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Tag Archive for: Commercial Lending

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News

Newly Released FDIC Numbers Show Wisconsin Banks in Solid Position

Data released September 5, 2024, by the Federal Deposit Insurance Corporation (FDIC) shows Wisconsin banks remained in a healthy position through the second quarter of 2024. Lending held steady or increased in Q2 2024 over the prior year in all categories (commercial, residential, and farm loans), as banks responded to the borrowing needs of their customers. Deposits increased year over year (2.00%), due in part to the high interest rates offered on certificates of deposit (CDs) and money market accounts. The Q2 2024 net interest margin of 3.15% is a slight decrease over the prior year (3.24%) but an increase over the prior quarter (3.10%). Wisconsin banks remain well capitalized.

Notable indicators include:

  • Residential real estate loans were up quarter over quarter (15.21%) and year over year (11.55%). With spring being a popular time to move, homes continue to sell quickly. Borrowers have become accustomed to the current home prices and interest rates. Wisconsin’s housing shortage persists, particularly as many homeowners refinanced into low-interest rate mortgages in prior years and have little appetite to sell.
  • Commercial lending held steady quarter over quarter (0.75%) and year over year (-0.33%) as business owners await potential interest rate cuts by the Fed and potential economic changes following the November election before making significant operational changes.
  • Farm loans increased quarter over quarter (20.59%) and year over year (2.44%) as farmers entered planting season and sought to upgrade equipment, make capital improvements, or manage operational costs affected by tighter margins.
  • Past-due loans were elevated year over year (33.76%) as inflation and the high cost of living impacts borrowers. Past due loans eased, however, quarter over quarter (-5.92%), and the current level of past-due loans remains above recessionary levels.

Statement on the release of second-quarter 2024 Federal Deposit Insurance Corporation (FDIC) numbers from Rose Oswald Poels, president and CEO of the Wisconsin Bankers Association:  

“The latest FDIC report underscores the strength and adaptability of Wisconsin banks. Despite economic and geopolitical concerns, banks remain well capitalized and continue to meet the needs of their communities, as evidenced by steady or increased lending across sectors and a steady deposit base. As indicators point toward a likely interest rate cut by the Fed in September, borrowing costs could ease and provide additional opportunities for banks to support their customers’ growth and financial goals.”

FDIC-Reported Wisconsin Numbers (Dollar Figures in Thousands)

   6/30/2024 3/31/2024 QoQ Change  6/30/2023 YoY Change 
Net loans and leases  $112,992,876 $110,786,174 1.99% $109,976,913 2.74%
Total deposits  $122,315,576 $122,823,065 -0.41% $119,920,909 2.00%
Commercial and industrial loans $18,179,173 $18,044,391 0.75% $18,240,073 -0.33%
Residential real estate loans  $34,770,361 $30,180,575 15.21% $31,170,659 11.55%
Farm loans  $4,942,403 $4,098,653 20.59% $4,824,718 2.44%
Total assets  $155,167,030 $153,075,902 1.37% $152,381,917 1.83%
Assets 90+ days past due or in nonaccrual status  $580,617 $617,124 -5.92% $434,070 33.76%
September 5, 2024/by Cassandra Krause
https://www.wisbank.com/wp-content/uploads/2021/09/Triangle-Backgrounds_Yellow-on-Light-Blue.jpg 972 1921 Cassandra Krause https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Cassandra Krause2024-09-05 13:04:142024-09-05 13:04:14Newly Released FDIC Numbers Show Wisconsin Banks in Solid Position
Compliance, Products, Resources

Now Available On Demand: WBA Loan Documentation Webinar Series

WBA’s  Loan Documentation Webinar series, which was broadcast live on four dates in April, is now available on demand. The four-part series discusses unique customer due diligence scenarios, the impact of cross-collateralization clauses in loan documents on requirements under the Flood Disaster Protection Act and HMDA, and other business and ag-loan related topics, including nested entities and section 1071 considerations.

Loan officers, loan processors, loan administrative assistants, compliance officers, bank legal counsel, as well as those who are new to lending can benefit from viewing the comprehensive and informative on-demand webinar series.

