M&I lost $139.3 million in second quarter
Marshall & Ilsley Corp. reported a second quarter net loss of $139.3 million, or 50 cents per share, compared with a net loss of $393.8 million, or $1.52 per share, in the same period a year ago.
"The second quarter of 2009 continued to be challenging for our nation’s economy, the financial services industry and Marshall & Ilsley Corp.," said Mark Furlong, president and chief executive officer of Marshall & Ilsley, the Milwaukee-based parent company of M&I Bank. "We continue to work hard to address the challenges of this economic cycle, specifically focusing on the proactive resolution of problem credits. We remain committed to ensuring M&I emerges from this cycle in a position of strength and believe we are continuing to make progress toward our goal of returning to profitability."
M&I’s average loans and leases totaled $48.9 billion for the second quarter of 2009, decreasing $1.1 billion or 2 percent from the second quarter of 2008. When adjusted for the targeted reduction in the corporation’s construction and development portfolio, loan growth was $1.7 billion or 4 percent vs. the same period last year.
M&I’s construction and development portfolio continued to experience deterioration in the estimated collateral values and repayment abilities of some of the corporation’s customers, particularly among small and mid-sized local residential developers. M&I’s provision for loan and lease losses was $468.2 million in the second quarter of 2009 vs. $477.9 million in the previous quarter. Net charge-offs for the period were $452.6 million. Included in this number was an acceleration in charge-offs related to consumer real estate nonperforming loans. This change led to a one-time increase in charge-offs of $47 million, which would otherwise have been taken in the following quarter. These charge-offs were fully reserved.
For the first six months of the year, M&I reported a net loss of $256.3 million, or 94 cents per share, compared with a net loss of $247.6 million, or 95 cents per share, for the same period a year earlier.
North Shore Bank second quarter profit up 25 percent
Brookfield-based North Shore Bank reported that its second quarter net income increased by 25 percent to $1.9 million compared to $1.5 million in the second quarter of 2008.
“This trend is a reflection of a significant increase in home loan refinancing, an unprecedented inflow of deposits and our ability to grow our industry-leading capital,” said Jim McKenna, North Shore Bank president and CEO. “We’ve also been able to reach out to credit-worthy customers to help put money back into the communities we serve.”
McKenna said the bank’s quarterly gain would have been even greater were it not for a special FDIC assessment imposed on all financial institutions to help fund costs related to the increased number of failed banks and protection of insured depositors. Additional FDIC assessments reduced pre-tax income by more than $1.2 million and represented a more than 1,000-percent increase from the previous quarter.
“Even with the extra FDIC assessments, our continued growth in the second quarter of 2009 shows that North Shore Bank remains a strong and stable bank that saw no need to accept or apply for any federal aid under the Troubled Asset Relief Program (TARP),” said McKenna.
North Shore Bank has assets of nearly $1.9 billion and 43 offices throughout eastern Wisconsin and northeastern Illinois.
Holding company of Marine Bank plans to file for bankruptcy
CIB Marine Bancshares Inc., the Pewaukee-based holding company that operates Marine Bank in the Milwaukee area, announced that it has asked holders of its trust preferred securities to give advance approval of a "pre-packaged" Chapter 11 bankruptcy plan.
Under terms of the plan, holders’ debt securities would be converted to preferred stock in the company.
John Hickey Jr., chairman and chief executive officer of CIB Marine Bancshares, said the bankruptcy filing for the holding company is necessary because of a "previous expansion effort that did not meet its business goals and objectives."
The failed expansion effort occurred earlier in this decade, when CIB Marine Bancshares took out about $60 million in debt to help fuel its growth. The company’s banks then made several large loans to real estate projects, which ran into problems in 2003, Hickey said.
"There were some large construction loans that went bad, and the holding company has been trying to dig itself out since," Hickey said. "Those loans were made through the banks, and it forced the holding company to restructure because of the large losses at the multiple banks it had back then."
Today, CIB Marine Bancshares only operates Marine Bank, which is well-capitalized and relatively debt-free, Hickey said.
"This is a creative approach at the holding company to restructure the debt of the holding company," he said. "Essentially, the bank has no debt. It’s all at the holding company."
In a solicitation sent to the holders of the trust preferred securities, the holding company said approval of the reorganization, similar to the approach used recently by Chrysler LLC and General Motors Corp., will allow the holding company to emerge as a stronger and better business.
Hickey stressed that the bank owned by CIB Marine Bancshares Inc. – operating as Marine Bank in the metro Milwaukee area, Indianapolis and Scottsdale, and as Central Illinois Bank in mid-state Illinois – will not be affected by the bankruptcy plan.
"The bank is in a strong position with capital levels that are above the national average and higher than most of our local competitors," Hickey said. "Any restructuring of the holding company would have no impact on the operations of the bank and deposits, and the bank would continue to be safe and sound."
Hickey said the bank is regulated separately from the holding company by both federal and state regulators and its accounts are insured by the Federal Deposits Insurance Corp. (FDIC).
"Our bank remains committed to meeting the needs of our valued customers and has the resources to maintain a safe and secure position. The bank is conducting regular banking business, making loans and meeting our customers’ banking needs," Hickey said.
If the plan is approved by the holders of the trust preferred securities, the reorganization could be completed within about 60 days, pending confirmation by the court, Hickey said.
Hickey said the reorganization would make the holding company "stronger and better" and make it more attractive to a prospective partner.
Upon approval of the plan by the trust preferred security holders, the holding company will present it to the court for approval.
"It is critical and essential that people understand and make clear the difference between the holding company and the bank. The bank is strong, sound and conducting business as usual. On the other hand, the holding company has to resolve the challenges brought on by the previous expansion effort. In simple language, the bank is fine, but the holding company needs to be financially restructured," Hickey said.