Wisconsin Banks

Wisconsin banks' return on assets rose to 1.22% in Q1 2026, up 9 basis points from 1.14% in Q4 2025 and 20 basis points from 1.03% a year earlier, marking the highest profitability in the data shown. The year-over-year gain of 20 basis points exceeds the quarter-over-quarter gain of 9 basis points, indicating accelerating momentum. ROA now sits 3 basis points above the national benchmark of 1.20%, a narrow margin that places Wisconsin in line with the broader FDIC-insured universe rather than ahead of it.

Two drivers account for the improvement. Net interest margin widened to 3.71%, up 10 basis points from 3.60% last quarter and 30 basis points from 3.40% a year ago, though it remains 11 basis points below the national 3.82%. The year-over-year NIM expansion of 30 basis points is triple the quarter-over-quarter pace of 10 basis points, so the rate of improvement is decelerating. The efficiency ratio fell to 63.87%, down 45 basis points from 64.32% last quarter and 390 basis points from 67.77% a year ago, now 28 basis points below the national 64.14%. The sustained efficiency improvement—390 basis points year-over-year versus 45 basis points quarter-over-quarter—suggests Wisconsin banks achieved structural cost discipline rather than one-time expense reductions. Net interest income as a percentage of revenue at 1.15% is 82 basis points above the national 0.32%, though the metric's 340-basis-point quarter-over-quarter decline from 4.55% indicates the prior quarter was an outlier.

Specialization patterns show wide divergence. Credit Card specialists, though representing only 0.2% of Wisconsin's 154 institutions, posted NIM of 13.80%, 9.99 percentage points above the national 3.82%, and ROA of 2.26%, well above the state's 1.22%. Mortgage specialists, at 7.3% of institutions, posted efficiency ratios of 76.96%, 12.81 percentage points above the national 64.14%, dragging profitability to 0.66% ROA versus the state's 1.22%. Agricultural banks, at 21.3% of the cohort, delivered ROA of 1.37% and NIM of 3.84%, outperforming the state average. If NIM continues widening at the current quarterly pace of 10 basis points, Wisconsin banks will close the 11-basis-point gap to the national benchmark by Q3 2026.

Wisconsin banks' asset growth decelerated to 4.79% year-over-year in Q1 2026, down from 5.12% a year earlier and 5.74% in Q4 2025, marking the slowest expansion in the data shown. Quarter-over-quarter, the deceleration was 16.54 percentage points; year-over-year, 6.49 percentage points. The quarter-over-quarter deceleration is sharper than the year-over-year trend, indicating the slowdown intensified in recent months. Asset growth now sits 36 basis points below the national benchmark of 5.15%, a modest gap that places Wisconsin slightly behind the broader FDIC-insured universe.

The deceleration reflects diverging loan and deposit trends. Loan growth accelerated to 6.44% year-over-year from 5.43% a year earlier and 6.36% last quarter, now 24 basis points above the national 6.20%. The year-over-year acceleration of 18.76 percentage points and quarter-over-quarter acceleration of 1.32 percentage points indicate sustained lending momentum. Deposit growth, by contrast, decelerated sharply to 4.25% year-over-year from 5.93% a year ago and 5.10% last quarter, now 77 basis points below the national 5.02%. The year-over-year deceleration of 28.42 percentage points dwarfs the quarter-over-quarter deceleration of 16.76 percentage points, so the deposit slowdown is a multi-quarter trend rather than a single-quarter shock. The 219-basis-point gap between loan growth at 6.44% and deposit growth at 4.25% mechanically compresses the funding cushion and forces asset-growth deceleration despite robust lending demand.

Specialization patterns show limited variation. Commercial banks, at 56.1% of Wisconsin's 154 institutions, and Agricultural specialists, at 21.3%, both face the deposit-growth headwind. Mortgage specialists, at 7.3% of the cohort, posted efficiency ratios 12.81 percentage points above the national average, suggesting constrained profitability limits their capacity to fund growth through retained earnings. The detected-stories block flags deposit growth diverging from loan growth as a tension point. If deposit growth continues decelerating at the current year-over-year pace of 28.42 percentage points while loan growth accelerates, Wisconsin banks will face intensifying liquidity constraints that force either loan-growth curtailment or wholesale-funding reliance by mid-2027.

