Oct. 20, 2009 (PR Newswire) -- MILWAUKEE, Oct. 20 /PRNewswire-FirstCall/ --
-- Net loss of $0.68 per share for 2009 third quarter.
-- Nonperforming loans decreased $166 million from prior quarter - first
decline in four years.
-- Early stage delinquencies fell $218 million, or 21 percent, from second
quarter 2009 - at lowest level since first quarter 2008.
-- Allowance for loan and lease losses increased to 3.07 percent of total
loans, up 23 basis points from prior quarter.
-- Reduced construction and development exposure to 13.7 percent of total
loans.
-- Financial results included debt termination gains of $56 million or
$0.10 per share, credit-related expenses of $70 million or $0.12 per
share, and dividends paid to U.S. Treasury under Capital Purchase
Program of $25 million or $0.07 per share.
Marshall & Ilsley Corporation (NYSE: MI) (M&I) today reported a 2009 third quarter net loss of $248.4 million, or $0.68 per share, as compared to net income of $83.1 million, or $0.32 per share, in the third quarter of 2008.
"Our financial results during the third quarter of 2009 were negatively impacted by bank holding company loans and housing-related credits," said Mark Furlong, president and CEO, Marshall & Ilsley Corporation. "The Company remains focused on the aggressive resolution of these loans in order to return M&I to profitability as soon as possible. There are some encouraging early signs that credit quality is improving, but we realize it will take a few more quarters to fully address our problem loans."
Loan and Deposit Growth
M&I's average loans and leases totaled $47.1 billion for the third quarter of 2009, decreasing $2.9 billion or 6 percent compared to the third quarter of 2008. When adjusted for the targeted reduction in the Corporation's construction and development portfolio, loan growth was $0.4 billion or 1 percent versus the same period last year. The Corporation's average deposits totaled $41.3 billion for the third quarter of 2009, rising $1.6 billion or 4 percent versus the third quarter of 2008. M&I's core deposits posted strong growth over the past year, reflecting expanded product offerings and the customer's desire for FDIC insured liquidity. The Corporation's average noninterest bearing deposits totaled $7.9 billion for the third quarter of 2009, increasing $2.0 billion or 33 percent compared to the third quarter of 2008. M&I's average savings and NOW accounts totaled $5.6 billion for the third quarter of 2009, increasing $2.3 billion or 69 percent compared to the third quarter of 2008.
Net Interest Income
The Corporation's net interest income (FTE) was $394.5 million for the third quarter of 2009, down $4.0 million or 1 percent compared to the second quarter of 2009. The net interest margin was 2.82 percent, up 3 basis points from the previous quarter. During the third quarter of 2009, M&I's net interest margin benefited from a lower level of nonperforming loans by 3 basis points and the maturity of certain debt instruments by 6 basis points. These improvements were offset by the Corporation's decision to maintain excess liquidity through this part of the credit cycle, which negatively impacted the net interest margin by 11 basis points.
Asset Quality
M&I's provision for loan and lease losses was $578.7 million in the third quarter of 2009 versus $619.0 million in the previous quarter. Net charge-offs for the period were $532.7 million compared to $603.3 million in the second quarter of 2009. Excluding the impact of certain bank holding company loans in the third quarter of 2009, the Corporation's provision for loan and lease losses was $393.7 million and net charge-offs were $374.9 million. Both numbers were in line with management expectations.
At September 30, 2009 and 2008, the allowance for loan and lease losses was 3.07 percent and 2.05 percent, respectively, of total loans and leases. Nonperforming loans and leases were 4.88 percent (or 3.70 percent excluding nonperforming loans and leases less than ninety days past due) of total loans and leases at September 30, 2009, compared to 2.50 percent at September 30, 2008.
Non-Interest Income
The Corporation's non-interest income was $227.9 million for the third quarter of 2009 compared to $183.8 million for the third quarter of 2008. Debt termination gains of $56.1 million and losses on loans held for sale of $18.1 million were unique to the current quarter compared to the same period last year. Excluding these items, non-interest income rose $6.0 million or 3 percent compared to the third quarter of 2008. Wealth Management revenue was $66.7 million for the current quarter, exceeding the prior quarter by 1 percent. However, compared to the same quarter last year, revenue fell $4.6 million or 7 percent. The decline was primarily driven by volatility in the equity markets in late 2008 and early 2009. Assets under Management and Assets under Administration were $32.8 billion and $118.5 billion, respectively, at September 30, 2009 (record highs), compared to $24.4 billion and $101.3 billion, respectively, at September 30, 2008.
Non-Interest Expense
M&I's non-interest expense was $409.4 million for the third quarter of 2009 compared to $360.0 million for the third quarter of 2008. Credit-related expenses (meaning expenses associated with collection efforts and carrying nonperforming assets) were $70.3 million for the current quarter versus $20.5 million in the same period last year. Excluding these items, non-interest expense was down slightly compared to the third quarter of 2008. After adjusting for certain net credit-related expenses and other one-time items, M&I's efficiency ratio was 57.6 percent in the current quarter.
Year-to-Date Results
M&I reported a net loss of $599.3 million, or $1.97 per share, as compared to a net loss of $164.4 million, or $0.63 per share, for the nine months ended September 30, 2009 and 2008, respectively. The Corporation's net interest income (FTE) was $1,201.9 million for the nine months ended September 30, 2009, a decrease of $137.7 million or 10 percent compared to the nine months ended September 30, 2008. M&I's non-interest income was $671.7 million for the nine months ended September 30, 2009, an increase of $89.6 million or 15 percent versus the nine months ended September 30, 2008. The Corporation's non-interest expense was $1,170.0 million for the nine months ended September 30, 2009, increasing $113.8 million or 11 percent compared to the nine months ended September 30, 2008.
Balance Sheet and Capital Management
The Corporation's consolidated assets and total equity were $58.5 billion and $6.4 billion, respectively, at September 30, 2009, compared to $63.5 billion and $6.5 billion, respectively, at September 30, 2008. There were 368.3 million common shares outstanding at September 30, 2009, compared to 260.0 million outstanding at September 30, 2008. In the third quarter of 2009, M&I paid $25 million or $0.07 per share for dividends on the Corporation's Senior Preferred Stock, Series B, owned by the U.S. Treasury under the Capital Purchase Program.
M&I's tangible common equity ratio was 7.0 percent at September 30, 2009.
Note: The previously announced conference call regarding third quarter 2009 results, which was to be held on Thursday, October 22, will not take place.
About Marshall & Ilsley Corporation
Marshall & Ilsley Corporation (NYSE: MI) is a diversified financial services corporation headquartered in Milwaukee, Wis., with $58.5 billion in assets. Founded in 1847, M&I Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 193 offices throughout the state. In addition, M&I has 53 locations throughout Arizona; 32 offices in Indianapolis and nearby communities; 36 offices along Florida's west coast and in central Florida; 16 offices in Kansas City and nearby communities; 26 offices in metropolitan Minneapolis/St. Paul, and one in Duluth, Minn.; and one office in Las Vegas, Nev. M&I's Southwest Bank subsidiary has 17 offices in the greater St. Louis area.
