Published: April 20, 2010
Marshall & Ilsley Corporation Reports 2010 First Quarter Results
MILWAUKEE, April 20 /PRNewswire-FirstCall/ --
-- Net loss of $140.5 million or $0.27 per share for first quarter 2010.
-- Net interest margin rose 18 basis points to 3.13 percent from prior
quarter.
-- Continued stabilization in credit quality.
-- Early stage delinquencies fell slightly from fourth quarter 2009 -
the fourth consecutive quarterly decline and the lowest level since
December 2007.
-- Nonperforming loan inflows dropped 29 percent from prior quarter to
$674 million - the lowest level since third quarter 2008.
-- Nonperforming loans decreased from fourth quarter 2009 - the third
consecutive quarterly decline.
-- Allowance for loan and lease losses at quarter-end was over $1.5
billion, or 3.55 percent of total loans and leases.
Marshall & Ilsley Corporation (NYSE: MI) (M&I) today reported a 2010 first quarter net loss of $140.5 million, or $0.27 per share, as compared to a net loss of $116.9 million, or $0.44 per share, in the first quarter of 2009.
"Our first quarter results reinforce our confidence that a credit quality recovery is underway at M&I," said Mark Furlong, president and CEO, Marshall & Ilsley Corporation. "We anticipate a relative stabilization of credit quality trends, reflecting sustained improvement in early-stage delinquencies, reduced inflows, and continued aggressive strategies to work out or sell problem credits. We are pleased with the Company's progress, but realize hard work remains to improve credit quality. M&I remains committed to returning the Company to profitability as soon as possible."
Net Interest Income
The Corporation's net interest income (FTE) was $409.1 million for the first quarter of 2010, up $3.0 million or 1 percent compared to the fourth quarter of 2009. The net interest margin was 3.13 percent, up 18 basis points from the previous quarter. During the first quarter of 2010, M&I's net interest margin benefited from lower funding costs and partial deployment of excess liquidity.
Asset Quality
M&I continued to proactively address credit quality in the first quarter of 2010 by identifying and writing down troubled assets, selling problem loans, reducing exposure to construction and development loans, and building loan loss reserves.
-- Provision for loan and lease losses was $458.1 million in the first
quarter of 2010, down $180.9 million or 28 percent versus the fourth
quarter of 2009. Net charge-offs for the period were $423.4 million,
falling $148.9 million or 26 percent compared to the prior quarter.
-- Construction and development (C&D) exposure declined from the fourth
quarter of 2009 to slightly less than 12.0 percent of total loans.
Arizona C&D exposure fell 69 percent since the fourth quarter of 2007.
-- Allowance for loan and lease losses at quarter-end was over $1.5
billion, or 3.55 percent of total loans and leases, an increase of 20
basis points from the prior quarter.
Asset quality trends demonstrated further stabilization through lower early stage delinquencies, nonperforming loan inflows, and nonperforming loans.
-- Early stage delinquencies fell slightly from the fourth quarter of 2009
- the fourth consecutive quarterly decline and the lowest level since
December 2007.
-- Nonperforming loan inflows dropped 29 percent from the prior quarter to
$674 million - the lowest level since third quarter 2008.
-- Nonperforming loans decreased $91 million, or 4 percent from the fourth
quarter of 2009 - the third consecutive quarterly decline.
-- Nonperforming loans and leases were 4.58 percent (or 2.93 percent
excluding nonperforming loans and leases less than ninety days past due)
of total loans and leases at March 31, 2010, compared to 4.62 percent at
December 31, 2009.
Non-Interest Income
The Corporation's non-interest income was $227.6 million for the first quarter of 2010 compared to $176.7 million for the first quarter of 2009. A gain on sale of M&I's merchant processing portfolio of $48.3 million was unique to the current quarter. Wealth Management revenue was $68.1 million for the current quarter, exceeding the same quarter last year by $5.4 million or 9 percent. Assets under management and assets under administration were $32.7 billion and $124.6 billion, respectively, at March 31, 2010, compared to $29.7 billion and $101.5 billion, respectively, at March 31, 2009.
Non-Interest Expense
M&I's non-interest expense was $371.9 million for the first quarter of 2010 compared to $345.5 million for the first quarter of 2009. The Corporation's non-interest expense was down $37.5 million or 9 percent versus the prior quarter. Credit-related expenses (meaning expenses associated with collection efforts and carrying nonperforming assets) were $46.5 million for the current quarter versus $42.0 million in the same period last year and $69.1 million in the prior quarter. After adjusting for certain net credit-related expenses and other one-time items, M&I's efficiency ratio was 56.0 percent in the current quarter.
