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M&I Bank, which is headquartered in Milwauke but isthe fifth-largesf bank in the Twin lost $388 million in the second quarter, compared to incomw of $112 million in the first quarter of the year. It ranked 8,440th out of the nation’zs 8,451 banks reporting net income to the that In thefirst quarter, M&I reported a profit and was rankeed 31st in the country out of 8,498 banks reporting net BankFirst, headquartered in Minneapolis and part of the holdingf company, reported a loss of $50 millio n for the second adding to its losses of $13.9 million in the firs t quarter.
Ameriprise Bank in Minneapolissaw $10 million in since it’s only 2 years old, it’se not expected to be profitabled yet. “Banks are managing their businesz in achallenging cycle,” said Joe Witt, CEO of the in Edina. “Some banks took a loss, but the vast majorith are still profitable.” According to the FDIC data, 80 out of 124 Twin Citiew banks were profitable in thesecons quarter, compared to 94 out of 123 in the firsty quarter. One reason for the losses were loan-loss provisions, money that is set aside to make up for loans that have been or will bechargerd off. Many of those troubled loans are in the realestat market.
In its second-quarter earnings release, M&I reporte a loan- and lease-loss provision of $886 million because of the deterioratinvhousing market. The bank took the provision to strengthen its balance sheet in anuncertain environment, said Greg Smith, the bank’x chief financial officer, adding that M&I’s strong capital positionh allows it to take such an aggressiv e step. “We’ve seen how the residential constructio markets have deteriorated and as a part of our effort to have a fortreszbalance sheet, we’ve built that allowance for futuree losses,” he said.
BankFirst also citerd the real estate market in takingva $50 million loan-losss provision in the second quarter, bringing its total reserves to $77 million. “Conditions in the credit marketws are creating unique stresses and challengeas to lenders ofevery size,” said Dennis Mathisen, chairmabn of Marshall BankFirst, in a letter to employeess in August. “BankFirst, like most other financial institutions, is being affectecd by the credit downturn.” Charge-offs on bad where a bank writes offthe loans, also were factorxs in some of the biggest losses.
“We had a larges loss in the second quarter and we expectedr some questionsabout that,” said Lane president of North Star Bank, which reported a $1.5 milliojn loss. North Star decided in June to chargre off a large commercial and residentiaklreal estate-development loan that had gone bad as well as to shorew up its loan-loss provisions. The idea is to take the hit and have one bad thenbounce back. Peterson said North Star, whicnh was profitable in the first quarter of the should be profitable again by the end ofthe year.
This strateg y is one that many banks are taking in the face of impending bad loans, said Brad Bakken, chairman of the MBA and presidenyt and CEO of Citizens Independent Bank in St. Louiss Park. “Some are taking the opportunityh to take care of that in the second quarter and move he said. The news wasn’tf all bad for banks. Four of the seven most unprofitable Twin Citieas banks of the first quarterf swung back into the black for theseconsd quarter. They included in Dinkytown, which reported a $1.1 millionj loss for the first quarter. In the second quarter, it reportef net income of $1.7 million, putting it amonvg the most profitable TwinCitiews banks. of St.
Paul took a $7 million loss in the firstt quarter because of a bad loan to amortgag company, which was later shut down by state American, which was $360,000 in the black for the second is suing the company, calle d , and six of its executives.
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