Marshall & Ilsley Corp. (MI) said on Tuesday that it anticipates a third-quarter loss due primarily to a higher loan loss provision for bank holding company loans.

The company expects to report a loss of 68 cents to 70 cents per share for the quarter as its allowance for loan and lease losses as a percentage of total loans and leases is expected to rise slightly over 3%.

The firm said that it will make a loan loss provision of $390 million to $400 million for the quarter and would make a special provision of about $185 million for certain bank holding company loans.

As a result of delays in raising capital, deterioration in loan portfolios and regulatory actions against some bank holding companies, total amount of loan and lease losses for the quarter are expected to range between $575 million and $585 million.

The bank said it expects net charge-offs in the quarter to reach as much as $540 million. The early stage loan delinquencies declined by $220 million, or 20%, for the period between June 30 and Sept 30.

The company is scheduled to release its third quarter results on Oct 22.

Marshall & Ilsley is a diversified financial services company, providing its clients with trust and investment management, equipment leasing, mortgage banking, financial planning, insurance, and other bank related services. In addition to its financial services, the company’s wholly owned technology subsidiary, Metavante Corp., provides technology support services to financial services companies.

The bank continues to suffer from its exposure to construction and residential development loans in Arizona, Florida’s west coast and certain correspondent channels. The management has taken aggressive steps in identifying credit issues and building capital, which we believe will help the company to take advantage of opportunities going through the cycle than most of its peers. However, worse credit quality, lack of core deposit growth and continuous pricing pressures on both sides of the balance sheet will be a drag on upcoming results.

Zacks Investment Research
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