April 11, 2013 at 1:00 p.m.
Health of state banks, credit unions
By By Secretary Peter Bildsten Wisconsin Department of Financial Institutions-
· 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.
