The economic slowdown, increased shutdowns and bankruptcy filings by businesses and resulting layoffs have prompted one Wisconsin lawmaker to propose changes to the way employees and banks are paid after a company has filed insolvency proceedings.

Current Wisconsin law allows employees to collect up to $3,000 in back wages when their employer files for bankruptcy or ceases operations. A new proposal authored by State. Sen. John Lehman (D-Racine), named the Employee Wage Protection Act," would eliminate the $3,000 per employee cap in recovering unpaid wages.

"We're in tough economic times and all too many Wisconsinites are losing their jobs," Lehman said. "These workers are already dealing with the challenge of finding a new job. They and their families shouldn't also have to deal with the hardship of getting wages they've already earned."

The proposal would destroy the current delicate balance of Wisconsin's wage lien law, the Wisconsin Bankers Association says, and could lead to more bankruptcy filings in the future.

"This amounts to an anti-economic stimulus for Wisconsin and will create a credit crunch where one didn't exist," said Kurt Bauer, president and chief executive officer of the organization. "How can something so anti-jobs and anti-business be called 'pro worker?'"

The loss of the $3,000 cap would likely prevent creditors - banks and other financial institutions - from lending or extending lines of credit to businesses that are struggling because of the increased amount of money that would be absorbed by the lien law in the event of a bankruptcy or shutdown, Bauer said.

The new law would essentially leave most businesses with insufficient collateral to pledge against a line of credit, and could create more shutdowns and bankruptcy filings.

"It's not an income protector; it's a job killer, plain and simple," Bauer said.

Lehman pointed to the recent federal assistance packages for auto companies and large financial institutions and said that Wisconsin needs to look out for its "working folks" too.

"No one wants to see someone lose their job because their employer went out of business or declared bankruptcy, but if that happens we ought to make sure state law is on the employees side in receiving the wages they're entitled to," he said.

Wellpoint Inc., the Indianapolis-based corporate parent of Anthem Blue Cross Blue Shield of Wisconsin, announced it would eliminate about 1,500 positions across the country. However, 900 of those positions are open now, making for approximately 600 job cuts from around the country.

A Wellpoint spokeswoman said the 600 cuts would mostly be made in the 14 states, including Wisconsin, where the company has its largest presence and that the cuts would be relatively evenly spread. The company employs 1,500 to 1,600 workers in the state.

Wellpoint's workforce reduction announcement comes on the heels of its disclosure earlier this month that it expects fourth quarter 2008 investment losses to total about $349 million. The company lost about $560 million during the third quarter, also related to investment losses.

Meanwhile, Louisville, Ky.-based Humana Inc. recently confirmed its lowered earnings projections for fiscal 2008. The company reported a 39 percent drop in profit during the third quarter and lowered its outlook at the time, estimating that it would earn $3.80 to $3.90 per share, compared with earlier forecasts of $4.30 to $4.40 per share. The company still anticipates earning $5.90 to $6.10 per share in 2009.

M&I posts 4Q loss, eliminates 830 jobs

Marshall & Ilsley Corp., Wisconsin's largest bank, has reported a 2008 fourth quarter net loss of $403.9 million, or $1.55 per share, and announced it will eliminate 830 jobs, or 8 percent of its workforce.

For the full fiscal year, the parent company of M&I Bank reported a net loss of $568.3 million, or $2.19 per share.

The reductions in force include positions already eliminated in 2008, the elimination of open positions, staff reductions and attrition. Approximately 80 percent of the staff reductions are complete. The remaining 20 percent are related to operational efficiencies and are expected to be achieved by year-end 2009.

"Our fourth quarter and year-end results reflect the extent to which the current recession has had an impact on our economy," said Mark Furlong, president and chief executive officer of Marshall & Ilsley. "Although these are disappointing results, our excess capital and strong levels of reserves will keep us ahead of the industry's challenges."

