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M&I Posts Loss, Shakes-Up Management

M&I reported its eight consecutive quarterly loss and said both the chairman and chief credit officer were stepping down.



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Marshall & Ilsley

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reported its eight consecutive quarterly loss on Wednesday and announced big changes in management, with both the chairman and chief credit officer stepping down.

The Milwaukee-based regional bank lost $169.2 million, or 32 cents per share, during the third quarter - an improvement from year-ago results, but further in the red than the 25-cent-per-share loss Wall Street had expected.

Mark Furlong, the president and CEO, will take on a third role as chairman, as Dennis Kuester steps down. Chief Credit Officer Mark Hogan also plans to retire at year-end but will serve in an "advisory role" through 2011; Kuester will remain on the board as a director. Ann M. Benschoter, executive vice president of M&I Bank and head of corporate banking will take over Hogan's role on an interim basis.

Furlong characterized the quarterly results as "significantly better" when adjusting for losses related to a "sizeable" business relationship that the bank write off last quarter.

"This continues the progress we have made in addressing asset quality challenges through our early identification of problem credits," said Furlong. "We will remain diligent in continuing to improve our credit profile, but our attention will increasingly shift toward a return to profitability and growth opportunities."

Investors didn't seem to be swayed: M&I shares were shedding 2.3% to $6.96 in early trading.

M&I's results show the challenges that smaller, regional lenders are still facing with asset quality while larger banking peers have largely returned to profitability. But despite the ongoing losses, M&I continued to show improvements in credit quality. Nonperforming loans dropped 11% from the previous quarter and now represent just over 4% of M&I's overall loan portfolio.

The bank's net charge offs and provisions for future losses both climbed to $560 million and $432 million, respectively, but the bank chalked this up to "one sizeable loan relationship associated with the hospitality industry." That soured deal accounted for over $200 million of last quarter's charge-offs and represents $86 million in future risk.

Some additional management changes took place at the bank within M&I's holding company. Thomas Ellis will take over Furlong's role as president of M&I Bank. Bradley Chapin was named head of consumer banking business and Richard Becker head of regional banking.

-- Written by Lauren Tara LaCapra in New York


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