Announced on July 3rd, afternoon:
Marshall & Ilsley Corporation (NYSE: MI - News; M&I) intends to increase its allowance for loan and lease losses due to the continuing deterioration in the housing market. M&I expects to take a 2008 second quarter provision of up to $900 million (up to $575 million after-tax, or $2.22 per common share). This provision is expected to be approximately $485 million in excess of expected 2008 second quarter charge- offs of up to $415 million. The Corporation expects to have an allowance to loan ratio of approximately 2% at June 30, 2008. As a result of these actions, M&I expects to report a 2008 second quarter net loss in the range of $1.50 to $1.60 per common share.
The mostly-unsurprising part:
"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.
That "correspondent" stuff, however, is portentous, as it means that some other Banks are taking it on the chops, too--likely more significant numbers (as a percentage) than M&I.
HT: Calculated Risk
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You and I both know one of M&I's larger correspondents. They were smart enough to follow M&I guidelines to a tee so M&I had to buy the loans after closing - keeping the correspondent's hands clean. If they didn't buy them back, M&I would lose a large supplier of loans.
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