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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-K
_______________________
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-1220
MARSHALL & ILSLEY CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-0968604
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
770 North Water Street
Milwaukee, Wisconsin 53202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 765-7801
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - $1.00 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates of
the registrant is $1,295,000,000 as of February 28, 1994. The number of shares
of common stock outstanding as of February 28, 1994 is 60,232,560.
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PART I
Item 1. Business.
THE CORPORATION
Marshall & Ilsley Corporation ("M&I" or the "Corporation") is a Wisconsin
corporation incorporated in 1959 as a registered bank holding company under the
Bank Holding Company Act of 1956, as amended. M&I's principal assets are the
stock of its subsidiaries. M&I presently owns substantially all the capital
stock of 36 banks with a total of 129 offices in Wisconsin and 12 offices in
Arizona. M&I also owns all of the stock of a number of companies engaged in
businesses that the Federal Reserve Board (the "Board") has determined to be
closely-related to banking, including the businesses of investment management,
trust, insurance agency, equipment leasing, mortgage banking, venture capital,
brokerage services, financial advisory services, and data processing. As a
bank holding company, M&I provides financial and managerial assistance and
services to its subsidiaries. At December 31, 1993, M&I had consolidated total
assets of approximately $8.0 billion and consolidated total deposits of
approximately $6.2 billion. Based on consolidated assets as of December 31,
1993, M&I was the second largest bank holding company headquartered in the
State of Wisconsin.
The executive offices of M&I are located at 770 North Water Street,
Milwaukee, Wisconsin 53202 (telephone number: (414) 765-7801).
Pending Merger with Valley Bancorporation
On September 19, 1993, M&I entered into an Agreement and Plan of Merger
("Merger Agreement") with Valley Bancorporation ("Valley") which provided for,
among other things, the merger of Valley with and into M&I (the "Merger"). The
Merger Agreement provides that each share of Valley common stock outstanding
at the effective date of the Merger will be converted into 1.72 shares of M&I
common stock. The Merger Agreement was approved by the shareholders of M&I and
Valley on February 15, 1994. Completion of the Merger is subject to the
conditions set forth in the Merger Agreement, including receipt of all required
regulatory approvals. M&I currently expects the Merger to be completed in the
second quarter of 1994. The foregoing description of the Merger and the Merger
Agreement is qualified in its entirety by reference to M&I's Registration
Statement on Form S-4 (Reg. No. 33-51753) and M&I's Form 8-K dated February 23,
1994 as filed with the Securities and Exchange Commission.
Valley is a Wisconsin corporation incorporated in 1962 and a registered
bank holding company under the Bank Holding Company Act of 1956, as amended and
registered savings and loan holding company under the Home Owners' Loan Act of
1933, as amended. Valley's principal assets are the stock of its subsidiaries.
Valley presently owns substantially all of the capital stock of 15 banks and
2 savings associations with a total of 160 offices in Wisconsin. Valley also
owns several companies engaged in businesses which are closely related to
banking, including the businesses of trust and fiduciary services, credit card
products and processing, brokerage services, mortgage banking and insurance
agency services. Valley provides financial and managerial assistance and
services to its subsidiaries. At December 31, 1993, Valley had consolidated
total assets of approximately $4.6 billion, consolidated total deposits of
approximately $4.0 billion, and consolidated shareholders' equity of
approximately $366 million.
BUSINESS OF M&I
M&I, through its subsidiaries, engages principally in one line of
business, that of providing financial services to a wide variety of corporate,
institutional, government and individual customers. Activities in which M&I
and its subsidiaries are presently engaged or may undertake in the future are
subject to certain statutory and regulatory restrictions. In addition,
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applicable law and regulations limit the amount of dividends payable to M&I by
its bank subsidiaries (which indirectly limits the amount of dividends payable
by M&I to its shareholders), the amount of loans made by M&I's bank
subsidiaries to any one borrower, the amount of funds transferred by M&I's bank
subsidiaries to M&I's other subsidiaries, and the total assets owned by M&I in
relation to its capital (which indirectly limits the total income generated by
M&I). See "Government Supervision and Regulation."
As a registered bank holding company, M&I owns directly or indirectly all
or substantially all of the capital stock of 35 commercial banks in Wisconsin
and one commercial bank in Phoenix, Arizona, and all of the capital stock of
subsidiaries engaged in the following non-banking businesses approved by the
Board for bank holding companies: personal property lease financing;
investment management and advisory activities; data processing services and
software sales to financial institutions; commercial mortgage banking;
residential mortgage banking; venture capital and financial advisory services;
trust services to residents of Wisconsin, Arizona and Florida; brokerage
services; and general insurance agency activities.
The Bank Holding Company Act and rules promulgated thereunder authorize
M&I to engage in activities deemed by the Board to be so closely related to
banking as to be a proper incident thereto. Financial services and products
which are or may be provided by M&I and its direct and indirect subsidiaries
are subject to certain statutory and regulatory restrictions. See "Government
Supervision and Regulation."
M&I's principal role is to provide its subsidiaries with financial and
managerial assistance. M&I assists its subsidiaries in such areas as
budgeting, tax planning and compliance, asset and liability management,
investment administration and portfolio planning, business development,
advertising, and human resources management. Although the officers and
directors of each subsidiary are responsible for conducting the day to day
affairs of the subsidiary, M&I establishes lending and accounting policies,
budgetary goals and long-range plans and assures compliance therewith through
its centralized audit and accounting systems and loan examinations.
M&I derives substantially all its income from investments in, advances
to and service fees from its subsidiaries. Dividends and interest from
subsidiaries are M&I's major sources of cash. Dividend payments from
subsidiaries are determined on an individual basis and generally in relation
to the earnings, credit quality and capital position of each subsidiary. M&I
increases the capital of its banking subsidiaries primarily through the
retention of earnings and, if necessary, the purchase of securities by M&I,
rather than through direct capital financing by the subsidiary banks. However,
the subsidiary banks may issue debt securities directly in order to fund their
operations.
BANKING AND BANK-RELATED SUBSIDIARIES
M&I's 36 bank subsidiaries ("M&I bank subsidiaries") are located in
communities throughout the State of Wisconsin and the Phoenix, Arizona
metropolitan area and provide a full range of banking services to individuals,
corporations and local governments in each of the areas they serve. M&I's
largest bank subsidiary is M&I Marshall & Ilsley Bank ("M&I Bank"), which was
founded in 1847. Based on consolidated assets of approximately $2.8 billion
as of December 31, 1993, M&I Bank was the third largest bank and the largest
state-chartered bank in the State of Wisconsin. M&I Bank maintains its
headquarters in the City of Milwaukee and operates 23 additional branches and
divisions in Milwaukee and in surrounding suburban communities, as well as a
branch in the Cayman Islands. Banking services provided by M&I Bank and other
M&I bank subsidiaries include retail, international and corporate banking,
investment, trust and insurance agency activities. In addition, M&I Bank
engages in correspondent banking services.
All M&I bank subsidiaries are members of the Federal Deposit Insurance
Corporation ("FDIC"). In addition, M&I Bank and M&I's seven national bank
subsidiaries are members of the Federal Reserve System (the "System"). All M&I
bank subsidiaries operate under names which incorporate the designation "M&I."
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Insurance Agencies
M&I offers insurance agency services through M&I Insurance Services,
Inc., a subsidiary of a state chartered subsidiary bank with offices located
in numerous communities throughout Wisconsin. M&I, through its subsidiaries,
offers a full line of annuity, life, health and casualty insurance products.
Investment Management and Trust Services
M&I Investment Management Corp., a subsidiary of M&I, located in
Milwaukee, Wisconsin, offers a full range of asset management services to the
M&I trust company subsidiaries and to other corporate, institutional and
individual customers, including the Marshall Funds, an open-end investment
company consisting of six portfolios. As of December 31, 1993, M&I Investment
Management Corp. had $5.7 billion in assets under management.
Marshall and Ilsley Trust Company, a subsidiary of M&I ("M&I Trust"),
provides a full range of trust services to individual, not-for-profit and
corporate customers. The Personal Trust Administrative Group provides trust,
estate and agency services for individuals. The Employee Benefits
Administrative Group administers pension, profit sharing and other forms of
employee benefit plans, including a Keogh Plan for self-employed individuals.
In addition to trust services provided by its Milwaukee office, M&I Trust
operates six trust service offices located in M&I subsidiary banks in Beloit,
Madison, Racine, Stevens Point, Watertown and Wausau, Wisconsin, and another
office in Brookfield, Wisconsin (not a trust service office).
M&I also provides trust and investment counseling services through two
out-of-state subsidiaries. M&I Marshall and Ilsley Trust Company of Arizona
("M&I Trust Arizona") was organized in 1976, with a primary emphasis on
providing trust and investment counseling services to the growing number of
Wisconsin natives retired in the Southwest. M&I Trust Arizona has offices in
Phoenix and in Sun City serving residents of those areas. The Marshall and
Ilsley Trust Company of Florida, located in Naples, was organized in 1984 to
provide trust and investment counseling services to residents of the area,
including Wisconsin natives who have retired in Florida. As of December 31,
1993, the market value of assets held in trust by the three trust companies
totalled $17.3 billion.
Equipment Leasing
M&I's subsidiary, M&I First National Leasing Corp. ("FNL"), acting as
owner and lessor, leases a variety of equipment and machinery, including
industrial machinery, computers, hospital and nursing home equipment and
construction equipment to both large and small businesses. FNL has its
headquarters in Milwaukee, Wisconsin and has offices in numerous other states.
Approximately 28% of its business comes from Wisconsin and 72% from other
states. At December 31, 1993, FNL held net lease and installment receivables
of approximately $236 million. FNL's competitors include other independent
leasing companies, banks and other institutions, some of which have larger
volume businesses and substantially greater resources.
Mortgage Banking
M&I has two subsidiaries engaged in mortgage banking, one providing
commercial financing and the other providing residential financing.
M&I Mortgage Corp. ("M&I Mortgage"), located in Milwaukee, Wisconsin,
with offices in Green Bay, La Crosse and Madison, Wisconsin, originates and
purchases long-term mortgages on one-to-four family owner-occupied residences
for sale in the secondary market. After sale to the secondary market, these
mortgages are serviced for the investor by M&I Mortgage. At December 31, 1993,
M&I Mortgage had a mortgage servicing portfolio of approximately $1.9 billion.
M&I Mortgage serves homeowners throughout the State of Wisconsin and offers
financing alternatives beyond those offered through traditional banking
institutions. M&I Mortgage also assists M&I bank subsidiaries in originating,
selling and servicing residential mortgage loans.
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Richter-Schroeder Company ("RSC"), located in Milwaukee, Wisconsin,
originates long-term commercial real estate loans for institutional investors
such as large life insurance companies. RSC services the mortgages for the
purchasing investor. RSC is one of the few mortgage banking firms in Wisconsin
that specializes in income property financing, seeking investment opportunities
for mortgage lenders in the retail, industrial and office sectors. RSC is one
of the largest income property mortgage banking firms in Wisconsin, servicing
a portfolio of approximately $235 million for investors.
Venture Capital and Financial Advisory Services
M&I Capital Markets Group, Inc. ("Capital Markets"), a subsidiary of M&I,
located in Milwaukee, Wisconsin, provides venture capital and financial
advisory services to a variety of customers, primarily in Southeastern
Wisconsin and surrounding areas. Capital Markets seeks to invest in businesses
that have talented management and technological advantages in their particular
field. Capital Markets also provides a broad range of financial advisory and
strategic planning services, including assistance in connection with the
private placement of securities, raising of funds for expansion, leveraged buy-
outs, divestitures and mergers and acquisitions. A subsidiary company of
Capital Markets, M&I Ventures Corporation, is licensed as a small business
investment company.
Brokerage Services
M&I Brokerage Services, Inc. ("M&I Brokerage"), a subsidiary of M&I
Capital Markets Group, Inc., located in Milwaukee, Wisconsin, provides
brokerage and other investment related services to a variety of retail and
commercial customers. As a broker-dealer firm registered with the National
Association of Securities Dealers and the Securities Exchange Commission, M&I
Brokerage serves as an introducing broker-dealer. Customer accounts and
securities are carried on a "fully disclosed" basis with the Pershing division
of Donaldson, Lufkin and Jenrette.
Data Services
M&I Data Services, Inc. ("M&I Data Services"), a subsidiary of M&I, is
a major supplier of data processing services and software to financial
institutions in the United States, including M&I and the M&I bank subsidiaries.
M&I Data Services presently serves over 500 financial institutions in 40 states
and the District of Columbia. In addition to data processing services, M&I
Data Services develops a comprehensive line of financial services software
products. M&I Data Services also sells software to foreign financial
institutions, and has contracts with sixteen foreign based institutions,
including banks in Canada, Great Britain, India, Indonesia, Italy, Malaysia,
Switzerland and Thailand. M&I Data Services' processing systems encompass five
major processing functions: Deposits, Loans, Financial Accounting, Customer
Information and Trust Accounting.
M&I Data Services' main data processing center and headquarters are
located in a 328,000 square foot building on 20 acres of land situated in Brown
Deer, a Milwaukee suburb, (the "Brown Deer Operations Center"). A new addition
that nearly doubled the size of the Brown Deer Operations Center was completed
in 1993. M&I Data Services also leases 50,000 square feet of commercial office
space in Brown Deer for the development and sale of software packages, the sale
and support of personal computer networks and the development and support of
trust processing services. The Brown Deer Operations Center acts as an
intermediary in bank-to-bank transactions and provides funds processing
services in connection with both incoming deposits and outgoing payments,
including transfers by check and by the bank's wire and money transfer systems.
M&I Data Services operates eight remote processing centers in Arizona,
Illinois, New York, Florida and Wisconsin. All remote processing centers
transmit information taken from checks and other documents to the host sites,
where the information is processed and printed on reports which are
subsequently sent to customers.
During recent years the financial services industry has witnessed an
acceleration of both state and federal deregulation, advances in technology,
increased consumer awareness and expectations as to banking services, and new
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product development. These factors have lessened distinctions between the
various types of financial institutions and have increased competition and
pressure on operating margins. Accordingly, the financial services industry
has emphasized the development of new technology-based products and services
in order to reduce operating costs while responding to consumer demands and the
need for product differentiation. Software, support operations, and new
product development have become more complex and expensive for financial
institutions to do on their own, and hence there is an increased need for the
services offered by third-parties such as M&I Data Services. Large third-party
servicers have the technical ability to respond to the data processing
requirements of new products and services and are able to spread development
and maintenance costs over a broader customer base, resulting in more efficient
service. Some larger financial institutions have ceased providing data
processing services to their correspondent banks or have decided to terminate
their in-house data processing operations in order to conserve resources and
concentrate on core banking business. M&I Data Services is concentrating its
sales efforts on the outsourcing opportunities at these larger financial
institutions.
The market for banking technology services is national in scope because
customers' data can be transmitted to and from, and processed on-line by, a
data center in any part of the United States. In any given geographic area,
M&I Data Services' competitors vary in size and include national, regional and
local operations. While historically the bank data processing industry has
been highly decentralized, there is an accelerating trend toward consolidation
in the industry, resulting in fewer companies competing over larger geographic
regions. As consolidation continues, successful companies in this business are
likely to increase substantially in size as the scale of activity necessary to
compete increases.
PRINCIPAL SOURCES OF REVENUE
The table below shows the amount and percentages of M&I's total
consolidated operating income resulting from interest and fees on loans,
interest on investment securities and fees for data processing services for
each of the last three years:
<TABLE>
<CAPTION>
Interest and Interest on Fees for Data
Fees on Loans Investment Securities Processing Services
______________________ _______________________ _____________________
Percent Percent Percent
of Total of Total of Total Total
Year Ended Operating Operating Operating Operating
December 31 Amount Income Amount Income Amount Income Income
______________ ______________________ _______________________ _____________________
($000's) ($000's) ($000's) ($000's)
<S> <C> <C> <C> <C> <C> <C> <C>
1991 $ 463,867 55.5% $ 124,935 15.0% $ 92,580 11.1% $ 835,436
1992 400,414 50.2 118,809 14.9 112,964 14.2 797,948
1993 383,560 48.7 98,052 12.5 136,044 17.3 787,408
</TABLE>
M&I business segment information is contained in note 17 of the Notes to
the Consolidated Financial Statements contained in Item 8 hereof.
COMPETITION
M&I and its subsidiaries face substantial competition in the financial
service markets they serve. M&I's banking subsidiaries compete for deposits
and other sources of funds and for credit relationships with other national and
state banks, savings and loan associations, credit unions, finance companies,
money market funds, life insurance companies (and other long-term lenders) and
other financial and non-financial companies, many of which offer products
functionally equivalent to bank products and located both within and outside
M&I's primary market area. M&I's non-bank subsidiaries compete with numerous
banks, finance companies, data servicing companies, leasing companies, mortgage
bankers, insurance companies, brokerage firms, financial advisors, trust
companies, mutual funds and investment bankers in Wisconsin and throughout the
United States. In addition, M&I competes for funds with both financial and
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non-financial institutions in a variety of financial markets. Improving the
quality and broadening the range of financially related services to customers,
easier access to facilities and competitive pricing are among the principal
methods of meeting competition in the financial service industry.
EMPLOYEES
As of December 31, 1993, M&I and its subsidiaries employed in the
aggregate approximately 6,611 full and part-time employees. M&I and its
subsidiaries maintain retirement plans for the benefit of all qualified
employees. M&I considers employee relations to be excellent. None of the
employees of M&I and its subsidiaries are represented by a collective
bargaining group.
GOVERNMENT SUPERVISION AND REGULATION
Governance of Bank Holding Companies
M&I is a bank holding company registered with and subject to regulation
by the Board of Governors of the Federal Reserve System (the "Board") under the
Bank Holding Company Act of 1956, as amended (the "Act"). The Act requires M&I
to file with the Board annual reports and such additional information as the
Board may require and authorizes the Board to conduct examinations of M&I and
its subsidiaries.
The Act requires every bank holding company to obtain the prior approval
of the Board before it may acquire substantially all the assets of any bank,
or ownership or control of any voting shares of any bank, if, after such
acquisition, it would own or control, directly or indirectly, more than 5% of
the voting shares of such bank. Under existing federal and state laws, the
Board generally may not approve the acquisition by M&I of the voting shares of,
or substantially all the assets of, any bank located outside the State of
Wisconsin, except for the acquisition of certain failing banks, as permitted
under Section 13(f) of the Federal Deposit Insurance Act, or as otherwise
permitted by state law in compliance with Section 3(d) of the Act. Section
3(d) of the Act provides that interstate acquisitions of banks may be approved
by the Board where such acquisition is specifically authorized by the laws of
the state in which the acquired bank is located.
A number of states have laws allowing interstate acquisitions within a
specified geographic region if one or more other states within the region
permit reciprocal acquisitions of banks and bank holding companies located in
their states. Wisconsin enacted a regional interstate banking statute in 1987.
The law provides for a region comprised of Illinois, Indiana, Iowa, Kentucky,
Michigan, Minnesota, Missouri, Ohio and Wisconsin. The law allows an in-state
bank and in-state bank holding company (institutions which have their principal
office in Wisconsin) to acquire or merge with a regional state bank or bank
holding company (institutions which have their principal office in a state
within the region) subject to certain filing requirements with the Wisconsin
Commissioner of Banking (the "Commissioner"). Similarly, a regional state bank
holding company may acquire or merge with an in-state bank or bank holding
company if various conditions are met. In addition, M&I may be able to acquire
or establish banks outside of the midwest region which are located in numerous
states and the District of Columbia which have adopted interstate banking not
regionally restricted or subject to the existence of reciprocal legislation,
or other states that have "trigger" dates which convert regional interstate
legislation into full national, non-reciprocal, interstate legislation.
The Act limits the activities of bank holding companies to managing,
controlling, and servicing their subsidiary banks and to engaging in certain
non-banking activities determined by the Board to be so "closely related" to
banking or to managing or controlling banks as to be a "proper incident"
thereto. With the exception of such closely related activities, bank holding
companies are prohibited from acquiring direct or indirect ownership of more
than 5% of the voting stock of any company which is not a bank. The Board's
approval must be obtained prior to M&I's engaging in any such closely-related
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activities, or in acquiring more than 5% of the voting shares of any company
engaged in such activities, or in some instances expanding the nature of such
activities or opening new offices. The Board also has permitted bank holding
companies to engage in certain additional activities on a case-by-case basis.
The Board has generally followed a restrictive policy in permitting the entry
or expansion of bank holding companies and other bank affiliates into domestic
and foreign bank and bank-related activities. Neither the Act nor applicable
law generally imposes geographic restrictions on the activities of non-bank
subsidiaries of bank holding companies.
The Act and the Federal Reserve Act (which applies to M&I's largest
subsidiary bank) and other state and Federal laws and regulations promulgated
thereunder limit the products and services offered by M&I and its subsidiaries
(as discussed above), the amount of loans made to any one borrower, the nature
of securities in which M&I may invest, deal in or underwrite, and the total
assets owned by M&I relative to its capital (which, in turn, restricts the
income generated by M&I). The Act and regulations of the Board also prohibit
M&I and its subsidiaries from engaging in certain tie-in arrangements in
connection with any extension of credit, lease or sale of property or
furnishing of services.
In addition to the Act, M&I's ability to enter various aspects of the
securities business may be limited by the Glass-Steagall Act. (The "Glass-
Steagall Act" is the name commonly used to refer to sections 16, 20, 21 and 32
of the Banking Act of 1933, 12 U.S.C. 24 (seventh), 78, 377-78.) The Board
has permitted bank holding companies to establish non-bank subsidiaries for the
purpose of conducting securities related activities under certain conditions
and restrictions.
In 1991, Congress passed the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"). FDICIA created a comprehensive new
regulatory structure for banks based on five categories of capitalization. The
primary focus of FDICIA was on the regulation of undercapitalized institutions,
though the law also placed limitations on the corporate activities of
financially strong institutions and their holding companies. Those
institutions which qualify as undercapitalized are subject to substantial
restrictions on their activities and to strict regulatory oversight. For
severely undercapitalized institutions, regulators may limit the institution's
ability to conduct transactions with affiliates, prohibit deposits from
correspondent institutions, require prior approval for capital distributions
by the institution's holding company and require the holding company to divest
the institution or any nondepository affiliate of the institution which is in
danger of becoming insolvent. Similarly, all depository institutions are
subject to capital distribution restrictions if making such distribution would
cause the institution to become undercapitalized. FDICIA required banking
regulators to propose and adopt regulations addressing a number of subjects,
many of which were adopted in 1992 and 1993 and are discussed more fully
below. FDICIA and the regulations promulgated thereunder have not materially
affected the operations of M&I or the M&I bank subsidiaries and M&I does not
believe that any further regulations to be promulgated in the future under
FDICIA will have an adverse effect on its operations or those of its
subsidiaries.
M&I is a legal entity separate and distinct from its subsidiaries.
Accordingly, the right of M&I, and thus the right of M&I's creditors and
shareholders, to participate in any distribution of the assets or income of any
subsidiary is necessarily subject to the prior claims of creditors of such
subsidiary, except to the extent that claims of M&I itself as a creditor may
be recognized. Payment of dividends to M&I by M&I bank subsidiaries is subject
to various state and federal regulatory limitations. In general, under
Wisconsin banking law, the board of directors of a state chartered subsidiary
bank may declare and pay a dividend from so much of the bank's undivided
profits as the board shall deem expedient, provided the payment of such
dividend does not in any way impair or diminish the bank's capital, or reduce
the capital level below minimum required levels set by regulatory agencies.
Under Federal law, which applies to national banks and state banks which are
members of the System, regulatory approval is required for the payment of
dividends by any bank in any calendar year in excess of such bank's net income
for that year combined with the retained net income of the two preceding years,
plus any required transfers to surplus. Under these provisions, at December
31, 1993, the M&I bank subsidiaries would have been permitted to pay dividends
to M&I of approximately $109.8 million without prior regulatory approval. At
December 31, 1993, the M&I subsidiaries (both bank and non-bank) would have
been permitted to pay dividends to M&I of approximately $202 million. The
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Federal and state bank regulatory agencies also have authority to prohibit
banks and bank holding companies from paying dividends which would constitute
an unsafe and unsound banking practice. The Board and the Comptroller of the
Currency have indicated that it would generally be an unsafe and unsound
banking practice for banks to pay dividends except out of current operating
earnings. Dividends paid to M&I by the M&I bank subsidiaries in 1993 totaled
$71.2 million. M&I does not expect that the restrictions referred to above
will impair M&I's ability to pay normal quarterly dividends to its
stockholders.
Commitments to Affiliated Institutions
Under Board policy, M&I is expected to act as a source of financial
strength to each of its bank subsidiaries and to commit resources to support
each bank subsidiary in circumstances when it might not do so absent such
requirements. In addition, any capital loans by M&I to any of its bank
subsidiaries would also be subordinate in right of payment to depositors and
to certain other indebtedness of such bank.
As a result of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), a depository institution insured by the
FDIC can be held liable for any loss incurred by the FDIC in connection with
(i) the default of a commonly controlled FDIC insured depository institution
or (ii) any assistance provided by the FDIC to a commonly controlled FDIC
insured depository institution in danger of default. "Default" is defined
generally as the appointment of a conservator or receiver and "in danger of
default" is defined generally as the existence of certain conditions indicating
that a "default" is likely to occur in the absence of regulatory assistance.
All of the M&I bank subsidiaries are FDIC insured depository institutions
within the meaning of FIRREA.
Capital Requirements
Information regarding capital requirements for bank holding companies and
tables reflecting M&I's regulatory capital position at December 31, 1993 can
be found in note 11 of the Notes to the Consolidated Financial Statements
contained in Item 8 hereof.
Other Regulation of M&I and its Subsidiaries
Section 23A of the Federal Reserve Act restricts the extent to which
M&I's bank subsidiaries may supply funds to M&I, or to M&I's non-bank
subsidiaries ("Affiliates") whether through direct extensions of credit, or
through purchase of securities, issuance of guaranties and the like. Unless
fully secured by obligations of or guaranteed by the U.S. Government or its
agencies, or by certain bank deposits, with certain limited exceptions, M&I
bank subsidiaries may not: (i) loan money or otherwise extend credit to; (ii)
purchase or invest in the stock of securities of; (iii) purchase the assets of;
(iv) issue a guarantee, acceptance, or letter of credit on behalf of; or (v)
accept as collateral for a loan or extension of credit the stock or securities
of, a bank holding company or its non-bank subsidiaries in an amount exceeding
10% of the capital stock and surplus of the bank in the case of any Affiliate
and in an amount exceeding 20% of the capital stock and surplus of the bank in
the case of all Affiliates in the aggregate. In addition, every such loan,
extension of credit, investment, purchase, guarantee, letter of credit or
acceptance must be secured to the extent required under the Federal Reserve Act
(at a minimum of 100%).
Section 23B of the Federal Reserve Act applies to certain transactions
by banks with affiliates that are not covered by Section 23A. Section 23B's
basic purpose is to ensure that an insured bank does not subsidize its bank
holding company or its sister nonbank subsidiaries by giving them more
advantageous terms, whether on loans, or any other contracts with the bank,
than they would be able to obtain from an unrelated party.
All of M&I's state chartered bank subsidiaries are members of and subject
to regulation and examination by the FDIC. M&I's nationally chartered bank
subsidiaries are subject to regulation and examination by the Comptroller of
the Currency, and its state chartered bank subsidiaries are subject to further
regulation and examination by the Commissioner of Banking for the State of
Wisconsin and in the case of M&I Thunderbird Bank, the Arizona State Banking
Department. In addition, subsidiary banks that are members of the System are
<PAGE>
subject to regulation and examination by the Board. Areas of banking that are
regulated by state and federal law include reserve requirements, investments,
loans, mergers, issuances of securities, dividend payments and branch banking.
The laws of the jurisdictions in which they operate impose restrictions on many
of M&I's non-bank subsidiaries in terms of the activities in which they may
engage and the amounts of, and interest rates on, credit they provide.
Additional restrictions may be imposed by Federal or state regulatory agencies
having authority to supervise or regulate specific types of companies or
activities conducted by such subsidiaries.
Additionally, the Securities Exchange Act of 1934, as amended (the "1934
Act") imposes regulatory and reporting requirements on various activities
conducted by banks, including beneficial ownership of certain securities,
dealing in municipal securities, acting as transfer agent, providing certain
types of investment management services, and in certain instances, acting as
a securities broker. M&I Bank is licensed as a municipal securities broker
under the Federal Municipal Securities Rule-Making Act. A subsidiary of M&I,
M&I Investment Management Corp., is registered with the Securities and Exchange
Commission (the "Commission") under the Investment Advisers Act of 1940. M&I
Brokerage Services, Inc., a subsidiary of M&I Capital Markets Group Inc., is
registered with the Commission as a broker-dealer and is regulated by the
Commission under the 1934 Act. The 1934 Act also requires certain types of
investment managers, including M&I Bank, to file reports with the Commission
with respect to the holding of certain securities. M&I Bank has also
registered with the Commission as a transfer agent and must comply with certain
record keeping and reporting requirements. Pursuant to the Government
Securities Act of 1986, M&I Bank has filed notice with the Board that it is
acting as a government securities broker-dealer.
The activities and operations of banks are subject to a number of other
federal and state laws and regulations, including state usury and consumer
credit laws, state laws relating to fiduciaries, the federal Truth-In-Lending
Act and Regulation Z promulgated thereunder, the federal Equal Credit
Opportunity Act and Regulation B, the federal Home Mortgage Disclosure Act and
Regulation C, the federal Expedited Funds Availability Act and Regulation CC,
the federal Fair Credit Reporting Act, the federal Bank Secrecy Act, the
federal Community Reinvestment Act, the federal antitrust laws, insider
transactions, changes in Bank ownership, management interlocks between
depository institutions and the disclosure of bank records.
Regulations promulgated by Federal banking regulators in 1992 pursuant
to FDICIA broadly impacted the operations of financial institutions and their
holding companies. These regulations which were intended to strengthen the
industry imposed new standards on various activities including real estate
secured lending, acceptance of brokered deposits, interbank liabilities and
loans to directors and executive officers of financial institutions and their
holding companies. Additional regulations resulting from FDICIA bar state
chartered banks from engaging as principal in any activity deemed impermissible
for a federally chartered bank and from acquiring or maintaining any equity
investment not permissible for a national bank. Furthermore, Regulation DD
implementing the Truth-in-Savings provisions of FDICIA was issued by the Board
in 1992 and became effective in June, 1993. Regulation DD requires banks to
make various new disclosures regarding deposit accounts.
Federal bank agencies have comprehensive enforcement authority over
banking institutions within their jurisdiction. Pursuant to FDICIA, these
agencies possess broad powers over undercapitalized institutions. Actions
available to the agencies include the termination of deposit insurance,
restrictions on asset growth, denying approval for acquisitions, branching or
new lines of business, requiring an institution to recapitalize, requiring
divestiture of a financial institution, issuance of temporary and permanent
cease and desist orders, imposition of civil money penalties, restrictions on
senior officers' compensation, and suspension and removal of directors and
officers and the prohibition of other persons from participating in the
management of a bank. The agencies frequently use their authority to institute
formal enforcement actions to persuade banking organizations on an informal
basis to take specified actions designed to insure compliance with applicable
laws and regulations. The federal bank agencies are broadly empowered to
define "unsafe and unsound" practices.
M&I, as the holder of stock of subsidiary banks, may be subject to
assessment to restore impaired capital of its national bank subsidiaries to the
extent provided in Section 5205 of the Revised Statutes of the United States
(12 U.S.C. 55) and of its state banks to the extent provided in Section 220.07
of the Wisconsin Statutes. At present, there is no such impairment of capital
<PAGE>
of any M&I bank subsidiaries. Any such assessment would be applicable only to
M&I and not to any M&I shareholder.
Under Section 221.56 of the Wisconsin Statutes, M&I, as a Wisconsin
corporation that owns, holds or controls a majority of stock in a state bank
or trust company is deemed to be engaged in the banking business and subject
to supervision of the Office of the Commissioner, including the requirement
that it file reports with and be subject to examination by the Office. The
Commissioner is also empowered to issue orders to a bank holding company to
remedy any condition or policy that, in the opinion of the Commissioner,
endangers the safety of deposits in any subsidiary bank or trust company. In
the event of noncompliance with such an order, the Commissioner has power to
direct the operations of the bank or trust company and to withhold dividends
from the holding company.
The foregoing references to applicable laws, statutes, regulations and
legislation are brief summaries thereof which do not purport to be complete and
are qualified in their entirety by reference to such statutes, regulations and
legislation.
GOVERNMENT POLICIES AND ECONOMIC CONDITIONS
The earnings and business of M&I and the M&I bank subsidiaries are and
will be affected by the general economic and political conditions in the United
States and abroad and by the monetary and fiscal policies of various Federal
agencies, particularly those of the Board. In addition to the functions
enumerated under "Government Supervision and Regulation," the Board regulates
the supply (and thereby the cost) of funds and bank credit and deals with
general economic conditions in the United States and internationally. From
time to time, the Board has taken specific steps to curtail domestic inflation,
to support the value of U.S. dollars in foreign currency markets and to control
the nation's money supply. Policies employed by the Board for these purposes
influence the interest rates paid on interest-bearing liabilities, the interest
received on earning assets, and the levels of bank loans, investments and
deposits.
The economic conditions in which M&I has operated have varied greatly
over recent years, ranging from extremely high to low rates of inflation,
volatile interest rates, and sharp fluctuations in the value of the U.S. dollar
compared to other currencies. Government and Board monetary policies have
significantly affected the operating results of commercial banks in the past
and are expected to do so in the future. The impact of fluctuating economic
conditions and federal regulatory policies on the future profitability of M&I
and its subsidiaries cannot be predicted with certainty.
The cost of funding bank assets has shifted from a reliance on fixed rate
sources of funds to funding sources which reflect market rates of interest.
This shift was commenced in 1980 pursuant to federal legislation which began
a gradual phase out of interest rate ceilings applicable to time and savings
deposits at commercial banks and thrift institutions. The only remaining
limitation on interest rates payable on transaction deposit accounts, with
certain minor exceptions and conditions, is the prohibition on the payment of
interest on demand deposits. The legislative and regulatory changes relating
to interest rate ceilings have enabled banks to compete more effectively with
other unregulated entities for deposits by offering market rates of interest,
but have increased the cost of core deposits.
SELECTED STATISTICAL INFORMATION
The following tables set forth certain statistical information relating
to M&I and its subsidiaries on a consolidated basis.
<PAGE>
Average Balance Sheets and Analysis of Net Interest Income
The Corporation's consolidated average balance sheets, interest earned and
interest paid, and the average interest rates earned and paid for each of the
last three years are (dollars in thousands):
<TABLE>
<CAPTION>
1991 1992 1993
____________________________________________________________________________________________
Average Interest Average Average Interest Average Average Interest Average
Balance Earned Yield Balance Earned Yield Balance Earned Yield
____________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans (1, 2) $4,745,683 $466,788 9.84% $4,803,413 $402,362 8.38% $5,035,183 $385,315 7.65%
Investment securities:
Taxable 1,155,005 97,348 8.43 1,315,545 98,031 7.45 1,525,630 85,201 5.58
Tax-exempt (1) 392,753 38,693 9.85 345,491 29,647 8.58 250,677 18,703 7.46
Interest bearing deposits in
other banks 55,964 3,387 6.05 118,237 4,340 3.67 80,853 2,413 2.98
Funds sold and security resale
agreements 189,306 10,147 5.36 160,534 5,697 3.55 60,786 1,907 3.14
Trading securities (1) 5,648 366 6.48 5,387 258 4.79 4,304 188 4.37
Other short-term
investments 84,214 5,180 6.15 63,405 2,578 4.07 41,090 1,437 3.50
____________________________________________________________________________________________
Total interest
earning assets 6,628,573 621,909 9.38 6,812,012 542,913 7.97 6,998,523 495,164 7.08
Cash and demand deposits
due from banks 396,232 421,289 454,014
Premises and
equipment, net 154,947 156,600 178,865
Other assets 182,111 171,230 183,313
Allowance for
loan losses (72,320) (78,956) (90,120)
___________ ___________ __________
Total Assets $7,289,543 $7,482,175 $7,724,595
</TABLE>
<PAGE>
Average Balance Sheets and Analysis of Net Interest Income - concluded
<TABLE>
<CAPTION>
1991 1992 1993
____________________________________________________________________________________________
Average Interest Average Average Interest Average Average Interest Average
Balance Earned Yield Balance Earned Yield Balance Earned Yield
____________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Savings and interest
bearing demand
deposits $2,225,954 $107,631 4.84% $2,572,455 $ 82,349 3.20% $2,701,854 $ 65,109 2.41%
Other time deposits 2,349,341 163,823 6.97 1,999,673 108,233 5.41 1,785,318 80,608 4.52
Short-term
borrowings 498,845 27,288 5.47 439,935 14,600 3.32 571,594 16,714 2.92
Long-term borrowings 211,310 20,146 9.53 212,657 19,085 8.97 208,772 15,927 7.63
____________________________________________________________________________________________
Total interest bearing
liabilities 5,285,450 318,888 6.03 5,224,720 224,267 4.29 5,267,538 178,358 3.39
Noninterest bearing
deposits 1,200,345 1,367,413 1,510,414
Other liabilities 165,650 175,690 167,819
Shareholders' equity 638,098 714,352 778,824
___________ ___________ __________
Total liabilities
and shareholders'
equity $7,289,543 $7,482,175 $7,724,595
Net interest income $303,021 $318,646 $316,806
Net yield on interest earning assets 4.57% 4.68% 4.53%
</TABLE>
Notes:
(1) Fully taxable equivalent basis, assuming a Federal income tax rate of
34% for the years 1991 and 1992, 35% for 1993, and excluding disallowed
interest expense.
