Wisconsin Banking News

Associated Bank reports quarterly loss of $33.8 million; Losses continue for M&I; U.S. Bancorp booming with new loans

Associated Bank reports quarterly loss of $33.8 million

Associated Banc-Corp reported a $33.8 million loss for the first quarter, compared with net income of $35.4 million for the same period a year ago.

The Green Bay-based parent company of Associated Bank said its total nonperforming loans increased $88.1 million during the quarter to $1.2 billion, with commercial real estate and construction-related nonperforming loans increasing $123.6 million to $844.4 million.

Potential problem loans declined $227.8 million during the quarter to $1.4 billion, with potential problem loans in the commercial real estate and construction segments of the company’s loan portfolio declining $160.7 million to $828.5 million.

As of March 31, the company’s Tier 1 capital-to-total-average-assets ratio was 10.57 percent, and total capital-to-risk-weighted-assets ratio was 18.15 percent, which “far exceed” the criteria for "well capitalized" banks and requirements by banking regulators, the company said.

On Jan. 15, the company completed a $500 million common equity offering, resulting in a net increase in the company’s equity capital of approximately $478 million and a 44.8 million increase in the number of common shares outstanding.

"Our successful capital raise during the quarter positions our company well and provides us with additional flexibility as we manage through this credit cycle and focus on our strategic priorities," said Philip Flynn, president and chief executive officer of Associated, which is Wisconsin’s second-largest bank. "As anticipated, first quarter results were impacted by our continuing efforts to address our credit challenges, particularly in the construction and commercial real estate segments of our loan portfolio."

Losses continue for M&I

Marshall & Ilsley Corp. reported a first quarter net losses of $140.5 million, compared with a net loss of $116.9 million, in the same period a year ago.

The Milwaukee-based parent company of M&I Bank continued to proactively address credit quality in the first quarter of 2010 by identifying and writing down troubled assets, selling problem loans, reducing exposure to construction and development loans and building loan loss reserves.

The company’s provision for loan and lease losses was $458.1 million in the first quarter of 2010, down $180.9 million or 28 percent from the fourth quarter of 2009. The firm’s construction and development (C&D) exposure declined from the fourth quarter of 2009 to slightly less than 12.0 percent of total loans.

"Our first quarter results reinforce our confidence that a credit quality recovery is underway at M&I," said Mark Furlong, president and chief executive officer of Marshall & Ilsley, which is Wisconsin’s largest bank. "We anticipate a relative stabilization of credit quality trends, reflecting sustained improvement in early-stage delinquencies, reduced inflows, and continued aggressive strategies to work out or sell problem credits. We are pleased with the company’s progress, but realize hard work remains to improve credit quality. M&I remains committed to returning the company to profitability as soon as possible."


U.S. Bancorp booming with new loans

U.S. Bancorp reported first quarter net income of $669 million, up from $529 million in the same period a year ago.

The Minneapolis-based company, which operates U.S. Bank in Wisconsin, continued to strengthen its allowance for credit losses in the first quarter of 2010 by recording $175 million of provision for credit losses in excess of net charge-offs, yet the firm remained profitable.

The company reported strong new lending activity of $36.5 billion during the first quarter including, $6.6 billion of new commercial and commercial real estate commitments.

U.S. Bancorp chairman, president and chief executive officer Richard Davis said, "Our first quarter earnings of 34 cents per diluted common share were approximately 42 percent higher than the same quarter of 2009 and were driven by solid year-over-year growth in total net revenue, moderating credit costs and on-going operational efficiency. Total net revenue benefited from earning asset and deposit growth, as well as an expanded net interest margin, while higher fee revenue, notably in payments and corporate banking, reflected our on-going investments and business line growth initiatives.”

Davis said the company expects its levels of charge-offs and nonperforming assets will remain stable in the second quarter.

"As a company, we are confident and focused on the future. We are investing in our businesses, branches, employees and infrastructure. We continue to build deeper relationships with our clients, while transitioning from providing high quality customer service to being recognized for providing a great, high quality customer experience. We have not, however, lost sight of the prudent operating and risk management principles of our past – principles that have allowed our company to successfully navigate an uncertain economy and unprecedented changes in the financial services industry,” Davis said. “There is more change to come, and we have taken a leadership position to help ensure that the industry and, importantly, our company play a vital role in the economic recovery. Our first quarter results demonstrated the underlying strength of our business model, and I am confident that our company’s momentum will accelerate as the economy recovers. We have the depth, breadth and strength to grow and prosper in the years ahead for the benefit of our customers, employees, the communities we serve and our shareholders."


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