Session 1:
WBA Fundamentals of Loan Documents
This webinar reviews in detail the importance of the many components of loan documents, and the significance of security interests and priorities in collateral.

Session 2:
WBA Introduction to Commercial Loan Documentation
For commercial loans, this webinar reviews proper documentation of a loan to a limited liability company and a loan to a sole proprietor, each with various types of collateral including business assets and equipment, life insurance, stock, brokerage accounts and a home. Guarantors will also be discussed.

Session 3:
WBA Introduction to Agricultural Loan Documentation
For agricultural loans, this webinar reviews proper documentation of a loan to an individual to buy a tractor and a loan to a married couple secured by all farm collateral where the loan is repaid from milk sales.

Session 4:
WBA Discussion of Miscellaneous Business and Ag Loan Considerations
This webinar reviews unique ag loan considerations such as statutory ag liens. It reviews proper documentation of such loans through an example of a loan to an individual to buy a tractor and a loan to a married couple secured by all farm collateral where the loan is repaid from milk sales.

Speakers: WBA Legal Department

On-Demand Access:
To purchase the on-demand webinar series contact: wbaeducation@wisbank.com

If you were a registered attendee for the live webinar series, you will have on-demand access to the recorded webinars through August. To access the on-demand sessions, log-in to the browser-based platform using prior emails from Sessions 1, 2, 3 or 4.  Look for the button which reads “Go to My Event” – you will then enter your name and the email address you used during registration process. You will receive a verification code to complete log-in. If you need assistance accessing the on-demand sessions, please feel free to contact: wbaeducation@wisbank.com

May 24, 2024/by Katie Reiser
https://www.wisbank.com/wp-content/uploads/2021/09/Triangle-Backgrounds_Blue-on-Lime-Green.jpg 972 1920 Katie Reiser https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Katie Reiser2024-05-24 07:42:082024-05-24 16:19:53Now Available On Demand: WBA Loan Documentation Webinar Series
Panelists
Member News, News

Real Estate, Workforce, and Inflation Among Top Economic Trends to Watch in 2024

Experts at the Wisconsin Economic Forecast Luncheon weigh in on what is in store for the remainder of the year  

By Cassandra Krause

2024 Midwest Economic Forecast Luncheon

2024 Midwest Economic Forecast Luncheon

The Wisconsin Economic Forecast Luncheon — back in person for the second year post-pandemic — was presented on April 10, 2024, by the Wisconsin Bankers Association in partnership with WisPolitics and WisBusiness. Dr. Mark Eppli, director of the James A. Graaskamp Center for Real Estate at the University of Wisconsin–Madison Business School, gave the keynote address covering macroeconomics, the single-family housing market, the single-family mortgage market, and commercial real estate. A panel discussion, moderated by WisPolitics and WisBusiness’s Jeff Mayers, included insights from bankers and economists. The bankers were Doug Nelson, regional president, Johnson Financial Group; and Mike Olson, president and CEO of the Bank of Brodhead. The economists were Dale Knapp, of Forward Analytics, a division of the Wisconsin Counties Association; and Romina Soria, a senior economist at the Wisconsin Department of Revenue (DOR).  

100% of Excess COVID Consumer Savings is Now Spent 
Dr. Mark Eppli

Dr. Mark Eppli, University of Wisconsin–Madison

In his macroeconomic overview, Eppli noted that the Federal reserve has kept short- and long-term rates high — pushing mortgage interest rates and interest rate spreads dramatically higher — yet the U.S. gross domestic product (GDP) grew 3.1% in 2023 (compared to a 50-year average of 2.7%). He illustrated that while the Federal Reserve had its feet on the brakes, the president and Congress had their feet on the gas, so to speak, with federal deficit spending increasing $9.8T between Q1 of 2020 and Q4 of 2023.  