Wisconsin banks' delinquency ratio held stable at 0.55% in Q1 2026, up 3 basis points from 0.52% in Q4 2025 and 15 basis points from 0.40% a year earlier. The quarter-over-quarter change of 3 basis points is minimal, but the year-over-year increase of 15 basis points indicates a sustained upward drift over the past year. Delinquency now sits 15 basis points below the national benchmark of 0.70%, positioning Wisconsin as lower-risk than the broader FDIC-insured universe. The nonperforming-asset ratio similarly held stable at 0.40%, up 2 basis points from 0.37% last quarter and 9 basis points from 0.31% a year ago, now 11 basis points below the national 0.51%.

Two patterns emerge. The year-over-year delinquency increase of 15 basis points is five times the quarter-over-quarter increase of 3 basis points, so the deterioration is decelerating, not accelerating. The NPA ratio's year-over-year increase of 9 basis points similarly exceeds the quarter-over-quarter increase of 2 basis points, confirming the deceleration. Both metrics remain well below national benchmarks, indicating Wisconsin banks' credit quality, while softening, remains stronger than the national average. Tier 1 capital held stable at 13.32%, down 4 basis points from 13.37% last quarter but up 10 basis points from 13.22% a year ago, now 94 basis points below the national 14.26%. The year-over-year capital increase of 10 basis points and the quarter-over-quarter decline of 4 basis points suggest capital is broadly stable, though the 94-basis-point gap to the national benchmark indicates Wisconsin banks operate with thinner cushions than the broader industry.

Specialization patterns show wide divergence. Credit Card specialists, though only 0.2% of Wisconsin's 154 institutions, posted delinquency of 2.57%, 187 basis points above the state's 0.55% and 187 basis points above the national 0.70%, reflecting the inherently higher loss rates in unsecured consumer lending. Agricultural banks, at 21.3% of the cohort, posted delinquency of 0.63%, 8 basis points above the state average, consistent with commodity-cycle exposure. Commercial banks, at 56.1% of institutions, posted delinquency of 0.72%, 17 basis points above the state's 0.55% but matching the national 0.70%. If delinquency continues rising at the current quarterly pace of 3 basis points, Wisconsin banks will reach the national 0.70% benchmark by Q4 2026.

Wisconsin banks' loan-to-deposit ratio rose to 86.28% in Q1 2026, up 0.49 percentage points from 85.78% in Q4 2025 and 2.41 percentage points from 83.86% a year earlier, marking the highest lending intensity in the data shown. The year-over-year increase of 2.41 percentage points dwarfs the quarter-over-quarter gain of 0.49 percentage points, indicating sustained balance-sheet tightening over the past year. The ratio now stands 9.90 percentage points above the national benchmark of 76.38%, positioning Wisconsin banks among the most loan-intensive in the FDIC-insured universe.

Two forces are driving this. Loan growth accelerated to 6.44% year-over-year in Q1 2026, up from 5.43% a year earlier and 6.36% in Q4 2025, while deposit growth decelerated sharply to 4.25% year-over-year from 5.93% a year ago and 5.10% last quarter. The 219-basis-point gap between loan and deposit growth mechanically compresses the funding cushion. Noninterest-bearing deposit share fell to 18.27% from 18.83% last quarter and 18.43% a year ago, now 3.33 percentage points below the national 21.60%, indicating Wisconsin depositors have migrated to interest-bearing accounts at a faster pace than the national trend. Net interest income as a percentage of revenue reached 1.15%, up 13 basis points year-over-year from 1.02% but down 340 basis points from the anomalous 4.55% recorded in Q4 2025, suggesting the prior quarter included a one-time item or reporting adjustment.

The specialization mix offers limited diversification: Commercial banks represent 56.1% of Wisconsin's 154 institutions, Agricultural specialists 21.3%, and Mortgage specialists 7.3%. Agricultural banks, with their commodity-cycle exposure, face loan-to-deposit ratios above the state average, while Mortgage specialists carry lower ratios due to securitization activity. If deposit growth continues decelerating at the current quarterly pace of 16.76 percentage points while loan growth holds near 6.44%, Wisconsin banks will exhaust their funding cushion by mid-2027, forcing either loan-growth curtailment or wholesale-funding reliance.