The second half of 2008 will see higher unemployment, inflation will remain at a high level, and gross domestic production will be lower than previous years, according to an analysis in the August 2008 edition of the Chicago Fed Letter, a monthly publication of the Federal Reserve Bank of Chicago.

The Federal Reserve Bank of Chicago represents the Seventh Federal Reserve District, which covers most of Wisconsin.

"The forecast for 2008 is for economic growth to continue to be restrained by the struggling housing sector," the article states. "However, growth in 2009 is expected to improve to a rate that our consensus group would consider to be above trend growth for the U.S. economy. Real GDP is anticipated to rise by 1.2 percent this year and by 2.9 percent in 2009."

The report anticipates an average unemployment rate of 5.4 percent by the fourth quarter of this year, lowering slightly in 2009. Inflation is expected to stay around 3.9 percent for the remainder of the year and falling to 2.8 percent next year. Oil prices are expected to fall to about $107 per barrel during the fourth quarter and to $105 per barrel by the end of 2009, the report states.

Residential housing investment is expected to fall another 16 percent this year. Housing starts are expected to reach their lowest levels of 930,000. Residential investment is expected to rise by about 5.6 percent next year, the report states.

The report, written after the Chicago Fed's annual Automotive Outlook Symposium, held in June in Detroit, also forecasts stronger small to mid-sized domestic auto sales, while trucks and sport-utility vehicle sales will continue to fall. Total light vehicle sales are predicted to fall to 15.2 million units, down from 16.1 million in 2007 and 16.5

Commercial vehicle sales are expected to increase by the fourth quarter of the year and through 2009. The full report is available here.

MGIC Investment Corp.'s board of directors declared that the company would pay a dividend of 25 cents per share on Sept. 2. MGIC's stock has been battered by the housing crisis and economic slowdown. Earlier this month, the company reported a $97.9 million net loss for the quarter ending June 30 and a $132.3 million during the first six months of 2008. At the time, Curt Culver, chairman and CEO of MGIC, said that delinquencies and foreclosures remain at elevated levels resulting from lower home values and a softening economy and as a result continue to impact the company's financial results.

The shareholders of Wauwatosa Holdings Inc., the holding company for WaterStone Bank SSB, formerly known as Wauwatosa Savings Bank, recently voted to change the firm's name to Waterstone Financial Inc. The name change will take effect on Aug. 1. Waterstone Financial will continue to be traded on the NASDAQ stock index. Its symbol will change from WAUW to WSBF. WaterStone Bank changed its name in May. It has branches in Wauwatosa, Franklin/Hales Corners, Germantown/Menomonee Falls, Oak Creek, Oconomowoc, Pewaukee, Waukesha and West Allis.

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.

New York investors acquire Milwaukee Gear Co.
Milwaukee Gear Co. and its sister company, Treat All Metals, have been acquired by High Road Capital Partners, a New York-based private equity firm. Milwaukee Gear is a manufacturer of custom precision spur and helical gears utilized in a number of markets, including energy, compressors, mining and other general industrial applications. Treat All Metals is the heat-treating arm of Milwaukee Gear and offers a line of heat treating services to Milwaukee Gear as well as outside customers.

Rick Fullington, president and chief executive officer of Milwaukee Gear, said he is "excited about the company's future and the capital and operating support High Road and its equity partner, Charter Oak Equity, will bring to the company."

Robert Fitzsimmons, High Road's managing partner, told SBT that the Milwaukee companies' management teams, employees and names will be retained. However, Milwaukee Gear's former chief executive officer, Harold Trusky, plans to retire.  "Milwaukee Gear (and Treat All Metals) have a lot of great opportunities in the markets they're already in," Fitzsimmons said. "We'd like to find ways to increase their capacity and we will look for add-on acquisitions that make strategic sense."

Both Milwaukee companies are poised for growth, according to John Emory Jr., president and chief executive officer of Emory & Co., a Milwaukee-based investment banking firm that advised the Milwaukee firms on the transaction. Debt financing for the transaction was provided by Babson Capital Management LLC and JP Morgan Chase. Financial terms of the transaction were not disclosed.

Mayville Engineering Company acquires start-up manufacturer
Mayville Engineering Company (MEC), a contract manufacturer based in Mayville, Wis., recently acquired Fabricating Specialists LLC, a startup manufacturer of formed tubes and form tube assemblies. Terms of the acquisition were not disclosed.

Fabricating Specialists will open a 54,000 square foot facility in Neillsville, in western Wisconsin, by the end of August, said Robert Kamphuis, chairman, president and CEO of MEC. When it begins operations, Fabricating Specialists will have 10 to 30 employees. "We expect, in the next three years, to have close to 100 employees," Kamphuis said.

