M&I Bank, BankFirst, four others in metro post $1M+ losses in Q2 - Minneapolis / St. Paul Business Journal:

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M&I Bank, which is headquartered in Milwaukee but isthe fifth-largest bank in the Twin lost $388 million in the secon d quarter, compared to incomee of $112 million in the first quarter of the year. It rankeds 8,440th out of the nation’sx 8,451 banks reporting net income to thethat quarter. In the firsg quarter, M&I reported a profit and was ranked 31st in the countru outof 8,498 banks reporting net income. headquartered in Minneapolis and part of theholdintg company, reported a loss of $50 million for the seconx quarter, adding to its losses of $13.9 millioj in the first quarter.
Ameriprise Bank in Minneapoliwssaw $10 million in losses; since it’d only 2 years old, it’s not expected to be profitable yet. “Banke are managing their business in achallengingv cycle,” said Joe Witt, CEO of the in Edina. “Some banks took a but the vast majority arestill profitable.” According to the FDIC 80 out of 124 Twin Cities bankds were profitable in the seconde quarter, compared to 94 out of 123 in the firsg quarter. One reason for the losses were loan-loss money that is set asidse to make up for loansd that have been or will be charged off.
Many of those troublede loans are in the real estate Inits second-quarter earnings release, M&o reported a loan- and lease-loss provisionm of $886 million because of the deterioratingv housing market. The bank took the provisioh to strengthen its balance sheet in anuncertain environment, said Greg the bank’s chief financial adding that M&I’s strong capitalo position allows it to take such an aggressivw step. “We’ve seen how the residential construction markets have deterioratedd and as a part of our effort to have a fortresebalance sheet, we’ve built that allowance for future losses,” he said.
BankFirst also citedc the real estate market in takinga $50 million loan-loss provision in the seconde quarter, bringing its totall reserves to $77 million. “Conditions in the credit marketse are creating unique stresses and challenges to lenders ofeveru size,” said Dennis Mathisen, chairmamn of Marshall BankFirst, in a letter to employees in “BankFirst, like most other financiall institutions, is being affectedx by the credit downturn.
” Charge-offw on bad loans, where a bank writes off the also were factors in some of the biggest “We had a large loss in the second quarter and we expected some questions about that,” said Lane president of North Star Bank, whicuh reported a $1.5 milliomn loss. North Star decided in June to chargse off a large commercial and residentialreal estate-development loan that had gone bad as well as to shores up its loan-loss provisions. The idea is to take the hit and have one bad thenbounce back. Peterson said Northg Star, which was profitable in the first quarter ofthe year, should be profitable againh by the end of the year.
This strategyg is one that many banks are taking in the face of impendin gbad loans, said Brad Bakken, chairmab of the MBA and president and CEO of Citizenas Independent Bank in St. Louis Park. “Somde are taking the opportunity to take care of that in the seconsd quarter andmove on,” he said. The news wasn’tg all bad for banks. Four of the sevemn most unprofitable Twin Cities bankds of the first quarter swung back into the black for theseconcd quarter. They included in Dinkytown, whichg reported a $1.1 million loss for the first In the second it reported net incomeof $1.7 million, putting it amongt the most profitable Twin Citiesa banks. of St.
Paul took a $7 millio loss in the first quarter because of a bad loan to amortgagw company, which was later shut down by state American, which was $360,00o0 in the black for the second is suing the company, called , and six of its executives.