(2) Loans on a nonaccrual status have been included in the computation of
average balances.
<PAGE>
Analysis of Changes in Interest Income and Interest Expense
The effect on interest income and interest expense of volume and rate changes
for 1992 and 1993 are outlined below. Changes not due solely to either volume
or rate are allocated to rate (in thousands of dollars).
<TABLE>
<CAPTION>
1992 versus 1991 1993 versus 1992
____________________________ ______________________________
Increase (Decrease) Increase (Decrease)
Due to Change in Due to Change in
__________________ _________________
Total Total
Average Average Increase Average Average Increase
Volume Rate (Decrease) Volume Rate (Decrease)
____________________________ ______________________________
<S> <C> <C> <C> <C> <C> <C>
Interest on earning assets:
Loans (1) $5,681 ($70,107) ($64,426) $19,422 ($36,469) ($17,047)
Investment securities:
Taxable 13,534 (12,851) 683 15,651 (28,481) (12,830)
Tax-exempt (1) (4,655) (4,391) (9,046) (8,135) (2,809) (10,944)
Interest bearing deposits
in other banks 3,768 (2,815) 953 (1,372) (555) (1,927)
Funds sold and security
resale agreements (1,542) (2,908) (4,450) (3,541) (249) (3,790)
Trading securities (1) (17) (91) (108) (52) (18) (70)
Other short-term
investments (1,280) (1,322) (2,602) (908) (233) (1,141)
Total interest
income change $15,489 ($94,485) ($78,996) $21,065 ($68,814) ($47,749)
Expense on interest bearing liabilities:
Savings and interest bearing
demand deposits $16,771 ($42,053) ($25,282) $ 4,141 ($21,381) ($17,240)
Other time deposits (24,372) (31,218) (55,590) (11,597) (16,028) (27,625)
Short-term borrowings (3,222) (9,466) (12,688) 4,371 (2,257) 2,114
Long-term borrowings 128 (1,189) (1,061) (348) (2,810) (3,158)
Total interest
expense change ($10,695) ($83,926) ($94,621) ($ 3,433) ($42,476) ($45,909)
</TABLE>
(1) Fully taxable equivalent basis, assuming a Federal income tax rate of
34% for the years 1991 and 1992, 35% for 1993, and excluding disallowed
interest expense.
<PAGE>
Investment Securities
The book value of the Corporation's consolidated investment securities at
December 31 of each year are:
<TABLE>
<CAPTION>
(In thousands)
______________________________________________________
1991 1992 1993
______________________________________________________
<S> <C> <C> <C>
U.S. Treasury and government agencies $1,125,371 $1,545,000 $1,460,009
States and political subdivisions 365,197 280,349 160,238
Other 70,285 57,422 53,434
______________________________________________________
$1,560,853 $1,882,771 $1,673,681
</TABLE>
The maturities, at book value, and weighted average yields (for tax-exempt
obligations on a fully taxable basis assuming a 35% tax rate) of investment
securities at December 31, 1993, are (in thousands):
<TABLE>
<CAPTION>
After One but After Five but
Within One Year Within Five Years Within Ten Years After Ten Years Total
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
______________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and
government agencies $723,980 5.57% $732,151 4.67% $ 0 0.00% $ 3,878 4.93% $1,460,009 5.12%
States and
other political
subdivisions 76,091 6.62 62,595 9.24 20,774 9.08 778 8.85 160,238 7.97
Other 4,371 9.81 5,581 10.10 1,281 9.80 42,201 3.41 53,434 4.78
______________________________________________________________________________________
$804,442 5.69% $800,327 5.07% $22,055 9.12% $46,857 3.63% $1,673,681 5.38%
</TABLE>
<PAGE>
Types of Loans
The Corporation's consolidated loans, classified by type, at December 31
of each year are:
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
_________________________________________________________________
(In thousands)
<S> <C> <C> <C> <C> <C>
Commercial, financial and agricultural . . . . $1,707,161 $1,650,158 $1,671,521 $1,717,874 $1,861,757
Industrial development revenue bonds . . . . . 89,706 70,928 52,288 37,878 27,821
Real estate:
Construction . . . . . . . . . . . . . . . 173,397 186,026 164,723 158,607 214,369
Mortgage:
Residential . . . . . . . . . . . . . . 1,087,718 1,220,476 1,203,477 1,199,407 1,254,748
Commercial. . . . . . . . . . . . . . . 755,388 879,4 891,993 933,585 1,061,635
_________________________________________________________________
Total mortgage . . . . . . . . . . . . . . 1,843,106 2,099,946 2,095,470 2,132,992 2,316,383
Personal . . . . . . . . . . . . . . . . . . . 648,065 579,831 583,032 602,218 711,194
Lease financing. . . . . . . . . . . . . . . . 163,568 180,889 206,507 229,155 239,561
_________________________________________________________________
4,625,003 4,767,778 4,773,541 4,878,724 5,371,085
Less: Allowance for loan losses . . . . . . . 57,308 68,723 73,915 85,884 93,189
_________________________________________________________________
Net loans. . . . . . . . . . . . . . . . . . . $4,567,695 $4,699,055 $4,699,626 $4,792,840 $5,277,896
</TABLE>
<PAGE>
Loan Maturity and Interest Rate Sensitivity
The analysis of loan maturities at December 31, 1993, and the rate structure
for the categories indicated are:
<TABLE>
<CAPTION>
Rate Structure of Loans
Maturity Due After One Year
________________________________________ ___________________________
Over One With Pre With
One Year Year Through Over Five determined Floating
Or Less Five Years Years Total Rate Rate
________________________________________ ___________________________
(In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and agricultural . $1,315,804 $521,346 $24,607 $1,861,757 $343,574 $202,379
Industrial development revenue bonds . . 9,028 10,000 8,793 27,821 11,369 7,424
Real estate - construction . . . . . . . 159,636 54,733 -- 214,369 35,128 19,605
Lease financing. . . . . . . . . . . . . 80,027 158,047 1,487 239,561 159,534 --
_________________________________________________________________________
$1,564,495 $744,126 $34,887 $2,343,508 $549,605 $229,408
</TABLE>
<PAGE>
Nonaccrual, Past Due and Restructured Loans
The Corporation's nonaccrual, past due and restructured loans at December 31,
of each year are:
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
__________________________________________________________
<S> <C> <C> <C> <C> <C>
Nonaccrual loans . . . . . . . . . . . . . . $34,920 $45,706 $47,519 $31,630 $27,880
Loans past due 90 days or more . . . . . . . 5,613 3,682 6,148 5,009 5,694
Restructured loans . . . . . . . . . . . . . 6,892 5,464 4,075 3,601 2,195
__________________________________________________________
$47,425 $54,852 $57,742 $40,240 $35,769
</TABLE>
Generally, a loan is placed on nonaccrual if payment of interest is more than 60
days delinquent and the loan has been determined by management to be a "problem"
loan. In addition, loans which are past due 90 days or more as to interest or
principal are also placed on non-accrual. Exceptions to these rules are
generally only for loans fully collateralized by readily marketable securities
or other relatively risk free collateral.
Information with respect to nonaccrual and restructured loans (in thousands) at
December 31, 1993, is as follows:
Gross interest income which would have been
recorded under original terms . . . . . . . $3,557
Interest income recorded during the period. . . $1,804
Potential Problem Loans
At December 31, 1993, the Corporation had $14,475 of loans for which payments
are presently current, but the borrowers are experiencing serious financial
problems. These loans are subject to constant management attention and their
classification is reviewed on a quarterly basis.
Other Interest Bearing Assets
At December 31, 1993, the Corporation's commercial finance subsidiary had $2,342
of corporate debt investment securities on nonaccrual status. The gross
interest that would have been recorded in 1993 under the original terms amounted
to $257. Interest income recorded during 1993, with respect to such debt
securities was $35.
<PAGE>
Summary of Loan Loss Experience
Information relating to the Corporation's consolidated allowance for loan losses
and the amount of loans charged off and recoveries, by type, for each of the
years ended December 31 is:
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
___________________________________________________________
<S> <C> <C> <C> <C> <C>
Average loans outstanding during the year,
net of unearned income . . . . . . . . . . . . $4,382,709 $4,735,080 $4,745,683 $4,803,413 $5,035,183
Allowance for loan losses at beginning of year . . $ 54,109 $ 57,308 $ 68,723 $ 73,915 $ 85,884
Allowance of banks acquired or sold. . . . . . . . 1,058 1,782 -- -- --
Loans charged off:
Commercial, financial and agricultural . . . . 5,538 18,026 8,429 3,963 2,289
Real estate--construction. . . . . . . . . . . 40 851 342 461 41
Real estate--mortgage. . . . . . . . . . . . . 2,536 6,678 6,272 3,980 1,327
Personal . . . . . . . . . . . . . . . . . . . 5,428 9,493 4,760 3,762 2,314
Lease financing. . . . . . . . . . . . . . . . 554 925 1,430 1,426 815
___________________________________________________________
Total loans charged off. . . . . . . . . . . . . . 14,096 35,973 21,233 13,592 6,786
Recoveries on loans previously charged off:
Commercial, financial and agricultural . . . . 1,786 2,136 3,375 7,552 2,153
Real estate--construction. . . . . . . . . . . 2 116 175 92 40
Real estate--mortgage. . . . . . . . . . . . . 208 284 465 1,217 1,371
Personal . . . . . . . . . . . . . . . . . . . 1,752 3,256 1,809 1,426 1,246
Lease financing. . . . . . . . . . . . . . . . 145 39 46 123 216
___________________________________________________________
Total recoveries on loans previously charged off . . . 3,893 5,831 5,870 10,410 5,026
</TABLE>
<PAGE>
Summary of Loan Loss Experience - continued
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
___________________________________________________________
<S> <C> <C> <C> <C> <C>
Net loans charged off. . . . . . . . . . . . . . . 10,203 30,142 15,363 3,182 1,760
Additions to allowance charged to operating expense 12,344 39,775 20,555 15,151 9,065(1)
___________________________________________________________
Allowance for loan losses at end of year . . . . . $57,308 $68,723 $73,915 $85,884 $93,189
Ratio of net loans charged off to
average loans outstanding. . . . . . . . . . . .23% .64% .32% .07% .03%
</TABLE>
(1) The amount of the addition to the allowance charged to operating expense
for the year ended December 31, 1993, is the amount necessary to bring
the allowance for loan losses at December 31, 1993, to a level believed
adequate by management to absorb current estimated potential losses in
the loan portfolio. Management's determination of the adequacy of the
allowance is based on a continual review of the loan portfolio, loan loss
experience, economic conditions, growth and composition of the portfolio,
and other relevant factors. As a result of management's continual
review, the allowance is adjusted through provisions for loan losses
charged against income.
<PAGE>
SUMMARY OF LOAN LOSS EXPERIENCE - CONTINUED
The Corporation's evaluation of the adequacy of the allowance for loan
losses broadly consists of two levels of analysis. The first level focuses
primarily on assessments of specific credits, as described more fully below.
The second more general level of analysis focuses on categories of similar
type loans and portfolio segments (e.g., commercial/individual; real
estate/non-real estate; geographical regions related to the locations of
affiliate banks). These methodologies include multiple analytical approaches
which are viewed together to assess overall reserve and provision levels. The
analyses consider, among other factors, historical loss experience, current and
anticipated economic conditions, loan portfolio trends, portfolio composition
by segment, assigned credit grades, and estimates of potential loss exposures.
The loan portfolios of the Corporation's affiliate banks and leasing
subsidiary are subject to continual management oversight and quarterly
analyses. Management's analyses are based on the Corporation's credit grading
system which classifies loans in a manner similar to that of bank regulatory
examiners, with estimates of probable and potential losses derived.
Management's assigned credit grades and quarterly portfolio analyses are
subject to independent monitoring by the Corporation's credit review group,
which also performs periodic portfolio reviews at each affiliate. The credit
review group prepares reports on the results of their evaluations of affiliate
loan portfolios, which together with quarterly analyses of credit exposure
provided by affiliate management, serve as the basis for determining the
adequacy of the allowance for loan losses.
Management utilizes the above-described reserve analysis approaches to
determine the overall adequacy of the allowance for loan losses. Management's
overall assessment is based on its view of the loan portfolio as consisting of
commercial business loans, real estate loans, personal loans, and direct
financing leases. Industrial development revenue bonds are viewed as
commercial real estate loans.
During 1993, consolidated net charge-offs decreased to $1.8 million,
representing $6.8 million of charge-offs, offset by $5.0 million of recoveries.
This decrease follows the lower than normal $3.2 million of losses experienced
in 1992. The lower than normal levels experienced in 1992 and 1993 contrast
with the higher than historic levels of losses experienced in 1990 and 1991.
The $5.0 million of recoveries recognized in 1993 reflect a return to more
normal historic levels. The higher $10.4 million of recoveries recognized in
1992 were primarily due to collection of a large commercial loan charge-off
recorded in 1990. The reduction in consolidated charge-off levels in 1992 and
further reduction in 1993, reflect the relative strength of the Wisconsin
economy and stabilization in the Arizona economy and real estate values. The
Corporation's Arizona-based loan portfolio represents approximately 4% of the
total portfolio. The Corporation's 1993 provision level of $9.1 million, which
is the lowest provision level in the last five years, results in a year-end
1993 loan loss reserve of $93.2 million or 1.74% of total loans, as compared
to the year-end 1992 reserve level of 1.76%. The increased reserve levels in
1992 and 1993, reflect the Corporation's favorable net charge-off experience
and the inherent cyclical nature of economic conditions and related credit
impacts. The year-end 1993 reserve level is considered adequate given
uncertainties regarding the economic conditions in the country and the
Corporation's primary service areas.
The 1993 charge-off levels for commercial and real estate loans decreased
to their lowest level in five years and were offset by nearly equal levels of
recoveries. The minimal net charge-offs for commercial loans in 1993 reflect
the general stability of the Wisconsin and Arizona economies relative to the
less favorable conditions experienced in 1990 and 1991. The minimal net
recoveries on real estate loans in 1993, compare to net charge-off levels of
$7.1 million, $6.0 million, and $3.1 million experienced in 1990, 1991 and
1992, respectively. This trend reflects the weakness in economic conditions
and real estate values which had significantly impacted the Corporation's
Arizona-based portfolio, and resulted in the higher than historic levels of
losses experienced in 1990 and 1991. Personal loan net charge-offs decreased
further in 1993, as compared to 1992 and prior year levels, reflecting, in
part, a continued de-emphasis on certain consumer oriented products which had
resulted in higher loss levels in 1989 and 1990, and the impact of overall
economic conditions. In 1993, the Corporation's lease financing portfolio net
charge-offs decreased to the lowest level since 1989 reflecting the favorable
impact of economic conditions on this portfolio segment which has experienced
growth in recent years.
<PAGE>
Disregarding the undetermined impacts of the pending Valley
Bancorporation acquisition, the existing Corporation's charge-off and provision
levels for 1994 are expected to continue to be largely dependent on economic
conditions in the Corporation's primary service areas. While Wisconsin's
economy continues to be relatively stable and the Arizona and national
economies reflect some continued strengthening, should the country's economic
conditions deteriorate, the Corporation's Wisconsin and Arizona markets may be
adversely affected. Absent deterioration in these conditions, total charge-
offs for 1994 are not currently expected to vary significantly from 1993 levels
and offsetting recoveries are currently expected to decrease from 1993 levels.
At the present time, there are no material loans which are known or believed
to be in imminent danger of deteriorating or defaulting which are currently
expected to give rise to material charge-offs; however, loss levels can be
significantly impacted by a few large loans which could deteriorate
unexpectedly or be adversely impacted by economic conditions. Based on current
conditions, commercial loan losses for 1994 are expected to remain below peak
1990 levels, with net charge-offs anticipated to more closely parallel historic
levels. Commercial real estate loans continue to be highly vulnerable to
regional economic conditions and real estate values; however, based on current
conditions, real estate loan losses for 1994 are expected to remain below the
higher than normal levels experienced in 1990 and 1991. Based on the existing
portfolio size and composition, personal loan losses for 1994 are currently
expected to increase somewhat from 1993 levels, but remain below the peak
levels experienced in 1990. At the present time, direct lease financing losses
for 1994 are expected to increase somewhat from 1993 levels, to more closely
parallel historic levels; however, actual losses could be impacted by portfolio
growth, fraud, or unanticipated weaknesses in industry segments within the
portfolio.
Deposits
The average amount of and the average rate paid on selected deposit
categories for each of the years ended December 31 is as follows:
<TABLE>
<CAPTION>
1991 1992 1993
_________________ _________________ _________________
Amount Rate Amount Rate Amount Rate
_________________ _________________ _________________
<S> <C> <C> <C> <C> <C> <C>
Noninterest bearing demand deposits $1,200,345 $1,367,413 $1,510,414
Interest bearing demand deposits 565,842 4.35% 651,960 2.79% 703,498 1.95%
Savings deposits 1,660,112 5.00 1,920,495 3.34 1,998,356 2.57
Time deposits 2,349,341 6.97 1,999,673 5.41 1,785,318 4.52
_________________ _________________ _________________
Total deposits $5,775,640 $5,939,541 $5,997,586
</TABLE>
The maturity distribution of time deposits issued in amounts of $100,000
and over and outstanding at December 31, 1993 (in thousands) is:
Three months or less. . . . . . . . . . . . . . . . . . . . . $109,803
Over three and through six months . . . . . . . . . . . . . . 32,732
Over six and through twelve months. . . . . . . . . . . . . . 30,117
Over twelve months. . . . . . . . . . . . . . . . . . . . . . 67,500
$240,152
At December 31, 1993, time deposits issued by foreign offices totalled $29,083.
<PAGE>
Return on Equity and Assets
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
_____ _____ ____ _____ _____
<S> <C> <C> <C> <C> <C>
Return on assets:
Before cumulative effect of changes
in accounting principles 1.26% 1.00% 1.36% 1.56% 1.62%
After cumulative effect of changes
in accounting principles 1.26 1.00 1.36 1.46 1.62
Return on equity:
Before cumulative effect of changes
in accounting principles 16.02 12.14 15.57 16.16 16.11
After cumulative effect of changes
in accounting principles 16.02 12.14 15.57 15.29 16.11
Dividend payout ratio 28.93 37.86 30.64 31.51 30.68
Average equity to average assets ratio 7.88 8.23 8.75 9.55 10.08
Ratio of earnings to fixed charges (a)
Excluding interest on deposits 2.39 x 2.42 x 3.79 x 5.51 x 6.21 x
Including interest on deposits 1.34 x 1.28 x 1.45 x 1.76 x 2.07 x
</TABLE>
(a) - See Exhibit 12 for detailed computation of these ratios.
Short-Term Borrowings
Information related to the Corporation's funds purchased and
security repurchase agreements for the last three years is as follows (in
thousands):
<TABLE>
<CAPTION>
1991 1992 1993
______________________________
(In thousands)
<S> <C> <C> <C>
Amount outstanding at year end $381,473 $398,673 $454,980
Average amount outstanding during the year 447,819 394,129 495,806
Maximum amount outstanding at any month's end 516,194 510,493 749,567
Weighted average interest rate at year end 3.71% 2.56% 2.75%
Weighted average interest rate during the year 5.43% 3.31% 2.90%
</TABLE>
Item 2. Properties.
Both M&I and M&I Bank occupy offices on all or portions of 16 floors of
a 21-story building, completed in 1969 and located at 770 North Water Street,
Milwaukee, Wisconsin. A subsidiary of M&I Bank owns the building and its
adjacent 10-story parking lot and leases unoccupied floors to a professional
tenant. Bank facilities at this location include five closed circuit TV
drive-in stations and six closed circuit TV walk-in stations. In addition,
various subsidiaries of M&I lease commercial office space in downtown Milwaukee
office buildings near the 770 North Water Street facility.
<PAGE>
M&I Bank operates 24 branch offices or divisions located in Milwaukee
and in surrounding suburban communities. A wholly-owned subsidiary of M&I
Bank owns the buildings at four branch sites, located in the western and in
the southern sections of downtown Milwaukee, and in Glendale, a Milwaukee
suburb. Eight branches, located in Milwaukee suburbs, occupy buildings owned
by M&I Bank. The remaining branches occupy leased facilities.
Thirty-four of M&I's other subsidiary banks are located in cities
throughout Wisconsin. M&I Thunderbird Bank, a wholly-owned subsidiary of M&I,
is located in Phoenix, Arizona and has 12 offices in surrounding Maricopa
County communities. Thirty-four subsidiary banks occupy modern facilities
owned by the banks or by M&I.
M&I Data Services owns a 328,000 square foot data processing facility
located in Brown Deer, a suburb of Milwaukee, from which it conducts data
processing activities for M&I, its subsidiaries and other financial
institutions throughout the nation. A new addition that nearly doubled the
size of the Brown Deer Operations Center was completed in 1993. M&I Data
Services leases 50,000 square feet of commercial office space in Brown Deer
for the development and marketing of software packages, the sale and support
of personal computer networks and the development and support of trust
processing services; leases additional processing centers in Elk Grove Village,
Illinois; Madison and Wausau, Wisconsin; Tampa and Fort Lauderdale, Florida and
Phoenix, Arizona; and leases space for sales offices in Glastonbury,
Connecticut; West Palm Beach, Florida; Wayne, Pennsylvania and De Pere,
Wisconsin. In addition, M&I Data Services manages a processing center in New
York, New York under a facility management contract.
Item 3. Legal Proceedings.
M&I is not currently involved in any material pending legal proceedings
other than litigation of a routine nature and various legal matters which are
being defended and handled in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
Name of Officer Office
J.B. Wigdale Chairman of the Board since December, 1992, Chief Executive
Age 57 Officer since October, 1992, Director since December, 1988,
Vice Chairman of the Board, December, 1988 to December, 1992,
Vice President, 1984 to December, 1988, Marshall & Ilsley
Corporation; Chairman of the Board since January, 1989, Chief
Executive Officer since 1987, Director since 1981, President,
1981 to January, 1989, M&I Marshall & Ilsley Bank; President
and Director - M&I Financial Corp., M&I Insurance Company of
Arizona, Inc., M&I Building Corp. and M&I Capital Markets
Group, Inc.; Director - M&I First National Leasing Corp., M&I
Mortgage Corp., Richter-Schroeder Company, Inc., M&I Data
Services, Inc., Loujo Company and Marshall & Ilsley Trust
Company.
<PAGE>
D.J. Kuester Director since February, 1994, President since 1987, Marshall
Age 52 & Ilsley Corporation; President and Director since January,
1989, Vice President, 1979 to January, 1989, M&I Marshall &
Ilsley Bank; Chairman of the Board, Chief Executive Officer
and Director, M&I Data Services, Inc.; Director - M&I
Financial Corp., M&I Building Corp and M&I Insurance Company
of Arizona, Inc.
G.H. Director since February, 1994, Executive Vice President and
Gunnlaugsson Chief Financial Officer since 1987, Marshall & Ilsley
Age 49 Corporation; Vice President of M&I Marshall & Ilsley Bank
since 1976; Vice President and Director, M&I Insurance Company
of Arizona, Inc.; Director - M&I Mortgage Corp. and M&I Data
Services, Inc.; Director - Loujo Company.
G.D. Strelow Senior Vice President and Human Resources Director of Marshall
Age 59 & Ilsley Corporation since 1993; Vice President and Human
Resources Director of M&I Marshall & Ilsley Bank since 1980.
M.A. Hatfield Senior Vice President since 1993, Treasurer since 1986 and
Age 49 Secretary since 1981, Marshall & Ilsley Corporation; Vice
President and Secretary, M&I Marshall & Ilsley Bank; Secretary
- M&I First National Leasing Corp., M&I Capital Markets Group,
Inc., Marshall & Ilsley Trust Company, M&I Investment
Management Corp., Marshall & Ilsley Trust Company of Florida,
M&I Ventures Corporation and M&I Brokerage Services, Inc.;
Secretary, Treasurer and Director - M&I Financial Corp., M&I
Building Corp., M&I Insurance Company of Arizona, Inc. and M&I
Insurance Services, Inc.; Secretary and Treasurer, M&I
Mortgage Corp.; Secretary and Director, M&I Data Services,
Inc.; Director - Richter-Schroeder Company, Inc., Loujo
Company and M&I Wauwatosa State Bank.
P.R. Vice President and Corporate Controller since April, 1989,
Justiliano Vice President, December, 1986 to April, 1989, Marshall &
Age 43 Ilsley Corporation.
J.L. Roberts Vice President and Corporate Banking Controller of Marshall
Age 41 & Ilsley Corporation since April, 1989; Vice President and
Controller of M&I Marshall & Ilsley Bank since 1986.
J.L. Senior Vice President of Marshall & Ilsley Corporation since
Delgadillo 1993; Director of M&I Data Services, Inc. since 1994;
Age 42 President and Chief Operating Officer of M&I Data Services,
Inc. since 1993; Senior Vice President of M&I Data Services,
Inc. since 1989.
If M&I completes the Merger with Valley, additional executive officers
of M&I will be appointed as described in M&I's Registration Statement on Form
S-4 (Reg. No. 33-51753) as filed with the Securities and Exchange Commission.
<PAGE>
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
Stock Listing
Marshall & Ilsley Corporation common stock is traded under the symbol "MRIS"
in the "NASDAQ National Market," and quotations are supplied by the National
Association of Securities Dealers.
Common Dividends Declared*
1993 1992
____ _____
First Quarter $.12 $.11
Second Quarter .14 .12
Third Quarter .14 .12
Fourth Quarter .14 .12
____ _____
$.54 $.48
Price Range of Stock (Low and High Bid)
First Quarter $21.06-23.31 $17.25-18.25
Second Quarter 22.94-25.75 16.94-20.56
Third Quarter 21.25-25.00 19.19-21.81
Fourth Quarter 21.75-24.25 20.06-22.06
* May not add due to rounding. A discussion of the regulatory
restrictions on the payment of dividends can be found under Item 1.
Business, Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation, and in footnote 11 to M&I's
Consolidated Financial Statements in Item 8 of this Form 10-K.
Holders of Common Equity
At December 31, 1993 M&I had approximately 10,374 record holders of its
Common Stock.
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
CONSOLIDATED SUMMARY OF EARNINGS
Years ended December 31 ($000's except share data)
1993 1992 1991 1990 1989
________________________________________________________
<S> <C> <C> <C> <C> <C>
Interest Income:
Loans $383,560 $400,414 $463,867 $501,005 $473,088
Investment Securities:
Taxable 85,201 98,031 97,348 99,466 95,448
Tax Exempt 12,851 20,778 27,587 28,907 30,716
Short-term Investments 5,924 12,849 19,054 12,381 12,707
________________________________________________________
Total Interest Income 487,536 532,072 607,856 641,759 611,959
Interest Expense:
Deposits 145,717 190,582 271,454 297,063 273,546
Short-term Borrowings 16,714 14,600 27,288 50,763 66,866
Long-term Borrowings 15,927 19,085 20,146 18,540 18,004
________________________________________________________
Total Interest Expense 178,358 224,267 318,888 366,366 358,416
________________________________________________________
Net Interest Income 309,178 307,805 288,968 275,393 253,543
Provision for Loan Losses 9,065 15,151 20,555 39,775 12,344
________________________________________________________
Net Interest Income After
Provision for Loan Losses 300,113 292,654 268,413 235,618 241,199
Other Income:
Data Processing Services 136,044 112,964 92,580 75,047 63,298
Trust Services 48,595 45,595 43,133 39,942 37,938
Other 115,233 107,317 91,867 76,537 69,513
________________________________________________________
Total Other Income 299,872 265,876 227,580 191,526 170,749
Other Expense:
Salaries and Benefits 233,564 215,932 187,456 172,690 161,023
Other 169,858 168,141 162,055 150,199 127,741
________________________________________________________
Total Other Expense 403,422 384,073 349,511 322,889 288,764
________________________________________________________
Income Before Taxes 196,563 174,457 146,482 104,255 123,184
Provision for Income Taxes 71,072 57,835 47,135 32,921 37,736
________________________________________________________
Income Before Accounting Changes 125,491 116,622 99,347 71,334 85,448
Changes in Accounting Methods -- (7,387) -- -- --
________________________________________________________
Net Income $125,491 $109,235 $ 99,347 $ 71,334 $ 85,448
</TABLE>
<PAGE>
CONSOLIDATED SUMMARY OF EARNINGS - continued
Years ended December 31 ($000's except share data)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
________________________________________________________
<S> <C> <C> <C> <C> <C>
Per Share*:
Primary Net Income
Before Accounting Changes $1.87 $1.73 $1.50 $1.08 $1.28
Primary net Income
After Accounting Changes 1.87 1.62 1.50 1.08 1.28
Fully Diluted Net Income
Before Accounting Changes 1.76 1.62 1.40 1.03 1.21
Fully Diluted Net Income
After Accounting Changes 1.76 1.52 1.40 1.03 1.21
Common Dividend Declared .54 .48 .43 .39 .35
Other Significant Data:
Year-End Common Stock Price 23.63 21.17 18.33 9.58 11.50
Return on Average Shareholders' Equity
Before Accounting Changes 16.11% 16.16% 15.57% 12.14% 16.02%
Return on Average Shareholders' Equity
After Accounting Changes 16.11 15.29 15.57 12.14 16.02
Return on Average Assets
Before Accounting Changes 1.62 1.56 1.36 1.00 1.26
Return on Average Assets
After Accounting Changes 1.62 1.46 1.36 1.00 1.26
Stock Splits 3 for 1 -- -- -- --
</TABLE>
_______________
*Restated for the 3 for 1 stock split effected in the form of a 200% stock
dividend distributed to shareholders in May, 1993.
<PAGE>
CONSOLIDATED AVERAGE BALANCE SHEETS
Years ended December 31 ($000's except share data)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
_________________________________________________________________
<S> <C> <C> <C> <C> <C>
Assets:
Cash and Due from Banks $ 454,014 $ 421,289 $ 396,232 $ 409,963 $ 411,943
Short-term Investments 182,729 342,176 329,484 143,916 131,730
Trading Securities 4,304 5,387 5,648 7,165 8,983
Investment Securities:
Taxable 1,525,630 1,315,545 1,155,005 1,169,995 1,145,256
Tax Exempt 250,677 345,491 392,753 392,184 414,199
Loans:
Commercial 1,821,254 1,757,691 1,738,436 1,778,950 1,744,822
Real Estate 2,340,623 2,236,908 2,236,168 2,129,184 1,896,388
Personal 641,205 586,535 583,933 656,881 586,195
Lease Financing 232,101 222,279 187,146 170,065 155,304
_________________________________________________________________
5,035,183 4,803,413 4,745,683 4,735,080 4,382,709
Allowance for Loan Losses 90,120 78,956 72,320 62,011 56,953
_________________________________________________________________
Net Loans 4,945,063 4,724,457 4,673,363 4,673,069 4,325,756
Other Assets 362,178 327,830 337,058 343,675 332,867
_________________________________________________________________
Total Assets $7,724,595 $7,482,175 $7,289,543 $7,139,967 $6,770,734
Liabilities and Shareholders' Equity:
Noninterest Bearing Deposits $1,510,414 $1,367,413 $1,200,345 $1,140,637 $1,118,457
Interest Bearing Deposits:
Savings and NOW Accounts 1,563,517 1,401,969 1,159,678 1,087,503 1,062,938
Money Market Savings 1,138,337 1,170,486 1,066,276 939,803 950,329
CDs of $100 or more 204,265 233,145 362,184 489,642 361,088
Other 1,581,053 1,766,528 1,987,157 1,891,991 1,659,800
_________________________________________________________________
Total Deposits 5,997,586 5,939,541 5,775,640 5,549,576 5,152,612
Short-term Borrowings 571,594 439,935 498,845 648,541 746,967
Long-term Borrowings 208,772 212,657 211,310 192,126 188,348
Accrued Expenses and Other Liabilities 167,819 175,690 165,650 162,216 149,276
Shareholders' Equity 778,824 714,352 638,098 587,508 533,531
_________________________________________________________________
Total Liabilities and Shareholders' Equity $7,724,595 $7,482,175 $7,289,543 $7,139,967 $6,770,734
Other Significant Data:
Book Value at Year End*** $11.99 $11.47 $10.31 $9.28 $8.59
Average Common Shares
Outstanding*** 63,537,534 63,859,455 63,063,834 63,284,286 63,737,022
Shareholders of Record at
Year End* 10,374 9,381 9,462 10,129 9,979
Employees at Year End* 6,611 6,315 6,137 6,001 5,953
Historically Reported Credit Quality Ratios:*
Net Loan Charge-offs to Average Loans .03% .07% .32% .64% .23%
Total Nonperforming Loans** & OREO to
End of Period Loans & OREO .86 1.14 1.49 1.41 1.24
Allowance for Loan Losses to
End of Period Loans 1.74 1.76 1.55 1.44 1.24
Allowance for Loan Losses to
Total Nonperforming Loans** 261 213 128 125 121
</TABLE>
____________
*Not restated for acquisitions accounted for as poolings of interests
**Nonaccrual loans, restructured loans, and loans past due 90 days or more
***Restated for 3 for 1 stock split
<PAGE>
YIELD & COST ANALYSIS
(Tax equivalent basis) Years ended December 31
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
____________________________________________________________
<S> <C> <C> <C> <C> <C>
Average Rates Earned:
Loans 7.65% 8.38% 9.84% 10.67% 10.90%
Investment Securities - Taxable 5.58 7.45 8.43 8.50 8.33
Investment Securities - Tax Exempt 7.46 8.58 9.85 10.24 10.36
Trading Securities 4.37 4.79 6.48 7.68 7.95
Short-term Investments 3.15 3.69 5.68 8.24 9.12
Average Rates Paid:
Interest Bearing Deposits 3.25% 4.17% 5.93% 6.74% 6.78%
Short-term Borrowings 2.92 3.32 5.47 7.83 8.95
Long-term Borrowings 7.63 8.97 9.53 9.65 9.56
M&I Marshall & Ilsley Bank Average
Prime Rate 6.00% 6.25% 8.46% 10.01% 10.87%
Summary Yield and Cost Analysis:
(As a % of Average Assets)
Average Yield 6.41% 7.26% 8.53% 9.20% 9.29%
Average Cost 2.31 3.00 4.37 5.13 5.29
____________________________________________________________
Net Interest Income 4.10 4.26 4.16 4.07 4.00
Provision for Loan Losses .12 .20 .28 .56 .18
____________________________________________________________
Net Interest Income After
Provision for Loan Losses 3.98 4.06 3.88 3.51 3.82
Net Securities Gains .10 .11 .06 .02 .05
Other Income 3.78 3.44 3.06 2.66 2.48
Other Expense 5.22 5.13 4.80 4.51 4.28
____________________________________________________________
Income Before Income Taxes 2.64 2.48 2.20 1.68 2.07
Provision for Income Taxes 1.02 .92 .84 .68 .81
____________________________________________________________
Income Before Cumulative
Effect of Accounting Changes 1.62 1.56 1.36 1.00 1.26
Net Income 1.62% 1.46% 1.36% 1.00% 1.26%
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Position and Results
of Operations
Marshall & Ilsley Corporation reported consolidated operating earnings of
$125.5 million in 1993, an increase of $8.9 million or 7.6% from the $116.6
million reported in the same period a year ago. Fully diluted earnings per
share on the same basis was $1.76 compared to $1.62 for 1992, an increase of
8.6%. The return on average assets and average shareholders' equity was 1.62%
and 16.11%, respectively, for the year ended December 31, 1993 and 1.56% and
16.16%, respectively, for 1992. Operating earnings increased $17.3 million or
17.4% in 1992 compared to 1991 while 1992 fully diluted earnings per share
increased 15.7% over the prior year.