To address its fiscal crisis, the company also announced the following actions:

• The corporation recorded a pre-tax charge of approximately $9 million in the fourth quarter of 2008 in connection with the costs related to the reduction in force.
• The company is cutting other expenses of about $30 million.
• The company slashed its quarterly cash dividend to shareholders to 1 cent per share.
• Proxy officers and all other executive officers will receive no bonuses for 2008.
• Total 2008 annual cash compensation for proxy officers as a group will decline approximately 26 percent from 2007, and a total of 56 percent for the two-year period since 2006.
• Proxy officer and all executive officer salaries will be frozen in 2009 and a broad salary freeze has been instituted for other senior officers.
• The board of directors has reduced the annual cash retainer for directors by 25 percent.
• The corporation also has decreased awards and benefits under a variety of other programs for employees.

"We believe the dividend reduction, the aggressive steps to address credit quality, and the expense initiatives will allow us to maintain a strong capital base as we move through what is looking to be the most severe economic downturn since the Great Depression," Furlong said. "The dividend and staff reductions are particularly painful and difficult decisions to make. However, these actions will help us maintain a strong capital base, which combined with a high level of reserves for loan losses, is essential for M&I to serve its customers, shareholders, employees, and communities. We expect that in the long run the difficult decisions we are announcing today will lay the foundation for a strong and profitable future for M&I."

The net loss available to common shareholders was $1.55 per share for fourth quarter.

M&I has received $1.3 billion in new credit from the federal Troubled Asset Relief Program (TARP) and has initiated a 90-day mortgage foreclosure moratorium for its customers.

M&I's construction and development portfolio continued to experience deterioration in the estimated collateral values and repayment abilities of some of the corporation's customers, particularly among small and mid-sized local residential developers.

In a conference call with analysts this morning, Furlong acknowledged that two-thirds of the company's "non-performing" loans are in the Arizona and the western coast of Florida.

After this morning's announcement, Standard & Poor's Ratings Services lowered its long-term counterparty credit rating of Marshall & Ilsley to "BBB+" from "A-."

"The downgrade was triggered by the company's announcement of another massive loan-loss provision and outsize net loss for fourth-quarter 2008, as asset quality continues to deteriorate," said Charles Rauch, an S&P credit analyst, according to MarketWatch.com.

Moody's also lowered its outlook for Marshall & Ilsley to "negative," noting the company's loan deterioration has been fueled by its sizable exposures to residential construction and land development loans.

Bank Mutual rises above financial industry meltdown

Bank Mutual Corp. reported net income in the fourth quarter of $6.2 million, 13 cents per share, up from $4.1 million, 8 cents per share, in the same period a year ago.

For the full year, the Milwaukee-based company's net income was $17.2 million, or 35 cents per share, up from $17.1 million, 31 cents per share, in 2007.

Michael Crowley Jr., chairman, president, and chief executive officer of Bank Mutual, said, "We are extremely pleased with our company's performance in 2008 in light of the tremendous upheaval in financial markets and the banking industry in general. Although our earnings for the full year are comparable to last year, our core results showed more improvement, led by a 6% rise in net interest income."

Crowley added, "Our performance in 2008 validates our company's long-standing commitment to conservative lending and investing, capital strength, and liquidity, which will enable us to continue to meet whatever challenges our industry may face in the near term."

The company's gains came despite a $6.9 million impairment loss on a mutual fund that invests in mortgage-related securities; a $1.4 million impairment loss related to Federal Home Loan Mortgage Corp. common stock; a $1.3 million loss provision on a loan secured by a completed condominium development project; and an $822,000 valuation allowance for impairment of mortgage servicing rights.

These developments were substantially offset by $7.2 million in gains on the sale of certain mortgage-related securities during the year.

California company acquires Mequon firm
Simulation Technology and Applied Research Inc. (STAAR), a Mequon-based developer of 3D tools for electromagnetic simulation used in subsystems that operate at radio and microwave frequencies, has been acquired by AWR, an El Segundo, Calif.-based firm that specializes in electronic design automation software.

All of STAAR's six employees, including founder John DeFord, will remain with the company, which has retained its name and Mequon location at 11520 N. Port Washington Road. STAAR is now an affiliate company within AWR.

"AWR has acquired the technology we developed and its people - both were important in the acquisition," DeFord said. "Our expertise is in 3D electromagnetic modeling, something their customers were asking for."

The acquisition will enable STAAR's employees to concentrate on electromagnetic modeling, DeFord said, and AWR's established sales force creates significant growth potential for STAAR.

