If you would have told me two years ago that Marshall & Ilsley Corp. would one day be losing more than $2 billion, mostly because of bad real estate investments, I would have chuckled and then politely asked you, "Man, what have you been smoking?"

But fast forward to this week. The Milwaukee-based parent company Monday reported a revised 2008 fourth quarter net loss of $1.9 billion, or $7.25 per share. The revision was driven entirely by a non-cash goodwill impairment charge. The corporation had initially reported a 2008 fourth quarter net loss of $404 million, or $1.55 per share.

M&I also reported a revised net loss of $2.1 billion, or $7.92 per share, for the full fiscal year of 2008.

"The goodwill impairment charge was driven by the decline in M&I's stock price and the deteriorating economy," said Greg Smith, senior vice president and chief financial officer of M&I.

To put this in perspective, M&I has long been notorious for having one of the most conservative, buttoned-down, non-adventurous corporate cultures in the Wisconsin banking industry.

In recent years, the bank was seeing a growing number of its elderly (and affluent) clients moving to warmer climates in retirement. Those customers wanted to continue doing banking with their hometown bank, but their winter hometowns were moving south.

M&I made the strategic decision to expand to where their clients are going. The bank opened up branches in Arizona and Florida and gave loans to people buying real estate there.

At the time, the M&I expansion to the south seemed to make perfect sense. Real estate was generating double-digit returns.

In hindsight, we now know that Arizona and Florida are two of the worst-hit real estate bubble markets, and the collapse of those markets and the foreclosures that ensued inflicted a horrible pounding on M&I's bottom line.

Robert W. Baird & Co. Inc. analyst David George, who covers M&I's stock, noted in his most recent research note that he foresees additional real estate-generated pain for M&I.

"Historically, the company has had one of the better credit track records in the industry. In a normalized environment, M&I consistently posted superior credit quality trends relative to most regional banks. In recent quarters, however, non-performing loans have risen materially, due primarily to weakness in the company's commercial real estate (CRE) portfolio, with weakness in some of the company's newer markets such as Arizona and Florida," George wrote.

"We expect continued degradation in credit trends to weigh on the valuation of the stock and could drive further additions to the company's loan loss reserve. To the extent the economy continues to deteriorate at a deeper and prolonged state, MI could experience higher losses in C&I and consumer lending."

If M&I is headed for continued tough times, its management team is not flinching.

A check of the insider training board reveals that M&I insiders have been buying up the company's stock in recent weeks.

M&I chief executive officer Mark Furlong bought 36,000 shares at $3.12 per share, for a total investment of $112,316.40 on Feb. 20. Smith bought 5,000 shares at $3.43 per share, for a total value of $17,149.50, on the same day.

Other recent M&I insider stock purchases from directors or officers have included: Ted Kellner, $218,595 in stock; John Shiely, $67,577; Randall Erickson, $6,220; Jonathan Chait, $4,138; and John Daniels Jr., $3,770.

In theory, the fact that M&I insiders are buying the company's stock, rather than bailing from it, is a sign that the company's leadership team believes it will rebound from this wretched economy.