The increase in 1993 net income was due to higher net interest income, a
lower loan loss provision and higher noninterest related revenues.
During 1992, the Corporation adopted two new accounting standards which
required the recognition of unrecorded post retirement benefits and that current
enacted tax rates be used in determining deferred tax balances. The cumulative
effect of the adoption of these accounting standards which was recognized as of
January 1, 1992, amounted to an after tax charge of $7.4 million or $.10 per
share on a fully diluted basis.
Provision for Loan Losses and Credit Quality
The provision for loan losses amounted to $9.1 million for 1993 a decrease
of $6.1 million or 40.2% when compared to $15.2 million in 1992 and $20.6
million in 1991. The decline in the 1993 provision level reflects current
favorable trends in nonperforming assets and net charge-offs in relation to the
allowance for loan losses.
Nonperforming assets at December 31, 1993 amounted to $46.4 million
compared to $55.6 million at December 31, 1992. Nonperforming loans declined
by $4.5 million while other real estate owned declined $4.7 million. The
largest contributor in the decline in nonperforming loans was nonaccrual loans
which declined $3.8 million and amounted to $27.9 million at December 31, 1993.
Each major category of nonaccrual loans declined from the prior year. Other
real estate owned declined due to the sale of properties across all major
affiliate groups.
Net charge-offs amounted to $1.8 million for the year ended December 31,
1993 compared to $3.2 million in the prior year. Loan charge-offs in 1993 were
at the lowest level reported for the past five years. Recoveries for the year
ended December 31, 1993 amounted to $5.0 million, a decline of $5.4 million from
that reported for 1992 when recoveries amounted to $10.4 million. During 1992,
a $4.4 million recovery on one large commercial loan, partially charged-off in
1990, was realized by our lead bank (M&I Marshall & Ilsley Bank).
The allowance for loan losses amounted to $93.2 million at December 31,
1993 compared to $85.9 million a year ago, an increase of $7.3 million or 8.5%.
While the allowance for loan losses to nonperforming loan coverage ratio
increased from 213% at December 31, 1992 to 261% at December 31, 1993, the
allowance for loan losses to total loans coverage ratio declined slightly to
1.74% due to the increase in loans outstanding.
Since the third quarter of 1993, nonperforming assets declined $4.8
million or 9.4%. Nonaccrual loans declined by $3.9 million while other real
estate owned declined $1.6 million. Net charge-offs for the fourth quarter of
1993 amounted to $1.2 million which were $1.0 million higher than the third
quarter of 1993.
<PAGE>
CREDIT QUALITY December 31,
($ 000's)
Consolidated Credit Quality Information
Nonperforming Assets by Type
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
____________________________________________________________
<S> <C> <C> <C> <C> <C>
Loans:
Nonaccrual $27,880 $31,630 $47,519 $45,706 $34,920
Renegotiated 2,195 3,601 4,075 5,464 6,892
Past Due 90 Days or More 5,694 5,009 6,148 3,682 5,613
____________________________________________________________
Total Nonperforming Loans 35,769 40,240 57,742 54,852 47,425
Other Real Estate
Owned (OREO) 10,634 15,341 13,797 12,543 10,255
____________________________________________________________
Total Nonperforming Assets $46,403 $55,581 $71,539 $67,395 $57,680
Allowance for Loan Losses $93,189 $85,884 $73,915 $68,723 $57,308
Net Loan Charge-offs
Loan Charge-offs $ 6,786 $13,592 $21,233 $35,973 $14,096
Loan Recoveries (5,026) (10,410) (5,870) (5,831) (3,893)
____________________________________________________________
Total Net Loan Charge-offs $ 1,760 $ 3,182 $15,363 $30,142 $10,203
Consolidated Statistics
Net Charge-offs to
Average Loans .03% .07% .32% .64% .23%
Total Nonperforming Loans
to Total Loans .67 .82 1.21 1.15 1.03
Total Nonperforming Assets
to Total Loans and Other
Real Estate Owned .86 1.14 1.49 1.41 1.24
Allowance for Loan Losses
to Total Loans 1.74 1.76 1.55 1.44 1.24
Allowance for Loan Losses
to Nonperforming Loans 261 213 128 125 121
</TABLE>
<PAGE>
Major Affiliate Group Credit Quality Information
Total Nonperforming Assets by Major Affiliate Group
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
____________________________________________________________
<S> <C> <C> <C> <C> <C>
M&I Marshall & Ilsley Bank $13,656 $13,847 $17,628 $17,392 $13,367
Other Wisconsin Affiliates 28,733 32,982 38,335 37,848 34,352
M&I Thunderbird Bank 4,014 8,752 15,576 12,155 9,961
Total Nonperforming Assets $46,403 $55,581 $71,539 $67,395 $57,680
Loan Loss Provisions by Major Affiliate Group
M&I Marshall & Ilsley Bank $ 1,200 $ 2,500 $ 4,316 $12,001 $ 3,336
Other Wisconsin Affiliates 7,190 10,926 13,539 7,309 5,678
M&I Thunderbird Bank 675 1,725 2,700 20,465 3,330
Total Loan Loss Provisions $ 9,065 $15,151 $20,555 $39,775 $12,344
Ratio of Allowance for Loan Losses to
Nonperforming Loans by Major Affiliate Group
M&I Marshall & Ilsley Bank 455% 471% 173% 161% 186%
Other Wisconsin Affiliates 193 163 122 113 119
M&I Thunderbird Bank 434 177 85 116 48
Consolidated 261% 213% 128% 125% 121%
</TABLE>
<PAGE>
The table below presents a summary of the major categories of
consolidated nonaccrual loans:
<TABLE>
<CAPTION>
1993 1992
___________________________________ __________________________________
% of % of
Loan % of Loan % of
Nonaccrual Type Nonaccrual Nonaccrual Type Nonaccrual
___________________________________ __________________________________
<S> <C> <C> <C> <C> <C> <C>
Commercial
Commercial $ 5,663 .30% 20.3% $ 7,745 .44% 24.5%
Lease Financing
Receivables 2,819 1.18 10.1 2,091 .91 6.6
___________________________________ __________________________________
Total Commercial 8,482 .40 30.4 9,836 .50 31.1
Real Estate
Construction and
Land Development 388 .18 1.4 1,237 .78 3.9
Commercial Real Estate 12,578 1.18 45.1 12,245 1.31 38.7
Residential Real Estate 5,014 .40 18.0 6,166 .51 19.5
___________________________________ __________________________________
Total Real Estate 17,980 .71 64.5 19,648 .86 62.1
Personal 1,418 .20 5.1 2,146 .36 6.8
___________________________________ __________________________________
Total $27,880 .52% 100.0% $31,630 .65% 100.0%
</TABLE>
<PAGE>
INCOME STATEMENT COMPONENTS AS A PERCENT OF AVERAGE TOTAL ASSETS
The table below presents a summary of the major elements of the income
statement for 1993, 1992, and 1991. Each of the elements is stated as a percent
of average total assets outstanding for the respective year and, where
appropriate, is converted to a fully taxable equivalent basis (FTE).
1993 1992 1991
______ ______ ______
Interest Income 6.41% 7.26% 8.53%
Interest Expense (2.31) (3.00) (4.37)
______ ______ ______
Net Interest Income 4.10 4.26 4.16
Provision for Loan Losses (.12) (.20) (.28)
Net Securities Gains .10 .11 .06
Other Income 3.78 3.44 3.06
Other Expense (5.22) (5.13) (4.80)
______ ______ ______
Income Before Income Taxes 2.64 2.48 2.20
Income Taxes (1.02) (.92) (.84)
______ ______ ______
Income Before Cumulative
Effect of Accounting Changes 1.62% 1.56% 1.36%
Net Income 1.62% 1.46% 1.36%
Net Interest Income
Net interest income was $309.2 million in 1993, a slight increase from
$307.8 million earned in 1992. The benefit was a result of a modest increase
in average earning assets combined with a shift in the asset and funding mix.
Average earning assets increased $186.5 million or 2.7% in 1993 and
amounted to $7.0 billion. Short-term investments declined $160.5 million while
long-term investments increased $115.3 million and amounted to $1.78 billion.
The tax-exempt portion of our long-term investment portfolio continues to
decline as the availability of such securities diminish and therefore are
replaced with taxable investments.
Total average loans increased $231.8 million or 4.8% and amounted to $5.04
billion for the year ended December 31, 1993. Average commercial loans grew
$63.6 million or 3.6% in 1993 compared to the prior year. Average total real
estate loans amounted to $2.34 billion compared to $2.24 billion last year, an
increase of 4.6%. Of this increase, commercial real estate increased 9.3% or
$91.6 million with business real estate loans contributing $53.4 million of the
growth. Residential real estate loans grew a modest 1.0% or $12.1 million and
amounted to $1.27 billion in 1993. Personal loans amounted to $641.2 million
in 1993, an increase of 9.3% from the prior year. Student loan activity was the
largest contributor to the increase. Lease financing grew 4.4% or $9.8 million
in 1993 compared to 1992.
As discussed throughout the year, the shift in our funding mix also helped
contribute to the slight increase in net interest income. Average noninterest
bearing deposits amounted to $1.51 billion for the year ended December 31, 1993,
an increase of $143.0 million or 10.5% from that reported in 1992. Total
interest bearing deposits amounted to $4.49 billion a decline of $85.0 million
or 1.9% compared to 1992. Core interest bearing deposit accounts increased
$129.4 million for 1993 compared to the prior year. Regular savings increased
$110.0 million or 14.7% while NOW/Super NOW accounts increased $51.5 million or
7.9% in the current year when compared to 1992. Money market accounts declined
<PAGE>
$32.1 million or 2.7%. Large dollar certificate of deposit accounts and other
certificates of deposit and time accounts decreased $28.8 million or 12.4%, and
$185.5 million or 10.5%, respectively, when comparing 1993 to the prior year.
In November 1992, the Corporation redeemed, at par, the $60 million
10 1/2% notes due in 1995. In July 1993, the Corporation issued $100 million
of 10 year 6.375% unsecured subordinated notes. The proceeds were used for
general corporate purposes which included the financing of the treasury share
repurchase program announced in April, 1993.
The net interest margin as a percent of average earning assets declined
from 4.68% for the year ended December 31, 1992 to 4.53% in the current year.
The average yield on our interest earning assets was 7.08%, a decline of 89
basis points from 1992. Loan yields declined by 73 basis points to 7.65% and
our long-term investment securities yielded 5.85%, a decline of 184 basis points
from that earned a year ago. The total cost of our interest bearing liabilities
amounted to 3.39% for 1993, a decline of 90 basis points when compared to the
prior year. The cost of our core interest bearing deposit accounts declined 79
basis points in the current year compared to 1992, while the cost of our other
time deposit accounts declined 89 basis points. Due to the above noted
realignment of our long-term borrowings, the cost associated with this funding
source declined 134 basis points and amounted to 7.63% compared to 8.97% in
1992.
While the spread between interest earning assets and interest bearing
liabilities declined by 1 basis point, the value of our noninterest bearing
deposit accounts declined by 89 basis points.
Net interest income was $307.8 million in 1992, an increase of $18.8
million or 6.5% from the $289.0 million earned in 1991. The improvement was
primarily due to an increase in the interest margin, an increase in average
earning assets and a continued favorable shift in the funding mix.
Average earning assets increased $183.4 million or 2.8% in 1992 and grew
to $6.8 billion. Total securities increased 7.3% while relatively slower loan
growth amounted to 1.2% and was exhibited across all major categories of loans.
The margin continued to benefit from a more favorable mix of funding
sources and interest rate environment trends. Noninterest bearing deposits
increased $167.0 million or 13.9% in 1992 compared to the prior year. While
total average interest bearing deposit balances remained relatively unchanged
in 1992, the changes within the individual categories of deposits helped
contribute to the margin increase. The interest margin also benefitted from the
more recent interest rate environment trends. While the yield on total average
interest earning assets declined from 9.38% in 1991 to 7.97% in 1992, a decline
of 141 basis points, the rate paid on our interest bearing liabilities declined
174 basis points. These rates resulted in a net interest margin on average
earning assets of 4.68% in 1992 compared to 4.57% in the prior year.
<PAGE>
The table below shows the composition of net interest income on a FTE
basis:
ANALYSIS OF NET INTEREST INCOME
($000's)
<TABLE>
<CAPTION>
1993 1992
____________________________________ __________________________________
Average Average
Average Yield or Average Yield or
Balance Interest Cost Balance Interest Cost
____________________________________ __________________________________
Average Assets:
<S> <C> <C> <C> <C> <C> <C>
Loans $5,035,183 $385,315 7.65% $4,803,413 $402,362 8.38%
Investment Securities:
Taxable 1,525,630 85,201 5.58 1,315,545 98,031 7.45
Tax Exempt 250,677 18,703 7.46 345,491 29,647 8.58
Interest-bearing deposits
in other banks 80,853 2,413 2.98 118,237 4,340 3.67
Funds sold and security
resale agreements 60,786 1,907 3.14 160,534 5,697 3.55
Trading securities 4,304 188 4.37 5,387 258 4.79
Other short-term
investments 41,090 1,437 3.50 63,405 2,578 4.07
____________________________________ __________________________________
Total interest-earning assets 6,998,523 495,164 7.08% 6,812,012 542,913 7.97%
Cash and demand deposits
due from banks 454,014 421,289
Premises and equipment, net 178,865 156,600
Other assets 183,313 171,230
Allowance for loan losses (90,120) (78,956)
__________ __________
Total Assets $7,724,595 $7,482,175
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1993 1992
____________________________________ __________________________________
Average Average
Average Liabilities and Average Yield or Average Yield or
Shareholders' Equity Balance Interest Cost Balance Interest Cost
____________________________________ __________________________________
<S> <C> <C> <C> <C> <C> <C>
Savings and interest-bearing
demand deposits $2,701,854 $ 65,109 2.41% $2,572,455 $ 82,349 3.20%
Other time deposits 1,785,318 80,608 4.52 1,999,673 108,233 5.41
Short-term borrowings 571,594 16,714 2.92 439,935 14,600 3.32
Long-term borrowings 208,772 15,927 7.63 212,657 19,085 8.97
____________________________________ __________________________________
Total interest-bearing
liabilities 5,267,538 178,358 3.39% 5,224,720 224,267 4.29%
Noninterest bearing deposits 1,510,414 1,367,413
Other liabilities 167,819 175,690
Shareholders' equity 778,824 714,352
__________ __________
Total Liabilities and
Shareholders' Equity $7,724,595 $7,482,175
Net interest margin
(FTE) as a percent
of earning assets 316,806 4.53% 318,646 4.68%
Fully taxable
equivalent
adjustment (7,628) (10,841)
________ ________
Net Interest Income $309,178 $307,805
</TABLE>
Other Income
Total other income amounted to $299.9 million for 1993, an increase of
$34.0 million or 12.8% from $265.9 million reported in 1992. The largest
contributor was data processing services revenue which increased $23.1 million
or 20.4% in 1993, and amounted to $136.0 million. Processing revenue and
software related revenue contributed to the increase. Certain contract
termination fees were paid by our customers who terminated their processing
agreements due to their being acquired by another entity. The amount recorded
as contract termination revenue amounted to $5.4 million in 1993 compared to
$1.1 million in 1992.
Trust services revenue increased $3.0 million or 6.6% in 1993 compared to
the prior year.
Other customer service revenue amounted to $82.4 million for 1993, an
increase of $4.3 million or 5.5%, when compared to $78.1 million earned in 1992.
Service charges on commercial demand accounts continue to increase and amounted
to $21.4 million, an increase of 9.3% or $1.8 million when compared to $19.6
million earned in 1992. Credit card fees increased $1.1 million or 12.9% in
1993 as compared to the prior year. Fees from our brokerage operations
<PAGE>
increased $1.3 million or 50.3% and amounted to $3.8 million for 1993. Total
loan fees amounted to $16.8 million for 1993 compared to $15.8 million in the
prior year. Other miscellaneous income also increased in 1993 and amounted to
$25.0 million, an increase of 19.9% or $4.1 million, when compared to $20.8
million earned in 1992. Income from the sale of 15 and 30 year mortgages
acquired and sold in the secondary market amounted to $6.7 million compared to
$3.4 million in 1992, an increase of $3.3 million.
Net securities gains from Investment Securities Available for Sale
amounted to $7.8 million in 1993 compared to $8.3 million in the prior year.
The primary sources of this activity were gains realized by the Corporation from
the sale of certain equity securities and gains realized by our Capital Markets
affiliate. Gains realized by Capital Markets were $3.3 million in 1993 and $6.7
million in 1992.
Other income amounted to $265.9 million in 1992, a $38.3 million or 16.8%
increase from $227.6 million reported in 1991. The largest contributor was data
processing fees which increased 22% in 1992 and amounted to $113.0 million.
This growth was driven by both processing and software revenue growth. Trust
services revenue increased 5.7% in 1992 compared to the prior year. Other
customer services amounted to $78.1 million in 1992 compared to $66.1 million
in 1991. Service charges on deposit accounts, primarily commercial deposit
accounts, contributed $3.6 million of the increase in 1992. Fees earned on the
origination of real estate loans amounted to $3.9 million in 1992 compared to
$2.4 million in 1991. Loan servicing income increased $1.2 million in 1992 and
amounted to $4.9 million. Our servicing portfolio grew 48.5% in 1992 and
amounted to $1.5 billion at December 31, 1992. Corporate finance fees increased
$1.1 million in 1992 while brokerage income increased $1.5 million in 1992
compared to the prior year.
Net securities gains amounted to $8.3 million in 1992 compared to $4.4
million in 1991. During 1992, our Capital Markets affiliate reported net gains
of $6.7 million due primarily to the sale of one of its investments, whereas a
loss of $.4 million was recognized in the prior year. The Corporation also sold
certain equity securities, carried at the lower of cost or market, and realized
a gain of $1.2 million in 1992 and $3.6 million in 1991.
Other miscellaneous income amounted to $20.8 million in 1992 compared to
$21.4 million in the prior year. Income from the sale of 15 and 30 year
mortgages acquired and sold in the secondary market amounted to $3.4 million in
1992 compared to $.4 million in the prior year. During 1991, the Corporation
accrued $5 million for recovery of losses arising out of litigation settled in
1990.
Other Expense
Other expense amounted to $403.4 million in 1993 compared to $384.1
million in 1992, an increase of $19.3 million or 5.0%. Salaries and employee
benefits expense increased $17.6 million or 8.2% in 1993 compared to the prior
year and amounted to $233.6 million. Our data processing subsidiary contributed
$16.7 million or 94.5% of the increase which was partially the result of their
number of full-time employees increasing from 1600 to 1866. The purchase of a
data center in the Southeast resulted in the addition of 144 full-time
employees.
Net occupancy expense for 1993 remained relatively unchanged from the
prior year. Equipment expense amounted to $42.5 million, an increase of 9.9%
or $3.8 million from 1992. Expanded computer capacity, more data storage
devices and other related data processing equipment all contributed to the
increase in equipment expense.
Processing expense increased 25.2% during 1993 and amounted to $13.2
million compared to $10.5 million in the prior year. Our data processing
subsidiary contributed a significant portion of this increase. The outsourcing
of certain record retention functions resulted in the increase in processing
charges by approximately $1.3 million.
Other miscellaneous expense amounted to $58.6 million, a decrease of $5.0
million or 7.8%, from $63.6 million reported in 1992. This category is affected
by the capitalization of costs, net of amortization, associated with software
development and data processing conversions. During 1993 the amount of expense
<PAGE>
capitalized, net of amortization, exceeded the amount recorded in 1992 by
approximately $8.0 million. Of this net increase, $4.9 million related to costs
associated with conversion activity while $3.1 million related to increased
software development work.
Total other expense in 1992 increased $34.6 million or 9.9% from $349.5
million reported in the prior year. Salaries and benefits expense amounted to
$215.9 million in 1992, an increase of 15.2% from that reported in 1991. Our
data processing subsidiary contributed $12.4 million of the increase.
Contributing to this growth was an increase in the number of full time employees
at that subsidiary. This was driven primarily by the revenue growth discussed
above. During 1992, the Corporation established supplemental retirement plans
for certain key executives. The expense for these plans included $4.0 million
which was nonrecurring.
Net occupancy expense increased a modest 1.1% in 1992 as compared to 1991.
Equipment expense amounted to $38.7 million for 1992 as compared to $36.0
million in 1991. A substantial portion of this increase was due to increased
depreciation charges on equipment used by our data processing subsidiary.
Payments to regulatory agencies amounted to $14.0 million in 1992, an
increase of $1.4 million when compared to 1991. The increase was primarily due
to higher FDIC insurance costs related to increased deposits in addition to a
full year's impact of 1991 insurance rate increases. Processing charges
increased $1.3 million or 14.0% in 1992 when compared to the prior year.
Approximately 57% of the increase is due to our data processing business.
Income Tax Provision
The provision for income taxes was $71.1 million in 1993 compared to $57.8
million in 1992 and $47.1 million in 1991. The increases in the provision are
due to higher pre-tax earnings and declines in tax exempt income along with an
increase of $1.2 million in 1993 due to a change in the Federal tax rate.
Asset/Liability Management
Asset/Liability management involves the funding and investment strategies
necessary to maintain an appropriate balance between interest sensitive assets
and liabilities as well as to assure adequate liquidity. These strategies
determine the characteristics and mix of the balance sheet. They affect net
interest margins, maturity patterns, interest rate sensitivity and risk, as well
as resource allocations.
The Corporation combines the active management of the balance sheet
position over interest rate cycles with the limited use of hedging products, to
confine interest rate risk within prudent parameters. We position the balance
sheet in a manner which will match asset and liability repricing schedules to
insulate our net interest margin from cyclical swings in interest rates, while
consciously matching or mismatching discretionary asset and liability repricing
schedules to take advantage of interest rate swings over short periods of time.
Adequate funding sources are maintained through a full line of deposit and
short-term borrowing products, competitively priced to a diversified customer
base. Asset diversification provides a proper mix of variable and fixed rate
loans, while investment decisions are primarily designed to balance the overall
interest rate risk in the balance sheet. Liquidity is provided through
marketability and an appropriate schedule of maturing investments.
A portion of demand deposits are considered rate sensitive under the
following assumptions. A core amount of demand deposits is calculated at the
beginning of each year. This core number is the average of the previous six
months actual and upcoming twelve months forecasted balances. The core balance
is considered nonrate sensitive and classified as a nonrate sensitive liability
in the "1 year +" time frame. Actual demand deposit balances are compared to
the core balance monthly. The difference, positive or negative, is considered
rate sensitive and classified as a rate sensitive liability. At December 31,
1993, $314 million of demand deposits were classified as rate sensitive in the
"1-30 Days" time frame.
<PAGE>
ASSET/LIABILITY MANAGEMENT
($ in millions)
<TABLE>
<CAPTION>
1-30 31-90 91-180 181-364 1
Days Days Days Days Subtotal Year + Total
__________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
Loans $2,142 $ 397 $ 314 $ 476 $3,329 $ 1,949 $5,278
Securities 132 147 127 398 804 870 1,674
Other Interest
Bearing Assets 129 18 -- -- 147 -- 147
Other Assets -- -- -- -- -- 871 871
__________________________________________________________________________________
Total Assets $2,403 $ 562 $ 441 $ 874 $4,280 $ 3,690 $7,970
Rate Sensitive
Liabilities $2,420 $ 231 $ 309 $ 286 $3,246 $ 2,376 $5,622
Nonrate Sensitive
Liabilities -- -- -- -- -- 2,348 2,348
__________________________________________________________________________________
Total Liabilities
& Equity $2,420 $ 231 $ 309 $ 286 $3,246 $ 4,724 $7,970
Gap $ (17) $ 331 $ 132 $ 588 $(1,034)
Cumulative Gap (17) 314 446 1,034
Cumulative Gap as a
% of Total Assets -0.21% 3.94% 5.60% 12.97%
</TABLE>
Capital Resources
Shareholders' equity was $750.4 million at December 31, 1993 compared to
$760.6 million at December 31, 1992. This decrease resulted from the repurchase
of treasury shares which amounted to $117.9 million in 1993. The Corporation
continues to have a strong capital base and its regulatory capital ratios are
significantly above the defined minimum regulatory ratios.
At December 31, 1993, the Corporation had a total risk-based capital ratio
of 15.49% and a 12.17% core capital to risk-based asset ratio. Selected
leverage capital ratios must also be maintained. The Corporation's leverage
ratio at December 31, 1993 was substantially in excess of the minimum 3% to 5%
guidelines.
The Corporation's subsidiaries, primarily its banking subsidiaries, are
restricted by regulations from making dividend distributions above prescribed
amounts. In addition, banking subsidiaries are limited in making loans and
advances to the Corporation. At December 31, 1993 approximately $109.8 million
and $92.3 million were available for distribution without regulatory approval
from the Corporation's banking and nonbanking subsidiaries, respectively.
Under Federal Reserve Board policy, the Corporation is expected to act as
a source of financial strength to each subsidiary bank and to commit resources
to support each subsidiary bank in circumstances when it might not do so absent
such policy.
In April, 1993 the Board of Directors authorized a common share repurchase
program for 5.7 million shares in anticipation of the conversion of its $50
million convertible note. The Corporation also reaffirmed its on-going program
<PAGE>
to annually purchase up to 1.5 million shares to fund obligations of its stock
option and other benefit plans. During 1993 approximately 5.0 million shares
were purchased.
In July, the Corporation issued $100 million of 10 year, 6.375% unsecured
subordinated notes. The newly issued notes are considered an element of total
capital for risk-based capital purposes. The proceeds were used for general
corporate purposes and to help finance the common share repurchase program. The
Corporation also filed a shelf registration statement with the Securities and
Exchange Commission to issue up to $150 million of medium-term unsecured and
unsubordinated Series C notes which will be due from 9 months to 30 years from
the date of issue, at a fixed and floating rate.
In December, 1993 the Corporation's Board of Directors approved a proposal
to amend the Corporation's Restated Articles of Incorporation, as amended, in
order to, among other things, increase the authorized Common Stock of the
Corporation from 80 million shares to 160 million shares. The proposal is
contingent upon shareholder approval and is to be considered at the special
meeting of shareholders which is scheduled to be held in February, 1994.
During 1992 and 1993, the Financial Accounting Standards Board issued
numerous standards which affect the accounting and reporting of investment
securities, impaired loans and postemployment benefits beginning as early as
1994. As discussed in the Notes to the Consolidated Financial Statements, the
Corporation does not anticipate that the pronouncements, taken individually,
will have a material impact on the Consolidated Financial Statements.
<PAGE>
Item 8. Consolidated Financial Statements and Supplementary Data
CONSOLIDATED BALANCE SHEETS
December 31 ($000's except share data)
<TABLE>
<CAPTION>
1993 1992
Assets _______________________________
<S> <C> <C>
Cash and Cash Equivalents:
Cash and Due from Banks $ 479,473 $ 491,826
Funds Sold and Security Resale Agreements 59,696 17,435
Money Market Funds 35,866 34,768
_______________________________
Total Cash and Cash Equivalents 575,035 544,029
Trading Securities, at Market Value 2,305 12,633
Other Short-term Investments, at Cost which Approximates
Market Value 49,365 244,345
Investment Securities Held to Maturity,
Market Value $173,262 ($305,467 in 1992) 169,484 300,710
Investment Securities Available for Sale,
Market Value $1,521,401 ($1,610,377 in 1992) 1,504,197 1,582,061
Loans, Net of Unearned Income of $37,939
($38,238 in 1992) 5,371,085 4,878,724
Less: Allowance for Loan Losses 93,189 85,884
_______________________________
Net Loans 5,277,896 4,792,840
Premises and Equipment 196,530 168,889
Accrued Interest and Other Assets 195,402 204,837
_______________________________
Total Assets $7,970,214 $7,850,344
Liabilities and Shareholders' Equity
Deposits:
Noninterest Bearing $1,724,256 $1,636,153
Interest Bearing 4,471,618 4,575,976
_______________________________
Total Deposits 6,195,874 6,212,129
Short-term Borrowings 633,668 550,376
Accrued Expenses and Other Liabilities 187,503 196,998
Long-term Borrowings 202,817 130,201
_______________________________
Total Liabilities 7,219,862 7,089,704
Shareholders' Equity:
Series A Convertible Preferred Stock, $1.00 par value,
500,000 Shares Authorized, 185,314 Shares Issued;
Liquidation Preference of $18,531 185 185
Common Stock, $1.00 par value, 80,000,000 Shares Authorized,
66,424,646 Shares Issued (22,096,832 in 1992) 66,425 22,097
Additional Paid-in Capital 50,184 93,792
Retained Earnings 756,556 666,499
_______________________________
873,350 782,573
Less:Treasury Stock, at Cost, 5,821,786 Shares (644,963 in 1992) 121,106 18,798
Deferred Compensation 1,892 3,135
_______________________________
Total Shareholders' Equity 750,352 760,640
_______________________________
Total Liabilities and Shareholders' Equity $7,970,214 $7,850,344
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31 ($000's except share data)
<TABLE>
<CAPTION>
1993 1992 1991
_________________________________________
<S> <C> <C> <C>
Interest Income
Loans $383,560 $400,414 $463,867
Investment Securities:
Taxable 85,201 98,031 97,348
Exempt from Federal Income Taxes 12,851 20,778 27,587
Trading Securities 167 234 340
Other Short-term Investments 5,757 12,615 18,714
_________________________________________
Total Interest Income 487,536 532,072 607,856
Interest Expense
Deposits 145,717 190,582 271,454
Short-term Borrowings 16,714 14,600 27,288
Long-term Borrowings 15,927 19,085 20,146
_________________________________________
Total Interest Expense 178,358 224,267 318,888
_________________________________________
Net Interest Income 309,178 307,805 288,968
Provision for Loan Losses 9,065 15,151 20,555
_________________________________________
Net Interest Income After Provision for Loan Losses 300,113 292,654 268,413
Other Income
Data Processing Services 136,044 112,964 92,580
Trust Services 48,595 45,595 43,133
Other Customer Services 82,415 78,133 66,064
Net Securities Gains 7,837 8,343 4,381
Other 24,981 20,841 21,422
_________________________________________
Total Other Income 299,872 265,876 227,580
Other Expense
Salaries and Employee Benefits 233,564 215,932 187,456
Net Occupancy 23,560 23,805 23,543
Equipment 42,538 38,691 36,043
Payments to Regulatory Agencies 14,119 14,027 12,658
Processing Charges 13,197 10,541 9,246
Supplies and Printing 9,808 9,352 8,731
Professional Services 8,038 8,161 7,935
Other 58,598 63,564 63,899
_________________________________________
Total Other Expense 403,422 384,073 349,511
Income Before Income Taxes and Cumulative
Effect of Changes in Accounting Principles 196,563 174,457 146,482
Provision for Income Taxes 71,072 57,835 47,135
_________________________________________
Income Before Cumulative Effect of
Changes in Accounting Principles 125,491 116,622 99,347
Cumulative Effect of Changes in Accounting
Principles, Net of Income Taxes -- (7,387) --
_________________________________________
Net Income $125,491 $109,235 $ 99,347
Net Income Per Common Share
Primary:
Income Before Cumulative Effect of Changes
in Accounting Principles $ 1.87 $ 1.73 $ 1.50
Cumulative Effect of Changes in Accounting Principles -- (.11) --
_________________________________________
Net Income $ 1.87 $ 1.62 $ 1.50
Fully Diluted:
Income Before Cumulative Effect of Changes
in Accounting Principles $ 1.76 $ 1.62 $ 1.40
Cumulative Effect of Changes in Accounting Principles -- (.10) --
_________________________________________
Net Income $ 1.76 $ 1.52 $ 1.40
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31 ($000's)
<TABLE>
<CAPTION>
1993 1992 1991
____________________________________________
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Income $ 125,491 $ 109,235 $ 99,347
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 34,392 20,348 20,578
Provision for Loan Losses 9,065 15,151 20,555
Gains on Sales of Assets (13,078) (14,334) (7,624)
Proceeds from Sales of Trading
Securities and Loans Held for Resale 2,629,311 2,911,508 2,681,022
Purchases of Trading Securities and
Loans Held for Resale (2,641,981) (2,962,291) (2,699,940)
Other (2,667) (11,334) 4,509
____________________________________________
Total Adjustments 15,042 (40,952) 19,100
____________________________________________
Net Cash Provided by Operating Activities 140,533 68,283 118,447
Cash Flows From Investing Activities
Net (Increase) Decrease in Shorter Term Securities 50,050 36,615 (25,145)
Proceeds from Maturities of Longer Term Securities 1,033,029 911,863 589,169
Proceeds from Sales of Securities Available for Sale 18,648 17,692 72,774
Purchases of Longer Term Securities (702,318) (1,311,362) (736,861)
Net (Increase) Decrease in Loans (463,298) (49,921) 13,536
Purchases of Assets to be Leased (94,187) (95,964) (89,860)
Principal Payments on Lease Receivables 105,352 96,062 85,840
Purchases of Premises and Equipment, net (55,129) (38,341) (20,348)
Other (393) 28,795 12,338
____________________________________________
Net Cash Used in Investing Activities (108,246) (404,561) (98,557)
Cash Flows From Financing Activities
Net Increase (Decrease) in Deposits (16,255) 79,050 153,458
Proceeds from Issuance of Commercial Paper 1,348,661 597,794 607,787
Principal Payments on Commercial Paper (1,325,634) (522,616) (644,483)
Net Increase (Decrease) in Other Short-term Borrowings 62,848 888 (60,767)
Proceeds from Issuance of Long-term Debt 116,959 53,121 37,730
Payments of Long-term Debt (48,659) (95,768) (28,149)
Dividends Paid (35,421) (31,634) (27,998)
Purchase of Treasury Stock (114,686) (99) (1,588)
Other 10,906 6,742 4,089
____________________________________________
Net Cash Provided (Used) by Financing Activities (1,281) 87,478 40,079
____________________________________________
Net Increase (Decrease) in Cash and Cash Equivalents 31,006 (248,800) 59,969
Cash and Cash Equivalents, Beginning of Year 544,029 792,829 732,860
____________________________________________
Cash and Cash Equivalents, End of Year $ 575,035 $ 544,029 $ 792,829
Supplemental Cash Flow Information:
Cash Paid During the Year for:
Interest $ 177,484 $ 233,069 $ 324,923
Income Taxes 69,299 67,490 47,507
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
($000's except share data)
<TABLE>
<CAPTION>
Additional Treasury
Preferred Common Paid-in Retained Common Deferred
Stock Stock Capital Earnings Stock Compensation
______________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1990 $ 185 $ 21,995 $ 93,066 $517,690 $ 32,753 $ 967
Net Income -- -- -- 99,347 -- --
Issuance of 69,766 Common Shares
on Conversion of Convertible Notes -- 69 738 -- -- --
Issuance of 280,469 Common Shares
Under Stock Option and Restricted
Stock Plans -- -- (1,221) -- (8,145) --
Acquisition of 56,413 Common Shares -- -- -- -- 1,587 --
Dividends Declared on Preferred Stock -
$4.55 Per Share -- -- -- (844) -- --
Dividends Declared on Common Stock -
$0.43 Per Share -- -- -- (27,154) -- --
Net Change in Deferred Compensation -- -- -- -- -- 1,641
Other -- -- -- (66) -- --
______________________________________________________________________
Balance, December 31, 1991 185 22,064 92,583 588,973 26,195 2,608
Net Income -- -- -- 109,235 -- --
Issuance of 32,558 Common Shares on
Conversion of Convertible Notes -- 33 344 -- -- --
Issuance of 260,669 Common Shares
Under Stock Option and Restricted
Stock Plans -- -- (938) -- (7,589) --
Acquisition of 5,148 Common Shares -- -- -- -- 192 --
Dividends Declared on Preferred Stock -
$5.08 Per Share -- -- -- (942) -- --
Dividends Declared on Common Stock -
$0.48 Per Share -- -- -- (30,692) -- --
Net Change in Deferred Compensation -- -- -- -- -- 527
Other -- -- 1,803 (75) -- --
______________________________________________________________________
Balance, December 31, 1992 185 22,097 93,792 666,499 18,798 3,135
Net Income -- -- -- 125,491 -- --
3 for 1 Stock Split Effected in the
Form of a 200% Stock Dividend -- 44,194 (44,194) -- -- --
Issuance of 134,150 Common Shares
on Conversion of Convertible Notes -- 134 383 -- -- --
Issuance of 1,166,420 Common Shares
Under Stock Option and Restricted
Stock Plans -- -- (4,675) -- (15,582) --
Acquisition of 5,053,317 Common Shares -- -- -- -- 117,890 --
Dividends Declared on Preferred Stock -
$5.76 Per Share -- -- -- (1,067) -- --
Dividends Declared on Common Stock -
$0.54 Per Share -- -- -- (34,354) -- --
Net Change in Deferred Compensation -- -- -- -- -- (1,243)
Other -- -- 4,878 (13) -- --
______________________________________________________________________
Balance, December 31, 1993 $ 185 $ 66,425 $ 50,184 $756,556 $121,106 $ 1,892
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993, 1992, and 1991 ($000's except share data)
1. Summary of Significant Accounting Policies
Consolidation principles - The Consolidated Financial Statements
include the accounts of Marshall & Ilsley Corporation (the "Corporation")
and all subsidiaries. All significant intercompany balances and
transactions are eliminated in consolidation. Certain amounts in the 1992
and 1991 Consolidated Financial Statements have been reclassified to conform
with the 1993 presentation.
