M&I Loan-Loss Hike Spurs Downgrade

Citing deterioration in the housing market, Milwaukee-based Marshall & Isley Corp. has announced plans to take a second-quarter provision of up to $900 million for loan and lease losses, prompting Fitch Ratings to downgrade the company's short-term Issuer Default Rating. M&I said the provision is expected to be approximately $485 million greater than expected second-quarter chargeoffs of $415 million. The company said it expects to report a loss of $1.50-$1.60 per share for the second quarter. "The continuing deterioration in the housing market, particularly in Arizona, on Florida's west coast, and in selected relationships in our correspondent business, makes this the prudent action to take at this time," said Mark F. Furlong, M&I's president and chief executive officer. Fitch, reporting that M&I's net loss is expected to be around $400 million in the second quarter, lowered the short-term IDRs of the parent company and its subsidiary banks from F1-plus to F1 and their individual ratings from A/B to B. Fitch also placed the company's A-plus long-term IDR and other long-term ratings on Rating Watch Negative. "While [M&I's] problematic areas of its loan portfolio appear to be well contained, construction and land development are sizable exposures for the company," Fitch said. M&I can be found online at http://www.micorp.com.