Nationwide, the unemployment rate has remained under 4% for over two years, and Eppli pointed out that while Wisconsin’s employment growth since the pandemic has been below the national average, Dane County has been a source of employment growth for Wisconsin. However, Eppli referenced a January 2024 article in the Wall Street Journal that showed that job quit rates and job postings are in decline. Eppli predicted that the second half of 2024 will see less economic growth and less consumer spending, citing factors such as student loans going back into repayment and recent data from the Federal Reserve Bank of San Francisco indicating that pandemic-era excess personal savings has now been spent. 

Wisconsin Housing Supply Remains Tight 

Data from the Wisconsin REALTORS® Association (WRA) and the Graaskamp Center shows that Wisconsin residential sales are down 29% since a peak in 2021, and Eppli noted that a limited for-sale housing supply is hurting sales volume. Federal Reserve Economic Data shows Wisconsin’s listing inventory down 79% from 2016 levels. On top of many current homeowners having refinanced into mortgages with low interest rates, WRA data shows that home prices have nearly doubled in the last 10 years. This means that people are not moving, and Eppli predicts that long-term housing demand will remain robust while the inventory of for-sale homes will remain tight in 2024. 

Commercial Real Estate Prices May Have Hit Bottom 

To close his keynote presentation, Eppli covered the commercial real estate market. He pointed to data from the Green Street Commercial Property Price Index® showing that commercial property values are around the early COVID pricing lows and said that prices may have hit bottom by this point. He named retail and office spaces as particularly challenged areas of commercial real estate as demand is low. Offices, for example, have not only low demand but are also expensive to operate. On the other hand, Eppli described apartment and industrial commercial real estate market fundamentals as ‘solid’ and ‘very solid,’ respectively.  

Housing Affordability and Cost of Living Among Top Concerns 
Panelists

(Left to right) Jeff Mayers, WisPolitics/WisBusiness; Doug Nelson, Johnson Financial Group; Dale Knapp, Forward Analytics; Mike Olson, Bank of Brodhead; Romina Soria, Wisconsin Department of Revenue

During the panel discussion, Bank of Brodhead’s Olson emphasized the importance of housing affordability to Wisconsin’s economy and noted that customers are coming to banks for education about what they can afford in terms of debt to income. When asked whether rental units can fill the housing inventory gap, Johnson Financial Group’s Nelson replied that they are only a safety valve for a point in time; units fill up quickly and prices go up. He stressed that everyone needs to have their eye on affordable housing. Knapp, of Forward Analytics, added that the cost of things like food and energy at home, as well as the cost of things like car insurance have gone up significantly, resulting in excess savings being drawn down. DOR’s Soria said that while some people will adapt to higher interest rates, others — particularly those who are in the bottom half of wealth percentile groups — will be priced out of buying a home. Soria also noted the issue of Wisconsin’s aging population and its implications for the state’s workforce. 

Will There Be a Recession in 2024? 

The final topic of discussion amongst the panel was the possibility of a soft landing in 2024. Olson, who is both a banker and a farmer, drew a laugh from the audience when he likened economic forecasts to weather forecasts: “every year, somebody predicts a drought.” Though the panelists did not come to a clear consensus on exactly when the U.S. economy may experience its next recession, all agreed that the next recession is likely not as imminent as many outlooks from six months or a year ago had predicted.  

April 11, 2024/by Cassandra Krause
https://www.wisbank.com/wp-content/uploads/2024/04/IMG_1190-scaled.jpg 1920 2560 Cassandra Krause https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Cassandra Krause2024-04-11 08:30:112024-04-10 22:57:24Real Estate, Workforce, and Inflation Among Top Economic Trends to Watch in 2024
Compliance, News

SBA Releases New Procedure for SBA Loan Review of Partial Approval Forgiveness Decisions

On January 28, SBA released Procedural Notice 5000-827666 regarding SBA loan reviews of PPP Lender partial approval forgiveness decisions. The notice outlines a new process to allow PPP Borrowers to request an SBA loan review of partial approval forgiveness decisions issued by their PPP Lenders. The procedures in the notice apply to loan forgiveness decisions submitted by Lenders to SBA through both the regular forgiveness process as well as the Direct Borrower Forgiveness process. The notice is effective January 27, 2022.