Cash and cash equivalents - For purposes of the Consolidated Financial
Statements, the Corporation defines cash equivalents as short-term
investments which have an original maturity of three months or less and are
readily convertible into cash.
Securities - Securities, when purchased, are designated as Trading,
Investment Securities Held to Maturity, or Investment Securities Available
for Sale and remain in that category until they are sold or mature. The
specific identification method is used in determining the cost of securities
sold.
Investment Securities Held to Maturity are carried at cost, adjusted
for amortization of premiums and accretion of discounts. Investment
Securities Available for Sale are carried at the lower of amortized cost or
market. See Note 6 for changes affecting Investment Securities Available
for Sale beginning January 1, 1994. Short-term Investments other than
Trading Securities are stated at cost, which approximates market value.
Trading Securities are carried at market value. Adjustments to the
carrying value of securities are reflected in the consolidated income
statements.
Loans - Interest on loans, other than direct financing leases, is
recognized as income based on the loan principal outstanding during the
period. Unearned income on direct financing leases is recognized over the
lease term on a basis that results in an approximate level rate of return on
the lease investment. Loans are generally placed on nonaccrual status when
they are past due 90 days as to either interest or principal. When a loan
is placed on nonaccrual status, previously accrued and uncollected interest
is charged to interest income on loans. A nonaccrual loan may be restored
to an accrual basis when interest and principal payments are brought current
and collectibility of future payments is not in doubt.
The Corporation defers and amortizes fees and certain incremental
direct costs, primarily salary and employee benefit expenses, over the
contractual term of the loan or lease as an adjustment to the yield. The
unamortized net fees and costs are reported as part of the loan balance
outstanding.
Allowance for loan losses - The allowance for loan losses is
maintained at a level believed adequate by management to absorb estimated
potential losses in the loan portfolio. Management's determination of the
adequacy of the allowance is based on a continual review of the loan
portfolio, loan loss experience, economic conditions, growth and composition
of the portfolio, and other relevant factors. As a result of management's
continual review, the allowance is adjusted through provisions for loan
losses charged against income.
Premises and equipment - Premises and equipment are recorded at cost
and depreciated principally on the straight-line method with annual rates
varying from 2% to 10% for buildings and 10% to 35% for equipment.
Maintenance and repairs are charged to expense and betterments are
capitalized.
Other real estate owned - Other real estate owned includes assets that
have been acquired in satisfaction of debts, accounted for as insubstance
foreclosures, or bank branch premises held for sale. Other real estate is
recorded at the lower of cost or fair value, less estimated selling costs,
at the date of transfer. Valuation adjustments required at the date of
transfer for assets acquired in satisfaction of debts or accounted for as
<PAGE>
insubstance foreclosures are charged to the allowance for loan losses,
whereas any valuation adjustments on bank branch premises are reported in
other expense. Subsequent to transfer, other real estate owned is carried
at the lower of cost or fair market value, less estimated selling costs,
based upon periodic evaluations. Rental income from properties and gains on
sales are included in other income, and property expenses, which include
carrying costs, required valuation adjustments and losses on sales, are
recorded in other expense.
Mortgage servicing - Normal fees related to the servicing of mortgage
loans are recorded as income when payments are received from mortgagors.
Gains or losses recognized on the sale of mortgage loans are adjusted to
reflect any excess or below market servicing fee generated at the time of
sale. Mortgage loans held for sale to investors are carried at the lower of
cost or market, determined on an aggregate basis, based on outstanding firm
commitments received for such loans or on current market prices.
Data processing services - Direct costs associated with the production
of computer software which will be marketed or used in data processing
operations are capitalized and amortized on the straight-line method over
the estimated economic life of the product, generally four years. Direct
costs associated with customer system conversions to the data services
operations are capitalized and amortized on the straight-line method over
the terms, generally five to seven years, of the related servicing contract.
Routine maintenance of software products, design costs and development costs
incurred prior to establishment of a product's technological feasibility are
expensed as incurred. Net unamortized capitalized costs were $16,979 at
December 31, 1993, and $11,189 at December 31, 1992. Amortization expense
was $4,668, $5,161, and $6,059, for 1993, 1992, and 1991, respectively.
Intangibles - Unamortized intangibles resulting from acquisitions,
primarily goodwill, core deposit premiums and purchased mortgage servicing
rights were $23,636 at December 31, 1993, and $22,059 at December 31, 1992.
Purchased mortgage servicing rights are amortized primarily over the periods
during which the corresponding servicing revenues are anticipated to be
generated. Adjustments for portfolio runoff in excess of that originally
anticipated are made in the period when the excess runoff appears permanent.
The other intangibles are amortized principally on the straight-line method
over periods ranging from 6 to 20 years. Amortization expense was $3,698,
$3,660, and $4,040, for 1993, 1992, and 1991, respectively.
Foreign exchange contracts - The Corporation enters into foreign
exchange contracts primarily to enable customers involved in international
trade to hedge their exposure to foreign currency fluctuations. These
contracts are carried at market value, with realized and unrealized gains
and losses included in other income.
Stock split - Common stock per share and average share information for
years 1992 and prior have been retroactively restated for the 3 for 1 stock
split effected in the form of a 200% stock dividend which was distributed to
shareholders in May 1993.
Net income per share - Primary net income per share is computed using
the weighted average number of common shares outstanding plus common
equivalent shares issuable upon the assumed conversion of the preferred
stock outstanding and shares issuable under outstanding stock option plans.
The average number of common and common equivalent shares used in computing
primary net income per share was 67,046,820 in 1993, 67,522,944 in 1992, and
66,162,405 in 1991.
Fully diluted net income per share also includes dilution resulting
from the assumed conversion of the convertible notes. The average number of
shares used in the computation of fully diluted net income per share was
72,957,677 in 1993, 73,673,022 in 1992, and 72,961,527 in 1991.
2. Business Combination
In September 1993, the Corporation entered into an Agreement and Plan
of Merger ("Merger Agreement") whereby Valley Bancorporation ("Valley"), a
Wisconsin bank holding company located in Appleton, Wisconsin, with
<PAGE>
consolidated assets of approximately $4.6 billion, will merge with and into
the Corporation ("the Merger"). Under the terms of the Merger Agreement,
each share of Valley common stock will be converted into the right to
receive 1.72 shares of the Corporation's common stock in a tax-free
reorganization which is to be accounted for as a pooling of interests.
The following unaudited pro forma data combines the results of
operations for the Corporation and Valley, giving effect to the Merger as if
it had been consummated at December 31, 1993.
1993 1992 1991
________ ________ ________
Net Interest Income $484,588 $474,345 $430,573
Income Before Cumulative Effects of Changes in
Accounting Principles (Operating Income) 171,487 156,270 130,013
Net Income 171,487 147,266 130,013
Income Per Common Share
Primary
Operating Income 1.67 1.55 1.33
Net Income 1.67 1.46 1.33
Fully Diluted
Operating Income 1.60 1.48 1.27
Net Income 1.60 1.40 1.27
The Merger Agreement is to be approved by the shareholders of the
Corporation and Valley at their respective special shareholders' meetings
which are scheduled for February 1994.
The Merger is also subject to the approval of certain regulatory
authorities. Certain divestitures by the Corporation and Valley will be
required in order to obtain regulatory approvals. The Corporation has filed
applications with such authorities proposing the divestiture of certain bank
branches in the State of Wisconsin with total deposits of approximately $300
million. It is anticipated that Federal Regulators will require the
Corporation to obtain commitments for the divestitures prior to consummation
of the merger and complete the divestitures within six months of the
consummation of the merger. The Corporation does not anticipate that such
divestitures will have a material impact on the Consolidated Financial
Statements. Consummation of the Merger is expected to occur in the second
quarter of 1994.
The Corporation estimates that employee severance and contract costs,
write-downs and write-offs of duplicative facilities, equipment and data
processing software associated with the Merger will result in a one-time
restructuring charge of approximately $80 million, $48 million net of tax,
in 1994. Also, an additional loan loss provision may be recorded at or near
the consummation of the Merger to conform Valley's loan valuation policies
with those of the Corporation. While the amounts have not been quantified,
it is not anticipated that the amount of such provision will be material to
the combined entity.
3. Changes in Method of Accounting
During 1992, the Corporation adopted Financial Accounting Standard No.
106 "Employers' Accounting for Postretirement Benefits, Other than Pensions"
(FAS 106). This standard, which applies to the Corporation's employee
<PAGE>
health plans, requires that the expected cost of these postretirement
benefits be charged to expense in the years the employees render the
services necessary to earn their benefits. The Corporation elected
immediate recognition of the accumulated postretirement benefit obligation
at January 1, 1992.
The Corporation also adopted during 1992, Financial Accounting Standard
No. 109 "Accounting for Income Taxes." Statement 109 requires a change from
the deferred method of accounting for income taxes to an asset and liability
method. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date. The cumulative effect of the change in accounting for
income taxes at January 1, 1992, amounted to a $4.8 million reduction of
beginning net deferred tax liabilities.
The following table summarizes the January 1, 1992 effects of these
changes in methods of accounting:
Earnings Per Share
Net Income Increase (Decrease)
Increase (Decrease) Primary Fully Diluted
____________________________________________
Adoption of accounting standard on
postretirement benefits, net of
income tax benefits of $7,744 $(12,190) $ (.18) $ (.17)
Adoption of accounting standard on
income taxes 4,803 .07 .07
____________________________________________
$ (7,387) $ (.11) $ (.10)
4. Cash and Due from Banks
At December 31, 1993, $136,985 of cash and due from banks was
restricted, primarily due to requirements of the Federal Reserve System to
maintain certain reserve balances.
5. Other Short-term Investments
Other short-term investments at December 31 were:
1993 1992
________ ________
Commercial paper $ 22,550 $ 72,600
Interest bearing deposits in other banks 26,815 171,745
________ ________
Total other short-term investments $ 49,365 $244,345
<PAGE>
6. Securities
The book and market values of securities at December 31 were:
1993 1992
______________________ ________________________
Book Market Book Market
Value Value Value Value
______________________ ________________________
Investment Securities Held to Maturity:
States and political
subdivisions $ 160,238 $ 163,999 $ 280,349 $ 284,878
Mortgage backed securities 58 58 12,014 12,227
Other 9,188 9,205 8,347 8,362
______________________ ________________________
Total $ 169,484 $ 173,262 $ 300,710 $ 305,467
Investment Securities Available for Sale:
U.S. Treasury and
government agencies $1,460,009 $1,463,644 $1,545,000 $1,560,183
Other 44,188 57,757 37,061 50,194
______________________ ________________________
Total $1,504,197 $1,521,401 $1,582,061 $1,610,377
The unrealized gains and losses of securities at December 31 were:
1993 1992
______________________ ________________________
Unrealized Unrealized Unrealized Unrealized
Gains Losses Gains Losses
______________________ ________________________
Investment Securities Held to Maturity:
States and political
subdivisions $ 4,307 $ 546 $ 5,954 $ 1,425
Mortgage backed securities -- -- 214 1
Other 23 6 22 7
______________________ ________________________
Total $ 4,330 $ 552 $ 6,190 $ 1,433
Investment Securities Available for Sale:
U.S. Treasury and
government agencies $ 5,546 $ 1,911 $ 18,479 $ 3,296
Other 13,570 1 13,133 --
______________________ ________________________
Total $ 19,116 $ 1,912 $ 31,612 $ 3,296
<PAGE>
The book value and market value of securities by contractual maturity
at December 31, 1993 were:
Investment Securities Investment Securities
Held to Maturity Available for Sale
______________________ ________________________
Book Market Book Market
Value Value Value Value
______________________ ________________________
Within one year $ 77,316 $ 77,793 $ 727,126 $ 730,417
From one through five years 64,978 67,481 735,349 735,677
From five through ten years 21,596 22,365 459 474
After ten years 5,594 5,623 41,263 54,833
______________________ ________________________
Total $169,484 $173,262 $1,504,197 $1,521,401
Securitized assets are included in the maturity table at contractual
estimated liquidation dates and not at the scheduled maturity dates of the
underlying collateral.
The gross realized gains and losses amounted to $7,897 and $60 in 1993
and $13,781 and $5,438 in 1992, and $6,013 and $1,632 in 1991, respectively.
At December 31, 1993, securities with a book value of approximately
$260,111 were pledged to secure public deposits, short-term borrowings, and
for other purposes required by law.
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," (FAS 115). FAS 115 requires,
among other things, that securities classified as available for sale be
carried at fair value, however, fair value adjustments and the related
income tax effects, are excluded from earnings and reported separately as a
component of shareholders' equity. This new standard which must be adopted
by the Corporation on January 1, 1994 will not have a material impact on the
Consolidated Financial Statements.
7. Loans
Loans at December 31 were:
1993 1992
__________ __________
Commercial, financial, and agricultural $1,861,757 $1,717,874
Industrial development revenue bonds 27,821 37,878
Real estate:
Construction 214,369 158,607
Residential mortgage 1,254,748 1,199,407
Commercial mortgage 1,061,635 933,585
Personal 711,194 602,218
Lease financing 239,561 229,155
__________ __________
Total loans $5,371,085 $4,878,724
<PAGE>
The Corporation's lending activities are concentrated primarily in the
Midwest with approximately 86% of its customers located in Wisconsin.
Approximately 4% of its portfolio consists of loans granted to customers
located in Arizona. The Corporation had $3,029 in foreign credits at
December 31, 1993. The Corporation's loan portfolio consists of business
loans extending across many industry types, as well as loans to individuals.
As of December 31, 1993, total loans to any group of customers engaged in
similar activities and having similar economic characteristics, as defined
by standard industrial classifications, did not exceed 10% of total loans.
The Corporation evaluates the credit risk of each customer on an
individual basis and, where deemed appropriate, collateral is obtained.
Collateral varies by individual loan customer but may include accounts
receivable, inventory, real estate, equipment, deposits, personal and
government guaranties, and general security agreements. Access to
collateral is dependent upon the type of collateral obtained. On an on-
going basis, the Corporation monitors its collateral and the collateral
value related to the loan balance outstanding.
An analysis of loans outstanding to directors and officers, including
their related interests, of the Corporation and its significant subsidiaries
for 1993 is presented below. All of these loans were made in the ordinary
course of business with normal credit terms, including interest rates and
collateral. The beginning balance has been adjusted to reflect the activity
of newly-appointed directors and executive officers and directors and
executive officers of subsidiaries previously not considered significant.
Balance, beginning of year $ 79,302
New loans 101,904
Repayments (110,863)
__________
Balance, end of year $ 70,343
At December 31, 1993, 85% of these loans were to companies in which
directors are principal owners.
An analysis of the allowance for loan losses follows:
1993 1992 1991
________ ________ ________
Balance, beginning of year $ 85,884 $ 73,915 $ 68,723
Provision charged to expense 9,065 15,151 20,555
Charge-offs (6,786) (13,592) (21,233)
Recoveries 5,026 10,410 5,870
________ ________ ________
Balance, end of year $ 93,189 $ 85,884 $ 73,915
As of December 31, 1993, and 1992, nonaccrual loans totalled $27,880
and $31,630, respectively. The effect of nonaccrual loans on net income in
1993, 1992, and 1991, was not significant.
In May 1993, the FASB also issued Statement of Financial Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan," (FAS
114). FAS 114 requires that a loan's value be measured when it has been
determined that the loan is impaired and loss is probable. Write-downs
which result from the measurement process are to be expensed. This new
standard must be adopted by the first quarter of 1995. Based upon the
current status of the Corporation's loan portfolio, it is not anticipated
that this pronouncement will have a material impact on the Consolidated
Financial Statements.
<PAGE>
8. Premises and Equipment
The composition of premises and equipment at December 31 was:
1993 1992
_________ _________
Land $ 24,713 $ 24,359
Buildings and leasehold improvements 158,920 141,198
Furniture and equipment 198,254 169,146
381,887 334,703
Less accumulated depreciation 185,357 165,814
_________ _________
Total premises and equipment $196,530 $168,889
Depreciation expense was $29,018 in 1993, $24,430 in 1992, and $21,421
in 1991.
The Corporation leases certain of its facilities and equipment. Rent
expense under such operating leases was $15,206 in 1993, $15,071 in 1992,
and $15,244 in 1991, respectively. The future minimum lease payments under
operating leases that have initial or remaining noncancellable lease terms
in excess of one year as of December 31, 1993 are:
1994 $ 4,498
1995 3,783
1996 3,261
1997 2,941
1998 2,224
_______
$16,707
9. Short-term Borrowings
Short-term borrowings at December 31 were:
1993 1992
_________ _________
Funds purchased and security repurchase agreements $454,980 $398,673
U.S. Treasury demand notes 33,977 27,768
Commercial paper 100,292 77,265
Current maturities of long-term borrowings 40,148 42,730
Other 4,271 3,940
_________ _________
Total short-term borrowings $633,668 $550,376
Unused lines of credit to support commercial paper borrowings were
$40,000 at December 31, 1993 and 1992.
<PAGE>
10. Long-term Borrowings
Long-term borrowings at December 31 were:
1993 1992
_________ _________
Corporation:
8.5% convertible subordinated notes due in 1997 $ 50,000 $ 50,000
6.375% subordinated notes due in 2003 99,373 --
Medium-term Series B notes 38,000 54,000
Other -- 6,194
Subsidiaries:
Nonrecourse notes 34,116 32,331
Mortgages 3,945 4,195
9.75% obligation under capital lease due through 2006 5,156 5,353
Other 12,375 20,858
_________ _________
242,965 172,931
Less current maturities 40,148 42,730
_________ _________
Total long-term borrowings $202,817 $130,201
The 8.5% convertible subordinated notes (the "Notes") require semi-
annual interest payments and are convertible at the option of the holder
into common stock at a conversion price of $8.75. The holder has the right
to exchange common stock, acquired by conversion of the Notes or otherwise,
for Series A convertible preferred stock ("Series A"). The holder may own
up to 24.9% (computed as the percentage of common shares owned directly or
indirectly through conversion privileges) of the Corporation's outstanding
common stock and convertible securities, but may not own directly more than
5% of the Corporation's outstanding common stock. Except under limited
circumstances, the holder may not sell, transfer or otherwise dispose of the
Notes or common stock acquired by conversion, and then, only under
prescribed conditions and subject to the Corporation's right of first
refusal.
A portion of the Notes qualify as equity contract notes as defined by
the applicable guidelines of the Board of Governors of the Federal Reserve
System. The Notes require the holder to take common stock (or other equity
securities) in lieu of cash in satisfaction of the claim for principal
repayment, unless the Corporation sells new common stock (or certain other
equity securities) and dedicates the proceeds thereof to the redemption or
retirement of the Notes.
In July 1993, the Corporation issued $100 million of unsecured
subordinated notes at a price of 99.351%. Interest is payable semiannually
in January and July of each year and the notes mature July 15, 2003. The
notes are not redeemable prior to maturity and qualify as "Tier 2" or
supplementary capital for regulatory capital purposes.
The Corporation has filed registration statements with the Securities
and Exchange Commission to issue up to $100 million of medium-term unsecured
and unsubordinated Series B and up to $150 million of medium-term unsecured
and unsubordinated Series C notes. Both issues have maturities which range
from 9 months to 30 years from the date of issue, at a fixed or floating
rate.
The Series B notes outstanding at December 31, 1993 mature in 1994
through 1996, and have fixed interest rates of 4.60% to 8.65%.
Approximately $35,730 of unissued Series B notes are remaining and available
to be issued in the future. At December 31, 1993, there were no Series C
notes outstanding.
<PAGE>
The nonrecourse notes are reported net of prepaid interest and
represent borrowings by the leasing subsidiary from banks and other
financial institutions. These notes have a weighted average interest rate
of 7.77% at December 31, 1993, and are due in installments over varying
periods through 2001. Lease financing receivables at least equal to the
amount of the notes are pledged as collateral.
The mortgages are secured by land and buildings with a net book value
of $8,732 at December 31, 1993.
Scheduled maturities of long-term borrowings are: $35,254, $19,150,
$43,578, and $751 for 1995 through 1998, respectively.
11. Shareholders' Equity
The Corporation has 5,000,000 shares of preferred stock authorized, of
which the Board of Directors has designated 500,000 shares as Series A
convertible, with a $100 value per share for conversion purposes. Series A
is nonvoting preferred stock. The same cash dividends will be paid on
Series A as would have been paid on the common stock exchanged for Series A.
Series A has the same restrictions on sale as are applicable to the 8.5%
convertible subordinated notes.
The holder of the convertible subordinated notes has the option through
1997 to exchange common stock of the Corporation for Series A. If the
common stock is acquired by the holder in conversion of the Notes, the
exchange ratio is one share of Series A for 11.43 shares of common stock.
If acquired otherwise, the exchange ratio is one share of Series A, valued
at $100, to the holder's weighted average purchase price per common share.
Also, the holder has the option to convert Series A into common stock at the
same ratio that the common stock was exchanged for Series A. The
Corporation has issued 185,314 shares of its Series A convertible preferred
stock in exchange for 1,962,900 shares of common stock, which were
subsequently retired.
The preferred stock is treated as a common stock equivalent in all per
share calculations.
In April 1993, the Corporation's Board of Directors authorized a common
share repurchase program for 5.7 million shares in anticipation of the
conversion of its 8.5% convertible subordinated notes and reaffirmed the
Corporation's on-going program for the repurchase of up to 1.5 million
shares annually to fund obligations to deliver or have available shares of
common stock for stock option and other employee benefit plans. During
1993, the Corporation purchased 5.0 million common shares.
Federal banking regulatory agencies have established capital adequacy
rules which take into account risk attributable to balance sheet assets and
off-balance sheet activities. All banks and bank holding companies must
meet a minimum total risk-based capital ratio of 8%. Of the 8% required,
half must be comprised of core capital elements defined as Tier 1 capital.
The federal banking agencies also have adopted leverage capital guidelines
which banking organizations must meet. Under these guidelines, the most
highly rated banking organizations must meet a minimum leverage ratio of at
least 3% Tier 1 capital to total assets, while lower rated banking
organizations must maintain a ratio of at least 4% to 5%.
<PAGE>
The Corporation's risk-based capital and leverage ratios are as follows:
RISK-BASED CAPITAL RATIOS
As of December 31, 1993
($ in millions)
Amount Ratio
_______ ______
Tier 1 capital $ 731 12.17%
Tier 1 capital
minimum requirement 240 4.00
_______ ______
Excess $ 491 8.17%
Total capital $ 931 15.49%
Total capital
minimum requirement 481 8.00
_______ ______
Excess $ 450 7.49%
Risk-adjusted assets $ 6,008
LEVERAGE RATIO
as of December 31, 1993
($ in millions)
Amount Ratio
_________________________
Tier 1 capital to
adjusted total assets $ 731 9.29%
Minimum leverage
requirement 236 - 394 3.00 - 5.00
_________________________
Excess $495 - 337 6.29 - 4.29%
Adjusted average total assets $ 7,877
All of the Corporation's banking subsidiaries' risk-based capital and
leverage ratios meet or exceed the defined minimum requirements.
Banking subsidiaries are restricted by banking regulations from making
dividend distributions above prescribed amounts and are limited in making
loans and advances to the Corporation. At December 31, 1993, the retained
earnings of subsidiaries available for distribution as dividends without
regulatory approval was approximately $202,072.
<PAGE>
12. Income Taxes
Total income tax expense for the years ended December 31, 1993 and 1992
was allocated as follows:
1993 1992
_________ _________
Income before Cumulative Changes in Accounting $71,072 $57,835
Cumulative Effect of Change in Accounting
for Postretirement Benefits, Other than
Pensions and Accounting for Income Taxes -- (12,547)
Shareholders' Equity, for Compensation
Expense for Tax Purposes in Excess of Amounts
Recognized for Financial Reporting Purposes (4,878) (1,803)
_________ _________
$66,194 $43,485
As discussed in Note 3, the Corporation adopted Financial Accounting
Standard No. 109 in 1992. This change had no significant effect on net
income, excluding the cumulative effect, in 1992. Financial statements for
1991 have not been restated to apply the new standard.
The current and deferred portions of the provision for income taxes
were:
1993 1992 1991
_______ _______ _______
Current:
Federal $63,783 $56,582 $38,461
State 10,992 10,626 10,858
_______ _______ _______
74,775 67,208 49,319
Deferred:
Federal (3,998) (9,141) (1,856)
State 295 (232) (328)
_______ _______ _______
(3,703) (9,373) (2,184)
_______ _______ _______
Total provision
for income taxes $71,072 $57,835 $47,135
<PAGE>
The following is a reconciliation between the amount of the provision
for income taxes and the amount of tax computed by applying the statutory
Federal income tax rate (35% in 1993, 34% in 1992 and 1991, respectively):
1993 1992 1991
_______ _______ _______
Tax computed at statutory rates $68,797 $59,315 $49,804
Increase (decrease) in taxes
resulting from:
Federal tax-exempt income (4,578) (7,368) (9,785)
State income taxes,
net of Federal tax benefit 7,546 7,292 7,061
Adjustment to deferred tax
assets/liabilities for an
enacted change in tax rate (469) -- --
Other (224) (1,404) 55
_______ _______ _______
Total provision for income taxes $71,072 $57,835 $47,135
The tax effects of temporary differences that give rise to significant
elements of the deferred tax assets and deferred tax liabilities at December
31, are as follows:
1993 1992
________ ________
Deferred tax assets:
Deferred compensation $ 6,307 $ 5,212
Allowance for loan losses 27,216 23,945
Accrued postretirement benefits 10,661 9,097
Other 16,531 13,280
________ ________
Total deferred tax assets $60,715 $51,534
Deferred tax liabilities:
Lease revenue reporting $20,805 $15,315
Deferred expense,
net of unearned income 7,224 4,491
Fixed assets, principally
due to depreciation 13,060 12,219
Other 2,409 6,551
________ ________
Total deferred tax liabilities 43,498 38,576
________ ________
Net deferred tax assets $17,217 $12,958
<PAGE>
Deferred taxes resulted from timing differences in the recognition of
income and expense for tax and financial statement purposes. The sources of
these differences and the tax effect of each were:
1991
________
Cash basis reporting $ (925)
Loan loss provision (2,056)
Other 797
________
Total deferred taxes $(2,184)
The amount of income tax expense related to net securities gains
amounted to $2,929, $3,381, and $1,330, in 1993, 1992, and 1991,
respectively.
13. Stock Option and Restricted Stock Plans
The Corporation has Executive Stock Option and Restricted Stock Plans
which provide for the grant of nonqualified and incentive stock options,
stock appreciation rights and rights to purchase restricted shares to key
employees at prices ranging from not less than the par value of the common
shares to the fair market value of the shares at the date of grant.
Activity relating to common stock options, restated for the 3 for 1
stock split, was:
Number Option Price
Of Shares Per Share
__________ _________________
Shares under option at December 31, 1991 5,655,012 $ 2.17 - 17.21
Options granted 321,150 19.50 - 19.92
Options lapsed or surrendered (19,128) 2.17 - 17.21
Options exercised (696,507) 2.17 - 13.38
__________ _________________
Shares under option at December 31, 1992 5,260,527 $ 4.47 - 19.92
Options granted 766,800 22.75 - 23.25
Options lapsed or surrendered (4,025) 9.42 - 19.50
Options exercised (1,166,420) 5.35 - 19.50
__________ _________________
Shares under option at December 31, 1993 4,856,882 $ 4.47 - 23.25
Options exercisable at December 31, 1993, and 1992, were 4,004,095 and
4,365,666, respectively. Shares reserved for the granting of additional
options at December 31, 1993, were 3,039,305.
There were no restricted stock purchase rights outstanding at December
31, 1993, and 1992. In addition, there were no stock purchase rights
exercised during 1993 and 85,500 rights exercised in 1992.
Restrictions on stock issued pursuant to the exercise of stock purchase
rights lapse within a seven-year period. Accordingly, the compensation
related to issuance of the rights is deferred and amortized over the vesting
period. Unamortized deferred compensation is reflected as a reduction of
shareholders' equity.
Aggregate compensation expense related to stock purchase rights was
$1,008, $1,004, and $1,129, in 1993, 1992, and 1991, respectively.
<PAGE>
14. Employee Retirement and Health Plans
The Corporation has a defined contribution retirement plan for
substantially all employees. The plan provides for a guaranteed
contribution for eligible participants equal to 2% of compensation. At the
Corporation's option, a profit sharing amount may also be contributed and
may vary from year to year up to a maximum of 6% of eligible compensation.
Total retirement plan expense was $12,915, $11,927, and $10,591, in 1993,
1992, and 1991, respectively.
The Corporation also has supplemental retirement plans which were
established in 1992 to provide retirement benefits to certain of its key
executives. Total expense relating to these plans amounted to $2,280 in
1993 and $4,323 in 1992.
The Corporation sponsors a defined benefit health plan that provides
health care benefits to all eligible current and retired employees. The
plan is contributory, with contributions adjusted periodically such that
participants contribute approximately 40% of the cost of health care
benefits. The plan also contains other cost-sharing features such as
deductibles and coinsurance. Retiree eligibility is dependent upon age,
years of service, and participation in the health plan during active
service. The plan is not funded.
As discussed in Note 3, the Corporation adopted FAS 106, "Employers'
Accounting for Postretirement Benefits, Other than Pensions" as of January
1, 1992. The Corporation elected immediate recognition of the accumulated
postretirement benefit obligation as of the beginning of the year through a
one-time charge to earnings of $19,934 before income taxes. Postretirement
benefit costs for 1991 were recorded on the cash basis and amounted to $756.
The components of the accumulated postretirement benefit obligation
(APBO) reconciled with the amount recognized in the Corporation's
Consolidated Balance Sheets at December 31, were:
1993 1992
________ ________
Accumulated postretirement benefit obligation:
Retirees $ 11,244 $ 8,643
Fully eligible active plan participants 8,748 3,805
Active plan participants 16,667 9,738
________ ________
36,659 22,186
Unrecognized gain (loss) (11,265) 29
________ ________
Accrued postretirement benefit cost $ 25,394 $ 22,215
Weighted average discount
rate used in determining APBO 7.5% 8.5%
Net periodic postretirement benefit cost for the years ended December
31, 1993 and 1992 includes the following components:
1993 1992
________ ________
Service cost $ 1,382 $ 1,212
Interest on APBO 1,917 1,668
________ ________
$ 3,299 $ 2,880
<PAGE>
For measurement purposes, the assumed health care cost trend rate was
14% and 13% in 1992 and 1993, respectively, and gradually declines to 6.5%
in the year 2021.
The health care cost trend rate assumption has a significant effect on
the amounts reported. An increase in the assumed health care cost trend
rate of one percentage point would increase the APBO at December 31, 1993 by
$4,128 and increase 1993 postretirement benefit expense by $680.
In November 1992, the FASB issued Statement of Financial Accounting
Standard No. 112 "Employers' Accounting for Postemployment Benefits," (FAS
112). FAS 112 establishes accounting and reporting standards for employers
who provide benefits to former or inactive employees after employment but
before retirement and must be adopted in the first quarter of 1994. Based
on the current types of postemployment benefits provided by the Corporation,
it is not anticipated that this new standard will have a material impact on
the Consolidated Financial Statements.
15. Financial Instruments with Off-Balance Sheet Risk
Financial instruments with off-balance sheet risk at December 31 were:
1993 1992
__________ __________
Financial instruments whose amounts represent credit risk:
Commitments to extend credit:
To commercial customers $2,500,465 $2,059,126
To individuals 421,504 331,920
Standby letters of credit, net of participations 226,001 199,944
Commercial letters of credit 16,434 14,350
Mortgage loans sold with recourse 8,408 12,695
Financial instruments whose amounts
exceed the amount of credit risk:
Foreign exchange contracts:
Commitments to purchase foreign exchange 229,061 152,544
Commitments to deliver foreign exchange 231,925 154,287
Options written 24,251 20,263
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates and may require payment of
a fee. Since many of the commitments are expected to expire without being
drawn upon, the total commitment amounts do not necessarily represent future
cash requirements.
The Corporation evaluates each customer's credit worthiness on an
individual basis. Collateral obtained, if any, upon extension of credit, is
based upon management's credit evaluation of the customer. Collateral
requirements and the ability to access collateral is generally similar to
that required on loans outstanding as discussed in Note 7.
Standby and commercial letters of credit are contingent commitments
issued by the Corporation to support the financial obligations of a customer
to a third party. Standby letters of credit are issued to support public
and private financing, and other financial or performance obligations of
customers. Commercial letters of credit are issued to support payment
obligations of a customer as buyer in a commercial contract for the purchase
of goods. Letters of credit have maturities which generally reflect the
maturities of the underlying obligations. The credit risk involved in
issuing letters of credit is the same as that involved in extending loans to
customers. If deemed necessary, the Corporation holds various forms of
collateral to support letters of credit.
<PAGE>
Mortgage loans sold with recourse are pools of residential mortgage loans
sold to government agencies subject to certain underwriting requirements.
If the loans do not meet the underwriting requirements of the government
agencies, the Corporation may be required to reacquire the loans.
Foreign exchange contracts are commitments to purchase or deliver
foreign currency at a specified exchange rate. These contracts are entered
into to hedge the Corporation's own exposure, and to enable customers
involved in international trade to hedge their exposure, to foreign currency
fluctuations. Generally, the Corporation does not require collateral to
support these financial instruments.
The Corporation's market risk from unfavorable movements in currency
exchange rates is minimized by essentially matching commitments to deliver
foreign exchange with commitments to purchase foreign exchange.
16. Fair Value of Financial Instruments
The book values and estimated fair values for on and off-balance sheet
financial instruments as of December 31, 1993 and 1992 are reflected below.
BALANCE SHEET FINANCIAL INSTRUMENTS ($ In Millions)
1993 1992
______________________ ______________________
Book Value Fair Value Book Value Fair Value
______________________ ______________________
Financial Assets:
Cash and short-term investments $ 624.4 $ 624.4 $ 788.4 $ 788.4
Trading securities 2.3 2.3 12.6 12.6
Investment securities
held to maturity 169.5 173.3 300.7 305.5
Investment securities
available for sale 1,504.2 1,521.4 1,582.1 1,610.4
Net loans 5,277.9 5,434.2 4,792.8 4,933.9
Interest receivable 46.7 46.7 55.4 55.4
Financial Liabilities:
Deposits 6,195.9 6,228.1 6,212.1 6,233.1
Short-term borrowings 593.5 593.5 507.6 507.6
Long-term borrowings:
Convertible debt 50.0 135.0 50.7 124.8
Other long-term borrowings 193.0 198.4 122.2 128.6
Interest payable 19.3 19.3 18.4 18.4
Where readily available, quoted market prices were utilized by the
Corporation. If quoted market prices were not available, fair values were
based on estimates using present value or other valuation techniques. These
techniques were significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. The calculated fair
value estimates, therefore, cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in immediate
settlement of the instrument. Statement 107 excludes certain financial
instruments and all nonfinancial assets and liabilities from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented do
not represent the underlying value of the Corporation.
