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Home > BizTimes Daily > Archives > April 15, 2008
Soft real estate market continues to drag on M&I Bank
Published April 15, 2008 - BizTimes Daily
Marshall & Ilsley Corp. continues to take a pounding from its real estate investments, announcing today that its first quarter net income dropped 32.5 percent to $146.2 million from $216.8 million in the same period a year ago.
The Milwaukee-based parent company of M&I Bank reported quarterly per share net income of 56 cents, down from 83 cents a year earlier.
"The continued stress on M&I's construction and development portfolio led to further elevated charge-offs and provisions. M&I posted first quarter net charge-offs of $131 million and a loan loss provision of $146 million," the company said in statement.
Speaking to a conference call with analysts this morning, Greg Smith, chief financial officer, said the company's quarterly results reflect the "challenging" environment faced by the banking industry today. He said the company expects to continue to see "nonperforming loans" escalate in the commercial and residential real estate markets.
M&I is incurring real estate losses in its Arizona and Florida markets, where the company has been expanding in recent years. Those markets also were among the most distressed in the bursting housing bubble.
M&I's reductions in net income would have been worse had they not been buttressed by two "unusual events which contributed to M&I's financial results for the quarter," the company said. M&I recognized pre-tax income of $39 million due to the redemption of 39 percent of the corporation's Visa Inc. stock shares and a related litigation reserve adjustment. M&I also recorded a $20 million tax benefit related to positive developments in the U.S. tax court.
M&I's wealth management business produced total revenue of $71.9 million for the quarter, an increase of $11.2 million or 18 percent, over the first quarter of 2007.