Jim Grunewald and Steve Donovan, founders of Fabricating Specialists, have become MEC employees. Kamphuis met the pair when they were seeking to lease space for their startup company. "We fabricated about $100 million worth of parts in Wisconsin and the Midwest last year," he said. "Their company is going to do some unique stuff that is right up our alley. Their business model is ready to take off."

MEC is 91 percent owned by its employee stock ownership program (ESOP), Kamphuis said. Both Grunewald and Donovan have become part of the ESOP, he said. Being part of the larger company will help the startup company to grow quickly, Grunewald said.

"Being part of the MEC family of companies gives a tremendous foundation and unlimited potential," he said. "MEC's financial strength, business support systems and breadth of capabilities coupled with its unparalleled commitment to zero defect quality and outstanding customer satisfaction creates tremendous opportunities in the marketplace."

Private equity firm buys Hartland printing company
Commercial Communications Inc., a Hartland-based digital document management and commercial printer, was recently acquired by TouchPoint Print Solutions Corp., a printing company acquisition platform sponsored by Huron Capital Partners, a Detroit private equity firm. Financial terms of the acquisition were not disclosed. Huron has completed four transactions since forming TouchPoint in July, 2007, and expects more than $100 million revenue. Its portfolio includes Milwaukee-based CoakleyTech LLC, a document process outsourcing firm. Milwaukee-based Emory & Co. was a financial advisor in the transaction.

Trico Corp. acquires Ohio company
Pewaukee-based Trico Corp. has acquired Predict USA, of Cleveland, Ohio. The acquisition enables Trico to bring oil analysis and monitoring services in house. Trico can now offer a one-stop shop for all predictive lubrication management services to its clients.

"Predict is a well-respected company and brand," said Trico chief executive officer Robert Jung. "Bringing our two organizations together creates a true total solutions package for manufacturers looking to enhance the life of their equipment and improve overall operations." Financial terms of the acquisition were not disclosed.

Predict will become a wholly-owned subsidiary of Trico, but will continue to operate under its own brand name, according to Trico president Nick Kroll. Predict's lab operations in Cleveland will continue, but its administrative and accounting functions will move to Trico's Pewaukee headquarters. Trico believes it will hire four to five new employees to handle those functions, Kroll said.

The law office of Davidson & Kuelthau, S.C., and the accounting firm Virchow Krause & Co. advised Trico in the acquisition, Kroll said.

Metavante reports strong quarter
Brown Deer-based Metavante Technologies Inc. posted second quarter revenue of $424.8 million, up 7 percent from $395.7 million in the same period a year ago. The company reported quarterly net income of $36.9 million, or 31 cents per share. However, earnings comparisons with the prior year would be irrelevant, since the company's capital structure has changed since it was spun off from Marshall & Ilsley Corp. in November 2007.

Frank Martire, president and chief executive officer of Metavante, said, "Our second quarter results met our expectations and completed a good first half of the year. Organic growth was solid, and benefited from success in prior periods cross-selling our comprehensive product portfolio and capturing new business. The combination of operating leverage and cost productivity allowed us to continue to make additional investments in future growth while still improving current profitability."

Commenting on company's outlook, Martire said, "At the mid-point of our fiscal year, it is becoming increasingly apparent that 2008 will be another good year for Metavante. Continued strong execution, coupled with some stability in consumer spending behavior and customer investment during the second half, should enable us to deliver full year financial results consistent with our guidance. While we remain focused on closing a solid 2008, we also recognize that sustaining organic growth in 2009 and beyond requires us to work harder to sign new business in a challenging economic environment, and continue to make investments in technologies and capabilities that will drive future growth."

Northwestern Mutual sells small stake in Russell Funds
Milwaukee-based Northwestern Mutual Life Insurance Co. recently sold 5 percent of its interests in its Russell Investments fund group to Nippon Life, Japan's largest life insurance company. The companies have agreed to explore potential joint business opportunities, continuing the relationship between the two leading mutual life insurance companies that has developed over the last several years.

Northwestern Mutual and Nippon Life initially will assist each other in pursuing U.S. and Japanese investment opportunities, including U.S. private equity and mezzanine co-investments, and potential Japanese equity investments. The companies also will periodically share investment insights and consider an exchange of investment personnel. Russell Investments, a global investment firm and subsidiary of Northwestern Mutual, is headquartered in Tacoma, Wash. With $211 billion of assets under management, Russell serves individual, institutional and advisor clients in more than 40 countries.

"This business opportunity is a good one and should prove beneficial to Nippon Life and Northwestern Mutual," said Edward Zore, president and chief executive officer of Northwestern Mutual. "Nippon Life is a premier long-term investor with a significant international presence, making its investment in Russell a 'win-win' for all parties involved.

Fiserv venture will serve Brazilian immigrants
Brookfield-based Fiserv Inc. has formed a partnership to help Brazilian banking giant Banco do Brasil create a new Federal Savings Bank in the United States to serve Brazilian immigrants who speak Portuguese.

