New Wisconsin DFI Secretary optimistic about state chartered banks

Ray Allen took his post as the new secretary of the Wisconsin Department of Financial Institutions at a turning point for state chartered banks. Allen, who was appointed by Wis. Gov. Scott Walker in February, said he is very optimistic about the future of banking in Wisconsin. "State chartered banks are moving in the right direction," he said. "They have returned to healthy, pre-recession capital ratios, net chargeoffs are down and loan levels are good.".For the 220 banks based in Wisconsin, the average net charge-off to loans came down to 0.26 percent in 2014 from 0.49 percent in 2013, according the FDIC. The average ratio of noncurrent loans to loans in the state fell to 1.42 percent in 2014, down from 1.79 percent in 2013. Equity capital to assets is up for the average Wisconsin bank to 11.95 percent, an increase from 11.9 percent in 2013..Wisconsin banks' average loan to deposit ratio increased to 85 percent in 2014, up from 83 percent in 2013. Allen said he'd like to see banks' loan to deposits ratio continue to increase. "We want it to improve in a healthy way," he said, noting that the DFI is focusing on capital ratios..Allen said he's concerned about reg burden. "You try to right-size the regulation," he said. "You have to strike the right balance between regulation and promoting safety and soundness. We don't want too many regulations that dampen economic growth, but we do want to ensure safety and soundness.".Allen said he is pleased federal regulators are hearing community bankers' concerns about the Consumer Financial Protection Bureau's mortgage rules. On a state level, DFI would like to update state mortgage statutes, he said. "We are reviewing them," he said. "We'll take a real hard view of [the mortgage laws], simplify them where possible, and take out things. It will always be in the context of ensuring safety and soundness.".Cybersecurity is one of the largest challenges facing state banks, Allen said. "We will be doing more in exams to make sure banks have the right procedures, due diligence and security," he said. Another concern for banks is the rising tide of shadow banking competitors, he said..Gov. Walker proposed in January to merge the Departments of Financial Institutions with Safety and Professional Services as a part of his proposed 2015-2017 budget. Bankers at the Wisconsin Bankers Association's annual meeting in February expressed concern bank assessments could be used to fund activities of Safety and Professional Services. "No revenue derived from banks will be used for nonbank functions in the merged agency," Allen said. "We will continue to use one hundred percent of the money for banking. Statute, however, still will require that 12 percent of the funds go back to the public.".Allen also said he supports Gov. Walker's efforts to make state government more efficient and accountable. "A merger creates a one-stop shop for many Wisconsin professionals," he said. "Both departments work on helping small businesses migrate through the government, and the merger will let us make that experience more comfortable for owners.."It will not affect our emphasis on safety and soundness or the agencies' commitment to serving banks and credit unions," Allen continued. Walker's proposed budget finds most of the savings from management consolidation, he said..Allen succeeds Peter Bildsten, who left to explore opportunities in the private sector. Allen has served at the DFI for 18 years, including the last four as Deputy Secretary. A Milwaukee native, he received a journalism degree from the University of Wisconsin-Madison. After graduating, he went to work for the John Deere Company as a marketing representative..He began his career in civil service in 1987, when he was appointment to serve in the state's Department of Industry, Labor and Human Relations..Allen also has been active serving on many community boards and commissions in Madison, Wis., including three terms on the Madison School Board from 1995 to 2004.