"As a stand-alone company, we had a product but no sales channels," he said. "Now we can run the company more or less as we did before, but we don't have to worry about the sales side. We're able to focus on the technology."

Financial terms of the acquisition were not disclosed.

PDS to acquire Sheboygan firm
Oconomowoc-based Paragon Development Systems Inc. (PDS) announced today it has acquired Provident Technologies Inc. of Sheboygan.

Provident Technologies is a Novell Platinum partner specializing in identity management and Linux-based solutions with engineering and sales divisions in Sheboygan, Madison and Milwaukee. Provident also is an authorized sales and service repair facility for Hewlett Packard and Samsung printers, HP workstations, laptops and tablet PCs.

All Provident staff will be joining PDS as part of the acquisition, including chief operating officer Angela Daniels, who will lead PDS's provisioning and platform management software services as a director in the computing architecture group. As part of the transition, PDS will maintain an office in the Sheboygan area indefinitely.

"Provident Technologies boasts rich IT infrastructure expertise, and we are pleased to welcome them to the team," said PDS chief technical officer Austin Park. "The skills added by the incoming group of consultants in open source, Novell Zenworks and Novell identity management solutions will complement our already strong consulting capabilities in configuration management with Microsoft System Center Configuration Manager and LANDesk.

"PDS continues to strengthen the Microsoft platform business, which we are well known for," Park added. "But we can now offer our customers more choice with expertise in open source software as well."

Provident's long-term clients include Sheboygan Falls-based Johnsonville Sausage, for which Provident implemented comprehensive Novell identity and systems management solutions to achieve a single point of control for thousands of employee and digital partner identities.

"The merger of PDS and Provident Technologies will enable the company to offer its customers high-value IT solutions, which gives them the flexibility and agility to deliver on their organization's IT objectives," said Joe McLaughlin, vice president of partner and channel sales for Novell.

Zurn Industries to acquire Canadian company
Milwaukee-based Rexnord LLC announced that Zurn Industries LLC, its wholly owned water management subsidiary, has entered into a definitive agreement to acquire the stock of Fontaine-Alliance Inc. and affiliates.

The acquisition is expected to close in the first calendar quarter.

Fontaine manufactures sluice gates and other engineered flow control products for the municipal water and wastewater markets. Fontaine is based in Magog, Quebec, Canada. Fontaine employs approximately 185 employees.

Rexnord anticipates funding the acquisition from existing cash balances and/or its existing credit facilities.

Fontaine will expand Rexnord's strategic water management platform, which was created with the company's acquisition of Zurn in February 2007. The acquisition further expands Zurn's presence in the municipal water and wastewater markets, both domestically and internationally, along with providing a product offering that is complementary with Zurn's recent acquisition of GA Industries Inc, which closed in January 2008.

Alex Marini, president and chief executive officer of Rexnord's Water Management Group, said, "We are extremely pleased with the acquisition of Fontaine. Fontaine is a well-managed company with a strong brand name."

Andre Fontaine, CEO of Fontaine-Alliance Inc. said, "The merger provides Fontaine the opportunity to grow in our markets even further by leveraging the size and performance of Rexnord and Zurn. We are excited to be part of Rexnord's Water Management business, which will greatly enhance the scope of products available to our customers."

Bob Hitt, president and CEO of Rexnord, said, "The addition of Fontaine serves as a complement to our existing water management business, and also strengthens our dedication to expanding valuable components of our water management platform."

Environmental Systems Inc. acquires ECC Controls Inc.
Waukesha-based Environmental Systems Inc. (ESI) has acquired ECC Controls Inc. of Milwaukee in a strategic growth move that expands ESI's technology offerings and its Midwest presence.

ECC's employees and operations have been integrated into ESI. The ECC Milwaukee office has moved to the ESI facility in Waukesha, located at W223 N603 Saratoga Drive.

ESI provides a range of technology and services in the areas of building automation, systems integration, networking and IT infrastructure, security, life safety, building operations and software applications in Wisconsin, Illinois and Michigan.

ECC provides temperature controls, building automation, energy management and security systems in Wisconsin and Upper Michigan.