Loan and Deposit Growth
M&I's average loans and leases totaled $43.5 billion for the first quarter of 2010, decreasing $6.3 billion or 13 percent compared to the first quarter of 2009. When adjusted for the targeted reduction in the Corporation's construction and development portfolio, loans fell $3.0 billion or 7 percent versus the same period last year. Loan balances continued to be negatively impacted by lower utilization rates on commercial lines of credit and the depressed real estate markets.
The Corporation's average deposits totaled $41.9 billion for the first quarter of 2010, rising $2.2 billion or 6 percent versus the first quarter of 2009. M&I's core deposits posted strong growth over the past year, reflecting expanded product offerings. The Corporation's average noninterest bearing deposits totaled $7.8 billion for the first quarter of 2010, increasing $1.3 billion or 21 percent compared to the first quarter of 2009. M&I's average savings accounts totaled $2.6 billion for the first quarter of 2010, increasing $1.7 billion or 191 percent compared to the first quarter of 2009.
Balance Sheet and Capital Management
The Corporation's consolidated assets and total equity were $56.6 billion and $6.9 billion, respectively, at March 31, 2010, compared to $61.8 billion and $6.3 billion, respectively, at March 31, 2009. There were 527.1 million common shares outstanding at March 31, 2010, versus 265.7 million outstanding at March 31, 2009. In the first quarter of 2010, M&I's net loss included $25.1 million or $0.05 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 8.1 percent at March 31, 2010, compared to 6.4 percent at March 31, 2009.
Conference Call
Marshall & Ilsley Corporation will hold a conference call at 11:00 a.m. (Central Daylight Time) Tuesday, April 20, regarding first quarter results. For those interested in listening, please call 1-888-711-1825 and ask for M&I's quarterly results conference call. If you are unable to join us at this time, a replay of the call will be available beginning at 3:00 p.m. on April 20 and will run through 5:00 p.m. May 18, by calling 1-800-642-1687 and entering pass code 647 74 065. Supplemental financial information referenced in the conference call can be found at www.micorp.com, Investor Relations, after 8:00 a.m. on April 20.
About Marshall & Ilsley Corporation
Marshall & Ilsley Corporation (NYSE: MI) is a diversified financial services corporation headquartered in Milwaukee, Wis., with $56.6 billion in assets. Founded in 1847, M&I Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 192 offices throughout the state. In addition, M&I has 53 locations throughout Arizona; 33 offices in Indianapolis and nearby communities; 36 offices along Florida's west coast and in central Florida; 15 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. M&I also provides trust and investment management, equipment leasing, mortgage banking, asset-based lending, financial planning, investments, and insurance services from offices throughout the country and on the Internet (www.mibank.com or www.micorp.com). M&I's customer-based approach, internal growth, and strategic acquisitions have made M&I a nationally recognized leader in the financial services industry.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements regarding expected financial and operating activities and results that are preceded by, followed by, or that include words such as "may," "expects," "anticipates," "estimates" or "believes." Such statements are subject to important factors that could cause M&I's actual results to differ materially from those anticipated by the forward-looking statements. These factors include (i) general business and economic conditions, including credit risk and interest rate risk, (ii) M&I's exposure to increased credit risks associated with its real estate loans, (iii) various factors, including changes in economic conditions affecting borrowers, new information regarding existing loans and identification of additional problem loans, which could require an increase in M&I's allowance for loan and lease losses, (iv) federal and state agency regulation and enforcement actions, which could limit M&I's activities, increase its cost structures or have other negative effects on M&I, (v) M&I's ability to maintain required levels of capital, (vi) the impact of recent and future legislative initiatives on the financial markets or on M&I, (vii) M&I's exposure to the actions and potential failure of other financial institutions, (viii) volatility in M&I's stock price and in the capital and credit markets in general, and (ix) those factors referenced in Item 1A. Risk Factors in M&I's Annual Report on Form 10-K for the year ended December 31, 2009 and as may be described from time to time in M&I's subsequent SEC filings, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect only M&I's belief as of the date of this press release. Except as required by federal securities law, M&I undertakes no obligation to update these forward-looking statements or reflect events or circumstances after the date of this press release.
Marshall & Ilsley Corporation
Financial Information
(unaudited)
Three Months Percent
Ended March 31,
---------------
2010 2009 Change
---- ---- ------
PER COMMON SHARE DATA
---------------------
Diluted:
Net Income (Loss) ($0.27) ($0.44) n.m. %
Basic:
Net Income (Loss) (0.27) (0.44) n.m.
