(Source: Associated Press/AP Online)
MILWAUKEE - Regional bank Marshall & Ilsley Corp. said Wednesday it will raise at least $750 million in a stock offering, and could use some of the funds to repay part of the $1.7 billion it received earlier this year under the government's Troubled Asset Relief Program.
Many banks have generated hundreds of millions of dollars through stock offerings over the past several months. While the sales put pressure on the banks' share values, they underscore the improving conditions in the capital markets and the increasing demand for bank stocks.
Milwaukee-based M&I is selling 136 million shares at $5.75 each in a move to raise $782 million. Proceeds after underwriting discounts, commissions and offering expenses will total about $750 million. The offering follows a $550 million stock sale in June, as the bank continues to shore up its capital position.
M&I also has granted underwriters an option to purchase up to 20.4 million more shares if demand exceeds initial supply, which could generate up to $117.3 million more for the company.
M&I wasn't among the 19 largest U.S. banks to undergo the government's stress test analysis, so it wasn't ordered to raise additional capital. But analysts had still expressed concern over its capital levels.
M&I said Wednesday it will use proceeds from the sale for general corporate purposes and may shift some funds to boost the balance sheets of its units. M&I said it may also redeem debt or buy back an undisclosed amount of the preferred shares it issued to the government in exchange for the bailout aid.
Such a move would first have to be approved by the bank's board and its regulators, M&I said.
Many banks that received the bailout money have chafed under the increased government scrutiny and restrictions on executive compensation that are contingent with the investment.
The offering is expected to close Tuesday. Morgan Stanley and BofA Merrill Lynch are acting as joint book-runners.
M&I operates 375 branches primarily in Wisconsin, Arizona, Florida, Indiana and Minnesota. On Tuesday, the bank reported a third-quarter loss of $248.4 million as soured loans made to other banks and to mortgage borrowers hurt results. The loss was in line with a forecast the company offered two weeks ago, and met analysts' expectations.
The company's provision for loan and lease losses more than tripled to $578.7 million in the latest quarter, compared with $155 million a year ago. However, the total was down from $619 million in this year's second quarter, and the company also reported a decrease in nonperforming loans compared with the second quarter, its first such decline in four years.
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