<PAGE>
The following methods and assumptions were used in estimating the fair
value for financial instruments.
Cash and Short-term Investments
The carrying amounts reported for cash and short-term investments
approximates the fair values for those assets.
Trading and Investment Securities
Fair value is based on quoted market prices or dealer quotes. See Note
6, Securities, for additional information.
Loans
Loans that reprice or mature within three months of December 31 were
assigned fair values based on their book value. Market values were used on
performing loans where available. Most remaining loan balances were
assigned fair values based on a discounted cash flow analysis. The discount
rate was based on the treasury yield curve, with rate adjustments for credit
quality, cost and profit factors.
Deposits
The fair value for demand deposits or any interest bearing deposits
with no fixed maturity date was considered to be equal to the carrying
value. Time deposits with defined maturity dates were considered to have a
fair value equal to the book value if the maturity date was within three
months of December 31. The remaining time deposits were assigned fair
values based on a discounted cash flow analysis using discount rates which
approximate interest rates currently being offered on time deposits with
comparable maturities.
Borrowings
Short-term borrowings are carried at cost which approximates fair
value. The Corporation has convertible debt (see Note 10) for which fair
value was considered to be the current market value of the shares that would
be issued in a full conversion. Other long-term debt was generally valued
using a discounted cash flow analysis with a discount rate based on current
incremental borrowing rates for similar types of arrangements or, if not
readily available, based on a build up approach similar to that used for
loans and deposits. Long-term borrowings include their related current
maturities.
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS ($ in millions)
Fair values of Loan Commitments and Letters of Credit have been
estimated based on the equivalent fees, net of expenses, that would be
charged for similar contracts and customers at December 31.
1993 1992
______ ______
Loan commitments $ 1.4 $ 1.4
Letters of credit 1.8 1.6
Foreign exchange contracts are carried at market value (U.S. dollar
equivalent of the underlying contract).
1993 1992
______ ______
Commitments to purchase foreign exchange $229.1 $152.5
Commitments to deliver foreign exchange 231.9 154.3
Options written .5 2.4
See Note 15 for additional information on financial off-balance sheet
instruments.
<PAGE>
17. Business Segments
The following table reflects certain information regarding our banking
and data processing businesses:
Adjustments
Data and
Banking Processing Eliminations Consolidation
____________________________________________________________
1993
Revenue from:
Unaffiliated
customers $ 651,364 $ 136,044 -- $ 787,408
Affiliated customers 5,580 42,300 $ (47,880) --
____________________________________________________________
Total revenue $ 656,944 $ 178,344 $ (47,880) $ 787,408
Operating profit $ 172,752 $ 23,811 -- $ 196,563
Identifiable assets $ 7,855,255 $ 138,294 $ (23,335) $ 7,970,214
Net capital
expenditures $ 11,392 $ 43,737 -- $ 55,129
1992
Revenue from:
Unaffiliated
customers $ 684,984 $ 112,964 -- $ 797,948
Affiliated customers 4,847 38,630 $ (43,477) --
____________________________________________________________
Total revenue $ 689,831 $ 151,594 $ (43,477) $ 797,948
Operating profit $ 154,277 $ 20,180 -- $ 174,457
Identifiable assets $ 7,761,678 $ 100,268 $ (11,602) $ 7,850,344
Net capital
expenditures $ 14,644 $ 23,697 -- $ 38,341
1991
Revenue from:
Unaffiliated
customers $ 742,856 $ 92,580 -- $ 835,436
Affiliated customers 5,173 38,022 $ (43,195) --
____________________________________________________________
Total revenue $ 748,029 $ 130,602 $ (43,195) $ 835,436
Operating profit $ 130,624 $ 15,858 -- $ 146,482
Identifiable assets $ 7,555,205 $ 87,344 $ (14,735) $ 7,627,814
Net capital
expenditures $ 9,781 $ 10,567 -- $ 20,348
The Corporation owns 38 banks and 12 nonbank subsidiaries. Each
subsidiary is a separate legal and operating entity. Our banking operations
provide traditional banking products along with trust, mortgage banking,
leasing, insurance agency and venture capital services. M&I Data Services,
Inc. (DSI) provides data processing, software, and other related services to
<PAGE>
both affiliated and unaffiliated customers. See Item 1 for a complete
description of the businesses.
Revenues from affiliated customers are primarily accounted for at rates
similar to those charged to unaffiliated customers.
Operating profit is pretax net income. Depreciation and amortization
expense for the banking services business amounted to $11,810, $1,171, and
$3,765 in 1993, 1992, and 1991, respectively, and for DSI amounted to
$22,582 in 1993, $19,171 in 1992, and $16,813 in 1991.
18. Condensed Financial Information - Parent Corporation Only
Condensed Balance Sheets
December 31 1993 1992
_____________________________
Assets
Cash and cash equivalents $ 1,351 $ 14,441
Indebtedness of affiliates:
Banks 5,000 5,000
Nonbanks 264,366 197,837
Investments in affiliates:
Banks 619,597 593,967
Nonbanks 155,753 138,393
Other assets 30,323 27,875
_____________________________
Total assets $1,076,390 $977,513
Liabilities and shareholders' equity
Commercial paper issued $ 100,292 $ 77,265
Other liabilities 38,373 29,414
Long-term borrowings 187,373 110,194
_____________________________
Total liabilities 326,038 216,873
Shareholders' equity 750,352 760,640
_____________________________
Total liabilities and shareholders' equity $1,076,390 $977,513
Scheduled maturities of long-term borrowings are $22,900 in 1994,
$13,500 in 1995, $11,600 in 1996, $40,000 in 1997, and $100,000 in 2003.
<PAGE>
Condensed Statements of Income
Years Ended December 31 1993 1992 1991
_________ ________ ________
Income
Cash dividends:
Bank affiliates $ 71,196 $ 64,856 $ 62,511
Nonbank affiliates 13,482 12,452 8,726
Interest from affiliates 10,540 9,601 9,988
Service fees and other 27,889 23,198 30,447
_________ ________ ________
Total income 123,107 110,107 111,672
Expense
Interest 12,523 14,475 16,487
Administrative and general 26,749 32,767 26,585
_________ ________ ________
Total expense 39,272 47,242 43,072
Income before income taxes,
cumulative effect of changes in
accounting principles and equity in
undistributed net income
of affiliates 83,835 62,865 68,600
Income tax benefit 563 6,258 612
Income before cumulative effect of
changes in accounting principles and
equity in undistributed net income
of affiliates 84,398 69,123 69,212
Cumulative effect of changes in accounting
principles, net of income taxes -- (1,327) --
_________ ________ ________
Income before equity in undistributed
net income of affiliates 84,398 67,796 69,212
Equity in undistributed net
income of affiliates:
Banks 25,451 21,083 17,175
Nonbanks 15,642 20,356 12,960
_________ ________ ________
Net income $125,491 $109,235 $99,347
<PAGE>
Condensed Statements of Cash Flows
Years Ended December 31
1993 1992 1991
_________ ________ ________
Cash Flows From Operating Activities:
Net Income $ 125,491 $ 109,235 $ 99,347
Noncash items included in income:
Equity in undistributed net income
of affiliates (41,093) (41,439) (30,135)
Depreciation and amortization 3,803 4,270 5,241
Other (366) 2,109 (6,371)
_________ ________ ________
Net cash provided by
operating activities 87,835 74,175 68,082
Cash Flows From Investing Activities:
Increases in indebtedness
of affiliates (502,651) (299,638) (161,300)
Decreases in indebtedness
of affiliates 436,122 237,390 161,565
Increases in investments
in affiliates -- (9,733) (8,200)
Other 4,104 3,326 7,144
_________ ________ ________
Net cash used in
investing activities (62,425) (68,655) (791)
Cash Flows From Financing Activities:
Dividends paid (35,421) (31,634) (27,998)
Proceeds from issuance of
commercial paper 1,348,661 597,794 607,787
Principal payments on
commercial paper (1,325,634) (522,616) (644,483)
Proceeds from issuance
of long-term debt 99,351 24,598 17,339
Payments on long-term debt (21,677) (74,413) (13,070)
Purchase of treasury stock (114,686) (99) (1,588)
Proceeds from exercise
of stock options 10,920 5,014 4,039
Other (14) (74) (67)
_________ ________ ________
Net cash used in
financing activities (38,500) (1,430) (58,041)
Net increase (decrease) in cash and
cash equivalents (13,090) 4,090 9,250
Cash and cash equivalents, beginning
of year 14,441 10,351 1,101
_________ ________ ________
Cash and cash equivalents,
end of year $ 1,351 $ 14,441 $ 10,351
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and the Board of Directors of Marshall & Ilsley
Corporation:
We have audited the accompanying consolidated balance sheets of
Marshall & Ilsley Corporation (a Wisconsin corporation) and subsidiaries as
of December 31, 1993 and 1992, and the related consolidated statements of
income, shareholders' equity and cash flows for the years ended December 31,
1993, 1992 and 1991. These consolidated financial statements are the
responsibility of the Corporation's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Marshall
& Ilsley Corporation and subsidiaries as of December 31, 1993 and 1992, and
the results of their operations and cash flows for the years ended December
31, 1993, 1992 and 1991, in conformity with generally accepted accounting
principles.
As discussed in note three to the consolidated financial statements,
effective January 1, 1992, the Corporation changed its method of accounting
for postretirement benefits other than pensions and income taxes.
/s/ Arthur Andersen & Co.
Milwaukee, Wisconsin,
January 28, 1994.
<PAGE>
QUARTERLY FINANCIAL INFORMATION
($000's except share data)
Following is unaudited financial information for each of the calendar
quarters during the years ended December 31, 1993 and 1992. All per share
information has been restated for the 3 for 1 stock split effected in the
form of a 200% stock dividend distributed to shareholders in May, 1993.
Quarter ended Quarter ended Quarter ended Quarter ended
December 31 September 30 June 30 March 31
________________________________________________________
1993
Total Interest Income $120,967 $121,299 $122,430 $122,840
Net Interest Income 77,787 77,109 77,708 76,574
Provision for Loan Losses 2,391 2,246 2,282 2,146
Income Before Income Taxes 50,412 49,158 49,424 47,569
Net Income 31,569 30,954 31,933 31,035
Net Income Per Share:
Primary .49 .46 .47 .46
Fully Diluted .46 .44 .44 .43
1992
Total Interest Income $128,721 $130,872 $135,162 $137,317
Net Interest Income 79,297 77,120 76,922 74,466
Provision for Loan Losses 4,266 3,461 3,789 3,635
Income Before Income Taxes and
Cumulative Effect of Changes
in Accounting Principles 46,061 43,186 43,339 41,871
Income Before Cumulative
Effect of Changes in
Accounting Principles 31,324 28,590 28,823 27,885
Net Income 31,324 28,590 28,823 20,498
Net Income Per Share:
Primary
Income Before Cumulative
Effect of Changes in
Accounting Principles .46 .42 .43 .41
Net Income .46 .42 .43 .31
Fully Diluted
Income Before Cumulative
Effect of Changes in
Accounting Principles .43 .40 .40 .39
Net Income .43 .40 .40 .29
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors of the Registrant
M&I's Restated Articles of Incorporation provide that M&I's Directors
are divided into three classes, designated Class I, Class II and Class III.
Each director serves a term of three years and until his successor is
elected and qualified. The following table sets forth certain information
with regard to the Class I, Class II and Class III Directors.
Principal Occupation
Name of Director and Directorships
Class I Directors (terms expiring in 1994)
Wendell F. President, Chief Executive Officer and Director, IMC
Bueche Fertilizer Group, Inc., February 1993 to present; Chairman
Age 63 of the Board and Chief Executive Officer from January 1986
through 1988, President and Chief Executive Officer, January
1984 through 1985, and Director, Allis-Chalmers Corp., a
diversified manufacturer of specialized machinery. Also a
director of WICOR, Inc. A Director since 1983.
G.H. Executive Vice President and Chief Financial Officer of
Gunnlaugsson Marshall & Ilsley Corporation since 1987; Vice President of
Age 49 M&I Marshall & Ilsley Bank since 1976; Vice President and
Director, M&I Insurance Company of Arizona, Inc.; Director -
M&I Mortgage Corp. and M&I Data Services, Inc. A Director
since 1994.
Jack F. Chairman from July 1991 to present, President, Chief
Kellner Executive Officer and Director until July 1991, Western
Age 77 Industries, Inc., a manufacturer of metal stampings and
sheet metal fabrication. A Director since 1976.
J.B. Wigdale Chairman of the Board since December, 1992, Chief Executive
Age 57 Officer since October, 1992, Director since December, 1988,
Vice Chairman of the Board, December, 1988 to December,
1992, Vice President, 1984 to December, 1988, Marshall &
Ilsley Corporation; Chairman of the Board since January,
1989, Chief Executive Officer since 1987, Director since
1981, President, 1981 to January, 1989, M&I Marshall &
Ilsley Bank.
James O. Chairman of the Board and Director, Badger Meter, Inc., a
Wright manufacturer of products using flow measurement technology
Age 73 serving utility, industrial and commercial markets. A
Director since 1960.
<PAGE>
Class II Directors (terms expiring in 1995)
Jon F. Chait Executive Vice President, Secretary and Director, August
Age 43 1991 to present, Manpower Inc. and Executive Vice President,
September 1989 to present, Manpower International Inc., a
provider of temporary employment services; shareholder,
January 1982 to September 1989, Godfrey & Kahn, S.C.,
counsel to the Company. A Director since 1990.
D.J. Kuester President of Marshall & Ilsley Corporation since 1987;
Age 52 President and Director since January, 1989, Vice President,
1979 to January, 1989, M&I Marshall & Ilsley Bank; Chairman
of the Board, Chief Executive Officer and Director, M&I Data
Services, Inc. A Director since 1994.
Don R. O'Hare Consultant to Sundstrand Corporation, August 1991 to
Age 71 present; Chairman of the Board, January 1989 to August
1991, Vice Chairman until January 1989 and Director,
Sundstrand Corporation, a manufacturer of aerospace, power
transmission, fluid and heat transfer components and
systems. Also a director of Modine Manufacturing Company
and Sauer, Inc. A Director since 1977.
J.A. Puelicher Retired; Chairman of the Board of the Company from April
Age 73 1981 to December 1992, Chief Executive Officer of the
Company from April 1981 to October 1992, President of the
Company from May 1963 to April 1981 and November 1985 to
October 1987. Also a director of Modine Manufacturing
Company, Sentry Insurance, A Mutual Company, Sundstrand
Corporation, and W.R. Grace & Co. A Director since 1959.
Stuart W. Retired; Chairman of the Board and Chief Executive Officer,
Tisdale August 1992 to January 1994, President and Chief Executive
Age 65 Officer, April 1986 to August 1992, President, April 1984 to
April 1986, and Director, WICOR, Inc. A director of Modine
Manufacturing Company and Twin Disc, Inc. A Director since
1986.
Class III Directors (terms expiring in 1996)
J.P. Bolduc President and Chief Executive Officer, January 1993 to
Age 54 present, President and Chief Operating Officer, August 1990
to January 1993, Vice Chairman, November 1986 to August
1990, Executive Vice President and Chief Financial Officer,
February 1986 to November 1986, Senior Vice President 1983
to November 1986, W.R. Grace & Co.; Chief Operating Officer
of President Reagan's Private Sector Survey on Cost Control
in the Federal Government from 1982 through 1984. Also a
director of W.R. Grace & Co., Sundstrand Corporation and
Unisys Corporation. A Director since 1987.
Glenn A. Retired; Chairman of the Board, 1971 through January 1987,
Francke M&I Northern Bank, a subsidiary of the Company. A Director
Age 72 since 1960.
Burleigh E. Chairman of the Board, Chief Executive Officer and Director,
Jacobs Grede Foundries, Inc., a manufacturer of grey and ductile
Age 74 iron, steel, and alloyed castings. A Director since 1967.
James F. Kress President, Chief Executive Officer and Director, Green Bay
Age 64 Packaging, Inc., a manufacturer of corrugated and packaging
materials. A Director since 1986.
<PAGE>
If M&I completes the Merger with Valley, additional directors will be
elected to the M&I Board of Directors as described in M&I's Registration
Statement on Form S-4 (Reg. No. 33-51753) as filed with the Securities and
Exchange Commission.
Executive Officers of the Registrant
Information with regard to the Executive Officers of the Registrant is
found in Part I of this Form 10-K.
No Director or executive officer is an adverse party or has an interest
adverse to M&I or any of its subsidiaries in any material pending legal
proceeding.
Item 11. Executive Compensation
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation Awards(1)
Securities
Annual Compensation Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Options/SARs(#) Compensation($)(2)
<S> <C> <C> <C> <C> <C>
J.B. Wigdale 1993 $450,000 $325,000 $204,092
Chairman of the 1992 400,000 300,000 214,980
Board and Chief 1991 350,000 250,000 150,000 56,432
Executive Officer
D.J. Kuester 1993 375,000 277,335 141,193
President 1992 350,000 227,108 149,545
1991 300,000 201,931 120,000 43,231
G.H. Gunnlaugsson 1993 300,000 201,954 87,283
Executive Vice 1992 275,000 166,775 94,763
President and Chief 1991 230,000 151,611 90,000 33,567
Financial Officer
J.L. Delgadillo 1993 173,750 130,889 27,562
Senior Vice President 1992 150,000 103,956 32,140
1991 130,000 93,785 9,000 21,068
E.I. Van Housen(3) 1993 175,000 125,000 27,597
Vice President 1992 150,000 150,000 34,940
1991 150,000 75,000 21,262
M.J. Revane(4) 1993 261,250 105,417 150,296
Vice President 1992 285,000 115,000 157,233
1991 275,000 110,000 90,000 49,671
</TABLE>
___________
(1) As of December 31, 1993, the following individuals have unreleased Key
Restricted Stock: Mr. Wigdale, 48,000 shares valued at $1,134,000;
Mr. Kuester, 36,000 shares valued at $850,500; Mr. Gunnlaugsson, 24,000
shares valued at $567,000; and Mr. Delgadillo, 6,300 shares valued at
$148,838. Dividends are paid on restricted stock.
(2) Includes the following amounts paid by M&I under a 401(k) Thrift Plan
for the years 1993, 1992 and 1991, respectively: J.B. Wigdale - $4,497,
$4,364 and $4,237; D.J. Kuester - $4,497, $4,364 and 4,237;
G.H. Gunnlaugsson - $4,497, $4,364 and $4,237; J.L. Delgadillo - $4,459,
$4,364 and $4,237; E.I. Van Housen - $4,497, $4,364 and $4,237; and
M.J. Revane - $4,497, $4,364 and $4,237. Includes the following amounts
paid by M&I under the Retirement Growth Plan for the years 1993, 1992 and
1991, respectively: J.B. Wigdale - $16,509, $16,908 and $17,287;
D.J. Kuester - $16,509, $16,908 and $17,287; G.H. Gunnlaugsson - $16,509,
$16,908 and $17,287; J.L. Delgadillo - $16,622, $16,908 and $16,705;
E.I. Van Housen - $16,509, $16,908 and $16,800; and M.J. Revane -
$16,509, $16,908 and $17,287. Includes the following amounts paid by M&I
under a Split Dollar Life Insurance Plan for the benefit of the executives
for the years 1993, 1992 and 1991, respectively: J.B. Wigdale - $13,842,
$13,842 and $13,842; D.J. Kuester - $8,430, $8,657 and $6,241;
G.H. Gunnlaugsson - $7,688, $7,867 and $5,777; and M.J. Revane - $15,881,
$15,881 and $15,881. Includes the following amounts accrued by M&I under
the Supplementary Retirement Benefits Plan for the years 1993, 1992 and
1991, respectively: J.B. Wigdale -$43,166, $59,668 and $21,066;
D.J. Kuester - $33,541, $45,668 and $15, 466; G.H. Gunnlaugsson - $21,991,
$30,868 and $6,266; J.L. Delgadillo - $6,481, $10,868 and $126;
E.I. Van Housen - $6,591, $13,668 and $225; and M.J. Revane - $12,824,
$24,468 and $12,266. Also includes the following amounts accrued by M&I
under the Nonqualified Supplemental Retirement Plan for the years 1993 and
1992, respectively: J.B. Wigdale - $126,078 and $120,198;
D.J. Kuester - $78,216 and $73,948; G.H. Gunnlaugsson - $36,598 and
$34,756; and M.J. Revane - $100,585 and $95,612.
(3) Mr. Van Housen died on March 6, 1994.
(4) Mr. Revane retired in November 1993, but is included herein pursuant to
the rules of the Securities and Exchange Commission.
The following table provides information on option exercises by the named
executive officers during fiscal 1993.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options/SARs
Acquired on Value Options/SARs at FY-End(#) at FY-End*($)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
___________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
J.B. Wigdale 0 $ 0 315,000 0 $3,196,245 $ 0
D.J. Kuester 0 0 270,000 0 2,818,740 0
G.H. Gunnlaugsson 78,000 1,126,488 165,000 0 1,558,755 0
J.L. Delgadillo 0 0 36,000 0 425,619 0
E.I. Van Housen 82,800 1,195,963 60,000 0 852,466 0
M.J. Revane 135,000 1,796,205 90,000 0 577,530 0
</TABLE>
* For valuation purposes, a December 31, 1993 market price of $23.625 was used.
<PAGE>
NONQUALIFIED RETIREMENT PLAN
M&I adopted the Marshall & Ilsley Corporation Nonqualified Retirement
Benefit Plan (the "Nonqualified Plan") on December 12, 1991. The goal of the
Nonqualified Plan is to provide six of the executive officers of M&I with a
monthly supplemental retirement benefit such that the sum of their benefits
from the Retirement Growth Plan, Social Security, the Supplementary Retirement
Benefits Plan and the Nonqualified Plan will equal 60% of each participant's
average salary for his last five years of employment. The monthly benefit
under the Nonqualified Plan, starting in most instances when an individual
reaches age 65, is fixed based on various actuarial and interest rate
assumptions. The annual benefits are $160,000, $180,000, $100,000 and $100,000
for Messrs. Wigdale, Kuester, Revane and Gunnlaugsson, respectively, and a
total of $45,000 for two other executive officers. The annual benefit
will be adjusted in the event of death before age 62 or early retirement and
can be paid for life with a 120-month certain payout or on a joint and survivor
basis at the option of the participant. The pay-out option elected will also
affect the amount of the annual benefit. If a participant leaves the employ
of the Company prior to age 55, he will receive no benefits under the
Nonqualified Plan, except that, in the event of a Change in Control (as defined
in the Nonqualified Plan), each participant will receive the present value of
the benefits to which he is entitled under the Nonqualified Plan within 30 days
of such Change in Control regardless of his age at that point.
EMPLOYMENT AGREEMENTS AND RELATED MATTERS
In order to assure management continuity and stability, M&I has entered
into substantially similar Employment Agreements (the "Employment Agreements")
with Messrs. Wigdale, Kuester, Delgadillo, and Gunnlaugsson, two additional
executive officers and 13 officers and other employees of the Company and its
subsidiaries (collectively, the "Executives"). The Employment Agreements with
Messrs. Wigdale, Kuester and Gunnlaugsson each have a term of three years, and
the Employment Agreement with Mr. Delgadillo has a term of two years. The
Employment Agreements with the other Executives have terms of two or three
years.
The Employment Agreements guarantee the Executives specific payments and
benefits upon a termination of employment as a result of a change of control
of M&I. If a change of control occurs the contract becomes effective and
continues for a two- or three-year employment term. The employment term renews
on a daily basis until M&I gives notice to terminate the daily renewal.
The Employment Agreements provide for specified benefits after a change
of control if the Executive voluntarily terminates for "good reason" or is
involuntarily terminated other than for "cause" (as defined in the Employment
Agreements). In addition, in the case of some Employment Agreements, at the
end of six months after a change of control, the Executive may terminate
employment for any reason and is entitled to receive full benefits. Upon a
termination, the Executive is entitled to (a) a lump sum payment equal to two
or three times (depending on whether the contract is a two- or three-year
contract) the sum of the Executive's current base salary plus the higher of the
Executive's bonus for the last year or the Executive's average bonus for the
past three years, (b) a proportionate amount of any unpaid bonus deemed earned
for the year of termination, (c) a lump sum payment equal to the retirement
benefits lost as a result of not having been employed for the remaining
contract term, (d) health and other benefits for the remaining contract term,
and (e) payments for certain other fringe benefits. In the event of a
termination of employment as a result of his death, the Executive's beneficiary
is entitled to six months of base salary. No additional benefits are
guaranteed under the contract upon an Executive's disability or termination by
M&I for cause.
The Employment Agreements provide that upon a change of control most
restrictions limiting the exercise, transferability or other incidents of
ownership of any outstanding award, restricted stock, options, stock
appreciation rights, or other property rights of M&I granted to the Executive
shall lapse, and such awards shall become fully vested, except in certain
circumstances. Some of the Employment Agreements also provide for "gross-up"
payments in the event payments to an Executive under the Employment Agreement
are subject to Section 4999 of the Code (the "Excise Tax") or any similar
<PAGE>
federal, state or local tax which may be imposed, in an amount such that the
net amount retained by the Executive, after deduction of any Excise Tax on the
payments and any federal, state and local income tax and Excise Tax upon the
gross-up payment, shall be equal to the payments then due.
In connection with Mr. Revane's retirement in November 1993, he entered
into an Agreement with M&I ("Retirement Agreement") and a Consulting and
Noncompetition Agreement with M&I ("Consulting Agreement"). Pursuant to the
Retirement Agreement (1) M&I determined that Mr. Revane's retirement
constituted "early retirement" for purposes of applicable benefit plans and,
accordingly, all options to acquire M&I Common Stock held by Mr. Revane vested
to the extent not already vested and all restrictions applicable to Mr.
Revane's Key Restricted Stock lapsed, (2) Mr. Revane will receive 36 monthly
payments of $10,278 commencing on January 1, 1996, provided that if Mr. Revane
dies prior to December 1, 1998, his estate or designated beneficiary shall
receive in lieu of such monthly payments either a lump sum or monthly payment,
depending upon the date of death, and (3) Mr. Revane is allowed to participate
in M&I's Non-Qualified Retirement Benefit Plan and split-dollar life insurance
arrangement while he is engaged as a consultant to M&I. Under the Consulting
Agreement, Mr. Revane provides various consulting and advisory services to M&I
and is prohibited from participating in certain competing activities. The
Consulting Agreement has a term of 25 months and provides for a payment to Mr.
Revane, or his estate in the case of his death, of $32,000 per month in
exchange for his consulting services and agreement not to compete.
NON-EMPLOYEE DIRECTOR COMPENSATION
Directors of M&I who are not employees are paid a retainer fee of $12,000
per year. In addition, non-employee directors receive a fee of $1,500 for each
Board meeting which they attend and $500 for each Committee meeting which they
attend. M&I has established a deferred compensation plan for its Directors.
Under such plan, all or part of the fees received by a Director may be deferred
at the election of the Director. Amounts deferred are credited with an
earnings factor based on the Director's allocation among 13-week U.S. Treasury
Bills, the Common Stock or any common trust fund offered by the Trust Company.
Deferred amounts are payable in not less than 36 nor more than 180 monthly
installments, as elected by the participating Director, unless the Board elects
to distribute amounts over a shorter period. One Director, Mr. Chait, elected
to defer compensation under the plan during 1993. Directors of M&I who are
also Directors of subsidiaries of M&I receive compensation from such
subsidiaries in varying amounts based on the Director compensation schedule of
such subsidiaries.
Mr. Puelicher receives various supplemental retirement benefits from M&I
which are not related to or conditioned upon his service as a director of M&I.
In 1993, M&I determined to increase Mr. Puelicher's supplemental retirement
benefit under his Supplemental Retirement Plan dated December 10, 1992 from
$41,667 per month to $58,333 per month. In addition, M&I made a special
payment of $200,000 to Mr. Puelicher in December 1993 in recognition of Mr.
Puelicher's extraordinary contributions to M&I.
Mr. Puelicher and M&I entered into a Consulting Agreement and Supplemental
Retirement Plan in 1986, which was amended in 1992 (the "Consulting/Retirement
Agreement"). The Consulting/Retirement Agreement went into effect in January
1993 and provides for Mr. Puelicher to serve as a consultant to M&I for five
years. As compensation for his commitment to provide consulting services, Mr.
Puelicher receives a retirement benefit of $25,000 per month for his life, and,
if Mr. Puelicher predeceases his wife, his wife will receive $12,500 per month
for her life. In addition, M&I pays an annual insurance premium for Mr.
Puelicher of $112,470 until the earlier of (i) Mr. Puelicher's death, (ii) 19
years from the date of the policy's issue, or (iii) such time as the policy is
paid up. M&I will also reimburse Mr. Puelicher for all travel and other
expenses incurred in the performance of his duties and will provide him with
secretarial services and office space. Mr. Puelicher will continue to
participate in M&I's group health insurance (or equivalent plan) while
receiving retirement benefits under the Consulting/Retirement Agreement. M&I
may terminate the Consulting/Retirement Agreement for "cause" (as defined in
the Consulting/Retirement Agreement). The Consulting/Retirement Agreement
provides that Mr. Puelicher may not compete with M&I and must maintain the
<PAGE>
confidentiality of certain information regarding M&I, its business and
customers.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table lists as of February 28, 1994 information regarding
the beneficial ownership of shares of Common Stock by each Director and named
executive officer of M&I, by each person believed by M&I to be a beneficial
owner of more than 5% of the Common Stock, and by all Directors and executive
officers of M&I as a group:
Amount and
Name and Nature of
Address of Beneficial Percent
Beneficial Owner Ownership(1) of Class
_______________________________________________________________________
The Northwestern Mutual 8,665,374(2) 12.8%
Life Insurance Company
720 East Wisconsin Ave.
Milwaukee, WI 53202
Marshall & Ilsley 4,830,181(3) 8.0%
Trust Company
770 North Water St.
Milwaukee, WI 53202
Nicholas Company, Inc. 3,706,550(4) 6.2%
700 North Water St.
Milwaukee, WI 53202
J.P. Bolduc -0- *
Glenn A. Francke 190,283 *
Burleigh E. Jacobs 40,500 *
James F. Kress 10,500 *
Wendell F. Bueche 10,500 *
Jack F. Kellner 480,702 *
J.B. Wigdale 610,603(5) 1.0%
James O. Wright 11,620(6) *
Jon F. Chait 17,486 *
Don R. O'Hare 3,600 *
J.A. Puelicher 653,817(7) 1.1%
<PAGE>
Stewart W. Tisdale 1,602 *
D.J. Kuester 421,853(8) *
G.H. Gunnlaugsson 274,653(9) *
J.L. Delgadillo 48,000(10) *
All Directors and officers of the Company as a group (27 persons,
including the above) own 3,604,642 shares of Common Stock or 6.0% of the total
common stock outstanding.(11)
_______________
*less than 1%
(1) Except as indicated below, all shares shown in the table are owned with
sole voting and investment power.
(2) This information is based on Amendment No. 7 to Form 13-G dated February
7, 1991. Of the shares held, 5,714,286 shares of Common Stock may be
acquired upon conversion of the Company's 8.5% Convertible Subordinated
Notes Due 1997 (the "Notes") held by The Northwestern Mutual Life
Insurance Company ("NML"). NML also holds 988,188 shares of Common Stock
and 185,314 shares of Preferred Stock. NML has sole voting and investment
power as to all such shares, subject to the terms and conditions of a
certain Investment Agreement (the "Investment Agreement") between the
Company and NML dated August 30, 1985. NML may exchange shares of Common
Stock, regardless of how they were acquired, for shares of Preferred
Stock. The Preferred Stock is non-voting and convertible into 1,962,900
shares of Common Stock at the same ratio that the Common Stock was
exchanged for the Preferred Stock. The Investment Agreement provides for
the purchase by NML of up to 24.9%, on a fully diluted basis, of the
Common Stock. Purchases may take the form of Common Stock, Preferred
Stock, notes or other securities of the Company (together with the Notes,
the "Securities") at such prices as may be agreed upon by the parties from
time to time. Pursuant to the Investment Agreement, on December 31, 1985,
NML purchased $50 million in principal amount of the Notes. The Notes are
convertible into 5,714,286 shares of the Common Stock (which would be
approximately 8.6% of the Company's outstanding pro forma Common Stock as
of February 28, 1994) at a conversion price of $8.75 per share. The Notes
are callable by the Company upon payment of prescribed premiums through
1995 and at par thereafter. The Investment Agreement restricts in certain
respects NML's right to transfer, acquire and vote any Securities. Under
certain conditions, NML may require the Company to repurchase its stock
at not less than prescribed prices after a "Change-in-Control" or upon the
occurrence of a "Business Combination" (as such terms are defined in the
Investment Agreement).
For further information concerning the Investment Agreement, the Notes and
the Preferred Stock, reference is hereby made to the Company's Current
Reports on Form 8-K dated May 20, 1985, August 30, 1985 and January 2,
1986.
(3) This information is based on Amendment No. 12 to Form 13-G dated February
9, 1994. Marshall & Ilsley Trust Company (the "Trust Company") owned
beneficially 4,830,181 shares (approximately 8.0%) of the outstanding
Common Stock. All such shares are owned by the Trust Company as trustee
or in other fiduciary capacities. The Trust Company has no economic
interest in such shares. Of these shares, the Trust Company has sole
voting power as to 1,076,669 shares (approximately 1.8%), and shared
voting power as to 249,954 shares (less than .1%); sole investment power
as to 3,967,838 shares (approximately 6.6%), shared investment power as
to 862,343 shares (approximately 1.4%). The Company owns all of the
issued and outstanding capital stock of the Trust Company.
(4) This information is based on Amendment No. 5 to Form 13-G dated February
8, 1994. Nicholas Company, Inc. ("Nicholas") is an investment adviser
registered under the Investment Advisers Act of 1940. Nicholas does not
<PAGE>
have sole or shared voting power with respect to any of the shares held
but sole investment power as to all of such shares.
(5) Includes 11,550 held by Mr. Wigdale's family as to which he disclaims
beneficial ownership and 315,000 shares which could be acquired pursuant
to exercise of stock options within sixty days of February 28, 1994.
(6) Includes 6,120 shares held in trust for the benefit of Mr. Wright's family
and 1,500 shares owned by Badger Meter Foundation as to which he disclaims
beneficial ownership.
(7) Includes 41,217 shares as to which Mr. Puelicher exercises sole voting
power and 450,000 shares which could be acquired pursuant to exercise of
stock options within sixty days of February 28, 1994.
(8) Includes 270,000 shares which could be acquired pursuant to exercise of
stock options within sixty days of February 28, 1994.
(9) Includes 2,700 shares held by Mr. Gunnlaugsson's family as to which he
disclaims beneficial ownership and 165,000 shares which could be acquired
pursuant to exercise of stock options within sixty days of February 28,
1994.
(10) Includes 36,000 shares which could be acquired pursuant to exercise of
stock options within sixty days of February 28, 1994.
(11) Includes 147,600 shares of restricted stock as to which the holders
exercise sole voting power and 1,596,500 shares which could be acquired
pursuant to exercise of stock options with sixty days of February 28,
1994.
Item 13. Certain Relationships and Related Transactions
Customers of the bank subsidiaries of M&I include nominees, directors and
officers of M&I and their associates. Since January 1, 1993, such persons and
firms have been indebted to M&I's bank subsidiaries for loans made in the
ordinary course of business. All such loans were made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with others and did not involve more than the
normal risk of collectibility or present other unfavorable features. Loans to
directors and executive officers or represented 9.4% of shareholders equity
at December 31, 1993. See also Item 11 - Executive Compensation and Item 8 -
Consolidated Financial Statements and Supplementary Data, Note 7 to
Consolidated Financial Statements.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements
Consolidated financial statements:
Balance sheets - December 31, 1993 and 1992
Statements of income - years ended December 31, 1993, 1992, and
1991
Statements of cash flows - years ended December 31, 1993, 1992,
and 1991
Statements of shareholders' equity - years ended December 31,
1993, 1992, and 1991
Notes to financial statements
Report of Independent Public Accountants
2. Financial Statement Schedules
All schedules are omitted because they are not required, not
applicable or the required information is contained elsewhere.
