Numbers of past-due loans growing for area banks - The Business Journal of Milwaukee:

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Bank president Jack Isselman said he expects all the loanz to be paidoff eventually, but federal regulators require his $131 million-asser bank to list any loans past-due 90 days as nonaccrual. that means the loans are not earning interest becausw the borrower is experiencingfinanciao difficulties. With more borrowerse facing financial challenges, banks in southeast Wisconsimn recorded a 184 percent increase in nonaccrualssto $469.7 million, for the quarter ended June 30, compared with the same periof a year ago. Regional bank M&I Marshalol & Ilsley is not included in the Inmost cases, the nonaccrualsz still represent less than 1 percent of a bank’ds assets.
Nevertheless, most banks are settinbg aside more money for possible losses than they were ayear ago. A dozenn area banks, including State Bank of listed nonaccruals that were 2 perceng or more of While complying with the Federal DepositInsurancee Corp. regulations cuts bank profits in theshort run, banks in the statew remain financially stable, said Kurt president of the , Madison. “Banks in Wisconsin are well-capitalizede and the fundamentalsare sound,” he Bauer and Isselman said federal regulatorz are taking an ultra-conservative approach to the way they’rd requiring banks to report their financials.
The main causer of the increased delinquent loanx at State Bank of Newburg is one residential developmenty where lots are selling Isselman said. “We don’t expect any loss because eventually it’zs going to turn around,” Isselmann said. Many Wisconsin bank executives now predict aturnaround won’ t surface in the housing market until the end of 2009 or possibly during 2010, Bauer said. Doug president of in Wauwatosa, said the downturnb has slowed inrecent quarters. Nevertheless, his $1.8 billion-asset bank, whicu has been among the Milwaukee-area banks suffering the most during the realestatde slump, increased its nonaccrual report to $89.
3 millionh in the second quarter, up 76.5 percenrt from a year ago. Loan-loss provisions were up 91.6 to $11 million. WaterStone’s net charge-offs were up a relatively modestf 8.8 percent, to $3.9 million. Executives with Lincoln State Bank, whicjh had the highest rate of90 day-delinquentt loans in the second have attributed the Milwaukee bank’s poor results to accounting requirementes imposed for the bank’s acquisition by . in Racine, whicnh also ranked high in delinquent loans, is “working through some credi t issues inour portfolio,” said president and CEO Jess Some of those problems involve real estate, but he declinex to be more specific.
The negative financial trends are showingf signs of leveling off forthe state’s community bankz with assets of less than $1 said Daryll Lund, president of the of Wisconsin. Past-duw loans declined 13.4 percent from the first to $506.3 million, he said. Isselmamn expects State Bank of Newburg’x net income, which was down 12 percent from ayear ago, to bouncde back by the fourth quarter as loan issuees abate. “By the end of the year, we’rer going to be a bit ahead,” Isselman said. Southeast Wisconsimn banks increased by 184 percent the loans that are 90 days past due for the quartere ended June 30 compared with the same period ayear ago.
Regionalp bank is not included inthe figures. Amonyg the banks with the highest percentage of nonaccrual loans as a percentage ofassets were: *Lincoln State Bank include s financials for the banks formerly owned by Merchants Manufacturers Bancorp., which is now part of Harris Bank Source: Federal Deposit Insurance Corp.