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Home > BizTimes Daily > Archives > October 17, 2008
Local banks are feeling Wall Street's pain
Published October 17, 2008 - BizTimes Daily
The global economic slowdown continued to take a toll on Wisconsin's financial services industry this week, and the carnage is reflected in the quarterly earning reports of MGIC Investment Corp., Associated Banc-Corp. and Bank Mutual Corp.
Milwaukee-based MGIC reported Thursday a third quarter net loss of $113.3 million, or 91 cents per share, which actually was an improvement over a net loss of $372.5 million, or $4.61 per share, for the same quarter a year ago. The company's total revenues for the quarter were $461.6 million, down 16.9 percent from $555.4 million in the third quarter of 2007.
Over the first nine months of 2008, MGIC has lost $245.6 million.
Curt Culver, chairman and chief executive officer of MGIC, said that the company's results continue to be negatively impacted by increased delinquencies and foreclosures that have resulted from deteriorating home prices, especially in California and Florida, as well as a weakening economy.
MGIC took losses and impairment charges of $34.9 million, which includes losses from fixed income investments in Fannie Mae, Freddie Mac, Lehman Brothers and AIG.
Green Bay-based Associated Bank reported quarterly net income of $ 37.8 million, or 30 cents per share, which was down from $71.7 million, or 56 cents per share, in the same period a year ago.
Associated incurred a charge of $13.6 million, or 7 cents per share after tax, related predominantly to preferred stock holdings of Freddie Mac and Fannie Mae. Associated's provision for loan losses was $55 million and net charge offs were $38 million.
Milwaukee-based Bank Mutual Corp. reported quarterly net income of $1.6 million, or 3 cents per share, which was down from $3.7 million, or 7 cents per share, in the same period a year ago.
Bank Mutual's earnings in the most recent quarter were impacted by a $2.3 million impairment loss on a mutual fund that invests in mortgage-related securities, a $1.4 million impairment loss related to Freddie Mac common stock and a $1 million loss provision related to a loan secured by a completed condominium development project.
Michael Crowley Jr., chairman, president and chief executive officer of Bank Mutual, said, "As our results this quarter will show, we have also felt the effects of the recent turmoil in the financial markets. However, once we filter through the 'noise' in our earnings, we are very pleased with our core results. We continue to believe that our capital strength, liquidity, asset quality, and cost efficiency set us apart from many of our competitors. We are also pleased to see continued improvement in our net interest margin in this difficult environment for financial institutions."
Earlier this week, Milwaukee-based Marshall & Ilsley Corp. reported third quarter net income of $83.1 million, or 32 cents per share, which was down 62.2 percent from $219.9 million, or 83 cents per share, in the same period a year ago.
