Marshall & Ilsley Profit Up on Metavante Spinoff

NEW YORK (Reuters) - Marshall & Ilsley Corp MI.N, Wisconsin's largest bank, said on Tuesday gains from its spinoff of Metavante Technologies MV.N helped fourth-quarter profit more than double, but soaring credit costs led to a loss from continuing operations that sent its shares lower.

Net income for the Milwaukee-based company rose to $493.9 million, or $1.83 a share, helped by a $526 million gain from the spinoff of Metavante on Nov. 1. In the year-earlier period it earned $205.4 million, or 79 cents.

Excluding Metavante and other one-time items, M&I reported a loss from continuing operations of $24.5 million, or 9 cents a share, compared with income from operations of $161.4 million, or 62 cents, a year earlier.

On that basis, analysts’ average profit forecast was 19 cents a share, according to Reuters Estimates. M&I shares fell $1.10, or 4.4 percent, to $23.79 in morning trading.

A slowing housing market and weakening economy is fueling a sharp increase in loan defaults and late payments, and that is taking a big bite out of bank earnings.

After reviewing its construction and development portfolio, M&I recorded $192 million in charge-offs and boosted its loan loss provision more than twelvefold to $235.1 million. The net charge-off ratio rose to 1.67 percent from 0.14 percent.

Adjusting for asset sales and purchases, M&I said average loans and leases rose 7 percent to $45.4 billion from a year ago, while its lending profit margin widened from the second quarter to 3.13 percent.

Other one-time items in the quarter included a small gain from selling Oklahoma branches, the retirement of some debt securities and its share of damages that credit card association Visa will pay for an antitrust settlement.

Reporting by Joseph A. Giannone; Editing by Maureen Bavdek