Dividend Declared per Common
Share 0.01 0.01 0.0
Book Value per Common Share 9.95 17.45 -43.0
Common Shares Outstanding
(millions):
Average - Diluted 524.1 264.5 98.1
End of Period 527.1 265.7 98.4
INCOME STATEMENT ($millions)
----------------------------
Net Interest Income (FTE) $409.1 $408.8 0.1%
Provision for Loan and Lease
Losses 458.1 477.9 -4.1
Wealth Management 68.1 62.7 8.7
Service Charges on Deposits 32.1 35.3 -9.1
Mortgage Banking 6.4 10.8 -41.2
Net Investment Securities
Gains (Losses) 0.1 0.1 41.7
Other 120.9 67.8 78.2
----- ----
Total Non-Interest Revenues 227.6 176.7 28.8
Salaries and Employee Benefits 161.6 155.2 4.1
Net Occupancy and Equipment 34.1 33.8 0.9
FDIC Insurance 27.3 15.1 80.4
Intangible Amortization 5.1 5.8 -11.3
Other 143.8 135.6 6.0
----- -----
Total Non-Interest Expenses 371.9 345.5 7.6
Tax Equivalent Adjustment 5.7 7.1 -19.9
--- ---
Pre-Tax Income (Loss) (199.0) (245.0) n.m.
Provision (Benefit) for Income
Taxes (83.6) (153.0) n.m.
----- ------
Net Income (Loss) Attributable
to M&I ($115.4) ($92.0) n.m.
======= ======
Preferred Dividends (25.1) (24.9)
----- -----
Net Income (Loss) Attributable
to M&I Common Shareholders ($140.5) ($116.9) n.m. %
======= =======
KEY RATIOS
----------
Net Interest Margin (FTE) /
Avg. Earning Assets 3.13% 2.82%
Interest Spread (FTE) 2.78 2.48
Efficiency Ratio 58.4% 59.0%
Equity /Assets (End of
Period) 12.15% 10.12%
Marshall & Ilsley Corporation
Financial Information
(unaudited)
As of March 31, Percent
---------------
2010 2009 Change
---- ---- ------
ASSETS ($millions)
------------------
Cash & Due From Banks $589 $745 -21.0%
Trading Assets 255 687 -62.9
Short - Term Investments 2,021 451 347.9
Investment Securities 7,625 7,728 -1.3
Loans and Leases:
Commercial Loans & Leases 12,315 15,108 -18.5
Commercial Real Estate 13,532 12,999 4.1
Residential Real Estate 4,824 5,711 -15.5
Construction and Development 5,106 8,251 -38.1
Home Equity Loans & Lines 4,590 5,025 -8.7
Personal Loans and Leases 2,282 2,151 6.1
----- -----
Total Loans and Leases 42,649 49,245 -13.4
Reserve for Loan & Lease Losses (1,515) (1,352) 12.1
Premises and Equipment, net 558 570 -2.2
Goodwill and Other Intangibles 739 758 -2.6
Other Assets 3,648 2,958 23.4
----- -----
Total Assets $56,569 $61,790 -8.4%
======= =======
LIABILITIES & EQUITY ($millions)
--------------------------------
Deposits:
Noninterest Bearing $7,788 $6,988 11.4%
Interest Bearing:
Savings and NOW 7,373 3,628 103.2
Money Market 12,758 10,614 20.2
Time 13,830 17,725 -22.0
Foreign 233 609 -61.7
--- ---
Total Interest Bearing 34,194 32,576 5.0
------ ------
Total Deposits 41,982 39,564 6.1
Short - Term Borrowings 894 5,336 -83.2
Long - Term Borrowings 5,865 9,539 -38.5
Other Liabilities 958 1,100 -13.0
--- -----
Total Liabilities 49,699 55,539 -10.5
Equity:
Marshall & Ilsley Corporation
Shareholders' Equity 6,859 6,240 9.9
Noncontrolling Interest in
Subsidiaries 11 11 8.5
--- ---
Total Equity 6,870 6,251 9.9
----- -----
Total Liabilities & Equity $56,569 $61,790 -8.4%
======= =======
Three Months
Ended Percent
March 31,
---------
2010 2009 Change
---- ---- ------
AVERAGE ASSETS ($millions)
---------------------------
Cash & Due From Banks $687 $803 -14.5%
Trading Assets 253 585 -56.8
Short - Term Investments 1,721 570 201.8
Investment Securities 7,454 7,689 -3.1
Loans and Leases:
Commercial Loans and Leases 12,687 15,292 -17.0
Commercial Real Estate 13,587 12,872 5.6
Residential Real Estate 4,868 5,768 -15.6