Subject to regulatory approval, the new financial institution will deploy the Premier core banking system from Information Technology Inc. (ITI), a business unit of Fiserv, and pursue an ambitious plan to open five branches in the coming months.

Federal Savings Bank will offer mortgages and deposit accounts, and will utilize a range of other Fiserv solutions to enhance its services, including Fiserv Credit Processing, IPS-Sendero for enterprise risk management, Fiserv EFT for ATM and debit cards and Fiserv Lending Solutions.

"We found large pockets of Brazilian immigrants throughout the U.S. who are not adequately served by existing banking institutions, mostly because they are primarily Portuguese-speaking," said Leonard Whyte, deputy general manager for Banco do Brasil. "This market is an obvious niche for the bank, and we chose Fiserv and ITI because they have a strong reputation for supporting clients serving niche markets. They will be an important partner to us, as we work to serve the Brazilian community in the U.S., and give immigrants a financial institution they can call their own."

"Banco do Brasil demands high levels of scalability and integration to accomplish their ambitious growth plan," according to Mike Young, president of the Fiserv Bank & Thrift Division. "Not only is Premier the most widely used core banking suite in the nation, serving financial institutions of all sizes, technology and business models, but Fiserv delivers a large and comprehensive set of solutions, all built around a dynamic core and outsourced services."

Vrakas/Blum pitches in at Women's Center
The Brookfield-based public accounting and business advisory firm of Vrakas/Blum, S.C. recently participated in a corporate volunteer effort for The Women’s Center.  More than 10 team members from Vrakas/Blum assisted in the half-day event on July 17, 2008.  Participants assisted The Women’s Center with a variety of cleaning and maintenance projects including cleaning and planting in the outdoor garden and sorting food in the pantry.  In addition, Vrakas/Blum recently made a monetary donation to The Women’s Center from funds raised during the firm’s Jeans Day, in which team members were allowed to wear blue jeans in exchange for a $5 contribution.

Located in Waukesha, The Women’s Center is a not-for-profit human service agency with a mission of providing safety and support to women and their families and to facilitate their development.

Jefferson Wells, a Milwaukee-based provider of internal audit and controls, technology risk management, tax, and finance and accounting-related services, recently hired Jeff Docalavich as the firm's chief financial officer. He will be responsible for overseeing finance, information technology, administration and acquisitions for Jefferson Wells. Docalavich brings more than 15 years of senior leadership experience to his new position. Prior to joining Jefferson Wells, Docalavich was vice president of finance and business operations for a division of Rockwell Automation Inc. in Milwaukee, where he was responsible for leading all finance functions, Six Sigma implementation and sales operations functions in Asia, Europe and Latin America. Additionally, Docalavich has held numerous leadership positions for Allied Signal (now Honeywell International Inc.) headquartered in Morristown, N.J., including director of global business services for Europe, the Middle East and Africa; and chief financial officer of Allied Signal Aerospace in Greenville, S.C. Jefferson Wells is an independently operating, wholly owned subsidiary of Milwaukee-based Manpower Inc.

M&I Bank recently promoted Greg Charlesworth to senior vice president. Charlesworth serves as manager of foreign exchange and interest rate derivatives in M&I’s Capital Markets division. The bank has also promoted Kara Kaiser to senior vice president, and William Feagles and Dawn Davis to vice president. Kaiser has worked at M&I since 1996. Feagles, a business banker, has been with M&I since 1994 and has over 17 years of industry experience. Davis has been with M&I since 1977.

M&I Home Lending Solutions recently promoted Susan Nuernberg to vice president. Nuernberg has been with M&I since 1996 and has over 22 years of industry experience.

AMCORE Bank recently hired Barbara Chucka as an assistant vice president and treasury management specialist. Chucka will work from the bank's Wauwatosa branch. Prior to joining AMCORE, she was an assistant vice president-cash management sales with National City/MidAmerica Bank.

Clifton Gunderson, ranked as one of the nation’s largest certified public accounting and consulting firms, recently promoted Megan A. Borgohain, Shane M. Duffy, CPA, Kristine Tse, CPA, Kyle A. Chuck, CPA, Marla K. Kettler, Michelle M. Maechtle, CPA, Valerie L. Sadowski, and Elena P. Serebriakova, to senior associate.

Ritz, Holman, Butala, Fine LLP, a Milwaukee-based accounting firm, recently promoted Matthew S. Rios, a member of the firm’s tax team, to senior manager; Matthew P. Cody, a member of the firm’s tax team, to senior accountant; Lisa M. Feldmeier, Kelly M. Goodmon, and Stefanie A. Tremaine, all of the firm's nonprofit team, have been promoted to senior accountant.

Winter, Kloman, Moter & Repp, S.C., a Brookfield-based accounting firm, recently promoted Rachel Stawicki and Dan Griesbach to senior; and Renee Bardenwerper, CPA, to Supervisor.