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Marshall & Ilsley has big loss

NEW YORK (Reuters) - In a bad sign for other regional banks, Marshall & Ilsley Corp MI.N said it was slashing its dividend and cutting its workforce and posted a surprising fourth-quarter loss as bad loans surged.

Shares of Wisconsin’s largest bank fell $2.40, or 22.4 percent, to $8.32 in morning trading and touched their lowest level in well over a decade.

The Milwaukee-based lender said it slashed its quarterly dividend to 1 cent per share from 32 cents, ending 36 years of increases. It is cutting 830 jobs, or 8 percent of the total. It said 80 percent of the cuts had already been made.

It also began a program to reduce costs by $100 million a year, and said no executive officers will receive bonuses for 2008.

In the fourth quarter, Marshall & Ilsley increased the amount set aside for bad loans to $850.4 million from $235.1 million, as commercial and construction loan losses surged, especially among residential developers and in the states of Arizona and Florida. Net charge-offs more than tripled to $679.8 million.

“The nation’s current recessionary climate is unlike any we have experienced,” Chief Executive Mark Furlong said in a letter to shareholders.

Marshall & Ilsley’s net loss for the quarter was $403.9 million, or $1.55 per share, including a $9 million pre-tax charge for job cuts. Analysts on average expected a profit of 7 cents per share, according to Reuters Estimates.

A year earlier, the bank had a profit of $493.9 million, or $1.86 per share, thanks to a gain from the spinoff of its Metavante Technologies Inc MV.N unit.

The bank obtained $1.72 billion under the U.S. Treasury’s $700 billion Troubled Asset Relief Program and said it has used about $1.3 billion of it for lending.

Analyst Ken Zerbe of Morgan Stanley wrote that the bank’s “formerly strong capital position has now fallen noticeably below its peers. We still see further credit deterioration as a headwind for the stock.”

Marshall & Ilsley is the first large U.S. regional bank to report fourth-quarter results. The banking industry is expected to report its first overall quarterly loss since 1990, as loan losses and writedowns soar.

JPMorgan Chase & Co JPM.N on Thursday reported a 76 percent decline in fourth-quarter profit, hurt by rising credit losses.

Founded in 1847, Marshall & Ilsley operates more than 370 branches in several U.S. states, including 193 in Wisconsin. It ended 2008 with $63.8 billion of assets.

Reporting by Jonathan Stempel, editing by Maureen Bavdek and John Wallace

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