The notice reiterates the process for a partial approval forgiveness decision and the steps that need to be taken by the Lender when it receives a forgiveness application from a Borrower. The notice also outlines a new process for borrower requests of SBA loan review of a partial approval forgiveness decision.

Starting from the effective date of the notice, when a Lender receives a forgiveness remittance from SBA on a partial approval decision, including where the Lender required the borrower to apply for forgiveness in an amount less than the full amount of the loan, the Lender’s post-forgiveness remittance notification must inform the borrower that the borrower has 30 calendar days from receipt of the notification to seek, through the Lender, an SBA loan review of the Lender’s partial approval decision. Within five calendar days of a Lender’s receipt of a borrower’s timely request for an SBA loan review, the Lender must notify SBA through the Platform. The Lender’s notice to SBA of the borrower’s timely request for review must include a copy of the Lender’s notice to the borrower of the reason(s) for the Lender’s partial approval decision. SBA reserves the right to review the Lender’s decision at its sole discretion.

Additionally, within 30 calendar days of the date of the notice, Lenders must notify all of their borrowers on loans that previously received a partial forgiveness remittance from SBA as a result of Lender partial approval decisions, including where the Lender required the borrower to apply for forgiveness in an amount less than the full amount of the PPP loan, that the borrower has 30 calendar days from receipt of the Lender notification to seek, through the Lender, an SBA loan review of the Lender’s partial approval decision. Within five calendar days of the Lender’s receipt of a borrower’s timely request for an SBA loan review, the Lender must notify SBA through the Platform. The Lender’s notice to SBA of the borrower’s timely request for review must include a copy of the Lender’s prior notice to the borrower of the reason(s) for the Lender’s partial approval decision. Again, SBA reserves the right to review the Lender’s partial approval decision at its sole discretion.

In either circumstance, if SBA selects the loan for an SBA loan review as a result of the borrower’s request, the borrower must continue to make payments on the remaining balance of the loan, and the loan is not deferred.

If SBA determines, as a result of the SBA loan review, that the borrower is entitled to forgiveness in an amount greater than the Lender’s partial approval decision and SBA has previously remitted a partial forgiveness payment to the Lender, SBA will remit an additional forgiveness payment to the Lender to make up the difference. SBA will issue an additional Notice of Paycheck Protection Program Forgiveness Payment (Payment Notice) to the Lender.

If the SBA loan review results in a higher forgiveness amount, but less than full forgiveness, SBA will also issue a final SBA loan review decision to the Lender. The Lender must provide a copy of the Payment Notice and, if applicable, the final SBA loan review decision, to the borrower within 5 business days of the remittance and comply with applicable requirements of the Lender Responsibilities Notice. If a borrower has begun making payments on their loan and the SBA loan review results in full forgiveness, the Lender must refund all payments made by the borrower.

If the SBA loan review results in a higher forgiveness amount, but less than full forgiveness, the lender must re-amortize the PPP loan and refund any excess payments made by the borrower.

Note: PPP Borrowers that have received full denial forgiveness decisions from their Lenders should continue to follow the process outlined in the Interim Final Rule on Loan Forgiveness Requirements and Loan Review Procedures as amended by the Economic Aid Act (86 FR 8283, February 5, 2021), as amended.

Lenders may call the Lender Hotline at (833) 572-0502 for live assistance regarding PPP access and support, policy questions and procedures, and Capital Access Financial System (CAFS) and SBA’s Electronic Transmission (E-Tran) systems support. Questions concerning the notice may be directed to the Lender Relations Specialist in the local SBA Field Office.

Notice 5000-827666 is posted on the WBA website.

January 31, 2022/by Jaclyn Lindquist
https://www.wisbank.com/wp-content/uploads/2021/09/Triangle-Backgrounds_Dark-Blue-on-Light-Blue.jpg 972 1921 Jaclyn Lindquist https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Jaclyn Lindquist2022-01-31 14:52:282022-01-31 17:21:17SBA Releases New Procedure for SBA Loan Review of Partial Approval Forgiveness Decisions
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