 |
 |
 |
|
Comment on This Story / Send This Article to a Friend
Business North - The Daily Briefing - Business Newspaper Online
M& I Bank takes write down on bad mortgage loans
|
12/27/2007 by Richard Thomas |
Wisconsin’s largest bank, Marshall & Ilsley Corp., better known as M & I, expects to write off $195 million in bad debt in its fourth quarter, compared to only $15 million last year, largely resulting from the downturn in the housing and real estate market. The delinquent loans are concentrated in Arizona and Florida residential construction and land development, the bank said.
The debt is one of “several unusual events which will impact M&I's financial results for the quarter and year ending December 31, 2007,” said the bank’s Dec. 17 statement.
M&I will offset the expected mortgage losses with a one-time $526 million gain and $1.7 billion capital infusion from the spinoff of its former financial technology arm, Mentavante Technologies.
Because the credit market is “currently unfavorable,” M&I also has retired $1 billion of Puttable Reset Securities, to reduce future borrowing costs. M&I incurred a one-time after-tax charge of $48 million for retiring the debt, but expects to recover it through lower financing costs over the next three years.
Milwaukee-based M & I also expects to pay $5 million as its share in the proposed settlement of an anti-trust lawsuit brought by American Express against Visa. M & I was not named individually in the lawsuit but has exposure as a Visa member bank.
“Despite these challenging market conditions, we are fortunate to have one of the strongest capital positions in the industry,” M & I president and CEO Mark Furlong said in a statement. “We believe we are well positioned to weather the downturn in the real estate market.”
On Dec. 21 analyst Richard Bove of Punk Ziegel & Co. maintained his “market perform” rating on Marshall & Ilsley but reduced his earnings estimates for the company.
Previous Daily Briefing Articles:
