DFI to Legislators: Banks Answered the Call

On Tuesday, March 2, the Assembly Committee on Financial Institutions held an informational hearing for an update on the status of Wisconsin’s financial industry. WBA President and CEO Rose Oswald Poels and Capitol Bank President and CEO Ken Thompson were invited to speak on several key issues. Notable topics included:  COVID’s long-term impact on the economy, banks’ role in the execution of the Paycheck Protection Program, real estate and agricultural market outlooks, and the importance of passing elder fraud prevention legislation. 

Wisconsin DFI Secretary Kathy Blumenfeld led off the hearing by noting that “Wisconsin’s Banks and Credit Unions answered the call and played a key role in state and federal relief efforts.” She remarked, Wisconsin’s state-chartered banks showed “good profitability, while maintaining strong capital positions with minimal asset quality problems.” An area of concern for DFI includes overall asset quality. While the PPP provided needed relief, the long-term impact of COVID to the economy is still unknown.” After several down years, Sec. Blumenfeld noted we still need to watch the ag sector despite recent improvement in commodity prices. “Wisconsin’s farmers still need a sustained period of improvement to truly recover from the last several years,” said Blumenfeld. 

DFI noted that current trends with commercial real estate are stable, but with the possibility of a more remote work environment in the future, commercial office space could be impacted. 

Oswald Poels led off WBA’s testimony by thanking legislators for their diligence on COVID-relief last session, and fast action on important tax conformity and liability protection policies enacted this session. She then highlighted banks’ role in both prior and during the PPP loan process, noting “Wisconsin banks stepped up and really punched above our weight class in making sure business owners got taken care of.” Before concluding, Oswald Poels covered some of the challenges facing the banking industry in Wisconsin, such as low merger and acquisition activity due to economic uncertainty, and the low interest rate environment. She stressed with legislators the importance of policies at the state and federal levels that support the community banking sector. 

Thompson stated that Wisconsin’s banks provided 87% of the PPP loans in the state and worked creatively with customers throughout the past year. “If there was ever a year that should convince you that community banking is needed in this state and in this country, this was the year. We are able to allow customers to defer loans and right now, collectively 15% of the commercial real estate loans are in deferral, but the position is improving.” Thompson noted that “people are being cautious and liquidity levels within the industry are very high which creates a great environment to make loans which will spur the economy.” 

Thompson and Oswald Poels requested the legislature take action during the hearing, such as the consideration of new tax policies that would allow certainty, efficiency, and lower costs for businesses and customers, creating agricultural policies that consider the unique perspective of both Wisconsin’s farmers and the banking industry, maintaining a consistent and predictable source of revenue for the state, and protecting our elderly by allowing all financial institutions to be able to place a pause on transactions.   

Banks remain the building blocks of communities by providing capital for consumers and businesses, revenue to the state, and value to the overall economy. You can watch the informational hearing in full by clicking here and creating a free WisconsinEye account.  

By, Alex Paniagua