Wisconsin banks saw their combined net loans and leases climb to more than $106.5 billion in the first quarter but total deposits dropped by around 1.56%, according to an analysis of FDIC figures released by the Wisconsin Bankers Association.
Banks ended the quarter with roughly $118.1 billion in deposits, down from $120 billion in the fourth quarter of 2022. Compared to the first quarter last year, deposits were down 0.7%.
The WBA attributed the decline in deposits to inflation eating away at the savings of both businesses and consumers and customers taking money out in search of higher yields.
The first quarter also did see significant turbulence in the banking sector following the failure of Silicon Valley Bank. The bank’s challenges fueled speculation customers might leave regional and smaller banks in favor of larger national banks.
In a recent BizTimes cover story, bank executives from southeastern Wisconsin said they did not see a dramatic shift in deposits in the aftermath of SVB’s collapse.
While deposits were down, banks did find customer demand for additional borrowing with net loans and leases up 1.11% in the quarter.
The increase was primarily driven by residential real estate, which saw a 1.92% increase in the quarter to $26.4 billion. The WBA noted that with low inventory, homes continue to sell quickly and while interest rates have increased, they remain relatively low in the historical context.
Still, the pace of quarter-over-quarter growth in residential loans has slowed from more than 5% in the second and third quarters of 2022 and more than 3% in the fourth quarter.
Commercial and industrial loans were down 0.59% in the first quarter to $17.7 billion. Year-over-year, C&I lending is up, but the pace of growth slowed over the course of the past year before tipping over to a decline this quarter.
The WBA noted business owners have held off on borrowing due to recession concerns.
Despite those worries about a downturn, the amount of assets at Wisconsin banks that are more than 90 days past due or in nonaccrual status declined 1.26% in the quarter to $406 million and was down almost 16% year-over-year.