"The acquisition of ECC Controls results in a powerful strategic synergy between the two companies," said Paul Oswald, president of ESI. "ECC Controls is a respected supplier in the building automation and management field. ECC brings a premier technology brand, T.A.C Andover, to ESI, which adds to ESI's existing role as a T.A.C  I/A  partner. In addition, ECC provides an expanded customer base and an important regional location in Eau Claire, Wis., that will allow us to serve our customers in Western Wisconsin. ”

ESI has facilities in Waukesha, Chicago, Ill., and Houghton, Mich.

Name: Dick Hansen

Title: President/CEO

Company: Johnson Financial Group, Racine WI

City of Residence: Racine

Family: Married, with one daughter, one stepson and two grandchildren

What's new at your company this year? "Given the challenges in the financial industry I'm pleased to say we're well capitalized, liquid, profitable and growing."

What was the best investment/client/project you've been involved with? "It was our own building. Participating in the planning, design, financing and construction of our headquarters - The Johnson Building."

What are you most proud of? "That the associates of Johnson Financial consider our company to be a great place to work."

What was the funniest or most interesting moment of your career? "Working, traveling and learning from Sam Johnson, one of the great business leaders in the world, was a professional opportunity of a lifetime."

Michael Maxwell, owner of Maxwell Attorneys LLC in Wauwatosa, was recently elected chairman of the board of directors at Landmark Credit Union. Maxwell was formerly vice chair and replaces Katherine Drewek, who served as chairperson since 1981.

RitzHolman CPAs, a Milwaukee-based accounting firm recently hired Kelly L. Peterson and Wade P. Piazza as staff accountants.

Lecia Johnson and Jennifer Hannon, attorneys specializing in financial services with Milwaukee's Godfrey & Kahn, have been elected as shareholders. Johnson is a member of the Tax and Employee Benefits Group in the Milwaukee office and has been with the firm since 2000. Hannon joined Godfrey & Kahn in 2000 and is a member of the Estate Planning Group who works out of the firm's Madison office. Godfrey & Kahn maintains offices in Milwaukee, Madison, Appleton, Green Bay and Waukesha, in addition to Washington, D.C., and Shanghai, China.

Feds approve funds for Barrett's foreclosure plan
Milwaukee Mayor Tom Barrett learned last week that the city's action plan to spend its $9.2 million Neighborhood Stabilization Program (NSP) allocation has been approved by the U.S. Department of Housing and Urban Development (HUD).

The city's plan includes assistance for homebuyers purchasing foreclosed properties, rental unit rehabilitation, large project rental development, acquisition, rehabilitation and resale for homeownership, demolition of unsafe structures and a land bank.

"We've created an ambitious plan to further address the needs of Milwaukee's neighborhood created by the foreclosure crisis. We're eager to begin implementing meaningful solutions," Barrett said.

In addition to receiving the $9.2 million, the city is also applying for NSP funds from the State of Wisconsin's $38 million allocation in order to address the full scope of crisis. Additional funds secured from the state will be used to bolster activities already identified in the city's action plan, Barrett said.

For the last two years, the City of Milwaukee and many partners have been working to address foreclosure issues and the impacts of subprime and predatory lending in the community.

Last September, Barrett convened the Milwaukee Foreclosure Partnership Initiative (MFPI), a public-private partnership of lenders, foundations and community stakeholders with the primary goal of addressing the foreclosure crisis using a three-tiered approach: prevention, intervention and stabilization.

As of last week, 1,868 foreclosed properties had been identified in the City of Milwaukee.  An additional 4,841 foreclosure filings have been opened.

The city's NSP Action Plan can be viewed at www.city.milwaukee.gov/CommunityDevelopment310.htm.

"Wisconsin's investment tax credits: What's working and what happens next?" will be the topic of the next meeting of the Wisconsin Innovation Network in Madison, to be held today from 11:30 a.m. to 1:30 p.m. at the Sheraton Hotel on John Nolen Drive in Madison. Featured speakers will be John Neis, managing director of Venture Investors LLC; Cheryl Gain, director of biotechnology initiatives at Thrive; Bill McCoshen, executive director of Competitive Wisconsin Inc.; and Deven McGlenn, CEO of NeoClone, who credits the tax credits law for helping his company raise funding. Wisconsin Technology Council president Tom Still will moderate. Cost is $25 for WIN members and $35 for non-members. For more, visit http://www.wisconsintechnologycouncil.com/win.

