NEW YORK ( TheStreet) -- Despite Marshall & Ilsley's ( MI) "significant underperformance," one bank analyst with a sell rating on the company doesn't think it will go the way of Wilmington Trust ( WL), which announced an agreement for a discounted sale to M&T Bank Corp. ( MTB - Get Report) last month.

Marshall & Ilsley's shares closed at $5.60 Friday, up 3% over the past year. The company was included among TheStreet's 10 Bank M&A Targets before its third-quarter results were announced and 10 High-volume Bank Stocks with Upside, which was based on consensus price targets among analysts polled by Thomson Reuters.

In a report published Monday reiterating his "underweight" rating on Marshall & Ilsley's shares, Evercore Partners analyst Andrew Marquardt said there was "growing investor concern that MI may indeed be the next Wilmington Trust, implying a distressed sale at deep discount," but went on to say that he doesn't believe this will happen because the Milwaukee-based lender is aggressively addressing its credit problems through write-downs and asset sales. He also cited board of directors support for CEO Mark Furlong, who was recently appointed as Chairman.

Still, Marquardt said Marshall & Ilsley faces a host of challenges, including "lingering credit issues, lack of profitability and eroding capital." The company owes the government $1.7 billion for bailout assistance received in November 2008.

The company had $52 billion in assets as of September 30, and nonperforming assets - including loans past due 90 days, nonaccrual loans and repossessed assets - made up 3.91% of total assets, improving from 4.18% the previous quarter and 4.46% a year earlier, according to data supplied by SNL Financial.

The company reported a third-quarter net loss to common shareholders of $169.2 million, or 32 cents a share, compared to a loss of $173.8 million, or 33 cents a share, the previous quarter and a loss of $248.4 million, or 68 cents a share, a year earlier.

Net loan charge-offs totaled $560.3 million during the third quarter, and with a provision for loan losses of $431.7 million, the company "released" $128.6 million in reserves, following the trend for several of the largest U.S. banks, including Citigroup ( C - Get Report) , which saw its loan loss reserves decline by $2.5 billion during the third quarter, along with Bank of America ( BAC - Get Report) and JPMorgan Chase ( JPM - Get Report), which both reported reserves declining by $1.7 billion during the quarter.

Marquardt lowered his price target for the shares to $5.50 from $6.00 saying it may take longer than his firm previously expected for Marshall & Ilsley to return to normalized earnings, "given lingering credit issues and still highly uncertain earnings power.

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-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.