WI banks slowly recovering, FDIC report indicates

Bank recoveries are on the rise, as only one in eight Wisconsin banks finished in the red this year, according to new data released by the Federal Deposit Insurance Corporation.

In contrast, one in five banks finished without a profit in 2010. The Wisconsin Bankers Association noted that state banks are surpassing national averages, according to an article in the Milwaukee Journal Sentinel.

Rose Oswald Poels, president and chief executive of the Wisconsin Bankers Association, said Wisconsin has been more steady than other states in the economic recovery.

“Wisconsin banks never hit the big lows you saw in other states,” Poels said. “Our economy is pretty stable. When you compare us to other states, especially the southern and coastal states, we never saw as big of highs or lows.”

Nonprofit businesses were hit hard by bank closures during the economic downturn, said Jamie Ferschinger, branch manager for the Riverside Park Urban Ecology Center.

The Urban Ecology Center is a local nonprofit organization with two community centers near Milwaukee County parks. It aims to provide outdoor science education to urban youth while protecting and using public natural areas, according to the organization’s Facebook page.

“Even though we’re a nonprofit, we were also hit pretty hard by bank failures,” Ferschinger said. “If those nonprofit investors have less money, we get affected by that because we rely heavily on private investors.”

But according to Ferschinger, businesses’ struggles have been caused more by general economic conditions than by bank closures specifically.

“While bank closures had an effect, I think the downward spiral of the economy as a whole contributed to nonprofit failures,” she said.

According to George Kutner, Marquette associate professor of finance, banks’ relative success in 2011 is one result of the Federal Reserve’s implementation of lower interest rates.

“Healthier banks in terms of profitability and capital is one sign among others that the economy is slowly getting better,” Kutner said, noting that small businesses rely on bank loans to get started. “Now that (banks) are healthier, they are slowly increasing their lending.”

In 2011, a total of 271 banks posted a combined profit of $532 million, compared to the $518 million dollar loss in 2010, according to a report released by the FDIC. The report also noted that fewer banks are closing.

The increased viability of banks will benefit students, who will have more banks to offer loans for school expenses, Kutner said.

Taylor Bradford, a freshman in the College of Arts & Sciences, said she will take out thousands of dollars in loans to get through college.

“With all the news featuring how banks have become stricter with handing out loans, I was worried that I might not get one,” Bradford said.

With banks in Wisconsin showing slow recovery, Bradford said she rests easy about future loans.

“Hopefully it’s a sign that the economy has slowly started making a recovery,” she said. “Things aren’t great, but hopefully they’re improving.”

Poels, however, said banks and student loans have little to do with one another.

“We do give out loans to students, but I think it’s best if students focus on federal money when it comes to student loans,” Poels said.