With news from First Wisconsin Bank & Trust’s corporate parent and National City’s second quarter numbers.
Parent company of First Wisconsin has stronger quarter
QCR Holdings Inc., the Moline, Ill.-based parent company of First Wisconsin Bank & Trust and M2 Lease Funds LLC in Milwaukee, reported second quarter earnings of $1.8 million, or 29 cents per share, which was up from $1.3 million, or 23 cents per share, in the same period a year ago. QCR also is the holding company for Quad City Bank and Trust Company, which is based in Bettendorf, Iowa; Cedar Rapids Bank and Trust Company, which is based in Cedar Rapids, Iowa; and Rockford Bank and Trust Company in Rockford, Ill.
Brookfield-based First Wisconsin Bank & Trust, which began operations in 2006, had total assets of $96.2 million at June 30, 2008, which was an increase of $19.3 million from March 31, 2008. As of June 30, First Wisconsin Bank & Trust had net loans of $66.9 million, which was an increase of $12.2 million from March 31. First Wisconsin Bank & Trust reported an after-tax net loss for the first six months of 2008 of $1.4 million, primarily due to a significant increase in provisions for loan losses related to the charge-off of a single commercial loan during the first quarter.
"The company, and all four subsidiary banks, remain well capitalized as of June 30, 2008, and have adequate access to liquidity. Our strategic focus on serving individuals and commercial clients that place a high value on personal relationships and exceptional service, and our lack of significant exposure to commercial and residential development lending, continues to serve us well as we have not experienced the asset quality problems that currently plague many financial institutions," said Todd Gipple, executive vice president, chief operating officer and chief financial officer.
"The local economies in the Quad Cities, Cedar Rapids, Rockford and Milwaukee communities continue to be relatively strong and are providing us with opportunities for additional growth in assets and earnings. We are disappointed that our stock was one of many bank stocks negatively impacted during the quarter as the banking sector experienced a broad sell-off in the financial markets due to the continued concerns over asset quality and capital for many banks in the country. However, we remain very optimistic regarding our future and management will continue to focus on growing EPS and maintaining solid asset quality to drive long-term shareholder value," Gipple said.
National City takes steps to stem housing market losses
National City Corp. has posted a second quarter net loss of $1.8 billion, or $2.45 per share, compared with net income of $347 million, or 27 cents per share, in the same period a year ago. The Cleveland, Ohio-based company’s latest quarter’s losses also were steeper than its first quarter loss of $171 million.
National City entered the Milwaukee market in 2007 by acquiring MAF Bancorp Inc., the former parent company of Mid America Bank. MAF had acquired St. Francis Capital Corp., the former parent company of St. Francis Bank, in 2003.
National City attributed its quarterly losses mainly to increased loss reserves on liquidating mortgage loan portfolios and a non-cash goodwill impairment charge of $1.1 billion related to previous acquisitions. The second quarter provision for loan losses was $1.6 billion, of which $1.0 billion pertained to liquidating portfolios of brokered home equity, nonprime mortgage, and construction loans to individuals.
The company said its second quarter provision for loan losses included supplemental reserves of $478 million, specifically reflecting the "difficult environment" in the housing market.
In response to its exposure to the housing market, National City is restructuring its mortgage business under a new management team, exiting all broker-based mortgage and home equity operations, closing correspondent lending, reducing national home equity exposures and lowering its mortgage headcount.
"In this very challenging environment, we have made significant progress during the quarter in strengthening our balance sheet, mitigating losses in our liquidating portfolios and positioning National City for long-term growth when the credit cycle turns. With the completion of our $7 billion capital raise, National City is by far the best capitalized bank among its peer group – and is the best capitalized of all major U.S. banks," said National City chairman, president and chief executive officer Peter Raskind.