3. Exhibits
See Index to Exhibits of this Form 10-K.
(b) Reports on Form 8-K
During the last quarter of 1993, M&I did not file any Current Reports on
Form 8-K with the Securities and Exchange Commission.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MARSHALL & ILSLEY CORPORATION
By /s/ J.B. Wigdale
____________________________
J. B. Wigdale
Chairman of the Board
Date: March 28, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
/s/ J.B. Wigdale
________________________________________
J. B. Wigdale
Chairman of the Board and a Director
(Principal Executive Officer) Date: March 28, 1994
/s/ G.H. Gunnlaugsson
________________________________________
G. H. Gunnlaugsson
Executive Vice President
(Principal Financial Officer) Date: March 28, 1994
/s/ P.R. Justiliano
________________________________________
P. R. Justiliano
Vice President and Corporate Controller
(Principal Accounting Officer) Date: March 28, 1994
Directors: J.P. Bolduc, Wendell F. Bueche, Jon F. Chait, Glenn A. Francke,
G.H. Gunnlaugsson, Burleigh E. Jacobs, Jack F. Kellner, D.J. Kuester,
Don R. O'Hare, J.A. Puelicher, J.B. Wigdale and James O. Wright
By /s/ M.A. Hatfield Date: March 28, 1994
____________________________________
M. A. Hatfield
Attorney-In-Fact*
* Pursuant to authority granted by powers of attorney, copies of which are filed
herewith.
<PAGE>
MARSHALL & ILSLEY CORPORATION
INDEX TO EXHIBITS
(Item 14(a)3)
ITEM
(2) Agreement and Plan of Merger dated as of September 19, 1993, between
M&I and Valley Bancorporation, incorporated by reference to M&I's Current
Report on Form 8-K dated September 19, 1993 (as amended by M&I's
Current Report on Form 8-K/A dated September 19, 1993), SEC File No.
0-1220
(3)(a) Restated Articles of Incorporation
(b) By-laws, as amended, incorporated by reference to M&I's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1993, SEC File No.
0-1220
(4)(a) Indenture between M&I and Chemical Bank (as successor to Manufacturers
Hanover Trust Company) dated as of November 15, 1985 ("Senior
Indenture"), incorporated by reference to M&I's Registration Statement on
Form S-3 (Registration No. 33-21377), as supplemented by the First
Supplemental Indenture to the Senior Indenture dated as of May 31, 1990,
incorporated by reference to M&I's Current Report on Form 8-K dated May
31, 1990, and as supplemented by the Second Supplemental Indenture to the
Senior Indenture dated as of July 15, 1993, incorporated by reference to
M&I's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993,
SEC File No. 0-1220
(b) Form of Medium Term Notes, Series B, issued pursuant to the Senior
Indenture, incorporated by reference to M&I's Current Report on Form
8-K dated May 31, 1990, SEC File No. 0-1220
(c) Form of Medium Term Notes, Series C, issued pursuant to the Senior
Indenture, incorporated by reference to M&I's Registration Statement on
Form S-3 (Reg. No. 33-64054)
(d) Indenture between M&I and Chemical Bank dated as of July 15, 1993
("Subordinated Indenture"), incorporated by reference to M&I's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1993, SEC File No.
0-1220
(e) Form of Subordinated Note issued pursuant to the Subordinated Indenture,
incorporated by reference to M&I's Registration Statement on Form S-3
(Reg. No. 33-64054)
(f) Investment Agreement between M&I and The Northwestern Mutual Life
Insurance Company dated August 30, 1985, incorporated by reference to
M&I's Current Report on Form 8-K dated May 20, 1985, SEC File No.
0-1220
(g) Subordinated Convertible Note Agreement between The Northwestern
Mutual Life Insurance Company dated December 31, 1985, incorporated by
reference to M&I's Current Report on Form 8-K dated May 20, 1985, SEC
File No. 0-1220
(h) Form of Convertible Subordinated Note, incorporated by reference to M&I's
Current Report on Form 8-K dated May 20, 1985, SEC File No. 0-1220
<PAGE>
(i) Designation of Rights and Preferences of holders of Series A Preferred
Stock, incorporated by reference to M&I's Current Report on Form 8-K
dated May 20, 1985, SEC File No. 0-1220
(10)(a) 1983 Executive Stock Option and Restricted Stock Plan, as amended,
incorporated by reference to M&I's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987, SEC File No. 0-1220*
(b) 1985 Executive Stock Option and Restricted Stock Plan, as amended,
incorporated by reference to M&I's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987, SEC File No. 0-1220*
(c) M&I Marshall & Ilsley Bank Supplementary Retirement Benefits Plan,
incorporated by reference to M&I's Annual Report on Form 10-K for the
fiscal year ended December 31, 1983, SEC File No. 0-1220*
(d) Directors Deferred Compensation Plan, adopted on February 14, 1985,
incorporated by reference to M&I's Annual Report on Form 10-K for the
fiscal year ended December 31, 1984, SEC File No. 0-1220*
(e) Consulting Agreement and Supplemental Retirement Plan dated as of
October 1, 1986 between M&I and J.A. Puelicher, incorporated by reference
to M&I's Annual Report on Form 10-K for the fiscal year ended December
31, 1986, SEC File No. 0-1220*
(f) Amendment to Consulting Agreement and Supplemental Retirement Plan
dated as of August 13, 1992.*
(g) Deferred Compensation Trust between Marshall & Ilsley Corporation and
Bessemer Trust Company dated April 28, 1987, as amended, incorporated
by reference to M&I's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, SEC File No. 0-1220*
(h) 1986 Non-Qualified Stock Option Plan of M&I and related Stock Option
Agreement between J.A. Puelicher and M&I, incorporated by reference to
M&I's Annual Report on Form 10-K for the fiscal year ended December
31, 1986, SEC File No. 0-1220*
(i) Form of employment agreements, dated November 5, 1990, between M&I
and Messrs. Gunnlaugsson, Kuester, Strelow and Wigdale incorporated by
reference to M&I's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, SEC File No. 0-1220*
(j) Employment agreement, dated November 5, 1990, between M&I and Mr.
Michael A. Hatfield incorporated by reference to M&I's Annual Report on
Form 10-K for the fiscal year ended December 31, 1990, SEC File No.
0-1220*
(k) Employment agreement, dated as of November 5, 1990, between M&I and
Mr. Delgadillo*
(l) Restricted Stock Plan of Marshall & Ilsley Corporation, incorporated by
reference to M&I's Annual Report on Form 10-K for the fiscal year ended
December 31, 1988, SEC File No. 0-1220*
(m) 1989 Executive Stock Option and Restricted Stock Plan, incorporated by
reference to M&I's Annual Report on Form 10-K for the fiscal year ended
December 31, 1988, as amended by M&I's Annual Report on Form 10-K
<PAGE>
for the fiscal year ended December 31, 1990, SEC File No. 0-1220*
(n) Marshall & Ilsley Corporation Nonqualified Retirement Benefit Plan,
incorporated by reference to M&I's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991, SEC File No. 0-1220*
(o) Marshall & Ilsley Corporation Supplemental Retirement Benefits Plan,
incorporated by reference to M&I's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991, SEC File No. 0-1220*
(p) Marshall & Ilsley Trust Company Supplemental Retirement Benefits Plan,
incorporated by reference to M&I's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991, SEC File No. 0-1220*
(q) Supplemental Retirement Agreement dated December 10, 1992, between
M&I and J.A. Puelicher, incorporated by reference to M&I's Annual Report
on Form 10-K for the fiscal year ended December 31, 1992, SEC File No.
0-1220*
(r) Amendment to Supplemental Retirement Agreement dated December 16,
1993, between M&I and J.A. Puelicher*
(s) Marshall & Ilsley Corporation 1993 Executive Stock Option Plan,
incorporated by reference to M&I's Registration Statement on Form S-4
(Reg. No. 33-51753)*
(t) Agreement dated July 1, 1993 between M&I and Mr. Revane*
(u) Consulting and Noncompetition Agreement dated as of December 1, 1993
between M&I and Mr. Revane
(11) Computation of net income per common share
(12) Computation of Ratio of Earnings to Fixed Charges
(21) Subsidiaries
(23) Consent of Arthur Andersen & Co.
(24) Powers of attorney for Messrs. Bolduc, Bueche, Chait, Francke,
Gunnlaugsson, Jacobs, Kellner, Kress, Kuester, O'Hare, Puelicher,
Tisdale and Wright
_______________
* Management contract or compensatory plan or agreement
<PAGE>
RESTATED ARTICLES OF INCORPORATION
OF
MARSHALL & ILSLEY CORPORATION
These Restated Articles of Incorporation are executed by the
undersigned to supersede and replace the heretofore existing Articles of
Incorporation and amendments thereto of Marshall & Ilsley Corporation, a
corporation organized under the laws of the State of Wisconsin:
ARTICLE I
The name of the corporation is Marshall & Ilsley Corporation (the
"Corporation").
ARTICLE II
The Corporation may engage in any lawful activity within the purpose
for which corporations may be organized under the Wisconsin Business
Corporation Law; provided, however, that the Corporation shall not engage in
any activities prohibited by the United States Bank Holding Company Act of
1956.
ARTICLE III
The aggregate number of shares which the Corporation shall have the
authority to issue, the designation of each class of shares, the authorized
number of shares of each class of par value and the par value thereof per
share, shall be as follows:
Designation Par Value Authorized
of Class Per Share Number of Shares
Preferred Stock. . . . . . . . $1.00 5,000,000
Common Stock . . . . . . . . . $1.00 160,000,000
Any and all such shares of Common Stock and Preferred Stock may be
issued for such consideration, not less than the par value thereof, as shall
be fixed from time to time by the Board of Directors. Any and all such
shares so issued, the full consideration for which has been paid or
delivered, shall be deemed fully paid stock and shall not be liable to any
further call or assessment thereon, and the holders of such shares shall not
be liable for any further payments except as otherwise provided by the laws
of the State of Wisconsin.
The preferences, limitations and relative rights of such classes shall
be as follows:
(1) Designation of Series. The Preferred Stock may from time to time
as hereinafter provided, be divided into and issued in one or more series,
and the Board of Directors is hereby expressly authorized to establish one
or more series, to fix and determine the variations as among series and to
fix and determine, prior to the issuance of any shares of a particular
series, the following designations, terms, limitations and relative rights
and preferences of such series:
(a) The designations of such series and the number of shares
which shall constitute such series, which number may at any time, or
from time to time, be increased or decreased (but not below the number
of shares thereof then outstanding) by the Board of Directors unless
the Board of Directors shall have otherwise provided in establishing
such series;
<PAGE>
(b) The voting rights to which the holders of the shares of
such series are entitled, if any;
(c) The yearly rate of dividends on the shares of such series,
the dates in each year upon which such dividend shall be payable and,
if such dividend shall be cumulative, the date or dates from which
such dividend shall be cumulative;
(d) The amount per share payable on the shares of such series
in the event of the liquidation or dissolution or winding up of the
Corporation (whether voluntary or involuntary);
(e) The terms, if any, on which the shares of such series shall
be redeemable, and, if redeemable, the amount per share payable
thereon in the case of the redemption thereof (which amount may vary
with regard to (i) shares redeemed on different dates; and (ii) shares
redeemed through the operation of a sinking fund, if any, applicable
to such shares, from the amount payable with respect to shares
otherwise redeemed);
(f) The extent to and manner in which a sinking fund, if any,
shall be applied to the redemption or purchase of the shares of such
series, and the terms and provisions relative to the operation of such
fund;
(g) The terms, if any, on which the shares of such series shall
be convertible into shares of any other class or of any other series
of the same or any other class and, if so convertible, the price or
prices or the rate or rates of conversion, including the method, if
any, for adjustments of such prices or rates, and any other terms and
conditions applicable thereto; and
(h) Such other terms, limitations and relative rights and
preferences, if any, of such series as the Board of Directors may
lawfully fix and determine and as shall not be inconsistent with the
laws of the State of Wisconsin or these Amended and Restated Articles
of Incorporation.
All shares of the same series of Preferred Stock shall be identical in
all respects, except that shares of any one series issued at different times
may differ as to dates from which any cumulative dividends thereon shall be
cumulative. All shares of the Preferred Stock of all series shall be equal
and shall be identical in all respects, except as permitted by the foregoing
provisions of this paragraph (1).
(2) Dividends. The holders of Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, dividends at the annual rate fixed by the Board
of Directors with respect to each series of shares and no more. Such
dividends shall be payable on such dates and in respect of such periods in
such year as may be fixed by the Board of Directors to the holders of record
thereof on such date as may be determined by the Board of Directors. Such
dividends shall be paid or declared and set apart for payment for each
dividend period before any dividend (other than a dividend payable solely in
Common Stock) for the same period shall be paid upon or set apart for
payment on the Common Stock, and, if dividends on the Preferred Stock shall
be cumulative, all unpaid dividends thereon for any past dividend period
shall be fully paid or declared and set apart for payment, but without
interest, before any dividend (other than a dividend payable solely in
Common Stock) shall be paid upon or set apart for payment on the Common
Stock. The holders of Preferred Stock shall not, however, be entitled to
participate in any other or additional earnings or profits of the
Corporation, except for such premiums, if any, as may be payable in case of
redemption, liquidation, dissolution or winding up.
(3) Redemption. In the event that the shares of any series of the
Preferred Stock shall be made redeemable as provided in subparagraph (e) of
paragraph (1), above, the Corporation may, at its option, redeem at any time
or from time to time all or any part of such shares, upon notice duly given
as hereinafter provided, by paying for each share the redemption price then
applicable thereto fixed by the Board of Directors as provided in
subparagraph (e) of paragraph (1), above.
<PAGE>
Notice of every such redemption shall be mailed at least thirty (30)
days prior to the date fixed for such redemption to the holders of record of
the shares called for redemption at their respective addresses as shown on
the stock records of the Corporation. In case of a redemption of a part of
a series of Preferred Stock at the time outstanding, the Corporation shall
select by lot, in such manner as the Board of Directors may determine, the
shares so to be redeemed.
On or before the date fixed for a redemption specified therein, the
Corporation shall deposit funds sufficient to redeem such shares with a bank
or trust company in good standing, as designated in such notice, organized
under the laws of the United States or of the State of Wisconsin, doing
business in the City of Milwaukee, Wisconsin, and having a capital, surplus
and undivided profit aggregating at least $50,000,000.00, according to its
last published statement of condition, in trust for the pro rata benefit of
the holders of the shares called for redemption, and if the name and address
of such bank or trust company and the deposit or intent to deposit the
redemption funds in such trust account shall have been stated in such notice
of redemption, and the Corporation shall have given such bank or trust
company irrevocable instructions and authorization to pay the amount payable
upon redemption to the proper holders upon surrender of certificates
representing such shares, then, from and after the mailing of such notice
and the making of such deposit, all shares so called for redemption shall no
longer be deemed to be outstanding for any purpose whatsoever and the right
to receive dividends thereon and all rights of the holders of such shares in
or with respect to such shares of the Corporation shall forthwith cease and
terminate, except only the right of the holders thereof to receive from such
bank or trust company the amount payable upon redemption together with all
accrued but unpaid dividends to the date fixed for redemption, without
interest, upon the surrender of the certificates representing the shares to
be redeemed, and the right to exercise privileges of conversion, if any, on
or before the date fixed for redemption or such earlier date as may be fixed
for the expiration thereof.
Any funds so deposited by the Corporation which shall not be required
for such redemption because of the exercise of any right of conversion
subsequent to the time of such deposit shall be released and repaid to the
Corporation upon its request. Any funds so deposited and unclaimed at the
end of five (5) years (or such shorter period as shall be provided by law)
after the date fixed for redemption shall be released and repaid to the
Corporation, after which holders of the shares called for redemption shall
no longer look to the said bank or trust company but shall look only to the
Corporation, or to others, as the case may be, for payment of any lawful
claim for such funds which the holders of said shares may still have. Any
interest accrued on funds so deposited shall be paid to the Corporation from
time to time.
(4) Reissue of Shares. Shares of the Preferred Stock which shall
have been converted, redeemed, purchased or otherwise acquired by the
Corporation, whether through the operation of a sinking fund or otherwise,
shall be retired and restored to the status of authorized but unissued
shares, but may be reissued only as a part of the Preferred Stock other than
the series of which they were originally a part.
(5) Liquidation. In the event of liquidation, dissolution or winding
up (whether voluntary or involuntary) of the Corporation, the holders of
shares of Preferred Stock shall be entitled to be paid the full amount
payable on such shares upon the liquidation, dissolution or winding up of
the Corporation fixed by the Board of Directors with respect to such shares
as provided in subparagraph (d) of paragraph (1), above, before any amount
shall be paid to the holders of the Common Stock. After payment to holders
of the Preferred Stock of the full preferential amounts to which they are
entitled, the remaining assets of the Corporation shall be distributed
ratably among the holders of the Common Stock.
(6) Designation of Rights and Preferences Series A Convertible
Preferred Stock.
(a) Designation of Series. There is hereby established
effective February 14, 1986 from the authorized preferred stock a
series of preferred stock to be designated as Series A Convertible
Preferred Stock, consisting of 500,000 shares, and having the powers,
rights, limitations, restrictions and preferences set forth herein.
The number of shares designated as Series A Convertible Preferred
Stock may at any time, or from time to time, be increased or decreased
(but not below the number of shares thereof then outstanding or then
<PAGE>
reserved for issuance in connection with the conversion of any
securities of the Company) by the Board of Directors.
(b) Voting Rights. The holders of Series A Convertible
Preferred Stock shall have only such right to vote as provided by
Sections 180.64(2) and 180.52 of the Wisconsin Statutes or by other
applicable law.
(c) Dividends. The holders of all issued and outstanding
shares of Series A Convertible Preferred Stock shall be entitled to
receive cash dividends when and as cash dividends are declared and
become payable with respect to the Common Stock of the Corporation, in
an amount, in the case of each holder of shares of Series A
Convertible Preferred Stock with respect to each cash dividend
declared with respect to the Common Stock, equal to the amount of the
cash dividend that such holder would have received with respect to the
resulting shares of Common Stock had he converted such shares of
Preferred Stock into Common Stock immediately before the declaration
of such dividend with respect to the Common Stock. Dividends on the
Series A Convertible Preferred Stock shall be noncumulative. The
holders of Series A Convertible Preferred Stock shall not be entitled
to participate in any other or additional earnings or profits of the
Corporation, except for such premiums, if any, as may be payable in
case of liquidation, dissolution or winding up.
(d) Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set apart
for the holders of the Common Stock or any other series or class of
stock of the Corporation ranking junior to the Series A Convertible
Preferred Stock upon liquidation, dissolution or winding up, the
holders of the shares of the Series A Convertible Preferred Stock
shall be entitled to receive $100 per share plus an amount equal to
all dividends, if any, which have accrued thereon as the result of the
declaration of dividends on the Common Stock but which remain unpaid
to the date of final distribution to such holders; but such holders
shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation to be paid or distributed to the holders of the
shares of the Series A Convertible Preferred Stock shall be
insufficient to pay in full the preferential amount aforesaid and the
preferential amount, if any, to be paid or distributed to the holders
of any other preferred stock ranking as to liquidation, dissolution or
winding up, on a parity with the Series A Convertible Preferred Stock,
then such assets shall be distributed among the holders of Series A
Convertible Preferred Stock and such other preferred stock, if any,
ratably in accordance with the respective amounts that would be
payable upon liquidation, dissolution or winding up to such holders
with respect to such shares of Series A Convertible Preferred Stock
and such other preferred stock, if any, if all preferential amounts
payable thereon were paid in full. For the purposes of this
subparagraph (d), a consolidation or merger of the Corporation with
one or more corporations shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary.
Subject to the rights of the holders of shares of any series or
class of stock ranking on a parity with or prior to the Series A
Convertible Preferred Stock upon liquidation, dissolution or winding
up, upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the Series
A Convertible Preferred Stock as provided in this subparagraph d, but
not prior thereto, the holders of the Common Stock or any other series
or class of stock ranking junior to the Series A Convertible Preferred
Stock upon liquidation, dissolution or winding up shall, subject to
the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or
distributed, and the Series A Convertible Preferred Stock shall not be
entitled to share therein.
(e) Conversion Rights. The holders of shares of Series A
Convertible Preferred Stock shall have the right, at their option, to
convert such shares into shares of Common Stock of the Corporation at
any time on and subject to the following terms and conditions:
<PAGE>
(i) The shares of Series A Convertible Preferred
Stock shall be convertible at the offices of the transfer
agent or agents for the Series A Convertible Preferred
Stock and at such other office or offices, if any, as the
Board of Directors may designate, into fully paid and
nonassessable shares (except as provided in Section
180.40(6) of the Wisconsin Statutes) of Common Stock of
the Corporation, at the conversion price, determined as
hereinafter provided, in effect at the time of conversion,
each share of Series A Convertible Preferred Stock being
valued at $100 for the purpose of such conversion. The
price at which shares of Common Stock shall be delivered
upon conversion (herein called the "Conversion Price")
shall be initially $78.75 per share of Common Stock,
except that the initial Conversion Price applicable to
shares of Series A Convertible Preferred Stock issued in
exchange for Common Stock shall be the weighted average
purchase price paid for such Common Shares as determined
in good faith by the Board of Directors of the Company.
The Conversion Price shall be adjusted in certain
instances as provided in subparagraph (e)(iii), (iv), (v),
(vi), (ix), (x) and (xi) below.
(ii) In order to convert shares of Series A
Convertible Preferred Stock into Common Stock, the holder
thereof shall surrender at any office hereinabove
mentioned the certificate or certificates therefor, duly
endorsed or assigned to the Corporation or in blank, and
give written notice to the Corporation at said office that
such holder elects to convert such shares. Any such
notice shall be irrevocable. No payment or adjustment
shall be made upon conversion on account of any dividends,
if any, which have accrued as the result of the
declaration of dividends on the Common Stock on the shares
of Series A Convertible Preferred Stock surrendered for
conversion, but which remain unpaid, but payment or
adjustment shall be made on account of any dividends
payable with respect to the Common Stock issued upon
conversion.
Shares of Series A Convertible Preferred Stock shall
be deemed to have been converted immediately prior to the
close of business on the day of the surrender of such
shares for conversion in accordance with the foregoing
provisions, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or
holders of Common Stock at such time. As promptly as
practicable on or after the conversion date, the
Corporation shall issue and shall deliver at said office a
certificate or certificates for the number of full shares
of Common Stock issued upon such conversion, together with
payment in lieu of any fraction of a share, as hereinafter
provided, to the person or persons entitled to receive the
same.
(iii) In case the Corporation shall pay or make a
dividend or other distribution on any class of Capital
Stock of the Corporation in Common Stock, the Conversion
Price shall be reduced by multiplying such Conversion
Price by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close
of business on the day fixed for the determination of
shareholders entitled to receive such dividend or other
distribution and of which the denominator shall be the sum
of such number of shares plus the total number of shares
constituting such dividend or other distribution, such
reduction to become effective immediately after the
opening of business on the day following the date fixed
for such determination. For purposes of this subparagraph
(e)(iii), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury
of the Corporation. The Corporation will not pay any
dividend or make any distribution on shares of Common
Stock held in the treasury of the Corporation.
<PAGE>
(iv) In case the Corporation shall issue rights or
warrants to all holders of its Common Stock, entitling
them to subscribe for or purchase shares of Common Stock
at a price per share less than the current market price
per share (determined as provided in subparagraph
(e)(viii) below) of the Common Stock on the date fixed for
the determination of shareholders entitled to receive such
rights or warrants, the Conversion Price shall be reduced
by multiplying such Conversion Price by a fraction of
which the numerator shall be the sum of the number of
shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the
number of shares of Common Stock which the aggregate
offering price for all of the shares of Common Stock so
offered for subscription or purchase would purchase at
such current market price and of which the denominator
shall be the sum of the number of shares of Common Stock
outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common
Stock so offered for subscription or purchase, such
reduction to become effective immediately after the
opening of business on the day following the date fixed
for such determination. For the purposes of this
subparagraph (e)(iv), the number of shares of Common Stock
at any time outstanding shall not include shares held in
the treasury of the Corporation. The Corporation will not
issue any rights or warrants in respect of shares of
Common Stock held in the treasury of the Corporation.
(v) In case outstanding shares of Common Stock
shall be subdivided into a greater number of shares, the
Conversion Price shall be proportionately reduced, and,
conversely, in case outstanding shares of Common Stock
shall be combined into a smaller number of shares, the
Conversion Price shall be proportionately increased, such
reduction or increase, as the case may be, to become
effective immediately after the opening of business on the
day following the date upon which such subdivision or
combination becomes effective.
(vi) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock,
evidences of its indebtedness or assets (including securi-
ties, but excluding any rights or warrants referred to in
subparagraph (e)(iv) above, any dividend or distribution
paid in cash out of earned surplus of the Corporation and
any dividend or distribution referred to in subparagraph
(e)(iii) above), the Conversion Price shall be adjusted by
multiplying such Conversion Price by a fraction of which
the numerator shall be the difference of the current
market price per share (determined as provided in
subparagraph (e)(viii) below) of the Common Stock on the
date fixed for the determination of the shareholders
entitled to receive such distribution less the then fair
market value (as determined by the Board of Directors,
whose good faith determination shall be conclusive) of the
portion of the assets or evidences of indebtedness so
distributed applicable to one share of the then
outstanding Common Stock, and of which the denominator
shall be such current market price per share of the Common
Stock, such adjustment to become effective immediately
after the opening of business on the day following the
date fixed for such determination. For purposes of this
subparagraph (e)(vi), the number of shares of Common Stock
at any time outstanding shall not include shares held in
the treasury of the Corporation. The Corporation will not
distribute any evidences of its indebtedness or assets
with respect to shares of Common Stock held in the
treasury of the Corporation.
(vii) A reclassification (including any reclassifi-
cation upon a consolidation or merger of which the
Corporation is the continuing corporation) of the Common
Stock into securities including securities other than the
Common Stock shall be deemed to involve (aa) a
distribution of such securities other than Common Stock
into which the Common Stock is reclassified to all holders
<PAGE>
of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for
the determination of shareholders entitled to receive such
distribution" within the meaning of subparagraph (e)(vi)
above) and (bb) a subdivision or combination, as the case
may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification
into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the date upon
which such subdivision or combination becomes effective"
within the meaning of subparagraph (e)(v), above).
(viii) For the purpose of any computation under
subparagraph (e)(iv), (vi), and (x), the current market
price per share of Common Stock on any date shall be
deemed to be 90% (100%, in the case of subparagraph
(e)(xvi) of (aa) the average of the daily closing prices
for the five (5) consecutive business days commencing ten
(10) business days before the date in question. The
closing price for each day shall be the last reported
sales price regular way or, in case no such reported sale
takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case
on any exchange on which the Common Stock is listed or
admitted to trading selected by the Board of Directors, or
(bb) if the Common Stock is not listed or admitted to
trading on any such exchange, the closing sale price in
the over-the-counter market, or (cc) in case no such
reported sale takes place or such data is not reported on
such day, the average of the closing bid and asked prices
in the over-the-counter market, as furnished by the
National Association of Securities Dealers, Inc. through
NASDAQ or a similar organization if NASDAQ is no longer
reporting such information. If on any such day the Common
Stock is not quoted by any such organization, the closing
price for such day shall be the fair value of such Common
Stock on such day, as determined by the Board of Directors
in good faith.
(ix) In case of any capital reorganization of the
Corporation (other than any reorganization referred to in
subparagraph (e)(iii), (iv), (v), (vi), or (vii), above),
any reclassification of the Common Stock (other than any
reclassification of the Common Stock referred to in
subparagraph (e)(ii), (v) or (vii) above), the
consolidation or merger of the Corporation with or into
any other corporation or of the sale of all or
substantially all of the properties and assets of the
Corporation to any other corporation, each share of Series
A Convertible Preferred Stock shall immediately thereafter
be convertible into the number of shares of stock, other
securities, assets and/or cash to which a holder of the
number of shares of Common Stock into which such share was
convertible immediately prior thereto would have been
entitled to receive upon such reorganization,
reclassification, consolidation, merger or sale. In case
of any such reorganization, reclassification,
consolidation, merger or sale, the provisions set forth in
this subparagraph (e)(ix) with respect to the rights and
interests of the holders of the Series A Convertible
Preferred Stock shall automatically be appropriately
adjusted so as to be applicable as nearly as possible to
the shares of stock, other securities, assets and/or cash
into which the Series A Convertible Preferred Stock
thereby becomes convertible, and effective provision shall
be made in the Articles of Incorporation of the resulting
or surviving corporation or otherwise, so that such
provisions shall thereafter be applicable, as nearly as
possible, to any such shares of stock, other securities,
assets and/or cash. The Corporation shall not effect any
such consolidation, merger or sale, unless before the
consummation thereof the successor corporation (if other
than the Corporation) resulting from such consolidation or
merger, the corporation purchasing such assets, or other
appropriate corporation or entity shall expressly assume
in writing the obligation to deliver to the holder of each
share of Series A Convertible Preferred Stock, upon
<PAGE>
conversion thereof, such shares of stock, other
securities, assets and/or cash as such holder shall be
entitled to receive pursuant to the provisions hereof, and
to make provisions for the protection of such conversion
right as above provided. The provisions of this subpara-
graph (e)(ix) shall similarly apply to successive
reorganizations, reclassifications, consolidations,
mergers or sales.
(x) In the event that the Corporation shall (except
as hereinafter provided) issue any additional shares of
Common Stock for cash at a price less than the Current
Market Price per share of Common Stock then in effect,
then the Conversion Price upon each such issuance shall be
adjusted to that price determined by multiplying the
Conversion Price in effect immediately prior to such event
by a fraction:
(aa) the numerator of which shall be the
number of shares of Common Stock outstanding immedi-
ately prior to the issuance of such additional
shares of Common Stock plus the number of full
shares of Common Stock which the aggregate
consideration for the total number of such
additional shares of Common Stock so issued would
purchase at the Current Market Price per share, and
(bb) the denominator of which shall be the
number of shares of Common Stock outstanding immedi-
ately prior to the issuance of such additional
shares of Common Stock plus the number of such
additional shares of Common Stock to issued;
For purposes of clauses (aa) and (bb) the date as of which
the Current Market Price per share of Common Stock shall
be computed shall be the earlier of (xx) the date on which
the Corporation shall enter into a firm contract for the
issuance of such additional shares of Common Stock or (zz)
the date of actual issuance of such additional shares of
Common Stock;
(xi) The Corporation may make such reductions in
the Conversion Price, so as to increase the number of
Common Shares into which the Series A Convertible
Preferred Stock may be converted, in addition to those
required by subparagraph (e)(iii), (iv), (v), (vi) and
(ix), as it considers to be advisable in order that any
event treated for federal income tax purposes as a
dividend of stock or stock rights shall not be taxable to
the recipients.
(xii) No adjustments to the Conversion Price
will be made for the issuance of options or securities to
employees of the Corporation or its subsidiaries pursuant
to any stock option, restricted stock, thrift, stock
purchase, savings or other employee benefit plan or to
shareholders of the Corporation pursuant to any dividend
reinvestment plan. No adjustment will be required to be
made in the Conversion Price until accumulative
adjustments require an adjustment of at least $.25, with
any smaller adjustments not made hereunder cumulated with
future adjustments.
(xiii) The Corporation shall mail to each holder of
Series A Convertible Preferred Stock notice of the pro-
posed effective date of any action which would result in
an adjustment in the Conversion Price determined as
provided in this subparagraph (e) at least twenty (20)
days prior to the record date thereof. Whenever the
Conversion Price is adjusted as herein provided, the
Corporation shall forthwith file with any transfer agent
for the Series A Convertible Preferred Stock a certificate
signed by the Chairman of the Board or one of the Vice
Presidents of the Corporation and by its Treasurer or an
Assistant Treasurer, stating the adjusted Conversion Price
determined as provided in this subparagraph (e), and
setting forth the facts requiring such adjustment. Any
such transfer agent shall be under no duty to make any
inquiry or investigation as to the statements contained in
any such certificate or as to the manner in which any
computation was made, but may accept such certificate as
conclusive evidence of the statements therein contained,
and any such transfer agent shall be fully protected with
respect to any and all acts done or action taken or
suffered by it in reliance thereon. No transfer agent in
its capacity as transfer agent shall be deemed to have any
knowledge with respect to any change of capital structure
of the Corporation unless and until it receives a notice
thereof pursuant to the provisions hereof, and, in the
absence of any such notice, each transfer agent may
conclusively assume that there has been no such change.
Whenever the Conversion Price is adjusted, the Corporation
shall forthwith cause a notice stating the adjustment, and
describing the events requiring such adjustments and the
Conversion Price to be mailed to the holders of record of
Series A Convertible Preferred Stock.
(xiv) The Corporation shall at all times reserve
and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the
conversion of Series A Convertible Preferred Stock, such
number of shares as shall from time to time be sufficient
to effect the conversion of all Series A Convertible
Preferred Stock from time to time outstanding. The
Corporation shall from time to time, in accordance with
the laws of Wisconsin, increase the authorized amount of
Common Stock if at any time the number of shares of Common
Stock remaining unissued shall not be sufficient to permit
the conversion of all the then outstanding shares of
Series A Convertible Preferred Stock.
(xv) The Corporation will pay any and all issue and
other taxes (other than taxes based on income) that may be
payable in respect of any issue or delivery of Common
Stock on conversion of Series A Convertible Preferred
Stock pursuant hereto. The Corporation shall not,
however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and
delivery of Common Stock in a name other than that in
which the Series A Convertible Preferred Stock so
converted was registered, and no such issue or delivery
shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of any such
tax, or has established, to the satisfaction of the
Corporation, that such tax has been paid.
(xvi) No fractional shares of Common Stock will be
issued upon conversion of the Series A Convertible
Preferred Stock, and in lieu of any fractional shares that
would otherwise be issuable, the Corporation will pay cash
on the basis of the current market price per share of the
Common Stock on the business day immediately preceding the
day of conversion determined in accordance with
subparagraph (e)(viii) above.
(xvii) The Board of Directors of the Corporation
shall not authorize for issuance any class of capital
stock ranking prior to the Series A Convertible Preferred
Stock without the consent of holders of two-thirds of the
outstanding shares of Series A Convertible Preferred
Stock. For purposes of this Agreement, any class or
classes of stock of the Corporation shall be deemed to
rank:
(aa) Prior to the Series A Convertible
Preferred Stock as to dividends or as to
distribution of assets upon liquidation, dissolution
or winding up if the holders of such class shall be
entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or
<PAGE>
priority to the holders of the Series A Convertible
Preferred Stock; and
(bb) On a parity with the Series A Convert-
ible Preferred Stock as to dividends or as to
distributions of assets upon liquidation,
dissolution or winding up, whether or not the
dividend rates, dividend payment dates, or
liquidation amounts per share thereof be different
from those of the Series A Convertible Preferred
Stock, if the holders of such class and the Series A
Convertible Preferred Stock shall be entitled to the
receipt of dividends or of amounts distributable
upon liquidation, dissolution or winding up, as the
case may be, in proportion to their respective
dividend rates or liquidation amounts, without
preference or priority of one over the other.
ARTICLE IV
Pre-emptive Rights. No holder of any stock of the corporation shall
have any pre-emptive or other subscription rights nor be entitled, as of
right, to purchase or subscribe for any part of the unissued stock of this
corporation or any of additional stock issued by reason of any increase of
authorized capital stock of this corporation or other securities whether or
not convertible into stock of this corporation.
ARTICLE V
The address of the registered office of the Corporation is 770 North
Water Street, Milwaukee, Wisconsin 53202 and its registered agent at such
address is Michael A. Hatfield.
