Black Chamber of Commerce challenges acquisition of M&I; CIBM Bank’s holding company lost $17.3 million in 2010
Black Chamber of Commerce challenges acquisition of M&I
The Wisconsin Black Chamber of Commerce (TWBCC) filed a Community Reinvestment Act (CRA) challenge in the acquisition of Milwaukee-based Marshall & Ilsley Corp. by the Bank of Montreal (BMO), alleging that M&I and its subsidiaries have subverted their legal responsibilities to meet the credit needs of low and moderate income communities.
The chamber filed the challenge with the Federal Reserve Bank.
BMO, the parent company of Harris Bank, intends to acquire Marshall & Isley Corp. for $4.1 billion.
The chamber said the bank responsibilities are required by the CRA, and M&I has instead contributed to putting many inner city neighborhoods in Milwaukee in a state of “socioeconomic devastation” due to the bank’s widespread disinvestment and its “irresponsible lending practices.”
Over the years, M&I has “disinvested” in Milwaukee inner city neighborhoods, the chamber said.
Due to the legislated segregation of the City of Milwaukee, its inner city is home to nearly 90 percent of Milwaukee’s minority populations, the chamber said.
M&I corporate leadership contributed to the segregation by funneling its business, mortgage lending and other financial services to geographic areas outside of its graded assessment areas that included the inner city, the chamber said.
The chamber said M&I imposed high interest rates on minorities in the inner city.
Ruben Hopkins, president and chief executive officer of TWBCC, said, “I find it ironic that the late great Senator William Proxmire is the author of the Federal Community Reinvestment Act and one of the biggest banks in his home created a culture of administrative disregard for this important national legislation and has put Senator’s legacy to shame …M&I’s lending and service culture in Milwaukee’s Inner City/CDBG area has been unacceptable and exploitive. The Bank of Montreal has no history with diverse communities like Milwaukee and its subsidiary Harris Bank and Trust has yet to demonstrate a willingness to make a presence in Milwaukee’s Inner City/CDBG area as required under CRA regulations."
According to the Federal Reserve Board’s web site, M&I has received nine consecutive “outstanding” CRA performing rankings since 1994.
Paul Deegan, vice president of government and public relations for BMO Financial Group, said Bank of Montreal and Harris Bank are serious about community involvement.
“As an organization, we strive to do the right thing – always,” he said in a prepared statement. “Banks have a unique role to play in community development, and we at BMO Financial Group take that role seriously. With respect to the comment letter that was submitted in response to our regulatory applications to acquire M&I, we will respond in accordance with the application process."
CIBM Bank’s holding company lost $17.3 million in 2010
CIB Marine Bancshares Inc., the Waukesha-based holding company of CIBM Bank, reported a net loss of $17.3 million for fiscal 2010.
In 2009, after the company successfully completed a pre-packaged plan of bankruptcy reorganization, the bank recorded net income of $13.7 million and net loss before extraordinary net gains of $40.8 million. The company had recorded an extraordinary gain of $54.5 million in 2009 as a result of the restructuring.
“The year 2010 showed some improvements in our operating results, despite continued weak real estate markets and a poor business economy,” said Chuck Ponicki, president and chief executive officer of CIB Marine Bancshares Inc. “The company took a number of actions to reduce operating expenses and improve net interest margins. Additionally, CIB Marine Bancshares Inc., managed its balance sheet and provided additional capital resources to its subsidiary, CIBM Bank, in order to achieve a Tier 1 capital ratio of 10.04 percent.”
Ponicki added, “Our progress in 2010 was slow, but steady, and we still have much work to do to enhance our balance sheet and restore profitability. As a result, we have announced we are closing our Scottsdale, Arizona office. This action, to be completed in the second quarter of this year, will allow us to focus on providing excellent service to our new and existing customers in our core banking markets in the Midwest. As we begin 2011 we have seen some recent improvements in the economy, but weak real estate markets continue to be a drag on the banking system in general, and us included. Nonetheless, we are focused on three major activities – improving credit quality, maintaining capital, and enhancing earnings.”
The company’s total assets of $589 million at Dec. 31, 2010, were down from $710 million at the prior year’s end, largely reflecting declines in securities and loans.