Milwaukee-based M&I Bank says it has stopped writing new construction and development loans in Arizona and Florida and will focus on cutting in half the size of its portfolio in the two states over the next three years.

Mark Furlong, president and CEO, told American City Business Journals it has established a "special assets division" to sell off delinquent and foreclosed properties.

For the future, he said, M&I will focus its construction lending in the Midwest markets it serves and look to do more retail and mortgage residential lending in Arizona and Florida.

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M&I's loans for residential construction and raw ground in Arizona and Florida accounted for $33.1 million, more than 88 percent, of the bank’s increase in nonperforming loans in the last quarter.