Delinquent bank loans in state up
Newly delinquent loans at Wisconsin banks have increased — rare since the Great Recession — but the total amount of tardy loans remains relatively small and isn’t cause for alarm, the industry’s state leader said.
Records from the Federal Deposit Insurance Corp. show that during the 12 months ending June 30, total Wisconsin bank loans that were 30 to 89 days past due jumped 17 percent, to $297.5 million from $253.7 million at the same time in 2017.
While that total is a far cry from the $2.1 billion in early stage delinquent loans on the books in 2009, the uptick goes against the general downward trend since then.
Growth in overdue loans increased in most categories of lending, including construction and land development, new home construction, agriculture, credit cards and autos. However, the amount of newly delinquent commercial and industrial loans by Wisconsin banks decreased 20 percent in the period, to $26.9 million from $33.7 million.
Rose Oswald Poels, president and chief executive officer of the Wisconsin Bankers Association, said the increase doesn’t indicate a problem is on the way.
She noted that the total of 30-to-89day past due loans was higher at the end of the first quarter than it was in the second quarter this year, even though it’s up in the latest 12-month span overall. Oswald Poels also stressed how much lower the total amount of new tardy loans is now compared with the total from the Great Recession period.
‘A normal part of banking’
Overall, the FDIC data indicates a healthy banking environment in Wisconsin. Through June 30 this year, noncurrent loans and leases at all stages of tardiness amounted to only 0.83 percent of total loans and leases, an improvement from 0.93 percent a year earlier. Loans 90 days or more past due were down 7 percent in the state.
At the same time, total loans and leases grew more than 4 percent for the 208 banks headquartered in Wisconsin.
“They make money making loans, and not every loan pays off. So having some level of past due loans and nonaccrual accounts is a normal part of banking,” Oswald Poels said.