Greater Milwaukee Committee president to speak at Economic Trends Breakfast
Julia Taylor, president of the Greater Milwaukee Committee, has been added to the featured speaker panel of the 2009 Northern Trust Economic Trends Breakfast to be presented by BizTimes Milwaukee on Wednesday, Jan. 21.

The event, which will provide insights about the year ahead in business, will take place at the Italian Community Center in downtown Milwaukee.

Taylor will provide a sneak peak of 2009 from the perspective of some of the region's largest employers. The GMC's mission is to keep southeastern Wisconsin the best community to live, learn, work and play. The GMC's membership includes 185 business, labor, academic, philanthropic, nonprofit and civic leaders.

In addition to Taylor, the speaker lineup for the conference will include:

• Michael Knetter, dean of the University of Wisconsin School of Business in Madison, will return to provide his macroeconomic outlook. Knetter, a former economic advisor to Presidents George H.W. Bush and Bill Clinton, will have some especially timely and critical insight at the 2009 event.

• Richard Meeusen, chairman, president and chief executive officer of Milwaukee-based Badger Meter Inc., will discuss the challenges and opportunities facing Wisconsin's manufacturers in 2009. Meeusen says Milwaukee's proximity to Lake Michigan will provide economic opportunities for the region. Badger Meter has grown to become a global company. The firm's stock is now traded on the New York Stock Exchange.

• Jane Cooper, founder, president and chief executive officer of Milwaukee-based Patient Care, the nation's leading advocacy company that helps employees navigate the health care system and become better consumers, will discuss the future of health care. Patient Care's clients include Assurant Health, Harley-Davidson Motor Co., MillerCoors LLC, Briggs & Stratton Corp., Regency Hospital Company and Midwest Airlines. Cooper founded her company in New Orleans in 2001. Cooper and her company fled to Milwaukee after Hurricane Katrina struck in 2005. Previously, Cooper was the CEO of the Community Physicians Network in Madison, Wisconsin, where she led a financial turnaround of the regional Independent Physician's Association (IPA). She also founded Advantage Health Plan, a regional preferred provider organization (PPO) and health maintenance organization, which grew to $280 million in annual revenues and 300 employees. Cooper also served as the chairman of the American Association of PPOs. She will discuss the future of health care in America.

• Jerry Shereshewsky, chief executive officer of Grandparents.com, will travel from New York City to Milwaukee to join the panel and speak about how Wisconsin businesses will have incredible opportunities to market their products and services to the growing population of baby boomer grandparents. This generation has wealth and is more vibrant, healthy and dynamic than any preceding generation of grandparents, according to Shereshewsky, who is a legend on New York's Madison Avenue. Shereshewsky invented the Mellow Yellow brand of soda. After stints among the "Mad Men" with Wunderman, Burson Marsteller, the Bertelsmann Music Group (BMG) and Yoyodyne, Shereshewsky became one of the driving forces in the growth of Yahoo!, where he spent almost nine years overseeing marketing for the Yahoo! Media Sales Group. Shereshewsky, a graduate of the University of Wisconsin in Madison, served on the board of directors of the Direct Marketing Association (DMA), as well as the Dean's Advisory Board at the UW School of Business.

To register to attend the event, visit www.biztimes.com/trends.

Banking

• Wisconsin Department of Financial Institutions 
• Federal Deposit Insurance Corp.
• Wisconsin Bankers Association 
• Community Bankers of Wisconsin
• Wisconsin Mortgage Bankers Association
• American Bankers Association
• Bankers Association for Finance and Trade
• Commercial Finance Association 
• Risk Management Association

Mergers & Acquisitions

• Association for Corporate Growth 
• International Business Brokers Association 
• Mergers.com

Wealth Management/Financial/Retirement Planning

• Financial Planning Association
• Financial Planning Association of Southern Wisconsin
• Investment Management Consultants Association
• National Association of Personal Financial Advisors (NAPFA)

Other 

• Small Business Administration
• State public awareness campaign
• Wisconsin Credit Union League
• CFA Institute
• CFA Society of Milwaukee
• Wisconsin Angel Network