The state of Wisconsin is recovering from an arduous two yearsfilled with high unemployment numbers, angry protesters opposing astate law stripping public employees of collective bargainingrights, and an expensive ($100 million) attempt to recallGov. Scott Walker.

When the dust settled on Nov. 7, Wisconsin's unemploymentnumbers came in at 6.9% and the governor and the lieutenantgovernor were voted back into office.

And the Wisconsin Economic Development Corporation reported thatWisconsinites remain optimistic about the overall direction of thestate, with 64% saying the state is “headed in the rightdirection.”

On paper, the outlook for the state's credit unions is alsopositive with 100 basis points of ROAA as of Sept. 30, 1.5% loandelinquencies and a healthy 12-month loan growth rate of 4.0%.Credit union CEOs in the Badger State credit their profits, whichare considerably higher than the national average of 86 basispoints, to prudent management.

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“We are starting to see some increased activity in businesseswilling to expand, but we are doing so cautiously,” said Bob Matz,chief financial officer of CitizensFirst Credit Union in Oshkosh. “I think the generalfeeling is we will have a slow economic recovery for the nextseveral years.”

The $371 million CitizensFirst has a strong ROAA at 0.97%with Matz attributes to the housing market creeping back.

“The mortgage business has been strong all year with the lowrate environment, which translates into strong income from sellingand servicing mortgage loans within the secondary market,” he said.“Asset quality continues to improve as the economy recovers, thismeans less loan loss, collection and OREO (Other Real Estate Owned)expenses in 2012.”

A recent report by the WDEC showed that Wisconsin was not nearlyas affected by the housing bubble as many other parts of thecountry and continues to sport a below-average foreclosure rate of3.2%. Home prices have also begun to stabilize.

CitizensFirst is a community-chartered credit union serving ninecounties and one township that boast relatively low unemploymentrates. Although the credit union offers a full line of commercialloan products, Matz said he will focus on commercial real estate.This shows in their 12-month loan growth of 2.51% and a delinquencyrate of 1.05%.

“We've seen significant improvement in our commercial loandelinquencies as the economy improves, along with improvements inour consumer and real estate areas,” Matz said. “We have workedwith our members when possible on troubled situations along withliquidating collateral when needed. Also, several years agowe took the position to improve our asset quality by tightening ourcredit standards on loan approvals, which is reflective in ourcurrent delinquency trends.”

While credit union members are still struggling to pullthemselves out of the slump of the last few years, the 'Forward'state and the Bureau of Labor of Statistics confirmed that jobsgrew by 23,608 in 2011, and there were 2,720,700 jobs inWisconsin as of October 2012.

“Wisconsin's continued job growth is good news,” said Gov.Walker. “I am encouraged that Wisconsin is continuing to grow jobsand that Wisconsin's jobs climate is improving. We are pleasedto see the increase in manufacturing jobs, which are an integralpart of Wisconsin's economy.”

Members at the $1.2 billion Royal Credit Union in Eau Claire,Wis., are still seeing jobs disappear, even with the optimism fromtheir governor. Eau Claire telemarketing firm iPacesettersrecently closed, leaving 150 people out of work. The credit unionis also affected by the well-publicized liquidation plans ofHostess Brands Inc., which has nine retail outlet bakeries in thestate, including Eau Claire. The loss of that bakery would resultin another 182 lost jobs in the city.

“Despite our positive performance, our community is not immuneto tough times,” said Rudy Pereira, Royal CU president/CEO.

To counter the lost local jobs, RCU developed a “payment relief”program to assist members while they are looking for otheremployment, Pereira said. Loan modification will be availablebeginning with the January 1, 2013 payment or earlier, depending onwhen the member lost his or her job.

Members can take advantage of the payment relief for threeconsecutive months for consumer and mortgage loans, he said. Creditcards will have payment relief available for the months of January,February or March.

“The credit union philosophy is “people helping people” and wefelt it was important for us to do our part to help those in ourcommunity who were affected by the closings,” Pereira said.

Despite the cloud over the holidays in Eau Claire, Royal'snumbers are pretty jolly, with an ROAA of 1.22%; but, Wisconsinisn't quite out of the woods yet. Twelve-month loan growth as ofSept. 30 was 1.23%, down from 4.56% one year ago.

“We anticipate continued mortgage refinances through the firstquarter and possibly beyond the first quarter due to historicallylow loan rates,” Pereira said of 2013. “We arealso seeing new home purchases as prices have begun to stabilizeand even go up in certain areas. As home prices start to increase,we will likely see more sellers and buyers, as well as increaseddemand for lending on home equity for remodeling projects. Weare also seeing stronger consumer loan demand and as consumerconfidence continues to improve, consumer loans should continue toimprove.”

To help members even more, Pereira said that the credit unionhas eliminated or lowered many service charges. ATM withdrawalsfrom ATMs owned by other institutions have dropped from $2 to 50cents.

“We are committed to strengthening the Royal Credit Unionadvantage and adding value to our members,” Pereira said. “We arefocused on improving processes and decreasing our operatingexpenses so that we can lower fees for our members. It is ourobjective to continue to reduce or eliminate many usage charges byDec. 31, 2017, so this is just the beginning.”