” Weyers said.
BIG LENDERS DURING BAD TIMES
Twenty-five of 36 community banks in southeast Wisconsin increased lending during the third quarter compared with the same period of 2007. Here are the banks with the largest increases and decreases in lending for the quarter compared with the third quarter of 2007.
Largest percentage increases
Bank Amount (000) Percent increase
Foundations $152,747 62.5
Ridgestone $332,622 55.8
Commerce $220,261 51.3
Legacy $175,891 25.3
Securant $162,967 25.0
Largest percentage decreases
Bank Amount (000) Percent decrease
Guaranty $1,241,857 -17.6
Investors $263,697 -9.3
Equitable $483,058 -8.9
Bank Mutual $1,857,135 -7.7
Sunset $113,426 -4.0
Source: Wisconsin Health and Educational Facilities Authority
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