Marshall & Ilsley posts wider 1st-quarter loss as charge-offs increase but tops Street view

Marshall & Ilsley 1Q loss widens on bad loan spike

MILWAUKEE — Regional bank Marshall & Ilsley Corp. posted a wider first-quarter loss Tuesday, as gains from deposits and wealth management fees failed to offset a jump in write-offs of bad loans.

Results still topped Wall Street expectations, however, and shares gained ground as the company said early-stage delinquencies declined for the fourth straight quarter to the lowest level since December 2007.

“Our first-quarter results reinforce our confidence that a credit quality recovery is underway at M&I,” said president and CEO Mark Furlong. M&I said it continued to address credit quality during the quarter by identifying and writing down troubled assets, selling problem loans and reducing exposure to construction and development loans.

After paying preferred dividends, the company lost $140.5 million, or 27 cents per share, compared with a loss of $116.9 million, or 44 cents per share, in the first quarter of 2009.

Marshall & Ilsley had nearly twice as many shares outstanding in the recent quarter as it did last year, which reduced the loss per share. The results also included a one-time gain of $48.3 million on the sale of M&I’s merchant processing portfolio.

Analysts polled by Thomson Reuters, on average, had expected a wider loss of 40 cents per share.

Non-interest income, or revenue derived from fees and other charges, rose to $227.6 million from $176.7 million a year ago. And wealth management revenue improved 9 percent to $68.1 million. Assets under management climbed to $32.7 billion from $29.7 billion last year as the market recovered, while assets under administration rose to $124.6 billion from $101.5 billion.

The bank reduced the amount of money it set aside for loan and lease losses by 4 percent to $458.1 million. But net charge-offs — or loans written off as unpaid — shot up 29 percent to $423.4 million, from $328 million last year. Nonperforming assets — loans carrying past due payments that are in danger of being written off — edged lower for the third straight quarter to $2.41 billion from $2.42 billion.

Net interest income, or money earned from deposits, was flat at $409.1 million, versus $408.8 million in the 2009 first quarter. Average deposits rose 6 percent from last year to $41.9 billion, though average loans and leases slid 13 percent to $43.5 billion.

In heavy midday trading, Marshall & Ilsley shares gained 68 cents, or 8 percent, to $9.09. The stock has changed hands between $4.05 and $10.79 in the past 52 weeks.