ARTICLE VI
The business and affairs of the Corporation shall be managed by a
Board of Directors. The number of directors (exclusive of directors, if
any, elected by the holders of one or more series of Preferred Stock, voting
separately as a series pursuant to the provisions of these Restated Articles
of Incorporation applicable thereto) shall be not less than 3 directors, the
exact number of directors to be determined from time to time by resolution
adopted by affirmative vote of a majority of the entire Board of Directors
then in office. The directors shall be divided into three classes,
designated Class I, Class II, and Class III, and the term of office of
directors of each class shall be three years. Each class shall consist, as
nearly as possible, of one-third of the total number of directors
constituting the entire Board of Directors. If the number of directors is
changed by resolution of the Board of Directors pursuant to this Article VI,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible,
but in no case shall a decrease in the number of directors shorten the term
of any incumbent director.
A director shall hold office until the annual meeting for the year in
which his term expires and until his successor shall be elected and shall
qualify. Any newly created directorship resulting from an increase in the
number of directors and any other vacancy on the Board of Directors, however
caused, shall be filled by the vote of a majority of the directors then in
office, although less than a quorum, or by a sole remaining director. Any
director so elected to fill any vacancy in the Board of Directors, including
a vacancy created by an increase in the number of directors, shall hold
office for the remaining term of directors of the class to which he has been
elected and until his successor shall be elected and shall qualify.
Exclusive of directors, if any, elected by the holders of one or more
series of Preferred Stock, no director of the Corporation may be removed
from office, except for Cause and by the affirmative vote of two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
at a meeting of shareholders duly called for such purpose. As used in this
Article VI, the term "Cause" shall mean solely malfeasance arising from the
performance of a director's duties which has a materially adverse affect on
the business of the Corporation.
<PAGE>
No person, except those nominated by or at the direction of the Board
of Directors, shall be eligible for election as a director at any annual or
special meeting of shareholders unless a written request, in the form
established by the Corporation's By-laws, that his or her name be placed in
nomination is received from a shareholder of record by the Secretary of the
Corporation not less than 30 days prior to the date fixed for such meeting,
together with the written consent of such person to serve as a director.
Where such a request for nomination and such consent have been timely
received, but such nominee is unable or declines to serve, the person who
placed the individual's name in nomination may request that an alternative
name be placed in nomination at the meeting.
Notwithstanding the foregoing, whenever the holders of any one or more
series of Preferred Stock issued by the Corporation shall have the right,
voting separately by series, to elect directors at an annual or special
meeting of shareholders, the election, term of office, filling of vacancies
and other features of such directorships shall be governed by the terms of
these Restated Articles of Incorporation applicable thereto. Directors so
elected shall not be divided into classes unless expressly provided by such
terms, and during the prescribed terms of office of such directors the Board
of Directors shall consist of such directors in addition to the number of
directors determined as provided in the first paragraph of this Article VI.
ARTICLE VII
The period of existence of the Corporation shall be perpetual.
ARTICLE VIII
Acquisition and Disposition of Own Shares. The Corporation shall have
the right to purchase, take, receive or otherwise acquire, hold, own,
pledge, transfer or otherwise dispose of its own shares; provided that no
such acquisition, directly or indirectly, of its own shares of equal or
subordinate rank shall be made unless:
(a) At the time of such acquisition the Corporation is not and
would not thereby be rendered insolvent; and
(b) The net assets of the Corporation remaining after such
acquisition would be not less than the aggregate preferential amount
payable in the event of voluntary liquidation to the holders of shares
having preferential rights to the assets of the corporation in the
event of liquidation.
ARTICLE IX
Notwithstanding any other provision of these Restated Articles of
Incorporation or the Corporation's By-Laws (and notwithstanding the fact
that some lesser percentage may be specified by law, these Restated Articles
of Incorporation or the Corporation's By-Laws), the Corporation's By-Laws
may be amended, altered or repealed, and new By-Laws may be enacted, only by
the affirmative vote of not less than two-thirds of the outstanding shares
of capital stock of the Corporation entitled to vote at a meeting of
shareholders duly called for such purpose, or by a vote of not less than
three-quarters of the entire Board of Directors then in office.
ARTICLE X
Except as otherwise specified herein, the "requisite affirmative
votes," and the recitals of votes which are "requisite for adoption" or
"requisite for approval" under Section 180.25 of the Wisconsin Statutes for
the approval or authorization of any (i) plan of merger or consolidation of
the Corporation with or into any other corporation, (ii) sale, lease,
exchange or disposition of all or substantially all the property and assets
of the Corporation to or with any other person, corporation or entity not
made in the ordinary course of business, or (iii) voluntary dissolution of
the Corporation or revocation of voluntary dissolution proceedings, shall be
the affirmative vote of the holders of two-thirds of the outstanding shares
of capital stock of the Corporation entitled to vote at a meeting called for
<PAGE>
such purpose (unless any class or series of shares is entitled to vote
thereon as a class, in which event the "requisite affirmative votes" shall
be the affirmative votes of the holders of two-thirds of the outstanding
shares of each class of shares and of each series entitled to vote thereon
as a class and of the total shares entitled to vote thereon), provided,
however, if the Board of Directors shall have approved any transaction
described in clauses (i), (ii) or (iii) above by a resolution adopted by
three-quarters of the Board of Directors then in office and entitled to vote
thereon, the "requisite affirmative votes," and the recitals of votes which
are "requisite for adoption" or "requisite for approval," shall be the
affirmative vote of the holders of a majority of the outstanding shares of
capital stock of the Corporation entitled to vote at a meeting called for
such purpose (unless any class or series of shares is entitled to vote
thereon as a class, in which event the "requisite affirmative votes" shall
be the affirmative votes of the holders of a majority of the outstanding
shares of each class of shares and of each series entitled to vote thereon
as a class and of the total shares entitled to vote thereon).
ARTICLE XI
A. In addition to any affirmative vote required by law or these
Restated Articles of Incorporation or the By-Laws of the Corporation, and
except as otherwise expressly provided in Section (B) of this Article XI, a
Business Combination (as hereinafter defined) shall require the affirmative
vote of not less than:
(1) Eighty percent (80%) of the votes entitled to be cast by
the holders of all then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(hereinafter referred to in this Article XI as "Voting Stock"), voting
together as a single class (it being understood that, for purposes of
this Article XI, each share of the Voting Stock shall have the number
of votes granted to it pursuant to the Wisconsin Business Corporation
Law or as otherwise provided pursuant to Article III of these Restated
Articles of Incorporation); or
(2) Two-thirds of the votes entitled to be cast by holders of
Voting Stock, voting together as a single class, other than Voting
Stock beneficially owned by an Interested Stockholder (as defined
below) who is a party to the Business Combination or an Affiliate or
Associate of such Interested Stockholder.
Such affirmative vote shall be required notwithstanding the fact that no
vote may be required, or that a lesser percentage may be specified by law or
in any agreement with any national securities exchange or otherwise, but
such affirmative separate class vote shall be required in addition to any
affirmative vote of the holders of any particular class or series of the
Voting Stock required by law or pursuant to Article III of these Restated
Articles of Incorporation.
B. The provisions of Section (A) of this Article XI shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative separate class vote as is
required by law and any other provision of these Restated Articles of
Incorporation, and any resolution or resolutions adopted by the Board of
Directors pursuant to these Restated Articles of Incorporation, as amended,
if the conditions specified in either of the following paragraphs (1) or (2)
are met:
1. The Business Combination shall have been approved by a
majority of the Disinterested Directors (as hereinafter defined), it
being understood that this condition shall not be capable of
satisfaction unless there is at least one Disinterested Director; or
2. All of the following conditions are met:
(a) the aggregate amount of cash and the Fair Market Value
(as hereinafter defined) as of the date of the consummation of
any Business Combination (the "Consummation Date") of
consideration other than cash to be received per share of Common
Stock as a result of such Business Combination shall be at least
equal to the higher of the following:
(i) (If applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Stockholder for any shares of Common Stock
acquired by it (aa) within the two-year period immediately
prior to the first public announcement of the proposed
Business Combination (the "Announcement Date"), or (bb) in
the transaction in which it became an Interested
Stockholder, whichever is higher, plus interest compounded
annually from the date on which the Interested Stockholder
became an Interested Stockholder (the "Determination
Date") through the Consummation Date at the base rate for
interest rate determinations of M&I Marshall & Ilsley Bank
in effect from time to time, less the aggregate amount of
any cash dividends paid, and the Fair Market Value of any
dividends paid other than in cash, per share of Common
Stock from the Determination Date through the Consummation
Date (but not exceeding the amount of such interest
payable per share of Common Stock); and
(ii) The Fair Market Value per share of Common
Stock on the Announcement Date or on the Determination
Date, whichever is higher.
The provisions of this Paragraph B(2)(a) of this Article
XI shall be required to be met with respect to all shares of
Common Stock outstanding whether or not the Interested
Stockholder has previously acquired any shares of Common Stock.
(b) The aggregate amount of cash and the Fair Market
Value as of the Consummation Date of consideration other than
cash to be received per share of any class or series of
outstanding Capital Stock, other than Common Stock, shall be at
least equal to the highest of the following (such requirement
being applicable to each such class or series of outstanding
Capital Stock, whether or not the Interested Stockholder has
previously acquired beneficial ownership of any shares of such
class or series):
<PAGE>
(i) (If applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Stockholder for any share of such class or
series of Capital Stock acquired by it (aa) within the
two-year period immediately prior to the Announcement
Date, or (bb) in the transaction in which it became an
Interested Stockholder, whichever is higher, plus interest
compounded annually from the Determination Date through
the Consummation Date at the base rate for interest rate
determinations of M&I Marshall & Ilsley Bank in effect
from time to time, less the aggregate amount of any cash
dividends paid, and the Fair Market Value of any dividends
paid other than in cash, per share of such class or series
of Capital Stock from the Determination Date through the
Consummation Date (but not exceeding the amount of such
interest payable per share of such class of Capital
Stock);
(ii) (If applicable) the highest preferential
amount per share to which the holders of shares of such
class or series of Capital Stock are entitled in the event
of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation; and
(iii) The Fair Market Value per share of such class
or series of Capital Stock on the Announcement Date or on
the Determination Date, whichever is higher.
(c) The consideration to be received by holders of a
particular class or series of outstanding Capital Stock
(including Common Stock) in such Business Combination shall be
in cash or in the same form as the Interested Stockholder has
previously paid for shares of such class or series of Capital
Stock. If the Interested Stockholder has paid for shares of any
class or series of Capital Stock with varying forms of
<PAGE>
consideration, the form of consideration of such class or series
of Capital Stock shall be either cash or the form used to
acquire the largest number of shares of such class or series of
Capital Stock previously acquired by it.
(d) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such
Business Combination: (a) except as approved by a majority of
the Disinterested Directors, there shall have been no failure to
declare and pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) on the outstanding stock
having a preference over the Common Stock as to dividends or
upon liquidations; (b) there shall have been (1) no reduction in
the annual rate of dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common Stock),
except as approved by a majority of the Disinterested Directors,
and (2) an increase in such annual rate of dividends (as
necessary to prevent any reduction) in the event of any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding
shares of the Common Stock, unless the failure so to increase
such annual rate is approved by a majority of the Disinterested
Directors; and (c) such Interested Stockholder shall have not
become the beneficial owner of any additional shares of Voting
Stock except as part of the transaction which resulted in such
Interested Stockholder becoming an Interested Stockholder.
(e) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall not
have received the benefit, directly or indirectly (except
proportionately, solely in such Interested Stockholder's
capacity as a stockholder of the Corporation), of any loans,
advances, guaranties, pledges or other financial assistance or
any tax credits or other tax advantageous provided by the
Corporation, whether in anticipation of or in connection with
such Business Combination or otherwise.
(f) A proxy or information statement describing the
proposed Business Combination in accordance with the
requirements of the 1934 Act (or any subsequent provisions
replacing such Act) shall be mailed to all Stockholders of the
Corporation at least thirty (30) days prior to the consummation
of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such
Act or subsequent provisions). The first page of such proxy or
information statement shall prominently display the
recommendation, if any, which a majority of the Disinterested
Directors then in office may choose to make to the holders of
Capital Stock regarding the proposed Business Combination. Such
proxy or information statement shall also contain, if a majority
of the Disinterested Directors then in office so request, an
opinion of a reputable investment banking firm of recognized
national standing (which firm shall be selected by a majority of
the Disinterested Directors then in office, furnished with all
information it reasonably requests, and paid a reasonable fee
for its services by the Corporation upon the Corporation's
receipt of such opinion) as to the fairness (or lack of
fairness) of the terms of the proposed Business Combination from
the point of view of the holders of Capital Stock other than the
Interested Stockholder.
(g) For purposes of this Article XI, the following
definitions shall apply:
(i) The term "Business Combination" shall mean any
transaction referred to any one or more of the following
clauses:
(aa) Any merger or consolidation of the
Corporation or any Subsidiary with (1) any
Interested Stockholder or (2) any other corporation
(whether or not itself an Interested Stockholder)
which is, or after such merger or consolidation
would be, an Affiliate or an Associate of any
Interested Stockholder; or
<PAGE>
(bb) Any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one
transaction or a series of transactions) to or with
any Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder of any
assets of the Corporation or any Subsidiary having
an aggregate Fair Market Value of $25,000,000 or
more; or
(cc) The issuance or transfer by the
Corporation or any Subsidiary (in any one
transaction or a series of transactions) of any
Securities of the Corporation or any Subsidiary
having an aggregate Fair Market Value of $25,000,000
or more to any Interested Stockholder or any
Affiliate or Associate of any Interested
Stockholder; or
(dd) The adoption of any plan or proposal for
the liquidation or dissolution of the Corporation
proposed by or on behalf of any Interested
Stockholder or any Affiliate or Associate of any
Interested Stockholder; or
(ee) Any reclassification of Securities
(including any reverse stock split), or
recapitalization of the Corporation, or any merger
or consolidation of the Corporation with any of its
Subsidiaries of any other transaction (whether or
not with or into or otherwise involving an
Interested Stockholder) which has the effect,
directly or indirectly, of increasing the
proportionate share of the outstanding shares of any
class of equity or convertible Securities of the
Corporation or any Subsidiary which is directly or
indirectly owned by any Interested Stockholder or an
Affiliate of any Interested Stockholder; or
(ff) Any series or combination of
transactions directly or indirectly having the same
effect as any of the foregoing.
(ii) "Interested Stockholder" shall mean any person
(other than the Corporation, any Subsidiary, or any
pension, savings or other employee benefit plan for the
benefit of employees of the Corporation and/or any
Subsidiary) who or which: (aa) is the beneficial owner,
directly or indirectly, of more than 10% of the
Corporation's outstanding Voting Stock; or (bb) is an
Affiliate or Associate of the Corporation and at any time
within the two-year period immediately prior to the date
in question was a beneficial owner, directly or
indirectly, of 10% or more of the Corporation's then
outstanding Voting Stock; or (cc) is an assignee of or has
otherwise succeeded to any shares of Voting Stock which
were at any time within the two-year period immediately
prior to the date in question beneficially owned by any
other Interested Stockholder, if such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a
public offering within the meaning of the 1933 Act.
(iii) A person shall be deemed the "beneficial
owner" of any Voting Stock; (aa) which such person or any
of its Affiliates or Associates owns, directly or
indirectly; or (bb) which such person or any of its
Affiliates or Associates has (y) the right to acquire
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options,
or otherwise, or (z) the right to vote pursuant to any
agreement, arrangement or understanding; or (cc) which is
beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing
of any shares of Capital Stock.
<PAGE>
(iv) In determining whether a person is an
Interested Stockholder pursuant to Subparagraph (g)(ii) of
this Article XI, the number of shares of Voting Securities
deemed to be outstanding shall include shares deemed owned
through application of Subparagraph (g)(iii) of this
Article XI, but shall not include any other shares of
Voting Stock which may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise
of conversion rights, warrants or options, or otherwise.
(v) "Subsidiary" means any corporation of which a
majority of any class of equity security is owned,
directly or indirectly, by the Corporation; provided,
however, that for the purpose of the definition of
Interested Stockholder set forth in Subparagraph (g)(ii)
of this Article XI, the term "Subsidiary" shall mean only
a corporation of which a majority of each class of Voting
Securities is owned, directly or indirectly, by the
Corporation.
(vi) "Disinterested Director" means any member of
the Board of Directors of the Corporation who is not
affiliated with the Interested Stockholder and who either
was a member of the Board of Directors prior to the
Determination Date or was elected or recommended for
election by majority of the Disinterested Directors in
office at the time such Director was nominated for
election.
(vii) "Fair Market Value" means: (aa) in the case
of stock, the highest closing sale price during the 30-day
period immediately preceding the date in question of a
share of such stock on the composite tape for the New York
Stock Exchange listed stocks, or, if such stock is not
quoted on the composite tape, on the New York Stock
Exchange, or, if such stock is not listed or admitted for
trading on such exchange, on the principal United States
Securities Exchange registered under the 1934 Act on which
such stock is listed or admitted for trading, or, if such
stock is not listed or admitted for trading on any such
exchange, the highest closing sale price (if applicable)
or bid quotation with respect to a share of such stock
during the 30-day period preceding the date in question on
the National Association of Securities Dealers, Inc.
automated quotations system or any system then in use, or
if no such quotations are available, the Fair Market Value
on the date in question of a share of such stock as
determined in good faith by a majority of the
Disinterested Directors then in office, in each case with
respect to any class or series of stock, appropriately
adjusted for any dividend or distribution in shares of
such stock or any stock split or reclassification of
outstanding shares of such stock into a greater number of
shares of such stock or any combination or
reclassification of outstanding shares of such stock into
a smaller number of shares of such stock; and (bb) in the
case of property other than cash or stock, the Fair Market
Value of such property on the date in question as
determined in good faith by a majority of the
Disinterested Directors then in office.
(viii) Reference to "highest per share price" shall
in each case with respect to any class or series of stock
reflect an appropriate adjustment for any dividend or
distribution in shares of such stock or any stock split or
reclassification of outstanding shares of such stock into
a greater number of shares of such stock or any
combination or reclassification of outstanding shares of
such stock into a smaller number of shares of such stock.
<PAGE>
(ix) In the event on any Business Combination in
which the Corporation survives, the phrase "consideration
other than cash to be received" as used in Paragraphs
B(2)(a) and (b) of this Article XI, shall include the
shares of Common Stock and/or shares of any other class or
series of Capital Stock retained by the holders of such
shares.
(x) "Capital Stock" shall mean all capital stock of
the Corporation issued from time to time under Article III
of the Corporation's Restated Articles of Incorporation.
ARTICLE XII
These Restated Articles of Incorporation supersede and take the place
of the heretofore existing Articles of Incorporation of the Corporation and
amendments thereto.
Executed in duplicate this 25th day of March, 1994.
MARSHALL & ILSLEY CORPORATION
By: /s/ James B. Wigdale
_________________________________
James B. Wigdale, Chairman
Attest: /s/ M.A. Hatfield
_______________________________
M.A. Hatfield, Secretary
This instrument was drafted by:
Scott A. Moehrke
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202-3590
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AMENDMENT TO CONSULTING AGREEMENT
AND SUPPLEMENTAL RETIREMENT PLAN
THIS AMENDMENT, made and entered into as of the 13th day of
August, 1992, between Marshall & Ilsley Corporation, a Wisconsin corporation
(the "Company") and J.A. Puelicher (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive Compensation Committee of the Board of
Directors of Marshall & Ilsley Corporation adopted the following resolution
at their meeting of August 13, 1992:
"FURTHER RESOLVED, that the Consulting Agreement and Supplemental
Retirement Plan dated as of October 1, 1986, between Mr. Puelicher and the
Company (the "Consulting Agreement") be amended to provide that the Company,
after the retirement of Mr. Puelicher, will pay an annual insurance premium
of $112,470 to NML in connection with the Policy until the earlier of (i)
Mr. Puelicher's death, (ii) nineteen years from the date of the Policy's
issue, or (iii) such time as the Policy is paid up."
NOW, THEREFORE, the parties hereby agree as follows:
1. The following Paragraph 4D is added immediately following
Paragraph 4C:
"D. Payment of Insurance Premiums. During the period that
the Executive is receiving Retirement Benefits pursuant to
Paragraph 4A hereof, the Company shall pay to Northwestern Mutual
Life Insurance Company in connection with Policy Number 12 236
596 (the "Policy") an annual insurance premium of $112,470 until
the earlier of (i) Mr. Puelicher's death, (ii) nineteen years
from the date of the Policy's issue, or (iii) such time as the
policy is paid up."
2. Except as specifically amended above, the Consulting
Agreement is hereby ratified and confirmed and shall remain in full force and
effect.
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IN WITNESS WHEREOF, this Amendment has been executed by the
parties as of the day, month and year first above written.
MARSHALL & ILSLEY CORPORATION
By: /s/ Jack F. Kellner
____________________________________
Jack F. Kellner, Chairman
Compensation Committee,
Board of Directors
Attest: /s/ M.A. Hatfield
________________________________
M.A. Hatfield, Secretary
EXECUTIVE
/s/ J.A. Puelicher
________________________________________
J.A. Puelicher
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EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into as of the 5th day of November, 1990,
by and between MARSHALL & ILSLEY CORPORATION (the "Company"), and JOSEPH L.
DELGADILLO (the "Executive") (hereinafter collectively referred to as "the
parties").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the possibility of a Change of Control (as hereinafter defined
in Section 2) exists and that the threat of or the occurrence of a Change of
Control can result in significant distractions of its key management personnel
because of the uncertainties inherent in such a situation; and
WHEREAS, the Board has determined that it is essential and in the
best interest of the Company and its shareholders to retain the services of the
Executive in the event of a threat or occurrence of a Change of Control and to
ensure his continued dedication and efforts in such event without undue concern
for his personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ
of the Company, particularly in the event of a threat of or the occurrence of
a Change of Control, the Company desires to enter into this Agreement with the
Executive.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. Employment Term. (a) The "Employment Term" shall commence on
the first date during the Protected Period (as defined in Section 1(c), below)
on which a Change of Control (as defined in Section 2, below) occurs (the
"Effective Date") and shall expire on the second anniversary of the Effective
Date; provided, however, that at the end of each day of the Employment Term the
Employment Term shall automatically be extended for one (1) day unless either
the Company or the Executive shall have given written notice to the other at
least thirty (30) days prior thereto that the Employment Term shall not be so
extended; and provided, further, that the Employment Term shall not be auto-
matically extended beyond the first day of the month following the month in
which the Executive attains age sixty-five (65).
(b) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated prior to the Effective
Date and the Executive reasonably demonstrates that such termination (i) was at
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the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change of Control, or (ii) otherwise occurred
in connection with or in anticipation of a Change of Control, then for all
purposes of this Agreement, the Effective Date shall mean the date immediately
prior to the date of such termination of the Executive's employment.
(c) For purposes of this Agreement, the "Protected Period" shall
be the two (2) year period commencing on the date hereof, provided, however,
that at the end of each day the Protected Period shall be automatically extended
for one (1) day unless at least thirty (30) days prior thereto the Company shall
have given written notice to the Executive that the Protected Period shall not
be so extended; and provided, further, that notwithstanding any such notice by
the Company not to extend, the Protected Period shall not end if prior to the
expiration thereof any third party has indicated an intention or taken steps
reasonably calculated to effect a Change of Control, in which event the
Protected Period shall end only after such third party publicly announces that
it has abandoned all efforts to effect a Change of Control.
2. Change of Control. For purposes of this Agreement, a "Change
of Control" shall mean the first to occur of the following:
(a) The acquisition by any individual, entity or "group" (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty-three
percent (33%) or more of either (i) the then outstanding shares of common stock
of the Company (the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following acquisitions of common stock
shall not constitute a Change of Control: (i) any acquisition directly from the
Company (excluding an acquisition by virtue of the exercise of a conversion
privilege or by one person or a group of persons acting in concert), (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any corporation pursuant
to a reorganization, merger or consolidation which would not be a Change of
Control under subsection (c) of this Section 2; or
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(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened "election contest" or other actual or
threatened "solicitation" (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) of proxies or consents by or on behalf
of a person other than the Incumbent Board; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, unless, following such reorganization,
merger or consolidation, (i) more than two-thirds (2/3) of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such reorganization,
merger or consolidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger or consolidation,
(ii) no person (excluding the Company, any employee benefit plan (or related
trust) of the Company or such corporation resulting from such reorganization,
merger or consolidation and any person beneficially owning, immediately prior
to such reorganization, merger or consolidation, directly or indirectly, thirty-
three percent (33%) or more of the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case may be) beneficially owns, directly
or indirectly, thirty-three percent (33%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting power of the then
outstanding voting securities of such corporation, entitled to vote generally
in the election of directors and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such reorganization, merger or
consolidation; or
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(d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other disposition, (A)
more than two-thirds (2/3) of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities who were the benefi-
cial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be, (B) no person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, thirty-three
percent (33%) or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly or
indirectly, thirty-three percent (33%) or more of, respectively, the then
outstanding shares of common stock of such corporation or the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (C) at least a majority of the
members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement or action
of the Board providing for such sale or other disposition of assets of the
Company.
3. Employment.
(a) Subject to the provisions of Section 3, hereof, the Company
agrees to continue to employ the Executive and the Executive agrees to remain
in the employ of the Company during the Employment Term. During the Employment
Term, the Executive shall be employed as Senior Vice President Financial
Services Group Manager of M&I Data Services, Inc. or in such other executive
capacity as may be mutually agreed to in writing by the parties. During the
Employment Term, Executive's position (including status, offices, titles and
reporting requirements), authority duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held
or assigned at any time during the twelve (12) month period immediately
preceding the Effective Date, and Executive's services shall be performed at the
location where Executive was employed immediately preceding the Effective Date
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or at any office or location less than thirty-five (35) miles from such
location, unless mutually agreed to in writing by the parties.
(b) Excluding periods of vacation and sick leave to which the
Executive is entitled, during the Employment Term the Executive agrees to devote
full time attention to the business and affairs of the Company to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder,
provided that the Executive may take reasonable amounts of time to (i) serve on
corporate, civil or charitable boards or committees, and (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, if such
activities do not significantly interfere with the performance of the
Executive's responsibilities hereunder. It is expressly understood and agreed
that to the extent any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
Executive's responsibilities hereunder.
4. Compensation.
(a) Base Salary. During the Employment Term, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall be paid at a
monthly rate, at least equal to twelve (12) times the highest monthly base
salary paid or payable to the Executive by the Company and its affiliated
companies in respect of the twelve (12) month period immediately preceding the
month in which the Effective Date occurs. During the Employment Term, the
Annual Base Salary shall be reviewed at least annually and shall be increased
at any time and from time to time as shall be substantially consistent with
increases in base salary generally awarded in the ordinary course of business
to other peer executives of the Company and its affiliated companies. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As used
in this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(b) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Term, an
annual bonus (the "Annual Bonus") in cash at least equal to the average
annualized (for any fiscal year consisting of less than twelve (12) full months
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or with respect to which the Executive has been employed by the Company for less
than twelve (12) full months) bonuses paid or payable, including any amounts
which were deferred under any plans of the Company and its affiliated companies,
to the Executive by the Company and its affiliated companies in respect of the
three (3) fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (the "Recent Average Bonus"). Each such Annual Bonus
shall be paid no later than seventy-five (75) days after the end of the fiscal
year for which the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus under any plan or arrangement of the
Company allowing therefor.
(c) Incentive, Savings and Retirement Plans. During the Employment
Term, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
twelve (12) month period immediately preceding the Effective Date, or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(d) Benefit Plans. During the Employment Term, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under benefit plans, practices,
policies and programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription drug, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies and their
families; but in no event shall such plans, practices, policies and programs
provide the Executive with benefits which are less favorable, in the aggregate,
than the most favorable of such plans, practices, policies and programs in
effect for the Executive and his family at any time during the twelve (12) month
period immediately preceding the Effective Date or, if more favorable to the
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Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies and their
families.
(e) Expenses. During the Employment Term, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the twelve (12) month period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(f) Fringe Benefits. During the Employment Term, the Executive
shall be entitled to fringe benefits (including but not limited to Company cars,
club dues and physical examinations) in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the twelve (12) month
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(g) Office and Support Staff. During the Employment Term, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the twelve (12) month period immediately preceding the Effective Date or, if
more favorable to the Executive, as provided generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(h) Vacation and Sick Leave. During the Employment Term, the
Executive shall be entitled to paid vacation and sick leave (without loss of
pay) in accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies as in effect for the
Executive at any time during the twelve (12) month period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(i) Restrictions. As of the Effective Date, all restrictions
limiting the exercise, transferability or other incidents of ownership of any
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outstanding award, including but not limited to restricted stock, options, stock
appreciation rights, or other property or rights of the Company granted to the
Executive shall lapse, and such awards shall become fully vested and be held by
the Executive free and clear of all such restrictions. This provision shall
apply to all such property or rights notwithstanding the provisions of any other
plan or agreement, unless the effect of the application of this provision to a
particular right or property would result in such right or property failing to
qualify for favorable tax treatment under the particular section of the Internal
Revenue Code for which it was designed to qualify, or would result in the loss
of favorable securities law treatment for participants under the plan pursuant
to which the award was granted.
5. Termination of Employment. During the Employment Term, the
Executive's employment hereunder may be terminated under the following
circumstances:
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Term.
If the Company determines in good faith that the Disability of the Executive has
occurred during the Employment Term (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 5 of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the thirtieth (30th) day after receipt of such notice by
the Executive (the "Disability Effective Date"), provided that, within thirty
(30) days after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for one hundred eighty (180) consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative, provided if the parties are unable to agree, the parties shall
request the Dean of the Medical College of Wisconsin to choose such physician.
(b) Cause. The Company may terminate the Executive's employment
for "Cause." A termination for Cause is a termination evidenced by a resolution
adopted in good faith by a majority of the Board that the Executive (i)
willfully, deliberately and continually failed to substantially perform his
duties under Section 3, above (other than a failure resulting from the
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Executive's incapacity due to physical or mental illness) which failure
constitutes gross misconduct, and results in and was intended to result in
demonstrable material injury to the Company, monetary or otherwise, or (ii)
committed acts of fraud and dishonesty constituting a felony, as determined by
a final judgment or order of a court of competent jurisdiction, and resulting
or intended to result in gain to or personal enrichment of the Executive at the
Company's expense, provided, however, that no termination of the Executive's
employment shall be for Cause as set forth in (i), above, until (a) Executive
shall have had at least sixty (60) days to cure any conduct or act alleged to
provide Cause for termination after a written notice of demand has been
delivered to the Executive specifying in detail the manner in which the
Executive's conduct violates this Agreement, and (b) the Executive shall have
been provided an opportunity to be heard by the Board (with the assistance of
the Executive's counsel if the Executive so desires). No act, or failure to
act, on the Executive's part, shall be considered "willful" unless he has acted
or failed to act in bad faith and without a reasonable belief that his action
or failure to act was in the best interest of the Company. Notwithstanding
anything contained in this Agreement to the contrary, no failure to perform by
the Executive after Notice of Termination is given by the Executive shall
constitute Cause for purposes of this Agreement.
(c) Good Reason.
(1) The Executive may terminate his employment for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean the occurrence
after a Change of Control of any of the events or conditions described in
Subsections (i) through (vi) hereof:
(i) A change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in the
Executive's reasonable judgment, does not represent a promotion from his
status, title, position or responsibilities as in effect immediately
prior thereto; the assignment to the Executive of any duties or
responsibilities which, in the Executive's reasonable judgment, are
inconsistent with his status, title, position or responsibilities in
effect immediately prior to such assignment; or any removal of the
Executive from or failure to reappoint or reelect him to any position,
except in connection with the termination of his employment for Disabil-
ity, Cause, as a result of his death or by the Executive other than for
Good Reason;
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(ii) Any failure by the Company to comply with any of the
provisions of Section 4 of this Agreement.
(iii) The insolvency or the filing (by any party, including
the Company) of a petition for bankruptcy of the Company;
(iv) Any material breach by the Company of any provision of
this Agreement;
(v) Any purported termination of the Executive's employment
for Cause by the Company which does not comply with the terms of Section
5 of this Agreement; and
(vi) The failure of the Company to obtain an agreement,
satisfactory to the Executive, from any successor or assign of the
Company, to assume and agree to perform this Agreement, as contemplated
in Section 10 hereof.
(2) Any event or condition described in Section 5(c)(1) which
occurs prior to the Effective Date but which the Executive reasonably
demonstrates (i) was at the request of a third party who has indicated an
intention or taken steps reasonably calculated to effect a Change of Control,
or (ii) otherwise arose in connection with or in anticipation of a Change of
Control, shall constitute Good Reason for purposes of this Agreement
notwithstanding that it occurred prior to the Effective Date.
(3) The Executive's right to terminate his employment
pursuant to this Section 5(c) shall not be affected by his incapacity due to
physical or mental illness. The Executive's continued employment or failure to
give Notice of Termination shall not constitute consent to, or a waiver of
rights with respect to, any circumstances constituting Good Reason hereunder.
(4) For purposes of this Section 5(c), any good faith
determination of Good Reason made by the Executive shall be conclusive.
(d) Voluntary Termination. The Executive may voluntarily terminate
his employment hereunder at any time.
(e) Notice of Termination. Any purported termination by the
Company or by the Executive (other than by death of the Executive) shall be
communicated by Notice of Termination to the other. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice which (i)
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indicates the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) the Termination Date.
For purposes of this Agreement, no such purported termination of employment
shall be effective without such Notice of Termination.
(f) Termination Date, etc. "Termination Date" shall mean in the
case of the Executive's death, his date of death, or in all other cases, the
date specified in the Notice of Termination subject to the following:
(1) If the Executive's employment is terminated by the
Company, the date specified in the Notice of Termination shall be at least
thirty (30) days after the date the Notice of Termination is given to the
Executive, provided, however, that in the case of Disability, the Executive
shall not have returned to the full-time performance of his duties during such
period of at least thirty (30) days;
(2) If the Executive's employment is terminated for Good
Reason, the date specified in the Notice of Termination shall not be more than
sixty (60) days after the date the Notice of Termination is given to the
Company; and
(3) In the event that within thirty (30) days following the
date of receipt of the Notice of Termination, one party notifies the other that
a dispute exists concerning the basis for termination, the Executive's
employment hereunder shall not be terminated except after the dispute is finally
resolved and a Termination Date is determined either by a mutual written
agreement of the parties, or by a binding and final judgment order or decree of
a court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
6. Obligations of the Company Upon Termination.
(a) Good Reason; Other Than for Cause, Death or Disability. If,
during the Employment Term, the Company shall terminate the Executive's
employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:
(i) The Company shall pay to the Executive in a lump sum in
cash within five (5) days after the Termination Date the aggregate of the
following amounts:
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A. The sum of:
(1) The Executive's Annual Base Salary through
the Termination Date to the extent not theretofore paid.
(2) The product of (x) the higher of (I) the
Recent Average Bonus and (II) the Annual Bonus paid or
payable, including any amount deferred, (and annualized for
any fiscal year consisting of less than twelve (12) full
months or for which the Executive has been employed for less
than twelve (12) full months) for the most recently completed
fiscal year during the Employment Period, if any (such higher
amount being referred to as the "Highest Annual Bonus") and
(y) a fraction, the numerator of which is the number of days
completed in the current fiscal year through the Termination
Date, and the denominator of which is 365; and
(3) Any compensation previously deferred by the
Executive (together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case to the
extent not theretofore paid.
The sum of the amounts described in Clauses (1), (2)
and (3) shall be hereinafter referred to as the "Accrued
Obligations."
B. The amount equal to the product of (1) two and (2)
the sum of (x) the Executive's Annual Base Salary (increased for
this purpose by any Section 401(k) deferrals, cafeteria plan
elections, or other deferrals that would have increased Executive's
Annual Base Salary if paid in cash to Executive when earned) and
(y) the Executive's Highest Annual Bonus;
C. A separate lump-sum supplemental retirement benefit
equal to the difference between (1) the actuarial equivalent
(utilizing for this purpose the most favorable to the Executive
actuarial assumptions and Company contribution history with respect
to the applicable retirement plan, incentive plans, savings plans
and other plans described in Section 4(c) (or any successor plan
thereto) (the "Retirement Plans") during the twelve (12) month
period immediately preceding the Effective Date) of the benefit
payable under the Retirement Plans and any supplemental and/or
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excess retirement plan providing benefits for the Executive (the
"SERP") which the Executive would receive if the Executive's
employment continued for an additional two (2) years after the
Termination Date with annual compensation equal to the sum of the
Annual Base Salary and Highest Annual Bonus, assuming for this
purpose that all accrued benefits and contributions are fully
vested and that benefit accrual formulas and Company contributions
are no less advantageous to the Executive than those in effect
during the twelve (12) month period immediately preceding the
Effective Date, and (2) the actuarial equivalent (utilizing for
this purpose the actuarial assumptions utilized with respect to the
Retirement Plans during the twelve (12) month period immediately
preceding the Effective Date) of the Executive's actual benefit
(paid or payable), if any, under the Retirement Plans and the SERP.