Construction and Development 5,429 8,671 -37.4
Home Equity Loans and Lines 4,645 5,064 -8.3
Personal Loans and Leases 2,318 2,149 7.9
----- -----
Total Loans and Leases 43,534 49,816 -12.6
Reserve for Loan & Lease Losses (1,535) (1,245) 23.3
Premises and Equipment, net 563 569 -1.1
Goodwill and Other Intangibles 741 761 -2.6
Other Assets 3,676 2,889 27.2
----- -----
Total Assets $57,094 $62,437 -8.6%
======= =======
Memo:
Average Earning Assets $52,962 $58,660
Average Earning Assets Excluding
Investment Securities
Unrealized Gains/Losses $52,957 $58,719
AVG LIABILITIES & EQUITY ($millions)
-------------------------------------
Deposits:
Noninterest Bearing $7,819 $6,482 20.6%
Interest Bearing:
Savings and NOW 7,227 3,530 104.7
Money Market 11,936 10,631 12.3
Time 14,680 17,901 -18.0
Foreign 248 1,123 -77.9
Total Interest Bearing 34,091 33,185 2.7
------ ------
Total Deposits 41,910 39,667 5.7
Short - Term Borrowings 1,015 5,724 -82.3
Long - Term Borrowings 6,232 9,571 -34.9
Other Liabilities 928 1,122 -17.4
--- -----
Total Liabilities 50,085 56,084 -10.7
Equity:
Marshall & Ilsley Corporation
Shareholders' Equity 6,998 6,343 10.3
Noncontrolling Interest in
Subsidiaries 11 10 7.9
--- ---
Total Equity 7,009 6,353 10.3
----- -----
Total Liabilities & Equity $57,094 $62,437 -8.6%
======= =======
Memo:
Average Interest Bearing Liabilities $41,338 $48,480
Marshall & Ilsley Corporation
Financial Information
(unaudited)
Three Months Percent
Ended March 31,
---------------
2010 2009 Change
---- ---- ------
CREDIT QUALITY (a)
------------------
Net Charge-Offs ($millions) $423.4 $328.0 29.1%
Net Charge-Offs /Average Loans and
Leases 3.94% 2.67%
Loan and Lease Loss Reserve
($millions) $1,515.2 $1,352.1 12.1%
Loan and Lease Loss Reserve /Period-
End Loans and Leases 3.55% 2.75%
Nonperforming Loans & Leases
($millions) $1,953.8 $2,074.6 -5.8%
Nonperforming Loans & Leases /
Period-End Loans and Leases 4.58% 4.21%
Loan and Lease Loss Reserve /
Nonperforming Loans and Leases* 80% 69%
Nonperforming Assets (NPA)
($millions) $2,408.1 $2,418.9 -0.4%
NPA /Period-End Loans & Leases and
Other Real Estate Owned 5.59% 4.88%
Renegotiated ($millions) $731.8 $446.0 64.1%
Loans past due 90 days or more
($millions) $9.3 $16.1 -42.0%
*Excludes nonperforming loans held
for sale.
MARGIN ANALYSIS (b)
-------------------
Loans and Leases:
Commercial Loans and Leases 4.53% 3.90%
Commercial Real Estate 5.02 5.26
Residential Real Estate 5.15 5.58
Construction and Development 3.74 3.72
Home Equity Loans and Lines 4.98 5.19
Personal Loans and Leases 5.50 5.54
Total Loans and Leases 4.75 4.62
Investment Securities 3.47 4.26
Short - Term Investments 0.26 0.89
Interest Income (FTE) /Avg. Interest
Earning Assets 4.41% 4.50%
==== ====
Interest Bearing Deposits:
Savings and NOW 0.47% 0.13%
Money Market 0.80 0.62
Time 2.22 2.71
Foreign 0.41 0.33
Total Interest Bearing Deposits 1.34 1.69
Short - Term Borrowings 0.27 0.28
Long - Term Borrowings 3.44 4.24
Interest Expense /Avg. Interest
Bearing Liabilities 1.63% 2.02%
==== ====
Net Interest Margin (FTE) /Avg.
Earning Assets 3.13% 2.82%
==== ====
Interest Spread (FTE) 2.78% 2.48%
==== ====
Notes:
(a) Nonperforming assets are comprised of nonaccrual loans & leases
and other real estate owned.
(b) Based on average balances excluding fair value adjustments for
available for sale securities.
SOURCE Marshall & Ilsley Corporation
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