Farm loans have increased and Wisconsin banks continue to meet the credit needs as the year comes to an end, according to the Wisconsin Bankers Association’s evaluation of the third-quarter 2022 Federal Deposit Insurance Corp. numbers.
Farm loans increased 5.8 percent quarter over quarter and 6.79 percent year over year. Farmers who had financed their own expenses in recent years — due to stimulus packages and strong balance sheets — are now more likely to borrow because of high input costs such as fuel and fertilizer and less favorable outlooks for 2023.
Wisconsin banks continue to be in a strong position to meet the credit needs of their customers as 2022 comes to a close. At the same time, despite inflationary pressures, the latest numbers released by the Federal Deposit Insurance Corporation show that consumers continue to exhibit strong balance sheets as loan defaults remain at historic lows.
With interest rates rising, banks’ profitability has increased to a net interest margin of 3.19 percent in the third quarter of 2022. All categories of lending have seen increases quarter over quarter and year over year. Consumers look to banks as trusted places to keep their money, resulting in deposit balances holding strong.
“The third quarter FDIC numbers continue to highlight the strength of Wisconsin’s banks, which are well positioned to help their customers and communities heading into 2023,” says WBA President and CEO Rose Oswald Poels. “With recessionary concerns still top of mind, Wisconsin consumers and business owners can continue to rely on their banks as a source of trusted financial partnership and a safe place to deposit their money.”
Other notable indicators include:
- Residential loan demand continued to grow at a steady pace (up 5.25 percent quarter over quarter and 10.23 percent year over year) despite rising interest rates, due in part to home prices coming down.
- Commercial lending saw ongoing strong demand year over year (up 10.04 percent) although the third quarter, while still positive (up 2.25 percent), was at a slower pace than the prior quarter as business owners held off on borrowing due to midterm election uncertainty and recession concerns.
- Credit quality continues to be strong as more borrowers are keeping on top of their payments. Loans and leases 90 or more days past due decreased 19.36 percent year over year and 2.99 percent quarter over quarter.
- The pace of deposit growth has slowed as consumers are tapping into their savings to offset higher prices due to inflation.
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