For example, if there were a termination today this supplemental
retirement benefit would be interpreted with respect to two plans
in existence today as follows: (i) with respect to the Retirement
Growth Plan of the Company, the Executive would receive no less
than two times eight percent (8%) of the maximum compensation that
can be taken into account under the Plan assuming Executive's
compensation is as set forth above, and (ii) with respect to the
Incentive Savings Plan of the Company, the Executive would receive
no less than two times an annual Company match of fifty percent
(50%) of Employee's maximum allowable contribution to the Plan
assuming Executive's compensation is as set forth above;
D. The amount equal to the product of (i) two and (ii)
the sum of (x) the imputed income reflected on Executive's W-2
attributable to the car provided to Executive by the Company or its
affiliates for the last calendar year ending before the Effective
Date and (y) the club dues for Executive paid by the Company or its
affiliates attributable to such year.
(ii) For twenty-four (24) months after the Termination Date,
or such longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been provided
to them in accordance with the plans, programs, practices and policies
described in Section 4(d) of this Agreement if the Executive's employment
<PAGE>
had not been terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated
companies applicable generally to other peer executives and their
families during the twelve (12) month period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies and their families; provided,
however, that if the Executive becomes reemployed with another employer
and is eligible to receive medical or other benefits under another
employer provided plan, the medical and other benefits described herein
shall be secondary to those provided under such other plan during such
applicable period of eligibility, provided that the aggregate coverage of
the combined benefit plans is no less favorable to the Executive, in
terms of amounts and deductibles and costs to him, than the coverage
required hereunder. For purposes of determining eligibility of the
Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have remained
employed until the end of such twenty-four (24) month period and to have
retired on the last day of such period.
(iii) The Executive shall have the right to purchase the car
provided to him by the Company or its affiliates during the twelve (12)
month period immediately preceding the Effective Date (or a comparable
car acceptable to the Executive if such car is no longer owned by the
Company or its affiliates), at the book value thereof on the Termination
Date, exercisable within thirty (30) days after the Termination Date; and
if the car is not purchased, Executive shall return the car to the
Company.
(iv) To the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement under any plan, program,
policy or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Term, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, except that the Company shall pay or provide the Accrued
Obligations, six (6) months of Annual Base Salary, and the Other Benefits. The
<PAGE>
Accrued Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within thirty (30) days of the Termination
Date. The six (6) months of Annual Base Salary shall be paid during the six (6)
month period following the Termination Date on a monthly basis. With respect
to the provision of Other Benefits, the term Other Benefits as utilized in this
Section 6(b) shall include, and the Executive's family shall be entitled to
receive, benefits at least equal to the most favorable benefits provided by the
Company and any of its affiliated companies to surviving families of peer
executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to family death benefits, if any, as
in effect with respect to other peer executives and their families at any time
during the twelve (12) month period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family, as in effect
on the date of the Executive's death with respect to other peer executives of
the Company and its affiliated companies and their families.
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Term, this Agreement
shall terminate without further obligations to the Executive, except that the
Company shall pay or provide the Accrued Obligations and the Other Benefits.
The Accrued Obligations shall be paid to the Executive in a lump sum in cash
within thirty (30) days of the Termination Date. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in this Section 6(c)
shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their families at any
time during the twelve (12) month period immediately preceding the Effective
Date or, if more favorable to the Executive and/or the Executive's family, as
in effect at any time thereafter generally with respect to other peer executives
of the Company and its affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Term, or if the
Executive voluntarily terminates employment during the Employment Term for other
than Good Reason, this Agreement shall terminate without further obligations to
the Executive other than the obligation to pay to the Executive Annual Base
Salary through the Date of Termination, any other amounts earned or accrued
<PAGE>
through the Termination Date, and the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore unpaid;
provided that if Executive voluntarily terminates Executive shall receive the
benefits normally provided upon normal or early retirement with respect to other
peer Executives and their families to the extent he qualifies therefore. All
salary or compensation hereunder shall be paid to the Executive in a lump sum
in cash within thirty (30) days of the Date of Termination.
(e) If any of the payments referred to in this Section 6 are not
paid within the time specified after the Termination Date (hereinafter a
"Delinquent Payment"), in addition to such principal sum, the Company will pay
to the Executive interest on all such Delinquent Payments computed at the prime
rate as announced from time to time by M&I Marshall & Ilsley Bank, or its
successor, compounded monthly.
7. No Mitigation. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced (except to the extent set forth in Section
6(a)(ii)) whether or not the Executive obtains other employment.
8. Unauthorized Disclosure. The Executive shall not make any
Unauthorized Disclosure. For purposes of this Agreement, "Unauthorized
Disclosure" shall mean disclosure by the Executive without the consent of the
Board to any person, other than an employee of the Company or a person to whom
disclosure is reasonably necessary or appropriate in connection with the per-
formance by the Executive of his duties as an executive of the Company or as may
be legally required, of any confidential information obtained by the Executive
while in the employ of the Company (including, but not limited to, any
confidential information with respect to any of the Company's customers or
methods of operation) the disclosure of which he knows or has reason to believe
will be materially injurious to the Company; provided, however, that such term
shall not include the use or disclosure by the Executive, without consent, of
any information known generally to the public (other than as a result of
disclosure by him in violation of this Section 8) or any information not
otherwise considered confidential by a reasonable person engaged in the same
business as that conducted by the Company. In no event shall an asserted
violation of this Section 8 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
<PAGE>
9. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the Company shall require
any successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession or assignment had taken place. The
term "Company" as used herein shall include such successors and assigns. The
term "successors and assigns" as used herein shall mean a corporation or other
entity acquiring all or substantially all the assets and business of the Company
(including this Agreement) whether by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representative.
10. Fees and Expenses. From and after the Effective Date, the
Company shall pay all legal fees and related expenses (including the costs of
experts, evidence and counsel) reasonably incurred by the Executive as they
become due as a result of (i) the Executive's termination of employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment), (ii) the Executive's hearing
before the Board as contemplated in Section 5(b) of this Agreement or (iii) the
Executive's seeking to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the Company under
which the Executive is or may be entitled to receive benefits.
11. Notice. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, if to the Company, to Marshall & Ilsley Corporation, 770 North
Water Street, Milwaukee, Wisconsin 53202, or if to Executive, to the address set
forth below Executive's signature, or to such other address as the party may be
notified, provided that all notices to the Company shall be directed to
the attention of the Board with a copy to the Secretary of the Company. All
notices and communications shall be deemed to have been received on the date of
delivery thereof or on the third business day after the mailing thereof, except
<PAGE>
that notice of change of address shall be effective only upon receipt.
12. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its subsidiaries for which the Executive may qualify. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan or program of the Company or any of its subsidiaries shall be payable
in accordance with such plan or program, except as explicitly modified by this
Agreement.
13. Settlement of Claims. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
14. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or compli-
ance with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
15. Employment. The Executive and the Company acknowledge that the
employment of the Executive by the Company is "at will" and prior to the
Effective Date, may be terminated by either the Executive or the Company at any
time. Moreover, if prior to the Effective Date, the Executive's employment with
the Company terminates then the Executive shall have no further rights under
this Agreement.
16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Wisconsin
without giving effect to the conflict of law principles thereof.
17. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
<PAGE>
affect the validity or enforceability of the other provisions hereof.
18. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof. In consideration of the
terms, conditions and benefits to be provided under this Agreement, the
Executive hereby expressly waives all rights under that certain Employment
Agreement between the Executive and the Company dated May 18, 1988.
19. Headings. The headings herein contained are for reference only
and shall not affect the meaning or interpretation of any provision of this
Agreement.
20. Modification. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing signed by both the Executive and the Company.
21. Withholding. The Company shall be entitled to withhold from
amounts paid to the Executive hereunder any federal, estate or local withholding
or other taxes or charges which it is, from time to time, required to withhold.
The Company shall be entitled to rely on an opinion of counsel if any question
as to the amount or requirement of any such withholding shall arise.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
MARSHALL & ILSLEY CORPORATION
By: /s/ J.B. Wigdale
____________________________________
Title: Vice Chair.
ATTEST:
/s/ M.A. Hatfield
_____________________________
Secretary
EXECUTIVE:
/s/ Joseph L. Delgadillo
________________________________________
Joseph L. Delgadillo
Address: 240 W. Aster Ln
___________________________
Mequon, WI 53092
___________________________
<PAGE>
AMENDMENT TO SUPPLEMENTAL RETIREMENT AGREEMENT
THIS AMENDMENT, dated this 16th day of December, 1993, between
MARSHALL & ILSLEY CORPORATION, a Wisconsin corporation (the "Company") and
J.A. PUELICHER (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive and the Company entered into a
Supplemental Retirement Agreement dated December 10, 1992 (the "Agreement");
and
WHEREAS, the Compensation Committee of the Board of Directors of
the Company has determined, in light of the events of the past year, that the
monthly supplemental retirement benefit contained in Paragraph 1 of the
Agreement should be increased.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Amendment to Paragraph 1 of Agreement. The first two
sentences of Paragraph 1 of the Agreement are hereby deleted and the
following is substituted therefor.
"The Company shall pay to the Executive a supplemental retirement
benefit in the amount of $58,333.33 per month for life ("the
Retirement Benefit"). The Retirement Benefit shall be payable on
a monthly basis on the first business day of each month during
the Executive's life."
2. Amendment to Paragraph 4(a) of Agreement. Paragraph 4(a)
is deleted in its entirety and the following is substituted therefor.
"(a) Successors and Assigns. (i) This Agreement shall be
binding upon and shall inure to the benefit of the Company, its
successors and assigns, and the Company shall require any
successor or assign (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to expressly assume and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such
succession or assignment had taken place. The term "Company" as
used herein shall include such successors and assigns. The term
"successors and assigns" as used herein shall mean a corporation
or other entity acquiring all or substantially all the assets and
<PAGE>
business of the Company (including this Agreement) whether by
operation of law or otherwise.
(ii) Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive,
nor shall Executive's rights hereunder be subject to encumbrance
or to the claims of the Company's creditors. This Agreement and
all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by Executive's personal or legal
representatives, Estate, executors, administrators, heirs and
beneficiaries."
3. No Other Amendments. Except as amended hereby, the
Agreement remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
MARSHALL & ILSLEY CORPORATION
By: /s/ Jack F. Kellner
______________________________
Jack F. Kellner, Chairman,
Compensation Committee
Attest: /s/ M.A. Hatfield
_________________________
M.A. Hatfield,
Secretary
EXECUTIVE
/s/ J. A. Puelicher
________________________________
J. A. PUELICHER
Address:
9080 North Range Line Road
________________________________
Milwaukee, Wisconsin 53217
________________________________
<PAGE>
AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of
July, 1993, by and between MARSHALL & ILSLEY CORPORATION ("M&I")
and MICHAEL J. REVANE ("Revane").
WHEREAS, Revane has had long service with M&I and its
subsidiaries in an executive capacity and now desires to take
early retirement; and
WHEREAS, Revane's experience, knowledge and
relationship is of significant value to M&I and M&I desires to
retain Revane in a consulting capacity; and
WHEREAS, the parties desire to set forth the terms and
conditions of Revane's early retirement.
NOW, THEREFORE, in consideration of good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereby agree as follows:
1. Early Retirement. Revane hereby delivers notice of
his early retirement, effective November 30, 1993, upon the terms
and conditions set forth in this Agreement, and conditioned upon
the receipt of the items to be provided to him hereunder. Such
effective date may be adjusted upon the consent of both Revane
and M&I. The effective date, as adjusted, is hereinafter
referred to as the "Effective Date." Prior to the Effective
Date, Revane agrees to serve, and M&I agrees to employ Revane, in
his current full-time position subject to his existing duties and
obligations and agreements, including but not limited to his
<PAGE>
Employment Agreement with M&I. In the event that Revane should
terminate employment prior to the Effective Date, whether due to
death, disability, voluntary termination or involuntary
termination, he shall be subject to and receive the benefits of
such plans, practices, and programs then in effect, and this
Agreement shall be null and void and of no further force or
effect. Upon Revane's early retirement hereunder, upon the
Effective Date all agreements applicable only during his
employment, such as his group-term life insurance and Employment
Agreement with M&I, shall terminate.
2. Effects of Early Retirement. Upon early retirement
of Revane in accordance with this Agreement, the following shall
occur:
(a) Bonus. To the extent Revane has not received
all of his regular compensation through the Effective Date,
or the bonus for periods which precede the Effective Date,
Revane shall receive the unpaid salary and shall receive a
prorated bonus for such period. The amount of the bonus,
unless otherwise agreed to by M&I and Revane, shall be paid
at the same rate as the bonus received by Revane for the
preceding year.
(b) Key Restricted Stock. The Stock Option
Committee has determined that Revane's early retirement
under the conditions set forth herein shall qualify as early
retirement under the terms of applicable stock plans of M&I.
<PAGE>
Accordingly, in accordance with the plans, at the Effective
Date, the options of M&I to repurchase at a favorable price
the key restricted stock held by Revane shall terminate, and
Revane shall thereafter hold such stock free of all such
restrictions, provided that he makes adequate arrangements
with M&I for any withholding or employment taxes due at such
time.
(c) Options. The Stock Option Committee has
determined that Revane's early retirement under the
conditions set forth herein shall qualify as early
retirement under the terms of applicable stock plans of M&I.
Accordingly, in accordance with the plans, at the Effective
Date, any options held by Revane to acquire M&I stock which
have not yet vested shall vest, and the options shall
thereafter be exercisable in accordance with their terms.
(d) Non-Qualified Retirement Benefit Plan.
Revane is a participant in the Marshall & Ilsley Corporation
Non-Qualified Retirement Benefit Plan dated December 12,
1991 (the "Non-Qualified Retirement Benefit Plan"). Solely
for purposes of the Non-Qualified Retirement Benefit Plan,
M&I hereby confirms that, for so long as Revane is engaged
as a Consultant to M&I pursuant to the Consulting Agreement
(as hereinafter defined), Revane shall continue to be
treated as in the employ of M&I for purposes of establishing
<PAGE>
benefits for Revane under the Non-Qualified Retirement
Benefit Plan.
(e) Severance. As severance to Revane for his
many years of service, M&I shall make thirty-six (36)
monthly payments of $10,277.78 to Revane commencing on
January 1, 1996, and continuing on the same day of each
succeeding month thereafter until December 1, 1998 (such
period of payments is hereinafter referred to as the
"Payment Period"). In the event of Revane's death prior to
December 1, 1998, in lieu of the foregoing, payments shall
be made to his estate or beneficiary acceptable to M&I that
Revane designates to M&I in writing, only as follows:
(i) In the event of Revane's death after
November 30, 1993 and before December 1, 1995, his
estate or designated beneficiary shall receive a lump
sum payment equal to $70,000.00 multiplied by a
fraction, the numerator of which is the number of whole
months between November 30, 1993, and the date of
death, and the denominator of which is twenty-four
(24); and
(ii) In the event of Revane's death after
November 30, 1995, his estate or designated beneficiary
shall receive monthly payments over the remaining
Payment Period equal to $1,944.44 per month.
<PAGE>
(f) Split-Dollar Insurance. Revane has a split-
dollar insurance arrangement with M&I pursuant to which M&I
has paid the premiums on two (2) life insurance policies on
the life of Revane and has a right of repayment of such
premiums upon termination of the arrangement. For so long
as Revane is engaged as a consultant to M&I pursuant to the
Consulting Agreement (as hereinafter defined) M&I shall
continue to pay the premium on such policies. Upon the
termination of the consulting services under the Consulting
Agreement, M&I shall be entitled to the return of all its
premiums and any other amounts due it under the split-dollar
arrangement.
(g) Withholding. M&I shall be entitled to
withhold from any amounts paid to Revane hereunder any
withholding or other employment taxes which it is required
to withhold.
3. Consulting. On the Effective Date, Revane and M&I
shall enter into a Consulting Agreement in the form of the
Consulting Agreement attached as Exhibit 3 attached hereto (the
"Consulting Agreement").
4. Miscellaneous. This Agreement shall be binding
upon the parties hereto and their heirs, successors and assigns.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Wisconsin. This Agreement and the
attached exhibit supersede all other agreements between the
<PAGE>
parties hereto covering the subject matter hereof. This
Agreement may not be amended or modified unless such amendment or
modification is agreed to in writing and signed by all parties
hereto.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date written above.
MARSHALL & ILSLEY CORPORATION
By /s/ J.B. Wigdale
___________________________
/s/ Michael J. Revane
______________________________
Michael J. Revane
<PAGE>
CONSULTING AND NONCOMPETITION AGREEMENT
THIS AGREEMENT, made as of the 1st day of December, 1993, between
MICHAEL J. REVANE ("Consultant") and MARSHALL & ILSLEY CORPORATION, a
Wisconsin corporation (the "Company").
BACKGROUND:
For the past 26 years, Consultant has served as a full-time
employee of the Company and/or its subsidiaries. Effective as of this date,
Consultant has taken early retirement. Consultant's experience, knowledge
and relationships in the trust area are of significant continuing value to
the Company and its subsidiaries, and the Company desires to retain
Consultant, and Consultant desires to serve, as a consultant for the Company
and its subsidiaries in the trust area. In addition, the Company desires to
enter into a noncompetition agreement with Consultant, and the Company views
the noncompetition agreement as an integral part the mutual arrangements
entered into by the parties surrounding Consultant's early retirement.
NOW, THEREFORE, in consideration of the mutual promises and
agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
agree as follows:
ARTICLE I
Consulting
1.1. Consulting Services. For a period of twenty-five (25)
months from the date hereof (the "Consulting Period"), Consultant shall act
as a consultant and advisor to the Company and shall render such advice and
assistance respecting the affairs and activities of the various trust
departments and services of the Company and its subsidiaries as the officers
of the Company may from time to time reasonably request and as may be
appropriate in view of the services formerly performed by the Consultant in
his capacity as an employee of the Company and its subsidiaries. It is
anticipated that such services shall include, without limitation, answering
questions and providing information to assist in the transition to
Consultant's successor, the continued service of the trust business and
relations with customers of such entities, responding to inquiries concerning
the trust business of the Company and its subsidiaries by telephone and by
mail as appropriate, the making of on-site visits to the premises of the
Company's headquarters in Wisconsin and trust offices in Florida and Arizona
or other locations acceptable to Consultant to answer questions and provide
information concerning the trust business, and the preparation of memoranda
<PAGE>
and summaries as appropriate of information relevant to the trust business
and customers and strategic planning thereof. In addition, upon the request
of the Company, Consultant agrees to serve as a director of the Company's
trust operations in Arizona without additional compensation. Consultant's
consulting services shall be performed at such times as shall be mutually
agreed by Consultant and the Company. It is understood that the Company
shall not be entitled to the Consultant's services on a full-time basis, that
the Consultant shall not be required without his consent to devote in excess
of seven days per month to the performance of such services and that it shall
not be necessary for Consultant to follow any established work schedule or to
work for any particular number of hours. The Company will not exercise
supervision over the Consultant in the performance of his consulting and
advisory services nor will it require his compliance with detailed orders or
instructions. During the Consulting Period, the Consultant may engage in
other activities, subject to the restrictions set forth in Article II hereof.
1.2. Consulting and Noncompetition Fees. In consideration of
the consulting services to be performed by Consultant pursuant hereto, and
the noncompetition agreement and other obligations of Consultant set forth
herein, the Company shall pay to Consultant a fee of Thirty-two Thousand
Dollars ($32,000.00) per month, which shall be paid by check and mailed to
Consultant on or before the 5th day of each month during the Consulting
Period commencing with the month of December, 1993. Such amount shall be
paid to Consultant regardless of whether or to what extent the Company
requests Consultant to provide consulting services hereunder, provided that
Consultant performs the services required of him and adheres to the
obligations imposed upon him hereunder. In view of Consultant's commitment
to refrain from competing against the Company for the period described
herein, payments due Consultant hereunder shall continue to Consultant or his
estate, as the case may be, notwithstanding Consultant's death or disability,
provided that Consultant was not in default of the terms of this Agreement at
the time of his death or disability.
1.3. Reimbursement for Expenses. Within thirty (30) days after
receipt of Consultant's invoice or accounting therefor, the Company shall
reimburse Consultant for any out-of-pocket expenses incurred by him in the
course of performing consulting services requested by the Company hereunder,
provided such expenses were either approved in advance by the Company or were
within the parameters approved by the Company from time to time for
Consultant's reimbursable expenses. In addition, for so long as Consultant
is providing the consulting services requested of him hereunder, the Company
shall pay the dues incurred by Consultant at the Milwaukee Country Club, the
<PAGE>
Phoenix Country Club, and the University Club, and shall continue to provide
Consultant with the automobile provided to Consultant immediately prior to
his termination of employment (along with the reimbursement of expenses
consistent with the policy for repairs, maintenance, insurance, etc. then in
effect). Consultant shall keep accurate records and receipts of such
expenditures and shall submit such accounts and proof thereof as may from
time to time be required in accordance with such expense account or
reimbursement policies as the Company may establish.
ARTICLE II
Noncompetition Agreement
2.1. Covenant Not to Compete. Consultant agrees that he shall
not at any time for a period of twenty-five (25) months after the date hereof
(the "Noncompetition Period"), either directly or indirectly, whether as
agent, stockholder (except as the holder of not more than 5% of the stock of
a publicly held company provided that Consultant does not render advice or
assistance to such Company), employee, employer, officer, director,
consultant, representative, trustee, partner, proprietor or otherwise:
(a) Acquire an ownership interest in, engage in or render
advice or assistance to any business which provides trust services or
manages investments or portfolios for individuals, businesses or other
persons within the continental United States (any such business being
hereafter called a "Competing Business"), without first obtaining
permission from the Company;
(b) Divert, or attempt to divert, any business whatsoever
from the trust departments of the Company and its subsidiaries or
solicit or entice, or attempt to solicit or entice, any of the
customers or suppliers of the trust departments of the Company and its
subsidiaries so as to cause any such customers or suppliers not to do
business with such businesses; or
(c) Contact or solicit for employment any person now or
hereafter employed by the trust departments of the Company and its
subsidiaries or solicit or entice, or attempt to solicit or entice, any
such person to leave such employment unless such person shall have
ceased to be an employee thereof not less than six (6) months prior to
any such contact, solicitation or enticement.
<PAGE>
ARTICLE III
Confidential Information
3.1. Definition of Confidential Information. Consultant
acknowledges that in the course of performing services for the Company and
its subsidiaries and in the course of performing consulting services
hereunder he has had and will have access to valuable nonpublic proprietary
information relating to the Company and its subsidiaries, their customers and
services regarded by such entities as confidential (hereinafter "Confidential
Information"). Notwithstanding the foregoing, no information shall be
considered to be Confidential Information and no obligation of nondisclosure
set forth in this Agreement shall apply to any information that (i) is or
becomes publicly known through no fault of Consultant, (ii) can be
demonstrated by Consultant to have been known by him prior to its disclosure
by the Company or its subsidiaries and not obtained in the course of
providing services for such entities, or (iii) is rightfully acquired by
Consultant from sources independent of the Company and its subsidiaries
without violation by such source of any obligation to the Company and its
subsidiaries.
3.2. Nondisclosure of Confidential Information. In
consideration of the agreements of the Company set forth herein, Consultant
agrees that he shall not at any time during the Consulting Period and for a
period of one (1) year thereafter, or for a period of three years after
disclosure thereof to Consultant, whichever is the last to expire, without
the written consent of the Chairman or President of the Company, use any
Confidential Information in any manner or disclose any Confidential
Information to anyone other than employees of the Company and its
subsidiaries to whom such disclosure is reasonably required in connection
with the business of the Company and its subsidiaries. Consultant further
agrees that he will at any time upon request of the Company surrender and
deliver to the Company any correspondence, files, customer lists, compute
disks and all other documents, records or electronic media of any kind which
contain any Confidential Information which are then in his possession or
under his control.
ARTICLE IV
Miscellaneous
4.1. Withholding. The amounts payable to Consultant pursuant to
this Agreement are stated before any deductions required to be made by the
Company under applicable law. The Company shall have the right to rely upon
<PAGE>
an opinion of its regular accountants or other tax advisors if any question
should arise as to any such deductions.
4.2. Notices. Any notice required or permitted to be given or
made by either party to the other hereunder shall be sufficient if hand
delivered, mailed postage prepaid, sent by prepaid express or courier service
or sent by facsimile transmission and actually received to the parties at
their respective addresses set forth opposite the signatures hereto or to
such changed address as either party shall designate by proper notice to the
other.
4.3. Enforcement. Consultant recognizes that irreparable injury
may result to the Company in the event of a breach by him of the restrictions
imposed by Articles II and III, above, and that his acceptance of such
restrictions was a material factor in the Company's decision to enter into
this Agreement. Accordingly, Consultant agrees that if he shall engage in
any act in violation of any such restrictions the Company shall be entitled,
in addition to any other remedies and damages as may be available to it, to
an injunction prohibiting him from engaging in any such acts.
4.4. Governing Law. This Agreement and all questions of its
interpretation, performance, enforceability and the rights and remedies of
the parties hereto shall be governed and construed in accordance with the
laws of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
Address for Notice: MARSHALL & ILSLEY CORPORATION
770 North Water St.
Milwaukee, WI 53202
Attn: President By: /s/ J.B. Wigdale
__________________________
/s/ Michael J. Revane
_______________________________
/s/ Gary D. Strelow Michael J. Revane
________________________
<PAGE>
Exhibit 11
MARSHALL & ILSLEY CORPORATION
COMPUTATION OF NET INCOME PER COMMON SHARE
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
1991 1992 1993
<S> <C> <C> <C>
Primary:
Weighted average common shares outstanding during
each year 63,063,834 63,859,455 63,537,534
Incremental shares relating to:
Conversion of preferred stock 1,962,900 1,962,900 1,962,900
Dilutive stock options outstanding at end of
each year (1) 1,098,849 1,629,162 1,434,896
Dilutive stock options exercised
during each year (1) 36,822 71,427 111,490
__________ __________ __________
Average number of common and common equivalent
shares for primary net income per share 66,162,405 67,522,944 67,046,820
========== ========== ==========
Fully diluted:
Weighted average common shares outstanding during
each year 63,063,834 63,859,455 63,537,534
Incremental shares relating to:
Conversion of preferred stock 1,962,900 1,962,900 1,962,900
Dilutive stock options outstanding
at end of each year (2) 1,669,710 1,625,172 1,310,558
Dilutive stock options exercised
during each year (3) 146,535 278,649 326,712
Conversion of convertible notes 6,118,548 5,946,846 5,819,973
__________ __________ __________
Average number of common and common equivalent
shares for fully diluted net income per share 72,961,527 73,673,022 72,957,677
========== ========== ==========
Primary:
Income before cumulative effect of changes
in accounting principles $99,347 $116,622 $125,491
Cumulative effect of changes in accounting
principles, net of income taxes -- (7,387) --
__________ __________ __________
Net income applicable to common shares $99,347 $109,235 $125,491
========== ========== ==========
Fully diluted:
Income before cumulative effect of changes
in accounting principles $99,347 $116,622 $125,491
Add: interest expenses, less income tax effect
on convertible notes 2,938 2,884 2,795
__________ __________ __________
102,285 119,506 128,286
Cumulative effect of changes in accounting principles,
net of income taxes -- (7,387) --
__________ __________ __________
Net income applicable to common shares $102,285 $112,119 $128,286
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
Exhibit 11
MARSHALL & ILSLEY CORPORATION
COMPUTATION OF NET INCOME PER COMMON SHARE
(continued)
<CAPTION>
1991 1992 1993
<S> <C> <C> <C>
Per common share amounts:
Primary:
Income before cumulative effect of changes
in accounting principles $1.50 $1.73 $1.87
Cumulative effect of changes in accounting principles -- (0.11) --
______ ______ ______
Net income $1.50 $1.62 $1.87
Fully diluted: ====== ====== ======
Income before cumulative effect of changes
in accounting principles $1.40 $1.62 $1.76
Cumulative effect of changes in accounting principles -- (0.10) --
______ ______ ______
Net income $1.40 $1.52 $1.76
====== ====== ======
</TABLE>
(1) Based on treasury stock method using average market price.
(2) Based on treasury stock method using year-end market price, if higher
than average market price.
(3) Based on treasury stock method using market price at date of exercise.
Note: 1991 and 1992 have been restated for the 3 for 1 stock split effected
in the form of a 200% stock dividend which was distributed to shareholders in
May 1993.
<PAGE>
Exhibit 12
MARSHALL & ILSLEY CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
_____________________________________________________
Earnings: 1989 1990 1991 1992 1993
_______ _______ _______ _______ ______
<S> <C> <C> <C> <C> <C>
Earnings before income taxes and cumulative
effect of changes in accounting principles $123,184 $104,255 $146,482 $174,457 $196,563
Fixed charges, excluding interest on deposits 88,759 73,497 52,515 38,709 37,710
_______ _______ _______ _______ ______
Earnings including fixed charges but excluding
interest on deposits 211,943 177,752 198,997 213,166 234,273
Interest on deposits 273,546 297,063 271,454 190,582 145,717
_______ _______ _______ _______ ______
Earnings including fixed charges and interest
on deposits $485,489 $474,815 $470,451 $403,748 $379,990
Fixed Charges:
Interest Expense:
Short-term borrowings $ 66,866 $ 50,763 $ 27,288 $14,600 $16,714
Long-term borrowings 18,004 18,540 20,146 19,085 15,927
One-third of rental expense for all operating
leases (the amount deemed representative of
the interest factor) 3,889 4,194 5,081 5,024 5,069
_______ _______ _______ _______ ______
Fixed charges excluding interest on deposits 88,759 73,497 52,515 38,709 37,710
Interest on deposits 273,546 297,063 271,454 190,582 145,717
_______ _______ _______ _______ ______
Fixed charges including interest on deposits $362,305 $370,560 $323,969 $229,291 $183,427
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits 2.39 x 2.42 x 3.79 x 5.51 x 6.21 x
Including interest on deposits 1.34 x 1.28 x 1.45 x 1.76 x 2.07 x
</TABLE>
<PAGE>
Exhibit 21
MARSHALL & ILSLEY CORPORATION
SUBSIDIARIES
February 28, 1994
M&I Bank of Antigo
M&I Bank of Beloit
M&I Bank of Cambridge
M&I Bank of Dodgeville
M&I Bank of Eagle River
M&I Bank of Mayville
M&I Bank of Menomonee Falls
M&I Bank of Mosinee
M&I Bank of Oconomowoc
M&I Bank of Onalaska
M&I Bank of Racine
M&I Bank of Watertown
M&I Central Bank & Trust
M&I Central State Bank
M&I Citizens American Bank
M&I Community State Bank
M&I First American National Bank
M&I First National Bank
M&I First National Bank of Superior
M&I Fox Heights Bank
M&I Greater Milwaukee Bank
M&I Greater Waukesha Bank
M&I Lake Country National Bank
M&I Lancaster State Bank
M&I Madison Bank
M&I Marshall & Ilsley Bank
M&I Merchants Bank
M&I Mid-State Bank, N.A.
M&I National Bank of Ashland
M&I National Bank of Neillsville
M&I New Holstein Bank
M&I Northern Bank
M&I South Shore Bank
M&I Thunderbird Bank
M&I Wauwatosa State Bank
M&I Western State Bank
M&I Capital Markets Group, Inc.
M&I Data Services, Inc.
M&I Financial Corp.
M&I First National Leasing Corp.
M&I Insurance Company of Arizona, Inc.
M&I Investment Management Corp.
M&I Marshall & Ilsley Trust Company of Arizona
M&I Mortgage Corp.
M&I Servicing Corp.
Marshall & Ilsley Trust Company
Marshall & Ilsley Trust Company of Florida
Richter-Schroeder Company, Inc.
(Each subsidiary was incorporated in Wisconsin, except the M&I Marshall &
Ilsley Trust Company of Arizona, M&I Insurance Company of Arizona, Inc. and
M&I Thunderbird Bank, incorporated in Arizona; the Marshall & Ilsley Trust
Company of Florida, incorporated in Florida; M&I Servicing Corp.,
incorporated in Nevada; M&I First National Bank, M&I First National Bank of
Superior, M&I First American National Bank, M&I Mid-State Bank, N.A., M&I
National Bank of Ashland, M&I National Bank of Neillsville and M&I Lake
Country National Bank organized as national banking associations.)
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated January 28, 1994 in this Annual Report on Form 10-K for the year ended
December 31, 1993 of Marshall & Ilsley Corporation.
We also consent to the incorporation by reference of such report in the
following Registration Statements of Marshall & Ilsley Corporation:
Registration Statement No. 33-3415 (Form S-8) pertaining to the Marshall &
Ilsley Corporation Retirement Growth Plan; Registration Statement No. 33-
33153 (Form S-8) pertaining to the Marshall & Ilsley Corporation 1989
Executive Stock Option and Restricted Stock Plan; Registration Statement No.
33-33090 (Form S-8) pertaining to the Marshall & Ilsley Corporation 1988
Restricted Stock Plan; Registration Statement No. 33-2642 (Form S-8)
pertaining to the Marshall & Ilsley Corporation 1985 Executive Stock Option
and Restricted Stock Plan; Registration Statement No. 2-89605 (Form S-8)
pertaining to the Marshall & Ilsley Corporation 1983 Executive Stock Option
and Restricted Stock Plan; Registration Statement No. 2-80293 (Form S-3)
pertaining to shares of Marshall & Ilsley Corporation held by those persons
named in such Registration Statement; and Registration Statement No. 33-64054
(Form S-3) pertaining to the issuance by Marshall & Ilsley Corporation of
Debt Securities.
/s/ ARTHUR ANDERSEN & CO.
Milwaukee, Wisconsin,
March 24, 1994.
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 28th day of March, 1994.
/s/ J.P. Bolduc
_________________________
J.P. Bolduc
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 15th day of March, 1994.
/s/ Wendell F. Bueche
_________________________
Wendell F. Bueche
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 28th day of March, 1994.
/s/ Jon F. Chait
_________________________
Jon F. Chait
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 14th day of March, 1994.
/s/ Glenn A. Francke
_________________________
Glenn A. Francke
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 28th day of March, 1994.
/s/ G.H. Gunnlaugsson
_________________________
G.H. Gunnlaugsson
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 14th day of March, 1994.
/s/ Burleigh E. Jacobs
_________________________
Burleigh E. Jacobs
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 17th day of March, 1994.
/s/ Jack F. Kellner
_________________________
Jack F. Kellner
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 28th day of March, 1994.
/s/ D.J. Kuester
_________________________
D.J. Kuester
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 16th day of March, 1994.
/s/ Don R. O'Hare
_________________________
Don R. O'Hare
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 14th day of March, 1994.
/s/ J.A. Puelicher
_________________________
J.A. Puelicher
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 14th day of March, 1994.
/s/ James O. Wright
_________________________
James O. Wright
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Marshall & Ilsley Corporation, a
Wisconsin corporation, hereby constitutes and designates each of J. B. Wigdale
and M. A. Hatfield, with the power of substitution, the true and lawful
attorney-in-fact of the undersigned to sign for him in his name, the Form 10-K
of Marshall & Ilsley Corporation for its fiscal year ended December 31, 1993 and
any and all amendments and/or supplements to said Form 10-K, generally to do all
such things in his name and behalf in his capacity as a director to enable
Marshall & Ilsley Corporation to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, and hereby ratifying and confirming his signature as it may
be signed by said attorney to said Form 10-K and any and all amendments and/or
supplements thereto.
Dated this 28th day of March, 1994.
/s/ J.B. Wigdale
_________________________
J.B. Wigdale
