June 11, 2008 / 1:09 PM / 11 years ago

UPDATE 1-Goldman adds Marshall & Ilsley to conviction sell

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 June 11 (Reuters) - Marshall & Ilsley Corp's MI.N
larger-than-average exposure to the construction sector will
likely result in "elevated" loan losses this quarter, according
to Goldman Sachs & Co, which added Wisconsin's largest bank to
its "conviction sell" list.
 Twenty percent of the bank's loan portfolio is made up of
construction loans, nearly twice the industry average, and
includes $1.6 billion of high-risk residential land exposure in
Arizona, analyst Brian Foran said in a note to clients.
 The portfolio in Arizona, one of the states hardest hit by
the nation's housing slump, had a mark-to-market loan-to-value
ratio of 104 percent at the end of March, reflecting declining
home prices. Generally, mortgage portfolios with high LTV
ratios are seen as higher risk.
 Foran said he expects Milwaukee-based Marshall & Ilsley's
stock to trade about 12 percent below its current level.
 U.S. banks have been battered by mounting loan losses as
the slumping economy, skidding housing markets, record oil
prices, rising unemployment and tighter credit conditions make
it harder for borrowers to stay current on their debts.
 Goldman Sachs said it lowered its profit per share
estimates on Marshall & Ilsley to 31 cents for the second
quarter, and to $1.40 from $1.80 a share for the year. It also
lowered its 12-month price target to $18 from $21. It rates the
bank "sell."
 Shares of Marshall & Ilsley were down nearly 5 percent at
$19.35 in pre-market trading. They had closed at $20.34 Tuesday
on the New York Stock Exchange.
 (Reporting by Dhanya Skariachan in Bangalore; Editing by
Jarshad Kakkrakandy)

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